Centamin plc is a gold mining company consisting of global projects with the largest located in the Eastern desert of Egypt, their Sukari Gold mine. The business is listed on the LSE from 2009 under the epic CEY and on the TSX under CEE since 2007.
Egyptian businesses were always looked upon with suspicion, and with controversial political events unfolding in the past year, it is even more so; but Centamin is not a business to ignore. In 2012, it had many problems doing business. Many institutions and organisations were corrupt, the scent of havoc lingered, and political tensions were present. Centamin got caught up in all these events and were barred from transporting 400kg of gold out of the country in mid-2012. And to make things worse, December of the same year, the gold miner was ordered by the courts to halt production entirely. It sounded like a horror story just began and Centamin‘s fate was sealed. The events shredded 75% off the share price in a mere 2 months. Then the company reached the end of the tunnel.
Although all these figures are pleasant to read, it doesn’t show the whole story. The business’s EPS fell 8% in 2013 year-on-year with the reason coming from the shock in gold price in the first half of 2013. As prices fell through to unexpected levels, what comes next is a thought to ponder. However, throughout the world we are seeing less gold mining start-ups because of the low gold price, gold being in continual demand from the Asian giants China and India and political tensions in the Middle East as well as with Ukraine and Russia. From this one can strongly form the argument that this safe haven against equities has potential to hit new highs in the next five years.
Gold miners are in their own right a hedge against themselves, though being equities they also benefit if the price of gold rises. And even though the share price has recently broke the short-term 70p upside barrier, trading at only 9x earnings with the sector average at much higher, one can only see the Egyptian Gold miner as still undervalued.