Centamin reaffirms guidance after solid second quarter

Centamin said it was on track to meet its 2022 production guidance in an update on Wednesday, with second-quarter gold production rising 11% year-on-year to 110,788 ounces.

The FTSE 250 company put the improvement down to the benefits of its underground transition, as well as an improved open-pit grade.

It also reported “strong” revenue generation, with revenue coming in at $207.2m, generated from gold sales of 111,027 ounces at an average realised gold price of $1,863 per ounce sold.

Cash costs came in at $868 per ounce produced, and all-in sustaining costs were $1,357 per ounce sold - respectively 2% lower and 5% higher than in the first quarter of 2022.

That reflected the improved production rate and an ongoing focus on cost control, the board said.

Second-quarter capital expenditure totalled $67.3m, which was put down to Centamin’s ongoing investment in establishing a “long-term foundation”, including significant investment in the paste fill plant and solar power station.

It described its balance sheet as “robust”, with cash and liquid assets of $176.4m at period-end on 30 June, with an update on the capital structure review due in the third quarter.

Looking at 2022 as a whole, Centamin reaffirmed its production and cost guidance for the year, while investing for operational consistency and growth.

It was expecting gold production of between 430,000 and 460,000 ounces for the year, and cash costs of $900 to $1,000 per ounce produced.

All-in sustaining costs were set to be $1,275 to $1,425 per ounce sold.

The board said that, given the current inflationary operating environment, the firm was continuing to monitor consumables pricing and reviewing opportunities to offset price increases with cost saving initiatives, such as the solar power plant.

Acknowledging the likelihood of inflationary pressures continuing through the second half, the directors said they now expected cash costs and all-in sustaining costs for 2022 in the upper end of its guidance range.

Its capital expenditure budget was $225.5m for the year, while exploration expenditure was expected to total $25m.

“Sukari delivered the planned increase in production during the second quarter, and we remain on track to meet full year production and cost guidance,” said chief executive officer Martin Horgan.

“The second quarter was the first full quarter of underground owner operations at Sukari following the transition from contractor operations during the first quarter, and the Sukari team delivered significant improvements in both productivity and costs.

“Continued progress was made at our key projects and we remain focussed on cost control across all our operations with a number of initiatives targeting completion in the second half, that are expected to partially offset the current inflationary environment.”

Centamin said it would report its half-year financials for the six months ended 30 June, and declare an interim dividend, on 4 August.

At 1007 BST, shares in Centamin were up 2.18% at 78.78p.

Reporting by Josh White at Sharecast.com.