Did higher gold prices improve the profitability of Centamin during FY20?

Source: Junjira Limcharoen, Shutterstock

Summary

  • Centamin PLC had registered a robust growth of 27% in revenue to USD 828.74 million during FY20.
  • CEY had shown an 82% jump in Profit before tax during FY20.
  • CEY will pay a final dividend of 3.0 US cents per share on 15 June 2021, taking the total FY20 dividend to 9 US cents per share.
  • The average realized gold price also climbed by 26% from USD 1,399 per ounce during FY19 to USD 1,766 per ounce during FY20.

Centamin PLC (LON: CEY) is the LSE listed mining stock. CEY’s shares have generated a return of approximately negative 2.19% in the last 12 months. It is listed on the FTSE 250 Index. CEY was incorporated in 2011.

Business Model

Centamin PLC (LON: CEY) is an FTSE-250 listed Gold Mining Company, which specializes in the exploration and developments of minerals. Moreover, the Company has several brownfield and greenfield projects mentioned below -

(Source: Company presentation)

Recent News

On 22 March 2021, CEY had declared a final dividend of 3.0 US cents per share with respect to six months period ended on 31 December 2020, taking the total FY20 dividend to 9.0 US cents per share. On 15 June 2021, CEY will pay the final dividend.

On 22 March 2021, CEY had provided the detailed bifurcation of payments made to the government as shown below –

(Source: Company result)

The Company had paid around USD 203.89 million to government during FY20.

Financial Summary (for 52 weeks ended 31 December 2020, as of 22 March 2021)

 (Source: Company result)

 

  • CEY had registered a remarkable growth of 27% in revenue to USD 828.74 million during FY20, driven by a strong average realized gold price.
  • Regarding the profitability, CEY had shown robust growth of 54% in EBITDA and an 82% growth in the Profit before tax during FY20.
  • The basic earnings per share were 13.53 US cents during FY20.
  • The average realized gold price also climbed by 26% from USD 1,399 per ounce during FY19 to USD 1,766 per ounce during FY20.
  • Centamin had produced 6% lesser gold during 2020 as its production stood at 452,320 ounces during FY20, while it remained at 480,528 during FY19.
  • CEY had a significant adjusted free cash flow of around USD 141.77 million during FY20. Moreover, it rose by 91% from an equivalent period of the prior year.
  • Furthermore, CEY had shown a 42% rise in the capital expenditure incurred during FY20 due to investment towards the long-term sustainability of the business.
  • Meanwhile, the operational cash flow had witnessed an improvement of almost 82% to USD 453 million during FY20.
  • On the liquidity aspect, CEY had sufficient cash and liquid assets of USD 310 million as of 31 December 2020.
  • CEY does not have any debt on its balance sheet.
  • The Company has accelerated its progress on the cost-saving program as CEY had shown a significant reduction of 4% in total mine production cost during FY20.

 

Share Price Performance Analysis of Centamin PLC

(Source: Refinitiv, chart created by Kalkine group)

CEY’s shares were trading at GBX 104.30 and were down by close to 0.48% against the previous closing price as of 22 March 2021 (before the market close at 11:39 AM GMT). CEY's 52-week Low and High were GBX 98.00 and GBX 233.30, respectively. Centamin PLC had a market capitalization of around £1.22 billion.

Gold Price Performance

(Source: chart edited by Kalkine group)

Gold price was trading at USD 1,732.70 per ounce and were down by close to 0.57% against the previous closing price as of 22 March 2021 (before the market close at 01:13 PM GMT).

Business Outlook

The Company had shown resilient financial performance during 2020, driven by strong commodity prices. Moreover, CEY had anticipated gold production ranging from 400,000 ounces to 430,000 ounces during FY21. Furthermore, the Board is willing to pay a total dividend of at least USD 105 million during FY21. From a long-term perspective, CEY is targeting production volume ranging from 450,000 ounces to 500,000 ounces at an all-in sustaining cost of less than USD 900 per ounce from FY24. The Company had accelerated its progress on the exploration portfolio in West Africa during FY20. Overall, the Company is well-positioned to follow the path of growth trajectory to achieve sustainable business growth.

(Source: Company presentation)

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