Gold production down a quarter at Centamin's Sukari project

Centamin announced preliminary production results for the second quarter ended 30 June from its Sukari Gold Mine in Egypt on Monday, reporting that gold production for the period was 92,803 ounces, a 25% reduction year-on-year.

The FTSE 250 company said that reflected the lower open pit grades, as mining progressed through the transitional zone and below forecast underground grades.

Gold production for the six months ended 30 June was 217,099, a 7% reduction year-on-year.

Materially-stronger production was expected for the second half, driven by continued improvements in grade from the open pit as mining progressed into the sulphide ore, and an increase in high-grade stoping tonnes from the underground.

Centamin maintained its full-year 2018 revised production guidance of between 505,000 and 515,000 ounces.

It said open pit mining operational parameters were performed in line with the revised mine plan in the second quarter, with total material movement rising 5% year-on-year to 18.4Mt.

Open pit ore mined improved 81% to 5.5Mt, at an average mined grade of 0.51g/t - a 33% decrease year-on-year, reflecting the mining of Stage 4A lower grade transitional zone.

Centamin reported that the open pit average milled grade was 0.59g/t, a 27% decrease year-on-year, with 3.6Mt at 0.42g/t delivered to the dump leach pads.

The dump leach produced 3,028 ounces in the second quarter, a 74% increase year-on-year.

Underground grade underperformed the mine plan in the second quarter, with stope grades impacted by greater-than-scheduled dilution from low grade porphyry material in the open stopes.

Development grades were also lower, as development was focused on access drives to future mining areas.

Stope tonnage continued to improve, and there had been no further disruptions to the long hole drill rig availability and utilisation, the board said.

Total underground ore delivered was 289kt, a 2% increase year-on-year, at an average mined grade of 4.62g/t - approximately 1 g/t below its revised forecast and a 47% decrease year-on-year.

Ore mined from stoping was 180kt at 4.61 g/t, and ore mined from development was 109kt at 4.64 g/t, with the stope-to-development ore split returning to an “optimal” 60:40 split.

Core underground equipment availability and utilisation improved in the quarter, Centamin said, adding that as a mitigating measure, a reserve LHDR was due to arrive on site in the fourth quarter.

Cleopatra exploration and development ramped up during the second quarter, following the mobilisation of the second crew and equipment in late April.

A total of 7,169 metres were completed in exploration drilling, with development of 540 metres, delivering 47,692 mined tonnes at an average development grade of 1.77 g/t.

Exploration assay results received within the quarter would be included with the company’s detailed interim results, the board confirmed..

Its processing plant performed in line with forecasts, despite a lower feed grade, as a result of a lower underground grade.

Total ore processed through the plant was 3.17Mt - a 4% increase year-on-year - with metallurgical plant recoveries for the quarter 87.3%, a 1% increase over the same time last year.

Centamin said Sukari achieved a zero-harm record in the second quarter with no lost time injuries, in line with the company's zero harm health and safety strategy, registering a lost time injury frequency rate of 0.00 per 200,000 hours worked - the same as in the second quarter of 2017.

“We have experienced several challenges this year, resulting in the revision of our full year guidance in May,” said chief executive officer Andrew Pardey.

“I am pleased to report progress throughout June in the open pit, where mining has begun to access improved grades as we are currently mining through the lower areas of the transitional zone and into the sulphide ore, which will be mined in the third quarter and onwards for the next four years.

“Our focus now remains firmly on delivering the underground operations back in line with forecasts and returning Sukari's production profile to a steady state.”

Centamin said it would publish its full interim results for the second quarter and six months ended 30 June on 2 August.