Centamin holds production targets despite strike action

Egyptian gold miner Centamin has revealed a significant drop in production in the first quarter after strike action hit its main Sukari operation, but the firm still maintains its full-year targets.

The Sukari project is the first modern gold mine in Egypt and had delivered impressive returns for shareholders until the recent political unrest in Egypt made life somewhat more difficult.

Earlier this year, workers downed tools and demanded a change of ownership of the asset. They didn't get their way and production has now restarted but total gold extracted from the open pit fell 37% compared to the last three months of 2011 - coming in at 49,071 ounces. The cash cost per ounce increased to $637 from $473 while the average sale price climbed from $1,671 per ounce to $1,694 per ounce.

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Total revenues for the quarter were $88m, up on the previous three months ($85.8m) while underlying earnings came in at $60.5m versus the $54.9m seen between October and December. Basic earnings per share were 4.95 cents, against 3.42 cents in the prior quarter.

Perhaps most crucially, Centamin is sticking to its 250,000 ounce full-year production target despite the recent interruptions. This probably explains why the stock gained 2.6% in very early trading.

BS