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Shares in gold miner Centamin plunged over 17% as company was cutting production guidance at its flagship Sukari gold mine in Egypt. Persistently lower grade output means production came in 10% below forecast, blamed on geological limitations.
The company expects Q2 to disappoint, but Q3 and Q4 to be better and so has left FY guidance unchanged. Investors are clearly taking this with a troy ounce of salt, unsure whether the FY target can be hit.
The stronger USD is already representing a headwind for safe haven yellow metal even with the revival of geopolitical concerns. Today’s news sees Centamin’s share price accelerate its retreat from recent highs, investors jumping ship amid a more uncertain outlook, sceptical about H2 production being able to make up for H1 shortfall.
Shareholder hopes will be pinned on better H2 production, a rebound to Nov-Dec share price highs, Dollar Index coming down from May highs and the now higher dividend yield (as long as it’s sustainable).
Artjom Hatsaturjants, Research Analyst, 25 May 2018
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