* Q2 core earnings fall 49 pct to $32.6 mln
* Q2 gold production falls 13 pct to 81,281 ounces
* Co maintains 2014 production target of 420,0000 ounces of
(Updates share price)
By Karen Rebelo
Aug 14 An appeal case hanging over Centamin
Plc's right to mine gold in Egypt is likely to
drag into next year, although mining will continue unchecked
pending its resolution.
Centamin's London-traded shares fell as much as 5 percent on
Thursday. The company also reaffirmed a full-year production
target for its only mine, Sukari, that one analyst described as
Centamin is appealing a 2012 court ruling that declared its
right to operate Sukari invalid. That ruling, under the
government of the Muslim Brotherhood, was one of several legal
challenges to commercial deals struck under the rule of former
President Hosni Mubarak. (r.reuters.com/kyh99v)
But Egypt's government has since changed again. Abdel Fattah
al-Sisi was sworn in as president in June after leading the army
during its ouster of former President Mohamed Mursi last year.
Andy Davidson, Centamin's head of investor relations, told
Reuters that the next hearing in the court process would be in
"That won't be the final hearing," he said. "That court case
... will likely go into next year before we get a resolution."
Centamin Chairman Josef El-Raghy told Reuters in June that
he expected the case to be resolved by the end of this year.
The company's case is strengthened by an investor-friendly
law, in force since April, that restricts the ability of any
third party to challenge contracts between the Egyptian
government and an investor.
Centamin says it understands, based on legal advice, that it
is likely to benefit from the new law.
Analysts were not concerned about the case running into 2015
- particularly as enforcement of the original 2012 ruling has
been suspended pending resolution of the appeal hearing.
Arguably a bigger challenge for the company will be to meet
its target of producing 420,000 ounces of gold at Sukari this
year. Second-quarter production fell 13 percent to 81,281 ounces
as the company mined lower-grade ore.
"It looks like they've got a lot to do," said Alison Turner,
analyst at Panmure Gordon.
Numis Securities analyst Cailey Barker said the guidance
looked "challenging", as Centamin would need to produce an
unprecedented 130,000 ounces-plus in each of the remaining two
Centamin said it would process more ore, with a higher
average grade, in the second half of the year.
The company also said it would pay a maiden interim dividend
of 0.87 cents a share.
Core earnings, or earnings before interest, taxation,
depreciation and amortisation (EBITDA), fell 49 percent to $32.6
million for the quarter ended June 30 from a year earlier.
Registered in Jersey, Centamin has been mining gold at
Sukari in Egypt's Eastern Desert since 2009. It also has
exploration projects in Ethiopia and offices in London,
Alexandria and Perth. Its stock trades in London and Toronto.
Centamin's shares were down 4.0 percent on the London Stock
Exchange at 1316 GMT, ranking as the biggest loser on the
FTSE-250 index. The index was up 1.0 percent.
(Editing by Gopakumar Warrier and Robin Paxton)