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...recent article in UK...interesting and positive


Gold miner Centamin rises 4% as production beats forecasts
Company positive on outlook despite falling gold prices and continuing licence dispute
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Precious metals miner Centamin had its problems in 2013. Generally, it had to face the effects of a falling gold price and specifically it remained in dispute with the Egyptian government amid political upheaval in the country.

But despite the violence and uncertainty about its right to mine at its Sukari site, the company has reported total output of 356,943 ounces of gold for 2013, above October's guidance of 320,000 ounces. Chairman Josef El-Raghy said:

We look forward to delivering a further successive year of growth in 2014 as the plant expansion drives the continued ramp-up towards our 450,000 to 500,000 ounce per annum long-term target.

Its shares have risen 2.08p to 47.30p on the news, although much depends on the outcome of its appeal against a court ruling questioning its licence for Sukari. Analyst Kate Craig at Liberum said:

Full year preliminary production results of 356,000 ounces (up 36% year on year) are a decent beat. We had already increased our 2013 production estimate to 340,000 ounces (we'd been told to expect a beat to 320,000 ounce guidance). The commissioning of the plant expansion hasn't materially impacted production and the plant is running with high levels of productivity and availability.
At Peel Hunt, Maurice Mason said:

The company has continued to deliver on the expansion plans at Sukari and is now in the process of ramping up production. Developments in the ongoing court case, while slow moving and bureaucratic, appear likely to be completed in the first half of 2014. We remain of the view that the ultimate outcome of this legal challenge will be in Centamin's favour.

With no debt, no hedge and with third quarter cash, bullion on hand and gold sales receivables of $156m, Centamin's balance sheet remains extremely healthy. That this has been achieved while funding capital development associated with the Sukari expansion is testament to the mine's cash-generating potential. We are of the view that the strong balance sheet will position Centamin to declare a dividend in 2014.

We upgrade our target price to 58p [from 56p] following the increased gold production, and keep our 2014 and 2015 estimated numbers flat at 430,000 ounces and 445,000 ounces respectively