Sentiment towards smaller gold producers soured after last April's gold price falls, but Egypt-focused Centamin (CEY) was able to mitigate a 17 per cent fall in realised prices by driving up production by over a third to 357,000 ounces.
With output 37,000 ounces ahead of management's guidance, Centamin was able to reduce cash costs per ounce despite domestic political unrest. The net result was that cash profits crept up by 1 per cent to $234m (£142m), which was slightly behind consensus forecasts.
Centamin said it was on course to deliver further production increases in 2014, although it is still awaiting government authorisation to use more ammonium nitrate. Management anticipates that the expansion of its Sukari mine will underpin an 18 per cent rise in production this year to 420,000 ounces, with a target range of 450,000 to 500,000 ounces a year set for 2015. The good news is that the development of Sukari hasn't been unduly affected by Egypt's political travails over the past two years.
Despite December's all-share takeover offer for Australia-based Ampella Mining - which has interests in Burkina Faso - Centamin's primary exposure to Egypt represents a significant risk factor for investors. The miner remains embroiled in legal battles over the breadth of its Sukari exploitation lease and the suspension of national fuel subsidies.
| CENTAMIN (CEY) | ||||
|---|---|---|---|---|
| ORD PRICE: | 58p | MARKET VALUE: | £658m | |
| TOUCH: | 57-58p | 12-MONTH HIGH: | 59p | LOW: 27p |
| DIVIDEND YIELD: | nil | PE RATIO: | 6 | |
| NET ASSET VALUE: | 106¢ | NET CASH: | $106m | |
| Year to 31 Dec | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 340 | 194 | 17.9 | nil |
| 2012 | 426 | 199 | 18.3 | nil |
| 2013 | 504 | 184 | 16.9 | nil |
| % change | +18 | -8 | -8 | - |
£1=$1.65 | ||||
