posted in the uk

Egyptian News story

http://www.bi-me.com/main.php?id=36488&t=1&c=129&cg=4&mset=1011

Found this on another site.

Please find below a research note brought out this morning from Canaccord Adams on Centamin Egypt, raising their price target to 80p.

Centamin Egypt Ltd. (CEY : AIM): First gold production in sight -- BUY, raising target price 80p
Centamin Egypt Ltd.
CEY : AIM : £0.65 | £638.0M | Buy, £0.80 ↑
First gold production in sight -- BUY, raising target price 80p
Event

We are raising our target to a multiple of NAV as first gold production at Sukari comes into focus. In its recent quarterly update, Centamin reported continued construction progress, with mining underway since February in preparation for commissioning of the process plant and first gold pour by the end of the current quarter. We note the potential for further P/NAV multiple expansion on achievement of design capacity, which we anticipate by the end of 2009, when market focus should move to the production expansion potential of the project.

Action/Valuation

We maintain our BUY recommendation and are increasing our near-term target price to £0.80 per share (previously £0.65 per share). Our revised target represents a 1.3 times multiple to our 8% NAV estimate using Canaccord Adams' gold price estimates, which decline from a peak of US$1,100/oz during 2009, to our long-term estimate US$750/oz by 2012. Established junior gold producers in our research coverage universe trade at an average of 1.1 times, 5% NAV calculated at spot gold. Our 5% NAV at spot gold for Centamin is £1.08 per share, indicating the potential for a further re-rating in the longer term on demonstrating that forecast operational performance can be achieved.

Upcoming catalysts

First gold pour by mid year, completion and commissioning of sulphide plant during H2, and full design production rate by year end. We also anticipate commencement of the planned underground decline in H2/09.

Investment risks

As with any new mining project, there are risks associated with commissioning and the ramp-up to commercial production taking longer than anticipated, but in this regard we note that the company has headroom in its current budget (we estimate residual cash of around US$20 million on completion of the initial project capex in Q4/09) and has the added comfort of an undrawn US$25 million corporate loan facility.