Broker snap: Centamin Egypt problems only 'short term'

13th Sep 2010 11:13

Centamin Egypt fell as much as 13% at one stage this morning after revising down 2010 gold production estimates, but Ambrian thinks all the problems are only short term, so keeps its 'buy' stance.Full calendar-year production guidance was dropped from 200,000 ounces (oz) for 2010 to 160-170,000oz, and cash costs are now likely to be US$400/oz as opposed to the "lower than US$400/oz" previously guided. "Taking into consideration: 1) the production downgrade; 2) the gold price having dropped US$10/oz since last Friday morning; and 3) that Centamin's share price reached a record high last week, it's not rocket science to suggest that we might see some profit taking today," reckons Ambrian, which acts as broker to and as a market maker to mid-cap Centamin.But it expects the stock to end the day higher relative to this morning's price. "All of the issues that have contributed to the downwards revision are short-term features in nature (which we had already factored into our model), and we therefore keep our target price of 191p and maintain our 'buy' recommendation," it told clients in a note.