Profits at Centamin slumped by 39 per cent in the first half as higher gold prices failed to offset a sharp drop in production.
The Egyptian miner sold 203,802 ounces of gold, down by 25 per cent on a year earlier, at an average price of $1,799 an ounce, up 9 per cent. That resulted in a 18 per cent drop in revenue to $367 million, while pre-tax profit fell to $117 million, from $193 million a year earlier.
Centamin produces gold from the Sukari mine about 430 miles from Cairo, where it has an open pit and underground mining operations.
In recent years the company has struggled with production issues at Sukari, including instability in the pit wall, and last year a new management team reviewed plans for the site, forcing Centamin to cut its outlook for last year and this. It is investing in stripping more waste rock from the open pit to increase future access to different areas. As a result Centamin said last autumn that it expected to produce between 400,000 ounces and 430,000 ounces this year, down from 452,320 ounces last year and 480,528 ounces in 2019. That feeds through to higher costs per ounce.
Martin Horgan, 47, chief executive, said: “Centamin has delivered a strong performance against plans in the first half of the year, driven by our continued focus on cost-control, operating efficiencies and productivity gains. We remain on track to meet full-year cost and production guidance and our key capital projects continue to progress on schedule.”
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Analysts at Jefferies, the broker, said that Centamin’s underlying earnings were about 8 per cent ahead of the City’s expectations and that this was “another sign that the operational turnaround is progressively positively”.
The analysts added that “while Centamin is undertaking a multi- year stripping programme in the open pit to secure its future stability and flexibility, the dividend remains cornerstone to the investment case”.
Centamin declared an interim dividend of four cents per share, or $46.3 million, about 5 per cent below consensus expectations, but reiterated its intention to pay a minimum dividend of $105 million for the full year, leaving about five cents per share to be paid alongside its full-year results.
Centamin shares closed on 102½p last night, down 3½p, or 3.2 per cent.
