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Centamin earnings surge on gold price

Interim payout increased from 4c to 6c on the back of far higher earnings in the first half
Centamin earnings surge on gold price

Centamin (CEY) has made the most of the gold price in the first half of 2020, and shareholders will reap the rewards.

IC TIP: Buy at 210p

The Egypt-focused miner increased production at Sukari and dropped its costs year-on-year, resulting in a cash profit for the period more than double last year’s, at $256m (£196m).

The interim dividend of 6ȼ per share was ahead of analyst expectations, and the year-end payout could be increased again.

Production for the half was 256,084 ounces (oz), a 9 per cent uptick on the first half of 2019. The average realised price was $1,657/oz, a 27 per cent increase, and the all-in sustaining cost was $899/oz. This cost measure includes sustaining exploration at the mine site as well as refining costs.

Adjusted free cash flow was $102m in the half, compared to $36m the year before. This will come down in the second half as capital spending is ramped up again. Capex guidance for the full year is $150m-$170m, with $100m to come between July and December because of Covid-19 constraints earlier in the year.

Berenberg is forecasting a 2020 dividend of 22ȼ and free cash flow of $323m.