Centamin refines 2020 guidance, sees lower production in 2021

The FTSE 250 miner said revenue generated totalled $230m (£176.8m) from gold sales of 118,617 ounces in the quarter, at an average realised gold price of $1,933 per ounce sold.

Cash costs for the quarter came in at $682 per ounce produced, and all-in sustaining costs were $961 per ounce sold, which the board said reflected the scheduled increase in capital expenditure.

Adjusted group free cash flow totalled $36m in the third quarter, after $39m of capital expenditure and $64m was distributed to the Egyptian government in profit share payments and royalties accrued.

Net cash and liquid assets were $345m as at 30 September, after payment of the second interim dividend of $69m on 11 September.

Looking ahead, following its operational update on 2 October, the company said it had rescheduled the open pit mining sequence, and confirmed 2020 guidance of between 445,000 and 455,000 ounces of gold produced, at cash costs of $740 to $790 per ounce produced and an all-in sustaining cost of $950 to $1,050 per ounce sold.

Fourth quarter production guidance was for between 60,000 and 70,000 ounces, at an estimated cash cost of $950 to $1,050 per ounce produced and an all-in sustaining cost of $1,450 to $1,650 per ounce sold, which would include capital spend of $30m to $40m, for a total of $120m to $130m for the year.

As a result, free cash flow expectations for the fourth quarter were expected to be largely neutral, bringing 2020 full-year free cash expectations to $135m to $145m.

The board said it expected to announce the 2020 final dividend with the preliminary results.

In 2021, in order to increase the number of production areas available within the open pit and thus improve operational optionality, Centamin said it had started an increased waste stripping programme, the costs of which were reflected in that year’s guidance.

Due to the rescheduling of the open pit operations, the firm said it was forecasting 2021 gold production of between 400,000 and 430,000 ounces, at cash costs of $875 to $950 per ounce produced and an all-in sustaining cost of $1,200 to $1,275 per ounce sold.

“The third quarter marked another solid performance, bringing 2020 year to date free cash flow generated to $137m, with a strong balance sheet of $345m in net cash and liquid assets,” said chief executive officer Martin Horgan.

“Following our operational update on 2 October, today we have refined our 2020 guidance to 445,000 to 455,000 ounces of gold produced.

“Reflecting the continued work required to improve operational flexibility in the open pit, 2021 production is forecast at 400,000 to 430,000 ounces.”

Horgan said the company had already started an increased waste stripping programme to improve optionality in the open pit, the benefits of which were expected to start to flow through in 2022.

“We will present the conclusions of the phase 1 life-of-asset review on 2 December.

“This will cover in more detail the three-year outlook for Sukari, as well as a series of initiatives targeted at improving costs and productivity.

“Operational safety remains a primary focus for management, and this quarter's safety record is evidence of the continued progress in this area.”

Centamin had strengthened its leadership team, Horgan said, notably in the areas of geology, projects, and environmental and social.

“These appointments add further depth to our management capacity and operational capability.

“During September, Centamin submitted applications for several new exploration licences in Egypt and we look forward to continuing to work with our partners at EMRA and the Ministry of Petroleum to further develop Egypt's gold industry.”

At 0909 BST, shares in Centamin were down 19.85% at 130.25p.