Tuesday 4 August 2020 8:11 am

Centamin first-half profit jumps on strong gold prices

Gold miner Centamin posted a jump in first-half profit before tax today, powered by rising gold prices as investors sought safe havens during the pandemic.

It also benefited from increased output from its Sukari mine in Egypt, the only active site in its portfolio.

The company, which declared a second interim dividend of six cents per share, said pre-tax profit rose to $191m for the six months to the end of June, compared with $59.6m a year ago.

Revenue hit $449m, as the all-in sustaining costs per ounce of gold produced ran at $899 and the average realised price of gold sold during the period was $1,657 per ounce.

Read more: Gold hits record $1,980 high as dollar weakens

Chief executive Martin Horgan told City A.M. that for Centamin, “in the face of the emerging Covid pandemic, to deliver that kind of performance… [and] to take full advantage of the gold price increase was a fantastic result.”

The London-listed company said it remained on track to meet its full-year production guidance of between 510,000 ounces and 525,000 ounces of gold, and cost guidance of $630-680 per ounce produced.

Centamin terminated talks with Endeavour Mining for a possible takeover earlier this year, closely followed by Horgan taking over leadership of the mining company in April.

Buoyed by its strong performance during the pandemic, Horgan said the company was exercising “prudence and discipline” in its acquisition strategy going forward.

“Gold companies have been very good in the past at doing some not great deals and destroying value for the market,” he added.

Read more: Endeavour calls off merger talks with gold miner Centamin

Centamin recently appointed an exploration manager to assess a portfolio of target projects in Egypt and west Africa, as it seeks to reduce its reliance on its sole Sukari mine.

Gold prices have surged about 30 per cent so far this year, supported mainly by lower interest rates and widespread stimulus measures by global central banks to ease the economic blow from the pandemic.

It continued to hold steady near record highs this morning, as worries over global economic fallout from mounting Covid-19 cases offset an uptick in risk sentiment driven by positive US economic data.

Spot gold was little changed at $1,975.07 per ounce by 5am this morning, $9.59 shy of the all-time high hit in the previous session.