Centamin Share Discussion Threads

[84stewart] 11/11/2020 12:08

Have I missed something sotolo states siko is a decent guy he might well be ,but what has he said,a crystal ball would be handy

[mr tibbles] 11/11/2020 12:08

What has happened is that the management have realised that Centamin has been forgoing strip in order to maximise ore production, and subsequently the strip schedule has got out of kilter with the longer term mine plan.
This means they have to do a lot of stripping to catch up.
Important to remember there is no less gold there, but by increasing the stripping, which effectively is mining a lot more dirt compared to ore, it opens up the flexibility of the open pit so that any challenges they face, like they did re the movement in the West Wall, can be overcome by mining in another areas of the pit.
At the moment, because of the way the pit walls are steep, they can only access one part of the open pit safely, and that is an area of lower grade than the LOM grade (ie c. 0.7 gpt, rather than 1.1gpt). Hence the reduction in guidance for 2021.

Underground output remains unaffected and access to the workings is being improved, spare LHDR still available if and when required.


Note the numbers given are really a very base case scenario and so do not include the benefit of further optimisation measures which the new CEO may implement.

Martin Horgan CEO has been brought in to fully realise the full potential and value of Sukari, not prepare the company for selling or merger.

[imastu pidgitaswell] 11/11/2020 11:51

When they (Peel Hunt in 41680) refer to those tables, what are they forecasting for EPS (and EBITDA if possible) for 2021 and 2022?

[mr tibbles] 11/11/2020 11:50

FROM 05th Nov 2020
Production setback

Centamin’s business and shares were performing strongly earlier this year. On the back of a higher gold price and production, it reported a 57% increase in first-half revenue and a 280% rise in earnings. Its shares reached a high of 232p in August.

However, last month it announced it was deferring production in one zone of its giant Sukari mine in Egypt. This was due to movement in a localised area of waste material. Subsequently, it revised its 2020 production guidance down to 445,000–455,000 from 510,000–525,000 ounces. Furthermore, it gave 2021 guidance of 400,000–430,000 ounces.

At a current 126p, this FTSE 250 miner’s shares are 46% below their August high. I think the fall is way overdone. At less than 12 times forecast 2021 earnings, and a prospective dividend yield of 6%, I reckon Centamin is another stock capable of delivering high returns for buyers today.

[mr tibbles] 11/11/2020 11:47

As Sotolo has already stated Siko is a very decent Egyptian chap who over the years has provided accurate updates about the Sukari mine and provided a very reliable insight into what the real situation is in Eygpt.
I have stress the point that to the best of my knowledge Siko has always acted with complete integrity and has always done his best to ensure the accuracy of anything he may post.

[stevedaytrader] 11/11/2020 11:43

Thanks MrTibbles, I read that too and we've just been hit by vaccine news and whack to gold like many others since then.
I think it's overdone and will turn shortly.

[stevedaytrader] 11/11/2020 11:37

Re-read my post Trader365 "... last few days..." reference

[mr tibbles] 11/11/2020 11:33

I thought some of you may find answers to some of your questions in this Peel Hunt note-
Peel Hunt Note 02nd Nov 2020-11-03 ( key points only no charts)

Upgrade to Buy
By mid-2021 we expect to be facing a much better near-term
outlook for H2 21 and H1 22, while the LOM review in
December should outline medium-term mine plans as well as any
cost-saving potential. With the CEY stock price off 37% since
2 October and a more visible path to production recovery at
Sukari, we have upgraded the stock to Buy (from Add)


Downgrading 2021 EBITDA by 29%, 2022 by 27%
We have cut our 2021 production forecast by 19% to 415k oz (from 513k oz) on
the back of renewed 2021 production guidance of 400-430k oz, which results in
a 29% decrease in 2021E EBITDA. We have also cut our 2022 production
forecast by 11% to 482k oz (from 543k oz), which results in an EBITDA
decrease of 27%. In 2021 we forecast average AISC at US$1173/oz, while in
2022 we forecast AISC at US$950/oz.
We see a normalised run rate by Q4 2021, but more of a cost focus
We believe a more sustainable level of production at Sukari could be around
500k oz, but at a lower cost level. While we have cut our production forecasts to
reflect a lower anticipated production rate going forward, we have not priced in
any additional cost benefits. We believe the heaviest bit of the additional
stripping in the open pit will take place in H1 2021, and we have forecast close to
a normalised production rate (140k oz) by Q4 2021.
Maintaining dividend forecast at USc12 in 2021
Despite the significantly lower production and profitability forecast for 2021 and
2022, we see good downside cash support at US$240-260m, and have forecast a
cash low of US$238m in Q3 2021. For this reason we have kept our final
dividend forecast of USc6 for 2020, as well as USc12 for 2021. With our belowconsensus profit forecasts in the coming two-to-three years, and no cut in the
dividend, we still have over US$300m of net cash forecast by the end of 2021.
Lower target by 22% to 170p. Upgrade to Buy rating
The substantial downgrade to our near-term earnings expectations results in a
22% cut to our target price from 218p to 170p. With 35% potential upside, we
upgrade CEY from Add to Buy. We expect the worst of the quarterly profits to
be behind us within nine months, and the 12-month EBITDA outlook by mid-
2021 to support higher valuations.

Sukari recovery should take 12 months
Recent update reflects our worst-cast scenario
At around the 150p level we thought the market was pricing in 10 months of
disruption to both production and profits at Centamin. However, with the stock
now below 130p, we see our worst-case scenario of 12-month disruption turning
into a reality. All in, it could even be as long as 15 months if CEY does not return
to a normalised run rate in Q4 2021.
Full recovery at Sukari open pit to take 12-15 months
As Chart 1 below sets out, we now believe production will run at rate of under
80k oz per quarter for the next three quarters. We expect to see an H2
production recovery in 2021, with production rates in Q4 close to normal for the
full quarter, which implies a normalised run rate by the end of Q4 2021. Much of
the lower production is due to accessing the lower grade Stage 5 of the open pit
and stockpiles near term, while the underground mine plan remains unchanged



Beyond 2021, CEY may aim for closer to the 500k oz mark at Sukari
While the recovery to a normalised run rate may not happen until the end of next
year on our forecasts, our normalised rates could well be lower than what CEY
has aimed for in recent years. Historically CEY was looking to produce +550k oz
at Sukari each year, while more recently that has been focused closer to the 500-
550k oz level.
However, going forward, we believe it’s possible we will see Sukari run as more
of a sustainable operation with a longer mine life at a lower annualised rate of
closer to 500k oz. For this reason we have forecast just 482k oz of production in
2022, down 11-12% from our previous forecast of 543k oz. The LOM asset
review on 2 December is likely to give more firm detail on what that mediumterm production profile could look like.
2021 and 2022 profit forecasts lowered by 25-30%
While we make only modest single-digit percentage changes to our 2020 profit
forecasts, our 2021 and 2022 EBITDA forecasts have been revised down 27-
29%, as set out in Table 1 below. Our EPS forecasts for both years have been
lowered by 31%. Our 2020-22 EBITDA forecasts are in line to just below
current consensus.
Cash buffer still intact, dividend unchanged
At the announcement of the instability in the Sukari open pit, we stated that we
saw the downside liquidity case resulting in close to US$250m of net cash in Q3
2021. That belief remains intact.
Our new forecasts do not account for any change in dividend forecasts. With a
final 2020 dividend forecast at USc6, and the total 2021 dividend forecast at
USc12 (both unchanged) we currently forecast that our cash low points to an
average of between US$240 and US$260m in 2021, with the absolute low point
of US$238m in Q3 2021 after payment of the 2021 interim dividend.
Target price lowered by 22% to 170p, upgrade to Buy
We continue to use a weighted average valuation using near-term EV/EBITDA
and a longer term NAV based valuation. As Table 2 below sets out, this gives us a
fair value range from 150p at the low end to 194p on the high end. Therefore, we
have lowered our target price by 22% to 170p (from 218p).


However, with 35% potential upside to our revised target, we upgrade to a Buy
rating. With greater certainty over the 12-month outlook we now feel higher
conviction on the upgrade than previously. We also believe that by mid-2021 the
12-month forward outlook will be more positive than it is now, allowing for

further upside to our share price valuation. As we forecast three quarters of
excessively low production rates in a row, it is not too long before we hope these
are behind us. We would also note potential upside should CEY come up with
further cost-saving initiatives during the coming 12-month period.

[investor0109] 11/11/2020 11:27

stevedaytrader- agreed, sector hit by vaccine news. CEY worse affected given recent downgraded forecast. share price might well fall further, though confident it will pick up. Interesting to see that Van Eck increased its holding by 585.7k on 31st Oct. (349.4k into Gold Miners EFT and 236.3k into Junior Gold Miners ETF).

[trader536] 11/11/2020 11:21

Fres hasn't lost 50% of its value, its only 23% below its 2.5 year high!

[stevedaytrader] 11/11/2020 11:17

We're just following other miners pretty much- look at FRES, Hochs etc last few days... of course the 2nd 21st Oct caused the big hits, but apart from this broadly like others...

[martinfrench] 11/11/2020 11:16

and you shouldnt get punished for being a loyal holder, but i think like me a lot of people have realised that this isnt worth holding overnight, cey have a way of punishing your loyalty.

slp, complete opposite.

[trader536] 11/11/2020 11:09

They've just issued a profit warning, profit will be 50% lower than expected, thats whats changed.

[84stewart] 11/11/2020 11:07

I have found out I think? Hogan has zilch no shares nothing in CEY great confidence boost.

[wallywoo] 11/11/2020 11:02

Lol you pay your money you make your choice, Martin. 2 months ago the share price was 210p today its 113p. What's changed a mining hiccup.I see that as a opportunity. You think they are doomed. Only time will tell.

[martinfrench] 11/11/2020 10:51

yeah will be 80p wally

sorry, couldnt resist

centamin and announcements, targets, performance....etc

go out and get some new licenses, some new ground and pounce on kefi and use that flippin 300 mill in the bank, never quite sure why it is still there tbh

[wallywoo] 11/11/2020 10:46

Well I don't care have bgt more again today at 112.7. Centamin has proven over the years to have quite a volatile SP, I have no doubt that is hitting the share price now. Buy now come back on the 2/12/20 when they announce their future strategy I am sure it will look different.

[84stewart] 11/11/2020 10:44

Why sell unless they are trying to short,risky this low

[martinfrench] 11/11/2020 10:38

another day of really wierd price action, think the seller is still about or newish one.

[84stewart] 11/11/2020 10:18

IWEB since 0800 till now have been quoting 111 to sell 127 to buy system gone crazy I suppose you get what you pay for

[84stewart] 11/11/2020 10:15

I think I read somewhere that executive directors had to hold shares worth 200% of salary seems strange correct me if I am wrong and does Hogan hold any shares in CEY

[84stewart] 11/11/2020 10:10

Before this inter web brokers issued on request an info sheet on a daily bases 2 to3 lines most companies kept you in the loop if share price dived without Obvious reasons times have changed

[terry barnett] 11/11/2020 10:04

Some pundits predicting a fall in gold price to 1770s. Also GDX to fall to around 34 which basically means 10% drop from the current 37 after which miners and gold price to recover with price reaching into the 2000s. Watching and waiting at the mo.

[yaszq2001] 11/11/2020 09:37

POG is doing well while this struggles!!!