Centamin faces safety concerns at Egyptian gold mine
Centamin Plc [CEE-TSX; CEY-LSE] is forecasting a fall in its annual gold production after delaying some open-pit mining operations at its key Sukari mine in Egypt for safety reasons.
Centamin said it detected a movement in a localized area of waste material in the Sukari open pit Stage 4 West wall using a radar system and decided to immediately defer the open-pit mining operations in this zone, which were scheduled to start during the fourth quarter of 2020.
The company said the decision is a preventative measure to safeguard the health and safety of its workforce and the long-term potential of Sukari.
As a result, the company said its 2020 guidance will be reduced and an updated mine plan for future years will be included in the life of the asset review.
Centamin’s principal asset, the Sukari Gold Mine, began production in 2009 and is the first large scale modern mine in Egypt. Base case production is 500,000 ounces per year, with the potential to exceed this level as optimization of the mining and processing operations continues.
The company has said its strong record of replacing reserves at Sukari means that despite producing more than 3.7 million ounces of gold to date, Sukari still has a current reserve life of more than 15 years.
On Friday, the company said the high-grade Stage 4 West wall was scheduled to be mined in the fourth quarter of 2020 and 2021. The area contains approximately 90,000 ounces of gold at grades of up to 2.0 g/t gold. Mining of the impacted area will be rescheduled, the company said.
Open pit mining at Stage 4 North and Stage 5 North will continue, albeit at grades of over 1.0 g/t gold. Any shortfall from the open pit will be offset by low-grade surface stockpiles (average grade 0.47 g/t gold).
Underground mining has not been affected and will continue as planned, the company said.
However, Centamin said it expects its gold production in the fourth quarter to fall to about 70,000 ounces from 120,000 ounces in the third quarter ended September 30, 2020.
The company said its 2020 production forecast of 510,000 to 525,000 ounces of gold will be reduced.
Centamin shares were unchanged Friday at $3.45 and currently trade in a 52-week range of $4.04 and $1.52.
Centamin was also in the news recently when it rejected a $1.9 billion takeover bid from Endeavour Mining Corp. [EDV-TSX]. Centamin said its board of directors believes the company is better positioned to deliver shareholder returns than the combined entity.