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Centamin: Remodelled for new accounting standards

Contributed by Fox-Davies Capital

We have remodelled Centamin, incorporating the new accounting standard for waste rock removal. Essentially anything over the life of mine strip ratio is now capitalised.

Whilst remodelling for the new accounting standards regarding stripping we have also included an additional 5.8Mt of underground ore containing 1,6M oz of gold (average grade=8.58g/t). This ensures that the operation does not run out of underground ore before the five year mine plan ends. Indeed, in our model we have underground ore at a grade of 8.7g/t being fed to the mill until the end of 2025. We believe this is a fair estimation as underground exploration is only now ramping up now that the decline has reached suitable drilling locations and the chosen grade is very close to the average grade of the last two quarters.

It also ensures that the feed grade to the mill only drops below 1 g/t very briefly in 2017. The modelling is also based on the assumption that the fuel subsidy is

This scenario boosts our target price back to £0.88, but it does include 1.6M relatively high grade ounces that are yet to be found.