Miner Centamin Egypt (CEY.L: Quote) (CEE.TO: Quote) said it cut its gold output guidance for 2010 by 15-20 percent due to a number of production problems at its Sukari operation, pulling its shares down 12 percent.
The company expects to produce 160-170,000 ounces of gold, revised down from the original target of 200,000 ounces.
The London-listed shares fell 12 percent to 162 pence by 0725 GMT, compared with a 1.7 percent rise in a British mining index , making it the biggest faller in the FTSE 250.
Lower production will result in higher cash cost per ounce particularly in the current quarter, but Centamin said it was confident of returning a total cost of around $400/oz in the final quarter of 2010.
“The short-term impediments to production performance … are well understood and are being progressively removed or resolved,” said Chairman Josef El-Raghy in a statement on Monday.
The 2010 target was reduced as a result of choppy output from the process plant, lower sulphide ore grades, and marginally lower metallurgical recoveries from the flotation and leach circuits.
Its shares have fallen to the lowest level since Aug. 13, valuing Centamin at 1.6 billion pounds ($2.5 billion).
“We see sentiment turning more cautious on this stock for the remainder of the year, until these problems are overcome,” said Cailey Barker, analyst at Numis Corp.
The company said its 500,000 ounce production target for 2012 remains unchanged.
In July, the miner produced a lower-than-expected 30,236 ounces in its fourth quarter to end June at average cash operating costs of $569/oz.
Centamin’s flagship Sukari project was the largest gold resource outside of the major gold companies to come into production in 2009. (Editing by Sharon Lindores) ($1=.6488 Pound)
© Thomson Reuters 2010 All rights reserved