Centamin Q4 production number may put pressure on Endeavour to lift merger proposal

CENTAMIN lifted production 50% in the fourth quarter, a performance that would put pressure on Endeavour Mining to lift its bid for the Egyptian gold miner, said the Financial Times in a report last week.

On December 3, Endeavour proposed an all-share merger with Centamin equal to a 5% premium to the 30-day volume-weighted average price. This represented a 13.1% premium to Centamin’s share price – a proposed offer of some £1.48bn.

Centamin rejected the offer, arguing that it didn’t take into account the fact that its Sukari mine would produce most of the cash flow in the merged entity. It also said that Endeavour shares were less liquid than those of Centamin whilst Endeavour’s Houndé mine, situated in Burkina Faso, was exposed to political and security risks.

Prior to his departure last year, Centamin CEO Andrew Pardey, said the company was in the throes of gradual improvement at Sukari which has underperformed production targets over the last 18 months to two years.

Fourth quarter production came in at 148,387 ounces of gold taking production for the year to 480,529 oz. This is less than the 490,000 oz Centamin had guided on the lower end of the range, and well off the 580,000 oz it said it would produce in a previous year. However, the fourth quarter represented a decent recovery.

Citing Richard Hatch, an analyst at Berenberg, the Financial Times said the material improvement in production at Centamin needed to be put in context.

“While production for the full-year … came in below the bottom end of the guidance range of 490-510,000, it beats our estimate of 471,000 oz. It is encouraging to see guidance for 2020 unchanged,” said Hatch.

Gold prices hit their highest level in almost seven years last week driven by a flight to safety by investors due to growing tensions between Iran and the US, said the newspaper.

The post Centamin Q4 production number may put pressure on Endeavour to lift merger proposal appeared first on Miningmx.


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