Numis cuts Centamin to 'hold' from 'add'

1st Nov 2016 09:56

(ShareCast News) - Numis on Tuesday lowered its recommendation on Centamin to 'hold' from 'add' and left its target price at 170p following the recent rally in the share price.Centamin on Monday said it expects 2016 gold production to be towards the upper end of its guidance of between 520,000 and 540,000 ounces as it reported a 41% increase in output in the third quarter to 148,674 ounces.The miner reported earnings before interest, tax, depreciation and amortisation of $122m compared to $31m a year ago. Numis had expected EBIDTA of $109m.Centamin finished the period with no debt and $388m of cash. "Centamin is well positioned to either increase the level of distribution or to fund the development of its exploration assets in West Africa without new external funds," Numis said.Numis also noted that Centamin has started with the development of a new decline at the Sukari mine, Cleopatra, which the broker believes will increase operational flexibility.It could also account for production of up to 180,000 ounces per year, assuming similar grades and recoveries like other areas at Sukari, Numis added. "Ultimately management hope to be able to mine up to 1m tonnes per year from this area of Sukari."Shares rose 1.90% to 160.80p at 1028 GMT.