Lower gold price impacts on Centamin earnings

JOHANNESBURG (miningweekly.com) – Dual-listed gold miner Centamin’s earnings before interest, taxes, depreciation and amortization (Ebitda) dropped 8% to $152-million for the year ended December 31, 2015, owing to lower gold prices and changes in production inventories in.

Cash costs decreased to $713/oz from $729/oz in 2014, driven by the dropping fuel price; this was marginally above the company’s guidance of $700/oz, despite a higher-than-forecast production rate.

Profit before tax decreased by 28% to $58.4-million, owing to the factors affecting Ebitda, as well as a $6.3-million write-off owing to the group's decision to cease exploration in Ethiopia.

“I am pleased to report that, during 2015, Centamin has continued to prosper under adverse market conditions. The company continues to achieve positive results through its core strategic focus on creating value for all stakeholders,” said Centamin CEO Andrew Pardey.

The company’s operational cash flow of $186-million was 59% higher than cash flow in 2014, owing to the higher gold production base achieved through the completion of the company’s stage-four expansion, which was completed in the second half of 2014, as well as a positive movement in working capital balances compared with 2014.

Centamin announced an interim dividend in August 2015 of 0.97c per ordinary share.

The company said it remained committed to its policy of being 100% exposed to the gold price through its unhedged position and that it maintained a healthy balance sheet

“Centamin remains debt-free and unhedged with cash, bullion on hand, [with] gold sales receivables and available-for-sale financial assets of $230-million as at December 31, 2015 – a material increase on the prior year’s $162.8-million,” said the company.

Centamin also increased its year-on-year production by 16% to 439 072 oz, which was within the revised guidance range. 

Production in the fourth quarter of 2015 totalling 117 644 oz was within the company’s Egypt-based Sukari gold mine’s target rate of 450 000 oz to 500 000 oz.

Nevertheless, all-in sustaining costs of $885/oz were below the company’s original forecast of $950/oz, mainly owing to the rescheduling of certain sustaining capital cost items, as well as the higher production rate.

Meanwhile, Centamin’s exploration projects in Burkina Faso and Côte d'Ivoire outlined areas with potential for near-surface and high-grade economic mineralisation. These prospects would be targeted for resource growth during 2016.