11th Nov 2015 08:55
LONDON (Alliance News) - Centamin PLC Wednesday said its pretax profit in the third quarter more than halved compared to a year ago as its margin was squeezed, but said its costs for the full year should be lower than expected as production significantly ramps-up in the fourth quarter.
Centamin shares were down 6.7% to 58.40 pence per share on Wednesday morning.
The FTSE 250-listed gold miner, operating in Egypt, Ethiopia and West Africa, said its pretax profit in the third quarter of 2015 more than halved to USD6.3 million from the USD15.8 million reported a year earlier despite revenue experiencing a small rise to USD118.5 million from USD116.1 million.
Profit before tax and exceptional items came in at USD16.8 million, still around half of the USD32.2 million profit made a year ago. Earnings before interest, tax, depreciation and amortisation fell to USD31.3 million from USD37.8 million.
Margin was squeezed in the third quarter, with Centamin reporting a USD12.7 million gross profit compared to USSD22.1 million a year ago after its costs rose and gold prices continued to fall.
Centamin produced 105,413 ounces of gold in the third quarter, up from 93,624 ounces a year earlier, but down from 107,781 ounces in the second quarter of 2015. Gold sales remained broadly flat quarter-on-quarter at 104,803 ounces, but that was up from 91,575 ounces a year ago.
In the third quarter, the miner's all-in sustaining cash cost rose to USD918 per ounce from USD853 per ounce in the second quarter. It did not provide a comparative figure for the third quarter of 2014.
Compounding higher costs was the continuing fall in gold prices. Centamin achieved an average price of USD1,131 per ounce in the third quarter, down from USD1,188 per ounce in the second quarter and from USD1,267 per ounce a year earlier.
Centamin said it remains confident in its strategy of being exposed to spot gold prices by not hedging any of its production.
For the full year, Centamin said production should come in between 430,000 to 440,000 ounces of gold as it expects fourth quarter production to rise and for those costs to fall. In the fourth quarter, production will increase to a rate equal to 450,000 to 500,000 ounces per year.
Centamin said it expects its full year cash cost and all-in-sustaining cash costs to be lower than its guidance of USD700 and USD950 per ounce respectively.
"As highlighted by our interim dividend, paid in October, we intend to continue returning 15-30% of this free cash flow to our shareholders, in line with our dividend policy, and to allocate the remainder towards our medium and long-term objective of organic growth aimed at realising incremental shareholder value and returns," said Centamin.
By Joshua Warner; [email protected]; @JoshAlliance
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