13th May 2015 09:11
LONDON (Alliance News) - Centamin PLC Wednesday reported a year-on-year rise in revenue, earnings, pretax profit and production in the first quarter of 2015, although all the measures were down quarter-on-quarter.
The FTSE 250-listed miner reported a pretax profit of USD28.6 million in the three months to end-March, up from USD20.6 million a year earlier, whilst earnings before interest, tax, depreciation and amortisation came in at USD53.0 million, up 55% from a year earlier when earnings totalled USD34.3 million. Basic earnings per share in the period was 2.50 cents, rising from 1.87 cents in the first quarter of 2014.
Revenue in the quarter rose to USD135.2 million from USD102.7 million as gold sales totalled 111,249 ounces compared with only 78,957 ounces a year earlier. Average gold prices dropped to USD1,216 per ounce compared with USD1,298 per ounce.
Although profit, earnings and revenue were all up year-on-year, all of these were down quarter on quarter.
In the fourth quarter of 2014, revenue totalled USD151.1 million with Ebitda of USD60.7 million and a pretax profit of USD33.8 million.
Gold production fell 16% on the quarter to 108,233 ounces but this is 46% higher than a year earlier. Its cash cost sat at USD717 per ounce in the quarter, up from USD655 per ounce in the previous quarter but down from USD744 per ounce a year earlier.
"A reduction in open pit grades and hence quarterly production rates was expected during the first half of 2015 as mining progresses through the upper portions of the next stage of open pit development. Despite this transition towards reserve-average grades at the expanded production rate from H2 onwards, Sukari continues to demonstrate its value as a low cost operation," said Chief executive Andrew Pardy.
Centamin said its full year production guidance is 420,000 ounces at a cash cost of USD700 per ounce. The miner is expecting production and grades to improve in the second half of the year, when it said annual production run-rate will reach between 450,000 and 500,000 ounces.
The miner said it "remains committed" to being completely exposed to the gold price by not undertaking any hedging. Centamin said its balance sheet remains strong with USD195.6 million of cash, gold bullion and gold sales receivable.
"The focus for 2015 is to continue production growth at Sukari whilst maintaining a strong control on costs, with the objective of generating substantial free cash flow even under challenging gold price assumptions. We intend to return 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.
Centamin said it does not plan any expenditure on expanding or developing its projects in 2015 as it focuses on exploring Sukari gold mine in Egypt, with a resource and reserve update expected in the third quarter of 2015. Outside of Sukari, exploration expenditure for 2015 is expected to total USD20 million, mainly in Burkina Faso.
Drilling from underground remains a focus of the Sukari exploration programme as new development provided improved access from below surface to test potential high-grade extensions of the deposit. The ore body has not yet been closed off to the north, south or at depth and further underground drilling of the Sukari deposit will take place during 2015.
The strategy for 2015 in Burkina Faso is to continue to systematically explore the entire 160 kilometre strike length of the belt and drill-test the prospectivity of the prospects. It is expected this will lead into further resource development work in late 2015 progressing into 2016.
In the Ivory Coast, the four permits that are under application are expected to be granted in first half of 2015 whilst early-stage regional works are currently underway at its new Ondonok Dabus' license in Ethiopia.
"We will continue to evaluate potential opportunities to grow the business through the acquisition of projects offering the potential for the Company to deliver on its strategic objectives," it said.
Centamin said it is preparing for a "lengthy" legal process in Egypt in regards to its ongoing court cases in the country with the Supreme Administrative Court appeal and diesel fuel court case. The miner said it anticipates a number of hearings and adjournments in both cases before decisions are reached but said operations related to the cases are continuing as normal.
Centamin shares were up 3.3% to 64.50 pence per share Wednesday morning.
By Joshua Warner; [email protected]; @JoshAlliance
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