As you know, the ‘AtticFund’ is due representation from the commodity world. I was considering simply buying a derivative of Gold futures, but volatility is still too high for this type of investment to be considered as part of the AtticFund.
I read an article yesterday revealing that Paulson & Co have increased their stake in Centamin Egypt (a gold mining company) from 8.09% to 9.6% (£41.65m). Paulson & Co are a high profile hedge fund who have benefited hugely from their investments over the credit crunch. They recently made a reported $100m on their shorting of RBS – this however pales into insignificance with the gains Paulson & Co have made over their “shorting” the US mortgage market – John Paulson apparently enjoyed a personal pay package of $3.7bn (£1.9bn) last year. As far as qualified leads go, Centamin Egypt is a good one, not only will I have exposure to the gold market, but I will also benefit from Centamin’s expansion plans. However this will not stop me from making my own decisions and conducting my own research.Centamin Egypt CEY.L
- On schedule to open the first ‘modern day’ gold mine in Egypt (called Sukari Hill) during Q2 2009.
- Hit hard by FX exposure, which lead to a successful capital raising exercise (GBP 33m) in January 2009. (Raising cash in the current market is no mean feat and underlines the potential of this company)
- Reserves at Sukari Hill 3.7m ounces Proven and Probable, 9m ounces (Measured and Indicated) and 3.3million ounces Inferred (that is a shit lot of gold in anyone’s book!!)
- Sources estimate that production will run at 200,000 ounces per annum over 15 years, with costs of $365 per ounce (these costs were revised up from $260 as result of the higher cost of consumables).
- Gold is currently trading around $910 per ounce, so their margin on an ounce is IRO $545. If they hit their production targets, this mine will yield $108m revenue per annum
- According to a 2008 presentation they have no debt.
- They have revenue sharing agreements in place with Arab Republic of Egypt. (No great surprises here – several multinationals have long operating histories in Egypt)
This is a really exciting prospect. All the signs are good. The company has a good product, good management and great prospects. This little fella’s definately on the AtticFund’s watch list.
