REG - Centamin PLC - Quarterly Report
20/04/2023 07:00
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RNS Number : 8122W Centamin PLC 20 April 2023
20 April 2023
Centamin plc
("Centamin", "Group" or "the Company")
LSE: CEY / TSX: CEE
QUARTERLY Report
for the three months ended 31 March 2023
MARTIN HORGAN, CEO, commented: "These results reflect a good start to the
year, with the Sukari team delivering another consistent performance in line
with our operational plan, as well as making great progress on our key capital
projects. Our mining operations continue to benefit from both increased
flexibility in the open pit, as a result of the accelerated waste-mining
strategy and operational productivity gains, as well as improved productivity
and performance from the underground mine, following the transition to owner
mining in 2022.
We reiterate our 2023 guidance and look forward to reporting later in the year
on several additional projects which will deliver growth and underpin returns.
These include connecting Sukari to the grid which will reduce carbon emissions
and save costs, publishing an optimised Sukari life of mine plan, commencing
drill testing on our Egyptian Eastern Desert blocks and completing the PFS at
our advanced Doropo Project in Côte d'Ivoire."
HIGHLIGHTS
Operational performance delivered in line with the mine plan
· The lost time injury frequency rate ("LTIFR") for the three months
to 31 March 2023 ("Q1") was 0.31 per one million hours worked, reflecting one
lost time injury. The total recordable injury frequency rate ("TRIFR") was
2.77 per one million hours worked
· Q1 gold production from the Sukari Gold Mine ("Sukari") was
105,875 ounces ("oz")
· Q1 revenue of US$205 million, an 18% increase from Q1 2022,
generated from gold sales of 107,661 oz at an average realised gold price of
US$1,902/oz sold
· Q1 cash costs of US$937/oz produced and all-in sustaining costs
("AISC") of US$1,348/oz sold
· Q1 capital expenditure of US$54 million including the final stages
of the underground paste-fill plant construction ahead of commissioning in Q2,
and
· Robust balance sheet with cash and liquid assets of US$155 million,
as at 31 March 2023 and US$150 million undrawn revolving credit facility.
2023 OUTLOOK
Guidance unchanged and on track
· Gold production guidance range of 450,000 to 480,000 oz per annum
weighted towards H2 (45:55)
· 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, weighted towards H1
(55:45), which excludes US$48 million of sustaining deferred stripping
reclassified from operating costs, and
· Exploration spend is budgeted at US$30 million, including US$23
million for the pre-development study work on the Doropo Project.
KEY MILESTONES
· 25 April 2023: Publication of the 2022 Sustainability Report
· June 2023: Doropo Project (Côte d'Ivoire) complete
pre-feasibility study
· H2 2023: Sukari Gold Mine (Egypt) update Life of Mine Plan (NI
43-101), including underground expansion
WEBCAST AND CONFERENCE CALL
The Company will host a webcast and conference call today, Thursday, 20 April
2023 at 08.30 BST to discuss the results, followed by an opportunity to ask
questions.
Webcast link:
https://www.investis-live.com/centamin/642e8f6bccbbd1120079c6fa/wtee
(https://www.investis-live.com/centamin/642e8f6bccbbd1120079c6fa/wtee)
Dial-in telephone numbers:
United Kingdom (and all other locations) +44 (0) 203 936 2999
United States +1 646 664 1960
Participation access code: 589260
PRINT-FRIENDLY VERSION of the quarterly results:
www.centamin.com/investors/results-reports/
(http://www.centamin.com/investors/results-reports/)
RESULTS SUMMARY
YoY comparative QoQ comparative
Q1 2023 Q1 2022 % Δ Q4 2022 % Δ
SAFETY
LTIFR (1m hours) 0.31 0.00 100% 0.00 100%
TRIFR (1m hours) 2.77 3.23 (14%) 2.95 (6%)
OPEN PIT
Total material mined (kt) 32,998 31,001 6% 36,401 (9%)
Ore mined (kt) 3,273 2,970 10% 3,146 4%
Ore grade mined (g/t Au) 0.87 0.92 (6%) 0.93 (6%)
UNDERGROUND
Ore mined (kt) 236 154 53% 233 1%
Ore grade mined (g/t Au) 4.02 3.55 13% 4.25 (5%)
PROCESSING
Ore processed (kt) 3,006 2,954 2% 3,045 (1%)
Feed grade (g/t Au) 1.20 1.07 12% 1.23 (3%)
Gold recovery (%) 88.8 88.1 1% 88.6 0%
Gold production (oz) 105,875 93,109 14% 109,564 (3%)
COST & SALES
Gold sold (oz) 107,661 92,559 16% 108,441 (1%)
Cash costs (US$/oz produced) 937 1,006 (7%) 997 (6%)
AISC (US$/oz sold) 1,348 1,558 (13%) 1,445 (7%)
Realised gold price (US$/oz) 1,902 1,883 1% 1,735 10%
Revenue (US$m) 205.2 174.6 18% 188.5 9%
Adj CAPEX (US$m) 49.0 59.4 (18%) 64.8 (24%)
Free cash flow (US$m) 8.1 (21.4) 138% (2.9) 379%
HEALTH AND SAFETY
Operational safety remains a key focus across the Group. In Q1, there was one
lost time injury ("LTI") resulting in an LTIFR of 0.31 per 1,000,000
site-based hours worked, compared to the corresponding 0.00 in the first
quarter in 2022 ("YoY"). The TRIFR for Q1 was 2.77 per one million site-based
hours worked, down from 3.23 YoY. Both lagging safety indicators are tracking
better than the Company's annual targets.
Sukari Gold mine, egypt
(Q1 2023 vs Q1 2022)
Production
Sukari gold production for the quarter was 105,875 oz, a 14% increase YoY, and
in line with the mine plan. The higher production volumes YoY were driven by
increased underground productivity as mining rates ramped up following the
transition to owner mining in the Sukari underground during H1 2022.
Open Pit Mining
Total material moved (waste and ore) of 33.0Mt, a 6% increase YoY, driven by
ongoing improvements in operating efficiencies and productivity within the
owner-operated fleet.
Total open pit waste material mined for the quarter was 29.7Mt, at 6% increase
YoY. This includes 10.9Mt of contracted waste-stripping as part of the
accelerated stripping programme, delivering improved mining flexibility within
the open pit. The strip ratio for the quarter was 9.1:1 (waste:ore).
During Q1, open pit ore was mined from multiple working areas, with
contributions from Stage 5 North, East, West and Stage 7. As per the mine
plan, total open pit ore mined for the quarter was 3.3Mt, a 10% increase YoY,
at an average mined grade of 0.87 grams of gold per tonne ("g/t Au"), a 6%
decrease YoY, driven by greater contributions from lower grade areas of the
pit. Grades are expected to improve moderately throughout the year averaging
approximately 0.9g/t for 2023.
During the quarter, the low-grade stockpiles increased from 18.7Mt to 18.9Mt
at 0.46g/t Au.
Underground Mining
Total material mined (waste and ore) was 345kt, a 61% increase YoY, reflecting
the ramp in mining rates following the transition to owner-mining in H1 2022.
Total ore mined was 236kt at an average combined (stoping and development)
grade of 4.02g/t Au. This represented a 53% increase in ore tonnes YoY and a
13% increase in grade YoY.
The underground ore was made up of 144kt of ore mined from stopes, at an
average grade of 4.86g/t Au, and 92kt of ore mined from development, at an
average grade of 2.69g/t Au.
Underground performance continued to improve as equipment was delivered and
commissioned.
Processing
The plant processed 3.0Mt of ore, a 2% increase YoY, at an average feed grade
of 1.20 g/t Au, a 12% increase YoY reflecting a greater contribution of
underground ore delivered to the plant.
The metallurgical gold recovery rate was 88.8% for the quarter, a 1% increase
YoY.
There were several key maintenance projects scheduled for the quarter,
including mill relining and work on the mill motors. All plant maintenance was
completed successfully with no unplanned disruption to throughput.
Sukari Mining Concession ("SMC") Exploration
Brownfield exploration across the 160km(2) Sukari Concession amounted to
US$3.8 million in the quarter. This is capitalised and captured within the
2023 capex guidance.
Work focused on the development of additional Mineral Resources within the SMC
that can be converted to Mineral Reserves and incorporated into the mine plan
in the shortest timeframe. The focus is on re-evaluation of old prospects and
new targets which have been developed over the last two years through
systematic soil sampling and geological mapping programmes.
Highlights during the quarter include:
· 1,613 metres of second phase exploration drilling at the new
V-Shear East prospect
· 2,842 metres follow-up drilling on Wadi Alam targets initially
identified in 2021
· Re-logging and modelling of the updated Quartz Ridge prospect
continued during the quarter, additional drilling is planned to commence in
Q2, and
· Continued soil and geochemical sampling of newly identified drill
targets (ARC, SE Corner and Sami South) to prepare them for drilling.
Approximately 7,000 metres of drilling has been planned to test the newly
defined drill targets.
Capital Expenditure
As part of the reinvestment programme at Sukari, key capital projects
progressed as scheduled during Q1, including the underground paste-fill plant,
underground infrastructure and equipment upgrades, plant optimisation and the
contracted waste-stripping programme. The underground paste-fill plant
progressed well with wet commissioning starting during the quarter; the first
paste is expected in Q2. The trial stopes have been identified in historically
mined areas as to not impact current mining production. The current
underground backfilling system of cemented rock fill ("CRF") and waste rock
fill will continue in parallel to the paste-plant commissioning, ensuring a
smooth transition.
Earthworks on the north dump leach commenced with leach pad preparation
underway.
The gross capex in Q1 was US$53.8 million and after removing the impact of the
waste mining accounting treatment, adjusted capex was US$48.9 million. The Q1
capex was lower than budgeted due to delayed timing of actual cash spend,
which are likely to be incurred in Q2. The capex guidance for the year remains
unchanged.
Q1 2023
(US$m)
Underground exploration 3
Underground mine development 8
Rebuilds, underground transition and other sustaining capex 10
Sustaining element of waste stripping capitalised 1 5
Sustaining expenditure capitalised 26
North dump leach, tailings storage facility 2 & underground paste-fill 4
plant
Contract waste stripping capitalised 21
Other non-sustaining capex 3
Non-sustaining expenditure capitalised 28
Total expenditure capitalised 54
Less:
Sustaining element of waste stripping capitalised(1) (5)
Capitalised Right of Use Assets -
ADJUSTED CAPEX (after reclassification) 49
SALES AND COSTS
Gold sales for the quarter were 107,661 oz, a 16% increase YoY. The average
realised gold price for the quarter was US$1,902/oz, up 1% YoY. Revenues
generated of US$205.2 million, increased by 18% YoY, driven by higher
production volumes and subsequent sales.
Cash costs of production were US$99.2 million for the quarter, a 6% increase
YoY, due to higher input costs such as fuel and consumables. Unit cash costs
of production were US$937/oz produced, a 7% decrease YoY, reflecting higher
production volumes.
Total all-in sustaining costs ("AISC") were US$145.2 million for the quarter,
a 1% increase YoY. Unit AISC of US$1,348/oz sold, a 13% decrease in YoY costs,
reflecting the higher gold sales.
EXPLORATION PROJECTS
The total greenfield exploration spend for the quarter was US$10.8 million.
Doropo Project, Cote d'Ivoire
The update provided in November 2022 highlighted the opportunity to simplify
the processing flowsheet, which had included a full flotation and regrind
circuit as part of the 2021 preliminary economic assessment. The work
completed over Q1 focussed on finalising the comminution and metallurgical
test work comparing whole ore leach versus flotation.
The PFS is expected to be completed in June 2023.
Eastern Desert Exploration ("EDX") (Egypt)
Systematic fieldwork continued during Q1 aimed at identifying potential
commercial scale targets for drill testing alongside preparation work for
identified drill targets. Fieldwork consisted of regional-scale screening
using bulk leach extractable gold ("BLEG") sampling and identification of
mineralised corridors with soil sampling and chip channel sampling.
Five drill targets have been identified in the Nugrus block following closer
spaced geological soil sampling and mapping. In the quarter, drone surveys
were flown over two of the targets to collect detailed topographic data as
part of the drill programme design and planning. The aim is to commence drill
testing the targets later in Q2, with initial assay results expected from Q4.
FINANCIAL POSITION
Free Cash Flow
Under the terms of the Sukari Concession Agreement, the Egyptian government
earned US$6.1 million in royalty payments and received US$13.5 million in
profit share payments during the quarter reflecting higher gold price. After
Sukari profit share distribution, Group exploration expenditure and corporate
investing activities, the free cash flow for the quarter was US$8.1 million.
Balance Sheet
Centamin is in a strong financial position, with cash and liquid assets to
US$155 million as at 31 March 2023. The Company has a US$150 million senior
secured sustainability-linked revolving credit facility ("RCF") which is
available and undrawn.
31 March 2023
(US$m)
Cash on hand 115
Liquid assets, including bullion on hand and gold sales receivables 40
Total cash and liquid assets 155
Sustainability-linked revolving credit facility 150
TOTAL BALANCE SHEET LIQUIDITY 305
CORPORATE
During the quarter, the Company issued several corporate announcements:
· Legal Update: Favourable Egyptian Constitutional Court Ruling
upholding Egyptian Law No. 32 of 2014 as constitutional giving 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 (full announcement
(https://tools.eurolandir.com/tools/Pressreleases/GetPressRelease/?ID=4229191&lang=en-GB&companycode=au-cey&v=)
)
· Final Dividend proposal of 2.5 US cents per share (US$29m), which
is subject to shareholder approval at the AGM (Dividend Declaration
announcement
(https://tools.eurolandir.com/tools/Pressreleases/GetPressRelease/?ID=4259913&lang=en-GB&companycode=au-cey&v=)
)
· Centamin decarbonisation roadmap to 2030 targeting a 30%
reduction in operational Scope 1 and 2 greenhouse gas emissions and excluding
several further abatement opportunities which remain under review (full
announcement
(https://tools.eurolandir.com/tools/Pressreleases/GetPressRelease/?ID=4267402&lang=en-GB&companycode=au-cey&v=)
)
· 2022 Annual Report and Accounts (2022 Annual Report homepage
(https://www.centamin.com/annual-report-2022/) ), and
· Published the Notice of Annual General Meeting, to be held on 23
May 2023 at Dukes Hotel in London (for more details
(https://www.centamin.com/investors/shares-dividends/shareholder-meetings/) ).
About Centamin
Centamin is an established gold producer, with premium listings on the London
Stock Exchange and Toronto Stock Exchange. The Company's flagship asset is the
Sukari Gold Mine ("Sukari"), Egypt's largest and first modern gold mine, as
well as one of the world's largest producing mines. Since production began in
2009 Sukari has produced 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, 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 operation are disrupted.
Financials
Full year financial data points included within this report are audited.
Non-GAAP measures
This statement includes certain financial performance measures which are not
GAAP measures as defined under International Financial Reporting Standards
(IFRS). These include EBITDA and adjusted EBITDA, Cash costs of production,
AISC, Cash and liquid assets, Free cash flow and adjusted Free cash flow.
Management believes these measures provide valuable additional information for
users of the financial statements to understand the underlying trading
performance. An explanation of the measures used along with reconciliation to
the nearest IFRS measures is provided in the Financial Review.
Profit after tax attributable to the parent
Centamin profit after the profit share split with the Arab Republic of Egypt.
Royalties
Royalties are accrued and paid six months in arrears.
Cash and liquid assets
Cash and liquid assets include cash, bullion on hand and gold sales
receivables.
Movements in inventory
Movement in inventory on ounces produced is the movement in mining stockpiles
and ore in circuit while the movement in inventory on ounces sold is the net
movement in mining stockpiles, ore in circuit and gold in safe inventory.
Gold produced
Gold produced is gold poured and does not include gold-in-circuit at period
end.
Dividend
All dividends are subject to final Board approval and final dividends are
subject to shareholder approval at the Company's annual general meeting.
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 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
1 Reclassified from operating expenditure, from 2021, the Company
implemented a more granular methodology to the accounting and classification
of waste-stripping costs, in line with IFRS accounting standards. As such,
there is an accounting 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.
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