Centamin Reports Record Gold Revenues, But Egyptian Turmoil Leaves An Asterisk

Centamin PLC (OTCPK: CELTF), a gold mining company focused on Egypt, announced a 25% increase in its annual profit for the year 2023.

This surge in profitability is attributed to a combination of higher gold sales volume and soaring prices for the precious metal.

In 2023, Centamin recorded a profit of $195.1 million, marking a 14% rise from the previous year’s figure of $171 million. This surge in profit was accompanied by a 13% increase in revenue, which climbed to $891.3 million from $788.4 million in 2022.

“2023 was the third consecutive year that we have safely delivered on our production guidance, reflecting the operational improvements and flexibility from our three-year reinvestment plan,” CEO Martin Horgan said in a statement.

Robust gold sales and solid performance from the Sukari mine in Egypt drove this achievement. Gold sales from Sukari totaled 456,625 ounces in 2023, a 4% increase from the previous year. Moreover, Centamin witnessed a significant 8.6% rise in realized gold prices, reaching $1,948 per ounce compared to $1,794 per ounce in the preceding year.

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Centamin strategically positioned itself to achieve a consistent annual production target of 500,000 ounces of gold. Efforts towards achieving this goal include investments in strengthening power generation capabilities, mainly through solar power, which is a logical choice given the country's geography.

Horgan reflected on power generation, as unstable power grids in developing economies often cause significant energy costs to mining operators—particularly in net energy importers like Egypt.

"Looking ahead to 2024, the grid connection project will continue our recent success in taking costs out of the business whilst delivering into our near-term de-carbonization targets of reducing our scope 1 and 2 emissions by 30 percent by 2030," he said.

Centamin’s commitment to efficient capital expenditure is evident. Total capital expenditure for the year amounted to $204 million, below the initially guided $272 million.

Despite Centamin’s success story, it’s essential to acknowledge Egypt’s broader economic challenges. The country is grappling with high inflation, a heavy debt burden, trade deficits and other pressing issues threatening stability.

While recent geopolitical instability pushed the price of gold higher, such disruptions threaten global markets. For Egypt, they also cause revenue losses from the Suez Canal, further exacerbating economic woes and calling for careful evaluations of firms with key assets in such regions.

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Photo: Courtesy Centamin