Centamin sticks to guidance as rising gold price boosts profit

Centamin reiterated its financial guidance for the current year after the rising price of gold helped push the gold miner's annual profit up by 13%.

Pretax profit for the year to the end of December rose to $173m (£143m) from $152.7m a year earlier as revenue increased 7% to $685.1m. Unit cash cost of production rose 12% to $699 per ounce.

The average realised price of gold rose 10% during the year to $1,399 per ounce. The amount of gold Centamin produced increased 2% to 480,528 ounces.

Centamin benefited from the rising price of gold even before the outbreak of Covid-19, which was declared by China at the end of 2019. The gold price has jumped to more than $1,700 per ounce as investors have sought safety during the crisis.

The FTSE 250 company said it was sticking with its guidance for 2020. It is targeting production between 510,000-540,000 ounces of gold at cash costs between $630-680 per ounce produced.

In April Centamin replaced its final dividend of 6 cents a share for 2019 with a first interim dividend of the same value to provide shareholders with certainty and speed up the payment so that it did not require approval at the annual meeting.

Centamin said its Sukari mine in Egypt was operating unaffected by the coronavirus outbreak with enough workers and supplies to last into the third quarter when global travel restrictions are expected to ease. If restrictions stay in place well into the second half operations could be affected, it said.

"2019 was characterised by continued operational improvements at Sukari, a strong financial performance [and] excellent exploration target generation," Ross Jerrard, Centamin's chief executive, said. "We have made a good start to 2020 with production and costs on track. The global uncertainty around the impact of the Covid-19 pandemic has created significant volatility in the global investment markets, resulting in increased safe-haven investing."

Non-essential capital spending has been halted including at the Sukari solar plant to minimise the number of extra contractors used. Capital spending in 2020 will be $150m-$170m down from a planned $190m.