personal finance

Centamin directors buy in after shares slide

Gold miner Centamin announced at the start of October that its expected production for 2020 would drop by around 50,000 ounces (oz) because an unstable section of its Sukari mine openpit in Egypt had to be avoided. This is worth about $96m (£75m) at this week’s gold price of $1,913/oz.

Centamin’s share price fell by a quarter on the news, and has stayed at this level. The gold in the pit zone that had seen “movement in a localised area” is not going anywhere, and the company said it was looking at ways to stabilise the rock so it can be mined. 

Guidance has been dropped to about 445,000oz for the year, down from 510,000-525,000oz. The company said mining from the unstable high-grade area would be replaced with stockpile ore, which contains much less gold. 

Chairman James Rutherford seems confident the company — which has had major operational issues in the past — will get beyond this, buying 100,000 shares after the guidance cut, at 152p apiece. So does finance chief Ross Jerrard, who bought 15,000 shares at 148p. Mr Rutherford — also an Anglo American and Anglo Pacific Group director — is in his first year in the top board seat, after taking over from Josef El-Raghy in January, who ran the company for almost 20 years. 

The company has said many times that it has turned a corner since its issues of 2017-18, when guidance was regularly cut and pit grades were highly variable. Sukari is both an underground and open-pit mine, with the majority of production coming from the pit. Centamin — also under a new chief executive, who started during the pandemic — is currently running a life of mine review for the Egyptian asset, which should give investors a clearer picture of what has gone wrong in the past and where the mine is going.

Non-executive director Sander van ’t Noordende has bought his first stake in Micro Focus, purchasing US depositary shares worth around $145,325 (£111,865). American depositary shares are used by US investors to buy shares in non-US companies.

Mr van ’t Noordende is one of the newest members on the board, having joined in June this year. He has arrived at a troubled business, which has seen its market value shed more than three quarters so far this year. Its share price has struggled to recover from the March sell-off, having already been depressed by its disastrous acquisition of Hewlett Packard Enterprise’s software business back in 2017. 

The deal cost an eye-watering $8.8bn. Its integration was ultimately a failure, with a review conceding that the business’s IT systems were simply “not fit for purpose”. And the company’s fortunes have still not returned: recent trading has lagged, with revenues dropping by over a tenth in the first half of 2020. This was compounded by a painful impairment charge of $922m, which pushed the company into a $1bn pre-tax loss. Small wonder that net debt (excluding lease liabilities) more than doubled, with its net debt to adjusted cash profits ratio sitting at a multiple of 3.3. 

It is somewhat encouraging then that Micro Focus has managed to secure an extension for its $350m revolving credit facility to June 2024. The company now has no maturity dates before then, which should give it some time to review its borrowing. Total liquidity stands at around $1.05bn. 

In a sign of growing management confidence, last month non-executive chairman Greg Lock and his wife added to their stake in the company, increasing their combined position by around a fifth. 



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