REG - Centamin PLC - Full Year 2023 Results
21/03/2024 07:00
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RNS Number : 7127H Centamin PLC 21 March 2024
21 March 2024
Centamin plc
("Centamin" or "the Company")
(LSE:CEY, TSX:CEE)
Full year 2023 results
Audited results for the twelve months ended 31 December 2023
MARTIN HORGAN, CEO, commented: "2023 is the third consecutive year that we
have safely delivered on our production guidance, reflecting the operational
improvements and flexibility from our three-year reinvestment plan. Despite
ongoing local inflationary pressures, we reduced our AISC by $194/oz versus
2022, beating the lower end of our guidance range. With the reinvestment
programme ending in 2024, Sukari has been repositioned towards consistently
delivering 500,000 ounces per annum over the long-term, with further growth
and cost saving opportunities identified.
Looking ahead to 2024, the grid connection project will continue our recent
success in taking costs out of the business whilst delivering into our
near-term decarbonisation targets of reducing our scope 1 and 2 emissions by
30% by 2030. We will continue to advance the organic growth opportunities
within our portfolio of assets by aggressively following up on the recent
exploration success with our Eastern Desert Exploration drilling programme
("EDX") and proceed towards an investment decision at Doropo in Cote d'Ivoire
following the publication of the DFS later this year."
HIGHLIGHTS
● 9.5 million hours worked at the Sukari Gold Mine ("Sukari") with zero lost
time injuries ("LTI"). The Group lost time injury frequency rate ("LTIFR") of
0.08 was an 83% improvement on the 3-year trailing average. Total recordable
injury frequency rate ("TRIFR") of 2.83, a 24% improvement on the 3-year
trailing average.
● Scope 1 and 2 Greenhouse Gas Emissions "GHG" reduced by 7% since 2021 base
year, driven primarily by the 21.5 million litre reduction in diesel
consumption during the first full year of solar power generation.
● Gold production of 450,058 ounces ("oz"), a 2% increase on 2022, delivered in
line with 2023 guidance.
● All-in sustaining costs ("AISC") of US$1,205/oz sold, a 14% improvement on
2022, beating 2023 guidance.
● Increased adjusted EBITDA by 25% to US$398 million, at a 45% margin, up from
40% in 2022.
● Annual capital expenditure ("capex") of US$204 million below guidance of
US$272 million: due to cost savings, lower capitalisation of costs and changes
to equipment rebuild schedules.
● Sukari cash contribution of US$121m, including US$45 million in cost recovery
and US$112 million of profit share, net of US$36 million capex funded from
corporate. Government profit share and royalties totalled US$139 million.
● Group free cash flow of US$49 million, up from -US$18 million in 2022.
● Robust balance sheet with cash and liquid assets of US$153 million, as at 31
December 2023, and total liquidity of US$303 million including the undrawn
US$150 million sustainability-linked revolving credit facility.
● Final dividend of 2.0 US cents per share, equating to US$23 million, subject
to approval at the annual general meeting on 21 May 2024. Total dividend for
full year 2023 of 4.0 US cents per share or US$46 million.
GROUP FINANCIAL SUMMARY
FY 2023 FY 2022((2)) % Δ H2-2023 H1-2023
Gold sold (oz) 456,625 438,638 4% 237,271 219,354
Cash costs (US$/oz produced) 875 913 -4% 901 849
AISC (US$/oz sold) 1,205 1,399 -14% 1,184 1,228
Realised gold price (US$/oz) 1,948 1,794 9% 1,963 1,936
Revenue (US$000) 891,262 788,424 13% 465,650 425,612
Adjusted EBITDA (US$000) 398,175 319,015 25% 205,250 192,925
Profit before tax (US$000) 195,140 171,001 14% 80,336 114,804
Profit after tax attrib. to the parent (US$000) ((1)) 92,284 72,490 27% 34,916 57,368
Basic EPS (US cents) ((1)) 7.97 6.29 27% 3.02 4.96
Gross capex (US$'000) 204,111 283,543 -28% 95,850 108,261
Operating cash flow(US$'000)((2)) 353,600 292,524 21% 181,834 171,767
Adjusted free cash flow(US$'000) ((2)) 48,995 -17,551 379% 29,633 19,362
1. The profit after tax attributable to the parent and the Basic EPS
for H1 2023 was updated after the reconciliation of the profit attributable to
the Non-Controlling Interest (due to EMRA) for both H1 2023 and H2 2023 was
completed at year end.
2. The comparatives in the Consolidated Statement of Cash Flows for
the year ended 31 December 2022 have been restated to reflect an increase of
cash generated from operating activities of $2.5m, interest paid of $1.9m and
a reduction of the effect of foreign exchange rate changes of $0.6m, resulting
in the net restatement of the Operating cash flow and the adjusted free cash
flow figures by an increase of US$0.6m
2024 OUTLOOK
Guidance unchanged
● Gold production guidance range of 470,000 to 500,000 oz per annum with a minor
weighting towards H2
● Cost guidance:
○ Cash cost guidance range of US$700-850/oz produced
○ AISC guidance range of US$1,200-1,350/oz sold
○ Guidance reflects a range of diesel prices from 75-90 US cents per litre
● Adjusted capex guidance is $215m, including:
○ US$112m of sustaining capex
○ US$103m of non-sustaining capex, of which US$58m is allocated to growth
projects that are funded from Centamin treasury under the Sukari Concession
Agreement and cost recovered over three years
○ Adjusted capex excludes US$91m of sustaining deferred stripping reclassified
from operating costs
2024 KEY MILESTONES
● Doropo Project, Cote d'Ivoire, completed DFS (mid-2024)
● Accelerated waste-stripping programme completion (mid-2024)
● EDX exploration update (H2 2024)
● Sukari 50MW grid connection project construction (H2 2024)
● Completion of Solar Expansion Study (H2 2024)
WEBCAST PRESENTATION
The Company will host a webcast presentation today, Thursday 21 March, at
08.30 GMT, to discuss the results with investors and analysts, followed by an
opportunity to ask questions. Please find below the required participation
details. A recording will be made available on the Company website.
To join the webcast:
https://www.lsegissuerservices.com/spark/Centamin/events/0995e3c5-b8c1-46ed-ac98-de2fa708e250
(https://www.lsegissuerservices.com/spark/Centamin/events/0995e3c5-b8c1-46ed-ac98-de2fa708e250)
Please allow a few minutes to register.
PRINT-FRIENDLY VERSION of the
results: www.centamin.com/investors/results-reports/
(http://www.centamin.com/investors/results-reports/)
About Centamin
Centamin is an established gold producer, with premium listings on the London
Stock Exchange and Toronto Stock Exchange. The Company's flagship asset is the
Sukari Gold Mine ("Sukari"), Egypt's largest and first modern gold mine, as
well as one of the world's largest producing mines. Since production began in
2009 Sukari has produced 5.7 million ounces of gold, and today has a projected
mine life to 2034.
Through its large portfolio of exploration assets in Egypt and Côte d'Ivoire,
Centamin is advancing an active pipeline of future growth prospects, including
the Doropo project in Côte d'Ivoire, and over 3,000km(2) of highly
prospective exploration ground in Egypt's Arabian Nubian Shield.
Centamin practices responsible mining activities, recognising its
responsibility to deliver operational and financial performance and create
lasting mutual benefit for all stakeholders through good corporate
citizenship.
FOR MORE INFORMATION please visit the website www.centamin.com
(http://www.centamin.com) or contact:
Centamin plc FTI Consulting
Michael Stoner, Head of Corporate Ben Brewerton / Sara Powell / Nick Hennis
investor@centaminplc.com (mailto:investor@centaminplc.com) +442037271000
centamin@fticonsulting.com (mailto:centamin@fticonsulting.com)
ENDNOTES
Guidance
The Company actively monitors the global geopolitical uncertainties and
macroeconomics, such as global inflation, and guidance may be impacted if the
supply chain, workforce or operation are disrupted.
Financials
Full year financial data points included within this report are audited.
Non-GAAP measures
This statement includes certain financial performance measures which are not
GAAP measures as defined under International Financial Reporting Standards
(IFRS). These include EBITDA and adjusted EBITDA, Cash costs of production,
AISC, Cash and liquid assets, Free cash flow and adjusted Free cash flow.
Management believes these measures provide valuable additional information for
users of the financial statements to understand the underlying trading
performance. An explanation of the measures used along with reconciliation to
the nearest IFRS measures is provided in the Financial Review.
Profit after tax attributable to the parent
Centamin profit after the profit share split with the Arab Republic of Egypt.
Royalties
Royalties are accrued and paid six months in arrears.
Cash and liquid assets
Cash and liquid assets include cash, bullion on hand and gold sales
receivables and financial assets at fair value through profit or loss.
Movements in inventory
Movement in inventory on ounces produced is the movement in mining stockpiles
and ore in circuit while the movement in inventory on ounces sold is the net
movement in mining stockpiles, ore in circuit and gold in safe inventory.
Gold produced
Gold produced is gold poured and does not include gold-in-circuit at period
end.
Dividend
All dividends are subject to final Board approval and final dividends are
subject to shareholder approval at the Company's annual general meeting.
Forward-looking Statements
This announcement (including information incorporated by reference) contains
"forward-looking statements" and "forward-looking information" under
applicable securities laws (collectively, "forward-looking statements"),
including statements with respect to future financial or operating
performance. Such statements include "future-oriented financial information"
or "financial outlook" with respect to prospective financial performance,
financial position, EBITDA, cash flows and other financial metrics that are
based on assumptions about future economic conditions and courses of action.
Generally, these forward-looking statements can be identified by the use of
forward-looking terminology such as "believes", "expects", "expected",
"budgeted", "forecasts" and "anticipates" and include production outlook,
operating schedules, production profiles, expansion and expansion plans,
efficiency gains, production and cost guidance, capital expenditure outlook,
exploration spend and other mine plans. Although Centamin believes that the
expectations reflected in such forward-looking statements are reasonable,
Centamin can give no assurance that such expectations will prove to be
correct. Forward-looking statements are prospective in nature and are not
based on historical facts, but rather on current expectations and projections
of the management of Centamin about future events and are therefore subject to
known and unknown risks and uncertainties which could cause actual results to
differ materially from the future results expressed or implied by the
forward-looking statements. In addition, there are a number of factors that
could cause actual results, performance, achievements or developments to
differ materially from those expressed or implied by such forward-looking
statements; the risks and uncertainties associated with direct or indirect
impacts of COVID-19 or other pandemic, general business, economic,
competitive, political and social uncertainties; the results of exploration
activities and feasibility studies; assumptions in economic evaluations which
prove to be inaccurate; currency fluctuations; changes in project parameters;
future prices of gold and other metals; possible variations of ore grade or
recovery rates; accidents, labour disputes and other risks of the mining
industry; climatic conditions; political instability; decisions and regulatory
changes enacted by governmental authorities; delays in obtaining approvals or
financing or completing development or construction activities; and discovery
of archaeological ruins. Financial outlook and future-ordinated financial
information contained in this news release is based on assumptions about
future events, including economic conditions and proposed courses of action,
based on management's assessment of the relevant information currently
available. Readers are cautioned that any such financial outlook or
future-ordinated financial information contained or referenced herein may not
be appropriate and should not be used for purposes other than those for which
it is disclosed herein. The Company and its management believe that the
prospective financial information has been prepared on a reasonable basis,
reflecting management's best estimates and judgments at the date hereof, and
represent, to the best of management's knowledge and opinion, the Company's
expected course of action. However, because this information is highly
subjective, it should not be relied on as necessarily indicative of future
results. There can be no assurance that forward-looking statements will prove
to be accurate, as actual results and future events could differ materially
from those anticipated in such information or statements, particularly in
light of the current economic climate and the significant volatility, the
risks and uncertainties associated with the direct and indirect impacts of
COVID-19. Forward-looking statements contained herein are made as of the date
of this announcement and the Company disclaims any obligation to update any
forward-looking statement, whether as a result of new information, future
events or results or otherwise. Accordingly, readers should not place undue
reliance on forward-looking statements.
LEI: 213800PDI9G7OUKLPV84
Company No: 109180
CEO Statement
I am pleased to report that 2023 was the third consecutive year of delivery
into our production guidance while beating our all-in sustaining cost and
capex forecasts. Our focus on operation delivery, alongside a strong gold
price environment enabled the Company to generate robust cash flows,
supporting the continued investment in our operations without the need to draw
down on our sustainability-linked loan.
2023 was the last full-year of our operational reset plan as we unlock the
full potential of the Company's portfolio, at the Sukari mine we have focused
on the optimisation of the operations and we published a new Life of Mine
Plan. The plan maximises the production opportunity and returns the mine to a
500,000 ounce annual production run rate in the long-term while simultaneously
focussing on cost and operational efficiencies that will position the mine in
the lower half of the industry cost curve and, when combined with the
increased gold production, deliver a sustainable improvement in cashflows.
Alongside Sukari, we have made encouraging progress across our EDX portfolio
with the identification of potential satellite feed targets in close proximity
to the Sukari mine, whilst in Côte d'Ivoire, we have delivered a
Pre-Feasibility Study for our Doropo project.
Having delivered on our commitments during 2023, we enter 2024 with confidence
and the potential to realise further opportunity across our portfolio,
supported by a strong balance sheet. With the investment in resetting our
operations now pivoting to investment in growth we believe we are at an
inflection point that will soon see us rewarded for the multi-year investment
programme, with stronger free cash flow enabling us to deliver that growth
while maintaining our track record of dividend payments.
EGYPT
It was a challenging year within the broader North Africa and Middle East
region as a result of multiple conflicts across the region alongside the
ongoing impact of the global inflationary environment. Despite these
challenges, the Company was well positioned to navigate the operating
environment with limited impact on our business. We believe that the risk
management processes developed through COVID-19 have enabled the Company to
continue to better identify and therefore mitigate risks. For example, to
minimise disruption to operations the Sukari mine carries higher levels of
inventory which are sourced from a more diversified supply chain, helping to
minimise any potential interruption to our business in 2023. We continue to
monitor the state of the broader Egyptian economy as it navigates short term
pressures and note that as a "Dollar functional business" Centamin has been
largely insulated from many of these pressures.
We recognise the importance of the Sukari Gold Mine and our exploration blocks
to our host nation, Egypt. Through Royalties and profit share payments we have
returned US$139m to the government in 2023 while indirectly contributing
US$686m through employment and local procurement. The Sukari mine is an
important employer within Egypt with over 4,400 jobs at the mine site through
direct and contractor employment.
Given mining's current and potential contribution to the broader Egyptian
economy, I am pleased to note that the modernisation of the Egyptian mining
industry continued during 2023, with an in-principle agreement around the
terms of a new Model Mining Exploitation Agreement (MMEA) with EMRA and the
Ministry of Petroleum & Natural Resources. The successful completion of
two years of negotiation between an industry group and the government lays the
foundation for a balanced economic outcome between state and industry that
sits within a robust development framework that is in-line with international
practices. The new MMEA unlocks untapped potential of the Arabian Nubian
Shield in Egypt and we have been able to leverage off our previous success at
Sukari to be one of the first movers in Egypt's Eastern Desert and despite
only starting drilling in 2023, we have already enjoyed drilling success which
we will build on in 2024.
Sukari Gold Mine
We view safety performance as a good proxy for management capability - 2023
saw continued improvement with only a single LTI recorded within the period
and an improvement across LTIRF and TRIFR metrics relative to the three year
trailing average. Following an ISO audit we are pleased to have been certified
for ISO 45001 Occupational Health and Safety management systems, giving
external validation to the strength of our safety systems and processes and
external validation of the work completed by the team at Sukari over the last
few years.
Our work on sustainability continued with a focus on defining and delivering
our decarbonisation roadmap, staffing across gender diversification, training
and management promotion. We also developed a roadmap for Global Industry
Standard on Tailings Management ("GISTM") conformance with the Engineer of
Record (Epoch) to manage our tailings facilities - targeting conformance by
2025 for SGM across the TSFs we operate.
This year was the first full year that Sukari benefited from the cost savings
and decarbonisation impact of the 30MWAC solar plant commissioned in 2022. The
facility achieved design specifications in terms of reduction in diesel
consumption and hence carbon abatement and it is pleasing to see that we are
already delivering into our carbon reduction targets. Given the success of
this facility we are assessing the solar expansion project which would provide
further cost and decarbonisation benefits by generating all our power
requirements from full solar power during daylight hours. In parallel our
grid connection project offers further carbon abatement and significant cost
benefits following the planned implementation in 2025 with the aim of
displacing diesel completely from power generation at Sukari on a combined
basis.
2023 saw the publication of the updated Life of Mine Plan ("LoM plan") which
confirms Sukari's status as a Tier 1 asset based on the forecast production
and cost profile over the next decade of operations. We have demonstrated a
fully engineered plan that sees production return to 500,000 ounces per year,
costs in the lower half of the industry cost curve and a mine life in excess
of ten years. The plan is centred around the lowering of operating risk
through the use of improved data and technical understanding, underpinning a
more robust planning process that incorporates operational contingency to
address unforeseen issues that arise from time to time.
Despite the excellent progress already made, we are continually searching for
continuous improvement opportunities. We have already identified areas to
refine and improve this plan. During 2024 we will continue to investigate
these opportunities and seek further opportunity for growth and optimisation.
In addition to articulating our long term vision for the Sukari mine, we also
maintained our focus on delivery into guidance. Our production was in the
lower end of the guidance range which given the unscheduled, preventative
maintenance completed in the milling circuit during the third quarter was
pleasing and highlighted the contingency in the operating plan. The focus on
cost control and prudent budgeting continued through 2023, enabling us to beat
the all-in sustaining cost guidance while we further improved cash flow
through capex savings associated with a change in our rebuild strategy
alongside some deferrals on project spend.
Since 2020 we have placed a significant focus on our geological understanding
of our assets and 2023 saw continued progress delivering Resource and Reserve
growth at the operation, driven by underground exploration success and a
redesign of the open pit and underground mining areas in the new LoM Plan.
Operationally, the open pit performed well with the planned waste movement
being achieved while the team mined 44% more ore compared to 2022 due to
mining in the northerly stage 7 area of the pit which saw significant waste to
ore conversion resulting from a lack of drill coverage due to steep terrain -
it is not anticipated that this will continue into 2024 or beyond. The
underground achieved the targeted volume growth with one million tonnes of ore
hauled to surface by our mining fleet, up from 625,000 tonnes in 2020 when
underground mining was carried out by a contractor. We remain on track to
achieve 1.4Mt per annum by 2026 as per the new LoM plan. Despite the
unscheduled mill maintenance issue, the processing facility achieved 12Mt
milled with metallurgical recoveries at the top end of the targeted
performance range which was an excellent outcome.
In respect of our tailings facilities, further progress was made with our work
to bring Centamin in line with the requirements of the GISTM and we have
developed a roadmap of work streams that will see the company conforming by
end-2025 - our facilities are in a good position at this time and the work
being completed at Sukari will ensure we continue to work in line with
international standards around tailings facilities.
On the workforce front, we continued to make good progress around our gender
diversity targets and as 2023 saw a further increase in female employment at
the Sukari mine - this initiative is a key priority for the Company and
performance in this area is embedded in both our corporate lending facility
and management performance metrics relating to remuneration. While gender
diversification lends itself to new employees, it has not come at the cost of
our existing workforce - our Employee Development Pathway training programme
continued to make good progress since commencement in 2021 and last year we
introduced the Leadership Development Pathway focussing on the identification
and development of talented individuals and providing a framework for them to
reach their full potential.
Looking forward to 2024, we expect to see continued Resource and Reserve
development resulting from our focused geological exploration efforts,
maintain our upward trajectory in regards to production growth and retain a
focus on cost control to drive improved cash flow through delivering such
outcomes as the grid connection and potential solar expansion.
Eastern Desert Exploration ("EDX")
It was a landmark year for our Egyptian exploration activities outside of the
Sukari Mining Concession. In 2020, with the launch of Egypt's EDX bid round
and vision for a new modern mining industry, Centamin applied for a number of
exploration licences across the Eastern Desert - both adjacent to the Sukari
mine and more remote from the operations. Since being successfully awarded
approximately 3,000km(2) of ground, Centamin has embarked on both field work
to generate drill targets while simultaneously working with the government of
Egypt and an industry group to finalise the terms of the new model mining
exploitation agreement (MMEA).
In mid-2023, negotiations between government and industry were concluded to
set out the final terms of a comprehensive legal and fiscal framework
applicable to any future discovery in the EDX blocks that compliments the
agreed exploration terms finalised in 2021. Following agreement of the terms,
the MMEA will be submitted to Parliament for approval as a special law. The
MMEA terms represent a balanced and equitable outcome for stakeholders
(government / industry / local communities) while providing a robust legal
framework in line with the internationally accepted standards required by the
industry for the long-term investment horizons associated with mining
projects. It also places Egypt in a competitive position compared to other
mining jurisdictions as it seeks to unlock its untapped geological potential.
In parallel with the negotiation process, Centamin continued exploration field
work across our portfolio with an initial focus on the areas immediately
adjacent to the Sukari mine.
During 2022 and the first half of 2023, a series of drill targets in the
Nugrus Block were identified by our team with some eight zones of interest all
within 30km of Sukari. H2 2023 saw the mobilisation of an RC rig to undertake
an initial 16,216 meter scout drilling campaign across these targets. The
results were released in early 2024 showing promise at two of the eight
targets - Little Sukari and Um Majal - where potentially commercial zones of
mineralisation were identified.
In parallel, soil sampling was completed across the Um Rus block some 50km
north of Sukari with the aim of testing geological structures for potential
gold mineralisation that could be developed into drill targets. Late in the
year field work commenced at the Nadj block, some 100km north of Sukari with
the timing aimed at seeking to work in the cooler winter and spring months
ahead of the summer.
2024 will see an aggressive follow up to the success seen in Nugrus at Little
Sukari and Um Majal. Further mapping, IP surveys and an extended drilling
campaign are planned to further define the potential of both targets. Work
will continue at Um Rus and Nadj blocks with the potential to generate drill
targets that can be tested in late 2024 and into 2025, subject to successful
outcomes.
CÔTE D'IVOIRE
Doropo
Good progress was achieved across our Côte d'Ivoire portfolio with a specific
focus on the advancement of the Doropo project in northern Côte d'Ivoire.
The Pre-Feasibility Study ("PFS") demonstrated a viable project with an
attractive scale of gold production at a competitive cost profile in line with
capital cost intensity as seen across the region. Based on the PFS outcomes
the project currently meets Centamin's hurdles for scale, quality and
financial metrics which supported the decision to commence a full Feasibility
Study and associated ESIA for Doropo which will be completed in mid-2024.
The development plan is technically simple in terms of robust geology,
supporting relatively shallow open pit mining across multiple sites which feed
into an industry standard process facility - the main challenge with the
project relates to its interaction with and impacts on local communities
during the construction and operation phases.
As such, a significant effort has been completed in respect of mapping and
understanding the baseline social and environmental setting of the project
area and importantly ensuring that this data is utilised in the project design
phase to minimise impacts on local communities by following a hierarchy of:
Avoid / Minimise / Mitigate / Compensate. This has led to changes in project
design to accommodate this strategy and ultimately deliver a more robust
outcome for all stakeholders.
The delivery of the Doropo PFS has enabled Centamin to publish our first
non-Sukari reserve and has been one of the key drivers of the Company
exceeding its stated aim of growing the Group Reserves by more than 3Moz over
the three years from 2021 to 2023, having now delivered 3.5Moz of Reserve
growth.
Building on the success of the PFS, the Company launched the Definitive
Feasibility Study ("DFS") and associated ESIA in mid-2023 with aim of
submitting a mining licence application in mid-2024. In parallel, we have
started to assess the funding options for the construction phase of Doropo
with the aim of reaching a final investment decision point in late 2024 with a
fully funded construction package in place alongside the requisite in-country
permits required to enable the Board to make an informed decision on the
construction phase.
2024 OUTLOOK
In 2024 we look to continue our track record of delivery and building on the
platform for growth that has been established by the reinvestment programme at
Sukari. We are forecasting increased production of 470,000 to 500,000 ounces
and are targeting all-in sustaining costs of US$1,200-1,350 per ounce sold.
This year capex at Sukari will be US$215m, plus US$91m of sustaining deferred
stripping reclassified from operating costs. This includes the final phase of
contracted waste-stripping programme which is expected to be completed during
the middle of the year. Other investments include the grid power connection
project, fleet expansion and underground expansion which will combine to
support long-term production rates of around 500,000 ounces per year and
improved margins.
We will follow up on our initial success at EDX to assess the potential for
satellite feed to be trucked to the Sukari mine and complete the Doropo
Definitive Feasibility Study. In respect of Government interaction we will
look to finalise the MMEA signature and have this ratified by Parliament and
progress the work on our 15 year Tax Exemption Renewal for Sukari to take
effect from March 2025.
After a successful year of excellent progress across our portfolio, I would
like to thank all our stakeholders who have made this progress possible. From
the dedication and hard work of our workforce across our portfolio, through to
our host governments and local stakeholders, it is their support and
engagement that has enabled us to continue the journey at Centamin across 2023
and set us up for further success into 2024 and beyond.
Martin Horgan
Chief Executive Officer
FINANCIAL REVIEW
The last three years have been about delivering the bold capital reinvestment
plans required to sustain our business and drive both higher production and
improved margins for the next decade and beyond. We exit this reinvestment
period with a much improved business which is well set for the future.
The significance of having a tier one asset is evident when faced with
economic challenges. Inflation was the one common threat that had an impact
across the whole industry in 2023. Despite these pricing pressures and
persisting global supply-side issues, our focus was firmly on what we could
control. We did this through rigorous planning and disciplined execution on
plans, and supported by a robust risk and opportunity assessment to ensure we
were always striving to improve.
FINANCIAL PERFORMANCE
Centamin delivered a resilient financial performance that was in line with our
expectations and guidance for the year. The Company's strong operational
performance throughout the year was supported by the healthy gold price
environment, which remained robust in 2023.
The Group's results are significantly affected by movements in the gold price,
input costs, particularly in consumables and fuel, and to a lesser degree
foreign exchange rates. All of which are external factors of which we need to
minimise the impact. We have protected our exposure to the gold price through
the gold price protection programme from July 2023 through to June 2024
(240,000 ounces at a $1,900 gold price per ounce) to match the remaining
significant capital investment period which ends in H1 2024.
Revenues increased year-on-year by 13% to US$891 million, generated from
annual gold sales of 456,625 ounces, up 4%, at an average realised price of
US$1,948 per ounce, up 9% year-on-year. A total of 6,915 ounces of unsold gold
bullion was held onsite at year end, due to the timing of gold shipments
across the year end.
Adjusted EBITDA increased by 25% to US$398 million, at a 45% EBITDA margin,
principally driven by;
● a 2% increase in gold production, as scheduled, at an average realised gold
price that was 9% higher as compared to last year;
● cost of sales (excluding the effect of depreciation and amortisation)
remaining flat year on year which was due to a 5% decrease in the combined
open pit and underground material mined at a slightly higher cost per tonne,
part of this cost has been capitalised to mining properties as a waste
stripping asset.
Profit before tax increased by 14% to US$195 million, due to;
● a 13% increase in revenue of US$103 million as compared to 2022, in line with
both increased gold sales and gold prices,
● a 10% increase in cost of sales driven by a marginal change in mine production
costs, however a 25% movement of mining inventory (decrease) against a 35%
movement depreciation and amortisation costs (increase), accounts for the net
change,
● a 240% increase in interest income due to higher interest rates on amounts
placed in interest bearing deposit products in 2023 as compared to deposit
yields in 2022,
● a 12% decrease in other income, mainly driven by foreign exchange movements
during the year,
● a 40% increase in other operating costs of US$20 million mainly due to a
non-cash US$4 million inventory write off, a US$3 million increase in
royalties (due to the higher gold sales) and an US$9 million non-cash loss on
asset disposals.
The Group implemented a new enterprise resource planning (ERP) software
system, SAP (S4 HANA) during the year. As part of the implementation and
migration from the legacy system, an extensive review process of the fixed
assets was performed as part of the fixed asset register and operational
records clean up. Consequently, assets that were identified as not being in
use and/or had been previously replaced by other assets (e.g. mobile equipment
rebuilds) had their carrying values derecognised from the statement of
financial position resulting in a US$9 million loss on asset disposals.
● a 6% increase in greenfield exploration and evaluation expenditure.
As expected, and in line with our three-year reinvestment plans, Centamin's
cash flows and earnings were positively impacted in 2023 by higher gold
production and sales, offset by higher costs.
Cashflows
Operational cash flow increased by 21% to US$354 million. Cash flows from
investing activities were impacted mainly by gross capital expenditure of
US$204 million, predominantly invested in sustaining the long-term production
from Sukari.
During 2023 each partner received profit share distributions of US$112 million
(2022: US$36 million (EMRA) and US$46 million (Centamin).
In addition to the profit share distributions, Centamin also received cost
recovery payments totalling US$45 million from SGM.
Centamin financed growth projects of US$36 million into Sukari, spent US$31
million in greenfield exploration related costs, advancing of our organic
growth pipeline at our exploration projects Doropo, EDX and ABC, plus paid for
our corporate activities.
COST MANAGEMENT
Our approach to forecasting and stringent cost management meant we were able
to counter some of the global inflationary cost pressures last year and
delivered costs either below or as stated in our guidance (albeit that the
ounce profile was at the lower end of the range).
Continued good progress was made during the year on the cost savings
programme. At 31 December 2023 we had extracted US$185 million of sustainable
cost savings from the business over the period of the programme. We remain
motivated to find further opportunities, initiatives included the solar plant,
light weight truck trays, re-ripping of dump leach material and appointment of
a new underground drilling contractor.
The most significant future opportunity remains the national grid power tie
in. The tender for connection to the national grid was successfully completed,
and the Sukari leadership is busy drafting a definitive agreement with the
winning bidder, with an estimated energisation date at the beginning of 2025.
Programme 2020 -2023 31 Dec 2023
Cost savings achieved per year US$'000
2020 44,000
2021 28,870
2022 43,273
2023 68,777
Cumulative total cost savings since start of initiative 184,920
Cash costs of production were US$875 per ounce produced, down 4%, reflecting a
5% decrease in total open pit material mined tonnes, and a 2% decrease in
tonnes processed, offset by a 36% year on year increase in total underground
mined tonnes and a 2% increase in gold ounces produced.
AISC was US$1,205 per ounce sold, down 14%, mainly due to a 63% decrease in
other sustaining capital expenditure, partially offset by a 12% increase in
royalties on gold sales paid to the Egyptian government, a 36% increase in
corporate administration costs which was driven by a number of one off
projects. This was also complemented by a 4% increase in gold ounces sold
(which was as scheduled and in line with guidance).
FUEL PRICES
Major macroeconomic and geopolitical events influenced the oil price
throughout 2023 with rising interest rates and the risks of recessions
weighing on oil price demand outlooks.
Oil price is the most significant commodity assumption materially affecting
the cost base of our business. The average price realised for the 2023 year
was US$0.80 per litre which was below actual spend and what we had budgeted
for and resulted in savings of US$15m despite using 2.3 million litres more
than budgeted (actual fuel used in 2023 was 165m litres) with majority being
used in the underground operations due to increased activity.
Total diesel consumption across the Sukari operation in 2024 is expected to be
160m litres equating to US$145 million at US$0.90/litre. The solar plant
performance has resulted in a significant reduction in diesel consumption
compared to historical averages, while the mining contractor's diesel
consumption is reduced by 50% as the waste mining contract comes to an end by
June 2024.
Further fuel savings are expected beyond 2024 with the Grid Connection Project
and solar expansion opportunities. Refer to our Decarbonisation Roadmap for
more information on the initiatives underway to fully displace the use of
diesel oil for power generation at Sukari.
IMPACT OF FOREX
Some of Egypt's more long-standing challenges have intersected with multiple
global shocks causing a foreign exchange crisis, historic inflation, and
pressures to worsen the already-stretched fiscal and external accounts.
While triggered by the global polycrisis, the rising macroeconomic imbalances
in Egypt reflect pre-existing domestic challenges, including the sluggish
non-oil exports and FDI, constrained private sector activity and job-creation,
as well as the elevated and rising government debt. Egypt's overall
macroeconomic environment during FY2023/24 is expected to be undermined by the
concurrent global shocks and domestic macroeconomic imbalances and regional
instability, before starting to improve over the medium-term as the country
continues to push ahead with stabilisation and structural reforms.
The three pillars of Egypt's path forward focus on foreign exchange
management, inflation targeting at the central bank, and private sector
development / State Owned Enterprises ("SOE") reform. There remain notable
opportunities for Egypt to attract foreign capital and investment which will
drive much-needed sustainable inflows for a medium-term solution to the
current economic imbalances. A significant step forward was made on the reform
programme when the Egyptian Pound ("EGP") was free floated on 6 March 2024.
Our business is primarily USD denominated so largely protected against the EGP
devaluation, but local supply chain costs and availability of goods becomes
challenging. The workforce in Egypt were awarded two sets of increases during
2023 with a 15% increase in January 2023 and a further 30% increase in October
2023. We continue to focus on and manage these challenges as a business to
ensure that our EGP component cost base remains well managed (circa 15% of the
Group spend) and anticipate that while inflation remains a challenge in the
short term, expect it to settle over the longer term.
CAPITALISATION OF OPEN PIT WASTE-STRIPPING
The largest investment in 2023 was on the accelerated waste-stripping
(deferred waste-stripping) which added US$90 million to our balance sheet,
US$89 million was included in non-sustaining capital expenditure and related
specifically to the work done by the waste-mining contractor, with the balance
of US$1 million allocated to sustaining capital expenditure, which was waste
material mined by the Centamin fleet above the life of mine strip ratio. Some
deferred waste-stripping has already been amortised in the year based on ore
extracted from the areas mined.
Refer to note 2.10 to the financial statements for further information.
STRONG BALANCE SHEET
Centamin closed the 2023 financial year with cash and liquid assets of US$153
million.
As announced on 22 December 2022, we secured the first piece of corporate debt
and on 13 March 2023, all conditions precedent were met regarding the US$150
million sustainably linked revolving credit facility ("RCF"), significantly
increasing the Company's financial flexibility to fund growth projects across
the portfolio. Initially, the focus will be Sukari. Under the terms of our
Concession Agreement growth capital invested and funded by Centamin, is
recovered over three years, making these investments ideally suited for the
structure of the RCF. Due to the strong operational performance supported by
the gold price we were able to manage our investments without drawing on the
RCF facility during 2023.
APPROACH TO CAPITAL ALLOCATION
Capital allocation continues to be disciplined and closely qualified against
value creation. The Company continues to exercise a balanced approach to
responsibly maximising operating cash flow generation, reinvesting for future
growth and prioritising sustainable shareholder returns. The Company's
liquidity and strength of the balance sheet is fundamental to the longevity of
the business and is a key consideration when assessing capital allocation.
Centamin has an active growth pipeline through results-driven exploration and
continually assesses inorganic growth opportunities. Our organic projects are
self-funded but before capital is allocated, they are routinely ranked based
on results against our development criteria and prospective returns.
In 2023, a key focus was on improving operational efficiencies to achieve
consistent operational performance with US$88 million spent on sustaining
capital expenditure and US$116 million on non-sustaining, or 'growth' capital
expenditure.
Impressive progress was made on project delivery as we achieved several
further important milestones, most notable the successful implementation of
the SAP (S4 HANA) ERP system which will greatly assist in centralising our
accounting and internal control systems across the Group and will enable
faster and more efficient reporting.
ACCELERATING BUSINESS TRANSFORMATION:
2023 has been pivotal in our ongoing digital transformation journey, marking a
significant step in enhancing operational efficiency and financial oversight
across our Group.
The successful implementation of SAP across our key operational areas
-finance, procurement, human resources, and maintenance, marks a
transformative step in our commitment to operational efficiencies, financial
excellence and strategic growth.
Enhanced Financial Oversight
Integrating SAP's financial management solutions has started and will continue
to evolve and transform our approach to fiscal operations, centralising
financial activities across all our entities, enabling real-time, integrated
financial reporting and providing greater transparency and control. This
streamlined financial consolidation will facilitate strategic decision-making,
particularly in cost management, and is a good foundation for robust financial
governance.
Revitalising Procurement and Supply Chain Management
SAP's advanced procurement solutions are expected to significantly enhance our
procurement and supply chain management processes. This will lead to increased
time and cost efficiencies and strengthened supplier relationships, further
bolstering our supply chain resilience and strategic purchasing capabilities.
Human Resources
The SAP suite has brought a new dimension to our human resources management.
By automating and streamlining HR processes, we will enhance employee
engagement and efficiency, whilst aligning our workforce strategy with our
broader business objectives.
Transforming Maintenance Operations
A notable addition to our SAP integration is through our maintenance teams.
The SAP Maintenance module will improve how we
manage and optimise our maintenance activities. This integration ensures more
efficient scheduling, tracking, and execution of maintenance tasks, and is
expected to significantly reduce downtime and increase operational
reliability. The enhanced visibility and control over maintenance operations
will improve asset longevity and contribute to overall operational cost
savings.
Future Proofing our Business
The strategic implementation of SAP solutions across our diverse operational
areas signifies our commitment to leveraging technology for sustainable and
scalable growth. This comprehensive digital transformation enhances our
day-to-day operations, long-term strategic planning and execution
capabilities.
As we move forward, the SAP implementation will continue to support the
redefinition of our business processes and will be instrumental in driving our
success whilst maintaining our commitment to excellence within our sector.
2023 DIVIDEND
Stakeholder, and specifically shareholder returns, are central to our Company
strategy. We have built a ten-year track record of returning cash to
shareholders, based on our policy linked to free cash flow generation before
growth investment. Our dividend policy makes firm commitments on capital
allocation, meaning shareholder interests are always at the centre of what we
do.
Consistent with the Company's commitment to returning cash to shareholders,
and recognising 2023 as the final full year of reset of Sukari, the Board
proposes a 2023 final dividend, for the year ended 31 December 2023 of 2.0 US
cents per share (circa.US$23 million), bringing the proposed total dividend
for 2023 to 4 US cents per share (circa.US$46 million):
● Interim 2023 dividend paid: 2.0 US cents per share
● Final 2023 dividend proposed: 2.0 US cents per share
The final 2023 dividend is subject to shareholder approval at the AGM on 21
May 2024 and following approval would be paid on 19 June 2024.
MANAGING OUR RISKS AND OPPORTUNITIES
In an unpredictable world, due to increasing macroeconomic and geopolitical
pressures, you can see below in the Principal Risks and Uncertainties some of
the main areas we consider to enable more effective decision making that
supports the delivery of our objectives and improves our performance as a
responsible mining company.
OUTLOOK
We are fully focused on managing the bottom line of the business so that we
can maximise the value at Sukari and deliver growth and diversification
combined with sustainable stakeholder returns.
We have budgeted for similar costs in 2024 as 2023, accounting for rising
input costs, driven by higher consumer price inflation within our operating
countries, supply chain pressures on fuel, consumables and shipping costs and
tighter labour markets. We have prudently decided not to budget any offsetting
impacts of our ongoing cost-savings and improving operating efficiencies and
productivity gains until we have a better sense of the longer-term
inflationary environment.
Ross Jerrard
Chief Financial Officer
PRIMARY STATEMENTS HIGHLIGHTS
Year ended 31 December 2023 Year ended 31 December 2022
US$'000
US$'000
Revenue 891,262 788,424
Revenue from gold and silver sales for the year increased by 13% year-on-year
to US$891 million (2022: US$788 million) with the year-on-year average
realised gold price also increasing by 9% to US$1,948 per ounce sold (2022:
US$1,794 per ounce sold) complimented by a 4% increase in gold ounces sold of
456,625 ounces (2022: 438,638 ounces).
Year ended 31 December 2023 Year ended 31 December 2022
US$'000
US$'000
Cost of sales (596,836) (544,075)
Cost of sales represents the cost of mining, processing, refining, transport,
site administration, depreciation, amortisation and movement in production
inventories. Cost of sales is up 10% year-on-year to US$597 million, mainly as
a result of:
● 35% increase (US$51 million) in depreciation and amortisation charge which
increased from US$146 million to US$197 million (+ve), primarily due to the
following drivers:
₋ increase in the depreciation and amortisation base from new fixed assets
capitalised during the year in addition to increased charges due to additional
volumes moved; and importantly
₋ SAP (S4 HANA) was implemented during the year, an extensive review process of
the fixed asset components and useful lives was performed as part of the
implementation and migration from the legacy system to the new SAP fixed asset
register, this accelerated the depreciation of some assets resulting in a
higher depreciation charge in the year as asset categories were depreciated at
a much more granular component level.
Year ended 31 December 2023 Year ended 31 December 2022
US$'000
US$'000
Dividend paid ₋ non-controlling interest in SGM (112,000) (35,492)
The profit share payments during the year are reconciled against SGM's audited
financial statements. Any variation between payments made during the year
(which are based on the Company's estimates) and the audited financial
statements, may result in a balance due and payable to EMRA or advances to be
offset against future distributions. SGM's 30 June 2023 financial statements
have been audited and signed off.
Refer to note 1.2.1.2 in the notes for details of the treatment and disclosure
of the EMRA profit share.
CAPITAL EXPENDITURE
The following table provides a breakdown of the total capital expenditure of
the Group:
Year ended Year ended
31 December 2023
31 December 2022
US$'000
US$'000
Underground exploration 9,225 8,636
Underground mine development 32,350 32,107
Other sustaining capital expenditure 46,241 124,162
Total sustaining capital expenditure 87,816 164,905
Non-sustaining exploration expenditure 2,947 3,539
Other non-sustaining capital expenditure((1)) 113,348 115,099
Total gross capital expenditure 204,111 283,543
Less:
Sustaining element of waste stripping capitalised((2)) (843) (51,527)
Capitalised Right of Use Assets (1,216) (7,746)
Adjusted capital expenditure (after reclassification) 202,052 224,270
(1) Non-sustaining capital expenditure included further spend on the solar
plant, underground paste-fill plant and the Capital Waste Stripping.
Non-sustaining costs are primarily those costs incurred at 'new operations'
and costs related to 'major projects at existing operations' that will
materially benefit the operation.
(2) Reclassified from operating expenditure.
EXPLORATION EXPENDITURE
The following table provides a breakdown of the total exploration expenditure
of the Group:
Year ended Year ended
31 December 2023
31 December 2022
US$'000
US$'000
Greenfield exploration
Burkina Faso 869 2,928
Côte d'Ivoire 25,226 25,120
Egypt - Eastern Desert exploration 5,558 1,675
Total greenfield exploration expenditure 31,653 29,723
Brownfield exploration
Sukari Tenement 12,172 12,175
Total brownfield exploration expenditure 12,172 12,175
Total exploration expenditure 43,825 41,898
Exploration and evaluation expenditure comprises expenditure incurred for
exploration activities primarily in Côte d'Ivoire and in the new Egypt
greenfield permit areas. Greenfield exploration and evaluation costs
(excluding Burkina Faso) increased by US$2 million or 6% as more exploration
and evaluation work specifically drilling and assaying at the two Côte
d'Ivoire sites was done in 2023 as compared to 2022 as well as the expansion
of exploration work in the Eastern Desert Exploration area under the new Egypt
permit areas. The brownfield capitalised exploration costs on the Sukari
Mining Concession area remained flat year on year.
The spend in Burkina Faso was on key services, wind down procedures and other
regulatory obligations to formally exit the country. The process to formally
exit and wind-up the in country incorporated entities is at an advanced
stage.
SUBSEQUENT EVENTS
As referred to in note 5.3 of the Group Consolidated Financial Statements,
subsequent to the year end, the Board proposed a final dividend for 2023 of
2.0 US cents per share. Subject to shareholder approval at the Annual General
Meeting on 21 May 2024, the final dividend will be paid on 19 June 2024 to
shareholders on record date of 31 May 2024.
Other than as noted above, there were no other significant events occurring
after the reporting date requiring disclosure in the financial statements.
NON‑GAAP FINANCIAL MEASURES
1) EBITDA and adjusted EBITDA
EBITDA is a non‑GAAP financial measure, which excludes the following from
profit before tax:
● Finance costs
● Finance income
● Depreciation and amortisation
Management considers EBITDA a valuable indicator of the Group's ability to
generate liquidity by producing operating cash flows to fund working capital
needs and capital expenditures. EBITDA is also frequently used by investors
and analysts for valuation purposes whereby EBITDA is multiplied by a factor
or 'EBITDA multiple' that is based on an observed or inferred relationship
between EBITDA and market values to determine a company's approximate total
enterprise value. EBITDA is intended to provide additional information to
investors and analysts and does not have any standardised definition under
IFRS and should not be considered in isolation or as a substitute for measures
of performance prepared under IFRS.
EBITDA excludes the impact of depreciation and amortisation, income from
financing activities and taxes, and therefore is not necessarily indicative of
operating profit or cash flow from operations as determined under IFRS. Other
companies may also calculate EBITDA differently. The following table provides
a reconciliation of EBITDA to profit for the year before tax.
Adjusted EBITDA removes the effect of transactions that are not core to the
Group's main operations, like adjustments made to normalise earnings, for
example fair value movements on derivative financial instruments, profit on
financial assets at fair value through profit or loss, impairments of
property, plant and equipment, non-current mining stockpiles and exploration
and evaluation assets.
Reconciliation of profit before tax to EBITDA and adjusted EBITDA:
31 December 2023 31 December 2022
US$'000
US$'000
Profit for the year before tax 195,140 171,001
Finance income (4,127) (1,214)
Finance costs 3,526 2,459
Depreciation and amortisation 198,127 146,769
EBITDA 392,666 319,015
Add back:
Net fair value loss on derivative financial instruments 5,509 -
Adjusted EBITDA 398,175 319,015
2) Cash cost of production per ounce produced and sold and all-in sustaining
costs ("AISC") per ounce sold calculation
Cash cost of production and AISC are non-GAAP financial measures. Cash cost of
production per ounce is a measure of the average cost of producing an ounce of
gold, calculated by dividing the operating costs in a period by the total gold
production over the same period. Operating costs represent total operating
costs less sustaining administrative expenses, royalties, depreciation and
amortisation. Management uses this measure internally to better assess
performance trends for the Company as a whole. Management considers that, in
addition to conventional measures prepared in accordance with GAAP, certain
investors use such non-GAAP information to evaluate the Company's performance
and ability to generate cash flow. Management considers that these measures
provide an alternative reflection of the Group's performance for the current
year and are an alternative indication of its expected performance in future
periods. Cash cost of production is intended to provide additional
information, does not have any standardised meaning prescribed by GAAP and
should not be considered in isolation or as a substitute for measures of
performance prepared in accordance with GAAP. This measure is not necessarily
indicative of operating profit or cash flow from operations as determined
under GAAP. Other companies may calculate these measures differently.
During June 2013 the World Gold Council ("WGC"), an industry body, published a
Guidance Note on the 'all in sustaining costs' metric, which gold mining
companies can use to supplement their overall non-GAAP disclosure. AISC is an
extension of the existing 'cash cost' metric and incorporates all costs
related to sustaining production and in particular recognising the sustaining
capital expenditure associated with developing and maintaining gold mines. In
addition, this metric includes the cost associated with developing and
maintaining gold mines. This metric also includes the cost associated with
corporate office structures that support these operations, the community and
rehabilitation costs attendant with responsible mining and any exploration and
evaluation costs associated with sustaining current operations. AISC US$/oz is
arrived at by dividing the dollar value of the sum of these cost metrics, by
the ounces of gold sold (as compared to using ounces produced which is used in
the cash cost of production calculation).
On 14 November 2018 the World Gold Council published an updated Guidance Note
on 'all-in sustaining costs' and 'all-in costs' metrics. Per their press
release it was expected that companies would choose to use the updated
guidance from 1 January 2019 or on commencement of their financial year if
later. The Group has applied the updated guidance from 1 January 2019 with no
impact on our results or comparatives.
Reconciliation of cash cost of production per ounce produced:
31 December 2023 31 December 2022
Mine production costs (note 2.3) US$'000 412,827 408,543
Less: Refinery and transport US$'000 (1,871) (2,324)
Movement of inventory((1)) US$'000 (17,133) (3,673)
Cash cost of production - gold produced US$'000 393,823 402,546
Gold produced - total (oz.) oz 450,058 440,974
Cash cost of production per ounce produced US$/oz 875 913
(1) The movement in inventory on ounces produced is only the net
movement in mining stockpiles and ore in circuit while the movement in ounces
sold is the net movement in mining stockpiles, ore in circuit and gold in safe
inventory.
A reconciliation has been included below to show the cash cost of production
metric should gold sold ounces be used as a denominator.
Reconciliation of cash cost of production per ounce sold:
31 December 2023 31 December 2022
Mine production costs (note 2.3) US$'000 412,827 408,543
Royalties US$'000 26,682 23,842
Movement of inventory((1)) US$'000 (9,536) (6,789)
Cash cost of production - gold sold US$'000 429,973 425,596
Gold sold - total (oz.) oz 456,625 438,638
Cash cost of production per ounce sold US$/oz 942 970
31 December 2023((1)) 31 December 2022((1))
Movement in inventory
Movement in inventory - cash (above) US$'000 (9,536) (6,789)
Effect of depreciation and amortisation - non-cash US$'000 22,855 17,448
Movement in inventory - cash & non-cash (note 2.3) US$'000 13,319 10,659
(1) The movement in inventory on ounces produced is only net the movement in
mining stockpiles and ore in circuit while the movement in ounces sold is the
net movement in mining stockpiles, ore in circuit and gold in safe inventory.
Reconciliation of AISC per ounce sold:
31 December 2023 31 December 2022
Mine production costs (note 2.3) US$'000 412,827 408,543
Movement in inventory US$'000 (9,536) (6,789)
Royalties (note 2.3) US$'000 26,682 23,842
Corporate administration costs US$'000 33,110 24,282
Rehabilitation provision interest expense - unwinding of discount US$'000 1,333 588
Sustaining underground development and exploration US$'000 41,575 40,743
Other sustaining capital expenditure US$'000 46,241 124,162
By‑product credit US$'000 (1,878) (1,503)
All‑in sustaining costs((1)) US$'000 550,354 613,868
Gold sold - total (oz.) oz 456,625 438,638
AISC per ounce sold US$/oz 1,205 1,399
(1) Includes refinery and transport.
(3) Cash and cash equivalents, bullion on hand, gold and
silver sales debtor and financial assets at fair value through profit or loss
Cash and cash equivalents, bullion on hand, gold and silver sales debtor is a
non-GAAP financial measure of the available cash and liquid assets at a point
in time. Management uses this measure internally to better assess performance
trends for the Company as a whole. Management considers that, in addition to
conventional measures prepared in accordance with GAAP, certain investors use
such non-GAAP information to evaluate the Company's performance and ability to
generate cash flow and the measure is intended to provide additional
information.
This non-GAAP measure does not have any standardised meaning prescribed by
GAAP and should not be considered in isolation or as a substitute for measures
of performance prepared in accordance with GAAP. This measure is not
necessarily indicative of cash and cash equivalents as determined under GAAP
and other companies may calculate it differently.
Reconciliation to cash and cash equivalents, bullion on hand, gold and silver
sales debtor and financial assets
at fair value through profit or loss:
31 December 2023 31 December 2022
US$'000
US$'000
Cash and cash equivalents (note 2.17(a)) 93,322 102,373
Bullion on hand (valued at the year-end spot price) 14,261 24,440
Gold and silver sales debtor (note 2.8) 44,917 29,832
Derivative financial instruments 654 -
Cash and cash equivalents, bullion on hand, gold and silver sales 153,154 156,645
debtor and financial assets at fair value through profit
or loss
The majority of funds have been invested in international rolling short-term
interest money market deposits.
(4) Free cash flow and adjusted free cash flow
Free cash flow is a non-GAAP financial measure. Free cash flow is a measure of
the available cash after distributions to the Non-Controlling Interest ("NCI")
in SGM, being EMRA, that the Group has at its disposal to use for capital
reinvestment and to distribute to shareholders of the parent. Free cash flow
is intended to provide additional information, does not have any standardised
meaning prescribed by GAAP and should not be considered in isolation or as a
substitute for measures of performance prepared in accordance with GAAP. This
measure is not necessarily indicative of operating profit or cash flow from
operations as determined under GAAP and other companies may calculate this
measure differently.
31 December 2023 31 December 2022
US$'000
US$'000((1))
Net cash generated from operating activities 353,600 292,524
Less:
Net cash used in investing activities (198,768) (274,583)
Dividend paid - non-controlling interest in SGM (112,000) (35,492)
Free cash flow 42,832 (17,551)
Add back:
Transactions completed through specific available cash resources((2)) 6,163 -
Adjusted free cash flow 48,995 (17,551)
(1) The comparatives in the Consolidated Statement of Cash Flows for the
year ended 31 December 2022 have been restated to reflect an increase of cash
generated from operating activities of $2.5m, interest paid of $1.9m and a
reduction of the effect of foreign exchange rate changes of $0.6m.
(2) Adjustments made to free cash flow, for example the cost of the put
options under the gold price protection programme, acquisitions and disposals
of financial assets at fair value through profit or loss, which are completed
through specific allocated available cash reserves.
CORPORATE GOVERNACE UPDATE
The Board understands the benefits of refreshing its composition, committee
structures as well as planning for future succession. The changes to the
committee structures illustrate the Company's commitment to continue to evolve
and strengthen our governance model.
BOARD APPOINTMENTS, RETIREMENT AND COMMITTEE RESTRUCTURING
The following disclosures are made in accordance with LR 9.6.11:
● Dr Ibrahim Fawzy, Non-Executive Director, will not stand for re-election at
the upcoming AGM in 2024 and will therefore retire from the Board effective
from the close of the AGM on 21 May 2024.
● Following the appointment of Iman Naguib on 10 January 2024 as a Non-Executive
Director, Iman will join the Remuneration Committee as a member in addition to
being a member of the Audit & Risk Committee,
● Following the appointment of Hoda Mansour on 10 January 2024 as a
Non-Executive Director, Hoda will join the Audit and Risk Committee as a
member in addition to being a member of the Sustainability Committee.
● Hennie Faul will step down as a member of the Audit and Risk Committee but
will continue as Chair of the Technical Committee and as a member of the
Nomination Committee and Sustainability Committee.
Committee membership following the AGM:
At the recommendation of the Nomination Committee, the Centamin Board has
approved the following planned Committee membership to take effect following
the AGM on 21 May 2024:
Audit & Risk Remuneration Nomination Sustainability Technical
Jim Rutherford NEC Member Chair
Dr Sally Eyre SID Chair Member Member
Mark Bankes NED Member Member
Marna Cloete NED Chair Member Member
Dr Catharine Farrow NED Member Chair Member
Hennie Faul NED Member Member Chair
Hoda Mansour NED Member Member
Iman Naguib NED Member Member
Following the AGM on 21 May 2024, the Board will be made up of the Chair,
Senior Independent Director plus six Non-Executive Directors and two Executive
Directors.
PRINCIPAL RISKS AND UNCERTAINTIES
PRINCIPAL RISKS
For the current reporting period we have identified 16 principal risks and 3
emerging risks, which means there is no change from the 2022 Annual Report.
Further detail on the Principal Risks which could affect Centamin are shown
below with a description of the nature of the risk, mitigation measures and
ongoing strategy to manage the risk.
Principal Risk Nature of Risk Mitigation Measures Ongoing Strategy
GEOPOLITICAL Future political, security and social changes in the countries in which we Government policies have developed over the past years in host countries to To maintain a detailed and up to date understanding of the investment
operate may impact on the Group. incentivise foreign direct investment and the development of local mining framework and operating conditions as well as a constructive relationship with
industries. Centamin deploys a proactive approach to government and all concerned stakeholders including host governments and local partners, such
The future investment framework, stability and business conditions in our stakeholder liaison and actively monitors - on an ongoing basis - legal, as EMRA.
operating locations could change with governments adopting different laws, fiscal, regulatory and political developments in its host countries.
regulations and policies that may impact on the ownership, development and
The Company undertakes to abide by the spirit and letter of the Concession
operation of our mineral resources projects. The Company continues to adapt to The terms of the Sukari Concession Agreement, (including the applicable tax Agreement as well as local laws/regulations in Egypt including around the
the changing regional security in our development and exploration projects in regime and rights of tenure), were issued and ratified under special Law No. areas of exploration and furthermore where our development and exploration
Côte d'Ivoire. Outside of our host countries we are monitoring the ongoing 222 of 1994 and can, therefore, only be amended by the passing of a further activities are taking place in Côte d'Ivoire.
conflicts in the Ukraine, Gaza and the Red Sea to ensure we can mitigate where law. We continue to closely monitor the situation through our own security,
possible the potential wider impact of this on the Company. local and national government contacts, national security and external
advisors.
LEGAL AND REGULATORY COMPLIANCE The Group's structure includes mining exploitation and exploration licences in Centamin deploys a proactive approach to government and stakeholder liaison The Company seeks to ensure that it complies with all relevant regulation and
Egypt and Côte d'Ivoire held through companies in Australia, Jersey and the and actively monitors - on an ongoing basis - legal, fiscal, regulatory and legislation including its environmental and operational commitments set out in
United Kingdom. As a result, the Group is subject to various legal and political developments in its host countries. the relevant permits/authorisations and local laws/regulations.
regulatory requirements across all jurisdictions, including cross
jurisdictional taxation, related party transactions, antibribery and In Egypt we have the Sukari Concession Agreement which was passed as a law and
corruption. can only be amended by means of another law amending this law, so we have the
right to export gold, repatriation of funds, the Tax Exemption and further
Ongoing legal, fiscal and regulatory changes may impact project permitting, considerations.
tenure, taxation, exchange rates, environmental protection, labour relations,
and the ability to repatriate income and capital. These measures may also The Group engages with the relevant regulatory authorities. In addition, on an
impact the ability to import key supplies, export gold production and ongoing basis, the Group seeks appropriate advice to ensure compliance with
repatriate revenues. all relevant regulation and legislation. Examples would be the global tax
strategy in place which ensures all taxes are paid at an operational level and
further tax requirements are met through the holding structure in addition to
added protection afforded by double tax and bilateral investment treaties in
Australia and the United Kingdom. Further to this the negotiation of the
Mining Model Exploitation Agreement (MMEA) provides a new legal and fiscal
framework for any new EDX commercial discoveries. Appropriate monitoring
procedures are in place, and we ensure that we manage legal and regulatory
compliance where required.
LITIGATION Centamin's ability to operate and conduct its business may be adversely In order to mitigate this risk Centamin had (a) retained reputable legal To minimise exposure to litigation and reduce the impact of actions by
affected by current and any future dispute resolution and/or litigation advisers and continues to actively pursue its legal rights with respect to complying with all relevant laws and regulations and to defend and/or bring
proceedings. Centamin was party to a single legal action in Egypt. The details this case; and (b) maintained regular contact with its Egyptian legal advisers any actions necessary to protect the Company's assets, rights and reputation.
of this litigation, which relates to the Sukari Concession Agreement, are who actively monitored developments in both court and local media for signs of
given on our website in the update issued on the 29 November 2023. This any legislative or similar developments that related to this litigation or
challenge to the Sukari Concession Agreement could have affected the Company's which may have otherwise threatened its operations, finances or prospects.
ability to operate the mine.
The potential for serious impact was further mitigated by:
• Centamin's adherence to local laws and agreements; the Egyptian
government's continued support on the constitutionality of Law No. 32 of 2014,
which restricts the ability of third parties to challenge contractual
agreements between the Egyptian government and investors such as Centamin; the
investment protections and dispute resolution provisions set out in the Sukari
Concession Agreement and the bilateral investment treaty between Australia
(PGM's place of incorporation) and the Arab Republic of Egypt
• On 14 of January 2023 there was a ruling by the Egyptian Supreme
Constitutional Court which held that Law No. 32 of 2014 was constitutional.
This was upheld in the final judgement by the Egyptian Supreme Administrative
Court setting aside the 2011 third party challenge to the validity of the
Sukari Gold Mine exploitation licence issued under the Sukari Concession
Agreement. Further detail is given on our website in the update issued on the
29 November 2023.
GLOBAL MACROECONOMIC DEVELOPMENTS Economies across the world negatively impacted by COVID-19 have been further We monitor price movements and market dynamics using primarily third-party We will continue to allow for financial flexibility when budgeting and
impacted by ongoing conflicts in the Ukraine, Gaza and the Red Sea plus wider analysis and forecasts in order to support our financial projections and cash forecasting using a measured approach to the potential fluctuations in gold
macroeconomic developments globally. From 2021 we saw increases in operating management strategies. Prices will continue to influence budget considerations price, inflationary pressures and the increasing costs across our capital
costs and greater inflationary pressures, together with a shortage of critical in areas such as development, exploration and the timing of certain capital expenditure and operational needs. Initiatives to manage these external
consumables and equipment. We expect this uncertainty to continue in 2024. expenditures. We focus on cost efficiencies and capital discipline to deliver pressures include the RCF, Gold Price Protection Programme, the solar plant,
This situation could create an adverse impact on our operations, costs, sales competitive all-in sustaining cost. Grid Connection Project and potential solar plant extension at Sukari.
and profits.
The Group must continue with the disciplined approach to managing operating
costs, continual investigation and implementation of cost saving opportunities
to counter inflation and improve margins. Further to this we have established
increased levels of stores and inventory which will be maintained in the short
to medium term to reduce uncertainty alongside continual engagement with our
partners to assist with support of managing our supplies in a timely
manner.
GOLD PRICE The extent of the Company's financial performance is due in part to the price The Group continues to be exposed to the gold price; however, in 2023 we We will continue to allow for financial flexibility when budgeting and
of gold, over which the Company has no influence. Revenues from gold sales are introduced the Gold Price Protection Programme and the cash costs of the forecasting using a measured approach to the potential fluctuations in gold
in US dollars and Centamin has exposure to costs in other currencies including Sukari Gold Mine remain within our budget, which is conservatively based on price. This includes ensuring that we can manage within the boundaries and
Egyptian pounds, Australian dollars and sterling. the long-term gold price as modelled by external advisors. This often means we margins that the price of gold and the impacts to our cost base allow.
can take advantage of any changes in the gold price, alongside retaining an
Centamin manages its exposure to gold price by keeping operating costs as low element of downside protection, which have been positive over the course of
as possible, has in place the Gold Price Protection Programme and continues to 2023 with a realised average price of $1,948.
consider other options where these would be viewed as beneficial for our
commitment to stakeholder returns.
CAPITAL ALLOCATION AND LIQUIDITY Centamin targets a capital structure to provide sufficient liquidity and We monitor price movements and market dynamics using primarily third-party We will continue to allow for financial flexibility when budgeting and
financial flexibility to meet the Company's current and future financial analysis and forecasts in order to support our financial projections and cash forecasting using a measured approach to the potential fluctuations in gold
commitments, while balancing that with sustainable stakeholder returns. management strategies. Prices will continue to influence budget considerations price, inflationary pressures and the increasing costs across our capital
in areas such as exploration and the timing of certain capital expenditures. expenditure and operational needs. This includes ensuring that we can manage
The capital requirements to develop Sukari, to deliver key projects, which in We focus on cost efficiencies and capital discipline to deliver competitive within the boundaries and margins that the impacts to our cost base allow.
2024 is a focus on the potential development of Doropo, future gold prices and all-in sustaining cost. Additional optionality could be generated through the
operating costs are all factors which need to be considered alongside the use or extension of the RCF. Distribution of free cash flow to stakeholders will continue to be managed in
external pressures, as highlighted in the Global Macroeconomic Developments
a balanced and sustainable manner that allows for both growth and returns.
risk. The Group must continue with the disciplined approach to managing operating
costs, continual investigation and implementation of cost saving opportunities
to counter inflation and improve margins with recent examples including
delivery of the solar plant, competitive tendering on operational contracts
and the project allowing for connection to the grid due to start in 2024.
Further options being considered include a solar plant extension, underground
operational expansion and proactive management of the supply chain to meet our
operational needs.
We have a robust investment approval process involving the management and the
Board as required.
DIVERSIFICATION Sukari currently constitutes Centamin's main mineral resource providing Sukari has a number of measures to increase operational and financial We are therefore actively looking to diversify the portfolio at all
production and revenue. We recognise until further production growth beyond resilience including, two distinct ore sources (open pit and underground), the development stages. From the earliest stage targeting exploration ground which
the core Sukari asset is identified there is the challenge of processing plant has two separate circuits and there are two separate power could build our long-term development programme, to considering the
diversification. stations. These factors and the investment in opening up multiple mining areas acquisition of production and development assets. These opportunities are
during 2021-23 results in improved operational flexibility. The commissioning subject to strict investment criteria and a robust investment approval process
of the Solar Farm, the project allowing for connection to the grid and further involving the Management Team and the Board, as required.
opportunities to reduce operating costs all act to improve margins at Sukari,
and therefore strengthen the Group's balance sheet. The exploration projects across the business provide a well-balanced project
pipeline, with potential to add incremental shareholder value by increasing
The Group's organic growth opportunities progressed in 2023 with the delivery production. Further information will be provided through 2024 in updates on
of a positive update on the pre-feasibility study for Doropo, with additional the development and exploration activities including the release of the latest
updates on the EISA and DFS planned for mid-2024. We also started fieldwork on position for Doropo.
the highly prospective Eastern Desert exploration ground in Egypt with an
update available on our website dated the 9 January 2024 on the encouraging
maiden EDX drill results.
Our existing assets offer longevity and organic growth which stands to deliver
diversification over time. Outside of this, where opportunities would provide
the correct asset quality and meet returns criteria, we would also consider
further expansion to the portfolio through acquisitions.
CONCESSION GOVERNANCE AND MANAGEMENT SGM is 50:50 jointly owned by PGM (the Company's wholly owned subsidiary who It is of key importance for Centamin to maintain a healthy and transparent A key objective of the Company is to maintain its licence to operate in its
operate Sukari) and EMRA, with equal board representation from both parties. working relationship with its 50% partner, EMRA, through adherence to the host countries. In Egypt, this is achieved through active and ongoing
The board of SGM operates by way of simple majority. Further to this with the Sukari Concession Agreement. With the onset of profit sharing, the proper co-operation, regular meetings and correspondence with EMRA and the Ministry
award of the EDX concession areas we need to adhere with the agreed terms. application of the cost recovery, net profit share payment provisions and SGM of Petroleum & Natural Resources, as well as making sure that the terms
protocols under the Concession Agreement, has become a key priority. and conditions of the Concession Agreement and applicable laws are complied
Should a dispute arise, or decision making become deadlocked which cannot
with as well as the terms of the EDX concessions. Ongoing monitoring and
otherwise be amicably resolved then time-consuming and costly arbitration or It is a key focus to maintain good working relations with EMRA, other relevant review of this is key and is an activity which we will continue to give the
other dispute resolution proceedings may need to be initiated. ministries and the wider government to ensure successful operation of the required focus to. A key focus in 2024 will be the engagement with EMRA and
Sukari Gold Mine including our appointment of external PR consultants. The the Government on the Tax Exemption Renewal for the Sukari Concession.
Group has regular meetings with officials from EMRA and invests time in
liaising with the relevant ministry and other governmental representatives.
This investment is shown by the wider commitment to Egypt through the EDX
Exploration investment.
LICENCE TO OPERATE Centamin is committed to building and operating our mines in a safe and Ensure that we act in an ethical, responsible and transparent manner. This Acting in an ethical, responsible and transparent manner is fundamental to
responsible manner. To do this, we seek to build trust-based partnerships with includes establishing clear performance standards that meet both industry good realising the significant business benefits gained from building trusted and
host governments and local communities to protect our licence to operate and practice and local expectations within our areas of operation. constructive relationships with all our stakeholders, and to maintaining our
ability to grow. We should only advance our business interests where this
protects people, fosters socio-economic development and safeguards the Confirming compliance with applicable regulatory requirements by maintaining
socio-political licence to operate.
environment, and leaves a positive legacy for our host communities. an up-to-date compliance register for each asset and routinely review our
performance against these commitments and obligations. We will continue to reinforce our sustainability performance framework -
policies, standards, and management assurance - to support growth.
Sustain broad-based support to our investment plans through informed
consultation and participation with stakeholders. Further information is shown in our 2023 Sustainability Report.
Establish baseline environmental and social conditions that provide a robust
science-based assessment of risks and impacts at the earliest stage in the
project cycle.
The government in Côte d'Ivoire have recognised the Doropo Project as a
strategic priority for the country, we will ensure we continue to engage with
the appointed Technical Committee on the progress of the EIS and DFS.
PEOPLE Our accomplishments as a Company rely on our ability to attract, develop and The Company will provide professional and personal development opportunities Reinforce awareness of our Code of Conduct, sustain training and professional
(Attract, develop and retain skilled people) retain talented people as they are the foundation of our business. that empower employees to fulfil their potential and operate at a proficient development programmes and reinforce leadership to overcome barriers to
level, including succession planning. diversity and inclusion.
It is imperative that we support our people to develop a shared understanding
of the critical behaviours and skills required for successful performance and All employees participate in an annual performance appraisal and objective
provide them with the opportunity to progress to more senior positions within setting process that defines their expectations and the support required for
the Company. Otherwise, we face the risk of elevated rates of turnover and further development.
knowledge loss.
We ensure that we raise workplace awareness of our organisational Values and
Valuing diversity and promoting inclusion is an ethical imperative for a the critical behaviours required for successful performance.
sustainable business.
We provide visible leadership to improve diversity and inclusion in the
workplace supported by target setting to increase female representation.
STAKEHOLDER ENVIRONMENTAL AND SOCIAL EXPECTATIONS Elevated expectations on sustainability, including stakeholder scrutiny, The Company will engage with industry groups, investors and regulators to Ensuring we continue to monitor the emergence of new industry standards and
third-party assurance, reporting and disclosure, regulatory requirements and understand their expectations. their application to Centamin's business. Reinforce our Sustainability
application of good industry practice.
Performance Framework - policies, standards and management assurance - and its
We have established clear performance standards that meet both industry good integration into asset-level management systems and practice.
Recent high-profile external events have put a spotlight on the need for practice and local expectations within our areas of operation. Key industry
increased levels of corporate accountability on matters including tailings standards include the RGMPs, GISTM, TCFD and the emergence of the Integrated Continue to build the capacity and awareness of our asset-level teams to
management, climate change, biodiversity, water management, responsible supply Reporting Framework (IFRS). integrate environmental and social risks and opportunities into operational
chains, diversity and inclusion.
activities.
We have defined environmental and social objectives and set targets to drive
continuous improvement. We measure, evaluate, report and disclose on our Further information is shown in our 2023 Sustainability Report.
sustainability performance.
We shall continue to build the capacity of our asset-level HSES specialist
teams to meet our performance standards including the development of
operational management systems aligned to ISO standards.
Decarbonisation We recognise transition to a net zero carbon economy is expected to profoundly We will focus on execution of our 2030 Decarbonisation Roadmap to reduce Continued execution of our 2030 Decarbonisation Roadmap including assessing
affect our business model over the medium and/or long term due to factors emissions, from the existing business, by 30% versus a 2021 base-year. This other carbon abatement opportunities to a higher level of detail.
including: capital investment and access to new technology, the pricing of target is underpinned by: (i) a 50MW(AC) connection to the national grid and
carbon emissions; availability and costing of commodities and consumables; (ii) a 15MW(AC) expansion of the existing solar PV plant. Integration of the results of the scenario analysis for climate-related
changing market and investor sentiment.
transition risks into our business model and life of mine planning as
The Company continues to investigate other carbon abatement opportunities appropriate.
The most significant opportunity for decarbonisation is the ability to reduce including electrification of our mining fleet and energy efficiency
and potentially remove fossil fuel-generated electricity from gold mining's programmes. Further information on our Climate Change Governance, Strategy, Risks, Metrics
sources of power.
and Targets are given in our 2030 Decarbonisation Roadmap.
We have completed scenario analysis of climate-related transition risks and
opportunities over the long term and assess the impact of these risks on
business strategy. We will systematically review our climate-related
transition risks and opportunities on an annual basis, including application
to growth projects.
SAFETY, HEALTH AND WELLBEING It is an inherent risk in our industry that incidents due to unsafe acts or Protecting the safety, health and wellbeing of employees, contractors, local Ensuring the safety, health and wellbeing of our workforce is directly aligned
conditions, or the failure of our equipment or infrastructure could lead to communities and other stakeholders is a fundamental responsibility for with our first Value, to Protect,
injuries or fatalities. Remote and rostered work also has potential to impact Centamin. We seek continuous improvement of our safety and health management
the mental health and wellbeing of our workers. system and practices including assurance processes, with particular focus on and is a moral imperative. This requires a focus on zero harm whilst
the early identification of risks and the prevention of incidents. constituting a direct investment in the
Our workforce faces potential risks from hazards such as fire, explosion and
electrocution, as well as risks specific to the mine site and development We have defined our OHS objectives and set targets to drive continuous productivity of the business and the physical integrity of our operations.
project. These include potential slope failures or collapse in the improvement. These are supported by a process to measure, evaluate, report and
underground, mobile plant collisions and incidents involving hazardous disclose on our safety performance. A safe and healthy workforce translates into an engaged, motivated and
materials. Continuing focus on the risks associated with mining companies'
productive workforce that mitigates operational stoppages, and reduces
tailings facilities also means we continue to monitor this risk, completing We have continued to reinforce our critical risk and control standards, review potential incidents or harm. We will ensure we sustain visible leadership in
regular internal and external technical reviews. and test our crisis management plan, and enhanced employee benefits including the achievement of a zero-harm workplace. Further information in relation to
delivery of a Health & Wellbeing plan. We continue to build the awareness our commitments and standards to Safety, Health and Wellbeing is given in the
and capacity of senior management teams to operationalise our critical risks 2023 Sustainability Report.
standards. Our OHS management system at Sukari is now certified to ISO
45001.
EXPLORATION AND PROJECT DEVELOPMENT Exploration activities by their very nature are highly speculative with an Before undertaking any exploration activities a risk-based approach is Ensuring we have an effective and efficient exploration and development
inherent degree of risk. Centamin strives to make new discoveries, growth and undertaken to filter projects considering a number of factors. programme to meet our strategic targets, long-term production and reserves
value-creation opportunities through our exploration programme.
goals. During the first half of 2024, we will release the results of the
There is a structured approach established with the exploration team who maiden drilling campaign across our Egyptian exploration portfolio and will
Whilst Egypt continues to represent a significant opportunity through undertake systematic work programmes which reduce the risk and gradually also aim to publish the updated reserve numbers for Doropo.
brownfield and greenfield exploration around the Sukari Concession and highly increase the certainty of exploration discoveries that allows a focussed
prospective ground in Egypt's Eastern Desert, we also recognise our potential spending strategy. This is supported by independent advice and an investment
growth projects in Côte d'Ivoire. in technology.
2023 delivered a positive update on the finalisation of the pre-feasibility
study for Doropo with additional updates on the EISA and DFS planned for
mid-2024, we started fieldwork on the highly prospective and underexplored
ground in Egypt with an update available on our website dated the 9 January
2024. During 2023 we invested a total of US$31M in greenfield exploration and
development activities, with further expenditure on brownfield exploration
provided in the Financial Review. An initial US$9M is budgeted for exploration
expenditure at EDX and US$14M on project development at Doropo in 2024.
MAXIMISING OUR GEOLOGICAL POTENTIAL Geological uncertainty is an inherent risk which all mining companies The Mineral Resource Management team is focused on developing the geological To achieve an accurate estimation based on geology, that informs improved mine
face. and structural framework in which mineralisation is hosted. This has brought planning and operations to deliver results. This will be supported by the
about a clear understanding of the structural and lithological controls on near-term roadmap to 475 - 500koz pa and updated Life of Mine Plan for Sukari
Understanding of the geology and associated grade distribution can be mineralisation and the development of a predictive model which is being used issued in 2023 including average guidance issued to 2034.
influenced by a number of factors which can impact the size, orientation and to expand the Mineral Resource and Reserve base for the company.
shape of the ore and the potential grade expected by the mining operations.
Orebody stewardship ensures geology and the geologist are at the forefront of
As these estimations are used to inform our operations and the wider business all mining and extraction process decision-making. This has allowed improved
strategy we need to ensure that we can make this process as accurate as long and short-term planning, timing of grade control, material movement,
possible. blending and processing requirements to maximise return on investment. A
specific example would be the change in drilling strategy for 2024, with a
focus on grade control and infill drilling to support short- and medium-term
operational planning as well as the introduction of underground RC grade
control drilling.
Detail on increases in the Group Resource and Reserves was issued on the 24
January 2024.
OPERATIONAL PERFORMANCE AND PLANNING By their nature, mineral resources and reserves are estimates based on a range Over 2021 and 2022 the Company focused on improving mining flexibility, To achieve reliable and consistent production, whilst optimising the potential
of assumptions, including geological, metallurgical, technical and economic delivering growth and building consistency alongside other improvements. of the operation. The Company provides timely and accurate information to the
factors. Other variables include expected costs, inflation rates, gold price,
market on production levels and forecasts. The mining sector continues to face
grade downgrades and production outputs. During 2023 we extended our track record of meeting production guidance to a operating cost inflation, including labour costs, energy costs and the natural
third year, commissioned the underground paste plant, updated the market on impact of ore-grade deterioration over time which we are looking to manage
Unplanned operational stoppages can impact our production. An inability to the new Life of Mine (LOM) Plan, issued estimated average guidance until 2034, where possible.
shift the volumes of waste required, drops in our operational capacity in continued with accelerated waste-stripping due to complete in mid-2024,
mining, contractor management, supply chain disruption or ground stability are started the grid connection project and provided a Group Resource & In order to deliver our growth strategy and to maintain and improve our
examples of potential risks. Reserve update. We also had a change in drilling strategy, to further competitive position, the Group must continue with the disciplined approach to
reinforce operational delivery in the near term. managing operating costs, continual investigation and implementation of cost
Accurate and complete planning is pivotal to informing production estimates,
saving opportunities and maintain consistent operational delivery
grade quality and provide greater clarity to corporate/operational decision The LOM should deliver increased gold production, lower operational costs,
making. We then need to deliver against our targets by analysis of our data to reduce operational risk and significantly reduce carbon emissions. Further
inform the right decisions. details can be found in the announcements we have made to the market and most
recently in the Q4 report on the 18 January 2024.
EMERGING RISKS
Emerging risks are defined as circumstances or trends that could significantly
impact the Company's financial strength, competitive position or reputation
within the next three years or over a longer term. Emerging risks may prove
difficult to quantify as they are often influenced by external factors and
difficult to predict. Emerging risks are considered as part of the Company's
strategic discussions through all levels of the Group.
Cyber security Cybersecurity risks, such as data breaches, cyber-attacks, phishing, and
compliance challenges, pose significant threats to our operational integrity.
These require proactive and flexible risk management strategies. These risks
can cause disruptions to our data and systems, undermining their security and
integrity. This can potentially lead to operational difficulties and a
decrease in stakeholder confidence. The Company is committed to increasing its
investment in cybersecurity. This involves strengthening our resilience and
advancing our technology infrastructure through a comprehensive digital
transformation initiative, ensuring robust defence against emerging threats.
Infectious Disease Potential of a regional/global outbreak of a new disease bringing medical,
economic and social challenges. We continue to recognise the potential impacts
of a global pandemic similar to COVID-19 as a threat bringing potential risks
to our people and business. Learning from COVID-19 and other infectious
disease management, we developed a dynamic action plan to safeguard the health
of our people and minimise any business impact. This will continue to adapt
and evolve to ensure we are in the best place to manage and respond as
required, during 2023 we have continued to manage the ongoing macroeconomic
and supply chain shocks with minimal impact to the business.
Climate Change Understanding of the Physical and Transition risks associated with Climate
Change and the required adaptation to these are given in greater detail in the
2023 Sustainability Report. At an emerging risk level, our operations and
projects are expected to face physical risks in the medium to longer term
alongside the wider systemic challenges within our countries of operation and
globally. Risks associated with the global transition to a low carbon economy
to reduce global warming could also affect the economic performance of the
company. We have undertaken modelling of the potential physical and transition
risks to the Sukari asset, and when practical will do for our other projects,
to ensure that we can respond accordingly. Financial modelling of key
transition related risks and opportunities under a 'Net Zero by 2050' climate
scenario assessed Centamin to remain financially viable over the Life of
Mine.
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DIRECTORS' RESPONSIBILITIES
For the year ended 31 December 2023
STATEMENT OF DIRECTORS' RESPONSIBILITIES IN RESPECT OF THE FINANCIAL
STATEMENTS
The Directors are responsible for preparing the financial statements in
accordance with applicable Jersey law and International Financial Reporting
Standards.
The Directors must not approve the financial statements unless they are
satisfied that they give a true and fair view of the state of affairs of the
Group and of the profit or loss of the Group for that period. In preparing the
financial statements, the Directors are responsible for:
● selecting suitable accounting policies and then applying them consistently;
● stating whether applicable accounting standards have been followed, subject to
any material departures disclosed and explained in the financial statements;
● making judgements and accounting estimates that are reasonable and prudent;
and
● preparing the financial statements on the going concern basis unless it is
inappropriate to presume that the Group will continue in business.
The Directors confirm that they have complied with the above requirements in
preparing the financial statements.
The Directors are responsible for ensuring that the financial statements
comply with The Companies (Jersey) Law, 1991 and safeguarding the assets of
the Group and hence for taking reasonable steps for the prevention and
detection of fraud and other irregularities. So far as the Directors are
aware, there is no relevant audit information of which the Group's auditors
are unaware, and each Director has taken all the steps that he or she ought to
have taken as a Director in order to make himself or herself aware of any
relevant audit information and to establish that the Group's auditors are
aware of that information.
The Directors consider that the Annual Report and financial statements, taken
as a whole, are fair, balanced, and understandable and provides the
information necessary for shareholders to assess the Group's position and
performance, business model and strategy.
The Directors have undertaken a robust assessment of the principal and
emerging risks impacting the Company. The assessment identified strategic and
operational risks at a corporate level and principal risks impacting our
operations in Egypt and Côte d'Ivoire. Details of the risk assessment can be
found in the Audit and Risk Committee Report and the risk management and
principal risks section of the Strategic Report.
The Directors are also responsible for keeping adequate accounting records
that are sufficient to show and explain the Group's transactions and disclose
with reasonable accuracy at any time the financial position of the Group.
On behalf of the Board:
Martin Horgan Ross Jerrard
Chief Executive Officer Chief Financial Officer
Director Director
21 March 2024 21 March 2024
Audited financial statements
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 December 2023
Note 31 December 2023 31 December 2022
US$'000 US$'000
Revenue 2.2 891,262 788,424
Cost of sales 2.3 (596,836) (544,075)
Gross profit 294,426 244,349
Exploration and evaluation expenditure 2.1 (31,653) (29,723)
Other operating costs 2.3 (68,542) (49,003)
Other income 2.3 5,817 6,623
Finance income 2.3 4,127 1,214
Finance costs 2.3 (3,526) (2,459)
Fair value loss on derivative financial instruments 2.4 (5,509) -
Profit for the year before tax 195,140 171,001
Tax 2.6 (255) (226)
Profit for the year after tax 194,885 170,775
Profit for the year after tax attributable to:
- the owners of the parent 92,284 72,490
- non-controlling interest in SGM 2.5 102,601 98,285
Total comprehensive income for the year 194,885 170,775
Total comprehensive income for the year attributable to:
- the owners of the parent 92,284 72,490
- non-controlling interest in SGM 2.5 102,601 98,285
Earnings per share attributable to owners of the parent:
Basic (US cents per share) 6.4 7.970 6.287
Diluted (US cents per share) 6.4 7.817 6.203
The above audited consolidated statement of comprehensive income should be
read in conjunction with the accompanying notes.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 31 December 2023
Note 31 December 31 December
2023 2022
US$'000 US$'000
Non-current assets
Property, plant and equipment 2.10 1,084,019 1,086,649
Exploration and evaluation asset 2.11 24,809 24,809
Inventories 2.12 103,121 94,773
Other receivables 2.8 1,014 1,372
Total non-current assets 1,212,963 1,207,603
Current assets
Inventories 2.12 149,457 134,065
Trade and other receivables 2.8 49,443 35,628
Prepayments 2.9 17,404 13,864
Derivative financial instruments 2.4 654 -
Cash and cash equivalents 2.17(a) 93,322 102,373
Total current assets 310,280 285,930
Total assets 1,523,243 1,493,533
Non-current liabilities
Other payables 2.13 8,264 11,801
Provisions 2.14 40,039 37,425
Total non-current liabilities 48,303 49,226
Current liabilities
Trade and other payables 2.13 94,248 99,395
Tax liabilities 2.6 102 249
Provisions 2.14 1,984 3,256
Total current liabilities 96,334 102,900
Total liabilities 144,637 152,126
Net assets 1,378,606 1,341,407
Equity
Issued capital 2.15 673,432 670,994
Share option reserve 2.16 10,124 6,082
Accumulated profits 681,912 641,794
Total equity attributable to owners of the parent 1,365,468 1,318,870
Non-controlling interest in SGM 2.5 13,138 22,537
Total equity 1,378,606 1,341,407
The above audited consolidated statement of financial position should be read
in conjunction with the accompanying notes.
The audited consolidated financial statements were authorised by the Board of
Directors for issue on 21 March 2024 and signed on its behalf by:
Martin Horgan Ross Jerrard
Chief Executive Officer Chief Financial Officer
Director Director
21 March 2024 21 March 2024
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2023
Note Share option Non-controlling
Issued reserve Accumulated interests Total
capital US$'000 profits Total US$'000 equity
US$'000 US$'000 US$'000 US$'000
Balance as at 1 January 2023 670,994 6,082 641,794 1,318,870 22,537 1,341,407
Profit for the year after tax − − 92,284 92,284 102,601 194,885
Total comprehensive income for the year − − 92,284 92,284 102,601 194,885
Own shares acquired 2.15 (245) − − (245) − (245)
Net recognition of share-based payments 2.16 − − − 6,725 − 6,725
Transfer of share-based payments 2.16 2,683 (2,683) − − − −
Dividend paid - non-controlling interest in SGM 2.5 − − − − (112,000) (112,000)
Dividend paid - owners of the parent − − (52,166) (52,166) − (52,166)
Balance as at 31 December 2023 673,432 10,124 681,912 1,365,468 13,138 1,378,606
Note Share option Non-controlling
Issued reserve Accumulated interests Total
capital US$'000 profits Total US$'000 equity
US$'000 US$'000 US$'000 US$'000
Balance as at 1 January 2022 669,531 4,975 655,508 1,330,014 (40,256) 1,289,758
Profit for the year after tax − − 72,490 72,490 98,285 170,775
Total comprehensive income for the year − − 72,490 72,490 98,285 170,775
Net recognition of share-based payments 2.16 − 2,570 − 2,570 − 2,570
Transfer of share-based payments 2.16 1,463 (1,463) − − − −
Dividend paid - non-controlling interest in SGM 2.5 − − − − (35,492) (35,492)
Dividend paid - owners of the parent − − (86,204) (86,204) − (86,204)
Balance as at 31 December 2022 670,994 6,082 641,794 1,318,870 22,537 1,341,407
The above audited consolidated statement of changes in equity should be read
in conjunction with the accompanying notes.
CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 31 December 2023
Note 31 December 2023 31 December 2022*
US$'000 US$'000 (restated)
Cash flows from operating activities
Cash generated from operating activities 2.17(b) 356,195 294,625
Income tax paid (402) (230)
Interest paid (2,193) (1,871)
Net cash generated from operating activities 353,600 292,524
Cash flows from investing activities
Acquisition of property, plant, and equipment (190,723) (263,622)
Brownfield exploration and evaluation expenditure (12,172) (12,175)
Finance income 2.3 4,127 1,214
Net cash used in investing activities (198,768) (274,583)
Cash flows from financing activities
Cash element of share-based payments (583) (523)
Own shares acquired (245) −
Dividend paid - non-controlling interest in SGM 2.5 (112,000) (35,492)
Dividend paid - owners of the parent 3.2.2 (52,166) (86,204)
Net cash used in financing activities (164,994) (122,219)
Net decrease in cash and cash equivalents (10,163) (104,278)
Cash and cash equivalents at the beginning of the year 102,373 207,821
Effect of foreign exchange rate changes on cash and cash equivalents 1,112 (1,170)
Cash and cash equivalents at the end of the year 2.17(a) 93,322 102,373
* The comparatives in the Consolidated Statement of Cash Flows for the year
ended 31 December 2022 have been restated to reflect an increase of cash
generated from operating activities of $2.5m, interest paid of $1.9m and a
reduction of the effect of foreign exchange rate changes of $0.6m.
The above audited consolidated statement of cash flows should be read in
conjunction with the accompanying notes.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2023
BASIS OF PREPARATION
These financial statements are denominated in US dollars ("US$"), which is the
presentation currency of Centamin plc. All companies in the Group use the US$
as their functional currency. All financial statements presented in US$ have
been rounded to the nearest thousand dollars, unless otherwise stated.
These consolidated financial statements have been prepared in accordance with
the International Financial Reporting Standards ("IFRS") as adopted by the
European Union ("EU") and interpretations issued from time to time by the IFRS
Interpretations Committee ("IFRS IC") and which are mandatory for reporting as
at 31 December 2023 and the Companies (Jersey) Law 1991. The Group has not
early adopted any other amendments, standards or interpretations that have
been issued but are not yet mandatory or effective.
The consolidated financial statements have been prepared on a going concern
basis and under the historical cost convention, as modified by financial
assets and financial liabilities (including derivative) instruments which are
measured at fair value.
The consolidated financial statements for the year ended 31 December 2023 were
authorised by the Board of Directors of the Company for issue on 21 March
2024.
Going concern
The Directors have assessed the going concern status of the Group, considering
the period to 31 December 2025.
Management prepares consolidated group budgets for each upcoming financial
period, the 2024 budget model has been used as the base case for the going
concern analysis. Management also prepares a financial model over the life of
mine which covers a period of twelve years and this model has been used as the
base case for the viability assessment for the years beyond the going concern
assessment period. Further detailed analyses and forecasts are then applied to
the base case models to assess the economic impact of various downside
scenarios from a going concern and viability perspective.
The Group continues to benefit from a strong balance sheet with a large cash
balance and no debt. At 31 December 2023 the Group had cash and cash
equivalents of US$93 million. As part of assessing the Group's ability to
continue as a going concern, management performed various downside stress
testing scenarios to assess the impact on liquidity headroom. The scenarios
were considered without applying any mitigating actions over the assessment
period, as well as assuming that the US$150 million revolving credit facility
which was available as of 13 March 2023, will not be drawn down. An example of
mitigating actions would involve assessing capital expenditures and focussing
on critical items only. The assessment covers a period of 24 months from 1
January 2024 and therefore 21 months from the date of signing the consolidated
financial statements.
Key assumptions underpinning the base case forecast include:
● A consistently applied fuel price of US$0.90/litre;
● A consistently applied processing plant recovery rate of 88.4%
● A consistently applied gold price of US$1,900/oz.; and
● Production volumes and grades in line with 2024 guidance and in-line with the
2025 forecast.
Management considered the potential impact of climate-related physical and
transition risks including modelling potential carbon pricing scenarios, in
the context of the disclosures included in the Strategic Report. Based on this
current assessment modelling plausible scenarios, climate-related risks are
not assessed to have a material financial impact on the going concern
assessment.
The base case and downside scenarios for the going concern assessment are as
follows:
● Base case: 2024 budget/24-month forward plan run against opening cash balance
at 1 January 2024;
● Gold price reduced to US$1,600 per ounce consistently applied through the
assessment period;
● Fuel price increase to US$1.25/litre;
● Open pit ore mined reduction by 10%;
● Open pit ore mined grade reduction by 15%;
● Underground ore mined reduction by 10%;
● Underground ore mined grade reduction by 15%;
● Processing capacity reduction by 20%; and
● Processing plant recovery rate reduction to 85.0%.
In all the above scenarios, liquidity was maintained throughout the going
concern period. We also note that a scenario run with a combination of all the
above factors consistently applied for a full 24-month period would still
maintain liquidity after mitigating measures within management's control are
applied.
The sensitivities applied were informed by internal and external data sources,
were identified as scenarios that could have the most significant impact on
the Group's available liquidity and are the primary drivers of the Group's
profitability.
The ability of the Company to continue as a going concern is contingent on the
ongoing viability of the Group, principally the Sukari operations. The Group
meets its day-to-day working capital requirements through its available cash
balances. The Group continues to closely monitor its major cost drivers e.g.,
fuel and other key consumables and reagents as well as key operational KPIs
that may have an impact on going concern and take mitigating actions where
necessary. The Group continues to benefit from a strong ungeared balance sheet
and a gold price protection programme with put option contracts in place until
30 June 2024, refer to note 2.4. The Group also has US$150 million of
liquidity through the undrawn RCF which can be accessed at any time.
The Group's forecasts and projections, taking account of reasonably possible
changes in performance, show that the Group should be able to operate within
the level of its available cash balances and will have adequate resources to
continue in operational existence throughout the assessment period and that
currently there are no material uncertainties regarding going concern.
Therefore, having assessed the Group's principal risks, a detailed cash flow
forecast prepared by management and the various downside scenarios outlined
above, the Directors considered it appropriate to adopt the going concern
basis of accounting in preparing its consolidated financial statements for the
year ended 31 December 2023, which contemplate the realisation of assets and
settlement of liabilities during the normal course of operations.
Accounting policies
This note provides a list of the other potentially material accounting
policies adopted in the preparation of these consolidated financial statements
to the extent that they have not already been disclosed above. These policies
have been consistently applied to all the years presented, unless otherwise
stated.
1. Current reporting period amendments
1.1 Changes in policies and estimates
Certain new accounting standards, amendments to accounting standards and
interpretations have been published that are not mandatory for 31 December
2023 reporting periods and have not been early adopted by the Group.
New or amended accounting standards
a. Adoption of new accounting standards
The following accounting standards, amendments and interpretations became
effective in the current year:
● IFRS 17, Insurance Contracts
● Deferred Tax related to Assets and Liabilities arising from a Single
Transaction (Amendments to IAS 12)
● Disclosure of Accounting Policies - Amendments to IAS 1 and IFRS Practice
Statement 2
● Definition of Accounting Estimates - Amendments to IAS 8
● International Tax Reform - Pillar Two Model Rules (Amendments to IAS 12)
The application of these standards and interpretations effective for the first
time in the current year has had no significant impact on the amounts reported
in these financial statements.
b. Accounting standards issued but not yet effective
At the date of authorisation of these financial statements, the following
standards and interpretations, which have not been applied in these financial
statements, were in issue but not yet effective. It is expected that where
applicable, these standards and amendments will be adopted on each respective
effective date. None of these standards are expected to have a significant
impact on the Group.
Amendments to IFRSs Effective date
Lease Liability in a Sale and Leaseback Annual periods beginning on or after January 1, 2024
(Amendments to IFRS 16)
Classification of Liabilities as Current or Non-Current Annual periods beginning on or after January 1, 2024
(Amendments to IAS 1)
Non-current Liabilities with Covenants Annual periods beginning on or after January 1, 2024
(Amendments to IAS 1)
Supplier Finance Arrangements Annual periods beginning on or after January 1, 2024
(Amendments to IAS 7 and IFRS 7)
Lack of Exchangeability Annual periods beginning on or after January 1, 2025
(Amendments to IAS 21)
1.2 Critical judgements and estimates in applying the entity's accounting
policies
The following are the critical judgements and estimates that management has
made in the process of applying the Group's accounting policies and that have
the most significant effect on the amounts recognised in the financial
statements. Management has discussed its critical accounting judgements and
estimates and associated disclosures with the Company's Audit and Risk
Committee.
The critical accounting judgements are as follows:
1.2.1 JUDGEMENT: CONTROL
1.2.1.1 Judgement: Accounting treatment of the Sukari Gold Mining Company
("SGM")
Pharaoh Gold Mines NL ("PGM") (the holder of an Egyptian branch) and EMRA are
50:50 partners in SGM. However, SGM is fully consolidated within the Group as
if it were a subsidiary due to it being a controlled entity, reflecting the
substance and economic reality of the Concession Agreement ("CA") (see note
4.1 to the financial statements).
IFRS 10 Consolidated financial statements defines control as encompassing
three distinct principles, which, if present, identify the existence of
control by an investor over an investee, hence forming a parent-subsidiary
relationship. The principles are:
− power over the investee;
− exposure, or rights, to variable returns from its involvement with the
investee; and
− the ability to use its power over the investee to affect the amount of the
investor's returns.
An investor has power over an investee when the investor has existing rights
that give it the current ability to direct the relevant activities (i.e., the
activities that significantly affect the investee's returns).
The Company's control of SGM, through PGM
PGM is a 100% owned subsidiary of the Company. The Company, through PGM, has
the right to appoint or remove the managing director of SGM under the terms of
the CA and in doing so controls the activities in relation to the operation of
SGM that most significantly affect the returns of SGM. These are all
illustrated in the sections that follow:
a) The duties of PGM
● PGM controls the appointment of the General Manager ("GM") at the Sukari Gold
Mine;
● By controlling the appointment of the GM and directing their activities, the
GM will make all day-to-day decisions to allow the mine to operate in a manner
that aligns with the Company's objectives which involve:
− preparing SGM's work programmes through determination of the daily and
longer-term mine plans, the budgets covering the operations to be carried out
throughout the life of the mine ("LOM") and approval of the same;
− managing capital expenditure, procurement, cost control and treasury;
− conducting exploration, development, production, and marketing operations;
− co-ordinating SGM operations and activities, including its dealings with all
contractors and subcontractors;
− bearing ultimate responsibility for all costs and expenses required in
carrying out any and all operations under the CA;
− funding the operations of SGM and recovering costs and expenses throughout the
LOM (i.e., exploration, development, and production phases);
− funding additional exploration and expansion programmes within the mine during
the production phase;
− taking custody of SGM's stock and management of its funds;
− selling and shipping of all gold and associated metals produced; and
− entering into and managing gold sales or hedging contracts and forward sale
agreements
b) The duties of EMRA
EMRA must, under the terms of the CA, provide the required approvals to allow
the mine to operate.
c) The duties, role, and function of the board of SGM:
The board of SGM has six board members:
− three of whom are appointed by the Company, through PGM; and
− three of whom are appointed by EMRA:
− the executive chairman, as one of the three EMRA appointed board members, is a
representative of EMRA and is appointed by the Egyptian Ministry of Finance.
The board of SGM convenes twice a year to:
− facilitate a forum for sharing information between the owners of SGM;
− provide a mechanism to scrutinise the timing and amounts of expenses; rather
than as a decision-making body over SGM's most significant relevant
activities;
− consider, review, and approve all the following in relation to SGM:
− the budget;
− the annual financial statements;
− the cost recovery position; and
− other compliance matters.
The board of SGM is not allowed to unreasonably withhold approval of any of
the above.
If there is a disputed matter or deadlock position at an SGM board level, it
is resolved as follows:
− through open discussion at board level;
− the executive chairman does not have a veto or casting vote;
− where matters cannot be agreed upon, an ad-hoc committee is appointed with
each party having equal representation. This committee will then recommend an
appropriate course of action to the board with the best interest of all
shareholders in mind; and
− should the board still not agree on a course of action, there is a provision
for final and binding arbitration
The board of SGM cannot appoint or remove the GM, this right belongs solely to
the Company, through PGM, under the terms of the CA;
EMRA and/or the Egyptian government have no downside risk in their share of
SGM. If SGM were to become loss making or insolvent, these costs are absorbed
in their entirety by the Company, through PGM, in accordance with the CA.
The Company, through PGM, is therefore exposed to the variable returns of SGM,
has the ability to affect the amount of those returns, has power over SGM
through its ability to direct its relevant activities and therefore meets all
the criteria of control to consolidate SGM's results within the Group to
reflect the substance and economic reality of the CA.
As the Company, through PGM, is determined to be the controlling party,
it should consolidate SGM, and should apply consolidation procedures,
combining balance sheet and profit and loss items line by line as well
as applying the rest of the consolidation procedures set out in IFRS 10 App B
para B86. The Group therefore prepares consolidated financial statements on
this basis.
1.2.1.2 Judgement: Treatment and disclosure of EMRA profit share
EMRA holds 50% of the shares in the Group controlled entity, SGM, which are
not attributable to the Company, and it is entitled to receive net proceeds
from the operations of SGM on a residual basis in accordance with their
specified shareholding per the CA (this distribution is in accordance with the
profit share mechanism and not as a consequence of accumulated profits as
defined by accounting standards). Therefore, the Group recognises a
Non-Controlling Interest ("NCI") in SGM to represent EMRA's participation.
In terms of the CA, the NCI's rights to any profit share payments (dividend
distributions) is only triggered after the cost recovery of all amounts
invested (or spent during operations) during the exploration, construction and
development stages have been repaid to PGM. The profit share mechanism was
only triggered in November 2016 (after all amounts due to be cost recovered
were complete). Until that time the NCI had no rights to claim any
distribution of accumulated profits or profit share.
It is important to note that the availability of cash in SGM for distribution
to its shareholders as profit share is under the control of the Company,
through PGM, by the decisions made on SGM's strategic direction and day-to-day
operational requirements of running the mine. This is regarded as
discretionary and exposes the Company to variable returns.
Distributions to shareholders in SGM:
once all expenditure requirements, including current cost recovery payments
due, have been met, excess cash reserves, if any, are distributed to both SGM
shareholders:
− distributions are always made simultaneously to both shareholders;
− the split of the distribution is in accordance with the ratchet mechanism
(i.e. the standard profit share ratios of 60/40 (first two years from 1 July
2016), 55/45 (second two years from 1 July 2018) and 50/50 (from 1 July 2020)
to PGM and EMRA respectively) as governed by the CA; but:
− distributions are not mandatory, they are entirely discretionary and are only
done if there are excess funds;
− distributions are paid in advance on a weekly or fortnightly basis by mutual
agreement between shareholders;
at the end of the SGM reporting period, final profits are determined,
externally audited, and then approved by the SGM board:
− final profit distributions become payable within 60 days of the financial year
end, SGM is unable to avoid payment at this point and the amount payable is
recorded as equity attributable to the NCI until paid;
the CA is merely a shareholder agreement specifying how and when profits from
SGM will be distributed to shareholders and is typical of a minority
shareholder protection mechanism
The Group should attribute the profit or loss for the year after tax and each
component of other comprehensive income for the year to the owners of the
parent and to the NCI in SGM. The entity shall also attribute total
comprehensive income for the year to the owners of the parent and to NCI even
if this results in the NCI having a deficit balance (IFRS 10 App B para B94).
The CA only contemplates the distribution of profit to shareholders.
The NCI would only have a deficit balance where advance distributions paid
during the year have exceeded final distributions payable after the year-end
financial statements have been prepared and audited. This deficit would be
entirely funded by the Company, through PGM, and would first be redeemed from
future excess cash before regular distributions to both parties resume. SGM
has no claw back provision for advance profits paid to the NCI. We note that
annual dividend payments, after approval of audited financial statements, is a
standard feature of transactions with an NCI and that such payments are not
normally treated as non‑discretionary payments triggering a liability in
the consolidated statement of financial position of the parent.
Any losses generated by SGM will be entirely funded by the Company, through
PGM, but attributed to both shareholders. These losses will first be recovered
before further profit share distributions commence.
In the Group statement of financial position, all the accumulated profits of
SGM are attributable to the Company as EMRA have already received their share
through the advance profit distribution payments made, therefore NCI is
usually disclosed in the financial statements as nil unless there is an
outstanding distribution payable to, or deficit due from EMRA due to timing
differences of the cash sweep.
SGM and Centamin have non-coterminous year ends and the audit of the profit
share and cost recovery mechanism and numbers is performed by EMRA for each
half year period ended 30 June and 31 December. There are inherent
uncertainties that may arise in the determination of amounts due to EMRA from
profit share and therefore, in some periods, additional amounts than would
have been paid to EMRA may become due and payable, creating additional
liabilities. The process may also determine that more profit share than was
due to EMRA was paid in which case this will create a receivable from EMRA
which will be offset against future profit share amounts. Please refer to note
2.5 for further information.
1.2.2 JUDGEMENT: IMPAIRMENT TRIGGER ASSESSMENT - SUKARI
IFRS requires management to test for impairment if events or changes in
circumstances indicate that the carrying amount of a finite life asset may not
be recoverable. Considering the requirements of IAS 36 Impairment of Assets an
impairment trigger assessment has been performed.
Group operating assets
As part of the impairment trigger assessment, management has also considered
movements in the key assumptions which have historically been used in
impairment assessments and is satisfied that there have not been any changes
that would constitute an impairment trigger.
These include changes to:
− forecast gold prices, considering current and historical prices, price trends
and related factors;
− discount rates;
− operating performance which includes production and sales volumes;
− exploration potential and reserves and resources report;
− operating costs, taking into consideration the impact of the solar plant on
those costs and emissions targets;
− recovery rates; and significant changes to the mine plan with an impact on the
mine's cost of mineral extraction
− share price; sustained decline in share price which is not consistent with
industry peers.
Management has considered a number of factors as listed above when concluding
on whether an impairment trigger existed as at 31 December 2023.
Notwithstanding the fact that the carrying value of the Group's net assets
exceeded its market capitalisation at some points during 2023, management
noted that both the fall in the share price at those points and the general
movement in the Company's share price was consistent with an industry-wide
trend, and that there have not been significant Group specific operational
issues at any of its locations in the year that may have a bearing on the
share price movement.
The Group achieved its annual production guidance, with costs in line with
forecasts.
On review, management concluded that there were no impairment triggers
affecting the Group's fixed assets as at 31 December 2023.
Consideration of climate change risks
In preparing the financial statements, the Directors have considered the
potential impact of climate-related physical and transitional risks for the
Group's operating assets, in the context of the TCFD disclosures. The
Directors recognise that climate-related risks have the potential to impact
the carrying value of assets through their effect on future cash flow
projections and impairments on the useful life of assets. The financial
statements also consider the opportunities arising from our transition to a
low carbon future and achievement of our target for reducing Greenhouse Gas
"GHG" emissions.
In particular, the Directors have applied qualitative and quantitative methods
to stress test the financial and strategic viability of the business for
various climate scenarios (including 'Net Zero by 2050'), to the likely impact
of climate-related transitional and physical risks in respect of the following
areas:
● Cash flow forecasts considering carbon, diesel and utility pricing increases
on operating and procurement costs;
● Effects on property, plant and equipment, arising from acute extreme weather
events and chronic shifts in climate patterns including precipitation,
temperature and sea-level rise;
● Capital expenditure over the short, medium and long term, arising from the
adoption/deployment of low carbon technology; and
● Going concern and viability of the Group to decreases in gold price arising
from market and investor uncertainty.
The Directors have made judgements and assumptions using available internal
and external information to assess the impact of climate-related risks on the
future cash flows and operations of the business and are aware of the
uncertainty around how climate-related transition risks will affect global and
national economies over the medium and longer term, and more specifically:
gold price, carbon pricing, other regulatory mechanisms and the availability
of low carbon technology of relevance to our operations.
In the case of climate-related transition risks under a Net Zero by 2050
scenario, preliminary modelling indicated that the introduction of carbon
pricing on our Scope 1 and 2 GHG emissions in Egypt and domestic supply chain
predicted that it could have an impact on the Group during the Sukari Life of
Mine, however this is still being assessed. A review of the regulatory
landscape relevant to our assets noted that Egypt does not have any carbon
mechanisms in place and there is no indication of when one may be implemented.
As a consequence, carbon pricing is not expected to have a material impact on
the carrying values of assets or liability of the Group in the short term. If
we conservatively assume that Egypt was to start developing ambitious (i.e.
'Net Zero by 2050') climate policies over the short term, these are not
predicted to impact the business until the medium term and beyond. We will
regularly review the development of climate policy and the timing of its
potential impact on the business.
In the case of gold price, the nature and extent of impact arising from
climate-related risk is uncertain taking into consideration the role of gold
in low-carbon technologies, gold as a traditional investment asset or
downstream consumption patterns. We have been unable to reference any credible
data sources of gold price for future climate scenarios and therefore have not
performed a quantitative assessment of climate-related impacts. Separately the
impact of fluctuations in gold to the business is assessed in note 3.1.1(d).
Under the scope of our existing target for GHG emissions reductions, capital
expenditure related to the adoption/deployment of low carbon technology is
assessed to be financially material in the short term, however the technology
is commercially available and the expenditure is value accretive in the medium
term and beyond. At Sukari, our planned extension to the solar plant and grid
connection are forecast to provide a positive return on investment within the
life of the asset.
We have assessed the physical risks to our operations under future emissions
scenarios. Our business was assessed to be resilient to physical risks for the
near-term predictions indicating that adaptation specifically to mitigate the
effects of climate change is not required for the operational life of Sukari.
The useful life of the Sukari asset is not expected to be reduced by
climate-related physical risks.
The Group will monitor and routinely test climate-related risk against
judgements and estimates made in preparation of the Group's financial
statements. Climate-related transitional and physical risks as well as carbon
pricing is not expected to have a material impact on the carrying values of
assets or liability of the Group during the Sukari Life of Mine and there is
no expectation that climate change will impact any of the useful economic
lives of the Sukari fixed assets.
The Group's critical estimates and assumptions are as follows:
1.2.3 ESTIMATE: MINERAL RESERVE AND RESOURCE STATEMENT IMPACT ON ORE RESERVES
Ore reserves and mineral resource estimates are estimates of the amount of ore
that can be economically and legally extracted from the Group's mining
properties. The Group's Mineral Reserve and Resource statement for SGM with an
effective date of 30 June 2023 is contained in the supplementary section of
the 2023 Annual Report. The information on the Mineral Resources and Reserves
statement was prepared by Qualified Persons as defined by the National
Instrument 43-101 of the Canadian Securities Administrators.
There are numerous uncertainties inherent in estimating Mineral Resources and
Mineral Reserves. Assumptions that are valid at the time of estimation may
change significantly when new information becomes available. Estimates of
recoverable quantities of reserves include assumptions on commodity prices,
exchange rates, discount rates and production costs for future cash flows. It
also involves assessment and judgement of complex geological models. The
economic, geological, and technical factors used to estimate ore reserves may
change from period to period.
Ore reserves are integral to the recognised amounts of depreciation and
amortisation and the valuation of inventory because of the unit of production
("UOP") amortisation method. Therefore, changes to ore reserves may impact the
Group's reported financial position and results in the following way:
● The carrying value of mine development properties, which incorporates the
rehabilitation obligation assets may be affected due to changes in estimated
future cash flows. The recoverable amount of mine development properties is
directly linked to the quantities of the economically recoverable reserves of
the mine and therefore with other factors held constant, a significant
decrease in the reserves might result in an impairment loss on the asset and
have a negative impact on the carrying values;
● Capitalised stripping costs recognised in the statement of financial position,
as either part of mine development properties or inventory or charged to
profit or loss, may change due to changes in stripping ratios;
● Depreciation and amortisation charges in the statement of profit or loss and
other comprehensive income may change where such charges are determined using
the UOP, or where the useful life of the related assets change. The Group's
mine development properties asset category, incorporating the deferred
stripping asset and rehabilitation obligation assets is amortised using the
UOP method; and
● Provisions for rehabilitation and environmental provisions may change where
reserve estimate changes affect expectations about when such activities will
occur and the associated cost of these activities.
Production forecasts from the underground mine at Sukari are partly based on
estimates regarding future resource and reserve growth. It should be
specifically noted that the potential quantity and grade from the Sukari
underground mine is conceptual in nature and that it is uncertain if
exploration will result in further targets being delineated as a mineral
resource. Please refer to the Mineral Reserve and Resource statement impact on
ore reserves sensitivity, note 3.1.1(h).
1.2.4 ESTIMATE: RESTORATION AND REHABILITATION PROVISION
Management performed a reassessment of the restoration and rehabilitation plan
for Sukari to determine the Company's obligation as at 31 December 2023. This
follows an extensive review process of the plan and provision in the prior
year's assessment which involved an external third party to verify the
assumptions and methodology used in the restoration and rehabilitation plan.
On the financial side, the restoration and rehabilitation plan and provision
assessment resulted in an increase of the provision by US$1.3 million (2022:
US$ 5.8 million decrease) to US$40 million as at 31 December 2023, see note
2.14.
The marginal US$1.3 million increase in the provision from the December 2023
reassessment, other than the unwinding of interest was due to a number of
factors and assumptions affecting the inputs to the model e.g. a small
increase in the inflation rate to 2.40% in 2023 from 2.37% in 2022 and an
increase in the undiscounted provision amount by US$6.2 million, partially
offset by the increase in the discount rate from 3.63% in 2022 to 4.01% in
2023. The undiscounted cost base for various components of the expected
rehabilitation activities also increased by a net amount of US$6.2 million.
The key drivers for the cost base increase were mainly due to the following
changes:
● Waste Rock Dumps − a US$1.3 million increase ( 2022: Nil) in the
rehabilitation cost of the surface area requiring regrading of slopes and
batters;
● Mine services area − a US$1.4 million increase (2022: Nil), in the costs
related to the dismantling, grading of surfaces and restoration of contours
within the mine services area;
● North and West Dump Leach − a US$0.9 million increase (2022: US$0.4
million increase) in the cost of loading and hauling waste rock to create a
cover over the tailings surface;
● TSF2 − a US$2.1 million increase (US$ 3 million decrease) in the cost of
loading and hauling and spreading the waste rock over the tailings surface and
regrading of embankments. Increase was mainly due to a revision of the unit
cost of the closure activities; and
● US$0.8 million increase (2022: US$1.5 million increase) in cost of mine
closure planning and design related work.
Estimates in the process include the unit costs used in calculating the
provision e.g., ripping and grading, hauling and application, regrading
slopes, construction of bunds and demolition of buildings and certain fixed
costs, including labour and dismantling of equipment. Management has assessed
the compliance costs relating to Global Industry Standard on Tailings
Management ("GISTM") and this was concluded to be immaterial.
For rehabilitation activities measured in tonnes, the unit costs range between
US$0.30/t to US$0.77/t and for those measured in cubic metres and for surface
areas measured in metres, the unit cost used are as follows:
● Load and haul waste rock by mass (average haul distance of 2km) US$0.30/t
● Load and haul waste rock by mass (average haul distance of 6km) US$0.75/t
● Load and haul waste rock by volume (average haul distance of 2km) US$0.64/m3
● Spread waste rock to create cover US$2.70/m3
● Load and haul demolition waste for on-site landfill US$1.92/m3
● Demolish concrete foundations (medium reinforced) US$53.00/m3
● Regrade slopes and batters US$1.35/m2
● Rip and grade compacted surfaces US$0.71/m2
● Demolish buildings (mix of prefabricated, steel and blockwork) US$8.00/m2
The range of the estimated unit costs as outlined above is primarily driven by
the level of the work required for each work area requiring restoration and
rehabilitation activity, the extent of the mine areas and/or infrastructure or
equipment requiring such work as well as the expected mix of the resources to
execute the activities i.e., either internally sourced, contracted third
party, other specialist resource or a combination of the three.
Sukari has a life of mine which runs through to 2034 and while generally the
majority of restoration and rehabilitation work will be undertaken when the
economically viable resources of the mine are depleted at the end of the life
of mine, the actual estimated timing of cash outflows for the restoration and
rehabilitation work may be different and, in some cases, significantly
different due to various factors, including the discovery of more resources
that increase the quantities of economically recoverable resources and
therefore, extend the life of mine. The ore reserves available for economic
extraction, the extent of the area they are located and the timeframe within
which they are reasonably expected to be depleted and consequently for
rehabilitation activities to commence therefore, have a significant impact on
the estimation process of the restoration and rehabilitation provision amount.
Some of the unit rates have changed from prior year, with a few of them having
only a marginal change and there are also other unit rates with no movement
from prior year. As the rehabilitation and restoration work will be done
in-country, management has considered the year-on-year inflation in Egypt and
particularly the devaluation of the Egyptian currency, EGP against the USD in
the year over the last two years and concluded that maintaining the unit rates
largely within the same range as the prior year would be reasonable in the
estimation process for the current year provision.
Management has performed sensitivity analyses of reasonably possible changes
in the significant assumptions which are primarily the unit costs of the
rehabilitation activities above as well as the discount and inflation rates.
The sensitivity results below are based on illustrative percentage changes,
however the estimates may vary by greater amounts. The provision for
restoration and rehabilitation may also change where reserve estimate changes
affect expectations about when such activities will occur and therefore the
associated cost of these activities.
The reported provision and corresponding asset amount would change as shown
below should there be a change in the estimated unit cost rates, discount
rates and inflation rate assumptions on the basis that all the other factors
that can potentially change remain constant:
● A 10% increase in these estimated unit and fixed costs elements would result
in a US$3.3 million increase (2022:US$3.1 million) in the provision and
corresponding asset amounts, while a 10% decrease would result in a US$3.3
million decrease (2022:US$3.1 million).
● A 10% increase in the discount rate would result in a US$1.8 million decrease
(2022: US$1.4 million) in the provision and corresponding asset amounts, while
a 10% decrease would result in a US$1.9 million increase (2022: US$1.4
million).
● A 10% increase in the inflation rate would result in a US$1.1 million increase
(2022: US$0.9 million) in the provision and corresponding asset amounts, while
a 10% decrease would result in a US$1.1 million decrease (2022: US$0.9
million).
The above scenarios resulted in increases of the restoration and
rehabilitation provision ranging from US$1.1 million (2022: US$0.7 million) to
US$3.3 million (2022: US$3.1 million) and decreases of the similar ranges. All
the scenarios would have an insignificant effect on the consolidated statement
of comprehensive income, through immaterial movements in the interest cost on
the liability and reduced rehabilitation asset amortisation charge. Refer to
note 2.14 for additional information on the restoration and rehabilitation
provision movements.
The sensitivities analysed above reflect reasonably possible changes in the
provisions in response to changes in the underlying assumptions.
1.3 OTHER SIGNIFICANT ACCOUNTING POLICIES
1.3.1 PRINCIPLES OF CONSOLIDATION
The consolidated financial statements are prepared by combining the financial
statements of all the entities that comprise the consolidated group, being the
Company (the parent entity) and its subsidiaries. Subsidiaries are all
entities over which the Group has control, as defined in IFRS 10 Consolidated
financial statements. Consistent accounting policies are employed in the
preparation and presentation of the consolidated financial statements.
The consolidated financial statements include the information and results of
each subsidiary and controlled entity from the date on which the Company
obtains control and until such time as the Company ceases to control such
entities. The Group controls an entity when the Group is exposed to, or has
rights to, variable returns from its involvement with the entity and has the
ability to affect those returns through its power over the entity.
In preparing the consolidated financial statements, all intercompany balances
and transactions, and unrealised profits arising within the consolidated
group, are eliminated in full.
2. How numbers are calculated
2.1 Segment reporting
The Group is engaged in the business of exploration for and mining of precious
metals, which represents three operating segments, two in the business of
exploration and one in the mining of precious metals. The Board is the Group's
chief operating decision-maker within the meaning of IFRS 8 Operating
segments. Management has determined the operating segments based on the
information reviewed by the Board for the purposes of allocating resources and
assessing performance. Operating segments are reported in a manner consistent
with the internal reporting provided to the chief operating decision-maker.
The chief operating decision-maker, who is responsible for allocating
resources and assessing performance of the operating segments, has been
identified as the Board of Directors.
The Board considers the business from a geographic perspective and a mining of
precious metals versus exploration for precious metals perspective.
Geographically, management considers separately the performance in Egypt,
Burkina Faso, Côte d'Ivoire and Corporate (which includes Jersey, United
Kingdom, and Australia). From a mining of precious metals versus exploration
for precious metals perspective, management separately considers the Egyptian
mining of precious metals from the Egyptian and Côte d'Ivoire exploration for
precious metals in these geographies. The Egyptian mining operations derive
revenue from the sale of gold while Côte d'Ivoire and the new Egyptian
entities are currently only engaged in precious metal exploration and do not
produce any revenue.
The Board assesses the performance of the operating segments based on profits
and expenditure incurred as well as exploration expenditure in each region.
Egypt is the only operating segment with one of its entities, SGM, mining
precious metals and therefore has revenue and cost of sales whilst the
remaining operating segments do not. All operating segments are reviewed by
the Board as presented and are key to the monitoring of ongoing performance
and assessing plans of the Company.
The Burkina Faso incorporated legal entities are currently at an advanced
stage of being formally wound-up and costs incurred in the year relate to
various aspects of that process. Costs incurred up to the time the Burkina
Faso entities' wind-up process is formally concluded will continue to be
disclosed within exploration costs and under Burkina Faso in the segment
reporting disclosures.
NON-CURRENT ASSETS, INCLUDING FINANCIAL INSTRUMENTS BY COUNTRY:
31 December 2023 Burkina Faso Côte d'Ivoire
Total Egypt US$'000 US$'000 Corporate
US$'000 US$'000 US$'000
Non-current assets (excl. financial assets) 1,211,949 1,210,391 − 537 1,021
Non-current assets (financial instruments) 1,014 927 2 85 −
Total non-current assets 1,212,963 1,211,318 2 622 1,021
Burkina Faso Côte d'Ivoire
Total Egypt US$'000 US$'000 Corporate
31 December 2022 US$'000 US$'000 US$'000
Non-current assets (excl. financial assets) 1,206,231 1,204,956 − 826 449
Non-current assets (financial instruments) 1,372 1,270 20 82 −
Total non-current assets 1,207,603 1,206,226 20 908 449
Additions to non-current assets mainly relate to Egypt and are disclosed in
note 2.10.
STATEMENT OF FINANCIAL POSTION BY OPERATING SEGMENT:
31 December 2023 Egypt Mining Egypt Exploration Burkina Faso Côte d'Ivoire
Total US$'000 US$'000 US$'000 US$'000 Corporate
US$'000 US$'000
Total assets 1,523,243 1,434,074 4,391 30 6,149 78,600
Total liabilities (144,637) (133,177) (787) − (2,596) (8,077)
Net assets 1,378,606 1,300,897 3,604 30 3,553 70,523
Total Egypt Mining Egypt Exploration Burkina Faso Côte d'Ivoire Corporate
US$'000 US$'000 US$'000 US$'000
31 December 2022 US$'000 US$'000
Total assets 1,493,533 1,413,266 4,057 40 4,074 72,096
Total liabilities (152,126) (142,556) (533) (470) (3,421) (5,146)
Net assets/(liabilities) 1,341,407 1,270,710 3,524 (430) 653 66,950
STATEMENT OF COMPREHENSIVE INCOME BY OPERATING SEGMENT:
For the year ended 31 December 2023 Total Egypt Mining Egypt Exploration Burkina Faso Côte d'Ivoire Corporate
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Revenue 891,262 891,262 − − − −
Cost of sales (596,836) (596,836) − − − −
Gross profit 294,426 294,426 − − − −
Exploration and evaluation costs (31,653) − − (869) (25,226) −
Other operating costs((1)) (68,542) (39,069) (377) 1,221 (127) (30,190)
Other income 5,817 6,058 99 102 1,686 (2,128)
Finance income 4,127 1,475 − − − 2,652
Finance costs (3,526) (1,681) (42) 2 (75) (1,730)
Net fair value loss on derivatives (5,509) − − − − (5,509)
Profit/(loss) for the year before tax 195,140 261,209 (5,878) 456 (23,742) (36,905)
Tax (255) (220) − − (21) (14)
Profit/(loss) for the year after tax 194,885 260,989 (5,878) 456 (23,763) (36,919)
Profit/(loss) for the year after tax attributable to:
- the owners of the parent(2) 92,284 158,388 (5,878) 456 (23,763) (36,919)
- non-controlling interest in SGM(2) 102,601 102,601 − − − −
(1) The US$1.2m gain in the Burkina Faso segment relates to intercompany
loans due to Centamin West Africa Holdings Limited (included as an expense
within the Corporate segment) that were written off in the year. These amounts
are fully eliminated on consolidation, therefore do not impact the overall
Group results.
(2) Please note that the cost recovery model on which profit share is
based under the Concession Agreement is different to the accounting results
presented above due to various adjustments and as such the share of profit
disclosed above is not reflective of the 55%:45% split that was in place from
1 July 2018 to 30 June 2020 and 50%:50% split from 1 July 2020 onwards that
occurs in practice, refer to the statement of cash flows by operating segment
below for further information.
For the year ended 31 December 2022 Total Egypt Mining Egypt Exploration Burkina Faso Côte d'Ivoire Corporate
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Revenue 788,424 788,424 − − − −
Cost of sales (544,075) (544,075) − − − −
Gross profit 244,349 244,349 − − − −
Exploration and evaluation costs (29,723) − (1,675) (2,928) (25,120) −
Other operating costs (49,003) (27,299) (116) (506) (326) (20,756)
Other income 6,623 8,039 196 (168) (666) (778)
Finance income 1,214 99 − − − 1,115
Finance costs(1) (2,459) (1,098) (19) (2) (58) (1,282)
Impairment of intra-group loans − − − 140,623 − (140,623)
Profit/(loss) for the year before tax 171,001 224,090 (1,614) 137,019 (26,170) (162,324)
Tax (226) (226) − − − −
Profit/(loss) for the year after tax 170,775 223,864 (1,614) 137,019 (26,170) (162,324)
Profit/(loss) for the year after tax attributable to:
− the owners of the parent(1) 72,490 125,579 (1,614) 137,019 (26,170) (162,324)
− non-controlling interest in SGM(1) 98,285 98,285 − − − −
(1) Please note that the cost recovery model on which profit share
is based under the Concession Agreement is different to the accounting results
presented above due to various adjustments and as such the share of profit
disclosed above is not reflective of the 55%:45% split that was in place from
1 July 2018 to 30 June 2020 and 50%:50% split from the 1 July 2020 onwards
that occurs in practice, refer to the statement of cash flows by operating
segment below for further information.
STATEMENT OF CASH FLOWS BY OPERATING SEGMENT:
For the year ended 31 December 2023 Egypt Mining Egypt Exploration Burkina Faso Côte d'Ivoire
Total US$'000 US$'000 US$'000 US$'000 Corporate
US$'000 US$'000
Statement of cash flows
Net cash generated from/(used in) operating activities 353,600 419,210 (395) 54 (1,384) (63,885)
Net cash (used in)/generated from investing activities (198,768) (200,631) (512) − (276) 2,651
Net cash used in financing activities (164,994) (232,994) − − − 68,000
Own shares acquired (245) − − − − (245)
Cash component of share-based payments (583) − − − − (583)
Dividend paid − non-controlling interest in SGM (112,000) (112,000) − − − −
Dividend paid − intercompany − (120,994) − − − 120,994
Dividend paid − owners of the parent (52,166) − − − − (52,166)
Net increase/(decrease) in cash and cash equivalents (10,163) (14,416) (907) 54 (1,660) 6,766
Cash and cash equivalents at the beginning of the year 102,373 27,373 1,971 1 1,422 71,606
Effect of foreign exchange rate changes 1,112 729 100 (25) 1,782 (1,474)
Cash and cash equivalents at the end of the year 93,322 13,686 1,164 30 1,544 76,898
For the year ended 31 December 2022 Total Egypt Mining((1)) Egypt Exploration Burkina Faso Côte d'Ivoire
US$'000 US$'000 US$'000 US$'000 US$'000 Corporate((1))
(restated) US$'000
Statement of cash flows
Net cash generated from/(used in) operating activities 292,524 321,542 1,912 (2,644) 1,673 (29,959)
Net cash (used in)/generated from investing activities (274,583) (274,120) (976) − (595) 1,108
Net cash used in financing activities (122,219) (35,492) − − − (86,727)
Cash element of share-based payments (523) − − − − (523)
Dividend paid − non-controlling interest in SGM (35,492) (35,492) − − − −
Dividend paid − owners of the parent (86,204) − − − − (86,204)
Net (decrease)/increase in cash and cash equivalents (104,278) 11,930 936 (2,644) 1,078 (115,578)
Cash and cash equivalents at the beginning of the year (207,821) 13,609 935 5 859 192,413
Effect of foreign exchange rate changes (1,170) 1,834 100 2,640 (515) (5,229)
Cash and cash equivalents at the end of the year 102,373 27,373 1,971 1 1,422 71,606
1) The comparatives in the Consolidated Statement of Cash Flows for
the year ended 31 December 2022 have been restated to reflect an increase of
cash generated from operating activities of $2.5m, interest paid of $1.9m and
a reduction of the effect of foreign exchange rate changes of $0.6m.
2.2 Revenue
An analysis of the Group's revenue for the year, is as follows:
For the year ended For the year ended
31 December 2023 31 December 2022
US$'000 US$'000
Gold sales 889,384 786,921
Silver sales 1,878 1,503
891,262 788,424
All gold and silver sales up to 30 June 2023 were made to a single customer in
North America, Asahi Refining Canada Ltd ("Asahi"). Asahi's contract expired
on 30 June 2023 and effective 1 July 2023, all gold and silver sales were made
to another single customer in Switzerland, MKS PAMP SA ("MKS").
ACCOUNTING POLICY: REVENUE
Revenue is measured at the fair value of the consideration received or
receivable for goods in the normal course of business.
Sale of goods
Under IFRS 15, revenue from the sale of mineral production is recognised when
the Group has passed control of the mineral production to the buyer (the
performance obligation), it is probable that economic benefits associated with
the transaction will flow to the Group, the sales price can be measured
reliably, and the Group has no significant continuing involvement and the
costs incurred or to be incurred in respect of the transaction can be measured
reliably.
Up to 30 June 2023, with the Asahi contract, the performance obligation was
satisfied when the doré bars were packaged and collected by the approved
carrier with the appropriate required documentation at the gold room and the
approved carrier accepted control of the shipment by signature. After receipt
of the shipment at the refinery, 98% of the amounts due are paid within five
working days, with the balance being paid within four working days thereafter.
Effective 1 July 2023, a new contract was signed with MKS and based on
management's assessment of the contract, SGM's performance obligations for the
determination of timing of revenue recognition have not changed, and revenue
continues to be recognised on satisfaction of the performance obligations as
outlined above.
Where an adjustment to the sales price based on a survey of the mineral
production by the buyer (for instance an assay for gold content) is done,
recognition of the revenue from the sale of mineral production is based on
the most recently determined estimate of product specifications.
Royalty
The Arab Republic of Egypt ("ARE") is entitled to a royalty of 3% of net sales
revenue (revenue net of freight and refining costs) as defined from the sale
of gold and associated minerals from SGM. This royalty is calculated and
recognised on receipt of the final certificate of analysis document received
from the refinery. Due to its nature, this royalty is not recognised in cost
of sales but rather in other operating costs.
2.3 Profit before tax
Profit for the year before tax has been arrived at after crediting/(charging)
the following gains/(losses) and income/(expenses):
For the year ended For the year ended
31 December 2023 31 December 2022
US$'000 US$'000
Other income
Net foreign exchange gains 5,641 6,559
Other income 176 64
5,817 6,623
Finance cost - net
Finance income 4,127 1,214
Finance costs (3,526) (2,459)
601 (1,245)
Net fair value loss on derivative financial instruments (5,509) −
Expenses
Cost of sales*
Mine production costs (412,827) (408,543)
Movement in inventory 13,319 10,659
Depreciation and amortisation (197,328) (146,191)
(596,836) (544,075)
Other operating costs
Corporate compliance (3,961) (2,869)
Fees payable to the external (1,080) (895)
auditors
6.5
Corporate consultants fees (4,301) (2,697)
Salaries and wages (12,434) (11,979)
Other administration expenses (4,026) (3,272)
Employee equity settled share-based payments (7,308) (2,570)
Corporate costs (sub-total) (33,110) (24,282)
Other provisions 1,182 1,180
Inventory written-off (3,721) (1)
Net movement on provision for stock obsolescence 4,004 (579)
Other non-corporate operating expenses (10,215) (1,479)
Royalty - attributable to the ARE government (26,682) (23,842)
Other operating costs (total) (68,542) (49,003)
* Inventories recognised as an expense in the Consolidated Statement of
Comprehensive Income during the year ended 31 December 2023 amounted to US$
597 million (2022: US$544 million) and these were included in 'cost of sales'.
ACCOUNTING POLICY: FINANCE INCOME, OTHER INCOME AND FOREIGN CURRENCIES
FINANCE INCOME
Finance income is accrued on a time basis, by reference to the principal
outstanding and at the effective interest rate applicable, which is the rate
that discounts estimated future cash receipts through the expected life of the
financial asset to that asset's net carrying amount.
Finance income is generated mainly from treasury activities (e.g., income on
surplus funds invested for the short term) and therefore is separately
disclosed outside of the Group's operating profit in the consolidated
statement of comprehensive income and disclosed as a separate line under
investing activities in the consolidated statement of cash flows.
FOREIGN CURRENCIES
The individual financial statements of each Group entity are presented in its
functional currency being the currency of the primary economic environment in
which the entity operates. For the purpose of the consolidated financial
statements, the results and financial position of each entity are expressed in
US dollars, which is the functional currency of all companies in the Group and
the presentation currency for the consolidated financial statements.
In preparing the financial statements of the individual entities, transactions
in currencies other than the entity's functional currency are recorded at the
rates of exchange prevailing on the dates of the transactions. At each
reporting date, monetary items denominated in foreign currencies are
retranslated at the rates prevailing at the reporting date. Non-monetary items
carried at fair value that are denominated in foreign currencies are
retranslated at the rates prevailing on the date when the fair value was
determined.
Non-monetary items that are measured in terms of historical cost in a foreign
currency are not retranslated. Exchange differences are recognised in profit
or loss in the period in which they arise.
ACCOUNTING POLICY: FINANCE COSTS
FINANCE COSTS
Finance costs for the Group will normally include:
● Costs that are 'borrowing costs for the purposes of IAS 23 Borrowing Costs:
− interest expense calculated using the effective interest rate method as
described in IFRS 9 Financial Instruments;
− interest in respect of lease liabilities; and
− exchange differences arising from foreign currency borrowings to the extent
that they are regarded as an adjustment to interest costs.
● the unwinding of the effect of discounting provisions.
Borrowing and finance costs which are generally incurred in the Group's
ordinary activities are recognised in the statement of profit or loss and
other comprehensive income in the period in which they are incurred, and the
Group would also include foreign exchange differences on directly attributable
borrowings as borrowing costs capable of capitalisation to the extent that
they represented an adjustment to interest costs. These finance costs are
separately disclosed in the consolidated statement of comprehensive income as
required by IAS 1 Presentation of Financial Statements and disclosed under
operating activities in the consolidated statement of cash flows.
Even though exploration and evaluation assets can be qualifying assets, they
generally do not meet the 'probable economic benefits' test therefore any
related borrowing costs incurred during this phase are generally recognised in
the statement of profit or loss and other comprehensive income in the period
in which they are incurred.
ACCOUNTING POLICY: EMPLOYEE BENEFITS
EMPLOYEE BENEFITS
Salary costs are absorbed within cost of sales and other operating costs.
Short term employee benefits are recognised when an employee has rendered
service to the Group in the accounting period, and bonus plans are recognised
when the Group has a present legal or constructive obligation as a result of
past events and the obligation can be reliably measured.
2.4 DERIVATIVE FINANCIAL INSTRUMENTS
On 14 June 2023, the Company entered into put option contracts whereby it
purchased a series of gold put option contracts (the "commodity contracts"). A
total of US$2.5 million, was paid to BMO, the counterparty as a premium on
entering into six put option contracts for a total of 120,000 ounces
representing, 20,000 ounces for each month beginning 1 July 2023 to 31
December 2023 at a strike price of US$1,900/oz as part of the Gold Price
Protection Programme. As part of the same programme, on 20 July 2023, the
Company entered into a second series of six put option contracts for a total
of 120,000 ounces representing, 20,000 ounces for each month beginning 1
January 2024 to 30 June 2024 at a strike price of US$1,900/oz and a total of
US$3.6 million, was paid to HSBC, the counterparty as a premium on entering
into the contracts. By entering into these contracts, the Company was able to
ensure it can reasonably protect the Group's cash flows by initiating a gold
price protection program for the contracted ounces at these prices over the
six-month period to year end.
The details of the commodity contracts opened and expired during the year and
those outstanding as at 31 December 2023, are as follows:
Commodity contract Quantity ((1)) (Oz) Contract Term Strike price per Oz ((1)(2)) Premium Paid Mark-to-Market (MtM) Unrealised loss recognised Realised loss recognised
Type purchased (Open Contracts) (Settled
$US $US'000 Contracts)
$US'000 $US'000 $US'000
Gold put options 120,000 1 Jul 23 to 31 Dec 23 1,900 2,538 − − (2,538)
Gold put option 20,000 1 Jan 24 to 31 Jan 24 1,900 604 − (604) −
Gold put option 20,000 1 Feb 24 to 29 Feb 24 1,900 604 22 (582) −
Gold put option 20,000 1 Mar 24 to 31 Mar 24 1,900 604 76 (528) −
Gold put option 20,000 1 Apr 24 to 30 Apr 24 1,900 604 123 (481) −
Gold put option 20,000 1 May 24 to 31 May 24 1,900 604 185 (419) −
Gold put option 20,000 1 Jun 24 to 30 Jun 24 1,900 604 248 (357) −
Total 240,000 6,162 654 (2,971) (2,538)
1. Quantities and strike prices do not fluctuate by month within
each calendar year
2. Contracts are exercisable based on the average price for the
month being below the strike price of the put
The resulting fair values of the outstanding commodity contracts at 31
December 2023 as shown in the table above, have been recognised, in derivative
financial instruments on the consolidated statement of financial position.
These derivative financial instruments were not designated as hedges by the
Company and are marked-to-market at the end of each reporting period with the
mark-to-market adjustment recorded in the consolidated profit or loss.
The commodity contracts are marked-to-market using a valuation model which
uses quoted observable inputs and are classified as Level 2 in the fair value
hierarchy. During the year ended 31 December 2023, a total of US$5.5m, made up
of US$2.5m realised fair value loss and US$3.0m unrealised fair value loss on
the put options was recognised in the consolidated profit or loss.
2.5 Non-controlling interest in SGM
EMRA is a 50% shareholder in SGM and is entitled to a share of 50% of SGM's
net production surplus which can be defined as 'revenue less payment of the
fixed royalty to the ARE and recoverable costs'.
Earnings attributable to the non-controlling interest in SGM (i.e., EMRA) are
pursuant to the provisions of the CA and are recognised as profit attributable
to the non-controlling interest in SGM in the attribution of profit section of
the statement of comprehensive income of the Group. The profit share payments
during the year will be reconciled against SGM's audited financial statements.
SGM's financial statements for the year ended 30 June 2023 have been audited
and signed off at the date of this report.
Certain terms of the CA and amounts in the cost recovery model may also vary
depending on interpretation and management and the Board making various
judgements and estimates that can affect the amounts recognised in the
financial statements.
(A) STATEMENT OF COMPREHENSIVE INCOME AND STATEMENT OF FINANCIAL POSITION
IMPACT
For the year ended For the year ended
31 December 2023 31 December 2022
US$'000 US$'000
Statement of comprehensive income
Profit for the year after tax attributable to the non-controlling interest in 102,601 98,285
SGM(1)
Statement of financial position
Total equity attributable to non-controlling interest in SGM(1) (opening) 22,537 (40,256)
Profit for the year after tax attributable to the non-controlling interest in 102,601 98,285
SGM(1)
Dividend paid - non-controlling interest in SGM (112,000) (35,492)
Total equity attributable to non-controlling interest in SGM(1) (closing) 13,138 22,537
(1) Profit share commenced during the third quarter of 2016. The first two
years was a 60:40 split of net production surplus to PGM and EMRA
respectively. From 1 July 2018 this changed to a 55:45 split for the next
two-year period until 30 June 2020, after which all net production surpluses
have been split 50:50.
Any variation between payments made during the year (which are based on the
Company's estimates) and the SGM audited financial statements, may result in a
balance due and payable to EMRA or advances to be offset against future
distributions and included within the non-controlling interest in SGM balance
on the statement of financial position and statement of changes in equity.
(b) Statement of cash flows impact
For the year ended For the year ended
31 December 2023 31 December 2022
US$'000 US$'000
Statement of cash flows
Dividend paid - non-controlling interest in SGM(1) (112,000) (35,492)
(1) Profit share commenced during the third quarter of 2016. The first two
years was a 60:40 split of net production surplus to PGM and EMRA
respectively. From 1 July 2018 this changed to a 55:45 split for the next
two-year period until 30 June 2020, after which all net production surpluses
will be split 50:50.
EMRA and PGM benefit from advance distributions of profit share which are made
on a weekly or fortnightly basis and proportionately in accordance with the
terms of the CA. Future distributions will consider ongoing cash flows,
historical costs that are still to be recovered and any future capital
expenditure. All profit share payments will be reconciled against SGM's
audited June financial statements for current and future periods.
2.6 Tax
The Group operates in several countries and, accordingly, it is subject to the
various tax regimes applicable in such countries. From time to time the Group
is subject to changes in tax laws and/or a review of its related tax regime
and filings. Disputes can arise with the tax authorities over the
interpretation or application of applicable tax laws, regulations and/or rules
to the Group's business. If the Group is unable to resolve any of these
matters favourably, there may be an adverse impact on the Group's financial
performance, cash flows or results of operations. If management's estimate of
the future resolution of these matters' changes, the Group will recognise the
effects of the changes in its consolidated financial statements in the period
that such changes occur.
Tax exemptions
In Egypt, Pharaoh Gold Mines NL ("PGM") has entered into a Concession
Agreement ("CA") with EMRA and the Government of Egypt represented by the
Ministry of Petroleum & Natural Resources. The CA was issued under special
law no. 222 of 1994. Under the CA, income generated by SGM's activities is
granted a tax exemption (as described below) from all taxes imposed in Egypt
(as at the date of the CA and any new taxes imposed under a different name
since such date), other than the fixed 3% royalty attributable to the Egyptian
government, rental income on property and interest income on cash and cash
equivalents. PGM and SGM have further tax exemptions for the duration of the
CA from certain other taxes.
The CA grants certain tax exemptions, including the following:
● Article III(e) of the CA provides for a 15-year exemption from any taxes
imposed by the Egyptian government on the revenues generated from SGM for the
period 10 March 2010 (being the date of commencement of commercial production)
to 9 March 2025. SGM will in due course have to file an application with the
Ministry of Petroleum & Natural Resources to extend the tax-free period
for a further 15 years to 9 March 2040. ("Tax Exemption Renewal") Under the
CA, EMRA is obliged to support the application for the Tax Exemption Renewal
so long as (i) there is no tax dispute with Government at SGM level or its
equity holders (PGM & EMRA) and (ii) exploration activities in the licence
areas have been planned and agreed by all parties. Preparatory works have
already commenced on the application for the Tax Exemption Renewal and the
Group intends for SGM to submit the application in the near future but no
later than Q3 2024. If granted, the extension should be on the same terms (as
it is an extension). Albeit there is no guarantee that the Government will
agree to grant the renewal or on the same basis, the Group believes that all
requisite requirements are and will have been complied with for such renewal.
Should the Tax Exemption renewal not be granted, then SGM will be subject to
previously exempted taxes, such as, for example, the prevailing 22.5%
corporate income tax rate applicable in Egypt.
● Article XI of the CA provides for PGM and SGM to be exempt for the duration of
the CA from custom taxes and duties with respect to the importation of
machinery, equipment and consumable items required for the purpose of
exploration and mining activities at SGM. The exemption shall only apply if
there is no local substitution with the same or similar quality to the
imported machinery, equipment, or consumables. Such exemption will also be
granted if the local substitution is more than 10% more expensive than the
imported machinery, equipment, or consumables after the addition of the
insurance and transportation costs. To this end, PGM's contractors and
subcontractors are - under the same provision - also entitled to import
machinery, equipment, and consumable items under the 'Temporary Release
System' which provides exemption from Egyptian customs duty.
● Under Article XIX of the CA, PGM, EMRA and SGM and their respective buyers
will for the duration of the CA be exempt from any duties or taxes on the
export of gold and associated minerals produced from SGM. PGM is at all times
free to transfer in US$ or other freely convertible foreign currency, any cash
of PGM representing its share of net proceeds and recovery of costs, without
any Egyptian government limitation, tax or duty.
● Under Article VIII of the CA legal title of all operating assets of PGM will
pass to EMRA when cost recovery is completed at the end of the life of mine.
PGM is exempted from all custom, duties, excise, stamps and sale taxes on the
transfer of such assets to EMRA. The right of use of all fixed and movable
assets, however, remains with PGM and SGM.
RELEVANCE OF TAX CONSOLIDATION TO THE CONSOLIDATED ENTITY
In Australia, Centamin Egypt Limited and Pharaoh Gold Mines NL, both wholly
owned Australian resident entities within the Group, have elected to form a
tax-consolidated group from 1 July 2003 and therefore are treated as a single
entity for Australian income tax purposes. The head entity within the
tax-consolidated group is Centamin Egypt Limited. Pharaoh Gold Mines NL, which
has a registered Egyptian branch, benefits from the 'branch profits exemption'
whereby foreign branch income will generally not be subject to Australian
income tax. Ampella Mining Limited (in Liquidation) is a single entity for
Australian income tax purposes.
NATURE OF TAX FUNDING ARRANGEMENTS AND TAX-SHARING AGREEMENTS
Entities within the Australian tax-consolidated group have entered into a tax
funding arrangement and a tax-sharing agreement with the head entity. Under
the terms of the tax-funding agreement, Centamin Egypt Limited and each of the
entities in the tax-consolidated group have agreed to pay a tax-equivalent
payment to or from the head entity, based on the current tax liability or
current tax asset of the entity. Such amounts are reflected in amounts
receivable from or payable to other entities in the tax‑consolidated group.
The tax-sharing agreement entered between members of the tax-consolidated
group provides for the determination of the allocation of income tax
liabilities between the entities should the head entity default on its tax
payment obligations. No amounts have been recognised in the financial
statements in respect of this agreement as payment of any amounts under the
tax-sharing agreement is considered remote.
Tax recognised in profit is summarised as follows:
TAX EXPENSE
For the year ended For the year ended
31 December 2023 31 December 2022
US$'000 US$'000
Current tax
Current tax expense in respect of the current year (255) (226)
Deferred tax − −
Total tax expense (255) (226)
The tax expense for the year can be reconciled to the profit per the
consolidated statement of comprehensive income as follows:
For the year ended For the year ended
31 December 2023 31 December 2022
US$'000 US$'000
Profit for the year before tax 195,140 171,001
Tax expense calculated at 0%(1) (2022: 0%)(1) of profit for the year before − −
tax
Tax effect of:
Other (255) (226)
Tax expense (255) (226)
(1) The tax rate used in the above reconciliation is the corporate tax rate
of 0% payable by Jersey corporate entities under the Jersey tax law (2022:
0%). There has been no change in the underlying corporate tax rates when
compared with the previous financial period.
Tax recognised in the balance sheet is summarised as follows:
For the year ended For the year ended
31 December 2023 31 December 2022
US$'000 US$'000
Current tax liabilities 102 249
Global implementation of OECD Pillar Two model rules
In December 2021, the Organisation for Economic Co-operation and Development
("OECD") published Tax Challenges Arising from the Digitalisation of the
Economy - Global Anti-Base Erosion Model Rules (Pillar Two): Inclusive
Framework on BEPS, hereafter referred to as the 'OECD Pillar Two model rules'
or 'the rules'. The rules are designed to ensure that large multinational
enterprises within the scope of the rules pay a minimum level of tax on the
income arising in a specific period in each jurisdiction where they operate.
In general, the rules apply a system of top-up taxes that brings the total
amount of taxes paid on an entity's excess profit in a jurisdiction up to the
minimum rate of 15%.
The rules need to be passed into national legislation based on each country's
approach. The Pillar Two legislation has not yet been enacted in Jersey,
however, the treasury minister of Jersey, the Company's country of
incorporation, announced the intentions in relation to Pillar Two
implementation, they intend to implement an Income Inclusion Rule ("IIR") and
domestic minimum tax from 2025, while continuing to monitor global
implementation. The rules will impact current income tax when the legislation
comes into effect.
When enacted, applying the OECD Pillar Two model rules and determining their
impact on the Group's financial statements is complex and poses a number of
practical challenges. However, since the Pillar Two legislation was not
effective at the reporting date, the Group has no related current tax
exposure.
The Group could be in scope of the OECD Pillar Two model rules from 2025
onwards in either Jersey or Australia based on current forecasts of revenue
and is currently in the process of performing an assessment of the potential
impact of this on the Group. The Group currently has an effective tax rate of
approximately 0%, albeit it makes substantial profit share payments to EMRA,
an Egyptian government body, refer to note 2.5 for further information on the
profit attributable to the NCI. There is uncertainty around how the OECD
Pillar Two model rules will be applied to the Group, and the position is
currently being worked through with the relevant tax advisors.
ACCOUNTING POLICY: TAXATION
Income tax expense comprises current and deferred tax. It is recognised in
profit or loss except to the extent that it relates to a business combination,
or items recognised directly in equity or in OCI.
CURRENT TAX
The tax currently payable is based on taxable profit for the period. Taxable
profit differs from profit as reported in the consolidated statement of
comprehensive income because of items of income or expense that are taxable or
deductible in other periods and items that are never taxable or deductible.
The Group's liability for current tax is calculated using tax rates that have
been enacted or substantively enacted by the end of the reporting period.
DEFERRED TAX
Deferred tax is recognised on temporary differences between the carrying
amounts of assets and liabilities in the financial statements and the
corresponding tax bases used in the computation of taxable profit. Deferred
tax liabilities are generally recognised for all taxable temporary
differences. Deferred tax assets are generally recognised for all deductible
temporary differences to the extent that it is probable that taxable profits
will be available against which those deductible temporary differences can be
utilised. Such deferred tax assets and liabilities are not recognised if the
temporary difference arises from goodwill or from the initial recognition
(other than in a business combination) of other assets and liabilities in a
transaction that affects neither the taxable profit nor the accounting profit.
2.7 FINANCIAL INSTRUMENTS
INTEREST BEARING LOANS AND BORROWINGS
US$150 million Revolving Credit Facility ("RCF")
On 22 December 2022, the Company entered into an agreement for a US$150
million RCF with a syndicate of four banks: Bank of Montreal (London Branch),
HSBC Bank plc, ING Bank N.V. (Amsterdam Branch) and Nedbank Limited (London
Branch).
As at 31 December 2023, there were no drawdowns on the facility and therefore
no interest expense on borrowings was recognised in the period, however, in
accordance with the RCF, commitment fees are charged on the US$150 million
undrawn commitment and the total commitment fees charged on this undrawn
commitment during the year ended 31 December 2023 was US$1.6 million (2022:
US$ Nil)and this was recognised in the consolidated statements of
comprehensive income in period. The commitment fee is charged and paid on a
quarterly basis at an annual rate of 1.4%.
The terms of the facility imposes certain financial covenants on the Company
in respect of each Relevant Period that has an outstanding borrowing as
outlined below i.e., the Company shall ensure that:
a) Interest Cover: Interest Cover in respect of any Relevant Period shall
not be less than the ratio of 4:1;
b) Leverage: Leverage in respect of any Relevant Period shall not exceed the
ratio of 3:1;
c) Liquidity: Liquidity shall at all times exceed US$50,000,000; and
d) Reserve Tail: at each Scheduled Reserves Assessment Date, the Reserve
Tail Ratio is not less than thirty per cent.
As at 31 December 2023, although there was no drawdown on the facility, the
Company was in full compliance with all the requirements and obligations in
respect of financial covenants and financial conditions as stipulated in the
agreement.
The Relevant Period is defined as each period of twelve months ending on or
about the last day of the Financial Year and each period of twelve months
ending on or about the last day of each Financial Quarter.
ACCOUNTING POLICY: FINANCIAL INSTRUMENTS
FINANCIAL LIABILITIES AND EQUITY
Debt and equity instruments are classified as either financial liabilities or
as equity in accordance with the substance of the contractual arrangement as
defined below. Financial liabilities are recognised in the Group's balance
sheet when the Group becomes a party to the contractual provisions of the
instrument.
OTHER FINANCIAL LIABILITIES
Other financial liabilities, including borrowings, are initially measured at
fair value, net of transaction costs and are subsequently measured at
amortised cost using the effective interest method, with interest expense
recognised on an effective yield basis.
DERECOGNITION OF FINANCIAL LIABILITIES
The Group derecognises financial liabilities when, and only when, the Group's
obligations are discharged, cancelled or they expire.
FINANCIAL ASSETS
CLASSIFICATION
The Group classifies its financial assets in the following measurement
categories:
● those to be measured subsequently at fair value (either through OCI or through
profit or loss); and
● those to be measured at amortised cost.
The classification depends on the entity's business model for managing the
financial assets and the contractual terms of the cash flows.
For assets measured at fair value, gains and losses will either be recorded in
profit or loss or OCI. For investments in equity instruments that are not held
for trading, this will depend on whether the Group has made an irrevocable
election at the time of initial recognition to account for the equity
investment at Fair Value through other Comprehensive Income ("FVOCI").
RECOGNITION AND DERECOGNITION
Purchases and sales of financial assets are recognised on trade date, being
the date on which the Group commits to purchase or sell the asset.
Financial assets are derecognised when the rights to receive cash flows from
the financial assets have expired or have been transferred and the Group has
transferred substantially all the risks and rewards of ownership. If the Group
neither transfers nor retains substantially all the risks and rewards of
ownership and continues to control the transferred asset, the Group recognises
its retained interest in the asset and an associated liability for amounts it
may have to pay. If the Group retains substantially all the risks and rewards
of ownership of a transferred financial asset, it continues to recognise the
financial asset and also recognises a collateralised borrowing for the
proceeds received.
MEASUREMENT
At initial recognition, the Group measures a financial asset at its fair value
plus, in the case of a financial asset not at Fair Value through Profit or
Loss ("FVPL"), transaction costs that are directly attributable to the
acquisition of the financial asset and trade receivables are initially
recognised at transaction price unless they have a significant financing
component. Transaction costs of financial assets carried at FVPL are expensed
in profit or loss. Financial assets with embedded derivatives are considered
in their entirety when determining whether their cash flows are solely payment
of principal and interest.
Subsequent to initial recognition, investments in subsidiaries are measured at
cost in the Company's financial statements. The classification depends on the
nature and purpose of the financial assets and is determined at the time of
initial recognition.
EFFECTIVE INTEREST METHOD
The effective interest method is a method of calculating the amortised cost of
a financial asset and of allocating interest income over the relevant period.
The effective interest rate is the rate that exactly discounts estimated
future cash receipts through the expected life of the financial asset, or,
where appropriate, a shorter period, to the net carrying amount on initial
recognition.
FINANCIAL ASSETS AT AMORTISED COST
The Group classifies its financial assets as at amortised cost only if both of
the following criteria are met:
● the asset is held within a business model whose objective is to collect the
contractual cash flows; and
● the contractual terms give rise to cash flows that are solely payments of
principal and interest.
This category of financial assets is measured at amortised cost using the
effective interest rate method less impairment. Interest is recognised by
applying the effective interest rate except for short-term receivables when
the recognition of interest would be immaterial.
IMPAIRMENT OF FINANCIAL ASSETS
Financial assets, other than those at fair value through profit or loss, are
assessed for indicators of impairment at each reporting date. In accordance
with paragraph 5.5.1 of IFRS 9 Financial Instruments, with respect to
recognition of expected credit losses, a loss allowance shall be recognised
for expected credit losses on a financial asset that is measured in accordance
with paragraphs 4.1.2 or 4.1.2A, a lease receivable, a contract asset or a
loan commitment and a financial guarantee contract to which the impairment
requirements apply in accordance with paragraphs 2.1(g), 4.2.1(c) or 4.2.1(d).
The objective of the impairment requirements is to recognise lifetime expected
credit losses for which there have been significant increase in credit risk
since initial recognition, whether assessed on an individual or collective
basis, considering all reasonable and supportable information, including that
which is forward-looking.
At each reporting date, the Group assesses whether financial assets carried at
amortised cost are credit impaired. A financial asset is credit-impaired when
one or more events that have a detrimental impact on the estimated future cash
flows of the financial asset have occurred.
The carrying amount of the financial asset is reduced by the impairment loss
directly for all financial assets through the use of an allowance account,
with a simplified approach for trade receivables. When a trade receivable is
uncollectible, it is written off against the allowance account. Subsequent
recoveries of amounts previously written off are credited against the
allowance account. Changes in the carrying amount of the allowance account are
recognised in profit or loss.
With the exception of financial assets at fair value through other
comprehensive income equity instruments, if, in a subsequent period, the
amount of the impairment loss decreases and the decrease can be related
objectively to an event occurring after the impairment was recognised, the
previously recognised impairment loss is reversed through profit or loss to
the extent the carrying amount of the investment at the date the impairment is
reversed does not exceed what the amortised cost would have been had the
impairment not been recognised.
2.8 Trade and other receivables
For the year ended For the year ended
31 December 2023 31 December 2022
US$'000 US$'000
Non-current
Other receivables − deposits 1,014 1,372
Current
Gold and silver sales debtor 44,917 29,832
Other receivables 4,526 5,796
49,443 35,628
Trade and other receivables are classified as financial assets subsequently
measured at amortised cost.
All gold and silver sales during the first half of the year were made to a
single customer in North America, Asahi Refining Canada Ltd, and there is no
recognised receivable balance from this customer as at year end. In the second
half of the year, all gold and silver sales were made to a single customer in
Switzerland, MKS PAMP SA, and there were no receivables past due from this
customer.
The average age of the total receivables is 20 days (2022: 16 days) while that
of gold and silver sales only which make up the significant part of the
debtors is an average of 9 days (2022: 9 days), see not 2.2 above and expected
credit losses ("ECL") are considered immaterial and therefore, no ECL have
been recognised in these financial statements. No interest is charged on the
receivables. Of the trade receivables balance, the gold and silver sales
debtor is all receivable from MKS PAMP SA. The amount due has been received in
full after year end. Other receivables represent GST and VAT owing from
various jurisdictions in which the Group operates.
The Directors consider that the carrying amount of trade and other receivables
is approximately equal to their fair value, therefore no expected credit loss
is recognised within this note, see note 3.1.1 for the risk assessment related
to trade receivables.
2.9 Prepayments
For the year ended For the year ended
31 December 2023 31 December 2022
US$'000 US$'000
Current
Prepayments (1) 17,404 13,864
17,404 13,864
(1) The prepayments balance above mainly consists of warehouse inventories
paid for in advance.
2.10 Property, plant, and equipment
Office equipment Buildings Plant and equipment Mining Mine Capital Total
US$'000 US$'000 US$'000 equipment development work in US$'000
US$'000 properties progress
US$'000 US$'000
Year ended 31 December 2023 cost
Balance at 1 January 2023 8,151 21,701 635,376 383,521 1,009,754 78,804 2,137,307
Additions 76 290 44 402 − 189,911 190,723
Additions: IFRS 16 right of use assets − 1,150 66 − − − 1,216
Increase in rehabilitation asset − − − − 1,310 − 1,310
Transfers from capital work in progress 890 3,216 74,033 29,233 123,599 (230,971) −
Transfers from exploration and evaluation asset − − − − 12,172 − 12,172
Transfers between categories 515 31,782 (26,266) (6,031) − − −
Disposals (1,464) (52) (9,373) (87,350) − − (98,239)
Disposals: IFRS 16 right of use assets − (1,311) (279) − − − (1,590)
Balance at 31 December 2023 8,168 56,776 673,601 319,775 1,146,835 37,744 2,242,899
Accumulated depreciation and amortisation
Balance at 1 January 2023 (6,634) (3,573) (308,034) (288,521) (443,896) − (1,050,658)
Depreciation and amortisation (1,387) (3,001) (63,511) (43,986) (86,242) − (198,127)
Transfers between categories (522) (19,412) 15,589 4,345 − − −
Disposals 1,467 1,018 9,620 77,800 − − 89,905
Balance at 31 December 2023 (7,076) (24,968) (346,336) (250,362) (530,138) − (1,158,880)
Year ended 31 December 2022 cost
Balance at 1 January 2022 9,243 13,823 625,077 359,467 816,224 85,003 1,908,837
Additions 127 1,041 526 281 − 261,647 263,622
Additions: IFRS 16 right of use assets − 2,342 1,399 4,005 − − 7,746
Decrease in rehabilitation asset − − − − (5,839) − (5,839)
Transfers from capital work in progress 508 6,587 10,808 63,201 186,742 (267,846) −
Transfers from exploration and evaluation asset − − − − 12,627 − 12,627
Disposals (1,727) (1,019) (2,434) (43,294) − − (48,474)
Disposals: IFRS 16 right of use assets − (1,073) − (139) − − (1,212)
Balance at 31 December 2023 8,151 21,701 635,376 383,521 1,009,754 78,804 2,137,307
Accumulated depreciation and amortisation
Balance at 1 January 2022 (7,543) (3,026) (275,640) (288,323) (378,088) − (952,620)
Depreciation and amortisation (818) (2,221) (34,467) (43,455) (65,808) − (146,769)
Disposals 1,727 1,674 2,073 43,257 − − 48,731
Balance at 31 December 2022 (6,634) (3,573) (308,034) (288,521) (443,896) − (1,050,658)
Net book value
As at 31 December 2023 1,092 31,808 327,265 69,413 616,697 37,744 1,084,019
As at 31 December 2022 1,517 18,128 327,342 95,000 565,858 78,804 1,086,649
Included within the depreciation charge in relation to depreciation of ROU
assets is US$1.0 million within the buildings asset class (2022: US$1
million), US$0.3 million within plant and equipment (2022: US$0.3 million) and
US$0.8 million related to mining equipment (2022: US$ 0.9 million).
The net book value of the assets in the note above includes the following
amounts relating to ROU assets on leases; US$2.1 million (2022: US$1.8
million) within buildings, US$0.9 million (2022: US$1.1 million) within plant
and equipment and US$2.4 million (2021: US$3.2 million) within mining
equipment.
An impairment trigger assessment was performed in 2023 on all Cash Generating
Units ("CGUs") including the Sukari Mine, refer to note 1.2.2 above, however
no impairment triggers on property, plant and equipment were identified in the
assessment.
Deferred stripping assets of US$90 million (2022: $141 million) were
recognised in the year ended 31 December 2023 and have been included within
mine development properties. An amortisation charge of US$35 million (2022:
US$26 million) has been recognised in the year relating to the deferred
stripping assets.
Assets that have been cost recovered under the terms of the Concession
Agreement ("CA") in Egypt are included on the statement of financial position
under property, plant and equipment as the Company will use them until the
expiration of the CA.
None of the Group's property, plant and equipment items is pledged as security
and the Group had US$54 million capital expenditure commitments as at 31
December 2023 (2022: US$19 million).
The Group implemented a new enterprise resource planning (ERP) software
system, SAP (S4 HANA) during the year. As part of the implementation and
migration from the legacy system, an extensive review process of the fixed
assets was performed as part of the fixed asset register and operational
record clean up and consequently assets that were identified as not being in
use and/or had been previously replaced by other assets (e.g. mobile equipment
rebuilds) had their carrying values derecognised from the statement of
financial position. The fixed assets derecognised as part of this process,
which are included within disposals in the above table, had a total cost of
US$61 million, accumulated depreciation of US$53 million and a carrying value
of US$8 million which was recognised as a loss in the profit or loss statement
within the other operating costs line. In addition, where assets were
identified as being classified in incorrect asset categories, reclassification
adjustments were made to correct this in the current year, see the PPE note
above. The Directors have concluded that these adjustments are qualitatively
immaterial to these financial statements given the small proportion of the
overall property, plant and equipment balance impacted, and the quantum of the
impact in the profit or loss statement.
ACCOUNTING POLICY: PROPERTY, PLANT AND EQUIPMENT ("PPE")
PPE is stated at cost less accumulated depreciation and impairment. PPE
includes capitalised development expenditure. Cost includes expenditure that
is directly attributable to the acquisition of the item and the estimated cost
of abandonment. In the event that settlement of all or part of the purchase
consideration is deferred, cost is determined by discounting the amounts
payable in the future to their present value as at the date of acquisition.
Subsequent costs are included in the asset's carrying amount or recognised as
a separate asset, as appropriate, only when it is probable that future
economic benefits associated with the item will flow to the Group and the cost
of the item can be measured reliably. The carrying amount of the replaced part
is derecognised. All other repairs and maintenance are charged to the income
statement during the financial year in which they are incurred. The cost of
PPE includes the estimated restoration costs associated with the asset.
Depreciation is charged on PPE, except for capital work in progress.
Depreciation is calculated on a straight-line basis so as to write off the net
cost or other revalued amount of each asset over its expected useful life to
its estimated residual value. Depreciation on capital work in progress
commences on commissioning of the asset and transfer to the relevant PPE
category.
The estimated useful lives, residual values and depreciation method are
reviewed at the end of each annual financial year, with the effect of any
changes recognised on a prospective basis. The following estimated useful
lives are used in the calculation of straight-line basis depreciation:
Plant and equipment: 2−20 years
Office equipment: 3−7 years
Mining equipment: 2−13 years
Buildings: 4−20 years
Where the assets relate to an active mine site, the shorter of the above
periods or remaining life of mine are used.
Freehold land is not depreciated, and all other depreciable assets are
depreciated over their useful life or the life of mine whichever is shorter.
The gain or loss arising on the disposal or scrappage of an asset is
determined as the difference between the sales proceeds and the carrying
amount of the asset and is recognised in other income or operating expenses.
RIGHT OF USE ASSETS
Right-of-use assets are measured at cost comprising the following:
● the amount of the initial measurement of lease liability.
● any lease payments made at or before the commencement date less any lease
incentives received.
● any initial direct costs.
● restoration costs
Right-of-use assets are generally depreciated over the shorter of the asset's
useful life and the lease term on a straight-line basis. If the Group is
reasonably certain to exercise a purchase option, the right-of-use asset is
depreciated over the underlying asset's useful life.
MINE DEVELOPMENT PROPERTIES
Where mining of a mineral reserve has commenced, the accumulated costs are
transferred from exploration and evaluation assets to mine development
properties.
Amortisation is first charged to new mine development ventures from the date
of first commercial production. Amortisation of mine properties is on a unit
of production basis resulting in an amortisation charge proportional to the
depletion of the proven and probable ore reserves. The unit of production is
on an ore tonne depleted basis for open pit mining property assets and an
ounce depleted basis for underground mining property assets.
Capitalised underground development costs incurred to enable access to
specific ore blocks or areas of the underground mine, and which only provide
an economic benefit over the period of mining that ore block or area, are
depreciated on a unit of production basis, whereby the denominator is
estimated ounces of gold in proven and probable reserves within that ore block
or area where it is considered probable that those reserves will be extracted
economically.
IFRIC 20 'STRIPPING COSTS IN THE PRODUCTION PHASE OF A SURFACE MINE'
IFRIC 20 provides clarity on how to account for and measure the removal of
mine waste materials which provide access to mineral ore deposits. Within
Sukari's open pit operations, removal of mine overburden or waste material is
routinely necessary to gain access to mineral ore deposits and this waste
removal activity is known as 'stripping'. There can be two benefits accruing
to the entity from the stripping activity:
● usable ore that can be used to produce inventory; and
● improved access to further quantities of material that will be mined in future
periods.
The costs of stripping activity are required to be accounted for in accordance
with the principles of IAS 2 Inventories to the extent that the benefit from
the stripping activity is realised in the form of inventory produced. The
costs of stripping activity which provides a benefit in the form of improved
access to ore is recognised as a non-current 'stripping activity asset' where
the following criteria are met:
● it is probable that the future economic benefit (improved access to the ore
body) associated with the stripping activity will flow to the entity;
● the entity can identify the component of the ore body for which access has
been improved; and
● the costs relating to the stripping activity associated with that component
can be measured reliably.
When the costs of the stripping activity asset and the inventory produced are
not separately identifiable, production stripping costs are allocated between
the inventory produced and the stripping asset by using an allocation basis
that is based on a relevant production measure. A stripping activity asset is
accounted for as an addition to, or as an enhancement of, an existing asset
and classified as tangible or intangible according to the nature of the
existing asset of which it forms part.
A deferred stripping asset is initially measured at cost and subsequently
carried at cost or its revalued amount less depreciation or amortisation and
impairment losses. A stripping asset is depreciated or amortised on a
systematic basis, over the expected useful life of the identified component of
the ore body that becomes more accessible as a result of the stripping
activity. The stripping activity asset is depreciated using a unit of
production method based on the total ounces to be produced for the component
over the life of the component of the ore body.
Capitalised deferred stripping costs are included in 'Mine Development
Properties', within property, plant, and equipment. These form part of the
total investment in the relevant cash generating unit, which is reviewed for
impairment if events or a change in circumstances indicate that the carrying
value may not be recoverable. Amortisation of deferred stripping costs is
included in cost of sales.
The stripping costs associated with the current period operations are expensed
during that period and any stripping activity cost associated with producing
future benefit is deferred on the balance sheet and amortised over the period
that the benefit is received i.e., is classified as capital expenditure,
creating a Deferred Stripping asset.
The pit components are the separate stages of the open pit mine. For each
component, the stripping ratio is determined, and costs are capitalised if the
stripping ratio in the year for that component is greater than the overall LOM
stripping ratio for that component. Based on the calculations performed the
amount capitalised to the balance sheet for 2023 is US$90 million (2022:
US$141 million).
Impairment of assets (other than exploration and evaluation and financial
assets)
At each reporting date, the Group reviews the carrying amounts of its tangible
and intangible assets to determine whether there is any indication that those
assets have suffered an impairment loss. If such an indication exists, the
recoverable amount of the asset is estimated to determine the extent of the
impairment loss (if any). For the purposes of assessing impairment, assets are
grouped at the lowest levels for which they potentially generate largely
independent cash inflows (cash generating units).
Recoverable amount is the higher of fair value loss costs to sell and value in
use. In assessing value in use, the estimated future cash flows are discounted
to their present value using a pre-tax discount rate that reflects current
market assessment of the time value of money and the risks specific to the
asset for which the estimates of future flows have not been adjusted.
If the recoverable amount of a cash generating unit ("CGU") is estimated to be
less than its carrying amount, the carrying amount of the CGU is reduced to
its recoverable amount. Where an impairment loss subsequently reverses, the
carrying amount of the cash generating unit is increased to the revised
estimate of its recoverable amount, but only to the extent that the increased
carrying amount does not exceed the carrying amount that would have been
determined had no impairment loss been recognised for the cash generating unit
in prior years.
A reversal of an impairment loss is recognised immediately in profit or loss,
unless the relevant asset is carried at a revalued amount, in which case the
reversal of an impairment loss is treated as a revaluation increase.
2.11 Exploration and evaluation asset
For the year ended For the year ended
31 December 2023 31 December 2022
US$'000 US$'000
Balance at the beginning of the year 24,809 25,261
Expenditure for the year 12,172 12,175
Transfer to property, plant, and equipment (12,172) (12,627)
Balance at the end of the year 24,809 24,809
The exploration and evaluation asset relates to the drilling, geological
exploration and sampling of potential ore reserves and can all be attributed
to Egypt, within the brownfield site at Sukari (US$24.8 million (2022: US$24.8
million)).
In accordance with the requirements of IAS 36 Impairment of assets ("IAS 36")
and IFRS 6 Exploration for and evaluation of mineral resources ("IFRS 6")
exploration and evaluation assets are assessed for impairment when facts and
circumstances (as defined in IFRS 6) suggest that the carrying amount of
exploration and evaluation assets may exceed its recoverable amount.
An impairment trigger assessment was performed on the SGM's exploration and
evaluation assets, and no impairment triggers were noted and therefore no
formal impairment test has been performed.
ACCOUNTING POLICY: EXPLORATION, EVALUATION AND DEVELOPMENT EXPENDITURE
Exploration and evaluation expenditures in relation to each separate area of
interest are differentiated between greenfield and brownfield exploration
activities in the year in which they are incurred.
The greenfield and brownfield terms are generally used in the minerals sector
and have been adopted to differentiate high risk remote exploration activity
from near-mine exploration activity:
(a) greenfield exploration refers to territory, where mineral deposits are not
already developed and has the goal of establishing a new mine requiring new
infrastructure, regardless of it being in an established mining field or in a
remote location. Greenfield exploration projects can be subdivided into
grassroots and advanced projects embracing prospecting, geoscientific surveys,
drilling, sample collection and testing, but excludes work of brownfields
nature, pit and shaft sinking and bulk sampling; and
(b) brownfield exploration, also known as near-mine exploration, refers to areas
where mineral deposits were previously developed. In brownfield exploration,
geologists look for deposits near or adjacent to an already operating mine
with the objective of extending its operating life and taking advantage of the
established infrastructure.
Greenfield exploration costs are expensed as incurred and are not capitalised
to the balance sheet until definitive feasibility studies have been completed
for the project that would allow for the application and successful receipt of
a mining license. Brownfield exploration costs continue to be capitalised to
the statement of financial position. Brownfield exploration and evaluation
expenditures in relation to each separate area of interest are recognised as
an exploration and evaluation asset in the year in which they are incurred
where the following conditions are satisfied:
● The rights to tenure of the area of interest are current; and
● At least one of the following conditions is also met:
− the exploration and evaluation expenditures are expected to be recouped
through successful development and exploration of the area of interest, or
alternatively, by its sale; or
− exploration and evaluation activities in the area of interest have not at the
reporting date reached a stage which permits a reasonable assessment of the
existence or otherwise of economically recoverable reserves, and active and
significant operations in, or in relation to, the area of interest are
continuing.
Exploration and evaluation assets are initially measured at cost and include
acquisition of rights to explore, studies, exploration drilling, trenching,
and sampling and associated activities. General and administrative costs are
only included in the measurement of exploration and evaluation costs where
they are related directly to operational activities in a particular area of
interest.
Exploration and evaluation assets are assessed for impairment when facts and
circumstances (as defined in IFRS 6) suggest that the carrying amount of
exploration and evaluation assets may exceed its recoverable amount. The
recoverable amount of the exploration and evaluation assets (or the cash
generating unit(s) to which it has been allocated, being no larger than the
relevant area of interest) is estimated to determine the extent of the
impairment loss (if any). Where an impairment loss subsequently reverses, the
carrying amount of the asset is increased to the revised estimate of its
recoverable amount, but only to the extent that the increased carrying amount
does not exceed the carrying amount that would have been determined had no
impairment loss been recognised for the asset in previous years. The E&E
asset's recoverable amount which is the higher of the amount to be recovered
through use of the asset and the amount to be recovered through sale of the
asset is determined based on the provisions of IAS 36.
In accordance with IFRS 6, the full balance of the Group's E&E assets
which do not currently generate cash inflows is allocated to a producing
mine's cash-generating unit (CGU) for the purpose of assessing and testing the
assets for impairment as this is considered the most appropriate level of
reporting reflecting the way the Groups' operations are managed. Management
considers an operation actively mining precious metals as a distinct CGU and
only E&E expenditure on such active mining operations is capitalised. Any
E&E expenditure on operations exploring for precious metals is expensed.
The application of the Group's accounting policy for E&E expenditure
requires judgement to determine whether future economic benefits are likely
from either future exploitation or sale, or whether activities have not
reached a stage that permits a reasonable assessment of the existence of
reserves.
In addition to applying judgement to determine whether future economic
benefits are likely to arise from the Group's E&E assets or whether
activities have not reached a stage that permits a reasonable assessment of
the existence of reserves, the Group has to apply a number of estimates and
assumptions. The determination of the Group's ore reserves and mineral
resource estimates is itself an estimation process that involves varying
degrees of uncertainty depending on how the resources are classified (i.e.,
measured, indicated or inferred), refer to note 1.2.3. The estimates directly
impact when the Group reclassifies E&E expenditure to mine development
properties. The reclassification process requires management to make certain
estimates and assumptions about future events and circumstances, particularly,
when a decision is made to proceed with development in respect of a particular
exploration area to start the economic extraction operation of the ore. Any
such estimates and assumptions may change as new information becomes
available. If, after expenditure is capitalised, information becomes available
suggesting that the recovery of expenditure is unlikely, the relevant
capitalised amount is written off to the statement of profit or loss and other
comprehensive income in the period when the new information becomes available.
Where a decision is made to proceed with development in respect of a
particular area of interest based on the commercial and technical feasibility,
the relevant exploration and evaluation asset is tested for impairment,
reclassified to mine development properties, and then amortised over the life
of the reserves associated with the area of interest once mining operations
have commenced.
Mine development expenditure is recognised at cost less accumulated
amortisation and any impairment losses. When commercial production has
commenced, the associated costs are amortised over the estimated economic life
of the mine on a units of production basis. Changes in factors such as
estimates of proved and probable reserves that affect the unit of production
calculations are dealt with on a prospective basis.
All revenues recognised after the commencement of commercial production are
recognised in accordance with the Revenue Policy stated in note 2.2.
The commencement date of commercial production is determined when stable and
sustained production capacity has been achieved.
2.12 INVENTORIES
The treatment and classification of mining stockpiles within inventory is
split between current and non-current assets. Priority is placed on the
higher-grade ore, accordingly, stockpiles which will not be consumed within
the next twelve months based on mining and processing forecasts have been
classified to non-current assets. The volume of ore extracted from the open
pit in the year exceeded the volume that could be processed, which has caused
an increase in the volume and value of the mining stockpiles.
The carrying value of the non-current asset portion is assessed at the lower
of cost or net realisable value. The long-term gold price would have to reduce
to approximately US$1,475 per ounce for the net realisable value to fall below
carrying value.
For the year ended For the year ended
31 December 2023 31 December 2022
US$'000 US$'000
Non-current
Mining stockpiles 103,121 94,773
Current
Mining stockpiles, ore in circuit, doré supplies 45,807 40,836
Stores inventory 106,150 99,733
Provision for obsolete stores inventory (2,500) (6,504)
149,457 134,065
The calculation of weighted average costs of mining stockpiles is applied at a
detailed level of ore grade categories. The open pit ore on the run-of-mine
("ROM") is split into seven different grade categories and the underground ore
is treated as a single high-grade category. Each grade category is costed
individually on a weighted average basis applying costs specifically related
to extracting and moving that grade of ore to and from the ROM pad. The grade
categories range from high-grade underground and open pit ore to low-grade
open pit ore. Costs per contained ounce differ between the various cost
categories.
Currently at Sukari, low-grade (0.4 to 0.5g/t) open pit stockpile material
above the cut-off grade of 0.4g/t has been classified as follows on the
statement of financial position:
● Current assets (ore tonnes scheduled to be processed within the next twelve
months): None
● Non-current assets (ore tonnes not scheduled to be processed within the next
twelve months): 15.2Mt at an average grade of 0.45g/t
ACCOUNTING POLICY: INVENTORIES
Inventories include mining stockpiles, gold in circuit, doré supplies and
stores and materials. All inventories are stated at the lower of cost and net
realisable value ("NRV"). The cost of mining stockpiles and gold produced is
determined principally by the weighted average cost method using related
production costs.
The cost of mining stockpiles includes costs incurred up to the point of
stockpiling, such as mining and grade control costs, but excludes future costs
of production. Ore extracted is allocated to stockpiles based on estimated
grade, with grades below defined cut-off levels treated as waste and expensed.
Material piled on the ROM pad is accounted for in their separate grade
categories. While held in physically separate stockpiles, the Group blends the
ore from selected stockpiles when feeding the processing plant to achieve the
resultant gold content. In such circumstances, lower and higher-grade ore
stockpiles each represent a raw material, used in conjunction with each other,
to deliver overall gold production, as supported by the relevant feed plan.
The processing of ore in stockpiles occurs in accordance with the LOM
processing plan and is constantly being optimised based on the known Mineral
Reserves, current plant capacity and mine design. Ore tonnes contained in the
stockpiles which exceed the annual tonnes to be milled as per the mine plan in
the following year, are classified as non-current in the statement of
financial position.
Costs of gold inventories include all costs incurred up until production of an
ounce of gold such as milling costs, mining costs and directly attributable
mine general and administration costs but excludes transport costs, refining
costs and royalties. NRV is determined with reference to estimated contained
gold and market gold prices, less estimated refining and transport costs.
Stores and materials consist of consumable stores and are valued at weighted
average cost after appropriate impairment of redundant and slow-moving items.
Consumable stock for which the Group has substantially all the risks and
rewards of ownership are brought onto the statement of financial position as
current assets.
2.13 TRADE AND OTHER PAYABLES
For the year ended For the year ended
31 December 2023 31 December 2022
US$'000 US$'000
Non-current
Other creditors (1)(2) 8,264 11,801
Current
Trade payables 27,637 43,493
Other creditors and accruals (2)(3) 66,611 55,902
94,248 99,395
(1) Included within non-current other creditors is US$4.8m (2022:
US$7.3m) in relation to the remaining instalments of a US$17.6m settlement
agreement signed with EMRA in 2021. By its nature, elements of the cost
recovery mechanism within the Concession Agreement are subject to
interpretation and ongoing audits by EMRA. It is possible that future
settlement agreements may be agreed with EMRA in relation to historic items.
The Directors have assessed that it is not probable that any additional
settlements with EMRA will be required as at 31 December 2023, and therefore
no additional provisions have been recognised within these financial
statements, therefore, this has been disclosed under contingent liabilities,
refer to note 5.1.
(2) Lease liabilities - finance lease liabilities relating to some of
the Group's property, plant and equipment of US$1.7m (2022: US$1.9m) are
included in the current portion of other creditors and accruals balance and
US$3.4m (2022: US$4.5m) is included in the non-current other creditors
balance.
(3) The current portion of the EMRA settlement agreement referred to in
(1) above of US$4.9m (2022: US$4.9m) is included in the current other
creditors and accruals balance above. Also included within the current other
creditors and accruals are stock accruals of US$35m (2022: US$17m) and
non-stock items accruals of US$25m (2022: US$32m).
Trade payables principally comprise the amounts outstanding for trade
purchases and ongoing costs. The average credit period taken for trade
purchases is 17 days (2022: 29 days). Trade payables are interest free for
periods ranging from 30 to 180 days. Thereafter interest is charged at
commercial rates.
The Group has financial risk management policies in place to ensure that all
payables are paid within the credit timeframe. Other creditors and accruals
relate to various accruals that have been recognised due to amounts known to
be outstanding for which the related invoices have not yet been received.
The Directors consider that the carrying amount of trade payables approximate
their fair value.
Accounting policy: Trade and other payables
These amounts represent liabilities for goods and services provided to the
Group prior to the end of the financial year which are unpaid. The amounts are
unsecured and are usually paid within 30 days of recognition. Trade and other
payables are presented as current liabilities unless payment is not due within
twelve months after the reporting period. They are recognised initially at
their fair value and subsequently measured at amortised cost using the
effective interest method.
2.14 Provisions
For the year ended For the year ended
31 December 2023 31 December 2022
US$'000 US$'000
Current
Employee benefits (1) 1,054 2,276
Other current provisions (2) 930 980
1,984 3,256
Non-current
Restoration and rehabilitation (3) 40,039 37,396
Other non-current provisions − 29
40,039 37,425
Movement in restoration and rehabilitation provision
Balance at beginning of the year 37,396 42,647
Increase/(Decrease) in provision 1,310 (5,839)
Interest expense - unwinding of discount 1,333 588
Balance at end of the year 40,039 37,396
(1) Employee benefits relate to annual, sick, and long service leave
entitlements and bonuses.
(2) Provision for customs, rebates and withholding taxes.
(3) The provision for restoration and rehabilitation has been discounted by
4.01% (2022: 3.63%) using a US$ applicable rate and inflation applied at 2.40%
(2022: 2.37%). The annual review undertaken as at 31 December 2023 has
resulted in a US$1.3 million increase in the provision (2022: US$5.8 million
decrease). The key assumptions used to determine the provision are disclosed
in note 1.2.4.
The Group recognises the Global Industry Standard on Tailings Management
(GISTM) and is committed to full implementation of the GISTM at all its
tailings storage facilities (TSFs). The standard sets a high bar and contains
77 requirements integrating social, environmental, local economic and
technical considerations; with the aim to eliminate harm to people and the
environment.
The Group manages two TSFs at Sukari, both of which are active. The TSFs are
designed, constructed and operated to a rigorous set of standards and are
carefully managed and monitored through a layered assurance system by internal
specialists and independent external third-party reviews, with mechanisms in
place for reporting risk and tracking mitigation measures. The GISTM guides
and supports the Group's tailings management framework.
In 2023, the Group made significant progress to align its tailings management
framework to the GISTM and is able to report its level of conformance against
each principle of the standard. This did not have a material impact on the
provision recognised during the year. Overall, the Group's tailings management
and governance system was assessed to be in conformance with approximately 80
to 85% of the GISTM requirements. The Group has put in place a clear action
plan and roadmap to fully conform with the GISTM by end-2025. We will monitor
and report on our progress towards full conformance.
The Group publishes an annual disclosure report on its tailings facilities on
its website. In 2024, the content of this disclosure will be updated to align
with Principle 15 of the GISTM.
ACCOUNTING POLICY: RESTORATION AND REHABILITATION
A provision for restoration and rehabilitation is recognised when there is a
present legal or constructive obligation as a result of exploration,
development and production activities undertaken, it is probable that an
outflow of economic benefits will be required to settle the obligation, and
the amount of the provision can be measured reliably. The estimated future
obligations include the costs of dismantling and removal of facilities,
restoration, and monitoring of the affected areas. The provision for future
restoration costs is the best estimate of the present value of the expenditure
required to settle the restoration obligation at the reporting date in
accordance with the requirements of the Concession Agreement. Future
restoration costs are reviewed annually and any changes in the estimate are
reflected in the present value of the restoration provision at each reporting
date.
The provision for restoration and rehabilitation represents the present value
of the Directors' best estimate of the future outflow of economic benefits
that will be required to decommission infrastructure, restore affected areas
by ripping and grading of compacted surfaces to blend with the surroundings,
closure of project components to ensure stability and safety at the Group's
sites at the end of the life of mine. This restoration and rehabilitation
estimate has been made based on benchmark assessments of restoration works
required following mine closure and after considering the projected area
disturbed to date.
Discount rates to present value the future obligations are determined by
reference to risk free rates for periods which approximate the period of the
associated obligation.
The initial estimate of the restoration and rehabilitation provision relating
to exploration, development and mining production activities is capitalised
into the cost of the related asset and amortised on the same basis as the
related asset, unless the present obligation arises from the production of the
inventory in the period, in which case the amount is included in the cost of
production for the period. Changes in the estimate of the provision of
restoration and rehabilitation are treated in the same manner, except that the
unwinding of the effect of discounting on the provision is recognised as a
finance cost within the income statement rather than capitalised to the
related asset.
2.15 Issued capital
31 December 2023 31 December 2022
Number US$'000 Number US$'000
Fully paid ordinary shares
Balance at beginning of the year 1,156,450,695 670,994 1,156,450,695 669,531
Own shares acquired during the year (1) − (245) − −
Employee share option scheme - newly issued shares 1,982,000 − − −
Transfer from share option reserve − 2,683 − 1,463
Balance at end of the year 1,158,432,695 673,432 1,156,450,695 670,994
(1) The US$ 0.2 million (2022: US$ Nil ) represents the cost of shares in
Centamin plc purchased on the market and held by the Centamin plc Employee
Benefit Trust to satisfy share awards under the Group's share options plans.
The authorised share capital is an unlimited number of no-par value shares.
Pursuant to the plan rules, at 31 December 2023, the trustee of the deferred
bonus share plan and Centamin incentive plan held 656,764 ordinary shares
(2022: 1,187,779 ordinary shares).
Fully paid ordinary shares carry one vote per share and carry the right to
dividends. See note 6.3 for more details of the share awards.
ACCOUNTING POLICY: ISSUED CAPITAL
Ordinary shares are classified as equity. Incremental costs directly
attributable to the issue of new shares or options are shown in equity as a
deduction, net of tax, from the proceeds.
Where the Company or other members of the consolidated Group purchase the
Company's equity share capital, the consideration paid is deducted from the
total shareholders' equity of the Group and/or of the Company as treasury
shares until they are cancelled. Where such shares are subsequently sold or
reissued, any consideration received is included in shareholders' equity of
the Group and/or the Company.
2.16 Share option reserve
For the year ended For the year ended
31 December 2023 31 December 2022
US$'000 US$'000
Share option reserve
Balance at beginning of the year 6,082 4,975
Share-based payments expense 6,725 2,570
Transfer to issued capital (2,683) (1,463)
Balance at the end of the year 10,124 6,082
The share option reserve arises on the grant of share options to employees
under the employee share option plan. Amounts are transferred out of the
reserve and into issued capital when the options and warrants are
exercised/vested. Amounts are transferred out of the reserve into accumulated
profits when the options and warrants are forfeited.
2.17 Cash flow information
(A) RECONCILIATION OF CASH AND CASH EQUIVALENTS
For the purpose of the statement of cash flows, cash and cash equivalents
includes cash on hand and at bank and deposits.
For the year ended For the year ended
31 December 2023 31 December 2022
US$'000 US$'000
Cash and cash equivalents 93,322 102,373
Most funds have been invested in international rolling short-term fixed
interest money market deposits.
The Company secured an RCF on 22 December 2022 and the facility is secured by
certain financial covenants on the Company (see note 2.7). The covenant
specific to the Company's cash assets states that:
• Liquidity shall at all times exceed US$50 million and as 31 December
2023, the Company was in compliance with this financial covenant requirement.
The carrying amounts of financial assets pledged as security for the facility,
being the cash is included in 2.17 above.
ACCOUNTING POLICY: CASH AND CASH EQUIVALENTS
Cash comprises cash on hand and demand deposits. Cash equivalents are
short-term, highly liquid investments that are readily convertible to known
amounts of cash and which are subject to an insignificant risk of changes in
value. Investments normally only qualify as cash equivalent if they have a
short maturity of three months or less from the date of acquisition.
(B) RECONCILIATION OF PROFIT BEFORE TAX FOR THE YEAR TO CASH FLOWS FROM
OPERATING ACTIVITIES
For the year ended For the year ended
31 December 2023 31 December 2022((1))
US$'000 US$'000 (restated)
Profit for the year before tax 195,140 171,001
Adjusted for:
Depreciation/amortisation of property, plant, and equipment 198,127 146,769
Inventory written off 3,721 2
Inventory obsolescence provision (4,004) 579
Net fair value movements on derivative financial instruments 5,509 -
Foreign exchange gains, net (5,682) (6,559)
Share-based payments expense 7,306 2,570#
Finance income (4,127) (1,214)
Finance costs 3,526 2,459
Loss on disposal of property, plant, and equipment 9,415 899
Changes in working capital during the year:
Increase in trade and other receivables (13,815) (3,049)
Increase in inventories (19,737) (35,940)
Increase in prepayments (3,181) (7,172)
Purchase of derivative financial instruments (6,163) -
(Decrease)/Increase in trade and other payables (9,901) 25,053
Increase/(decrease) in provisions 61 (773)
Cash flows generated from operating activities 356,195 294,625
(1) The comparatives as at 31 December 2022 have been restated to
reflect finance costs of US$2.5m, now added back to cash flows from operating
activities.
(C) NON-CASH FINANCING AND INVESTING ACTIVITIES
During the year there have been no non-cash financing and investing activities
other than in relation to leases accounted for under IFRS 16 Leases.
3. Group financial risk and capital management
3.1 Group financial risk management
3.1.1 Financial instruments
(a) Group risk management
The Group manages its capital to ensure that entities within the Group will be
able to continue as a going concern while maximising the return to
stakeholders through the optimisation of the cash and equity balances. The
Group's overall strategy remains unchanged from the previous financial year.
The Group has no debt and thus is not geared at the year end or in the prior
year. However, on 22 December 2022, the Company entered into an agreement for
a US$150 million revolving credit facility ("RCF") with four banks. The
facility will introduce debt and gearing to the Company when drawn down. As at
31 December 2023, there were no draw downs on the facility and there were also
no drawdowns during the year.
The capital structure currently consists of cash and cash equivalents and
equity attributable to equity holders of the parent, comprising issued capital
and reserves as disclosed in notes 2.15 and 2.16. The Group operates in
Australia, Jersey, United Kingdom, Egypt and Côte d'Ivoire and is currently
winding down its project in Burkina Faso. None of the Group's entities are
subject to externally imposed capital requirements.
The Group utilises inflows of funds towards the ongoing exploration and
development of SGM in Egypt and the exploration projects in both Côte
d'Ivoire and Egypt.
Categories of financial assets and liabilities
For the year ended For the year ended
31 December 2023 31 December 2022
US$'000 US$'000
Financial assets
Non-current
Other receivables - deposits 1,014 1,372
Current
Cash and cash equivalents 93,322 102,373
Trade and other receivables (1) 45,214 33,848
Derivative financial instruments 654 −
140,204 137,593
Financial liabilities
Non-current
Other payables 8,264 11,801
Current
Trade and other payables 94,248 99,395
102,512 111,196
1. The prior year amount for Trade and other receivables has been
restated to exclude an amount relating to taxes receivable.
(b) Financial risk management and objectives
The Group's overall risk management programme focuses on the unpredictability
of financial markets and seeks to minimise potential risk adverse effects and
ensure that net cash flows are sufficient to support the delivery of the
Group's financial targets whilst protecting future financial security. The
Group continually monitors and tests its forecast financial position against
these objectives.
The Group's activities expose it to a variety of financial risks: market,
commodity, credit, liquidity, foreign exchange, and interest rate. These risks
are managed under Board approved directives through the Audit and Risk
Committee. The Group's principal financial instruments comprise interest
bearing cash and cash equivalents. Other financial instruments include trade
receivables and trade payables, which arise directly from operations.
It is, and has been throughout the period under review, Group policy that no
speculative trading in financial instruments be undertaken.
(c) Market risk
The Group operates internationally and is exposed to foreign exchange risk
arising from various currency exposures, primarily with respect to the
Australian dollar, Great British pound, and Egyptian pound. Foreign exchange
risk arises from future commercial transactions and recognised assets and
liabilities that are denominated in a currency that is not the entity's
functional currency. The risk is measured by regularly monitoring,
forecasting and performing sensitivity analyses on the Group's financial
position.
Financial instruments denominated in Great British pounds, Australian dollars
and Egyptian pounds are as follows:
Great British pound Australian dollar Egyptian pound
31 December 2023 31 December 2022 31 December 2023 31 December 2022 31 December 2023 31 December 2022
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Financial assets
Cash and cash equivalents 728 622 261 343 1,486 837
728 622 261 343 1,486 837
Financial liabilities
Trade and other payables 3,464 2,084 13,139 11,751 15,383 37,218
3,464 2,084 13,139 11,751 15,383 37,218
Net exposure (2,736) (1,462) (12,878) (11,408) (13,897) (36,381)
The following table summarises the sensitivity of financial instruments held
at the reporting date to movements in the exchange rate of the Great British
pound, Egyptian pound, and Australian dollar to the US dollar, with all other
variables held constant. The sensitivities are based on reasonably possible
changes over a financial year, using the observed range of actual historical
rates.
Impact on profit Impact on equity
31 December 2023 31 December 2022 31 December 2023 31 December 2022
US$'000 US$'000 US$'000 US$'000
US$/GBP increase by 10% 389 482 − −
US$/GBP decrease by 10% (476) (590) − −
US$/AUD increase by 10% (342) 98 − −
US$/AUD decrease by 10% 417 (119) − −
US$/EGP increase by 20% (2022:10%) 833 (2,816) − −
US$/EGP decrease by 20% (2022:10%) (1,249) 3,443 − −
The amounts shown above are the main currencies to which the Group is exposed.
The Group also has small deposits in Euro US$443,522 (2022: US$335,586) and
West African Franc US$1,496,766 (2022: US$1,422,704), and net payables in Euro
US$4,285,177 (2022: US$5,277,783) and in West African Franc US$3,024,139
(2022: US$3,064,019). A movement of 10% up or down in these currencies would
have a negligible effect on the assets/liabilities.
The Group has not entered into forward foreign exchange contracts. Natural
hedges are utilised wherever possible to offset foreign currency liabilities.
The Company maintains a policy of not hedging its currency positions and
maintains currency holdings in line with underlying requirements and
commitments.
The 20% used for the EGP in the current year is in line with the average
devaluation of the EGP against the USD during the year.
(d) Commodity price risk
The Group's future revenue forecasts are exposed to commodity price
fluctuations, in particular gold that it produces and sells into the global
market and fuel prices. The market prices of gold is the key driver of the
Group's capacity to generate cash flow. The Group has not entered into any
forward gold or fuel hedging contracts, it has however, entered into a series
of gold put option contracts during the year, refer to note 2.4 for further
details.
Gold price
The table below summarises the impact of increases/decreases of the average
realised gold price on the Group's profit after tax for the year. The
analysis assumes that the average realised gold price per ounce of US$1,948/oz
(2022: US$1,794/oz) had increased/decreased by 10% with other variables held
constant.
Impact on after tax profit
31 December 2023 31 December 2022
US$'000 US$'000
After tax profit 194,885 170,775
After tax profit with impact of increase by 10% US$/oz 281,155 247,106
After tax profit with impact of decrease by 10% US$/oz 108,615 94,444
The table above is considered before factoring in the impact of the Group's
gold price protection programme. Should the gold price per ounce drop to below
US$1,900/oz, the gold put option contracts will pay out to the Group the
difference between the realised average price per ounce and US$1,900/oz.
Therefore, a 10% decrease on the average realised gold price during the year
would result in all the six contracts for the 2023 financial year with a total
of 120,000 ounces paying out approximately US$18 million. Refer to note 2.4
for further details on the gold price protection programme.
Fuel price
Any variation in the fuel price has an impact on the mine production costs and
the table below summarises the impact of increases/decreases of the average
fuel price on the Group's mine production costs. The analysis assumes that the
average fuel price of US$ 0.80 per litre (2022: US$ 0.88 per litre) had
increased/decreased by 10% per litre with all other variables held constant.
Impact on mine production costs
31 December 2023 31 December 2022
US$'000 US$'000
Mine production costs (412,827) (408,543)
Mine production costs with impact of increase by 10% US$/litre 14,910 16,943
Mine production costs with impact of decrease by 10% US$/litre (14,910) (16,943)
(e) Interest rate risk and liquidity risk
The Group's main interest rate risk arises from cash and short-term deposits.
Given the size of these balances and that the Group does not have any debt
instruments, interest rate risk is not considered to be material. Cash
deposits are placed on a term period of no more than 30 days at a time.
The financial instruments exposed to interest rate risk and the Group's
exposure to interest rate risk as at the balance sheet date were as per the
table below. The table analyses the Group's financial liabilities into
relevant maturity groupings based on their expected settlement profiles for
all non-derivative financial liabilities. The amounts disclosed in the table
are the undiscounted expected cash flows. A separate line for lease
liabilities has been presented in the maturity analysis of the Group's
financial liabilities in the table below.
The Group's liquidity position is managed to ensure that sufficient funds are
available to meet its financial commitments in a timely and cost-effective
manner. The RCF requires a minimum liquidity level at all times of US$50
million.
Ultimate responsibility for liquidity risk management rests with the Board,
which has established an appropriate management framework for the management
of the Group's funding requirements. The Group manages liquidity risk by
maintaining adequate cash reserves and management monitors rolling forecasts
of the Group's liquidity based on expected cash flows. The tables in section
(a) to (c) of this note above reflect a balanced view of cash inflows and
outflows and show the implied risk based on those values. Trade payables and
other financial liabilities originate from the financing of assets used in the
Group's ongoing operations. These assets are considered in the Group's overall
liquidity risk. Management continually reviews the Group's liquidity position
including cash flow forecasts to determine the forecast liquidity position and
maintain appropriate liquidity levels.
Weighted average Less than one month Between Between 1 and 2 years Between 2 and 5 years Over 5 years Total
1 and 12 months
effective interest rate % US$'000
US$'000 US$'000 US$'000 US$'000
US$'000
31 December 2023
Financial assets
Fixed interest rate instruments 3.99% 31,868 33,775 − − − 65,643
Non-interest bearing 77,775 − − − − 77,775
109,643 33,775 − − − 143,418
Financial liabilities
Non-interest bearing 0% 95,112 2,500 2,500 2,500 − 102,612
Lease liabilities 165 1,629 1,662 1,962 378 5,795
95,277 4,129 4,162 4,462 378 108,407
Weighted average Less than one month Between Between 1 and 2 years Between 2 and 5 years Over 5 years Total
1 and 12 months
effective interest rate % US$'000
US$'000 US$'000 US$'000 US$'000
US$'000
31 December 2022
Financial assets
Fixed interest rate instruments 1.04% 21,394 54,998 − − − 76,392
Non-interest bearing − 61,610 − − − − 61,610
83,004 54,998 − − − 138,002
Financial liabilities
Non-interest bearing 0% 97,716 2,500 2,500 5,000 − 107,716
Lease liabilities 234 1,929 1,750 2,587 549 7,049
97,950 4,429 4,250 7,587 549 114,765
(f) Credit risk
Credit risk refers to the risk that a counterparty will default on its
contractual obligations resulting in financial loss to the Group. The Group
has adopted a policy of only dealing with creditworthy counterparties and
obtaining sufficient collateral or other security where appropriate, as a
means of mitigating the risk of financial loss from defaults. The Group
measures credit risk on a fair value basis. The Group's credit risk is
concentrated in one entity, the refiner Asahi Refining Canada Ltd, up to 30
June 2023 and thereafter MKS PAMP SA, but the Group has good credit control on
its customer and none of the trade receivables from the customer have been
past due. Also, the cash balances held in all currencies are held with
financial institutions with a high credit rating.
The gross carrying amount of financial assets recorded in the financial
statements represents the Group's maximum exposure to credit risk without
taking account of the value of collateral or other security obtained.
(g) Fair value
The carrying amount of financial assets and financial liabilities recorded in
the financial statements represents their respective fair values, other than
in relation to lease liabilities, principally as a consequence of the
short-term maturity thereof.
(h) Mineral reserve and resource statement impact on ore reserves
The following disclosure provides information to help users of the financial
statements understand the judgements made about the future and other sources
of estimation uncertainty. The key sources of estimation uncertainty described
in note 1.2.3 above and the range of possible outcomes are described more
fully below.
Depreciation of capitalised underground mine development costs
Depreciation of capitalised underground mine development costs at SGM is based
on reserve estimates. Management believe that these estimates are both
realistic and conservative, based on current information. The sensitivity
analysis assumes that the reserve estimate has increased/decreased by 25% with
all other variables held constant.
Decrease by 25% 31 December 2023 Increase by 25%
US$'000 US$'000 US$'000
Amortisation of rehabilitation asset (within mine development properties) (3,452) (2,589) (1,942)
Amortisation of mine development properties (remainder) (111,537) (83,653) (62,740)
Mine development properties - net book value 587,950 616,697 638,258
Property, plant, and equipment - net book value* 1,055,272 1,084,019 1,105,580
* Reflects the impact on the overall property, plant and equipment
carrying amount at the reporting date from the movements in mine development
amortisation above.
Decrease by 25% 31 December 2022 Increase by 25%
US$'000 US$'000 US$'000
Amortisation of rehabilitation asset (within mine development properties) (3,978) (2,984) (2,238)
Amortisation of mine development properties (remainder) (83,766) (62,824) (47,118)
Mine development properties - net book value 549,761 571,697 588,149
Property, plant, and equipment - net book value* 1,070,553 1,092,489 1,108,941
* Reflects the impact on the overall property, plant and equipment
carrying amount at the reporting date from the movements in mine development
amortisation above.
The sensitivity analysis presented above includes the impact on the
amortisation amounts of the capitalised deferred stripping asset. The deferred
stripping asset and the rehabilitation asset are included within the Mine
Development Properties category in the Group's property, plant and equipment.
(i) Loan covenants
On 22 December 2022, the Company entered into an agreement for a US$150
million RCF with four banks: Bank of Montreal (London Branch), HSBC Bank plc,
ING Bank N.V. (Amsterdam Branch) and Nedbank Limited (London Branch) (see note
2.7).
The terms of the facility impose certain financial covenants on the Company in
respect of each Relevant Period that has an outstanding borrowing, refer to
note 2.7 for further information on the covenant requirements. As at 31
December 2023, the Company was in compliance with all the RCF's financial
covenants requirements however, there were no drawdowns on the facility yet.
3.2 Capital management
3.2.1 RISK MANAGEMENT
The Group's objectives when managing capital are to:
● safeguard their ability to continue as a going concern, so that they can
continue to provide returns for shareholders and benefits for other
stakeholders; and
● maintain an optimal capital structure to reduce the cost of capital.
To maintain or adjust the capital structure, the Group may adjust the amount
of dividends paid to owners of the parent, return capital to owners of the
parent or issue new shares.
3.2.2 DIVIDENDS TO OWNERS OF THE PARENT
For the year ended For the year ended
31 December 2023 31 December 2022
US$'000 US$'000
Ordinary shares
Final dividend for the year ended 31 December 2022 of 2.5 US cents per share 29,100 57,740
(2022: Q1 Final dividend for the year ended 31 December 2021 of 5.0 US cents
per share)
Q2 Interim dividend for the year ended 31 December 2023 of 2.0 US cents per 23,065 28,464
share
(2022: Q2 Interim dividend for the year ended 31 December 2022 of 2.5 US cents
per share)
Total dividends provided for or paid 52,166 86,204
Dividends to owners of the parent:
Paid in cash 52,166 86,204
4. Group structure
4.1 Subsidiaries and controlled entities
The parent entity of the Group is Centamin plc, incorporated in Jersey, and
details of its subsidiaries and controlled entities are as follows:
Nature of Country of incorporation Ownership interest
activity
31 December 2023 31 December 2022
% %
Centamin Egypt Limited Holding company Australia(1) 100 100
Pharaoh Gold Mines NL (holder of an Egyptian branch) Holding company Australia(1) 100 100
Sukari Gold Mining Company (*) Mining company Egypt(2) 50 50
Centamin Group Services UK Limited Services company UK(3) 100 100
Centamin West Africa Holdings Limited Holding company UK(3) 100 100
Centamin Group Services Limited Services company Jersey(4) 100 100
Centamin Holdings Limited Holding company Jersey(4) 100 100
MHA Limited Holding company Jersey(4) 100 100
Ampella Mining Limited (in Liquidation) Holding company Australia(1) 100 100
Ampella Mining Gold SARL (in Liquidation) Exploration company Burkina Faso(5) 100 100
Ampella Mining SARL (in Liquidation) Exploration company Burkina Faso(5) 100 100
Ampella Resources Burkina Faso (in Liquidation) Exploration company Burkina Faso(5) 100 100
Konkera SA (in Liquidation) Mining company Burkina Faso(5) 100 100
Ampella Mining Côte d'Ivoire Exploration company Côte d'Ivoire(6) 100 100
Centamin Côte d'Ivoire Exploration company Côte d'Ivoire(6) 100 100
Ampella Mining Exploration CDI Exploration company Côte d'Ivoire(6) 100 100
Centamin Exploration CI Exploration company Côte d'Ivoire(6) 100 100
Centamin Egypt Investments 1 (UK) Limited Holding company UK(7) 100 100
Centamin Egypt Investments 2 (UK) Limited Holding company UK(7) 100 100
Centamin Egypt Investments 3 (UK) Limited Holding company UK(7) 100 100
Centamin Mining Services Egypt LLC Services company Egypt(8) 100 100
Centamin Central Mining SAE Exploration Egypt(8) 100 100
Centamin North Mining SAE Exploration Egypt(8) 100 100
Centamin South Mining SAE Exploration Egypt(8) 100 100
(*) Sukari Gold Mining Company is fully consolidated within the Group
under IFRS 10 Consolidated financial statements as if it were a subsidiary due
to it being a controlled entity, reflecting the substance and economic reality
of the Concession Agreement ("CA") (see note 1.2.1).
(1) Address of all Australian entities: Suite 8, 7 The Esplanade, Mount
Pleasant, WA 6153.
(2) Address of all Egypt entities (except the new exploration entities in
(11) and (12): 361 El-Horreya Road, Sedi Gaber, Alexandria, Egypt.
(3) Address of all UK entities: Hill House, 1 Little New Street, London,
EC4A 3TR.
(4) Address of all Jersey entities: 2 Mulcaster Street, St Helier, Jersey,
JE2 3NJ.
(5) Address of all Burkina Faso entities: Ampella Resources Burkina Faso:
11 BP 1974 Ouaga 11. Ampella Mining SARL: 01 BP 1621 Ouaga 01. Ampella Mining
Gold SARL: 11 BP 1974 CMS 11 Ouaga 11. Konkera SA: 11 BP 1974 Ouaga CM11.
(6) Address of all Côte d'Ivoire entities: Cocody II Plateaux Les
Vallons, En face de la Résidence Bertille Lot 1557, Ilot 149
(7) Address of all the UK holding companies of the new Egypt exploration
companies; Hill House, 1 Little New Street, London, EC4A 3TR.
(8) Address of the new Egypt exploration companies: F-1-5 ,Agora Mall, EL
Nasr St. , 5th settlement, Cairo..
Through its wholly owned subsidiary, PGM, the Company entered into the
Concession Agreement ("CA") with EMRA and the ARE granting PGM and EMRA the
right - through SGM as Operating Company - to explore, develop, mine and sell
gold and associated minerals in specific concession areas located in the
Eastern Desert of Egypt. The CA came into effect under Egyptian law on 13 June
1995.
In 2005 PGM, together with EMRA, were granted an exploitation lease over 160
km2 surrounding the Sukari Gold Mine site. The exploitation lease was signed
by PGM, EMRA and the Egyptian Minister of Petroleum and gives tenure for a
period of 30 years, commencing 24 May 2005 and extendable by PGM for an
additional 30 years upon PGM providing reasonable commercial justification.
In 2006 SGM was incorporated under the laws of Egypt. SGM was formed to
conduct exploration, development, exploitation, and marketing operations in
accordance with the CA. Responsibility for the day-to-day management of the
project rests with the general manager, who is appointed by PGM.
The fiscal terms of the CA require that PGM solely funds SGM. PGM is however
entitled to recover from sales revenue recoverable costs, as defined in the
CA. EMRA is entitled to a share of SGM's net production surplus or profit
share (defined as revenue less payment of the fixed royalty to ARE and
recoverable costs). During 2016, payments to EMRA commenced as advance profit
share distributions. Any payment made to EMRA pursuant to these provisions of
the CA are recognised as dividend paid to the non-controlling interest in SGM.
5. Unrecognised items
5.1 Contingent liabilities and contingent assets
CONTINGENT LIABILITIES
Refer to note 2.13 for additional information on the EMRA position with
respect to provisions.
Other than as highlighted above, there were no contingent liabilities at year
end.
Contingent assets
There were no contingent assets at year-end, and none in 2022.
5.2 Dividends per share
The dividends paid in 2023 were US$52 million and are reflected in the
consolidated statement of changes in equity for the year (2022: US$86
million).
A final dividend in respect of the year ended 31 December 2023 of 2.0 US cents
per share, totalling approximately US$23 million has been proposed by the
Board of Directors and is subject to shareholder approval at the Annual
General Meeting on 21 May 2024. These financial statements do not reflect the
dividend payable.
As announced on 9 January 2017, the update to the Company's dividend policy
sets a minimum payout level relative to cash flow while considering the
financial condition of, and outlook for, the Company. When determining the
amount to be paid, the Board will take into consideration the underlying
profitability of the Company and significant known or expected funding
commitments. Specifically, the Board will aim to approve an annual dividend of
at least 30% of the Company's net cash flow after sustaining capital costs and
following the payment of profit share due to the government of Egypt.
5.3 Subsequent events
As referred to in note 5.2, subsequent to the year end, the Board proposed a
final dividend for 2023 of 2.0 US cents per share. Subject to shareholder
approval at the Annual General Meeting on 21 May 2024, the final dividend will
be paid on 19 June 2024 to shareholders on record date of 31 May 2024.
Other than as noted above, there were no other significant events occurring
after the reporting date requiring disclosure in the financial statements.
6. Other information
6.1 Related party transactions
(A) EQUITY INTERESTS IN RELATED PARTIES
Equity interests in subsidiaries
Details of the percentage of ordinary shares held in subsidiaries are
disclosed in note 4.1.
(B) KEY MANAGEMENT PERSONNEL AND NON-EXECUTIVE DIRECTOR COMPENSATION
Key management personnel are persons having authority and responsibility for
planning, directing, and controlling the activities of the Group, directly or
indirectly, including any Director (executive or otherwise) of the Group.
The aggregate compensation made to key management personnel of the
consolidated entity is set out below:
For the year ended For the year ended
31 December 2023 31 December 2022
US$ US$
Short-term employee benefits 9,212,369 10,261,960
Post-employment benefits − 1,320
Share-based payments 3,352,786 1,949,569
12,565,155 12,212,849
(C) KEY MANAGEMENT PERSONNEL AND NON-EXECUTIVE DIRECTOR EQUITY HOLDINGS
The details of the movement in key management personnel equity holdings of
fully paid ordinary shares in Centamin plc during the financial year ended 31
December 2023 are as follows:
For the year ended Balance at Granted as remuneration ("DBSP") Granted as remuneration ("PSP") Net other change - share plan lapse(1) Net other change(2) Balance at
31 December 2023
1 January 2023
31 December 2023(3)
M Horgan 2,326,193 − 835,800 (217,710) (76,013) 2,868,270
R Jerrard 2,348,000 − 667,300 (143,910) 53,000 2,924,390
J Rutherford 250,000 − − − − 250,000
S Eyre 15,000 − − − − 15,000
M Bankes 319,000 − − − − 319,000
M Cloete 15,000 − − − − 15,000
C Farrow 30,000 − − − − 30,000
I Fawzy 140,000 − − − − 140,000
H Faul − − − − − −
G Du Toit 1,442,000 − 400,000 − − 1,842,000
A Hassouna 697,931 − 400,000 − − 1,097,931
C Barker 771,000 − 375,000 − − 1,146,000
M Stoner 314,000 − 295,000 − − 609,000
H Bills 980,000 − 375,000 (73,800) (59,433) 1,221,767
P Cannon 627,000 − 295,000 − − 922,000
C Murray 911,000 − 295,000 (73,800) − 1,132,200
A Carse 856,688 − 295,000 (29,520) (36,332) 1,085,836
D Le Masurier 677,300 − 250,000 (24,908) (42,593) 859,799
R Nel 607,306 − 295,000 (18,450) (48,216) 835,640
(1) 'Net other change - share plan lapse' relates to awards that have
lapsed following partial vesting of the 2020 grant.
(2) 'Net other change' relates to the on-market acquisition or disposal of
fully paid ordinary shares.
(3) Balance includes unvested grants under the Company's performance share
plan.
Since 31 December 2023 to the date of this report there have been no
transactions notified by the Company in accordance with the requirements of
Article 19 of the UK Market Abuse Regulation (Regulation (EU) 596/2014.
The details of the movement in key management personnel and non-executive
director's equity holdings of fully paid ordinary shares in Centamin plc
during the financial year ended 31 December 2022 are as follows:
For the year ended Balance at Granted as remuneration ("DBSP") Granted as remuneration ("PSP") Net other change - share plan lapse(1) Net other change(2) Balance at
31 December 2022
1 January 2022
31 December 2022(3)
M Horgan 1,281,405 − 979,000 − 65,788 2,326,193
R Jerrard 2,077,000 − 821,000 (617,000) 67,000 2,348,000
J Rutherford 250,000 − − − − 250,000
S Eyre 15,000 − − − − 15,000
M Bankes 289,000 − − − 30,000 319,000
M Cloete 15,000 − − − − 15,000
C Farrow 30,000 − − − − 30,000
I Fawzy 140,000 − − − − 140,000
H Faul − − − − − −
G Du Toit 950,000 − 492,000 − − 1,442,000
A Hassouna 236,931 − 492,000 (31,000) − 697,931
C Barker 300,000 − 471,000 − − 771,000
M Stoner − − 314,000 − − 314,000
H Bills 500,000 − 480,000 − − 980,000
P Cannon 250,000 − 377,000 − − 627,000
C Murray 474,000 − 461,000 − (24,000) 911,000
A Carse 648,688 − 377,000 (169,000) − 856,688
D Le Masurier 517,300 − 287,000 (127,000) − 677,300
R Nel 401,973 − 332,000 (110,000) (16,667) 607,306
(1) 'Net other change - share plan lapse' relates to awards that have
lapsed due to the full performance conditions not being met on the 2019 grant.
(2) 'Net other change' relates to the on-market acquisition or disposal of
fully paid ordinary shares.
(3) Balance includes unvested grants under the Company's performance share
plan.
(D) KEY MANAGEMENT PERSONNEL AND NON-EXECUTIVE DIRECTOR SHARE OPTION HOLDINGS
There were no options held, granted, or exercised during the year by Directors
or senior management in respect of ordinary shares in Centamin plc.
(E) OTHER TRANSACTIONS WITH KEY MANAGEMENT PERSONNEL AND NON-EXECUTIVE
DIRECTOR
The related party transactions for the year ended 31 December 2023 are
summarised below:
• salaries, superannuation contributions, bonuses, LTIs, consulting
and Directors' fees paid to Directors during the year ended 31 December 2023
amounted to US$4,439,649 (31 December 2022: US$3,918,404), with pension
contributions amounting to US$51,753 (2022: US$16,670).
(F) TRANSACTIONS WITH THE GOVERNMENT OF EGYPT
Royalty costs attributable to the government of Egypt of US$26,681,717 (2022:
US$23,842,287) were incurred in 2023. Profit share to EMRA of US$112,000,000
(2022: US$ 35,492,459) was incurred in 2023.
(G) TRANSACTIONS WITH OTHER RELATED PARTIES
Other related parties include the parent entity, subsidiaries, and other
related parties as disclosed in 4.1 above.
All amounts advanced to related parties are unsecured. No expense has been
recognised in the year for bad or doubtful debts in respect of amounts owed by
related parties.
Transactions and balances between the Company and its subsidiaries were
eliminated in the preparation of the consolidated financial statements of the
Group.
6.2 Contributions to Egypt
(a) Gold sales agreement
On 27 March 2023, SGM and the Central Bank of Egypt ("CBE") amended their 20
December 2016 agreement with respect to SGM's facilitation of the purchase of
refined gold bullion for the CBE from its refiner. The amended agreement
provides that the parties may elect, on a monthly basis, for the CBE to supply
SGM with its local Egyptian currency requirements for that month to a maximum
value of EGP130 million (2022: EGP80 million). In return, SGM facilitates the
purchase of refined gold bullion for the CBE from SGM's refiner, Asahi
Refining Canada Ltd up to 30 June 2023 and thereafter, MKS PAMP SA. This
transaction has been entered into as SGM requires local currency for its
operations in Egypt (it receives its revenue for gold sales in US dollars).
The values related to these transactions are as follows:
For the year ended For the year ended
31 December 2023
31 December 2022
US$'000
US$'000
Gold purchased 34,124 50,497
Refining costs 17 28
Freight costs 43 56
34,184 50,581
For the year ended For the year ended
31 December 2023
31 December 2022
Oz
Oz
Gold purchased 17,520 27,907
At 31 December 2023 the amount receivable from CBE is approximately US$25,045
(2022: US$23,681 net receivable).
(B) UNIVERSITY GRANT
During 2018, the Group together with Sami El-Raghy and the University of
Alexandria Faculty of Science initiated a sponsored scholarship agreement, the
Michael Kriewaldt Scholarships, to outstanding geology major students to enrol
at the postgraduate research programme of the geology department of the
University for their MSc and/or PhD in mining and mineral resources. An amount
of EGP10,000,000 was deposited with an Egyptian bank as a nucleus of the
scholarship fund in a fixed deposit account, with contributions of
EGP7,330,000 from PGM and EGP2,670,000 from Sami El-Raghy. The interest earned
on the account will be put towards the cost of the scholarships and will be
administered by the University on the conditions set out in the agreement.
This amount was accounted for under donations expense in profit and loss and
any interest earned on the deposit is also accounted for under donations
expense.
6.3 SHARE-BASED PAYMENTS
PERFORMANCE SHARE PLAN
The Company's shareholder approved Performance Share Plan ("PSP") allows the
Company the right to grant awards (as defined below) to employees of the
Group. Awards may take the form of either conditional share awards, where
shares are transferred conditionally upon the satisfaction of performance
conditions; or share options, which may take the form of nil cost options or
have a nominal exercise price, the exercise of which is again subject to
satisfaction of applicable performance conditions.
The awards granted in April 2023 will vest following the passing of three
years. Vesting will be subject to the satisfaction of the performance
conditions (and for Executive Directors a full two-year post-vesting holding
period). Awards will vest based upon a blend of three-year relative TSR, cash
flow and production targets, full details of which are set out in the
Directors' Remuneration Report. These measures are assessed by reference to
current market practice and the Remuneration Committee will have regard to
current market practice when establishing the precise performance conditions
for awards.
To date, the Company has granted the following conditional awards to employees
of the Group:
June 2020 awards
Of the 2,582,500 awards granted on 5 June 2020 under the PSP, 1,153,153 vested
to eligible participants (nine in total)
April 2021 awards
Of the 5,945,000 awards granted on 30 April 2021 under the PSP, 5,330,000
awards remain granted to eligible participants (28 in total) applying the
following performance criteria:
● 50% of the award shall be assessed by reference to a target total shareholder
return;
● 25% of the award shall be assessed by reference to compound growth in adjusted
free cash flow; and
● 25% of the award shall be assessed by reference to compound growth in gold
production.
May 2022 awards
Of the 9,042,000 contingent share awards granted on 20 May 2022 under the
Incentive Share Plan ("ISP"), 8,982,000 awards remain granted to eligible
participants (33 in total) applying the following performance criteria:
● 50% of the award shall be assessed by reference to a target total shareholder
return;
● 25% of the award shall be assessed by reference to compound growth in adjusted
free cash flow; and
● 25% of the award shall be assessed by reference to compound growth in gold
production.
Conditional share awards and options together constitute 'awards' under the
plan and those in receipt of awards are 'award holders'.
A detailed summary of the scheme rules is set out in the 2022 AGM Notice which
are available at www.centamin.com. In brief, awards will vest following the
passing of three years from the date of the award and vesting will be subject
to satisfaction of performance conditions. The above measures are assessed by
reference to current market practice and the Remuneration Committee will have
regard to market practice when establishing the precise performance conditions
for future awards.
Where the performance conditions have been met, in the case of conditional
awards awarded to certain participants, 50% of the total shares under the
award will be issued or transferred to the award holders on or as soon as
possible following the specified vesting date, with the remaining 50% being
issued with a two year restriction on trading.
April 2023 awards
Performance share plan awards granted during the year:
Grant date ISP 2023
25 April 2023
Number of instruments 1,903,100
TSR: fair value at grant date GBP(1) 0.59
TSR: fair value at grant date US$(1) 0.74
Adjusted free cash flow, gold production and decarbonisation targets: fair 1.04
value at grant date GBP(1)
Adjusted free cash flow, gold production and decarbonisation targets: fair 1.29
value at grant date US$(1)
Vesting period (years) 3
Holding period applicable to the award (years) 2
Expected volatility (%) 41.52%
Expected dividend yield (%) 4.89%
Number of instruments 4,537,500
TSR: fair value at grant date GBP(1) 0.59
TSR: fair value at grant date US$(1) 0.74
Adjusted free cash flow, gold production and decarbonisation targets: fair 1.04
value at grant date GBP(1)
Adjusted free cash flow, gold production and decarbonisation targets: fair 1.29
value at grant date US$(1)
Vesting period (years) 3
Holding period applicable to the award (years) 0
Expected volatility (%) 41.52%
Expected dividend yield (%) 4.89%
(1) The vesting of 50% of the awards granted under this plan are dependent
on a TSR performance condition. As relative TSR is defined as a market
condition under IFRS 2 Share-based payments, this requires that the valuation
model used considers the anticipated performance outcome. We have therefore
applied a Monte-Carlo simulation model. The simulation model considers the
probability of performance based on the expected volatility of Centamin and
the peer group companies and the expected correlation of returns between the
companies in the comparator group. The remaining 50% of the awards are subject
to adjusted free cash flow , decarbonisation targets and gold production
performance conditions. As these are classified as non-market conditions under
IFRS 2 they do not need to be considered when determining the fair value. The
fair value calculated was then converted at the closing GBP:US$ foreign
exchange rate on grant date.
RESTRICTED SHARE AWARDS ("RSA")
Under the Company's Incentive Share Plan ("ISP"), the Company has restricted
share awards, which are a long-term share incentive arrangement for senior
management (but not Executive Directors) and other employees (participants).
The RSA awards shall be subject to the terms and conditions of the ISP and
shall ordinarily vest in three equal tranches on the anniversary of the grant
date, conditional upon the continued employment with the Group.
RSA awards granted during the year:
Grant date RSA 2023
25 April 2023
Number of instruments 3,069,000
Fair value at grant date - tranches 1 to 3 £(1) 1.04
Fair value at grant date - tranches 1 to 3 US$(1) 1.29
Vesting period Tranche 1 (years)(2) 1
Vesting period Tranche 2 (years)(2) 2
Vesting period Tranche 3 (years)(2) 3
Expected dividend yield Tranche 1 (%) 4.87%
Expected dividend yield Tranche 2 (%) 4.88%
Expected dividend yield Tranche 3 (%) 4.89%
(1) The fair value of the shares awarded under the RSA were calculated by
using the closing share price on grant date, converted at the closing GBP:US$
foreign exchange rate on that day. No other factors were considered in
determining the fair value of the shares awarded under the RSA.
(2) Variable vesting dependent on one to three years of continuous
employment.
ACCOUNTING POLICY: SHARE-BASED PAYMENTS
Equity settled share-based payments with employees and others providing
similar services are measured at the fair value of the equity instrument at
grant date. Fair value is measured using the Black-Scholes model. Where
share-based payments are subject to market conditions, fair value is measured
using a Monte-Carlo simulation. The fair value determined at the grant date of
the equity settled share-based payments is expensed over the vesting period,
based on the consolidated entity's estimate of shares that will eventually
vest.
SHARE-BASED PAYMENTS
Equity settled share-based transactions with other parties are measured at the
fair value of the goods or services received, except where the fair value
cannot be estimated reliably, in which case they are measured at the fair
value of the equity instruments granted, measured at the date the entity
obtains the goods or the counterparty renders the service. The fair value of
the employee services received in exchange for the grant of the options is
recognised as an expense. The total amount to be expensed is determined by
reference to the fair value of the options granted:
● including any market performance conditions (for example, an entity's share
price);
● excluding the impact of any service and non-market performance vesting
conditions (for example, profitability and remaining an employee of the entity
over a specified period); and
● including the impact of any non-vesting conditions (for example, the
requirement for employees to save or holding shares for a specific period).
When the options are exercised, the Company issues new shares. The proceeds
received net of any directly attributable transaction costs are credited to
share capital (nominal value) and share premium. The expected life used in the
model has been adjusted, based on management's best estimate, for the effects
of non-transferability, exercise restrictions, and behavioural considerations.
Further details on how the fair value of equity settled share-based
transactions has been determined can be found above. At each reporting date,
the Group revises its estimate of the number of equity instruments expected to
vest. The impact of the revision of the original estimates, if any, is
recognised in profit or loss over the remaining vesting period, with
corresponding adjustment to the equity settled employee benefits reserve.
6.4 EARNINGS PER SHARE ("EPS") ATTRIBUTABLE TO OWNERS OF THE PARENT
For the year ended For the year ended
31 December 2023 31 December 2022
US cents per share US cents per share
Basic earnings per share 7.970 6.287
Diluted earnings per share 7.817 6.203
BASIC EARNINGS PER SHARE ATTRIBUTABLE TO OWNERS OF THE PARENT
The earnings and weighted average number of ordinary shares used in the
calculation of basic earnings per share are as follows:
For the year ended For the year ended
31 December 2023 31 December 2022
US$'000 US$'000
Earnings used in the calculation of basic EPS 92,284 72,490
For the year ended For the year ended
31 December 2023
31 December 2022
Number of shares Number of Shares
Weighted average number of ordinary shares for the purpose of basic EPS 1,157,933,122 1,152,960,534
DILUTED EARNINGS PER SHARE ATTRIBUTED TO OWNERS OF THE PARENT
The earnings and weighted average number of ordinary shares used in the
calculation of diluted earnings per share are as follows:
For the year ended For the year ended
31 December 2023 31 December 2022
US$'000 US$'000
Earnings used in the calculation of diluted EPS 92,284 72,490
For the year ended For the year ended
31 December 2023 31 December 2022
Number of shares Number of shares
Weighted average number of ordinary shares for the purpose of basic EPS 1,157,933,122 1,152,960,534
Shares deemed to be issued for no consideration in respect of employee options 22,654,848 15,597,563
Weighted average number of ordinary shares used in the calculation of diluted 1,180,587,971 1,168,558,097
EPS
No potential ordinary shares were excluded from the calculation of weighted
average number of ordinary shares for the purpose of diluted earnings per
share.
6.5 AUDITORS' REMUNERATION
The analysis of the auditors' remuneration is as follows:
For the year ended For the year ended
31 December 2023 31 December 2022
US$'000 US$'000
Fees payable to the Company's auditors and their associates for the audit of
the Company's annual financial statements
Audit fee for the current year audit(1) 790 630
Fees payable to the Company's auditors and their associates for other services
to the Group
Audit fee of the Company's subsidiaries 225 126
Total audit fees 1,015 756
Non-audit fees:
Audit related assurance services - interim review 151 139
Total non-audit fees 151 139
(1) The audit fee amount disclosed in note 2.3 is for the Jersey, UK and
Australian companies only, the note above is for all the Group entities.
The audit fees for the corporate entities are billed in GBP and were
translated at an average foreign exchange rate for the year ended 31 December
2023 of US$1.25:GB£1 (rate on 31 December 2022: US$1.23:GB£1). Not included
within the above amounts are auditors' expenses (recharged to the Company) of
US$31k (2022: US$19k).
6.6 General information
Centamin plc (the "Company") is a listed public company, incorporated and
domiciled in Jersey and operating through subsidiaries and jointly controlled
entities operating in Egypt, Burkina Faso, Côte d'Ivoire, United Kingdom,
Jersey and Australia. It is the Parent Company of the Group, comprising the
Company and its subsidiaries and joint arrangements.
Registered office and principal place of business:
Centamin plc
2 Mulcaster Street
St Helier
Jersey
JE2 3NJ
The nature of the Group's operations and its principal activities are set out
in the Governance Report and the Strategic Report of the 2023 Annual Report.
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