Centamin share price is in a bear market: Buy the dip?

Centamin (LON: CEY) share price has been in a freefall this year even as gold prices have jumped to the highest level on record. The stock retreated to a low of 90.65p this month, ~27% below the highest level this year. It remains in a bear market, which happens when an asset drops by 20% from its highest level.

Business still resilient

Centamin is a gold mining company that operates the Sukari gold mine, Doropo, ABC, and EDX projects. The company produced over 440k ounces of gold in 2022, most of it from Sukari mine in Egypt. This mine is expected to produce 400k ounces annually in the next 12 years.

The most recent results showed that Centamin’s revenue jumped by 18% in the first quarter while gold production jumped to 105,875 ounces. Its average gold selling price was $1,9032 per ounce. 

Most importantly, Centamin has a strong balance sheet and it expects to boost its production this year. It expects that its gold production will be between 450k and 480k ounces this year. It also expects to spend between $840 and $990 per ounce. 

It ended the quarter with over $155 million in cash, which is adequate to cover its exploration budget of $30 million. 

Meanwhile, the company announced a major find at its Doropo project in Ivory Coast. It found 1.9 million ounces of probable reserves. It expects that it will produce an average of 173k ounces of gold annually in the next five years.

Therefore, I believe that Centamin is a good investment since I expect that gold demand will remain in high demand. For one, I suspect that more countries, especially Russia, India, and Turkey will continue adding to their gold reserves as the de-dollarisation trend continues. As such, there is a likelihood that gold prices will retest their all-time high.

Centamin share price forecast

Centamin chart by TradingView

The daily chart shows that the Centamin stock price has been in a strong bearish trend in the past few months. It is now hovering at the important support level at 93.25p, the lowest point on March 16th. 

Centamin stock has also remained comfortably below the 25-day and 50-day moving averages and the 50% Fibonacci Retracement level. Therefore, with the Relative Strength Index (RSI) rising, there is a likelihood that the shares will resume the bullish trend as buyers target the key resistance at 100p.

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