Numis cuts Centamin to 'hold' on "challenging" output guidance

15th Aug 2014 12:11

Numis Securities has cut its recommendation for Centamin from 'buy' to 'hold', saying that it will be challenging for the Egypt-focused gold miner to hit its full-year output target.Second-quarter earnings per share dropped by 79% year-on-year to just 0.99 cents, the company said this week, well below Numis' forecast of 1.7 cents. However, this was mainly due to a higher depreciation charge and operating profits were in line with estimates.On the positive side, the company declared a maiden interim dividend of 0.87 cents, in line with predictions, "which is a positive step for the company", Numis said.Centamin said it still expects to produce 420,000 ounces of gold in 2014 with output and throughput set to increase over the next two quarters now that stage four of the Sukari plant expansion is complete."In our view, this looks challenging and believe underground grade improvement and securing blasting permits will be key," Numis said.The broker said that considering first-half production was just 156,000 ounces, 264,000 ounces will need to be produced in the second half to meet forecasts. It, however, estimates full-year output of just 406,000 ounces.The target price for the stock has been left at 70p.The shares were down 2% at 68.5p by 11:28.BC