LONDON, Dec 2 (Reuters) - London-listed Centamin said on Wednesday it plans to spend more over the next three years improving efficiency and cash flow at its Sukari mine after years of operational issues and under-investment.
The miner, which operates Egypt’s sole commercial gold mine, revamped its board and added a new chief executive eight months ago after a failed takeover by Endeavour Mining.
Under the new plan the Sukari mine will spend $595 million to increase its waste stripping to put Centamin in a position to produce between 450,000-500,000 ounces at an all-in sustaining cost of between $800-$900 per ounce from 2024 onwards.
The new production target fell slightly below market expectations for 500,000 ounces but costs were better than expected, analysts said.
Waste stripping - which will be done by drilling company Capital Ltd at Sukari - is an extraction process that helps miners access higher grade ore.
“The three year guidance is characterised as an investment phase, we are looking to reset the asset from a production basis,” Centamin chief executive Martin Horgan told reporters on a call.
He said the company had “changed its philosophy” from a “dogmatic” focus on the 500,000-ounce target to a focus on cash flow.
“What we are looking for now is margin and cash flow generation... because that is what funds growth and that’s what pays for the dividend rather than those headline ounces,” said Horgan.
Centamin said its cash flow will fund $104 million in dividends this year and a minimum of $105 million next year.
“A value-over-volume reassess-and-reset program is always a good thing, especially when a company consistently cannot meet the volume targets,” said Investec analyst Hunter Hillcoat.
Shares in Centamin, which are down over 6% so far this year, edged down 0.7% by 1210 GMT, making it the biggest loser in an index of its London peers.
Reporting by Zandi Shabalala;Editing by Elaine Hardcastle
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