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Why Is Centamin’s Share Price Falling Despite Upbeat Q3 Earnings Results?

Trade Centamin Shares Your capital is at risk
Updated: 22 Oct 2021

Centamin PLC (LON: CEY) share price has fallen over the past three days despite upbeat earnings results for the third quarter ended 30 September 2021.

The gold mining company told investors that its gold production during the quarter was higher than expected at 103,546 ounces, bringing its total production since January to 307,821 ounces.

The Egypt-focused miner generated $182.9 million from selling 103,514 ounces of gold at $1764 per ounce.

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Centamin had free cash flows of $6.9 million in Q3, adding up to $23.8 million for the nine months to September. Higher mining costs drove the low levels of free cash flow.

The miner reassured investors of its strong financial position since it has no debt or leverage and had liquid assets worth $256.1 million after distributing $46.1 million as an interim dividend payment at the end of September.

Centamin also won a prospecting license over a greenfield exploration project in the Egyptian Arabian Nubian Shield measuring approximately 3,000km2.

The miner reiterated its annual gold production target of between 400,000 – 430,000 ounces with a mid-range target of 415,000 ounces.

The lacklustre reaction from investors could have been driven by worries about gold prices, which have been trading below their June highs for several months now.

Investors have also been concerned that the gold reserves at the Sukari mine, Centamin’s flagship project, could start declining to lead to lower production in coming years, given how long the mine has been operational.

Centamin’s recent share price performance does not inspire confidence as its shares are currently trading below the 100p resistance level. I would like to see a rally back above the level before opening new bullish positions.

A drop to the 94-95p support level could also trigger a bounce and a rally higher, presenting an excellent trading opportunity.

*This is not investment advice. Always do your due diligence before making investment decisions.

Centamin share price.

IG chart of Centamin share price 22-10-2021
Source: IG

Centamin shares have fallen over the past three days despite an upbeat Q3 earnings report. Here’s why.

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