Gold miner Centamin reports 2017 profit fall

LONDON - 31 January 2108: Centamin posted a 13 percent fall in core profit in 2017 on Wednesday as gold production fell and costs rose but the miner declared a final dividend that beat consensus.

Earnings before interest, tax, depreciation and amortisation (EBITDA) fell to $326 million in the year that ended on Dec. 31, said the London-listed miner, which operates Egypt’s only producing gold mine.

The company declared a full year dividend of 10 U.S. cents per share, bringing 2017’s total payout to 12.5 cents. “We have done what we have said we would do which is that any excess cash will be returned to shareholders,” Chief Executive Andrew Pardey said in an interview with Reuters.

Centamin’s final dividend was “well ahead of expectations”, noted Jefferies equity analyst Alan Spence. Market consensus was for a payout of 3.9 cents.

The dividend payout was down 20 percent on a year ago, however, after Centamin in 2017 entered into a profit sharing agreement with the government of Egypt.

Gold production slipped 1 percent to 544,658 ounces but was above a target of 540,000 ounces. Its all-in sustaining cost of producing an ounce of gold rose 14 percent to $790 partly due to higher fuel costs.

Pardey said there had been no change in the terms they considered “unattractive” that were offered by the government in the first round of exploration bids.

The Egyptian government launched an international tender for gold mining concessions in January 2017 which included a higher royalty payment, only partial cost-recovery before the start of production-sharing.

“The terms (in) that last bid round ...we didn’t think it offered value,” he said.

“Geologically Egypt is very, very attractive. It just needs to bring through a modern day mining code to attract further investment.”

“There has been some talk in government circles that they will review what they had so they can attract more people,” Pardey said.

Australian-listed Resolute Mining said in July it was awarded two exploration concessions in Egypt.

Centamin is looking to expand its existing Sukari mine and is exploring and developing three gold projects in Ivory Coast and Burkina Faso.

Shares in Centamin were up 0.38 percent at 159.80 pence at 1117 GMT. They are up about 6 percent over the past year.