Record Profit at Gold Miner Centamin


LONDON -- Centamin this morning released its audited annual results for the year ended Dec. 31, 2012, revealing record EBITDA of $233.3 million, up 10% on 2011.

Full-year production at the Egypt-focused gold-miner was up 30% on the previous year, with the final figure of 262,828 ounces above the guidance of 250,000 ounces. Basic earnings per shares rose 2% to $0.1827, while Centamin has continued to reap the benefits of the high gold price as it remains debt-free and unhedged with cash, bullion on hand, gold sales receivable, and available-for-sale financial assets of $219.4 million as of Dec. 31, 2012.

Centamin's Sukari gold mine -- now in its third year of production -- has been pivotal to Centamin's fortunes in recent months and had a rollercoaster effect on the share price. First, operations were suspended due to a lack of diesel supplies and the halting of sales by "unforeseen and arbitrary" red tape, which caused a 61% crash in the share price in a single day. The price recovered 25% the following day as the fuel supply resumed and a further 25% a few days later as customs lifted its halt on gold exports from Sukari.

Management "remains confident that a satisfactory outcome will ultimately be achieved" over two separate court cases relating to Sukari. The first concerns a decision by the Egyptian General Petroleum Company to charge international prices, rather than local (subsidized) prices, for the supply of diesel fuel oil. The second involves a judgment by an Egyptian administrative court in relation to the validity of Centamin's 160-square-mile exploitation lease -- though normal operations are able to continue during this process.

Having shed 4.7% of its value as of 10:05 a.m. EDT today, at 54 pence Centamin's share price has yet to regain all of its value prior to the plunge, and whether the potential for recovery makes Centamin a buy remains your decision.

Indeed, you may wish to consult this free Motley Fool report, which explains how betting on battered shares can provide wonderful gains -- if the underlying company recovers. To put a possible turnaround into perspective, Centamin's shares reached a peak of 197 pence before the Egyptian troubles erupted. Anyway, if Centamin is tempting you today, please click here to read the Fool's exclusive "millionaire" report before you hit the buy button.

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