Centamin second-quarter profits fall on lower production

2nd Aug 2018 09:55

(Sharecast News) - Centamin's profit fell heavily in the second quarter as the Egyptian gold miner produced less gold and costs rose. Pre-tax profit for the three months to the end of June dropped 38% to $21.97m from £35.37m a year earlier.Centamin produced 26% less gold and sold 19% less. The reductions sent revenue down 18% to $123.9m despite a 4% increase in the average realised gold price to $1,298 an ounce. Cash cost of production rose 17% to $714 per ounce.The second-quarter performance showed a deterioration from the first quarter. For all of the first half, profit rose 34% to $80.4m.The FTSE 250 miner said it expected significantly stronger production in the second half and stuck to its revised guidance for 505,000-515,000 ounces. In May the company reduced its production estimate from 580,000 ounces because of lower grade gold from the open pit and underground at its Sukari mine in Egypt.Chief executive Andrew Pardey said: "While H1 was a challenging period for the Company in terms of ounces produced, many operational areas of the mine performed strongly with record volumes reported from the both the open pit and process plant."The shares, which traded at 160p before May's production warning, fell 0.2% to 113.25p at 10:22 BST.Shore Capital analyst Yuen Low said: "Given the previously reported production disappointments, it should not come as a surprise to anyone that revenues and operational cash generation were significantly lower in Q2 2018 despite a higher gold price." He said Centamin's cash pile was large and the balance sheet was strong.