Peel Hunt, Westhouse still upbeat about Centamin despite production downgrade

5th Nov 2014 11:52

Centamin's downgrade to production guidance on Wednesday was disappointing but not wholly unexpected, according to analysts at Peel Hunt and Westhouse Securities who kept 'buy' ratings on the stock.After plant productivity suffered a slowdown in October, output at its flagship Sukari gold mine in Egypt is now expected to be between 370,000 and 380,000 gold ounces compared to previous forecasts of 420,000 ounces."This development should be unsurprising, given it was only 60% there [for full-year guidance] at the end of the third quarter," said Peel Hunt.Similarly, Westhouse said that the fourth quarter was "always going to be challenging" and they had anticipated the downgrade.Nevertheless, it pointed out that cash cost guidance for 2014 was still maintained at $700 an ounce, "suggesting that it was on track to outperform".Peel Hunt has cut its output forecasts for this year but said that production in 2015 is expected to be "very good"."Despite the downgrade to 2014 production, investors should pay attention to the good production run-rate that is currently being achieved at Sukari as the stage-four expansion ramp-up settles down to steady-state production," it said.In other news the next hearing of the ongoing court case surrounding the Sukari operating licence has been delayed to late February 2015. Peel Hunt said it is still confident of an "eventual resolution in Centamin's favour".The stock had fallen 8.2% to 47.95p by 11:40.