Centamin PLC (LON:CEY) has been upgraded by City broker Numis to ‘Buy’ from ‘Add’ despite recent production downgrades from its Sukari gold mine in Egypt.
In a note to clients, the broker said despite the material downgrades, shares in the FTSE 250 gold miner “have been oversold as Sukari remains a low cost long life asset and CEY retains a very strong balance sheet with US$426mln of cash and no debt at the end of Q1 [first quarter].”
READ: Centamin plunges on forecasts for weaker second quarter as low grades persist at Sukari
Numis added that production at Sukari “should move back up in 2019 as mining in the open pit moves back into higher grade material and the ration of development to stope tonnes renormalizes.”
On May 25, Centamin saw its share price plunge 18% after it forecast a weaker second quarter as low grades persisted at its flagship Sukari mine.
At the time, the company said underground production at the mine was 10% below forecast, with production equipment availability resulting in lower production ore tonnage mined and subsequently development tonnage mined increased, resulting in a 50:50 split.
In mid-morning trading Tuesday, Centamin shares were down 3.2% at 125.9p.