Output below expectation at Centamin gold mine

Centamin, operator of Egypt’s first large-scale gold mine, cut 2014 output forecasts by around 10 percent.

The company, whose main asset is the Sukari mine in Egypt’s Eastern Desert, announced today that it expects this year’s production to reach between 370,000 and 380,000 gold ounces. It previously forecast output of 420,000 ounces.

The mine produced 356,943 ounces last year.

The company attributed today’s reduced forecast to low productivity in October and to lower-than-expected average grades for underground ore.

The company said it expects record production in the next quarter, due to the completion of an expanded ore processing plant and to receiving permission from the government to increase the amount of ammonium nitrate it uses as explosives in open pit mining.

In response, Centamin share prices dropped nearly nine percent on the London Stock Exchange, from GBP0.5225 at the close of yesterday’s market to GBP0.4764 by 1 pm London time.

The mine’s operations have also faced legal trouble in Egypt. In October 2012, an administrative court ordered the mine closed and nullified Centamin’s exploitation contract, which was issued under former President Hosni Mubarak. 

Centamin is appealing the verdict, and has been granted permission to operate the mine while the lengthy court process continues. 

For several weeks during December 2012 and January 2013, customs officials refused to allow Centamin to export gold, demanding permits from Egyptian authorities.

This year, however, relations with the government have improved, with both expansion plans and the ammonium nitrate increase being allowed to proceed.