Centamin portfolio offers significant growth potential, says UBS


Gold miner Centamin PLC (LON:CEY) has an exploration portfolio that offers “significant additional volume growth potential” according to analysts at UBS, who initiated coverage of the stock on Tuesday with a ‘buy’ rating and 150p target price.

In a note, the Swiss bank also restored their ‘tier 1’ status to the company’s flagship Sukari gold mine in Egypt following recently proposed changes and a mine of life review, saying the orebody was now set to “deliver significantly better financial results in the future”.

“[A recovery at Sukari] is expected to drive 25% volume growth between 2021-24 and >20% reduction in [all-in sustaining costs]; in our view new management has a clear and credible plan to improve operational stability and restore financial performance to a level that is consistent with a tier 1 ore body like Sukari”, UBS said.

Meanwhile, the bank said Centamin has 12mln ounces of gold split between its brownfield Egyptian tenements and its greenfield in West Africa, exploration and growth of which can provide “important asset/ geographical diversification” which could drive a re-rating of the stock.

UBS also said the company offered an “attractive” 2021 dividend yield of around 5%.

Shares in Centamin rose 1.8% to 125.2p in late-morning trading.


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