Centamin’s consensus-beating six month performance provides evidence of turnaround

Solid and dependable

CENTAMIN provided further evidence of its turnaround under CEO Martin Horgan announcing interim numbers this week that beat cost and earnings consensus estimates.

Production from the firm’s Sukari mine in Egypt totalled 221,000 ounces for the six months ended June putting Centamin on track for full year production guidance of between 450,000 to 480,000 oz.

The operation is relatively high cost but interim all-in sustaining costs (AISC) came in at $1,228/oz beating consensus of $1,375/oz and putting the firm on track for 2023 guidance of between $1,250 to 1,400/oz.

Earnings before interest, tax, depreciation and amortisation (Ebitda) totalled $193m, a 26% year-on-year improvement and above consensus of $182m for the period.

This marks Centamin’s third consecutive six month period of improved Ebitda, driven by our focus on operating performance and cost management, whilst also benefiting from an improved gold price,” said Horgan in a statement.

“While costs have remained high, the significant reduction in Q2/23 costs performance provides some optimism that the improvement initiatives and gradual abatement of inflationary pressures are delivering the turnaround,” said Raj Ray, an analyst for BMO Capital Markets.

Shares in Centamin are 12% higher over the last 12 months but it has been under pressure  since the start of the year. Over this period, shares in the company are almost 19% weaker.

The company’s cost structure will get a boost in the long term with the successful delivery of its proposed Doporo project in Côte d’Ivoire. The project, estimated to cost $349m in pre-production capital, will produce an average of 173,000 oz a year over its 10-year life at an average AISC of $1,017/oz.

The capital cost is much higher than the $275m assumption in a preliminary economic assessment published by the company in March 2022. In that assessment, a 13-year life of mine was envisaged producing 150,959 oz a year.