REG - Centamin PLC - Quarterly Report

CentaminAnnouncement

20/10/2022 07:01

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RNS Number : 4625D  Centamin PLC  20 October 2022

 

20 October 2022

Centamin plc

("Centamin", ÒGroupÓ or "the Company")

LSE: CEY / TSX: CEE

 

QUARTERLY Report

for the three months ended 30 September 2022

 

MARTIN HORGAN, CEO, commented: ÒThe third quarter results reflect continued
strong delivery across the Group and we remain firmly on track to meet full
year guidance. Several key milestones were achieved in the quarter, including
a new record safety performance and commissioning of the Sukari solar plant
which marked a material step in reducing our GHG emissions and cost base. In
the quarter, Sukari produced its five millionth ounce of gold, and with
visibility on at least the next five million ounces of production, it is a
strong reminder of the exceptional quality of this asset.Ó

HIGHLIGHTS

Milestones and records achieved

á      New Group safety record: the Company recorded no Lost Time
Injuries (ÒLTIÓ) in the third quarter (ÒQ3Ó) and Sukari has achieved a
site record of greater than five million hours LTI free

á      Gold production of 127,512 ounces (ÒozÓ), driven by planned
higher grades from the open pit and underground, and bringing gold production
for the nine months of the year (ÒYTDÓ) to 331,410 oz and on track for the
middle of 2022 guidance

á      Revenue of US$218.1 million (YTD: US$599.9m), generated from gold
sales of 126,610 oz (YTD: 330.2koz) at an average realised gold price of
US$1,720/oz sold

á      Cash costs of US$811/oz produced (YTD: US$885/oz) and on track
for lower end of 2022 guidance

á      All-in sustaining costs (ÒAISCÓ) of US$1,289/oz sold (YTD:
US$1,386/oz) and on track for upper end of 2022 guidance

á      Sukari solar plant is delivering lower costs and reduced
greenhouse gas (ÒGHGÓ) emissions: whilst in the final stages of
commissioning, since September the solar plant has consistently delivered
nameplate capacity, displacing up to 70,000 litres of diesel fuel per day
(Link to announcement: Sukari Power Update
(https://tools.eurolandir.com/tools/Pressreleases/GetPressRelease/?ID=4173562&lang=en-GB&companycode=au-cey&v=)
)
(https://tools.eurolandir.com/tools/Pressreleases/GetPressRelease/?ID=4173562&lang=en-GB&companycode=au-cey&v=)
 

á      Capital projects progressing as scheduled: this includes the
underground paste-fill plant, underground infrastructure and equipment
upgrades, and plant optimisation, as part of the reinvestment programme in the
long term optimisation of the mine

á      Five millionth ounce milestone: in Q3, Sukari produced its five
millionth ounce of gold, demonstrating the quality of the asset, which has 5.8
million ounces in Proven & Probable Reserves as at 30 June 2021 and
identified growth upside potential

á      Robust balance sheet: cash and liquid assets of US$153.6 million,
as at 30 September 2022, and after US$29 million distributed in interim
dividends.

OUTLOOK

On track to meet full year 2022 guidance

á      Gold production guidance maintained at 430,000 to 460,000 oz for
the year, targeting the middle of the range

á      Cost guidance maintained at cash costs of US$900-1,000/oz
produced and AISC of US$1,275-1,425/oz sold, targeting the lower end of cash
cost range and the upper end of the AISC range

á      Adjusted capital expenditure guidance is maintained at US$225.5
million

á      Results driven exploration expenditure expected to be
approximately US$30 million.

Q4 2022 news flow

á      Underground expansion study

á      Capital structure review

á      Doropo Project (Cote dÕIvoire) pre-feasibility study update

á      Sukari Resources & Reserve update.

 

WEBCAST AND CONFERENCE CALL

The Company will host a webcast and conference call today, Thursday, 20
October at 09.00 BST to discuss the results, followed by an opportunity to ask
questions.

Webcast link:
https://www.investis-live.com/centamin/633d53edab77041200512904/pkqq
(https://gbr01.safelinks.protection.outlook.com/?url=https%3A%2F%2Fwww.investis-live.com%2Fcentamin%2F633d53edab77041200512904%2Fpkqq&data=05%7C01%7Cemilie.hodson%40centaminplc.com%7C29cff04ccfa347be7d3608daa6c01a6d%7Ca02403da39374fe8917b48e08012a5e7%7C0%7C0%7C638005641557661705%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C3000%7C%7C%7C&sdata=OeRTEFzmxNSH2L3GM15zqAK2GFnyXMaHldtRM1IYPOc%3D&reserved=0)

Conference call dial-in telephone numbers:
 

United Kingdom (and all other locations)       +44 (0) 203 936 2999

United States
 
+1 646 664 1960

Participation access
code:
310084

PRINT-FRIENDLY VERSION of the quarterly results:
www.centamin.com/investors/results-reports/
(http://www.centamin.com/investors/results-reports/)

RESULTS SUMMARY

                                   Year on year (ÒYoYÓ) comparative          QoQ comparative

                                   Q3 2022       Q3 2021       % Δ           Q2 2022   % Δ       YTD 2022
 SAFETY
 Group LTIFR (1m hours)            0             0             0%            0.32      100%      0.11
 OPEN PIT
 Total material mined (kt)         35,647        31,656        13%           33,371    7%        100,020
 Ore mined (kt)                    2,814         2,915         (3%)          2,767     2%        8,550
 Ore grade mined (g/t Au)          1.04          1.02          1%            1.07      (3%)      1.01
 UNDERGROUND
 Ore mined (kt)                    210           201           5%            231       (9%)      595
 Ore grade mined (g/t Au)          6.2           4.47          39%           4.74      31%       4.95
 PROCESSING
 Ore processed (kt)                3,230         2,885         12%           2,884     12%       9,069
 Feed grade (g/t Au)               1.37          1.29          6%            1.36      1%        1.27
 Gold recovery (%)                 87.9          88.7          (1%)          88.3      (1%)      88.1
 Gold production (oz)              127,512       103,546       23%           110,788   15%       331,410
 COST & SALES
 Gold sold (oz)                    126,610       103,514       22%           111,027   14%       330,197
 Cash costs (US$/oz produced)      811           846           (4%)          868       (7%)      885
 AISC (US$/oz sold)                1,289         1,266         2%            1,357     (5%)      1,386
 Realised gold price (US$/oz)      1,720         1,764         (3%)          1,863     (8%)      1,813
 Revenue (US$m)                    218.1         182.9         19%           207.2     5%        599.9
 Capex (US$m)                      74.9          67.6          11%           67.3      11%       213.6

HEALTH AND SAFETY

Operational safety continues to be a key focus across the Group with no LTIs
being reported in the quarter (YTD: 1) and Sukari achieved a site record of
greater than five million hours LTI free.

The Q3 lost time injury frequency rate (ÒLTIFRÓ) was 0.00 per 1,000,000
site-based hours worked (YTD: 0.11), comparable to the corresponding zero
LTIFR for the third quarter of 2021. The total recordable injury frequency
rate (ÒTRIFRÓ) for Q3 was 1.69 per 1,000,000 site-based hours worked, down
21% quarter on quarter (ÒQoQÓ), and down 50% year on year (ÒYoYÓ). TRIFR
YTD was 2.50, which is below our 2022 target of 3.99.

Sukari Gold mine, egypt

(Q3 2022 vs Q3 2021)

Production

Sukari Gold Mine (ÒSukariÓ) production for Q3 totalled 127,512 oz (YTD:
331,410 oz), a 23% increase YoY and 15% increase on Q2 (ÒQoQÓ). The
production increase was attributable to higher grades from both the
underground and open pit alongside ongoing productivity improvements such as
the installation of lightweight high-capacity truck trays in the open pit.

 

 

Open Pit Mining

Total material moved (waste and ore) increased by 13% YoY to 35.6Mt (YTD:
100.0Mt) a new record for total material moved during a quarter, resulting
from improved operating efficiencies and productivity and increased waste
moved as part of the accelerated waste stripping programme.

Total open pit waste material mined (owner and contractor) for the quarter was
32.8Mt (YTD: 91.5Mt), a 14% increase YoY, driven largely by the ongoing
contractor waste-stripping programme (12.0Mt), designed to improve the
long-term mining flexibility within the open pit. The strip ratio for the
quarter was 11.7:1 (waste:ore) (YTD: 10.7:1).

Open pit ore mining activity continued to focus primarily on the Stage 5 North
during Q3, with ore contributions from Stage 4. Total open pit ore mined for
the quarter was 2.8Mt (YTD: 8.6Mt), a 3% reduction YoY, at an average mined
grade of 1.04 grams of gold per tonne (Òg/t AuÓ) (YTD: 1.01g/t Au), a 1%
increase YoY.

During the quarter, the low-grade stockpiles remained broadly unchanged at
18.7Mt at a grade of 0.46g/t Au.

Underground Mining

In Q3, mining activities progressed into higher grade areas. Mining rates were
impacted by underground equipment availability resulting in lower than planned
material mined. Improvements in underground performance are expected in Q4 as
the new underground equipment starts to be delivered to site and commissioned.

Total material mined (waste and ore) was 268kt (YTD: 777kt), a 11% reduction
YoY. Total ore mined was 210kt (YTD: 595kt) at an average combined (stoping
and development) grade of 6.20g/t Au (YTD: 4.95g/t Au). This represented a 5%
increase in ore tonnes YoY and a 39% increase in grade YoY.

The underground ore mined consisted of 121kt of ore mined from stopes at an
average grade of 8.37g/t Au, and 89kt of ore mined from development, at an
average grade of 3.25g/t Au.

Processing

During Q3, the plant processed 3.2Mt of ore (YTD: 9.1Mt), a 12% increase YoY,
at an average feed grade of 1.37 g/t Au (YTD: 1.27g/t Au), a 6% increase YoY
reflecting the higher open pit and underground grades mined and delivered to
the plant over the period.

The metallurgical gold recovery rate was 87.9% for the quarter (YTD: 88.1%),
in line with budget but a 1% reduction YoY. As part of the ongoing gravity
recoverable gold trial, material from Bast was processed, which has
potentially reduced recoveries in the short term, given higher clay content.

EXPLORATION PROJECTS

A comprehensive exploration update was published on 7 July 2022. (Link to full
announcement: Group Exploration Update Confirming Growth Potential Across the
Portfolio
(https://tools.eurolandir.com/tools/Pressreleases/GetPressRelease/?ID=4133950&lang=en-GB&companycode=au-cey&v=)
).

Sukari Concession Exploration

Work is focussed on the development of potential resources within the
concession area that can be converted to reserves and incorporated into the
mine plan in the shortest timeframe.  Highlights during the quarter include:

á      Evaluation of the 2022 field work programmes to prioritise the
targets for follow up work;

á      Design of a 50,000m RC and diamond drilling programme for the
selected targets to support resource estimation and associated metallurgical
and geotechnical assessments; and

á      Design and start of access development works to facilitate the
commencement of drilling in Q4.

Brownfield exploration across the 160km(2) Sukari Concession amounted to
US$4.9 million (YTD: US$8.6 million) in the quarter and is capitalised and
included within the 2022 capex guidance.

Group Exploration

á      Eastern Desert Exploration (ÒEDXÓ) (Egypt): systematic
fieldwork continued aimed at identifying and prioritising commercial scale
opportunities. This consisted of regional screening via BLEG sampling and
identification of mineralised corridors via soil sampling. BLEG sampling was
competed at the Um Rus area and work has returned to focus on detailed follow
up at high priority targets within the Nugrus block including closer spaced
geological sampling and mapping, ahead of drill testing at the earliest
opportunity;

á      Doropo Project (C™te dÕIvoire): pre-feasibility study
(ÒPFSÓ) is well progressed, including development of an updated Mineral
Resource Estimate based on the results of the 2022 field programme.
 Metallurgical test work has continued in parallel with mine planning and
baseline ESIA studies; and

á      Batie West Project (Burkina Faso): given the prevailing political
and security concerns the decision has been taken to relinquish the remaining
licenses, which has no carrying value on the balance sheet, as per the 2021
Annual Report and Accounts.

The total greenfield exploration expensed for the quarter was US$4.0 million
(YTD: US$21.5 million).

SALES AND COSTS

Gold sales for the quarter were 126,610 oz (YTD: 330,197oz), a 22% increase
YoY. The average realised gold price for the quarter was US$1,720/oz (YTD:
US$1,813/oz), down 3% YoY. Revenues generated were US$218.1 million (YTD:
US$599.9m), an increase of 19% YoY, driven by higher gold sales countering a
slightly lower gold price.

Cash costs of production were US$103.4 million for the quarter (YTD:
US$293.3m), a 18% increase YoY, predominantly driven by increased material
moved and processed in the period. Inflationary cost pressures around fuel and
consumables have largely been offset by cost-savings initiatives including the
transition to underground owner mining and the initial impact of the solar
power plant. Open pit costs have decreased during the quarter due to the
increase in the stripping ratio resulting in certain waste mining costs being
capitalised to the balance sheet. Unit cash costs of production were US$811/oz
produced (YTD: US$885/oz), a 4% decrease YoY.

Total all-in sustaining costs (ÒAISCÓ) were US$163.2 million for the quarter
(YTD: US$457.6m), a 24% increase YoY, resulting from inventory movements and
global inflationary cost pressures. The AISC of US$1,289/oz sold (YTD:
US$1,386/oz) increased 2% YoY, reflecting gold sales during the quarter.

Irrespective of the ongoing inflationary environment, we remain firmly
focussed on stringent cost control and improving productivity at Sukari. We
continue to make good progress with our US$150 million stretch cost savings
programme and continue to identify new potential cost savings opportunities.
Notably in Q3, the commissioning of the solar plant, creating the potential to
save up to US$20 million per annum at current fuel prices; and the final
installation of the high production truck trays.

Capital Expenditure

As part of the reinvestment programme in the long-term sustainability of
Sukari, key capital projects progressed as scheduled during Q3, including the
underground paste-fill plant, underground infrastructure and equipment
upgrades, tailings storage facility, plant optimisation and the accelerated
waste-stripping programme.

From 2021, the Company implemented a more granular methodology to the
accounting and classification of waste-stripping costs. As such, there is a
reclassification of open pit waste mining costs, resulting in a reduction in
total cash costs with a corresponding equal increase in the sustaining
expenditure and therefore AISC, with no impact on net cash flow.

The table below illustrates the impact of the waste-stripping which is
capitalised as sustaining and non-sustaining capital and therefore
reclassified out of operating expenditure (ÒopexÓ). Total capex in Q3 was
US$74.9 million (YTD: US$213.6m), which was an 11% increase YoY. After
removing the impact of this waste mining accounting treatment, adjusted capex
was US$50.1 million (YTD: US$167.2m) which reconciles with 2022 guidance.

                                                                               Q3 2022   YTD 2022

                                                                               (US$m)   (US$m)
 Underground exploration                                                       4.1      5.8
 Underground mine development                                                  7.0      24.0
 Rebuilds, underground transition and other sustaining capex                   12.1     50.0
 Sustaining segment of waste stripping capitalised (reclassified from opex)    24.7     46.4
 Sustaining expenditure capitalised                                            47.9     126.1
 Solar plant & paste plant                                                     2.5      16.7
 Contract waste stripping capitalised                                          23.2     64.4

 Other non-sustaining capex                                                    1.2      6.4
 Non-sustaining expenditure capitalised                                        26.9     87.4
 Total expenditure capitalised                                                 74.9     213.6
  Less:
  Sustaining element of waste stripping capitalised (reclassified from opex)   (24.7)   (46.4)
  ADJUSTED CAPEX (after reclassification)                                      50.2     167.2

FINANCIAL POSITION

Free Cash Flow

Under the terms of the Sukari Concession Agreement, the Egyptian government
earned US$6.5 million in royalty payments (YTD: US$18.2m) and received US$7.0
million in profit share payments during the quarter (YTD: US$28.5m). After
Sukari profit share distribution, Group exploration expenditure and corporate
investing activities, Group free cash flow for the quarter was US$11 million
(YTD: negative US$14.3m), negative YTD due to the continued investment in
waste stripping and other capital projects. Capital expenditure continues in
key areas that will improve the long-term profitability and operability of
Sukari.

Balance Sheet

Centamin is in a strong financial position, with net cash and liquid assets to
US$153.6 million as at 30 September 2022, and after the distribution of US$29
million in interim dividends. The Company remains unhedged and debt-free.

CORPORATE

Capital Structure Review

The Company committed to undergoing a capital structure review in 2022 to
increase financial flexibility, in particular assessing the balance sheet
structure and opportunity to introduce an appropriate level of debt and how
this fits within the Group capital allocation framework. The review is well
advanced with active engagement with several banks on available debt
instruments, with the intention to provide an update later in 2022.

EDX Exploitation Terms

Centamin continues its ongoing constructive engagement with the Egyptian
government to finalise the details of the exploitation terms applicable on the
exploration blocks awarded in 2021. It should be noted that any terms agreed
do not impact the Sukari Concession Agreement, which was awarded under
Egyptian law 222 of 1994.

 

 

About Centamin

Centamin is an established gold producer, with a premium listing on the London
Stock Exchange and Toronto Stock Exchange. The CompanyÕs flagship asset is
the Sukari Gold Mine (ÒSukariÓ), EgyptÕs largest and first modern gold
mine, as well as one of the worldÕs largest producing mines. Since production
began in 2009 Sukari has produced circa 5 million ounces of gold, and today
has a projected mine life of 12 years.

Through its large portfolio of exploration assets in Egypt and West Africa,
Centamin is advancing an active pipeline of future growth prospects, including
the Doropo Project in C™te dÕIvoire, and approximately 3,000km(2) of highly
prospective exploration ground in EgyptÕs Arabian Nubian Shield.

Centamin practices responsible mining activities, recognising its
responsibility to not only deliver operational and financial performance but
to create lasting mutual benefit for all stakeholders through good corporate
citizenship.

FOR MORE INFORMATION please visit the website www.centamin.com
(http://www.centamin.com) or contact:

 Centamin plc                                                 Buchanan

 Alexandra Barter-Carse, Head of Corporate Communications     Bobby Morse/Ariadna Peretz/George Cleary

 investor@centaminplc.com (mailto:investor@centaminplc.com)   + 44 (0) 20 7466 5000

                                                              centamin@buchanan.uk.com (mailto:centamin@buchanan.uk.com)

ENDNOTES

Financials

Financial data points included within this report are unaudited.

Non-GAAP measures

This statement includes certain financial performance measures which are
non-GAAP measures. These include Cash costs of production, AISC, Cash and
liquid assets, and Free cash flow. Management believes these measures provide
valuable additional information for users of the financial statements to
understand the underlying trading performance. Definitions and explanation of
the measures used along with reconciliation to the nearest IFRS measures are
detailed in the CompanyÕs 2021 Annual Report
www.centamin.com/investors/results-reports/
(http://www.centamin.com/investors/results-reports/) .

Adjusted capital expenditure

Excludes the sustaining capital element of the waste-stripping.

Exploration expenditure

Exploration expensed covers all exploration activities excluding the Sukari
Concession Agreement and are expensed in the period they are incurred.

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.

Qualified Person

Information of a scientific or technical nature in this document was prepared
under the supervision of Craig Barker, an employee of the Company and a
Qualified Person, as such term is defined by National Instrument 43-101
Standards of Disclosure for Mineral Projects of the Canadian Securities
Administrators.

The Qualified Person has verified the data disclosed, including sampling,
analytical, and test data underlying the information or opinions contained in
this announcement in accordance with standards appropriate to their
qualifications.

 

 

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 the ongoing 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,
uncertainty and disruption caused by the outbreak 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

 

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