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Centamin ponders deal opportunities as it trims output guidance

Kitco News

LONDON, July 13 (Reuters) - Gold miner Centamin is looking at expansion opportunities, it said on Monday as it trimmed full-year production guidance but reported higher second-quarter output from its Sukari mine in Egypt.

The gold price has rallied to its highest since 2011, at about $1,800 an ounce, boosting mining companies and accelerating merger and acquisition activity.

Chief Executive Martin Horgan said the gold price "makes things interesting in our ability to do transactions".

He acknowledged, however, that clinching a deal could prove challenging, given that other miners are also benefiting from gold's price strength. Horgan also said Centamin was interested in bidding in an auction of 56,000 sq km of exploration concessions in Egypt's Eastern Desert.

"We have significant infrastructure in Egypt and leveraging off that would be a good thing," he said, adding that Centamin was awaiting more detail about the auction before preparing any bid. The London-listed company now expects to mine between 510,000 and 525,000 ounces of gold from a previous range of 510,000 to 540,000 ounces, it said, citing the coronavirus crisis. "I don't think we have seen the full impact of COVID-19 yet, it will continue to unroll in the second half of the year," Horgan said.

He said it was prudent to lower guidance because of the coronavirus response at its solitary mine, including two-week quarantines and minor delays in its supply chain.

As part of Centamin's response to the novel coronavirus, employees are quarantined for two weeks before arriving on site and tested to create a "COVID-free bubble" at the mine, Horgan said.

Four employees have tested positive and were classed as mild cases, he added.

In the second quarter, Centamin production rose 11% year on year to 130,997 ounces, helped by higher mill feed grades and the deferral of maintenance shutdowns to the third quarter. Centamin avoided material impact on production because the Egyptian government allowed Sukari to continue operating throughout its national lockdown.

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