Gold miner Centamin has been under pressure on concerns about its Sukari project in Egypt.
A court questioned the miner's right to operate Sukari in October, and last week a report from the Egyptian State Commissioner's office was not positive for its case.
However production at the mine is continuing - despite a temporary halt in December = and Centamin has reported a 71% rise in earnings to a record $81.7m for the first quarter. It expects a 22% rise in gold output for the full year.
The news gave its shares some respite, sending them 2.5p higher to 38.83p. Westhouse Securities said:
Centamin has released better than expected first quarter results due to cash costs of $556 an ounce being below full-year guidance of $700 an ounce, following the temporary reduction in open-pit mining in January. First quarter production of 87,016 ounces had already been reported and guidance for the full year is maintained at 320,000 ounces while cash costs are expected to return to normal over the rest of the year. Despite these strong numbers, the concession court case continues to weigh on the stock with the first hearing on 19 June 2013.
Canaccord Genuity agreed on the court case:
We believe the key to Centamin's rerating remains a successful finalisation of the court case regarding the validity of the Sukari mining license. In the meantime, this remains an overhang and will likely limit the share price response to operational delivery. Share price volatility is likely to remain high given the potential for negative news flow during the appeal. We maintain our hold recommendation and a 38p a share target price.
