Centamin Digs In


LONDON -- African miner and FTSE 250 group Centamin (ISE: CEY.L) has unveiled its second-quarter numbers. In morning trading, the shares are up more than 2%.

Relying almost exclusively on its large scale, low-cost Sukari gold mine in Egypt, Centamin boasted its strongest operating quarter yet, and reaffirmed its full-year production guidance. The Sukari mine is set to deliver 250,000 gold ounces this year, a 25% increase in production from 2011.

Highlights from the quarter include:

  • Record gold production from the Sukari mine.

  • Continued exploration and development in Ethiopia, as drilling continued at the first of four exploration licenses in northern Ethiopia.

  • Debt-free balance sheet led by liquid assets of $183 million.

The Sukari mine is the first large-scale modern gold mine in Egypt. The company is also keen to acquire and develop other gold projects in the prospective Arabian-Nubian Shield. In 2011, the group acquired Sheba Exploration and now has interests in four mineral licenses in Ethiopia, where it is conducting further exploration activities.

All eyes are on Sukari
Total revenue generated from Centamin's main mine this quarter was $96.8 million, producing an EBITDA of $54.9 million and earnings of 3.87 cents per share, with cash, bullion and liquid assets of $183 million.

In July of this year, Josef El-Raghy, chairman of Centamin, made a large purchase of company shares (500,000) at 69.62 pence each. Reflecting on his company's second-quarter performance, El-Raghy said: "Our team at Sukari has delivered a record quarter ... and remain on track to deliver our full year production guidance of 250,000 ounces."

Though it's been a mixed bag for miners and explorers this year, with the threat of rising international fuel prices looming large, we are seeing other positive results in the sector:

  • Caledonia Mining Corp. (ISE: CMCL.L) revealed that gold produced in Q2 at its Blanket Mine in Zimbabwe was up 26% over first quarter, and 41% higher year over year.

  • Cluff Gold (ISE: CLF.L) announced significant sulphide drilling results from its Yaoure Project in the Ivory Coast, where it's seen encouraging initial results with four diamond drill rigs.

  • Horizonte Minerals (ISE: HZM.L) released interim results. The first half of the year saw the company increase the resource at its Araguaia nickel project in Brazil by 31% and raise 5.2 million pounds.

  • Orsu Metals Corp. (ISE: OSU.L) is hard at work at Karchiga, Kazakhstan, where it's focused on securing financing to develop the mine and processing facilities there.

How to invest in miners
As you may expect, shares of the largest and most profitable miners have generally fared better than their smaller peers. So, for a conservative approach to selecting a mining stock to invest in, look for diversified operations and types of resources the company harvests from the ground.

Centamin doesn't quite fit that bill. But to see which mining companies, big or small, do, grab your free copy of Top Sectors 2012, a special investor report presented by The Motley Fool. It's free to download today and features three sectors we're bullish about today.

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Jill does not own shares of any company mentioned above.The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.

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