Centamin PLC (LON:CEY) shares slumped in late-morning trading Monday after it reported a 25% drop in gold production at its flagship Sukari gold mine in Egypt during the second quarter.
The FTSE 250-gold miner reported production for the second quarter was 92,803 ounces, down 25% year-on-year (YoY) due to lower open pit grades as mining progressed through a transitional zone, as well as lower than forecast grades from its underground activities.
READ: Centamin plunges on forecasts for weaker second quarter as low grades persist at Sukari
The firm also said gold production for the six months to 30 June was down 7% YoY to 217,099 ounces, although it expected “materially stronger” production in the second half as grades improved from the open pit operation.
However, the group said performance at its processing plant had been in line with forecasts, despite the lower feeds grades, with total ore processed up 4% YoY at 3.17mln tonnes in the period, while metallurgical recoveries were up 1% YoY at 87.3%.
The company also maintained its full-year revised production guidance of between 505,000-515,000 ounces.
Andrew Pardey, Centamin chief executive, said: "We have experienced several challenges this year, resulting in the revision of our full year guidance in May. I am pleased to report progress throughout June in the open pit, where mining has begun to access improved grades as we are currently mining through the lower areas of the transitional zone and into the sulphide ore, which will be mined in the third quarter and onwards for the next four years.”
In May, Centamin had forecast that the second quarter would be a weaker one due to the persistently weaker grades at Sukari, which caused its share price to plunge around 18%.
In a note to clients, analysts at City broker Shore Capital said it had inferred that inadequate grade control drilling had been the cause of the fall in grade quality, which they added was "a rookie-level error which we would not be surprised to see in a junior miner just starting up operations but more unusual for a company of Centamin’s stature and relative maturity".
Centamin shares were down 5.6% at 111p.
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