Broker snap: Centamin forecasts look 'conservative' after strong Q4

6th Jan 2014 10:45

Canaccord Genuity has labelled Egypt-focused gold miner Centamin as a 'speculative buy' after fourth-quarter production results smashed expectations on Monday.Total gold production from its flagship Sukari project in the fourth quarter ended December 31st 2013 reached 91,546 ounces (oz), 8% higher than the third quarter and up 7% on the same quarter of 2012. This also came in much higher than Canaccord Genuity's estimate of 73,000oz.As such, full-year output for 2013 was up 36% year-on-year at 356,943oz, easily beating the company guidance for 320,000oz and Canaccord Genuity's forecast of 338,000oz."The results are positive and substantially better than we expected as we had based our forecast on the company's guidance of lower production in Q4/13 versus the average in Q1-Q3 due to the Stage 4 commissioning," said analysts Dmitry Kalachev and Peter Mallin-Jones.They explained that the Stage 4 commissioning - which has not yet had an impact on production - could have been started at the end of the quarter. Therefore, it might mean that production in the first quarter of 2014 is "somewhat lower than average quarterly output in 2013".Nevertheless, they said that their 2014 production forecast of 362,000oz already looks "fairly conservative" given the strong fourth-quarter results.Regarding the court decision to suspend Sukari's mining license - the outcome of which is still uncertain - the broker believes that Centamin's appeal should be positive.Canaccord Genuity maintained its 60p target price for the stock.The share price was up 3.34% at 46.73p by 11:11 on Monday.BC