- Centamin benefits from slowly rising gold prices
- Costs come in under budget
Centamin (CEY) delivered largely what it said it would in its fourth-quarter trading update, with several of the company’s key performance indicators taking on a decent shine. For example, total capital expenditure for the year came in at a notably low $204mn (£161mn), compared with the $272mn that management had forecast. Significantly lower diesel prices in the fourth quarter and changes to the equipment build schedule were apparently the reasons for this.
Fundamentally, Centamin is managing to sell gold at decent prices, with its full-year revenues of $892mn generated from gold sales of 456,625 ounces (oz) at an average realised gold price of $1,948 an oz sold. There was a definite pick-up in prices during the fourth quarter, where Centamin sold 133,465 oz at an average realised gold price of $1,983 an oz, with the weakening of the US dollar over the period a key factor in the metal’s steady rise.
Execution was a plus point, as the annual all-in sustaining cost trumped the bottom end of guidance by $30 an oz, coming in at an average of $1,220 an oz for 2023.
The balance looks in reasonable health with a quick ratio score of 1.5 indicating positive cash generation. Cash was $153mn at 31 Dec 2023, with total liquidity of $303mn, which includes an undrawn $150mn revolving credit facility.
The company plans to increase its annual production to between 470,000 and 500,000 an oz in 2024. And it now has a much clearer picture on mine life, having added 1.6mn oz to the Sukari mine reserves and announcing 1.9mn oz in the Drobo mine in Ivory Coast (ahead of a final investment decision). It is also working on connecting the Sukari mine to Egypt’s national electricity grid. Management will be pleased by the operational performance, particularly in terms of cost efficiencies.
The company will publish its audited full-year 2023 financial results on 21 March.
Last IC view: Buy, 98p, 26 Jul 2023
