Centamin (Price: 38.4p | Target: 45.6p | Rec: Buy) While the political issues impacting Egypt continue to make the headlines, Centamin is clearly just getting on with the job, delivering yet another excellent production quarterly.

After a solid 1Q13 producing 87,016koz (at subsequently reported cash costs of $556/oz), Centamin delivered 93,624oz in the 2Q, taking the 1H13A total to 181koz, or already at 57% of the FY13 target of 320koz (at targeted cash costs of $700/oz).

Centamin has retained its FY target, citing likely reduced production in the 4Q due to commissioning activities as part of the Stage 4 plant expansion to 10mtpa. * The Sukari plant crew clearly have their section under control, with the plant processing 1.42mt in the 2Q13.

This equates to a run rate of 5.7mtpa, well above the nameplate capacity of 5.0mtpa.

This bodes well for Stage 4 expansion and the ability for the crew to rapidly ramp it up to the planned 10mtpa run rate. * The underground crew are also performing well, delivering 142kt of ore, equating to a run rate of 568ktpa.

This is already above the maximum production rate of 550ktpa that we assume from the underground operations.

Given the higher underground grades (c.10g/t), this is encouraging for future total production rates for the company, with the underground expected to contribute approximately one third of overall ounces.

We only ever assume a maximum total production rate for Centamin of 437koz/pa, but the company is targeting 450-500koz/pa longer term. * Our target price of 46p is based on an equal blend of NPV and forward earnings multiples (5x PER, 3x EV/EBITDA, 3x FCFPS).

We expect that the market discount to our target price partly reflects the Egyptian sovereign risk, together with, and not unrelated to, the ongoing concession agreement court case.

We caution that we apply a long term gold price of $1,400/oz, which is above the current spot price of $1,256/oz.

Applying the spot price, our TP would reduce to 36p.
To access the full note please click here Analyst: Hunter Hillcoat
To receive further information or change your Research Preferences please email: South Africa or United Kingdom and Australia
IMPORTANT NOTICE: This communication forms part of an electronic communication sent to the intended recipient (or such persons authorised representative) for their sole use and is subject to important legal and regulatory restrictions, qualifications and disclaimers that may be accessed and read in the attached research publication.

If you cannot access the disclaimer, please obtain a copy thereof from us by sending an e-mail to in the case of SA or in the case of the UK or Australia: The disclaimer is deemed to form part of this communication.

In the event of a conflict between the disclaimer and this notice, the disclaimer shall take precedence.

This communication is confidential for the information of the addressee only (and may not be reproduced in whole or in part, copies circulated, or disclosed to another party, unless permitted pursuant to and in accordance with the disclaimer. If you are not the intended recipient of this e-mail, then: (a) please notify the sender of this e-mail immediately by return e-mail, facsimile or telephone and delete this message from your system; (b) you may not print, store, forward or copy this message or any part thereof or disclose or cause information in this message to be disclosed to any other person. Nothing in this message constitutes an offer, warranty or representation from us.

None of our employees or representatives are permitted to send unsolicited messages ("spam") and our company cannot be held liable therefore.

If you regard this message as spam, please inform us immediately by sending an e-mail to in the case of SA or in the case of the UK or Australia: Unless otherwise agreed: (a) We are only deemed to have received an e-mail once we have confirmed receipt thereof to you; (b) We are deemed to have sent an e-mail once reflected as “sent” on our e-mail server. If this message contains offensive, derogatory or defamatory statements or materials, it means the message has been sent outside the sender’s scope of employment with us and only the sender can be held liable in his/her personal capacity.

Our corporate information and names of our office bearers can be accessed by sending an e-mail to in the case of SA or in the case of the UK or Australia: The disclaimer applies to our original message, any attachments and all subsequent messages or attachments we may send.
________________________________
-------------------------------------------------------------------------------- CONFIDENTIALITY NOTICE AND LEGAL LIABILITY WAIVER: The content of this email and any attachments are CONFIDENTIAL and may contain privileged information.

If you are not the addressee it may be UNLAWFUL for you to read, copy, distribute, disclose or otherwise use the information contained herein.

The content of the message and or attachments may not reflect the view and opinions of the originating company or any party it is representing.

If you are NOT the intended recipient then please email back to ------------------------------------------------------------------------------------