Centamin reiterates full-year 2017 production guidance

Centamin's profits caved in at the start of the year as production declined, but the company reiterated its full-year output guidance on expectations for a recovery in the grade of gold it mines at its main open pit mine and continued high productivity at its underground operations.

Egypt-focused Centamin also anticipated further improvement in its break-even price of gold.

Earning per share (after profit share) fell 63% in comparison to the fourth quarter of 2016 to reach 1.16 US cents as average grades fell at both its open pit and underground operations, alongside rising costs from increased material movement at the former, while revenues shrank 4.9% to $140.7m.

Milling grades at the open pit mine fell 15% quarter-on-quarter to 0.72 grammes per tonne.

Meanwhile, at the underground mine at Sukari grades worsened by 29% on the quarter to 7.44 grammes per tonne.

Total gold production fell by 13% year-on-year and 20% in comparison to the preceding three months to 109,187 ounces.

In parallel, throughput at the process plant at Sukari slipped 1% quarter-on-quarter to 2.91m tonnes, with metallurgical recovery falling from 89.9% in the fourth quarter to 88.8%.

However, the gold-digger stood by its guidance for output to reach 540,000 ounces in 2017 as open pit grades recovered.

"During the second quarter, we expect to see open pit ore grades increase towards the reserve average as the cutback in the east wall of the pit is further progressed," said Centamin's chief, Andrew Pardey.

Total cash costs are seen at $580.0/oz. and all-in sustaining costs at $790.0/oz.. AISC was $758/oz. in the first quarter of 2016.

For the fourth quarter, cash costs ran at $734/oz. and all-in sustaining costs at $887/oz.. The former was up from $536/oz. in the last quarter of 2016 and the $603 hit one year ago.

The company revised its estimate of the open pit plant feed grade higher from that contained in its preliminary first quarter numbers.

Centamin also reported "encouraging" initial results from diamond drilling and said development of the Cleopatra exploration decline in the north-east Sukari Hill had advanced by 810 metres.

It also reported a maiden indicated resource of 0.3m ounces and inferred 1.0m ounces at the Doropo project in Côte d'Ivoire.

Exploration drilling was continuing apace in both Burkina Faso and Côte d'Ivoire.

The company remained debt free and un-hedged, with liquidity at period-end standing at $290.9m following the payment of the final 2016 dividend.

Commenting on the company's fundamentals before Wednesday's figures, Jonathan Guy at Numis said that at 1.25 times net asset value the stock was changing hands at the upper end of its trading range and, in the broker's opinion, at "fair value".