REG - Centamin PLC - Interim Results
26/07/2023 07:00
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RNS Number : 1667H Centamin PLC 26 July 2023
26 July 2023
Centamin plc
("Centamin" or "the Company" of "the Group")
LSE: CEY / TSX: CEE
INTERIM report
for the six months ended 30 June 2023 ("H1 2023")
IMPROVED results driven by strong operating PERFORMANCE
and stringent cost management
MARTIN HORGAN, CEO, commented: "This marks Centamin's third consecutive six
month period of improved EBITDA, driven by our focus on operating performance
and cost management, whilst also benefiting from an improved gold price. This
has enabled us both to continue investing in our portfolio and to distribute
returns to our stakeholders. Our operational track record and strong balance
sheet put Centamin in a robust position to deliver the next stage of growth
including further optimisation at Sukari and continued development of the
Doropo project."
OPERATIONAL HIGHLIGHTS
· Group safety performance on track to meet safety targets: zero
LTIs in Q2, resulting in a lost time injury frequency rate ("LTIFR") of 0.15
H1 2023 with a total recordable injury frequency rate ("TRIFR") of 2.94
· Production of 220,561 ounces ("oz") for H1 2023 from the Sukari
Gold Mine ("Sukari") in Egypt and on track to meet 2023 guidance
· Cash costs of US$849/oz produced and all-in sustaining costs
("AISC") of US$1,228/oz sold and on track to meet 2023 guidance
· Decarbonisation roadmap published with interim target of 30%
reduction in scope 1 and 2 GHG emissions by 2030. Grid power connection tender
submissions are under evaluation and solar expansion study work is underway
· Doropo Gold Project in Côte d'Ivoire pre-feasibility ("PFS")
study complete: robust economics with a post-tax net present value using an 8%
discount rate ("NPV(8%)") of US$497 million and internal rate of return
("IRR") of 41% at US$1,900/oz gold price with further upside opportunities,
DFS expected mid-2024 (full announcement
(https://gbr01.safelinks.protection.outlook.com/?url=https%3A%2F%2Fwww.centamin.com%2Fmedia%2F2975%2Fcey-rns_doropo_update_final_270623_website.pdf&data=05%7C01%7CAlexandra%40centaminplc.com%7C94e139294f1f4663809808db76585a2e%7Ca02403da39374fe8917b48e08012a5e7%7C0%7C0%7C638233894369941555%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C3000%7C%7C%7C&sdata=%2BOvbtcEsWUJuBmah5QyeszOPq6xAIDjjD%2BF7nAQZLtU%3D&reserved=0)
)
· New Egyptian mining framework agreed in principle with the
Egyptian government for the Company's Eastern Desert Exploration licences
("EDX Blocks") creating a clear, competitive regulatory structure for
development of new mining projects (full announcement)
(https://tools.eurolandir.com/tools/Pressreleases/GetPressRelease/?ID=4355862&lang=en-GB&companycode=au-cey&v=)
· Commenced drilling on 3,000km(2) highly prospective EDX Blocks
with 3,100 metres completed of a 10,000 metre drill programme focussing on
seven priority targets identified on the Nugrus block (adjacent to Sukari)
FINANCIAL HIGHLIGHTS
· Revenue generation of US$426 million from gold sales of 219,353
oz at an average realised gold price of US$1,936/oz, with equivalent to US$28
million in gold inventory to be shipped
· Increased EBITDA margin of 45% with EBITDA up 26% to US$193
million (H1 2022: US$153m)
· Basic EPS of 7.86 US cents and net profit after tax attributable
to shareholders of US$91 million
● Capital expenditure ("capex") of US$108 million with key capital
projects advanced as scheduled and on track to meet 2023 guidance
· Group operating cash flow of US$172 million from Sukari
· Group free cash flow of US$19 million after US$88 million was
received in profit share and cost recovery and US$59 million was distributed
to our Egyptian government partners in profit share and royalties
· Gold price protection programme implemented for the twelve months
to June 2024, with the purchase of put options for 240,000 ounces of gold at a
strike price of US$1,900/oz
· Strong and flexible balance sheet with available cash and liquid
assets of US$161 million (at 30 June 2023), after payment of the 2022 final
dividend of US$29 million, and total liquidity of US$311 million reflecting
the undrawn sustainability-linked revolving credit facility
· Interim dividend declared of 2.0 US cents per share, equating to
a distribution of approximately US$23 million, to be paid to shareholders on
29 September 2023 (ex-dividend date of 31 August 2023)
2023 OUTLOOK
Guidance unchanged and on track
· Gold production guidance range of 450,000 to 480,000 oz per annum
targeting the midpoint
· Cash cost guidance range of US$840-990/oz produced and AISC
guidance range of US$1,250-1,400/oz sold
· Adjusted capex guidance is US$225 million, which excludes US$48
million of sustaining deferred stripping costs
· Exploration spend is results-driven. 2023 exploration expenditure
budget is US$30 million, including US$23 million for the pre-development study
work on the Doropo Gold Project
KEY H2 2023 DELIVERABLES
· Sukari updated Life of Mine Plan (NI 43-101), including
underground expansion
· Sukari Gold Mine grid power connection study and project timeline
· Group Mineral Resource and Reserve update
· Group exploration activities report
GROUP RESULTS SUMMARY 1 (#_ftn1)
Quarter on quarter ("QoQ") comparative Year on Year ("YoY") comparative
Q2 2023 Q1 2023 % H1 2023 H1 2022 %
SAFETY
LTIFR (1m hours) 0.00 0.31 (100%) 0.15 0.16 (6%)
TRIFR (1m hours) 3.40 2.77 23% 2.94 2.91 1%
OPERATIONAL
Open pit material mined (kt) 32,303 32,998 (2%) 65,301 64,372 1%
Open pit ore mined (kt) 3,609 3,273 10% 6,882 5,736 20%
Open pit ore mined grade (g/t Au) 0.90 0.87 4% 0.88 0.99 (11%)
Underground ore mined (kt) 222 236 (6%) 458 385 19%
Underground ore mined grade (g/t Au) 4.40 4.02 9% 4.21 4.26 (1%)
Ore processed (kt) 3,076 3,006 2% 6,082 5,839 4%
Feed grade (g/t Au) 1.26 1.20 5% 1.23 1.22 1%
Gold recovery (%) 88.3 88.8 (1%) 88.5 88.2 0%
Gold produced (oz) 114,687 105,875 8% 220,562 203,898 8%
COSTS & SALES
Gold sold (oz) 111,693 107,661 4% 219,354 203,587 8%
Cash cost (US$'000) 87,995 99,162 (11%) 187,157 189,856 (1%)
Unit cash cost (US$/oz produced) 767 937 (18%) 849 931 (9%)
AISC (US$'000) 124,299 145,157 (14%) 269,456 294,406 (8%)
Unit AISC (US$/oz sold) 1,113 1,348 (17%) 1,228 1,446 (15%)
Avg realised gold price (US$/oz) 1,969 1,902 3% 1,936 1,872 3%
FINANCIALS
Revenue (US$'000) 220,386 205,226 7% 425,612 381,786 11%
EBITDA (US$'000) 114,727 78,688 46% 193,415 153,116 26%
Profit before-tax (US$'000) 70,478 44,326 59% 114,804 84,747 35%
Profit post-tax attrib to shareholders (US$'000) n/a n/a - 90,968 84,737 7%
Basic EPS (US cents) n/a n/a - 7.86 7.35 7%
Operating cash flow (US$'000) 96,427 75,340 28% 171,767 128,674 33%
Capital expenditure (US$'000) 54,419 53,842 1% 108,261 138,686 (22%)
Free cash flow (US$'000) 10,861 8,501 28% 19,362 (22,694) 185%
WEBCAST PRESENTATION
The Company will host a webcast presentation today, Wednesday, 26 July 2023,
at 08.30 BST to discuss the results, followed by an opportunity to ask
questions.
Webcast link:
https://www.investis-live.com/centamin/64632d444170900d004d0607/lubo
(https://www.investis-live.com/centamin/64632d444170900d004d0607/lubo)
PRINT-FRIENDLY VERSION of the announcement: www.centamin.com/
(http://www.centamin.com/media/company-news) media/company-news
(http://www.centamin.com/media/company-news) .
About Centamin
Centamin is an established gold producer, with a premium listing on the London
Stock Exchange and a secondary listing on the 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 over 5 million
ounces of gold, and today has 6.0Moz in gold Mineral Reserves. 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 has over 3,000km(2) of highly prospective
exploration ground in Egypt's Nubian Shield.
Centamin recognises its responsibility to deliver operational and financial
performance and create lasting mutual benefit for all stakeholders through
good corporate citizenship, including but not limited to in 2022, achieving
new safety records; commissioning of the largest hybrid solar farm for a gold
mine; sustaining a +95% Egyptian workforce; and, a +60% Egyptian supply chain
at Sukari.
FOR MORE INFORMATION please visit the website www.centamin.com
(http://www.centamin.com) or contact:
Centamin plc FTI Consulting
Alexandra Barter-Carse, Head of Corporate Communications 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 operations are disrupted.
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 owners of the parent ("shareholders")
Centamin's profit after the profit share split with the Egyptian Mineral
Resource Authority ("EMRA"), the Company's Egyptian government partner.
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.
Liquidity
Liquidity is defined as the sum of cash and cash equivalents and available
credit under the Company's revolving credit facility.
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.
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
TABLE OF CONTENTS
CEO OPERATIONAL REVIEW 6
CFO FINANCIAL REVIEW 9
GOVERNANCE 16
PRINCIPAL RISKS AND UNCERTAINTIES 17
DIRECTORS' RESPONSIBILITY STATEMENT 18
INDEPENDENT REVIEW REPORT TO CENTAMIN PLC 20
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 22
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION 23
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 24
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS 25
NOTES TO THE UNAUDITED INTERIM CONDENSED FINANCIAL STATEMENTS 26
CEO OPERATIONAL Review
(H1 2023 vs H1 2022)
I am pleased to report a strong first half of 2023 due to the continued
operational delivery at Sukari, coupled with a stronger gold price. We have
also advanced numerous projects and work streams that will deliver the full
potential of Centamin's portfolio. We remain on track to deliver against our
2023 guidance and all key capital projects are progressing on schedule.
HEALTH & SAFETY
We remain focussed on the protection of our workforce and the local
communities that we work in. Our safety performance continues to be strong;
while noting that our ultimate ambition is to create a zero-harm workplace.
We had only one lost time injury in H1 2023 at Sukari. Notwithstanding, there
has been an increase in low consequence, minor injuries. Proactive measures
have been taken to understand these injuries, identify trends, and implement
mitigations. These measures include 'safety stops' focused on awareness
sessions and the implementation of programmes that ensure greater management
oversight and enhance hazard identification education.
The Group LTIFR was 0.15 per one million hours worked and we are on track to
meet our annual target. The Group TRIFR was 2.94 per one million hours worked,
a 1% increase YoY.
SUSTAINABILITY
Centamin published its sixth annual Sustainability Report and 2022 Modern
Slavery Statement. The Sustainability Report was aligned with globally
recognised reporting frameworks including GRI Sustainability Reporting
Standards ("GRI"), the Sustainability Accounting Standards Board ("SASB") for
the metals and mining industry, and the Task Force on Climate-related
Financial Disclosures ("TCFD"). Furthermore, we have strengthened our
third-party verification and assurance processes, around our greenhouse gas
accounting, people and workforce development frameworks, gender inclusion and
diversity, and closure cost liability.
Tailings management
Our comprehensive and systematic approach to tailings management continues,
with good progress on bringing the governance processes and management systems
in line with the Global Industry Standard on Tailings Management ("GISTM").
The raising of our second tailings storage facility ("TSF2") continues to
progress ahead of schedule.
Energy and climate change
In March 2023, we issued our decarbonisation roadmap to 2030 with an interim
30% carbon abatement target. This science-based target is underpinned by
integrating and expanding solar power generation at Sukari, combined with
switching to lower carbon Egyptian grid power. This will fully replace the
current use of diesel fuel for power generation at Sukari.
The Sukari 30MW(AC) solar plant has now been operating for nine months and has
exceeded project power generation expectations, showcasing exceptional
performance as we operate in the peak sunlight hours during the summer months.
The preliminary technical work to expand the Sukari solar capacity to 50MW(AC)
is complete and advanced studies are underway including project design and
timeline. The tender process for the Egyptian grid connection was launched in
Q1. All qualifying proposals have been received and are currently under review
by our management team supported by external technical advisors. The estimated
target for grid connection is 2024. These two carbon abatement initiatives
will reduce our GHG carbon emissions by 30% from our 2021 base year by 2023
and deliver significant cost-savings.
Professional development
In H2 2023, alongside the second year of our Employee Development Pathway we
will also be rolling out the Leadership Development Pathway at Sukari,
targeted at all management and supervisory roles. We are committed to educate,
develop and empower our workforce with the requisite tools and skills to
continue to deliver operational excellence.
SUKARI GOLD MINE (Egypt)
The Sukari team delivered another solid operational performance in H1 2023 and
we remain on track to meet the midpoint of 2023 production guidance. Total
open pit material mined was 65Mt, a 1% increase YoY. The accelerated
waste-stripping programme continues to yield positive results, increasing
operational flexibility with multiple working areas available in the north,
east and west of the pit. The Centamin fleet mined 36Mt of waste in H1 2023.
The waste mining contractor mined an additional 22Mt, resulting in the total
contracted 120Mt programme being approximately 70% complete, with scheduled
completion mid-2024.
In terms of total open pit ore tonnes, Sukari achieved 7Mt with an average
grade of 0.88g/t Au. This marks a 20% increase in tonnes and an 11% decrease
in grade YoY, reflecting the scheduled inclusion of low-grade oxide and
transitional ore tonnes from Stage 7, which will be placed on the dump leach.
Open pit average milled grade was 0.99 g/t Au for H1 2023, a 2% decrease YoY.
The underground mine continues to benefit from the transition to owner mining,
as demonstrated by a 19% increase in ore tonnage mined YoY. Grades remained
consistent YoY, averaging 4.2g/t Au. We anticipate a slight improvement in
average grades during H2 2023. The key focus within the underground is
augmenting the fleet with a staged replacement of end-of-life equipment,
whilst simultaneously introducing the use of paste-fill into the operating
cycle.
The underground paste-fill plant commenced commissioning during Q2 pouring the
first paste into trial stopes, with the excellent results for both Portland
and slag cement strength. As part of the commissioning phase, we are
conducting various performance monitoring and optimisation programmes such as
viscosity modelling test work as we work to refine the process. It's worth
noting that the trial stopes are located within historically mined areas,
ensuring no disruption to current mining operations. To ensure a seamless
transition, we will continue to utilise the existing underground backfilling
system of cemented rock fill ("CRF") and waste rock fill in parallel with the
commissioning of the paste plant. This approach mitigates implementation risk
while maintaining ongoing mining operations.
As planned, the plant processed 6Mt of ore at an average feed grade of 1.23
g/t Au, a 4% increase YoY in tonnes and 1% in grade. There were several key
projects during the period, including mill relining and work on the mill
motors, all of which were completed successfully with no unplanned disruption
to throughput.
The metallurgical gold recovery rate was 88.5%, in line with budget and flat
YoY. Work on the gravity circuit continued to progress with design reviews
nearing completion. The design review is underway with a detailed design
tender and construction decision by the end of 2023.
Significant progress has been made on the North Dump leach project, with the
installation of the high-density polyethylene ("HDPE") liner completed, and
the base layer of mill scats placed on top of the liner. Ore placement has
commenced on the fully constructed cells. We aim to initiate leaching
activities in H2 2023, depending on the percolation rates, this could
potentially result in the first pregnant gold solution being generated at the
end of 2023.
The optimised life of mine plan is on track for completion in Q4, including
the fully-engineered underground expansion. Our team has recently concluded a
comprehensive work programme with external support, specifically addressing
the updated geotechnical parameters that will assist in determining the
criteria for the revised open pit and underground mine design. Moving ahead,
our focus will be on analysing the initial outputs derived from the revised
input parameters, as well as refining the open pit stage design, expanded
underground and equipment maintenance strategy.
Doropo GOLD Project (Côte d'Ivoire)
On 27 June 2023, we published the results from the Doropo pre-feasibility
study
(https://tools.eurolandir.com/tools/Pressreleases/GetPressRelease/?ID=4346596&lang=en-GB&companycode=au-cey&v=)
("PFS"), which demonstrated the economic robustness of the project with a
post-tax NPV(8)% of US$497 million and an IRR of 41% at US$1,900/oz gold
prices. Importantly, using a more conservative long-term gold price of
US$1,600/oz, the project meets Centamin's hurdle rates and the definitive
feasibility study ("DFS") and environmental and social impact assessment
("ESIA") are well underway and expected to be completed in H1 2024, ahead of
the mining licence submission.
Doropo ESIA terms of reference were approved by the Ivorian government with
work commencing immediately afterwards. Baseline studies and the impact
assessment are well advanced supporting the optimisation of the project design
and accompanying stakeholder engagement.
The project sits in a well-established mining jurisdiction, and with a maiden
Mineral Reserve estimate of 1.87Moz of Probable reserves, it supports a
10-year life of mine with an average production rate of 173,000 ounces per
annum at all-in sustaining costs of US$1,017/oz.
We have identified several opportunities for potential reserve and resource
growth and to further optimise the project, which will be assessed as part of
the DFS. Of the US$23 million budgeted for Doropo in 2023, US$13.2 million
was spent on finishing the PFS and completing the DFS drilling and fieldwork.
Further drilling will be focussed on hydrology, metallurgy, geotechnics and
sterilisation as we continue to progress the DFS. This de-risks the timeline
to completion and further confirms our faith in the potential of Doropo to
support a commercially viable project which will bring significant investment
and job creation to northeastern Côte d'Ivoire.
EASTERN DESERT EXPLORATION BLOCKS (Egypt)
Model mining exploitation agreement
The Ministry of Petroleum & Natural Resources has been clear in its vision
to create a thriving mining industry for the benefit of Egypt and its people.
Centamin shares this vision and strongly believes that mining can fulfil its
true potential in Egypt through employment, education and training, and direct
financial and infrastructure investment to support Egypt's target for the
mining industry to contribute 5% of the country's GDP by 2030.
On 20 July 2023 we agreed the framework for the model mining exploitation
agreement ("MMEA") in principle with the Egyptian Ministry of Petroleum &
Natural Resources and the Egyptian Mineral Resources Authority. The MMEA sets
out the legal and fiscal framework that will apply to commercial discoveries
made on the highly prospective c.3,000km(2) of ground awarded to Centamin in
2021 for exploration in the Eastern Desert of Egypt, referred to as the EDX
blocks. Following routine Egyptian government and legal procedures, the MMEA
will be ratified as a Special Law by the Arab Republic of Egypt in late 2023.
The MMEA terms are comparable to other jurisdictions with international,
modern mining codes. The MMEA does not apply to the 160km(2) Sukari Gold
Mine mining concession, which operates independently under the Sukari
Concession Agreement, ratified by parliament under Egyptian Law No. 222 of
1994.
Exploration
Drilling commenced in Q2 2023 at our EDX Nugrus block. The Nugrus block is
adjacent to the Sukari Mining Concession, sitting within 30km of the Sukari
processing plant. The 10,000 metre drill programme is focussed on seven
priority targets identified from the initial regional exportation programmes.
To date, 3,000 metres have been drilled with assay results due later in H2
2023. In addition to the drilling, regional exploration will continue at
Nugrus and Um Rus, including soil and generative rock chip sampling, with BLEG
sampling commencing on the Nadj block in H2 2023.
EXPLORATION
Throughout H1 2023, we continued to advance our highly prospective exploration
portfolio. At Sukari, a 20,000 metre drill programme was underway across the
160km(2) concession area. The programme focused on infill drilling of the
resources that could generate satellite feed and testing strike extensions at
Quartz Ridge, V-Shear East, Wadi Alam and the new Arc prospect located east of
Sukari.
At Doropo, reverse circulation and core drilling activities were focused on
resource infill drilling for the DFS. In addition, the team completed 15,403
metres of auger drilling alongside continued soil sampling with the aim to
generate further drill targets.
At ABC, exploration was focused on testing extensions along the strike to
confirm continuity of mineralisation with trenching undertaken on the Windou
permit which generated several new drill targets. On the Kona permit, which is
where the current Mineral Resource is located, a 11,500 metre RC programme was
completed testing the Lolosso structure between Kona Central and Kona South
and to the north and south. Moving forwards, we may undertake a provisional
financial evaluation of the current resource before undertaking any further
fieldwork.
OUTLOOK
Centamin is well positioned with guidance for 2023 unchanged. We are on track
to achieve the midpoint of the production range, while continuing to progress
our key projects that will unlock the full potential of our portfolio.
I would like to commend our workforce for their commitment, professionalism
and passion. Their operational excellence has enabled us to deliver another
strong half, building on our operational track record and delivering our
strategy. I would also like to thank our local communities, partners and wider
stakeholders for their support and shared vision.
We look forward to a busy second half of news flow, as we continue to deliver
on our commitments and progress towards our vision of being a multi-asset,
multi-jurisdictional, responsible producer.
Martin Horgan
CEO
26 July 2023
CFO FINANCIAL REVIEW
(H1 2023 vs H1 2022)
We are pleased to report material improvements across most of our key
financial metrics including revenue, EBITDA, profit after tax, operating cash
flow and free cash flow. The strength of these results during a period of
elevated capital investment, is testament to our prudent long-term approach to
capital allocation and cost management.
H1 2023 has delivered strong operating cash flow of US$172 million, the
highest in five interim periods. We generated positive Group free cash flow of
US$19 million, after Sukari profit share distribution of US$46 million to our
Egyptian partner, EMRA, and US$46 million to Centamin, and US$18 million spent
advancing our organic growth pipeline at Doropo (Côte d'Ivoire), EDX (Egypt)
and ABC (Côte d'Ivoire).
FINANCIAL PERFORMANCE
Revenues increased YoY by 11% to US$426 million, from annual gold sales of
219,353 ounces, up 8%, at an average realised price of US$1,936/oz, also up 3%
YoY. Due to timing of gold shipments, a total of 14,692 ounces of unsold gold
bullion was held at Sukari as at 30 June 2023, equivalent to US$28 million.
The Group adjusted EBITDA was US$193 million, at a 45% EBITDA margin,
principally driven by:
· 8% increase in gold production, as scheduled, at a 3% higher
average realised gold price YoY; in addition to:
· a marginal 1% increase in the combined open pit and underground
material mined, some of which has been capitalised to mining properties as a
waste stripping asset, and
· lower fuel prices and lower fuel consumption, offset by higher
volumes, has resulted in a net US$8 million savings against budget,
predominantly driven by the integration of solar power generation
· Profit before tax increased by 36% to US$115 million, due to the
factors below, with basic EPS increasing by 7% to 7.89 US cents
· 11% increase in revenue, in line with increased gold sales
· a significant increase in finance income and other income:
· due to the volatility of mainly the Egyptian pound ("EGP")
currency, there was a US$4 million foreign exchange gain in H1 2023
· rising interest rates in both Egypt and the United Kingdom
resulted in a US$2 million increase in interest income from funds placed in
term-deposit, offset by
· 20% increase in other operating costs, predominantly due to a 9%
increase in royalties paid
· 8% increase in greenfield exploration and evaluation expenditure, as
budgeted, and
· 4% increase in cost of sales, marginally lower than budget
STRINGENT COST MANAGEMENT
Globally cost inflation remains high and central banks continue to tighten
monetary policy in response. Our judicious approach to forecasting and
stringent cost management has allowed us to deliver costs within our guidance
last year and we remaining on track to meet 2023 guidance.
Cash costs of production in H1 2023 were US$187 million, a 1% improvement YoY
and below our internal forecasts. This is primarily due to lower fuel prices
and lower fuel consumption ( due to the integration of solar and our focus on
operational efficiency gains,) partially offset by a 2% YoY increase in total
material mined. Unit cash costs of production were US$849/oz produced, a 9%
improvement YoY, driven by higher production volumes.
AISC in H1 2023 were US$269 million, an 8% improvement YoY, reflecting lower
sustaining capex in the period offset by increased corporate costs due to
non-recurring legal fees associated with the debt facility and gold protection
programme. Unit AISC was US$1,228/oz sold, a 15% improvement YoY, driven by
higher sales volumes. Importantly, our AISC margin is US$708/oz up 66% YoY.
Good progress continues to be made on our multi-year cost-savings programme
with a cumulative US$143 million of our US$150 million target of cost
savings by the end of 2023.
STRONG FINANCIAL POSITION
As of 30 June 2023, Centamin had cash and liquid assets of US$161 million,
including 14.7koz of gold inventory waiting to be shipped. From a liquidity
standpoint, the US$150 million sustainability-linked revolving credit facility
remains available and undrawn.
CAPITAL INVESTMENT
This year is a period of significant reinvestment in the Sukari mine with an
elevated level of gross capex of US$273 million budgeted for 2023. This
includes US$48 million of sustaining capitalised deferred stripping. As a
number of studies and multi-year projects move towards completion, we expect
the capex to reduce from 2024 and beyond. These projects underpin our
confidence in the long-term potential of Sukari.
H1 2023 gross capital expenditure was US$108 million, including commissioning
the underground paste-fill plant, continued contracted waste-stripping
programme, new underground equipment purchases, underground development, open
pit equipment rebuilds, and construction of the North Dump Leach facility.
Total sustaining capex was US$50 million, including US$10 million on deferred
stripping, and non-sustaining was US$58 million. We had expected a higher
capex spend in H1 but due to minor changes in scheduling, this has been moved
to H2 2023 and we remain on track to meet 2023 guidance.
Gold Price Protection ProgramME
Centamin purchased put options for 240,000 ounces of gold at a strike price of
US$1,900/oz. The put options mature at a rate of 20,000 ounces of gold per
month, for the twelve months from July 2023 to June 2024 2 (#_ftn2) . This is
a cash-settled programme, not involving physical gold delivery.
The programme provides the Company protection should the average monthly gold
price fall below the US$1,900/oz strike price, while allowing us to retain
full exposure to any upside in the gold price above this level. As detailed
above, this programme aligns with a period of elevated capital investment at
Sukari, and gives us further financial flexibility to pursue the Company's
strategy of delivering growth and returns to shareholders.
We were able to lock-in attractive pricing for put options, for a total
premium paid of US$6.1 million which was funded from the Group's cash
position.
Interim dividend
Consistent with the Company's stated commitment to shareholder returns, the
Board declares an interim dividend of 2.0 US cents per share (US$23 million)
for the period ended 30 June 2023. As per the dividend policy, this
distribution is in line with the commitment to return a minimum of 30% of
Group free cash flow before growth capex(3) to shareholders in cash dividends.
In consideration of the below factors, and reflecting the Board's confidence,
a total of 56% of H1 2023 Group free cash flow before growth capex will be
distributed to shareholders on 29 September 2023:
· Centamin is in a financially robust position with US$161 million
in cash and liquid assets
· The US$150 million sustainability linked revolving credit
facility remains undrawn as a result of H1 2023 growth capex being funded from
cash flow
· The gold price protection programme limits the revenue downside
risk below US$1,900/oz gold price
· The Company is operationally and financially well positioned for
a stronger H2 2023, in line with plan
The interim dividend is calculated by the following:
30 June 2023
US$'000
Group free cash flow 19,362
Add back:
Growth capex financed from treasury 3 (#_ftn3) 21,818
Cashflow available for dividends 41,180
30% minimum distribution as per dividend policy (12,354)
Surplus cash flow for discretionary capital allocation 4 (#_ftn4) 28,826
Board interim dividend supplement (10,814)
Total interim dividend declared 23,168
Please refer to the Dividend Declaration announcement and or the website
(www.centamin.com/investors/shares-dividends/dividend-information/
(http://www.centamin.com/investors/shares-dividends/dividend-information/) )
for further detail including the interim dividend timetable.
OUTLOOK
Financially, we expect a stronger second half of 2023 driven by higher
production volumes and supported by our gold price protection Programme,
should the gold price move below US$1,900/oz. Meanwhile, our focus on
continuous improvement means we remain fully focused on managing the bottom
line of the business so that we can maximise the value at Sukari and deliver
growth and diversification combined with sustainable stakeholder returns.
ROSS
JERRARD
CFO
26 July 2023
primary statements highlights
H1 2023 H1 2022 Full Year 2022
US$'000 US$'000 US$'000
Revenue 425,612 381,786 788,424
Revenue from gold and silver sales for the period increased by 11%
year-on-year to US$426 million (2022: US$382 million) with a 3% increase in
the year-on-year average realised gold price to US$1,936 per ounce sold (2022:
US$1,872 per ounce sold) complimented by an 8% increase in gold ounces sold to
219,353 ounces (2022: 203,587 ounces).
H1 2023 H1 2022 Full Year 2022
US$'000 US$'000 US$'000
Cost of sales (267,801) (257,436) (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 4% year-on-year to US$268 million, mainly
because of:
· 16% increase in depreciation and amortisation charges year-on-year
from US$68 million to US$79 million (+ve). This increase was mainly due to:
o US$137 million additions to property, plant and equipment (excl. capital
work in progress) which increased the depreciation and amortisation charges;
in addition to higher gold production year-on-year; partially offset by
· a 2% decrease (US$4 million) in total mine production costs from
US$192 million to US$188 million (-ve), primarily due to the following
drivers:
o an 11% decrease in processing costs (US$11 million) (-ve). The decrease
was driven by general price decreases and stabilisation on fuel and other
consumables as well as the consumption reduction due to the solar power coming
online. Diesel fuel is mainly consumed at Sukari for the process plants power
generation
o a 20% decrease in administration costs (US$5 million) (-ve); offset by
o a 17% increase in open pit mining costs (US$10 million) (+ve)
H1 2023 H1 2022 Full Year 2022
US$'000 US$'000 US$'000
Dividend paid - non-controlling interest in SGM (46,000) (21,492) (35,492)
Profit share payments during the year are reconciled against SGM's audited
financial statements. Any variation between payments made during the year
(based on the Company's estimates) and the SGM's 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 2022 financial statements have
been audited and signed off, the 30 June 2023 financial statements are
currently under audit.
Refer to note 1.3.1.2 in the 2022 Annual Report 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:
H1 2023 H1 2022 Full Year 2022
US$'000 US$'000 US$'000
Underground exploration 5,368 1,729 8,636
Underground mine development 16,011 16,965 32,107
Other sustaining capital expenditure 28,950 59,501 124,162
Total sustaining capital expenditure 50,329 78,195 164,905
Non-sustaining exploration expenditure 1,210 1,954 3,539
Other non-sustaining capital expenditure(1) 56,723 58,537 115,099
Total gross capital expenditure 108,262 138,686 283,543
Less:
Sustaining element of waste stripping capitalised(2) (10,023) (21,649) (51,527)
Capitalised Right of Use Assets (66) (6,339) (7,746)
Adjusted capital expenditure 98,173 110,698 224,270
(1) Non-sustaining capital expenditure included further spend on the solar
plant, underground paste-fill plant and the Capital Waste Stripping.
Non-sustaining costs are primarily those costs incurred at 'new operations'
and costs related to 'major projects at existing operations' that will
materially benefit the operation.
(2) Reclassified from operating expenditure.
EXPLORATION EXPENDITURE
The following table provides a breakdown of the total exploration expenditure
of the Group:
H1 2023 H1 2022 Full Year 2022
US$'000 US$'000 US$'000
Greenfield exploration
Burkina Faso 775 1,688 2,928
Côte d'Ivoire 15,914 15,386 25,120
Egypt - Eastern Desert Exploration 2,234 500 1,675
Total greenfield exploration expenditure 18,923 17,574 29,723
Brownfield exploration
Sukari Tenement 6,578 3,683 12,175
Total brownfield exploration expenditure 6,578 3,683 12,175
Total exploration expenditure 25,501 21,257 41,898
Exploration and evaluation expenditure comprises expenditure incurred for
exploration activities primarily in Côte d'Ivoire and in the Egypt greenfield
permit areas. Greenfield exploration and evaluation costs (excluding Burkina
Faso) increased by US$2 million or 14% as the exploration and evaluation work
at the two Côte d'Ivoire sites advanced, more significantly at the Doropo
site. Some drilling work has also started at Nugrus, one of the new Egypt
permit areas. The brownfield capitalised exploration costs on the Sukari
concession area increased by US$3 million or 79% year on year due to the
exploration and evaluation work and related activities at the Sukari permit
areas increasing in the period.
The spend in Burkina Faso is mainly on key services and other regulatory
obligations required as the process to formally exit the project is currently
underway.
SUBSEQUENT EVENTS
Interim dividend
The Directors have declared an interim dividend of 2.0 US cents per share on
Centamin plc ordinary shares (totalling approximately US$23 million). The
interim dividend for the half year period ended 30 June 2023 will be paid on
29 September 2023 to shareholders on the register on the Record Date of 1
September 2023.
Gold price protection programme
Centamin purchased a further six months of put options for 120,000 ounces of
gold at a strike price of US$1,900/oz. The put options mature at a rate of
20,000 ounces of gold per month, for the six months from January to June 2024.
This is a cash-settled programme, not involving physical gold delivery.
The programme provides the Company protection should the average monthly gold
price fall below the US$1,900/oz strike price, while allowing us to retain
full exposure to any upside in the gold price above this level. As detailed
above, this programme aligns with a period of elevated capital investment at
Sukari, and gives us further financial flexibility to pursue the Company's
strategy of delivering growth and returns to shareholders. The premium for
the programme extension was US$3.6 million.
Other than as noted above, there were no other significant events occurring
after the reporting date requiring disclosure in the financial statements.
NON‑GAAP FINANCIAL MEASURES
1) EBITDA and adjusted EBITDA
EBITDA is a non‑GAAP financial measure, which excludes the following from
profit before tax:
· Finance costs
· Finance income
· Depreciation and amortisation
Management considers EBITDA a valuable indicator of the Group's ability to
generate liquidity by producing operating cash flow to fund working capital
needs and capital expenditures. EBITDA is also frequently used by investors
and analysts for valuation purposes whereby EBITDA is multiplied by a factor
or 'EBITDA multiple' that is based on an observed or inferred relationship
between EBITDA and market values to determine a company's approximate total
enterprise value. EBITDA is intended to provide additional information to
investors and analysts and does not have any standardised definition under
IFRS and should not be considered in isolation or as a substitute for measures
of performance prepared in accordance with IFRS.
EBITDA excludes the impact of income from financing activities and taxes, and
therefore is not necessarily indicative of operating profit or cash flow from
operations as determined under IFRS. Other companies may also calculate EBITDA
differently. The following table provides a reconciliation of EBITDA to profit
for the year before tax.
Adjusted EBITDA removes the effect of transactions that are not core to the
Group's main operations, like adjustments made to normalise earnings, for
example profit on financial assets at fair value through profit or loss,
impairments of property, plant and equipment, non-current mining stockpiles
and exploration and evaluation assets.
Reconciliation of profit before tax to EBITDA and adjusted EBITDA:
H1 2023 H1 2022 Full Year 2022
Profit for the year before tax US$'000 114,804 84,747 171,001
Finance income US$'000 (1,791) (214) (1,214)
Finance costs US$'000 1,380 529 2,459
Depreciation and amortisation US$'000 79,022 68,054 146,769
EBITDA US$'000 193,415 153,116 319,015
Add back/(less)(1) US$'000
Net fair value gains on derivative financial instruments US$'000 (490) - -
Adjusted EBITDA US$'000 192,925 153,116 319,015
(1) Adjustments made to normalise earnings for example profit on
financial assets at fair value through profit or loss, impairments of
property, plant and equipment, non-current mining stockpiles and exploration
and evaluation assets.
2) Cash cost of production per ounce produced and sold and all-in sustaining
costs ("AISC") per ounce sold calculation
Cash cost of production and AISC are non-GAAP financial measures. Cash cost of
production per ounce is a measure of the average cost of producing an ounce of
gold, calculated by dividing the operating costs in a period by the total gold
production over the same period. Operating costs represent total operating
costs less sustaining administrative expenses, royalties, depreciation and
amortisation. Management uses this measure internally to better assess
performance trends for the Company as a whole. Management considers that, in
addition to conventional measures prepared in accordance with GAAP, certain
investors use such non-GAAP information to evaluate the Company's performance
and ability to generate cash flow. Management considers that these measures
provide an alternative reflection of the Group's performance for the current
year and are an alternative indication of its expected performance in future
periods. Cash cost of production is intended to provide additional
information, does not have any standardised meaning prescribed by GAAP and
should not be considered in isolation or as a substitute for measures of
performance prepared in accordance with GAAP. This measure is not necessarily
indicative of operating profit or cash flow from operations as determined
under GAAP. Other companies may calculate these measures differently.
Reconciliation of cash cost of production per ounce produced:
H1 2023 H1 2022 Full Year 2022
Mine production costs (note 2.2) US$'000 188,344 192,090 408,543
Less: Refinery and transport US$'000 (1,182) (1,126) (2,324)
Movement of inventory (1) US$'000 (5) (1,108) (3,673)
Cash cost of production - gold produced US$'000 187,157 189,856 402,546
Gold produced - total (oz.) oz 220,561 203,898 440,974
Cash cost of production per ounce produced US$/oz 849 931 913
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:
H1 2023 H1 2022 Full Year 2022
Mine production costs (note 2.2) US$'000 188,344 192,090 408,543
Royalties US$'000 12,733 11,679 23,842
Movement of inventory (1) US$'000 3,346 1,078 (6,789)
Cash cost of production - gold sold US$'000 204,423 204,847 425,596
Gold sold - total (oz.) oz 219,353 203,587 438,638
Cash cost of production per ounce sold US$/oz 932 1,006 970
H1 2023 H1 2022 Full Year 2022
Movement in inventory
Movement in inventory - cash (above) US$'000 3,346 1,078 (6,789)
Effect of depreciation and amortisation - non-cash US$'000 (4,062) 1,341 17,448
Movement in inventory - cash & non-cash (note 2.2) US$'000 (716) 2,419 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:
H1 2023 H1 2022 Full Year 2022
Mine production costs (note 2.2) US$'000 188,344 192,090 408,543
Movement in inventory US$'000 3,346 1,078 (6,789)
Royalties US$'000 12,733 11,679 23,842
Sustaining corporate administration costs US$'000 14,964 11,780 24,282
Rehabilitation costs US$'000 668 294 588
Sustaining underground development and exploration US$'000 21,379 18,694 40,743
Other sustaining capital expenditure US$'000 28,950 59,501 124,162
By‑product credit US$'000 (928) (711) (1,503)
All‑in sustaining costs (1) US$'000 269,456 294,405 613,868
Gold sold - total (oz.) oz 219,353 203,587 438,638
AISC per ounce sold US$/oz 1,228 1,446 1,399
(1) Includes refinery and transport.
3) Cash and cash equivalents, bullion on hand and gold and silver sales debtor
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:
30 June 30 June 31 December 2022
2023 2022
Cash and cash equivalents (note 2.10(a)) US$'000 96,231 126,849 102,373
Bullion on hand (valued at the period-end spot price) US$'000 28,095 20,830 24,440
Gold and silver sales debtor US$'000 33,573 27,761 29,832
Derivative instruments at fair value through profit or loss US$'000 3,028 - -
US$'000 160,927 175,440 156,645
The majority of funds have been invested in international rolling short-term
interest money market deposits.
4) Free cash flow and adjusted free cash flow
Free cash flow is a non-GAAP financial measure. Free cash flow is a measure of
the available cash after distributions to the Non-Controlling Interest ("NCI")
in SGM, being EMRA, that the Group has at its disposal to use for capital
reinvestment and to distribute to shareholders of the parent. Free cash flow
is intended to provide additional information, does not have any standardised
meaning prescribed by GAAP and should not be considered in isolation or as a
substitute for measures of performance prepared in accordance with GAAP. This
measure is not necessarily indicative of operating profit or cash flow from
operations as determined under GAAP and other companies may calculate this
measure differently.
H1 2023 H1 2022 Full Year 2022
Net cash generated from operating activities US$'000 171,767 128,674 293,047
Less:
Net cash used in investing activities US$'000 (106,405) (132,134) (274,583)
Dividend paid - non-controlling interest in SGM US$'000 (46,000) (21,492) (35,492)
Free cash flow US$'000 19,362 (24,952) (17,028)
Add back:
Transactions completed through specific available cash resources (1)
US$'000 2,538 - -
Adjusted free cash flow US$'000 21,900 (24,952) (17,028)
(1) Adjustments made to free cash flow, for example acquisitions and
disposals of financial assets at fair value through profit or loss, which are
completed through specific allocated available cash reserve
governanCe
Share Plan Awards
Granted 25 April 2023
· The Company granted 6,065,600 performance share awards over
ordinary shares of nil par value to executive Directors and 21 employees of
the Group under the Company's shareholder approved Incentive Share Plan.
Performance conditions and further details of the scheme can be found in the
2022 Annual Report
(https://gbr01.safelinks.protection.outlook.com/?url=https%3A%2F%2Fwww.centamin.com%2Fannual-report-2022%2F&data=05%7C01%7CAlexandra%40centaminplc.com%7C699a5b266ea247d3022708db7e247d51%7Ca02403da39374fe8917b48e08012a5e7%7C0%7C0%7C638242467397862573%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C3000%7C%7C%7C&sdata=LZEN9QFhjIAbOVRSYNvmE1pTEIi%2Bbu6uedh8QNZ8akA%3D&reserved=0)
.
· The Company granted 3,057,000 restricted share awards over
ordinary shares of nil par value to 112 senior employees across the Group
under the Company's shareholder approved Incentive Share Plan. These shares
vest annually over a three-year period in equal tranches to participants,
subject to the scheme rules and the employee remaining with the Company.
Legal developments in egypt
On 14 January 2023, Egyptian Law No. 32 of 2014 ("Law 32") was upheld as
constitutional by the Egyptian Supreme Constitutional Court ("SCC"), having
been under challenge since 2014.
SUMMARY
· Law 32 provides that third parties are prevented from lawfully
challenging contractual agreements between the Egyptian government and an
investor(s), such as the Sukari Gold Mine Concession Agreement ("Concession
Agreement")
· The SCC judgment gives Centamin the right to request the Supreme
Administrative Court ("SAC") to rule that the 2011 challenge to the Concession
Agreement is now legally inadmissible on the basis that the original
complainant had no capacity to bring the claim as he was not a party to the
Concession Agreement
· As per the provisions of Egyptian Civil Procedures Law,
Centamin's subsidiary, PGM, has submitted an application to the SAC to resume
the Appeal proceedings and request the SAC to reject the original case in its
entirety in accordance with the provisions of Law 32
· The SAC has set the hearing date for 2 September 2023
· Operations at the Sukari Gold Mine remain unaffected and continue
as normal
There have been no material developments since the issuance of the 2022 annual
report. For further detail please refer to Note 5.1 of the 2022 Annual Report
(https://www.centamin.com/annual-report-2022/) .
PRINCIPAL RISKS AND Uncertainties
RISK MANAGEMENT
Centamin recognises that nothing is without risk. We believe a successful and
sustainable business requires a robust and proactive risk management framework
as its foundation. This is supported by a strong culture of risk awareness,
encouraging openness and integrity, alongside a clearly defined appetite for
risk. This enables the Company to consider risks and opportunities for more
effective decision-making, delivery on our objectives and improve our
performance as a responsible mining company. The Board has overall
responsibility, supported by the Audit and Risk Committee, for establishing a
framework that allows for the review of existing and emerging risks in the
context of both opportunities and potential threats that inform the principal
risks and uncertainties. These risks and opportunities inform the assessment
of the future prospects and long-term viability of the Group, as shown in the
Viability Statement of the 2022 Annual Report and are also considered when
challenging the strategic objectives of the Company.
2022 was a year of extreme macroeconomic changes exacerbated by geopolitical
pressures including the situation in Ukraine and the ongoing impacts of the
COVID pandemic. Whilst as a business we were able to successfully manage the
operational considerations of the pandemic, we have felt the financial
pressures as every government, business and individual has globally. The 2022
Annual Report included updates to the principal and emerging risks driven by
these pressures, with detail provided on these changes in the Risk Review of
the 2022 Annual Report. There has been no change to the Principal and Emerging
risks since then except for those highlighted below. We continue to feel the
ongoing global impact of these increased financial pressures, which we
continue to monitor, which has led to the introduction of the Gold Price
Protection Programme, as highlighted in the CFO Financial Review. These
downside protection mechanisms have changed the mitigations and ongoing
strategy through H2 2023 for the financially focussed risks of Gold price,
Global macroeconomic developments and Capital allocation & liquidity. When
also considering the healthy financial position of the business, additional
measures such as the focus on cost savings initiatives and the revolving
credit facility, means we feel there is now sufficient financial flexibility
to meet the Company's current and future financial commitments through 2023.
In addition, regarding the Litigation risk we are awaiting the Supreme
Administrative Court hearing, as highlighted in the Legal Developments in
Egypt, to make the relevant updates to this risk.
The Directors confirm that a robust assessment of the principal, new and
emerging risks impacting the Company has been undertaken which identified
external, strategic and operational risks on a sliding scale depending on the
level of influence over which the Company may have on the factors which can
impact the risk. For further detail please refer to the Risk Review within the
2022 Annual Report and 2022 Sustainability Report, published on the Company's
website: www.centamin.com.
PRINCIPAL RISKS
The principal risks and uncertainties facing the Group remain unchanged from
those which are set out in detail within the Strategic Report section of the
2022 Annual Report and can be found on the Company's website
(https://www.centamin.com/investors/principal-risks-and-uncertainties/
(https://www.centamin.com/investors/principal-risks-and-uncertainties/) ) .
The principal risks are listed below:
External risks
· Geopolitical
· Legal and regulatory compliance
· Litigation
· Global macroeconomic developments
· Gold price
Strategic risks
· Capital allocation and liquidity
· Diversification
· Concession governance and management
· Licence to operate
· People (attract, develop and retain skilled people)
· Stakeholder environmental and social expectations
· Decarbonisation
Operational risks
· Safety, health and wellbeing
· Exploration and project development
· Maximising our geological potential
· Operational performance and planning
EMERGING RISKS
Below we have outlined a list of emerging risks, these remain unchanged from
those which are set out within the Strategic Report section of the 2022 Annual
Report and website
(https://www.centamin.com/investors/principal-risks-and-uncertainties/) :
· Cyber security
· Infectious disease
· Climate change
________________________________________________________________________________________________
DIRECTORS' RESPONSIBILITY STATEMENT
RESPONSIBILITY STATEMENT OF THE DIRECTORS IN RESPECT OF THE SIX MONTHS ENDED
30 JUNE 2023 FINANCIAL REPORT
The Directors confirm that to the best of their knowledge:
a) the set of interim condensed consolidated financial statements for
the six months ended 30 June 2023 has been prepared in accordance with
International Accounting Standard 34 'Interim Financial Reporting' as adopted
by the European Union;
b) the set of interim condensed consolidated financial statements, which
has been prepared in accordance with the applicable set of accounting
standards, gives a true and fair view of the assets, liabilities, financial
position and profit or loss of the issuer, or the undertakings included in the
consolidation as a whole as required by DTR 4.2.4;
c) the interim management report includes a fair review of the
information required by DTR 4.2.7R (indication of important events during the
first six months and description of principal risks and uncertainties for the
remaining six months of the year); and
d) the interim management report includes a fair review of the
information required by DTR 4.2.8R (disclosure of related parties'
transactions and changes therein).
The board of Directors that served during all or part of the six month period
ended on 30 June 2023 and their respective responsibilities can be found on
pages 90 to 147 of the 2022 annual report and accounts of Centamin plc.
By order of the Board,
Martin
Horgan
Ross Jerrard
CEO
CFO
26 July
2023
26 July 2023
UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED
30 JUNE 2023
Independent review report to Centamin plc
Report on the interim condensed consolidated financial statements
Our conclusion
We have reviewed Centamin plc's interim condensed consolidated financial
statements (the "interim financial statements") in the Interim Report of
Centamin plc for the 6 month period ended 30 June 2023 (the "period").
Based on our review, nothing has come to our attention that causes us to
believe that the interim financial statements are not prepared, in all
material respects, in accordance with International Accounting Standard 34,
'Interim Financial Reporting' as adopted by the European Union and the
Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's
Financial Conduct Authority.
The interim financial statements comprise:
· the unaudited interim condensed consolidated statement of
financial position as at 30 June 2023;
· the unaudited interim condensed consolidated statement of
comprehensive income for the period then ended;
· the unaudited interim condensed consolidated statement of changes
in equity for the period then ended;
· the unaudited interim condensed consolidated statement of cash
flows for the period then ended; and
· the explanatory notes to the interim financial statements.
The interim financial statements included in the Interim Report of Centamin
plc have been prepared in accordance with International Accounting Standard
34, 'Interim Financial Reporting' as adopted by the European Union and the
Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's
Financial Conduct Authority.
Basis for conclusion
We conducted our review in accordance with International Standard on Review
Engagements (UK) 2410, 'Review of Interim Financial Information Performed by
the Independent Auditor of the Entity' issued by the Financial Reporting
Council for use in the United Kingdom ("ISRE (UK) 2410"). A review of interim
financial information consists of making enquiries, primarily of persons
responsible for financial and accounting matters, and applying analytical and
other review procedures.
A review is substantially less in scope than an audit conducted in accordance
with International Standards on Auditing (UK) and, consequently, does not
enable us to obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do not express
an audit opinion.
We have read the other information contained in the Interim Report and
considered whether it contains any apparent misstatements or material
inconsistencies with the information in the interim financial statements.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis for conclusion section of this report,
nothing has come to our attention to suggest that the Directors have
inappropriately adopted the going concern basis of accounting or that the
Directors have identified material uncertainties relating to going concern
that are not appropriately disclosed. This conclusion is based on the review
procedures performed in accordance with ISRE (UK) 2410. However, future events
or conditions may cause the Group to cease to continue as a going concern.
Responsibilities for the interim financial statements and the review
Our responsibilities and those of the directors
The Interim Report, including the interim financial statements, is the
responsibility of, and has been approved by the Directors. The Directors are
responsible for preparing the Interim Report in accordance with the Disclosure
Guidance and Transparency Rules sourcebook of the United Kingdom's Financial
Conduct Authority. In preparing the Interim Report, including the interim
financial statements, the Directors are responsible for assessing the Group's
ability to continue as a going concern, disclosing, as applicable, matters
related to going concern and using the going concern basis of accounting
unless the Directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Our responsibility is to express a conclusion on the interim financial
statements in the Interim Report based on our review. Our conclusion,
including our Conclusions relating to going concern, is based on procedures
that are less extensive than audit procedures, as described in the Basis for
conclusion paragraph of this report. This report, including the conclusion,
has been prepared for and only for the Company for the purpose of complying
with the Disclosure Guidance and Transparency Rules sourcebook of the United
Kingdom's Financial Conduct Authority and for no other purpose. We do not, in
giving this conclusion, accept or assume responsibility for any other purpose
or to any other person to whom this report is shown or into whose hands it may
come save where expressly agreed by our prior consent in writing.
PricewaterhouseCoopers LLP
Chartered Accountants
London
26 July 2023
Unaudited interim condensed consolidated statement of comprehensive income
for the six months ended 30 June 2023
Half year ended Half year ended 30 June Year ended
30 June 31 December
2023 2022 (Unaudited)* 2022
(Unaudited) (Audited)
Notes US$'000 US$'000 US$'000
Revenue 2.1 425,612 381,786 788,424
Cost of sales 2.2 (267,801) (257,436) (544,075)
Gross profit 157,811 124,350 244,349
Exploration and evaluation expenditure (18,923) (17,574) (29,723)
Other operating costs 2.2 (29,602) (24,081) (49,003)
Other income 4,617 2,493 6,623
Finance income 2.2 1,791 214 1,214
Finance costs 2.2 (1,380) (655) (2,459)
Net fair value gain on derivative financial instruments 2.3 490 - -
Profit for the period before tax 114,804 84,747 171,001
Tax (10) (10) (226)
Profit for the period after tax 114,794 84,737 170,775
Profit for the period after tax attributable to:
- the owners of the parent 90,968 84,737 72,490
- non-controlling interest in SGM 2.4 23,826 - 98,285
Total comprehensive income for the period 114,794 84,737 170,775
Total comprehensive income for the period attributable to:
- the owners of the parent 90,968 84,737 72,490
- non-controlling interest in SGM 2.4 23,826 - 98,285
Earnings per share attributable to owners of the parent:
Basic (US cents per share) 7.860 7.352 6.287
Diluted (US cents per share) 7.728 7.277 6.203
( )
*In the 2022 Interim Condensed Consolidated Statement of Comprehensive Income,
Finance costs were included and disclosed in the line 'Other operating costs',
in these financial statements they are now separately disclosed in their own
line and as such 'Other operating costs' for the 6 months ended 30 June 2022
have changed.
The above unaudited interim condensed consolidated statement of comprehensive
income should be read in conjunction with the accompanying notes.
Unaudited interim CONDENSED consolidated STATEMENT OF Financial position
as at 30 June 2023
30 June 30 June 31 December
2023 2022 2022
(Unaudited) (Unaudited) (Audited)
Notes US$'000 US$'000 US$'000
Non‑current assets
Property, plant and equipment 2.5 1,114,000 1,026,494 1,086,649
Exploration and evaluation asset 2.6 24,809 25,261 24,809
Inventories 2.7 110,337 78,823 94,773
Other receivables 1,582 1,010 1,372
Total non‑current assets 1,250,728 1,131,588 1,207,603
Current assets
Inventories 2.7 112,067 125,481 134,065
Trade and other receivables 39,259 28,777 35,628
Prepayments 13,114 13,095 13,864
Derivative financial instruments 2.3 3,028 - -
Cash and cash equivalents 2.10(a) 96,231 126,849 102,373
Total current assets 263,699 294,202 285,930
Total assets 1,514,427 1,425,790 1,493,533
Non‑current liabilities
Provisions 2.8 38,064 42,973 37,425
Other payables 2.9 8,814 12,179 11,801
Total non‑current liabilities 46,878 55,152 49,226
Current liabilities
Trade and other payables 2.9 80,966 71,039 99,395
Tax liabilities 259 237 249
Provisions 2.8 2,954 3,366 3,256
Total current liabilities 84,179 74,642 102,900
Total liabilities 131,057 129,794 152,126
Net assets 1,383,370 1,295,996 1,341,407
Equity
Issued capital 673,527 670,994 670,994
Share option reserve 5,818 4,245 6,082
Accumulated profits 703,662 682,505 641,794
Total equity attributable to:
- owners of the parent 1,383,007 1,357,744 1,318,870
- non-controlling interest in SGM 363 (61,748) 22,537
Total equity 1,383,370 1,295,996 1,341,407
The above unaudited interim condensed consolidated statement of financial
position should be read in conjunction with the accompanying notes.
The unaudited interim condensed consolidated financial statements were
authorised by the Board of Directors for issue on 26 July 2023 and signed on
its behalf by:
Martin Horgan
Ross Jerrard
CEO, Director
CFO,
Director
26 July 2023
26 July 2023
Unaudited interim condensed consolidated statement of changes in equity
for the six months ended 30 June 2023
30 June 2023 (Unaudited) Issued capital Share option reserve Accumulated profits Total Non-controlling interests Total
equity
Notes US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Balance as at 1 January 2023 670,994 6,082 641,794 1,318,870 22,537 1,341,407
Profit for the period after tax - - 90,968 90,968 23,826 114,794
Total comprehensive income for the period - - 90,968 90,968 23,826 114,794
Own shares acquired - - - - - -
Net recognition of share-based payments - 2,269 - 2,269 - 2,269
Transfer of share-based payments 2,533 (2,533) - - - -
Dividend paid - non-controlling interest in SGM 2.4
- - - - (46,000) (46,000)
Dividend paid - owners of the parent - - (29,100) (29,100) - (29,100)
Balance as at 30 June 2023 673,527 5,818 703,662 1,383,007 363 1,383,370
30 June 2022 (Unaudited) Issued capital Share option reserve Accumulated profits Total Non-controlling interests Total
equity
Notes US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Balance as at 1 January 2022 669,531 4,975 655,508 1,330,014 (40,256) 1,289,758
Profit for the period after tax - - 84,737 84,737 - 84,737
Total comprehensive income for the period - -
84,737 84,737 - 84,737
Own shares acquired (523) - - (523) - (523)
Net recognition of share-based payments
- 1,256 - 1,256 - 1,256
Transfer of share-based payments 1,986 (1,986) - - - -
Dividend paid - non-controlling interest in SGM 2.4
- - - - (21,492) (21,492)
Dividend paid - owners of the parent - - (57,740) (57,740) - (57,740)
Balance as at 30 June 2022 670,994 4,245 682,505 1,357,744 (61,748) 1,295,996
31 December 2022 (Audited) Share option reserve Accumulated profits Total Non-controlling interests Total
Issued capital equity
Notes US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Balance as at 1 January 2022 669,531 4,975 655,508 1,330,014 (40,256) 1,289,758
Profit for the year after tax - - 72,490 72,490 98,285 170,775
Total comprehensive income for the year - - 72,490 72,490 98,285 170,775
Net recognition of share-based payments - 2,570 - 2,570 - 2,570
Transfer of share-based payments 1,463 (1,463) - - - -
Dividend paid - non-controlling interest in SGM 2.4
- - - - (35,492) (35,492)
Dividend paid - owners of the parent - - (86,204) (86,204) - (86,204)
Balance as at 31 December 2022 670,994 6,082 641,794 1,318,870 22,537 1,341,407
The above unaudited interim condensed consolidated statement of changes in
equity should be read in conjunction with the accompanying notes.
unaudited interim condensed consolidated statement of cash flows
for the six months ended 30 June 2023
Half year ended 30 June Half year ended 30 June Year ended
31 December
2023 (Unaudited) 2022 2022
(Unaudited)* (Audited)*
Notes US$'000 US$'000 US$'000
Cash flows from operating activities
Cash generated from operating activities 2.10(b) 172,479 129,060 294,625
Income tax (paid)/received - (25) (230)
Interest paid (712) (361) (1,871)
Net cash generated from operating activities 171,767 128,674 292,524
Cash flows from investing activities
Acquisition of property, plant and equipment (101,618) (128,665) (263,622)
Brownfield exploration and evaluation expenditure (6,578) (3,683) (12,175)
Finance income 2.2 1,791 214 1,214
Net cash used in investing activities (106,405) (132,134) (274,583)
Cash flows from financing activities
Cash element of share-based payments (583) (523) (523)
Dividend paid - non-controlling interest in SGM 2.4 (46,000) (21,492) (35,492)
Dividend paid - owners of the parent (29,100) (57,740) (86,204)
Net cash used in financing activities (75,683) (79,755) (122,219)
Net decrease in cash and cash equivalents (10,321) (83,215) (104,278)
Cash and cash equivalents at the beginning of the period 102,373 207,821 207,821
Effect of foreign exchange rate changes 4,179 2,243 (1,170)
Cash and cash equivalents at the end of the period 2.10(a) 96,231 126,849 102,373
( )
* The comparatives at 30 June 2022 have been restated to reflect an increase
of cash generated from operating activities of $0.7m, interest paid of $0.4m
and a reduction of the effect of foreign exchange rate changes of $0.3m. The
comparatives at 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 unaudited interim condensed consolidated statement of cash flows
should be read in conjunction with the accompanying notes.
notes to the unaudited interim condensed consolidated financial statements
for the six months ended 30 June 2023
General information and basis of preparation of interim report
1. Summary of material accounting policies
1.1 Basis of preparation
These unaudited interim condensed consolidated financial statements have been
prepared in accordance with IAS 34 "Interim Financial Reporting" (IAS 34) as
adopted by the European Union and the requirements of the Disclosure and
Transparency Rule sourcebook (DTR) of the Financial Conduct Authority (FCA) in
the United Kingdom as applicable to interim financial reporting. These
unaudited interim condensed consolidated financial statements are not affected
by seasonality.
The unaudited interim condensed consolidated financial statements represent a
'condensed set of financial statements' as referred to in the DTR issued by
the FCA. Accordingly, they do not include all of the information required for
a full annual financial report and are to be read in conjunction with the
Group's financial statements for the year ended 31 December 2022, which were
prepared in accordance with International Financial Reporting Standards
("IFRS") as adopted for use by the European Union. The financial statements
for the year ended 31 December 2022 have been filed with the Jersey Financial
Services Commission. The financial information contained in this report does
not constitute statutory accounts under the Companies (Jersey) Law 1991, as
amended.
The financial information for the year ended 31 December 2022 is based on the
statutory accounts for the year ended 31 December 2022. Readers are referred
to the auditors' report on the Group financial statements as at 31 December
2022 (available at www.centamin.com (http://www.centamin.com) ).
The accounting policies applied in these interim financial statements are
consistent with those used in the annual consolidated financial statements for
the year ended 31 December 2022 except for the adoption of new standards and
endorsed by the EU which apply for the first time in 2023 as referred to in
the 31 December 2022 Annual Report. The Group has not early adopted any
amendments, standards or interpretations that have been issued but are not yet
effective.
The preparation of these interim condensed consolidated financial statements
requires the use of certain significant accounting estimates and judgements by
management in applying the Group's accounting policies. There have been no
changes to areas involving significant judgement and estimates, other than
those disclosed in note 1.1 above, and set out in Note 1 of the Group's annual
audited consolidated financial statements for the year ended 31 December 2022.
1.2 Going concern
Management performed detailed analyses and forecasts to assess the economic
impact of a base case and various downside scenarios from a going concern and
viability perspective as at 31 December 2022. Based on the financial and
operational performance analysis and review done for the six-month period to
30 June 2023 the Company is still operating within budget and guidance in
terms of production and costs. Additionally, as at 30 June 2023, management
performed similar base case and various downside scenarios without applying
any mitigating actions over a period of at least twelve months from 26 July
2023 and an example of such mitigating measures that was not applied would be
drawdowns on the available US$150 million revolving credit facility. The
scenarios modelled are as follows:
· Base case scenario being the financial model based on the budget;
· Average realised gold price reduction to US$1,750/oz;
· Fuel price increase to US$1 per litre;
· Processing capacity reduction by 20%;
· Processing plant recovery rate reduction by 3%; and
· A worst case scenario with a combination of the above.
All the scenarios evaluated above had a net ending positive cash outcome.
This base case analysis as at 30 June 2023 together with the downside
scenarios analysis outlined above, completed shortly after a detailed analysis
to support the year end going concern assessment, was sufficient to give the
Directors comfort that the Company's financial statements for the six months
ended 30 June 2023 should be prepared on a going concern basis.
However, the Group continues to monitor the business' 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 balance sheet with
large cash balances and no debt. At 30 June 2023 the Group had cash and cash
equivalents of US$96 million (30 June 2022: US$127 million) and had initiated
a gold price protection programme, refer to note 2.3. The Group also had
US$150 million of liquidity through the undrawn RCF.
These financial statements for the six month period ended 30 June 2023 have
therefore been prepared on a going concern basis, which contemplate the
realisation of assets and liquidation of liabilities during the normal course
of operations.
1.3 Changes in critical judgements and estimates in applying the
entities accounting policies
There were no updates and/or changes to critical accounting judgements and
estimates that management have made in the period in applying the Group's
accounting policies, that have a significant effect on the amounts recognised
and the disclosure of such amounts in the financial statements. Refer to the
2022 Annual Report for applicable critical accounting judgements or estimates.
1.4 Changes in policies and estimates
There were no changes in policies and estimates during the reporting period.
1.5 New and amended standards and their impact to the Group
A number of new or amended standards became applicable for the current
reporting period. Where the new or amended standards were currently
applicable, the Group did not have to change its accounting policies or make
retrospective adjustments as a result of adopting these standards. Refer to
the table below for details of these standards.
Accounting Standard Requirement Impact on financial statements
IFRS 17 Insurance Contracts IFRS 17 was issued in May 2017 as replacement for IFRS 4 Insurance Contracts. No material impact on these Group unaudited interim condensed consolidated
It requires a current measurement model where estimates are remeasured in each financial statements
reporting period.
Disclosure of Accounting Policies - Amendments to IAS 1 and IFRS Practice The IASB amended IAS 1 to require entities to disclose their material rather Impact on disclosure of accounting policies
Statement 2 than their significant accounting policies. The amendments define what is
'material accounting policy information' and explain how to identify when
accounting policy information is material. They further clarify that
immaterial accounting policy information does not need to be disclosed. If it Requirements incorporated in these unaudited interim condensed consolidated
is disclosed, it should not obscure material accounting information. financial statements
To support this amendment, the IASB also amended IFRS Practice Statement 2
Making Materiality Judgements to provide guidance on how to apply the concept
of materiality to accounting policy disclosures.
Definition of Accounting Estimates - Amendments to IAS 8 The amendment to IAS 8 Accounting Policies, Changes in Accounting Estimates No material impact on these Group unaudited interim condensed consolidated
and Errors clarifies how companies should distinguish changes in accounting financial statements
policies from changes in accounting estimates. The distinction is important,
because changes in accounting estimates are applied prospectively to future
transactions and other future events, whereas changes in accounting policies
are generally applied retrospectively to past transactions and other past
events as well as the current period.
Deferred Tax related to Assets and Liabilities arising from a Single The amendments to IAS 12 Income Taxes require companies to recognise deferred No material impact on these Group unaudited interim condensed consolidated
Transaction - Amendments to IAS 12 tax on transactions that, on initial recognition, give rise to equal amounts financial statements
of taxable and deductible temporary differences. They will typically apply to
transactions such as leases of lessees and decommissioning obligations and
will require the recognition of additional deferred tax assets and
liabilities.
International Tax Reform -Pillar Two Model Rules - Amendments to IAS 12 The amendments aim to provide temporary relief from accounting for deferred No material impact on these Group unaudited interim condensed consolidated
taxes arising from the implementation of the Pillar Two model rules. financial statements
The Group is within the scope of the OECD Pillar two model rules. Pillar two
legislation was recently substantively enacted in some of the territories in
which the Group operates and will come into effect in these territories
(Australia and UK) from 1 January 2024 and 1 January 2025 in Jersey. At the
interim reporting date, none of the Pillar two legislation is effective and so
the Group has no related current tax exposure. The Group has commenced their
Pillar two impact analysis but is, as yet, not in a position to provide
quantified analysis of the potential future impact.
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.
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 West African exploration for
precious metals in these geographies. The Egyptian mining operations derive
its revenue from the sale of gold while the West African and recently
incorporated 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.
Non‑current assets other than financial instruments by country:
30 June 30 June 31 December
2023 (Unaudited) 2022 2022
(Unaudited) (Audited)
US$'000 US$'000 US$'000
Egypt 1,249,357 1,129,691 1,206,226
Burkina Faso 3 468 20
Côte d'Ivoire 1,035 873 908
Corporate 333 556 449
Total non-current assets 1,250,728 1,131,588 1,207,603
Additions to non-current assets mainly relate to Egypt and are disclosed in
the Property, Plant and Equipment note 2.5.
Statement of financial position by operating segment:
30 June 2023 Egypt Egypt Exploration Burkina Côte
Total Mining Faso d'Ivoire Corporate
(Unaudited) US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Statement of financial position
Total assets 1,514,427 1,419,087 4,545 58 5,116 85,621
Total liabilities (131,057) (124,473) (804) (465) (2,306) (3,009)
Net assets/total equity 1,383,370 1,294,614 3,741 (407) 2,810 82,612
30 June 2022 Egypt Egypt Burkina Côte
Total Mining Exploration Faso d'Ivoire Corporate
(Unaudited) US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Statement of financial position
Total assets 1,425,790 1,344,491 2,864 1,575 2,579 74,281
Total liabilities (129,794) (127,285) (669) (1,319) (1,733) 1,212
Net assets/total equity 1,295,996 1,217,206 2,195 256 846 75,493
Egypt Egypt Burkina Côte
Mining Exploration Faso d'Ivoire Corporate
31 December 2022
Total
(Audited) US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Statement of financial position
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/total equity 1,341,407 1,270,710 3,524 (430) 653 66,950
Statement of comprehensive income by operating segment:
Half-year ended 30 June 2023 Egypt Egypt Exploration Burkina Faso* Côte d'Ivoire
Total Mining Corporate
(Unaudited) US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Statement of comprehensive income
Gold sales 424,684 424,684 - - - -
Silver sales 928 928 - - - -
Revenue 425,612 425,612 - - - -
Cost of sales (267,801) (267,801) - - - -
Gross profit 157,811 157,811 - - - -
Exploration and evaluation costs (18,923) - (2,234) (775) (15,914) -
Other operating costs (29,602) (15,397) (126) 687 (240) (14,526)
Other income 4,617 4,788 102 108 (354) (27)
Net fair value gain on derivative financial instruments
490 - - - - 490
Finance income 1,791 563 - - - 1,228
Finance costs (1,380) (781) (12) (1) (21) (565)
Profit/(loss) for the period before tax 114,804 146,984 (2,270) 19 (16,529) (13,400)
Tax (10) (10) - - - -
Profit/(loss) for the period after tax 114,794 146,974 (2,270) 19 (16,529) (13,400)
Profit/(loss) for the period after tax attributable to:
- owners of the parent ((1)) 90,968 123,148 (2,270) 19 (16,529) (13,400)
- non-controlling interest in SGM ((1)) 23,826 23,826 - - - -
* The US$0.7m gain in the Burkina Faso segment relates to intercompany loans
due to Centamin West Africa Holdings Limited (included as an expense within
the Corporate segment) that were written off in the 6 months period ended 30
June 2023. These amounts are fully eliminated on consolidation, therefore do
not impact the overall Group results.
(1) Please note that the cost recovery model on which profit share is based
under the Concession Agreement is different to the accounting results
presented above due to various adjustments and as such the share of profit
disclosed above is not reflective of the 55%:45% split that was in place from
1 July 2018 to 30 June 2020 and the 50%:50% split from 1 July 2020 onwards
that occurs in practice. Refer to the statement of cash flows by operating
segment below for further information on the profit share paid to EMRA.
Statement of comprehensive income by operating segment:
Half-year ended 30 June 2022 Egypt Egypt Exploration Burkina Côte d'Ivoire
Total Mining Faso Corporate
(Unaudited)* US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Statement of comprehensive income
Gold sales 381,075 381,075 - - - -
Silver sales 711 711 - - - -
Revenue 381,786 381,786 - - - -
Cost of sales (257,436) (257,436) - - - -
Gross profit 124,350 124,350 - - - -
Exploration and evaluation costs (17,574) - (500) (1,688) (15,386) -
Other operating (costs)/income (24,081) (14,187) (32) (68) (144) (9,650)
Other income 2,493 3,902 97 (10) (544) (952)
Finance income 214 (2) - - - 216
Finance costs (655) (586) (5) (1) (37) (26)
Profit/(loss) for the period before tax 84,747 113,477 (440) (1,767) (16,111) (10,412)
Tax (10) (10) - - - -
Profit/(loss) for the period after tax 84,737 113,467 (440) (1,767) (16,111) (10,412)
Profit/(loss) for the period after tax attributable to:
- owners of the parent ((1)) 84,737 113,467 (440) (1,767) (16,111) (10,412)
- non-controlling interest in SGM ((1)) - - - - - -
*In the 2022 Interim Condensed Consolidated Statement of Comprehensive Income,
Finance costs were included and disclosed in the line 'Other operating costs',
in these financial statements they are now separately disclosed in their own
line and as such 'Other operating costs' for June 2022 have changed.
(1) Please note that the cost recovery model on which profit share is based
under the Concession Agreement is different to the accounting results
presented above due to various adjustments and as such the share of profit
disclosed above is not reflective of the 55%:45% split that was in place from
1 July 2018 to 30 June 2020 and the 50%:50% split from 1 July 2020 onwards
that occurs in practice. Refer to the statement of cash flows by operating
segment below for further information on the profit share to EMRA.
Statement of comprehensive income by operating segment:
Full-year ended 31 December 2022
Egypt Egypt Exploration Burkina Côte d'Ivoire
Total Mining Faso Corporate
(Audited) US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Statement of comprehensive income
Gold sales 786,921 786,921 - - - -
Silver sales 1,503 1,503 - - - -
Revenue 788,424 788,424 - - - -
Cost of sales (544,075) (544,075) - - - -
Gross profit 244,349 244,349 - - - -
Exploration and evaluation costs (29,723) - (1,675) (2,928) (25,120) -
Other operating costs (49,003) (27,299) (116) (506) (326) (20,756)
Other income 6,623 8,039 196 (168) (666) (778)
Finance income 1,214 99 - - - 1,115
Finance costs (2,459) (1,098) (19) (2) (58) (1,282)
Impairment of intra-group loans - - - 140,623 - (140,623)
Profit/(loss) for the year before tax 171,001 224,090 (1,614) 137,019 (26,170) (162,324)
Tax (226) (226) - - - -
Profit/(loss) for the year after tax 170,775 223,864 (1,614) 137,019 (26,170) (162,324)
Profit/(loss) for the year after tax attributable to:
- owners of the parent ((1)) 72,490 125,579 (1,614) 137,019 (26,170) (162,324)
- non-controlling interest in SGM ((1)) 98,285 98,285 - - - -
(1) Please note that the cost recovery model on which profit share is
based under the Concession Agreement is different to the accounting results
presented above due to various adjustments and as such the share of profit
disclosed above is not reflective of the 55%:45% split that was in place from
1 July 2018 to 30 June 2020 and the 50%:50% split from 1 July 2020 onwards
that occurs in practice. Refer to the statement of cash flows by operating
segment below for further information on the profit share to EMRA.
( )
All gold and silver sales during the period were made to a single customer in
North America, Asahi Refining Canada Ltd.
Statement of cash flows by operating segment:
Half year ended 30 June 2023 Egypt Mining Egypt Exploration Burkina Faso((1)) Côte d'Ivoire((1)) Corporate((1))
Total
(Unaudited) US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Statement of cash flows
Net cash generated from/(used in) operating activities 171,767 210,645 (54) 73 (629) (38,268)
Net cash (used in)/generated from investing activities (106,405) (107,523) (165) - (259) 1,542
Net cash (used in)/generated from financing activities
Cash element - Share Based Payments (583) - - - - (583)
Dividend paid - non-controlling interest in SGM (46,000) (46,000) - - - -
Dividend (paid)/received - intragroup - (78,034) - - - 78,034
Dividend paid - owners of the parent (29,100) - - - - (29,100)
Net (decrease)/increase in cash and cash equivalents (10,321) (20,912) (219) 73 (888) 11,625
Cash and cash equivalents at the beginning of the period 102,373 27,373 1,971 1 1,422 71,606
Effect of foreign exchange rate changes 4,179 5,248 193 (19) (249) (994)
Cash and cash equivalents at the end of the period 96,231 11,709 1,945 55 285 82,237
(1) Please note that the cash generated by operating activities for
Burkina Faso and Côte d'Ivoire are affected by the movements in working
capital, specifically intercompany loans, with its direct parent entity
Centamin West Africa Holdings Limited which is included within the corporate
segment.
Statement of cash flows by operating segment (continued):
Half year ended 30 June 2022 Egypt Mining((1)) Egypt Exploration Burkina Faso((2)) Côte d'Ivoire((2))
Total Corporate((1),(2))
(Unaudited) US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Statement of cash flows
Net cash generated from/(used in) operating activities 128,674 181,173 1,297 15 638 (54,449)
Net cash (used in)/generated from investing activities (132,134) (130,764) (1,148) - (436) 214
Net cash (used in)/generated from financing activities
Cash element - Share Based Payments (523) - - - - (523)
Dividend paid - non-controlling interest in SGM (21,492) (21,492) - - - -
Dividend paid - owners of the parent (57,740) - - - - (57,740)
Net (decrease)/increase in cash and cash equivalents (83,215) 28,917 149 15 202 (112,498)
Cash and cash equivalents at the beginning of the period 207,821 13,609 935 5 859 192,413
Effect of foreign exchange rate changes 2,243 4,495 114 (16) (449) (1,901)
Cash and cash equivalents at the end of the period 126,849 47,021 1,198 4 612 78,014
(1) The comparatives at 30 June 2022 have been restated to reflect an
increase of cash generated from operating activities of $0.7m, interest paid
of $0.4m and a reduction of the effect of foreign exchange rate changes of
$0.3m.
(2) Please note that the cash generated by operating activities for
Burkina Faso and Côte d'Ivoire are affected by the movements in working
capital, specifically intercompany loans, with its direct parent entity
Centamin West Africa Holdings Limited which is included within the corporate
segment.
Year ended 31 December 2022 Egypt Mining((1)) Egypt Exploration Burkina Faso((2)) Côte d'Ivoire((2))
Total Corporate((1)(2))
(Audited) US$'000 US$'000 US$'000 US$'000 US$'000 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
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 at 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 $0.6m.
(2) Please note that the cash generated by operating activities for
Burkina Faso and Côte d'Ivoire are affected by the movements in working
capital, specifically intercompany loans, with its direct parent entity
Centamin West Africa Holdings Limited which is included within the corporate
segment.
Exploration expenditure by operating segment
The following table provides a breakdown of the total exploration expenditure
of the Group by operating segment:
Half year ended 30 June Half year ended Year ended
30 June 31 December
2023 (Unaudited) 2022 2022
(Unaudited) (Audited)
US$'000 US$'000 US$'000
Côte d'Ivoire 15,914 15,386 25,120
Egypt - Exploration 2,234 500 1,675
Burkina Faso 775 1,688 2,928
Exploration expenditure - greenfield 18,923 17,574 29,723
Egypt - Mining 6,578 3,683 12,175
Exploration expenditure - brownfield 6,578 3,683 12,175
Total exploration expenditure 25,501 21,257 41,898
2.2 Profit before tax
Profit for the period has been arrived at after crediting/(charging) the
following gains/(losses) and income/(expenses):
Half year ended 30 June Half year ended Year ended
30 June 31 December
2023 (Unaudited) 2022 2022
(Unaudited)* (Audited)
US$'000 US$'000 US$'000
Other income
Net foreign exchange gains 4,464 2,452 6,559
Other income 153 41 64
4,617 2,493 6,623
Finance income 1,791 254 1,214
Finance costs (1,380) (654) (2,459)
Expenses
Cost of sales
Mine production costs (188,344) (192,090) (408,543)
Movement in inventory (716) 2,419 10,659
Depreciation and amortisation (78,741) (67,765) (146,191)
(267,801) (257,436) (544,075)
Other operating costs
Corporate compliance (2,248) (1,320) (2,869)
Fees payable to the external auditors (465) (493) (895)
Corporate consultants (2,581) (1,378) (2,697)
Salaries and wages (5,605) (6,677) (11,979)
Employee equity settled share-based payments (2,852) (1,256) (2,570)
Other administration expenses (1,212) (656) (3,272)
Corporate costs (sub-total) (14,963) (11,780) (24,282)
Other provisions 29 (32) 1,180
Net movement on provision for stock obsolescence 419 - (579)
Other non-corporate operating expenses (2,354) (590) (1,480)
Royalty - attributable to the ARE government (12,733) (11,679) (23,842)
(29,602) (24,081) (49,003)
* In the 2022 Interim Condensed Consolidated Statement of Comprehensive
Income, Finance costs were included and disclosed in the line 'Other operating
costs', in these financial statements they are now separately disclosed in
their own line and as such 'Other operating costs' for 2022 have changed.
2.3 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 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 outstanding as at 30 June
2023, are as follows:
Commodity contract type Quantity ((1)) (Oz) Contract Term Strike price per Oz ((1)(2)) Premium Paid Mark-to-Market ("MtM") MtM Adjustment
$US $US'000 $US'000 $US
Gold put option - purchased 20,000 1 Jul 23 to 31 Jul 23 1,900 423 140 (283)
Gold put option - purchased 20,000 1 Aug 23 to 31 Aug 23 1,900 423 354 (69)
Gold put option - purchased 20,000 1 Sep 23 to 30 Sep 23 1,900 423 494 71
Gold put option - purchased 20,000 1 Oct 23 to 31 Oct 23 1,900 423 600 177
Gold put option - purchased 20,000 1 Nov 23 to 30 Nov 23 1,900 423 683 260
Gold put option - purchased 20,000 1 Dec 23 to 31 Dec 23 1,900 423 757 334
Total/W. Avg 120,000 1,900 2,538 3,028 490
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 30 June
2023, have been recognised, in derivative assets on the consolidated statement
of financial position. These derivative 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 six months ended 30 June 2023, a total of $US0.5 million
in unrealised fair value gains on the commodity contracts was recognised in
the consolidated profit or loss.
2.4 Non-controlling interest in SGM
EMRA is a 50% shareholder in SGM and is entitled to a share of 50% of SGM's
net production surplus which can be defined as 'revenue less payment of the
fixed royalty to the Arab Republic of Egypt (ARE) and recoverable costs'.
Earnings attributable to the non-controlling interest in SGM (i.e., EMRA) are
pursuant to the provisions of the Concession Agreement (CA) and are recognised
as profit attributable to the non-controlling interest in SGM in the
attribution of profit section of the statement of comprehensive income of the
Group. The profit share payments during the year will be reconciled against
SGM's audited financial statements. The SGM financial statements for the year
ended 30 June 2023 have not been signed off at the date of this report and are
in the process of being audited.
Certain terms of the CA and amounts in the cost recovery model may also vary
depending on interpretation, and are therefore subject to continued
discussions between EMRA and management which can result in variations in the
profit sharing split between periods.
a) Statement of comprehensive income and statement of financial
position impact
Half year ended 30 June Half year ended Year ended
30 June 31 December
2023 (Unaudited) 2022 2022
(Unaudited) (Audited)
US$'000 US$'000 US$'000
Statement of comprehensive income
Profit for the period after tax attributable to the non-controlling interest 23,826 - 98,285
in SGM((1))
Statement of financial position
Total equity attributable to the non-controlling interest in SGM((1)) 22,537 (40,256) (40,256)
(opening)
Profit for the period after tax attributable to the non-controlling interest 23,826 - 98,285
in SGM((1))
Dividend paid - non-controlling interest in SGM (46,000) (21,492) (35,492)
Total equity attributable to the non-controlling interest in SGM((1)) 363 (61,748) 22,537
(closing)
(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.
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. This will be reflected as an amount attributable to the NCI in
SGM on the statement of financial position and statement of changes in equity.
b) Statement of cash flow impact
Half year ended 30 June Half year ended Year ended
30 June 31 December
2023 (Unaudited) 2022 2022
(Unaudited) (Audited)
US$'000 US$'000 US$'000
Statement of cash flows
Dividend paid - non-controlling interest in SGM((1)) (46,000) (21,492) (35,492)
(2) Profit share commenced during the third quarter of 2016. The first two
years was a 60:40 split of net production surplus to PGM and EMRA
respectively. From 1 July 2018 this changed to a 55:45 split for the next
two-year period until 30 June 2020, after which all net production surpluses
will be split 50:50.
EMRA and PGM benefit from advance distributions of profit share which are made
on a weekly or fortnightly basis and proportionately in accordance with the
terms of the CA. Future distributions will take into account ongoing cash
flows, historical costs that are still to be recovered and any future capital
expenditure. All profit share payments will be reconciled against SGM's
audited June financial statements for current and future periods.
2.5 Property, plant and equipment
Mine Capital
Half year ended 30 June 2023 Office Plant and Mining development work in
(Unaudited) equipment Buildings equipment equipment properties progress Total
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Cost
Balance at 1 January 2023 8,151 21,701 635,376 383,521 1,009,754 78,804 2,137,307
Additions 34 68 33 289 - 101,194 101,618
Additions: IFRS16 right of use assets - - 66 - - - 66
Transfers from capital work in progress 485 1,981 46,375 11,235 69,817 (129,893) -
Transfer from exploration and evaluation asset - - - - 6,578 - 6,578
Disposals (314) - - (35,936) - - (36,250)
Disposals: IFRS16 right of use assets - - (156) - - - (156)
Balance at 30 June 2023 8,356 23,750 681,694 359,109 1,086,149 50,105 2,209,163
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 (479) (1,315) (20,044) (20,394) (36,790) - (79,022)
Disposals 309 - 140 34,068 - - 34,517
Balance at 30 June 2023 (6,804) (4,888) (327,938) (274,847) (480,686) - (1,095,163)
Year ended 31 December 2022 (Audited)
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: IFRS16 right of use assets - (1,073) - (139) - - (1,212)
Balance at 31 December 2022 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 2022 1,517 18,128 327,342 95,000 565,858 78,804 1,086,649
As at 30 June 2023 1,552 18,862 353,756 84,262 605,462 50,105 1,114,000
As at 30 June 2023, the Group has contractual commitments for capital
expenditure for the remainder of the year amounting to US$47 million.
Included within the depreciation charge for the period in relation to ROU
assets is US$0.5 million for buildings and US$0.6 million related to plant and
equipment (2022: US$0.3 million buildings and US$0.4 million plant and
equipment).
The net book value of the assets in the note above includes the following
amounts relating to ROU assets on leases; US$1.9 million (2022: US$2.4
million) within buildings, US$0.5 million (2022: US$0.6 million) within plant
and equipment and US$3.4 million (2022: US$3.8 million) within mining
equipment.
Deferred stripping assets of US$54 million (2022: US$63 million) were
recognised in the six-month period ended 30 June 2023, which have been
included in mine development properties, US$18 million (2022: US$10 million)
of amortisation has been recognised in the same period.
Management has considered a number of factors when concluding on whether an
impairment trigger existed as at 30 June 2023. Notwithstanding the fact that
the carrying value of the Group's net assets exceeded its market
capitalisation as at 30 June 2023, management noted that the fall in share
price is consistent with an industry-wide trend, and that there have not been
significant operational issues at Sukari in the period, and the Group remains
on track to achieve its annual production guidance, with costs in line with
forecasts. As such, management has concluded that there is not an impairment
trigger relating to the Sukari CGU as at 30 June 2023.
Assets that have been cost recovered under the terms of the CA in Egypt are
included on the statement of financial position under property, plant and
equipment as the Company will use them until the expiration of the CA.
2.6 Exploration and evaluation asset
30 June 30 June 31 December
2023 2022 2022
(Unaudited) (Unaudited) (Audited)
US$'000 US$'000 US$'000
Balance at the beginning of the year 24,809 25,261 25,261
Expenditure for the period 6,578 3,683 12,175
Transfer to property, plant and equipment (6,578) (3,683) (12,627)
Balance at end of the period 24,809 25,261 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.
In accordance with the requirements of IAS 36 'Impairment of Assets' and IFRS
6 'Exploration for and evaluation of mineral resources' exploration assets are
assessed for impairment when facts and circumstances (as defined in IFRS 6
'Exploration for and evaluation of mineral resources') suggest that the
carrying amount of exploration and evaluation asses may exceed its recoverable
amount.
An impairment trigger assessment was performed as at 30 June 2023 on the
exploration and evaluation assets and no impairment triggers were identified.
2.7 Inventories
30 June 30 June 31 December
2023 2022 2022
(Unaudited) (Unaudited) (Audited)
US$'000 US$'000 US$'000
Non-current
Mining stockpiles 110,337 78,823 94,773
Current
Mining stockpiles, ore in circuit, doré supplies 24,556 48,546 40,836
Stores inventory 93,596 82,860 99,733
Provision for obsolete stores inventory (6,085) (5,925) (6,504)
112,067 125,481 134,065
The calculation of weighted average costs of mining stockpiles is applied at a
detailed level. The open pit ore on the Mine ROM is split into seven different
grade categories and the underground ore is treated as a single high-grade
category. Each grade category is costed individually on a weighted average
basis applying costs specifically related to extracting and moving that grade
of ore to and from the Mine ROM pad. The grade categories range from
high-grade underground and open pit ore to low-grade open pit ore. Costs per
contained ounce differ between the various cost categories.
Currently at Sukari, low grade-low (0.4 to 0.5g/t) open pit stockpile material
above the cut-off grade of 0.4g/t has been classified as follows on the
statement of financial position:
· No low-grade-low stockpiles are in the current inventory balance
as none are scheduled to be processed within the next twelve months; and
· 14.6Mt at 0.45g/t to non-current assets as these ore tonnes are
not scheduled to be processed within the next twelve months
2.8 Provisions
30 June 30 June 31 December
2023 2022 2022
(Unaudited) (Unaudited) (Audited)
US$'000 US$'000 US$'000
Current
Employee benefits((1)) 2,429 1,981 2,276
Other current provisions((2)) 525 1,385 980
2,954 3,366 3,256
Non‑current
Restoration and rehabilitation((3)) 38,064 42,941 37,396
Other non-current provisions - 32 29
38,064 42,973 37,425
Movement in restoration and rehabilitation provision
Balance at beginning of the year 37,396 42,647 42,647
Decrease in provision - - (5,839)
Interest expense - unwinding of discount 668 294 588
Balance at end of the period 38,064 42,941 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 is as per the 31
December 2022 assessment. At that date, the provision was discounted at 3.63%
(2021: 1.38%) using a US$ applicable rate and inflation applied at 2.37%
(2021: 2.5%). The annual review undertaken as at 31 December 2022 resulted
in a US$5.8 million decrease in the provision (2021: US$21.9 million
increase). The key assumptions within the estimate, the various ranges and
further details are disclosed in note 1.3.6 in the 2022 Annual Report. No
updates to the provision were made in H1 2023 other than the unwinding of the
interest.
As at 30 June 2023, the work is ongoing to reliably estimate the value of
incremental costs required to achieve the Group's conformance with the new
standard, the Global Industry Standard for Tailings Management ("GISTM") and
hence no incremental rehabilitation provision has been recognised. The Group's
progress will be reassessed at year end by which time the Group expects to be
in a position to estimate the value of these incremental costs.
2.9 Trade and other payables
30 June 30 June 31 December
2023 2022 2022
(Unaudited) (Unaudited) (Audited)
US$'000 US$'000 US$'000
Non-Current
Other creditors((1)) 8,814 12,179 11,801
8,814 12,179 11,801
Current
Trade payables 34,856 30,914 43,493
Other creditors and accruals(1)(2) 46,110 40,125 55,902
80,966 71,039 99,395
(1) Included within non-current other creditors and current other
creditors and accruals is $4.8m (2022: $7.3m) and $4.9m (2022 $4.9m)
respectively in relation to the remaining instalments of a $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 30 June 2023, and therefore no
additional provisions have been recognised within these financial statements.
Also included within current and non-current other creditors are lease
liabilities of US$2m and US$3.8m respectively.
(2) Included within the current other creditors is a US$8m decrease in
SGM's stock and non-stock item accruals as at 30 June 2023 as compared to 31
December 2022 mainly driven by comparatively some cost reductions on locally
sourced inputs due to the devaluation of the EGP currency, lower diesel unit
prices and a stabilised owner operated model.
2.10 Cash flow information
(a) Reconciliation of cash and cash equivalents
For the purpose of the statement of cash flows, cash and cash equivalents
includes cash on hand and at bank and short-term deposits of less than 90 days
maturity on inception.
30 June 30 June 31 December
2023 2022 2022
(Unaudited) (Unaudited) (Audited)
US$'000 US$'000 US$'000
Cash and cash equivalents - per statement of cash flows and
statement of financial position 96,231 126,849 102,373
96,231 126,849 102,373
(b) Reconciliation of profit for the year to cash flows from operating
activities
Half year ended Half year ended Year ended 31 December
30 June 30 June
2023 2022 2022
(Unaudited) (Unaudited)((1)) (Audited) ((1))
US$'000 US$'000 US$'000
Profit for the period before tax 114,804 84,747 171,001
Adjusted for:
Depreciation/amortisation of property, plant and equipment 79,022 68,054 146,769
Inventory written off 204 - 2
Inventory obsolescence provision (419) - 579
Foreign exchange gains, net (4,463) (2,452) (6,559)
Fair value gain on derivative financial instruments (490) - -
Share‑based payments expense 2,268 1,256 2,570
Finance income (1,791) (214) (1,214)
Finance costs 1,380 655 2,459
Loss on disposal of property, plant and equipment 1,855 301 899
Changes in working capital during the period:
(Decrease)/increase in trade and other receivables (3,632) 3,801 (3,049)
Increase/(decrease) in inventories 6,853 (10,828) (35,940)
Increase/(decrease) in prepayments 540 (6,040) (7,172)
Purchase of derivative financial instruments (2,538) - -
Decrease in trade and other payables (21,481) (9,263) 25,053
Increase/(decrease) in provisions 367 (957) (773)
Cash flows generated from operating activities 172,479 129,060 294,625
(1) The comparatives as at 30 June 2022 and 31 December 2022 have been
restated to reflect finance costs of US$0.6m and US$2.5m respectively, now
added back to cash flows from operating activities.
(c) Non‑cash financing and investing activities
During the period there have been no non‑cash financing and investing
activities.
3. Unrecognised items
3.1 Contingent liabilities
There have been no significant changes to the Concession agreement court case
and the EMRA position since the issuance of the 2022 annual report, for
further information and disclosure on this matter please refer to the 31
December 2022 Annual Report.
3.2 Subsequent events
The Directors declared an interim dividend of 2.0 US cents per share on
Centamin plc ordinary shares (totalling approximately US$23 million). The
interim dividend for the half year period ended 30 June 2023 will be paid on
29 September 2023 to shareholders on the register on the Record Date of 1
September 2023.
On 20 July 2023, the Company entered into a second series of six put option
contracts for a total of 120,000 ounces i.e., 20,000 ounces for each month
beginning 1 January 2024 to 30 June 2024 at a strike price of US$1,900/oz as
part of the Gold Price Protection Programme. A total of US$3.6 million, was
paid to HSBC, the counterparty as a premium on entering into the contracts.
Other than the above, there were no other significant events occurring after
the reporting date requiring disclosure in the financial statements.
4. Other information
4.1 Contributions to Egypt
Gold sales agreement
On 20 December 2016, SGM entered into a contract with the Central Bank of
Egypt ("CBE"). The agreement provides that the parties may jointly elect, on a
monthly basis, for the CBE to supply SGM with its local Egyptian currency
requirements for that month to a maximum value of EGP80 million (2022: EGP80
million). In return, SGM facilitates the purchase of refined gold bullion for
the CBE from SGM's refiner, Asahi Refining Canada Ltd. This transaction has
been entered into as SGM requires local currency for its operations in Egypt
(it receives its revenue for gold sales in US dollars). Sixty-two transactions
have been entered into at the date of this report, five of which occurred in
the six months ended 30 June 2023, pursuant to this agreement, and the values
related thereto are as follows:
30 June 30 June 31 December
2023 2022 2022
(Unaudited) (Unaudited) (Audited)
US$'000 US$'000 US$'000
Gold purchased 12,993 27,515 50,497
Refining costs 7 15 28
Freight costs 20 28 56
13,020 27,558 50,581
30 June 30 June 31 December
2023 2022 2022
(Unaudited) (Unaudited) (Audited)
Oz Oz Oz
Gold purchased 6,752 14,596 27,907
At 30 June 2023 the net receivable in EGP owing from the Central Bank of Egypt
is approximately the equivalent of US$16,062 (30 June 2022: US$42,922 net
payable and 31 December 2022: US$23,681 receivable).
-END-
1 (#_ftnref1) The Company publishes profitability performance metrics on a
bi-annual basis.
2 (#_ftnref2) Please refer to subsequent events for further disclosure on
the extended gold protection programme.
3 (#_ftnref3) Defined as Sukari growth capex funded from Treasury and
available for cost-recovery as per the Concession Agreement. The FY23
estimated growth capex funded from treasury is US$53m
4 (#_ftnref4) Discretionary capital allocation options include future
project investment, portfolio optimisation, supplemental shareholder returns
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