How Centamin Has Fared During 2012


LONDON -- The shares of Centamin have collapsed almost 50% to 43 pence during 2012, making them one of this year's worst performers within the London market.

Centamin, which is a member of the FTSE 250 index and operates the Sukari gold mine in Egypt, has suffered mixed market responses to various updates within the last 12 months.

During January and February, the shares rallied about 20% to breach 100 pence after the company issued its 2011 results. The figures showed gold production up 35% to 203,000 ounces, revenues up 175% to $341 million, and profits up 300% to $185 million.

The performance prompted Josef El-Raghy, Centamin's chairman, to say: "A record quarter of gold production with low cash costs has demonstrated the deliverability of a significantly higher production profile for Sukari in 2012. With expanding production, increasing resources and reserves and a robust balance sheet, we are well positioned for a strong 2012."

By March, the shares had dropped to 70 pence as the company announced production at its Sukari mine had been suspended due to "illegal labor unrest." Centamin claimed the action was a result of a breakdown to discussions involving "general salary increases and other benefits."

But one week later an agreement was reached and staff returned to work.

By July, the shares had continued to trade around 70 pence as the group dismissed Egyptian media reports of breaches to its mining concession agreement. During the same month, Centamin owned up to another short-lived strike, but also revealed production during its second quarter had advanced 40% on last year.

Centamin's shares had climbed to their 2012 peak of 107 pence by October, during which the firm announced production volumes had advanced 20% during the third quarter.

However, Centamin's shares collapsed 35% to 64 pence during one frantic October morning after the Egyptian media reported the group's Sukari mining license had been scrapped. Trading in the shares was suspended for a day and Centamin issued a statement suggesting there were no legal grounds for any loss of mining permissions.

Then this month, Centamin's shares endured a further roller-coaster ride as they crashed 50% to 28 pence in one day -- only then to bounce back 50% during the following two days -- as the group suspended its Sukari operations. The suspension was blamed on a lack of fuel and sudden ban on gold exports, both of which seem to have been resolved for now.

Whether Centamin's gold production potential, exposure to erratic Egyptian authorities, current £457 million market cap -- as well as today's news of the Sukari mine reopening -- make the shares a buy remains your decision.

Indeed, you may wish to consult this free Motley Fool report, which explains how volatile mining shares with great potential can deliver wealth-changing returns for ordinary investors. You never know, perhaps Centamin could put its troubles behind it during 2013 and see its shares recovery strongly...

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