JOHANNESBURG (miningweekly.com) – Despite a 6% year-on-year increase in gold production to 377 261 oz, LSE- and TSX-listed miner Centamin’s earnings before interest, taxes, depreciation and amortisation for the 2014 financial year dropped by 29%, to $165.4-million, owing to a lower gold price.

In the year under review, the average realised gold price fell to $1 257/oz, compared with $1 384/oz in 2013.

The gold miner, which operates the Sukari mine, in Egypt, on Monday reported that 2014 had seen the fifth successive year of production growth at the mine, with the successful completion and commissioning of the $331.2-million Stage 4 expansion project.

This took the project out of the investment phase and into a sustainable period of free cash flow generation over an expected minimum 20-year mine life.

“Although our strong record of delivery against yearly gold production guidance was affected by lower-than-expected processing rates and underground grades, resulting in [a] revised guidance, the fourth quarter saw yearly rates in excess of our long-term 450 000 oz to 500 000 oz target,” Centamin said in a statement.

“Cost control remains an absolute focus of the company and it is pleasing to note that, despite full-year production of around 10% lower than forecast at the start of the year, the cash operating cost of $729/oz was only marginally above our original $700/oz guidance,” it added.

OUTLOOK
“The focus for 2015 is to continue production growth at Sukari, while maintaining a strong control on costs, with the aim of generating substantial free cash flow even under challenging gold price assumptions,” CEO Andrew Pardey said in a statement.

He added that the company intended to return 15% to 30% of this cash flow to its shareholders, in line with its dividend policy, and to allocate the remainder towards its medium- and long-term aim of organic growth aimed at realising incremental shareholder value and returns.

Further, the company noted that it expected Sukari to deliver 420 000 oz of gold in 2015, at $700/oz cash operating cost and $950/oz all-in-sustaining cost.

At the openpit Sukari mine, the focus would continue on the northern and eastern cutback to expose higher-grade ore from the second half of the year.

“This will ensure that the operation is on a secure footing to sustain, on a yearly basis, the required tonnages at reserve-average grades,” Pardey noted, adding that the company aimed to build on the significant productivity increases from the underground mine by targeting a reduction in grade volatility.
 
No capital expenditure for expansion or project development was planned for 2015.

The company’s share price on the LSE rose nearly 15% in early morning trade.