Centamin PLC (LON:CEY) unearthed more gold in the first quarter than the Egyptian miner had previously guided, while costs were also better than expected.
The FTSE 250 group’s Sukari mine turned out 116,183 ounces in the first three months of the year, having previously pencilled in a quarterly haul of 105,000-115,000 oz.
Management had predicted this period would be the toughest quarter of the year, but still kept full-year guidance at 490,000-520,000 oz.
Production is being boosted quicker than expected by operational improvements underway at Sukari’s open pit and underground sections, which are now being overseen by new chief operating officer Jeremy Langford, freshly recruited from African gold miner Endeavour Mining.
Talk like an Egyptian (gold miner)
Chief executive Andrew Pardey said: "We have made a solid start, delivering Q1 ahead of expectations. Despite being the weakest quarter forecasted for 2019, it is encouraging to see the systems and process upgrades across all sections of the mine positively impacting performance.”
He added that the second half should be stronger than the first, delivering approximately 55% of total 2019 production guidance. "This will be driven by increasing quarter on quarter open pit ounce contribution, as the grade profile improves with depth, and further optimisation of our underground operations.”
Pardey also said Centamin would publish a three-year outlook, including 2020 and 2021 guidance, before June.
Lower capital expenditure during the quarter led to unit cash costs and all-in sustaining costs both trending toward the lower end of annual guidance, with unit costs of US$631 per ounce produced and AISC of US$898 per ounce sold. AISC guidance remained at US$890-950 per oz.
Cash of US$331.6mln was in the bank as of 31 March, up from US$322m at the end of December, after free cash flow of US$13.9m was generated during the quarter.
As well as welcoming the increased investor visibility from the promised three-year outlook, broker Peel Hunt said the “most important” thing was the increase in cash, “showing that even during the toughest quarter of the year (by our expectations) the company is already on track to build cash further in 2019.