TORONTO (CP) -- Shares of Centerra Gold Inc. fell almost 3% Monday after the Toronto miner [TSX:CG] reported higher profits but reduced production, leading to only a small revenue increase in the latest quarter.
Stock in the company, controlled by uranium giant Cameco Corp. [TSX:CCO; NYSE:CCJ], fell C$1.40 to C$45.80, a drop of 2.97%, as the company was squeezed on its top-line growth.
''This quarter, Centerra has demonstrated solid operational and financial results with significant success in organic growth by implementing and outstanding exploration program,'' CEO Len Homeniuk said on a conference call with analysts.
On Sunday, Centerra Gold reported it earned $18.2 million or 25 cents a share in the three months ended March 31, beating analysts' profit expectations by a penny. That compared with net profits of $12 million or 17 cents for the same 2005 period.
But revenue rose only slightly to $93 million from $92 million a year earlier. Centerra produced 153,811 ounces at cash costs of $337 an ounce in the latest quarter, compared with output of 213,450 ounces at $211 per ounce in the previous period.
The company, which reports in U.S. dollars, said its lower-than-expected production was due to reduced average grades at its Kumtor mine in the Kyrgyz Republic, an independent country in Central Asia that used to be part of the former Soviet Union.
Homeniuk said the company is working ''through a transition area that continues to challenge us, with lower-than-expected average ore grade'' at the Kumtor mine.
''We expect to be through it and into higher grade in 2007.''
Centerra's exploration shows good prospects for high-grade reserve expansion at Kumtor and updated mine life projections point to production efficiency and cash cost trends in the second half of 2007 ''that are significantly better than we expect to experience throughout the balance of this year,'' he said.
''We continue to pursue a very aggressive exploration program as key to achieving or objective of substantial organic growth,'' Homeniuk said.
In another development, Centerra said it has cut its 2006 production outlook for the Kumtor mine as the company defers about 40,000 ounces of gold from this year's mine plan into next year. The company now expects production at Kumtor to be 410,000 to 420,000 ounces this year, compared with 461,000 previously forecast.
Average cash cost is now expected to be $370 to $380 per ounce, compared with $347 an ounce previously forecast.
(c) The Canadian Press 2006
