Costs down, production up in Q2 at Centamin

The FTSE 250 firm said this was driven by an increase in realised gold prices and gold sales volumes, together with improved operational efficiencies and lower overall costs.

Its board said Centamin remains debt-free and unhedged with cash, bullion on hand, gold sales receivable and available-for-sale financial assets of $332.2m at 30 June, up $56.5m over the quarter.

An interim dividend of two cents per ordinary share was declared, compared to an interim payment of 0.97 cents in 2015.

Basic earnings per share were at 6.297 cents; up 78% on the prior quarter.

On the operational front, gold production hit 140,306 ounces - a 12% increase on the first quarter and 30% higher than Q2 2015.

The cash cost of production was $461 per ounce, and all-in sustaining costs were $669 per ounce.

Centamin confirmed an increased 2016 annual production guidance of between 520,000 and 540,000 ounces - previously 470,000 ounces - at a cash cost of production of between $530 and $550 per ounce - previously $680.

Its guidance AISC was now between $720 and $750 per ounce, down from $900.

The company reported a record process plant throughput of 2.93 million tonnes during the period, a 2% increase on the previous quarter, with recovery of 89.5% up by 1% over the first quarter.

Centamin said its underground mine delivered 256kt of ore, which was a 9% decrease on Q1, though it was at a grade of 9.3g/t - up 19% on the first quarter.

There were also continued positive results from underground exploration drilling at Sukari, with an updated resource and reserve estimate scheduled during the second half of the year.

Development of a new exploration decline commenced this month within the north-eastern Cleopatra zone of Sukari Hill, aimed at testing the potential for further reserve growth and additional underground production of up to 1Mt per annum.

Centamin’s board said the Initial project expenditure is expected to be $11.5m.

Exploration was continuing to support the potential for near-surface and high-grade economic mineralisation in Burkina Faso as well, the board said, with encouraging results from the exploration programme in Côte d'Ivoire.

“The Sukari operation has continued to build on the strong start to the year, with total first half production of 265,574 ounces of gold,” said Centamin CEO Andrew Pardey.

“The continued optimisation of the processing operation saw plant throughput increase further during the second quarter, remaining above our base case forecast rate of 11Mt per annum.

“The open pit delivered an increase in ore material movement and the underground mine continued to deliver both tonnes and grade in excess of our base case forecast,” Pardey said.

He explained that the company’s 2016 guidance has been updated to reflect the strong first half.

“The key focus for the operation during the coming quarters remains on realising the potential for sustained productivity and cost improvements.”