Expansion of Sukari proceeding as scheduled, Centamin says

13th May 2015 07:44

Gold miner Centamin saw gold output fall in the first quarter due to lower open pit grades as the company continued to expand its open-pit development at Sukari, its main producing asset.In the first three months of 2015 gold production fell by 16% to reach 108,233 ounces when compared with the last quarter of 2014, in line with market expectations. However, the stated figure was 46% higher than a year ago.Indeed, during the quarter the Egypt-focused miner set a record for the amount of material moved.Cash cost of production clocked in at $717 per ounce (Panmure Gordon: $740) while the broader all-in sustaining costs (AISC) of production were at $858.Those lower than expected costs helped cushion the blow to the bottom line from decreased production. In EBITDA terms operating profits fell 13% to $53m (Panmure Gordon: $44m).For the full-year, the outfit reiterated production would reach 420,000 ounces with cash-costs of $700 per ounce and AISC of $950. "We had previously opined that this guidance could well prove to be another low-ball to cater for potential underperformance," Shore Capital said in a research note e-mailed to clients.Management had previously announced that planned increases in investments to develop its mine would lead to higher AISC.However, as a result of the above in the second half of the year the open pit grades were scheduled to increase back to the average levels of its reserves, the company's chief executive officer Andrew Pardey said in a statement.Annual production rates were also seen returning to levels above 450,000 ounces.Commenting on the results Panmure analyst Alison Turner said: "following a good Q1 on production and reasonable performance on costs we continue to believe they are likely to outperform on the former measure (our current forecast is 432koz) but may slightly miss on the latter (our forecast currently stands at US$750/oz which looks a touch but not dramatically high following the Q1 result)."