Centamin reiterates full-year guidance as Q3 profits rise

12th Nov 2014 09:40

Egypt-focused gold miner Centamin has reiterated its recently-downgraded production guidance after lower gold prices were offset by record quarterly plant throughput and falling costs in the third quarter.Earnings before interest, tax, depreciation and amortisation totalled $37.8m in the three months to 30 September, up 16% on the $32.6m made in the second quarter. However, this was still 12% below the $43.1m earned the previous year.Centamin said on 5 November that it had reduced its 2014 output guidance for its flagship Sukari mine from 420,000 ounces (oz) to 370,000-380,000oz as a result of reduced monthly plant productivity in October and lower average grades from underground development ore.However, its forecast for full-year cash operating costs was maintained at $700/oz.Cash costs of production in the third quarter were $771/oz, down 1.5% from $783/oz in the second quarter.Meanwhile, the process plant at Sukari saw record quarterly throughput at 2.39m tonnes, up 22% on the second quarter, as production increased 15% to 93,624oz.This helped to outweigh a near-2% drop in the average sales price of gold over the three-month period to $1,267/oz."Our full-year production forecast of between 370,000 and 380,000 ounces anticipates further significant increases in productivity during the fourth quarter, which is expected to bring the full-year average cash cost of production in line with guidance of $700 per ounce."The group expects to achieve a production rate of 450,000-500,000oz per annum in the fourth quarter following the completion of the 'Stage 4' expansion at Sukari.However, analyst Rob Broke from Westhouse Securities said that the $700/oz full-year cost guidance "appears to be a stretch" with costs at $771/oz in the third quarter. He estimated that costs needs to fall to around $560-575/oz in the fourth quarter to achieve the target.The stock was up 0.6% at 50.9p by 10:29 on Wednesday, but remains well below the near-60p level seen in early October.