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Centamin gold production on course to "blow away" guidance

Centamin (CEY) has marked a "solid start to the year", announcing record gold production of 87,016 ounces from its Sukari gold mine in Egypt for the quarter ended 31 March.

This was a 77% increase on the corresponding quarter in 2012 and a 2% increase on the fourth quarter of 2012.

Quarterly throughput at the Sukari processing plant was a record 1,402,000 metric tonnes, a 37% increase on the prior year period and a 12% increase on the fourth quarter of 2012; exceeding the annualised rate of five million tonnes.

"This performance was driven by continued high levels of productivity coupled with a reduced impact from stoppages compared with the previous quarter," the company explained.

Open pit total material movement of 10,550,000 tonnes increased 56%, while ore production of 2,133,000 tonnes was up 11% on the fourth quarter of 2012. The underground mine delivered 119,000 tonnes, up 6% on the fourth quarter of 2012. The run of mine ore stockpile balance increased by 38,000 tonnes to 759,000 tonnes at the end of the period.

Chairman Josef El-Raghy confirmed the output remained on target to achieve the 2013 guidance of 320,000 ounces of gold at a cash operating cost of $700 (£457) per ounce.

"With the plant running at consistently high levels of productivity, the processing function is well placed to deliver the next step change in throughput from the Stage 4 expansion, which remains on course to complete commissioning by the end of the year," he added.

Analyst view

Analysts at FoxDavies called the news "excellent".

They explained: "In our modelling, we had production skewed towards the second half as the plant ramped up and more high-grade underground ore was milled.

"If production keeps going at this rate, guidance will be blown away and production will be much closer to the 367,000 ounces of gold production in the original five-year plan."

Analysts at Investec echoed this view, saying: "[This is] a very good result for Centamin, which certainly appears to be doing a better job at managing (and exceeding) market expectations."

However, they warned: "Unfortunately for Centamin, its investment attractiveness is always going to be tempered by Egyptian political/legal risk."