Shares in gold miner Centamin (TSX:CEE) (LON:CEY) fell more than 5% Wednesday after the company reported pre-tax profit for the first quarter that was 20% lower than the same period last year due to an output decline.
The Egypt-based miner said gold production for the quarter fell to 109,187 ounces in the three months to March 31, down 13% year-on-year, although it said the results were in line with its prior forecast.
Despite the drop in production, Centamin kept guidance unchanged for its 2017 financial year at 540,000 ounces.Despite the drop in production, the company kept guidance unchanged for its 2017 financial year at 540,000 ounces with $580 per ounce cash cost of production and $790 per ounce all-in sustaining costs.
Shares in Centamin were down 4.2% in London at 166.30 pence Wednesday morning, the second-worst performer in the FTSE 250 index.
The company, which is currently hoping to expand operations to Ivory Coast and Burkina Faso, said it has seen continued positive results from drilling at its Sukari gold mine in Egypt, Centamin's only operating mine, with an updated resource and reserve estimate planned for the first half of 2017.
"As forecast, production rates decreased in the first quarter mainly driven by a planned reduction in average grade from the open pit. Despite lower production rates Sukari generated $58 million of cash from operations during the quarter. During the second quarter, we expect to see open pit ore grades increase towards the reserve average as the cutback in the east wall of the pit is further progressed," chief executive Andrew Pardey said in a statement.
Centamin also reported "encouraging" initial results from diamond drilling and said development of the Cleopatra exploration decline in the northeast Sukari Hill had advanced by 810 metres.
The miner remains debt free and un-hedged, with liquidity at period-end standing at $290.9 million following the payment of the final 2016 dividend.