Centamin Share Discussion Threads

[harry_david] 15/10/2024 10:24

That is not a problem 1gw, at these gold prices CEY is a steal.

[1gw] 15/10/2024 10:00

You're discounting the risk that disgruntled retail shareholders manage to frustrate the deal by winning the "majority in number" vote and Anglogold shareholders breathe a sigh of relief and persuade Anglogold to walk away?

[harry_david] 15/10/2024 09:34

As a shareholder there appear only two possibilities where we could lose money. The first is if Egypt gets caught up in Israel's war ambitions and the second is if the price of gold collapses. The first is unlikely and as I am a believer in gold, especially now with the giant US fiscal deficit, I discount the risk of a gold price fall

[1gw] 14/10/2024 20:25

I agree they're most likely merger arbitrage (except possibly for D.E. Shaw although it may just have moved very quickly to build its position on the day the deal was announced).

If the deal collapses then they stand to lose on both sides of the deal - they lose on the AU short if the price rebounds and they lose on the CEY long as the price falls back.

If the deal succeeds as currently priced, they make a relatively small amount (relative to the size of each position) as the CEY discount to the offer price has been pretty small for most of the offer period. Having said that, with a pairs trade the only real cost is the financing of the short position so even 1% or 2% on the arbitrage is likely to be worthwhile.

Where they really make big money is if AU is forced to raise its bid for CEY as they win on both sides of the trade - CEY price will increase towards the revised bid while AU price is likely to take a corresponding hit reflecting the increased cost of the offer.

Although there appear to be 3 or 4 arbitrage positions here, and there may be more under the discloseable threshold, it still feels to me like a relatively small arbitrage position for this stage in the process. Is that a view that the risk of the deal collapsing is too high relative to the arbitrage that is on offer with the CEY discount to the bid price?

[harry_david] 14/10/2024 19:58

1gw, these transactions look like normal arbitrage to me. If the deal collapses they will lose money on the target and make a small amount on the bidder. If this bid succeeds or a counter or the bid is raised they have a big win.

[1gw] 14/10/2024 16:51

From the 8.3's we seem now to have at least 3 hedge funds playing the merger arbitrage, or betting that things will change in a way that benefits CEY over AU:

Alpine Associates (12.9m shares long CEY, 0.9m shares short AU)
Syguant Capital (11.8m shares long CEY, 0.8m shares short AU)
Kryger Capital (14.7m shares long CEY, 1.0m shares short AU)

The Kryger position is as of 10th Oct as I haven't seen an AU declaration from them for 11th, but on 11th they increased their CEY position to 16.2m shares. Kryger has been building its long CEY position steadily since going through the 1% declaration threshold on 4th October. Syquant appears to have gone through the threshold on Friday. The Alpine position is as of 2nd October.

In addition, D.E. Shaw appears to have a similar position to Kryger (15m shares long CEY, 1.1m shares short AU) but to have already held it as of 10th September - so presumably a view on the relative outlooks for the companies pre-announcement.

Alpine is a self-avowed merger arbitrage player:
"Alpine’s primary strategy is merger arbitrage, focusing on transactions with definitive merger contracts."

[larry laffer] 14/10/2024 14:05

Zamgdook

I don’t bother with Xmas or birthday’s.

They are just another day.

[1gw] 14/10/2024 12:51

I think there may have been a bit of overreach from LSL there. We'll perhaps get a better idea if and when CEY publish the numbers for the "majority in number" vote.

[zangdook] 14/10/2024 12:17

If you really have hundreds of mates do you give each other birthday presents? It must be pretty much every day.

[larry laffer] 14/10/2024 12:08

Beeezzz

I would ring them and check.

Me and my 100’s of mates are registered shareholders so it’s different for a nominee holder. Best bet is to speak to them, to see what their system is.

[beeezzz] 13/10/2024 20:16

Larry thanks - Should Broker send voting forms..I looked today there wasn't corporate action for CEY..

[larry laffer] 13/10/2024 15:52

beeezzz

You should look at pages 14 TO 16




10.00 a.m. (London time) on 24 October 2024, in the case of the Court Meeting; and

10.15 a.m. (London time) on 24 October 2024, in the case of the Centamin General Meeting

you will need to allow enough time for the communications to get to them.

You can place your vote for both meetings

[beeezzz] 13/10/2024 14:57

I still haven't received information from Barclays, when is close of voting....is it end of month..

[1gw] 13/10/2024 08:44

Same chart brought up to date, showing how a period of underperformance against GDX was switched by the bid to material outperformance:

free stock charts from uk.advfn.com


Or if you just want to see what happened after the price had adjusted for the bid, this one shows how CEY has subsequently underperformed against GDX (and gold), whether as a result of concern that AU was paying too much (and CEY price moving in line with AU price) and/or the AU Ghana galamsey story and/or something else:

free stock charts from uk.advfn.com

Personally, I prefer the chart in post 59889 as an indicator of what the bid has done for the CEY price relative to GDX (and therefore what might happen to the CEY price if the bid were to fail without a counter-offer being made) as it takes the CEY-GDX correlation as read and shows the divergence since just before the bid.

Health warning on advfn charts that the first day's price sometimes looks like it's a day out - in the case of the 2nd chart it appears it starts from the 11th Sept close of 149.6 instead of the 10th Sept close of 146.9, but I don't think that changes the picture materially.

[harry_david] 13/10/2024 04:24

1gw, thanks really interesting chart, I also would like to see it brought up to date if you can please.

[arlington chetwynd talbott] 12/10/2024 20:47

Can you show us what that chart looks like from the day after the offer to date?

[1gw] 12/10/2024 17:51

Centamin in black vs gold (rebased) in blue vs GDX (rebased) in green over 6 months prior to the offer. Does gold or GDX look like the better correlation to CEY?


free stock charts from uk.advfn.com

[larry laffer] 12/10/2024 17:16

"The offer has never been 163p...."

Well here's what it it says in the firm offer document.

"The terms of the Transaction value each Centamin Share at 163 pence based on the Closing Price of US$28.80 per AngloGold Ashanti Share and a £:US$ exchange rate of £1:US$1.3080 on 9 September 2024 (being the last Business Day before the date of this Announcement) (the “Offer Value”)...."

It has always been a 90% paper 10% cash offer. So on the 9th @ close of markets it was valued at 163p. They even refer to it as the “Offer Value”

So now you have realised institutions don't always vote would that mean retail investor votes might potentially be more significant in determining the outcome.

Lastly, as the boxing is just about to start, you keep posting a chart comparing Centamin to GDX. Is it that useful when the original comments in the post you replied to were about Centamin compared to the market gold price. Using your method of comparison means you will see a change in Centamins performance if or when Endeavour lose their Burkino Faso license. The same thing if AngloGold's mine floods in Ghana. Clearly none of that nonsense has anything to do with Centamins performance vs Gold. Which is what the original post referred to.

[1gw] 12/10/2024 16:03

OK, I'll take the other side of those points.

The offer has never been 163p, it is a mainly paper offer. 163p is a calculation based on the last available price of AU prior to the offer. If the AU price and the exchange rate get back to those levels then the offer price will be 163p. A more relevant marker imo is GDX. On that basis the offer currently gives a roughly 17% premium against an alternative where CEY loses its post-offer premium to GDX. Those institutions looking to cash out are more likely imo to base their decision on that premium to GDX, those institutions looking to stay in will take a view on how the AU price is likely to move going forward as they integrate CEY and achieve cost synergies.


free stock charts from uk.advfn.com


I agree that institutions often don't vote, even in M&A situations. But the point I made in an earlier post was that CEY managed to get a relatively high turnout (around 70% of shares) of the vote for the last AGM (arguably of far less moment than the AU deal) - so I infer from that that they have a reasonably polished institutional IR operation and are likely to be able to persuade a number of long-standing institutional holders to vote for the deal.

I'm not sure how you reconcile "posting on a little read bulletin board" with claiming you're in a group of Centamin shareholders and know that 100's of them are on the register in their own right and have voted no.

I haven't followed Centamin particularly closely (seeing it as portfolio diversification that's a bit more interesting than buying GDX or the commodity) and don't have a view on their ability to execute well on their strategy for Sukari or Doropo and so outperform GDX going forward. But I can see how AU's price has reacted after its bid for CEY and can also see that no-one else has so far come forward with a counter-offer - so that makes me think the bid is probably reasonably generously priced. On the other hand I can see that the gold price has had an incredible run and that's really what makes me happy to take the AU bid premium and sell out if no counter-offer does emerge in the near future.

[1gw] 12/10/2024 14:21

Larry - I think you misunderstand my motivations here. I'm happy for the opportunity to exit CEY at this point, bemused by your somewhat aggressive campaign to try to defeat the vote and interested in the dynamics of the offer period.

I've held CEY since 2013 (although I topped up at a much higher price in 2018) as a bit of a hedge against the rest of my equity portfolio. I'm not a goldbug, just interested in a bit of gold diversification. Having not sold out at past peaks and with gold where it is I had already started selling down in April before AU made its move. As I've said already, I sold around 40% of my remaining holding after the offer and so far have kept the rest in the hope of a counter-bid or further move up in the GDX while the Middle East troubles and US interest rate speculation continue.


free stock charts from uk.advfn.com


I find your campaign bemusing for the following reasons:

Firstly you think retail has a meaningful voice in this process whereas I think it will be completely determined by the institutions and I think the market pricing of CEY indicates the market has seen it as a done deal pretty much from the start;

And secondly, in my opinion the most likely consequence of victory for you at the vote (i.e. a defeat of the Scheme of Arrangement proposal) will be a near-term material fall in the shareprice - that may be recovered if AU decides to come back with a sweetened offer or a full takeover bid (90% pass mark I would presume and no "majority in number" test), but that's by no means guaranteed given the relatively poor AU shareprice reaction to its current bid.

And while I'm not a goldbug I am interested in M&A and have followed many of these Scheme of Arrangement proposals - so feel like I do have something relevant to say about how they work and what the 8.3's might reveal.

[arlington chetwynd talbott] 12/10/2024 12:43

Folk seem almost perturbed by the idea that AU might not succeed on their first attempt. I am not sure why. It is not as if that would crater the CEY share price. More power to the CEY Rebel Alliance.

[1gw] 11/10/2024 19:58

It was just in response to your comment that you knew 100's of others were voting against, after suggesting I was making stuff up about the voting eligibility for the "majority in number" test.

It strikes me that if it's true that 100's of shareholders on the register are going to vote against, then Anglogold ought to be worried because that seems like a lot to be voting against in a "majority in number" test. As you say, there aren't all that many institutions giving 8.3 notices.

If you don't think the examples I picked are relevant, can you find more relevant examples? I picked a couple of recent ones from a quick search, then went looking for one with a bigger turnout and finally remembered another gold miner deal I had been involved with.