Centamin unveils maiden dividend, expects strong second half

14th Aug 2014 07:35

- Maiden interim dividend of 0.87 cents declared- Gold production up q/q but down y/y- Earnings fall sharplyEgyptian gold miner Centamin has unveiled a maiden interim dividend of 0.87 cents a share despite reporting a dip in profits in the second quarter as the cost of production rose.The company said it is to pay out a total of $10m to shareholders through its first ever dividend. Chairman Josef El-Raghy said that with no further major expansion projects planned at Centamin's flagship Sukari project, he now sees "solid growth potential and a stable balance sheet". He added: "We now look forward to a sustained period of strong free cash flow generation".Gold production totalled 81,281 ounces in the second quarter, up 9% on the first three months of the year but down 13% year-on-year.The stage four expansion programme at Sukari is now complete and production should rise towards the 450,000-500,000 ounce mark from 2015 onwards. Centamin said it has built a "substantial gold mining operation" after investing $1bn.With expansion now finished, the company said it expected a "steady lift in throughput during the second half". With average grades also likely to improve, production levels should rise progressively in the third and fourth quarter. The full-year output guidance has been maintained at 420,000 ounces.The cash cost of production increased 5% quarter-on-quarter to $783 per ounce as a result of higher processing costs associated with increased throughput at a lower grade. It also highlighted longer haul distance and increased cycle times for the open put mining fleet.However, costs should fall over the rest of the year due to "improving efficiencies and higher quarterly production rates".Earnings before interest, tax, depreciation and amortisation fell to $32.6m, from $34.3m in the first quarter and $63.7m the year before. Basic earnings per share were just 0.99 cents, down 47% quarter-on-quarter and 79% year-on-year.Revenues during the period were relatively stable at $102.6m, but were down from $134.3m last year.BC