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Egypt gold miner Centamin's Q3 profit drops as gold price bites

As gold prices reached three-year low in June, Egypt's biggest gold miner Centamin says negatively impacted in the third quarter

Reuters, Thursday 7 Nov 2013
Sukari, the first large-scale modern gold mine in Egypt
Sukari, the first large-scale modern gold mine in Egypt (Photo: Al-Ahram)
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Views: 2604

Egypt-focused gold miner Centamin said core profit dropped by more than a third in the third quarter, hit by a sharp drop in bullion prices, but said it was well-placed to exceed a targeted increase in full-year output.

Earnings before interest, tax, depreciation and amortisation (EBITDA) came in just over $43 million for the three months to September, slightly lower than some analysts had expected.

That profit was down 36 percent lower on the same period last year, due to the fall in the price of gold, which hit a near three-year low in June. The price at which Centamin sold bullion in the quarter shrank by more than a fifth compared with a year earlier.

But Centamin said its cash cost of production in the quarter shrank to $693 per ounce, below last year's $724 and closing in on 2013 guidance of $700 per ounce.

The company - which last month reported quarterly production below the previous three months due to lower grades, but up on last year - also confirmed it expected to exceed its 2013 output guidance of 320,000 ounces at its sole-operating mine.

Sukari, the first large-scale modern gold mine in Egypt, is about 700 km (435 miles) from Cairo and has emerged largely unscathed from a wave of political turmoil which started in July.

Most of Egypt has been under nighttime curfew since mid-August, when security forces broke up sit-ins of supporters of President Mohamed Morsi, who was deposed on July 3 following mass protests against his rule.

Hundreds of people have died in clashes between security forces and Morsi supporters.

"There has been no knock-on effect on the operation," Centamin's head of business development, Andy Davidson, said.

The company, which is in the processing of appealing a court ruling against it in Egypt, reiterated it was on track to start commissioning a new part of its mine in the fourth quarter.

The miner also said it would take a $11.9 million writedown in relation to its investment in Nyota Minerals , a developer exploring in Ethiopia. Centamin has been selling down its shares, but still holds a 14.4 percent stake.

"We are still committed to Ethiopia. But we couldn't find a way forward with Nyota, hence the writedown," Davidson said.

Centamin says it plans to continue to diversify through acquisitions in the region and last month struck a joint venture agreement with junior miner Alecto Minerals to pursue other opportunities in Ethiopia.

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