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Centamin to up production again in 2016

Full-year production in 2015 was 439,072 ounces; this year it is set to rise to 470,000 ounces.

During the fourth quarter the Sukari operation reached its target production rate of 450,000 to 500,000 ounces of gold per annum


Gold miner Centamin (LON:CEY, TSE:CEE) had mixed news on the production front, with output up quarter-on-quarter but down year-on-year at its Sukari mine in Egypt.

Fourth quarter production totalled 117,644 ounces of gold, up 12% on the preceding quarter but down 8% on the corresponding quarter of 2014.

Broker Numis Securities noted that output in the fourth quarter of 2014 was especially strong, so the dip year-on-year was nothing to get too worried about.

Full-year production in 2015 was 439,072 ounces, which was up 16% on the previous year's output and at the top end of the guidance range of 430,000 to 440,000 ounces, though broker Shore Capital expressed the opinion that the 2015 guidance range had been "a low-ball to cater for potential underperformance".

Forecast production for 2016 from the Sukari Gold Mine is 470,000 ounces at a cash operating cost of US$680 per ounce and all-in-sustaining cost (AISC) of US$900 per ounce. This would represent a 7% increase on 2015 production and a reduction over 2015 cost guidance of US$700 per ounce cash operating cost and US$950 per ounce AISC.

The shares fell 2% to 65.71p on the announcement, in line with the decline of the FTSE 100, confounding Numis's expectations of a positive reaction to the news, backed by an increase overnight in the gold price.

Meanwhile, VSA Capital noted that the fourth quarter up-tick had come about despite operational disruptions.

"CEY has provided annual guidance for 2016 for production of 460koz, as well as full year cost guidance with operating cash costs likely to be around US$680/oz and AISC at an average of US$900/oz; a decrease from the guidance of US$950/oz for AISC in 2015; however, we await the Q4 2015 full results and remain cautious, particularly as through 9mo15 [first nine months of 2015] AISC averaged below US$880/oz indicating a sharp contraction in Q4 2015 free cash flow notwithstanding the weak gold price environment," the broker said.

Quick facts: Centamin PLC

Price: 123 GBX

Market: LSE
Market Cap: £1.42 billion

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