Centamin restores hopes of 540,000 oz year-end production

Centamin's Sukari gold mine, Egypt.

CENTAMIN was on track for guided annual production of some 540,000 ounces for its 2017 financial year after Sukari, its Egyptian gold mine, turned in a record third quarter performance. Output was 156,533 ounces which represented a 26% increase on the previous quarter and 5% higher than the previous record production in the third quarter of its 2016 financial year.

“The higher grade zones of the open pit, exposed in the later part of the second quarter, continued to be mined in the third quarter leading to an as planned increase in the head grade to the plant from the open pit,” said Andrew Pardey, CEO of Centamin in a company announcement.

“Mining of higher grades from the open pit is expected to continue for the remainder of 2017,” he added. Centamin had forecast annual production at at a cash operating cost of $580 per ounce and all‐in‐sustaining cost of $790/oz. The head grade to the plant ran at 1.11 grams per tonne compared to 0.81g/t in the second quarter.

Investec Securities said that the grade was the key to the mine’s performance for the quarter. The output also restores the likelihood of Centamin reaching its annual target, it said. “After just 109,000 oz in the Q1 and 125,000 in the Q2, guidance was looking stretched, but this solid 3Q takes FY17 production so far to 390koz and leaves it well placed to meet its FY17 target,” it said.

The run of mine ore stockpile balance increased by 899,000 tonnes to 1.4 million tonnes at the end of the period while the underground section of the mine delivered 302,000 oz at an average mined grade of 7.98 g/t. “Underground mining continued to perform well, with strong mining rates and grades achieved from both stoping and development activities,” said Pardey.

Centamin said in February it would pay a 13.5 US cents per share final dividend which took the full dividend payout to 15c/share, equal to 70% of free cash flow.

Shares in the company edged up 1.4% in early London trade today. Shares in the company have been under pressure since about mid-April, however, partly on the relatively low grades it was achieving in the first two quarters. On a 12-month basis, the company’s share price is 5% weaker.