Centamin Egypt Ltd - multi million ounce gold deposit

CHAMBEAJ, can't remember the edgits name from the FT who confidently told us all about 1yr-18mths ago that the old relic was running out of puff, can you? That was obviously a great contrarian indicator.

That is one of my worries at the moment (not really a worry i suppose, merely an observation). The amount of attention tells me a correction is overdue and that we should shortly see gold heading in the opposite direction for a while. If so, i fully intend to use it as an opportunity to increase my exposure to the shiny stuff.

With much of the talk now turning to takeovers etc (ie. consolidation), it is clear to me that we are entering phase 2 of the bull market (if not already there). It is definately time to take your position and sit back for the next couple of years.

drinkgood, i stated a couple of weeks back that i had ceased my extrapolation of CEY's value as it was becomimg increasingly difficult to put a price on the company. I have stated a few times that, with regard to normal market conditions, i consider the current SP to reflect fair value. Maybe not what you want to hear.

However, i will qualify that statement. We are currently in 'far from normal' market conditions. Indeed, we may be standing on the cusp of one of THE great bull markets in gold (and other commodities) of all time. I firmly believe we will at least see the levels reached in the early eighties.

CEY's value then can be looked at from 2 different angles:

1. From the value of its reserve. The current SP, IMHO, reflects the 3 million or so ounces thus far firmed up (awaiting confirmation). You could argue that it perhaps trades on a small premium given the timescale involved in bringing gold to production. That said, we are now entering new territory with regard to the value of each one of those ounces given the fixed (reasonably) cost of mining in conjunction with the ever changing value of what is being mined.

There are obviously widely differing opinions on this valuation and TW of t1ps.com eg. has stated his own case fairly convincingly and it is significantly north of 20p.

2. As a potential take-over target for one of the bigger players. Gold is far easier to buy in the market than it is to mine from the ground. That is why every bull market is identified with an industry wide consolidation phase. CEY is becoming ripe for the picking. In normal times, a buyer would be prepared to pay $30 per ounce in a takeover. Lets say CEY has 3 million ounces. That places us roughly where we are just now so far as valuation goes.

What if we have 5 million ounces and somebody is prepared to pay $50 given that the gold price is $5 or maybe $600 an ounce? It doesn't take a great deal of extrapolation to see the value head sharply higher. Pick your own figures and do your own sums. 10 million ounces and $50 an ounce?

My best guess is that we will indeed be taken out at some point in the coming 12 months and at somewhere in the middle of the above figures. I think that is realistic.

My hope....is that gold really takes off, it sparks a buying frenzy amongst the majors and CEY's reserve looks like a 10 million ouncer (or more). Happy days are here again........ In which case, 20p will look like a steal.

Whatever happens, i don't think we can lose on this one now. Hope this answers some queries.