Centamin production dips, reiterates 2024 cost and output guidance

Centamin reported a temporary slight decline in production and higher unit costs, but reaffirmed its full-year cost and output guidance.

A mix of factors contributed to lower output during the first quarter, including the scheduled processing of lower-grade ore from the open pit, planned underground ventilation upgrades and mill maintenance during the first quarter.

Production for the three months to March reached 104,821oz. and gold sales from its main Sukari mine ran at 92,494oz.

The Egypt-focused gold miner however now anticipated that output would rise for the balance of 2024.

Lower production, together with the timing of gold sales, resulted in a temporary rise in unit costs.

Cash costs for the period were put at $1,0887/oz., while all-in sustaining costs were down by 3% on the quarter and 6% year-on-year to $1,519/oz..

Capital outlays for the quarter were $46m.

Full-year output was still pegged at 470,000-500,000 oz. and AISC at $1,200-1,350/oz. sold.

Guidance for adjusted capital expenditures during the year was put at $215m.

The company also said that it was following up its exploration successes in its Eastern Desert Exploration drilling programme and progressing well on completing the Definitive Feasibility Study for its Ivory Coast Doropo project by mid-year.

At period end, Centamin had $167m of cash and liquid assets on its balance sheet, as well as a $150m undrawn sustainability-linked revolving credit facility.

Centamin's shares had shot 39% higher since the start of March until 17 April, on the back of the surge in gold prices and some analysts believed that the latter, at least, might still be headed higher.

On 16 April, Citi analyst Aakash Doshi raised his forecast for the average price of the yellow metal in 2024 to $2,350/oz., whilst upping that for 2025 by 40% to $2,875/oz..

Doshi was expecting $2,500/oz. price level to be tested in the back half of 2024, while the $2,200/oz. level would provide "strong buying support".

The driver of the price gains would be heightened flows from managed money players.

Additional investment demand would come from the start of Fed rate cuts or a potential recession unfolding.

As of 0812 BST, shares of Centamin were off by 4.71% to 123.59p.