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Centamin expects strong final results despite weak third quarter performance

The Egyptian gold miner said “strong” free cash generation will be driven by improved gold sales and reduced costs

Centamin PLC - Centamin PLC could be Peel Hunt’s “most attractive” gold company if it delivers forecast dividend
Full-year production is estimated to be 490,000 ounces as per guidance

Centamin PLC (LON:CEY) shares jumped on Wednesday following an upbeat trading update, with Peel Hunt suggesting the miner could be the “most attractive” gold company under its coverage.

The Egyptian gold miner said it expects to maintain the 2019 final dividend at a minimum of 4 US cents per share, thanks to “strong” free cash generation expected in the fourth quarter driven by improved gold sales and reduced costs.

READ: Centamin boss retires as gold miner misses production target

According to Peel Hunt, if the final dividend reaches 8 US cents the company will deliver a 6% dividend yield.

“With the dividend the strongest element of the CEY story at the moment, we like that the board has given its reassurance on the short-term outlook,” the broker said in a note.

The FTSE 250-listed firm also said it expects to record the best monthly performance of the year in October, while full-year production will be 490,000 ounces as per guidance.

Full-year cost estimates remain unchanged, with cash costs in a range of US$675-725 per ounce (/oz) produced and all-in sustaining costs (AISC) at US$890-950/oz sold, as reported in the quarterly update.

For the three months to 30 September, gold production dropped 17% quarter-on-quarter to 98,045oz, with cash costs up 14% to US$860/oz produced and AISC up 16% to US$1,141/oz sold.

Free cash generation was US$4mln, much lower than Peel Hunt’s estimate of US$12.7mln, although production and production costs were in line with previous forecasts.

Centamin shares were up 4% to 111.45p late on Wednesday morning.

Quick facts: Centamin PLC

Price: 212 GBX

Market: LSE
Market Cap: £2.45 billion

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