Centamin Share Discussion Threads

[warranty] 11/1/2018 17:48

Well a merger worked wonders for CAML recently, the shares have been flying since so maybe that's what's needed to light a fire under CEY?

[flopticalcube] 11/1/2018 17:43

With Josef going its possible that a road is being cleared for a takeover or merger. New board member Alison Baker is non-exec director of copper miner KAZ Minerals.

[fangorn2] 11/1/2018 11:22

Anyone concerned that Josef El Raghy is retiring at the end of the year?
He is the one with the "relationship" with Egyptian govt isn't he?

[phillis] 11/1/2018 10:12

Fishy
good point
opening half cash at $300m which suggest all of second half FCF is free to distribute
$90-$100m divi approximates to 8-8.5c per share

[skinny] 11/1/2018 09:14

Numis Buy 162.63 170.00 200.00 Retains

[jfishy55] 11/1/2018 09:13

Thanks, that makes sense re RJ. I thought he was already on the board but perhaps not!

"No point in piling up more and more cash."
Yes, the company has explicitly stated that it is not a bank and will return cash to shareholders :-)

Phillis, yes EMRA gets profit share from CF. However, FCF is after profit share so we can add up the FCF figures:
20+31+45+44e = 140
70% of 140 = 98
98 - 29 (interim div) = 69
69m / 1,152.11m (shares in issue) = approx. 6c per share

However, this statement from Q3 results suggests there may have been $45m above the $300m reserve the company wants to keep, so perhaps that can be used for the final dividend:
"Cash at bank, bullion on hand, gold sales receivable and available-for-sale financial assets as at 30 September 2017 of US$345.8 million, following an interim dividend payment of US$29.0 million."

So, just looking for a best case scenario (that I personally do NOT believe will happen):
140 + 45m = 185m
100% of 185m - 29m = 156m
156m / 1,152.11m = 13.5c per share

Note: Some or all of that $45m may have come from FCF in this FY in which case I am counting it twice.

[phillis] 11/1/2018 08:35

legg

NB
Government gets half of cash flow

[legg96] 11/1/2018 08:27

Fishy,
Ross was Chief Financial Officer but not on the board. He now joins the board. Thanks for your FCF projections. Most helpful. I think we will see something around 70% distributed. No point in piling up more and more cash. No credit in the share price for it and one day a predator could just come along and use it to offset his acquisition costs.

[rrr] 11/1/2018 08:11

I think it means Ross Jerrard has been appointed to the Board (but I agree it could be clearer).

[jfishy55] 11/1/2018 08:03

I'm a bit confused by todays RNS. Is Ross Jerrard being re-appointed as CFO or something else? (Exec. Chair to replace JER perhaps?)

FCF figures ($m):
Q1-17 19.725
Q2-17 31.104
Q3-17 45.213
Q4-17 ? Slightly less gold produced than Q3 at a slightly lower price. We don't know costs yet: Q3 was 732/483 AISC/CCP which is lower than guidance for FY18 of 770/555 which suggests to me that Q4 will be the same or slightly higher than Q3.

$29m has already been spent on the interim dividend.
Dividend policy is 30% FCF+
Last years dividend was 70% of FCF

[phillis] 10/1/2018 19:38

Yes legg - agree cash flow could be higher
It was just an approximation rather than a detailed calculation

[legg96] 10/1/2018 18:38

Phillis,
Thanks for those figures but I think that second half free cash flow will be well in excess of $50m. Remember 300,000 ozs of gold have been produced and sold in the second half.

[flopticalcube] 10/1/2018 17:17

Yeehaw! 190p target in play! Great day to be putting out the good news. Gold getting rejected yet again at the $1320 level... soon... soon...

[phillis] 10/1/2018 16:32

a 10c final dividend would cost $115m
Assume say $50m free cash flow from second half and it would require a further $60m+ drawdown from half year balances

Looks unlikely to me
More like 7.5 cents (if that)

[legg96] 10/1/2018 16:04

Fishy,
Thanks very much for those comments which I broadly agree with. I`m not sure that the announcement of a mine is West Africa is that far off. The previous management of Ampella thought 2015, but under Cey much more drilling has taken place and the last time I spoke to management on this they suggested that in due course 3 mines might be justified in that region. We really have an abundance of prospects and that is what is taking the time in deciding what configuration of facilities is required to fully exploit the resources most cost efficiently. I think the reason that they may have suggested that the building of mines in West Africa would be financed by borrowing is that they sensitive to the suggestion that cash earned in Egypt is being used to finance developments in other parts of the world and it leaves in tact cash that as you rightly point out can be used to finance further developments in Egypt. Longer term prospects for the company are truly outstanding.

[jfishy55] 10/1/2018 12:53

legg96, thanks. Bear in mind that CEY have stated (September presentation I think) that they intend to maintain a $300m cash position. Also, the company has pointed to a final dividend amount quite a bit lower than last year. However, I am surprised they would put themselves in a position to have a much lower final than last time, especially as the interim was 25% higher than last years, so I keep thinking they will aim higher so you may be right. Either way, 2018 looks to be a bumper year for dividends.

As for West Africa, a mine is a long way off but when it happens I would think it can be financed by cash from Sukhari but I'm sure any decisions on debt, paper or cashflow to finance would depend on conditions at the time.

I also wonder if, once the CC has been concluded, if a new mine will be needed in Egypt to process ore from other prospects as the current mine is at capacity. Or perhaps just higher grade ore will be fed to the mill & lower grade stockpiled?

[ukgeorge] 10/1/2018 12:15

I don't think the west africa project is anywhere near a decision on building a mine. I certainly haven't seen a feasibility study. I will check sedar.

I think these will go through £2 by about June on higher gold prices.

[legg96] 10/1/2018 11:31

Fishy,
Thanks for all your analysis. The company is still sitting on a cash mountain. Probably in excess of $400m at year end. So I am a bit more optimist about the final dividend than you are. Also very strong cash flow going forward and they have said that mine construction in West Africa will be financed by debt. Any announcement about mine commencement there will make the share price motor.

[jfishy55] 10/1/2018 09:19

Thanks for the correction George.

Yes, UG was designing into the mine plan as quick access to the high grade ore (the pit will reach the UG area eventually). This also allows the selective use of low/high grade ore to provide consistent results / meet guidance etc.

This all builds into a great 2018 I think (and potentially for the next 5 years as it is all on the North wall). However, I suspect dividends may be lower once cash is needed for progress other prospects - but this will drive the share price higher. The future for CEY does look golden indeed!

[ukgeorge] 10/1/2018 08:35

The gold price was quite a bit lower in q4 so your fcf estimate maybe a little high. The op ore grade was pretty low this quarter. But the ug was great once again. This is one of the best gold mines in the world. The ug is where the upside is imo.

[jfishy55] 10/1/2018 08:16

PS I assumed 44m FCF for Q4 (based on production slightly under Q3 which was 45.213m)

[jfishy55] 10/1/2018 08:14

540k target beaten but Q3 production wasn't which was disappointing.
No figures for FCF so it is difficult to put a finger on what the final dividend will be (announcement due 31st Jan). I have pencilled in these figures for the final:

Minimum 1.1c (30% FCF), maximum 9.6c (100% FCF), realistic 6c (70% FCF)

I had been hoping CEY would pull something put of the hat to get it higher. Can't complain though, as the lower than last year final has been on the cards for some time (and perhaps explains why JER sold so many & why the share price has been on the decline for recent months).

However, this statement is very interesting:
"mine plan forecasting a relatively balanced quarterly production profile over the year"
It suggests that CEY will have a stable year (no East wall cutbacks etc), as such I would think the 580koz guidance is easily beaten. Current rates of >150koz per Q suggest at least 600koz pa plus another crusher is due to come on line at the end of Q1. This suggests dividend returns will be somewhat higher than 2016 in 2018, which will also drive the share price upward as the yield will increase.

Also, I would think the CC will finally be resolved in CEYs favour in 2018. I think the diesel subsidy will be resolved but not in CEYs favour although the management have already factored this in & CEY may still get some sort of a concession. Resolution of the CC allows for further exploration of other prospects near Sukhari. And then there are further results for CdI & BF to look forward to. All of these should drive the share price up in 2018.

[ukgeorge] 10/1/2018 08:14

2018 Outlook·     Gold production guidance for 2018 from Sukari is 580,000 ounces, a 6% increase from 2017 with the mine plan forecasting a relatively balanced quarterly production profile over the year;  ·     Forecast cash cost of production for 2018 of US$555 per ounce and all-in-sustaining cost of US$770 per ounce;·    Processing plant throughput of 12.3Mtpa, with the installation of the fourth secondary crusher increasing capacity;·    70.5Mt total open pit material scheduled to be mined; 17.7Mt total open pit ore scheduled to be mined at an overall grade of 0.70g/t including dump-leach and stock-pile material, with open pit feed grade in line with open pit reserve grade;·     Open pit mining activities will be focused on Stage 4A of the north wall, the predominant source of ore over the next five years;·     1.3Mt total underground ore scheduled to be mined at a grade of 7.2 g/t; comprising a 65:35 split respectively between stoping and development ore·    Ongoing decline development and exploration at Cleopatra, to access the high grade western contact, a key near term growth catalyst;·     Ongoing underground decline development at Amun and Ptah, to access the Horus, Bast and Osiris zones, which are key drivers of medium term growth;·    Four exploration rigs allocated to focus on underground reserve replacement and resource expansion drilling as the orebody remains open in multiple directions;·     Further resource development in West Africa, with resource definition continuing in Burkina Faso and across the border at the Doropo project in north-east Côte d'Ivoire;·     Follow up exploration work continues after encouraging first pass drill results from the ABC project in Western Côte d'Ivoire.