Another record quarter for Centamin gold production

Centamin reported record gold production of 156,533 ounces for its third quarter on Thursday, which was a 26% increase on the second quarter and 5% higher than the same period last year.

The FTSE 250 firm said the cash cost of production and all-in sustaining costs remained “well controlled” for the period to 30 September, resulting in unit cash cost of production of $483 per ounce produced and unit AISC of $732 per ounce sold.

Full year 2017 guidance was maintained at 540,000 ounces, with a $580 per ounce cash cost of production and $790 per ounce AISC.

Quarterly throughput was 3.0 million tonnes from the Sukari process plant - a slight decrease of 2% on the second quarter and an increase of 7% on the third quarter of 2016.

The company said the Amun and Ptah underground operations delivered 302kt at a grade of 7.98g/t to the ROM pad, with mill feed from underground of 305kt at 8.07g/t during the period.

It also reported the third successive record quarterly open-pit material movement of 18.6 million tonnes.

Centamin also claimed “continued positive results” from underground exploration drilling at Sukari - at both Amun and Ptah, and Cleopatra - and further encouraging drill results were apparently received from Côte d'Ivoire.

Development of the Cleopatra exploration decline, located in the north-east of Sukari Hill, advanced 153 metres in the period.

On the financial front, Centamin said its third quarter EBITDA of $103.6m was up 57% from the second quarter, due to an increase in both sales volumes and average realised gold price.

It reported “strong” cash flow generation, with free cash flow generation of $45m in the third quarter and $96m in the year-to-date.

Cash at bank, bullion on hand, gold sales receivable and available-for-sale financial assets as at 30 September totalled $345.8m, following an interim dividend payment of $29m.

The board said the Egyptian state benefitted directly from profit share payments to EMRA of $76.6m during the first nine months of 2017, in addition to US$14.5m in royalties.

Quarterly basic earnings per share, after profit share, were 3.41 cents - an increase from 1.10 cents in the second quarter, which the board said was primarily due to higher EBITDA offset by higher profit share payments.

“Sukari enjoyed an excellent quarter with all parts of the mine continuing to perform well,” said Centamin CEO Andrew Pardey.

“Open pit mining rates reached another record, with ore production from high grade areas allowing a significant increase in open pit plant feed grade.

“The underground operations delivered another quarter of good grades at an annualised 1.2 million tonne rate and the process plant again achieved a quarterly throughput of approximately 3 million tonnes.”

Pardey said the resulting increase in overall plant feed grade led to record quarterly gold production.

“Mine production costs increased slightly on the second quarter due to higher mining rates and higher reagent usage, but remain well controlled.

“As a result, Centamin generated cash flow from operating activities of $109.2m and recorded free cash flow of $45.2m, or 3.9 cents per share, for the quarter.”