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I think we are all getting distracted from the real problem CEY has that is causing the atrocious share price performance.
AISC is not a big issue, it is in line with what the entire gold industry is experiencing (the link Gnome provided before provides a concise analysis of this issue).
The key issue is non-sustaining capex & in particular the waste stripping program.
The recent NSC reported is 2021 FY $132M, 2022 FY $115M & 2023 HY $56M, that is over $300M or in excess of 20% of CEY’s market cap in 2.5 years - this cannot continue!
The reason the market is giving our share price a thumping is not the NSC itself but the lack of explanation from management as to why they are making these expenditures and what benefits the expenditures will create for shareholders in the future - in the absence of explanation for the spending of over 20% of the entire value of a company simple prudence requires one to question whether the current management has a clue what they are doing.
At least the much maligned precious management dug gold out of the ground, paid hefty dividends & built up cash reserves that the current team are rapidly eroding - the level of animosity towards previous management is quite perplexing.
Until the current management explain in detail why they are spending the money or show the reasons for the expenditure in the form of significantly improving production metrics the share price will continue to languish.
Cowichan, I have a lot of respect for you & appreciate your efforts in holding CEY management to account. However, please do me a favour & hammer them on the capex issue rather than getting stuck on minor accounting issues - you made a mistake in your interpretation of the financial report, nothing wrong with making mistakes especially if you learn from them - move on and continue to fight for us retail shareholders in your most effective & amusing style. I for one appreciate what you do :)
That’s my two bobs worth, I am now going to make a big pot of beef burgundy and enjoy a special dinner with my doggie (the true Lady Spoonington Woofalot)!
Cheers
Spoon
Spoonington, I think what you write is spot on in every respect including about Cowichan, your knowledge and clear explanations are much appreciated. I quite agree about the managements. Also I used to bang on about rising AISC when others were obsessed by ounces. However it is now actually falling in real terms and as you say is more like others as they have risen, so no longer the problem. It is a shame there is so much less for dividends that under Pardy with such high capex and less of remaining profit paid out. Plus the weird $6m just in this half on the weird $1900 hedge, another sizeable chunk of dividend gone. He was not as bad as some make out and Horgan not as good. Our dividend just coming is sadly lower
Agree Spoony- factor on waste is key contributor, along with industry ones.
Hi Spoonigton,
Thank you for giving us the benefit of your professional experience on this issue, certainly the appointment of FTI seems to be all part of the BOD and managements strategy of giving the impression a new era of openness with share holders but is in reality quite the opposite.
The reality now is slick presentations promising much, but so far delivering shareholders far less at greater cost, whilst entering into huge debt agreements and hedging future gold production whilst eroding the company cash pile
I see your point about the unsustainable CAPEX, to be fair Dasut also made reference to this on the inception of the Capital waste clearance contract, but now you have further confirmed the detrimental impact this is having on the share price,profits and indeed dividends!
Share holders who are less experienced in all the various aspects of mining, including corporate accountancy may not always know the best places to look in the quarterly reports, or the most appropriate/pertinent questions to ask and this is why in many respects its easy for the company to hide the most important or details by distracting the majority of trusting shareholders with slick presentations promising more sometime in the future in order to keep them on the hook whilst the management fill their boots with bonuses for just doing what they are already paid handsomely for anyway!
You are right I have been critical of Andrew Pardey and the previous management, also I agree that they did reward share holders more than this new management, although that said we are paying for it now, but even allowing for the waste clearance the new managements strategy so far has meant that we are are paying what seems to be excessive to say the least and over and above what may be regarded as justifiable.
When Martin Horgan took over I had great hopes,but 3 years in feel that the new management aren't delivering as much as they promised and even worse are not being open or entirely honest with share holders!
Tibbs
The company doesn't take us retail shareholders seriously!
For instance one of my questions to Centamin IR and FTI
Re Egypt's lack of funds to import fuel is only getting worse – a serious consideration for Centamin contemplating connection to Egypt's power grid ?
https://www.dailynewsegypt.com/2023/07/27/egypts-prime-minister-announces-measures-to-address-power-cuts/
12th Aug 2023
Dear ****
As a long term holder of a not inconsiderable number of Centamin shares and having told in the past on a telephone call by Martin Horgan that all shareholders are valued by the company I can only assume that I no longer fall into that category as my emails over the past months seem to have been disregarded .
I appreciate that this may be due to you having a very demanding work schedule and indeed other shareholders to deal with, however in the past I would often approach “Buchanan” who were usually able to answer on Centamin’s behalf , however I feel certainly since Centamin has appointed FTI as its new PR company that this support to shareholders is somewhat lacking to say the least.
However whatever the present company policy is on communication with shareholders I feel that the feasibility of linking Centamin up to the Egyptian national power grid needs some clarification to be sure that the company is able to deliver the hoped for efficiencies and savings.
Yours Sincerely
My Details
Retail Share Holder
Reply sameme day from FTI
Hi ******
It has indeed been a busy period particularly in the run up to and following the interim results.
With the results RNS, shareholders are in possession of the latest material information and therefore we did not retrospectively respond to all enquiries.
Thank you for the below, obviously such factors will be taken into consideration as part of the ongoing grid power connection study which we expect to conclude in H2. Following any grid connection, Centamin will still have the option of reverting to its current power source alongside power generated by its solar plant.
More generally, the company is conscious of its regulatory obligations to disclose material information to shareholders via the correct channels. We do value all input from shareholders but often it will be more appropriate to respond to such issues / concerns / suggestions through formal RNS announcements than via email.
Regards
Name ***
FTI Consulting
Is it any wonder that Cowichan gets frustrated!
Dear Mr Tibbs, I've been looking to you for encouragement all these years (I know: do your own etc) but you finally seem to have lost faith. But are you staying in?
Tibbs, why on earth do you think that every post on this forum must in some way revolve around you?
Why do you feel that every post must be responded to with a most often inane comment from you?
Have you in your apparent ever declining state of arrogance & hubris come to the misguided conclusion that the rest of the participants in this forum somehow require your imprimatur in order to validate or negate their own opinions?
Sir, I am all for active participation in any debate, but you do not seek participation you seek domination which is bad enough in itself but when it comes with no perceivable constructive input whatsoever it becomes tiresome and irritating.
In my opinion you are an ideologue, alongside the ranks of other ideologues such as Hitler, Stalin, McCarthy, Mao, Pol Pot, etc., there maybe some validity to the initial basis that gives rise to your opinions but your passionate zealotry has blinded you to the existence of any alternate viewpoints thus creating a state in your own mind where your opinions are not simply opinions but irrefutable truths that may not be debated.
Fortunately for us all you do not have the capacity to influence the lives of others in the way the other ideologues I have mentioned did, however, the intent of your actions is just as evil albeit insignificant. Accordingly I find said actions to be offensive and of ill intent.
There is my quick critique of your posts, as you seem to believe it necessary to provide yours to every other poster I thought you might appreciate the same scrutiny of your own :)
Spoonington, "Non sustaining Capex particularly the waste contract".
Feel the Capex expenditure on Solar Farm is money well spent, Likewise the upgrading equipment and reverting to owner mining underground should be a profitable venture and money well spent.
Personally believe light weight bodies geared to the weight of the material being hauled is a good albeit risky venture that I hope works out over the long term but I am sure it will need tweaking to get the balance of lightweight and wear material sorted out.
Capex related to coupling up to the National Grid will I am sure be beneficial and won't require difficult maths to determine the return on investment, when compared with running a diesel generation facility, this type of study is not new and has happened in many countries around the world.
The waste contract I do hope won't need to be continued after it is due to end mid next year as I have said previously this is a necessary evil and by way of explanation.
The hole in the ground is basically not large enough and if left any longer enlarging the hole would have proved unviable. Apologies in advance for those mining engineers or miners reading this forum but imagine digging a hole in the ground 20 foot in diameter and 10 foot deep and once dug realising it needed to be 22 foot in diameter. Now how do you take out the extra two foot without a considerable amount of material ending up in the bottom of the hole.
However if you realise that the hole needs to be 2 foot wider when you have only dug 4 foot then the problem is somewhat easier to overcome.
Obviously this is very basic and Centamin's issues are way more complicated but the need to remedy the driving into a blind alley was paramount. As I have also said the proof in the decision to blitz the waste and expand the pit will only become clear once the contract ends and hopefully there are numerous ore bearing faces that can be worked and not reliant on working one and moving on to the next, therefore far more flexible and hopefully more productive.
I agree however Spoonington that this Capex is not sustainable and the ratio between working in waste and ore has to drop.
The good news is once the waste has been moved it won't need to be moved again, although there will always be the need to move different waste but this has to be at a lower ratio.
Hi Casparoni,
I'm sure that you will understand that considering all that we long term holders experienced together that any decision to get out is not to be taken lightly as one likes to hope that this time will be different!
You may recall when the share price dropped from £2.30ish to £1.70ish after the initial RNS announced the problems with the open pit wall,.
At that point I considered getting out, but then and in hindsight I mistakenly thought that Martin Horgan would make a statement about the remedial actions being taken and this would stabilise the share price, wrong again, then it dropped to £1.30 as it became even more apparent just how bad the situation was with no possibility of any quick fix and to make the open pit safe and fit for purpose was gong to be a lengthy very involved job, as we know the share price has since declined and remained at its present penny share level.
So here we are in the "Last Stop Saloon" and having sunk to this level the share price hopefully wont drop much more , so I feel its worth taking a chance that before too long the company will make some substantiated announcement that the turnaround is finally under way!
So I remain invested, but if that changes then I will of course let you know.
Kind Regards
Tibbs
Hi Dasut,
Thank you for a your very informative,but easy to understand explanation of the complex operations that are taking place to rectify the situation at Sukari
Kind Regards
Tibbs
Thanks for that, Tibbs. Yes I was in at £2.30 and long before that - maybe 7 0r 10p? A stockbroker at a party told me about CEY - they had lots of gold but couldn't get it out of Egypt. I took a punt and have got more heavily involved over the years. What you might call a rollercoaster ride...
Hi Dasut,
This re sculpting of the open pit walls has certainly needed a lot of capex although “Earnings” were not affected there has been a very considerable hit to cash flow.
So hopefully unless anything untoward happens or there is a change in corporate policy that capex will continue to go down from now onwards with at least a corresponding increase in net free cash flow until it contract completion middle of 2024.
i wonder then as the contact completion gets closer if the share price will increase be on a corresponding gradual basis or will there be sudden surge on an particular RNS update?
Hi Casparoni, strangely enough my experience is similar, more years ago than I care too remember I took a tip on Centamin from a stockbroker acquaintance in the pub!
Spoonington
Possibly oversight due to the severity of your outburst of vitriol you forget to include "Putin" & "Trump" .
My vitriol was aimed solely at you Tibbs, your attempt to deflect this to others is quite typical of ideologues, when faced with unanswerable questions simply move the attention to an unrelated area - I have dealt with your sort all too often in my career!
If you wish to enter into a discourse answer the questions posed to you, I will offer you the same courtesy. If you wish to engage in a more invective exchange I am more than happy to oblige but I caution you that I will “remove the gloves” and give you a real dressing down :)
Your last paragraph is the key my friend, once the waste has been removed?
We have no guidance whatsoever as to the ore body that will be opened from what is for all intents and purposes a pre-strip. You do not pre-strip unless you will get rewarded, gold mining 101, if you are doing a pre-strip in the middle of an ongoing operation it normally means a departure from the long term mine plan, explanation for this departure is considered mandatory, lack of explanation is considered worrying, thus our share price.
Spoonington, how much do you invest here because you think profitability will rise again at this gold price, and how much in the hope or expectation that it is fairly or underpriced at this gold price, ao a play on gold rising?
I still hold 50k of what I consider legacy shares.
Originally I held 400k and I put my mum & dad into 150k.
We bought these as options for A$0.03 & exercised at A$0.20 so a total cost of A$0.23, these purchases were made in the 2000 financial year so we held them for a long time.
In the 2020 financial year I sold 350k & mum & dad sold 150k at GBP 2 which net of fees got us about A$3.58 per share a profit of $3.35 per share or just shy of $1.7M which is the reason why I am defensive of previous management, they did a lot for me & my own.
I added 75k to my legacy holding at an average cost of US $1.25 (using CELTF) I dumped those at US $1.40 so got out at a small profit but nowhere near what I had anticipated due to the ineptitude of current management.
I will always maintain the 50k legacy holding as I figure they owe me nothing & also due to their age are certificated and accordingly hard to negotiate especially when I live in Australia & they have delisted here.
I still retain hope in the quality of the Sukari deposit which is why I will retain my 50k legacy holding, but I & my family have profited so handsomely from our investment in this company that I have a soft spot which I openly admit.
Accordingly do not follow my investment choices in this company as they are motivated by by previous profits taken rather than my usual beancounter based investment motives :)
sotolo,
i'm not disputing the profits made by the pervious management , unfortunately though it is their desire for as much profit with minimal investment that has brought about the huge increase ciapex now.
mr gnome offered his opinion in feb 2023
as a general rule, shallow mining has higher margins than deeper (esp. for open pits) mining, irrespective of the stupidity of the ceo or mine manager. simply the strip ratio increases, which means you move more waste to mine than ore, and travel distance you have to drive your trucks increases with vertical depth. so unless grade increases you will have to pay more to get the same return.
if you are not vigilant on pit walls, there is a problem as you go deeper, as you have more vertical meters of walls. the tendency for the greedy and incompetent mine managers and ceos is to try and increase the angle of the pit walls (move less dirt). problem is that when you have not done proper geotech, and looked for subvertical structures properly, [rather relied on sub vertical holes to define subvertical fault planes]...then you are exposed... and your profound greed and stupidity is about to be exposed...., and when the wall decides to fall in, it falls in and nothing will stop it. greed and stupidity exposed, as is suggested by recent history.
then when the ceo (andrew pardey )who managed this sukari fiasco has to be replaced (some survive !!!), the new ceo has not only to remove the excess that has fallen in from the last ceo, but has to cope with the high strip ratio, and has probably realised the incompetent idiot (before him just made everything too steep for stability and sustainability!
so rather than maintain the unsustainable pit angle, he has to "stand back", which means more dirt has again to be moved because of the greed of the last ceo, and hence margins further impacted.
just basic science and engineering, and a good spreadsheet to do the calcs!
i think martin horgan is doing a solid job, under promising (which always gets the wind bag analysts ****ed off, who get paid on % of selling/buying of shares) and delivering firm but good results!
horgan is positioning the mine in a good operational space, and has a lot of optionality being built into the operation, which is boring to the analysts, but very good management!
centamin doing well
comments from kees dekker mining analyst feb 2023
this is exactly correct and the issue identified by me in 2015. it was evident then that the strip ratio was far below planned ratio and the company was painting itself in a corner. hence the title of my report,
get out while the going is good!
I have posted my views before. I've been here about 11 or 12 years, first buying in a few at around 35p and buying other as high as 220 or 230, when Sotolo was saying that they were on their way to £3. I've also bought on the way down at 160, 130 and as low as low 80's. My average is around 107 now.
The previous high share price, when the £3 was forecast, was based on the amount of gold coming out of the ground and some of the dividends payed. I'm sure the high dividends brought people in and boosted the share price. The previous management benefited by the dividends and then the high price when they sold out because they knew what was coming. Pardon the pun, but was it a pyramid scheme?
From Boosted share price to Busted share price in a couple of years. :-(
I don't know much about mining gold at all but it seems some do on here. The same with shares. Some people are lucky and some are unlucky. Having read this board for years, I've seen people who seem to be "Oracles" with their predictions until it all goes wrong. I would say that generally the strike rate was less than the chimp with the dartboard .
So while it is interesting at times to read the board, I would say that it doesn't matter whether you bang on about data points, charts, waves, stages of the moon or tea leaves in a cup, sometimes you will be right and sometimes you will be wrong---------And it is unlikely to have any effect on the share price.
Some people have access to the actual internal goings on and the MM do their bits of manipulation. I guess most of us just hope that Horgan is doing the right thing and that the gold is there at Sukari and can be got out at a price that will boost the share price in a genuine way and also give decent dividends.
So I'm crossing my fingers for Sotolo's £3 a share and hopefully Mr T's £5 .
I'm hoping in the shortish term this share price rises a decent amount so all the name calling, boasting, bullying and handbags at dawn that has crept in on this board recently, stops.
"Peace and long life".
If your analysis of the situation were correct Tibbs, the current waste stripping program would largely be moving material which should have already been moved as part of mining ore already processed.
If the above were correct the directors would not be able to classify the expenditures as non-sustaining capex and the auditors would not allow it.
Unless you are suggesting that the directors and auditors are colluding to commit accounting fraud, the explanation that you & supposedly Kees Dekker provide is clearly & demonstrably false!
The link below is to information released by the World Gold Council.
Read the discussion of non-sustaining capex at point 5.
Then consider whether the explanations you have provided with such certainty, essentially presenting them as statements of fact, can indeed carry any validity.
www.gold.org/about-gold/gold-supply/responsible-gold/all-in-costs
I suggest anyone who wishes to contacts Kees Dekker I am sure he will be delighted to answer any doubts about his professional integrity
Most of you will be aware of my posting the articles by Kees Dekker pf 2015 and agin in 2018 which flagged up serious concerns about the way Sukari was being operated by the previous management, although in 2015 Andrew Pardey claimed Kees had used incorrect data , however when asked for the correct data by Kees all dialogue ceased and then Andrew Pardey tried get the article pulled, the article was published and even then previous management carried on in the same foolhardy manner, in 2018 a further article flagged up similar concerns, this was also ignored by Pardey and co, however inevitably their deliberate failings for short term gain where exposed https://www.sharesmagazine.co.uk/news/shares/centamin-plunges-as-production-hit-by-mine-trouble
https://seekingalpha.com/article/4229201-kees-dekker-reviews-centamin-plc-analysis
https://seekingalpha.com/author/kees-dekker
Interview With: Kees Dekker, Freelance Mining Analyst
https://tinyurl.com/2jc4n53n
Once again you seek to avoid answering direct questions regarding your opinions and deflect attention to others.
Kees Dekker is an analyst whose motivations are not necessarily aligned with those of shareholders, to try and hold out any opinion he may express as irrefutable fact is both foolish and disingenuous.
Explain your opinions in light of the factual circumstances I have drawn your attention to or withdraw your clearly incorrect statements!
It can' be denied that who bought shares in the early days of Centamin and the directors who amassed huge amounts of free or bonus share have all done exceptionally well , unfortunately though the way this wealth was achieved was by cutting corners and using inappropriate mining methods which consisted of high grading with insufficient waste clearance which created pit walls of too steep inclination and ultimately unsafe!
The previous management were aware of the inherent grade problems at Sukari, but from 2015 denied the problem and instead of investing funds to improve the flexibility of the Sukari operation glossed over the investable potential pit wall collapse it by continued high grading!
Even though I am critical of the communications between the new management and the shareholders and don't agree with the decisions to hedge future gold production, I do agree that Martin Horgan had no choice but to almost start again by re sculpting the Sukari open pit operations and improve access and egress to the essential underground operations , something that Pardey and co should have done over eight years ago!
The annoying thing for the majority of newer share holders from 2014 on s that they were persuaded to investinto a known flawed mine plan and it is they who are now paying a heavy price, one might argue almost a subsidy of the the profits and good fortune of the very early investors!
Tibbs