Lower output hits Centamin’s Q1 earnings

JOHANNESBURG (miningweekly.com) – Lower gold production rates and a decrease in gold sales have impacted the first-quarter earnings of dual-listed Centamin.

The company on Wednesday reported that basic earnings per share (EPS) after profit share decreased by 63% quarter-on-quarter and 67% year-on-year to $0.0116, while EPS before profit share dropped 50% to $0.02557 during the quarter to March 31.

Earnings before interest, taxes, depreciation and amortisation for the first three months of the year under review dipped 35% to $53.1-million when compared with the preceding quarter and 21% compared with the first quarter of the prior year, owing to a decrease in gold sales volumes, in line with lower production, and higher production costs on the back of increased material movement.

Profit before tax of $29.5-million was 28% lower than the first quarter of 2016, while profit for the period after Egyptian Mineral Resource Authority (EMRA) profit share declined from $40.8-million in the first quarter of 2016 to $13.4-million in the first three months of this year.

As a result of the $58-million cash generation from the company’s flagship Sukari gold mine, in Egypt, profit share continued during the quarter, with advance distributions to EMRA totalling $18.6-million during the period under review.

Both EMRA and Centamin’s wholly-owned subsidiary Pharaoh Gold Mines continue to benefit from advance distributions of profit share on a proportionate basis, in line with the terms of the concession agreement, said Centamin CEO Andrew Pardey.

Revenue for the first quarter fell 11% quarter-on-quarter, owing to a 12% reduction in gold sales volumes offset by a 2% rise in realised gold prices.

Revenue of $140.7-million during the first quarter of this year also represented a 5% year-on-year decrease on the back of a 7% decrease in gold sales volumes.

Centamin remains debt-free and unhedged with cash, bullion-on-hand, gold sales receivable and available-for-sale financial assets of $290.9-million as at March 31 – a decrease of $137.2-million during the quarter, following payment to shareholders during the period of $155.4-million in respect of the 2016 final dividend.