REG - Centamin PLC - Sukari New Life of Mine Plan

CentaminAnnouncement

12/10/2023 07:00

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RNS Number : 8472P  Centamin PLC  12 October 2023

12 October 2023

Centamin plc

("Centamin" or "the Company")

LSE: CEY / TSX: CEE

 

Sukari NEW LIFE OF MINE PLAN delivers improved margins

 

Martin Horgan, CEO, commented: "Today's new life of mine plan firmly
reestablishes Sukari as a global tier one gold asset, with long-term
production above 500,000 ounces per annum at all-in sustaining costs below
US$1,000 per ounce, underscoring our dedication to maximising free cash flow
generation. This plan is not only a substantial improvement on what was
previously published but, importantly it incorporates significantly lower
operational risk and delivers improved carbon abatement. This revised plan
underpins our strategy to maximise the value of Sukari as the foundation for
growth and diversification balanced with stakeholder returns."

HIGHLIGHTS

Sukari Gold Mine - Tier 1 Asset(1)

·      The new life of mine plan ("LOM Plan") delivers long-term
increased gold production, lower operational costs, reduced operational risk
and significantly reduced carbon emissions through a combination of:

o  an improved open pit schedule, including a 40% improvement to LOM strip
ratio (6.5x) compared to full year 2022 ("FY22") (10.8x)

o  an increased underground schedule, including a 75% increase in average LOM
ore mining rates (1.4Mtpa) compared to FY22 (0.8Mt)

o  connection to the Egyptian national grid, delivering an estimated US$41
million of annual cost savings based on current diesel prices

o  integration of a gold gravity circuit to the processing plant, driving a
2% increase in LOM gold recoveries (89.8%) compared to FY22 (88.2%)

·      Average gold production of 506,000 ounces per annum for next nine
years (2024-2032); and 475,000 ounces per annum for life of mine (2024-2034),
reflecting a 5% increase in LOM gold production compared to FY22 (441koz)

·      Average LOM AISC of US$922 per ounce of gold sold, placing Sukari
in the bottom half of the global cost curve(2) and reflecting a 34% reduction
in AISC compared to FY22 (US$1,399/oz)

·      Average annual LOM greenhouse gas ("GHG") intensity of 0.69
tonnes CO(2)-e per ounce, reflecting a 39% reduction compared to FY22 (1.14
tonnes CO(2)-e per ounce)(3)

·      Multiple opportunities identified to extend the current 11-year
LOM (2024-2034) within the Sukari underground, surface satellite deposits and
EDX Nugrus exploration licences adjacent to the mine to further increase
resource and reserves

·      Additional upside opportunities not included in the new LOM Plan
have been identified to further reduce costs and carbon emissions and to
improve operational productivities and efficiencies

2023 outlook

Full year guidance maintained

·      In September, as part of the routine mill relines, a potential
issue was identified on SAG mill 1 ("SAG1") and the decision was taken to
undertake pre-emptive repairs. The work was successfully completed and SAG1
has been fully operational since 1 October 2023

·      As a result, production for the three months ended 30 September
("Q3") was 101,370 ounces. Despite being lower than the internal forecast, the
build-up of high grade material on the ROM pad and increased operational
flexibility in the mine plan means that 2023 annual production guidance
remains on track

·      The Company will publish detailed Q3 Results at 07.00 BST (UK
time) next Thursday 19 October 2023 followed by a webcast and Q&A

·      2023 gold production guidance is maintained with a range of
450,000 to 480,000 oz, targeting the lower end of the range

·      2023 cash cost guidance is maintained with a range of
US$840-990/oz produced and AISC guidance range of US$1,250-1,400/oz sold,
targeting the midpoint of the ranges

·      2023 adjusted capex guidance is maintained at US$225 million,
which excludes US$48 million of sustaining deferred stripping costs

WEBCAST

Investor and analyst presentation

Centamin is hosting a virtual investor presentation today, Thursday 12 October
2023, for investors and analysts. The event will be hosted by Martin Horgan,
CEO, and Ross Jerrard, CFO.

The event will start at 14.30 BST (UK time) and, including a Q&A session,
is expected to end no later than 16.00 BST.

·      Event access: To join the webcast:
https://www.lsegissuerservices.com/spark/Centamin/events/e9d8edd6-7536-4e63-810f-a08189c4f89b
(https://www.lsegissuerservices.com/spark/Centamin/events/e9d8edd6-7536-4e63-810f-a08189c4f89b)
.  Please allow a few minutes to register.

·      A recording of the event and presentation material will be
available on the Company's website shortly after the webcast has concluded.

·      Questions: During the live event, there is a tab where investors
can submit questions. Should any questions arise after the event or while
watching the replay, please email investor@centaminplc.com
(mailto:investor@centaminplc.com) .

·      Presentation: If you wish to view the presentation after the
event, it can be found on our website:
https://www.centamin.com/investors/presentations-webcasts/
(https://www.centamin.com/investors/presentations-webcasts/)

SUKARI LIFE OF MINE Overview

Objective

The new Sukari LOM Plan has been developed by Centamin's in-house technical
team, supported by expert consultants, with a focus on sustaining a 500,000
ounces per year production rate at an optimised cost base, to maximise free
cash flow generation over the LOM.

Basis of preparation

Restructuring the approach to geology at Sukari with the implementation of a
dedicated Mineral Resource Management ("MRM") team has significantly improved
the geological understanding of the orebody over the last three years. This
improved understanding has moved Sukari from a sustained period of Mineral
Reserve depletion to growth and as of 30 June 2022 the Measured and Indicated
Mineral Resources estimate was 320 million tonnes grading 1.08 grams of gold
per tonne containing 11.11 million ounces of gold, inclusive of 6.0 million
ounces of Mineral Reserves.

The LOM Plan ("Reserve plus Resource Conversion Case") is based on the 2022
Mineral Resource and Reserve statement and includes the following assumptions:

·      US$1,450/oz reserve gold price which is consistent with the
assumption used in the 2021 interim life of mine plan published in December
2021.

·      Mineral Reserve cut-off grades are unchanged across the open pit
(0.4g/t) and underground reserves (2.2g/t)

·      A long term diesel price forecast of US$0.75/l, based on current
pricing levels and oil price forecasts

·      25% conversion of underground resources (Measured &
Indicated) to Mineral Reserves, that are not already included in the
underground Reserve Case plan. This plan includes limited material from
unclassified resource targets where drill spacing between holes is greater
than that required for Inferred Resource classification. Underground Mineral
Resource cut-off grades is 1.0g/t

The NI43-101 Technical Report will be filed on the new LOM Reserve Case
(please refer to the table below).

Work programmes

The LOM Plan amalgamated four major workstreams: optimisation of the open pit;
expansion of the underground mine; optimisation of the processing facility;
and fully replacing the use of diesel for stationary power generation.

Result

The new robust long-term plan for Sukari reduces the operating risk and carbon
emissions whilst delivering increased consistent gold production of 506,000
ounces per annum average over the next nine years at a lower AISC of US$956
per gold ounce sold, placing Sukari in the bottom half of the global cost
curve, driving margins and free cash flow generation.

The total life of mine is 11 years (2024-2034), producing an estimated 5.2Moz
in addition to the 5.5Moz produced since 2009, as of 30 June 2023.

SUKARI LIFE OF MINE SUMMARY

For full life of mine schedules (link here
(https://gbr01.safelinks.protection.outlook.com/?url=https%3A%2F%2Fwww.centamin.com%2Fmedia%2F2996%2Fsukari-life-of-mine-summary-oct-23.pdf&data=05%7C01%7CAlexandra%40centaminplc.com%7C5176dd68f439476ab21908dbca6836e6%7Ca02403da39374fe8917b48e08012a5e7%7C0%7C0%7C638326321203100147%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C3000%7C%7C%7C&sdata=iBVjjEXRDUT73zKWcqT4%2BoHHmDLhjDwSNW5Vdi7csA0%3D&reserved=0)
)

                                    units              LOM Plan (Reserve + Resource conversion case)  LOM Plan (Reserve case)  % change
 PHYSICALS
 Mine life                          years              11                                             11                       0%
 Total OP material mined            Mt                 824                                            824                      0%
 Total OP ore mined                 Mt                 110                                            110                      0%
 Avg strip ratio                    waste:ore          6.5                                            6.5                      0%
 Total UG ore mined                 Mt                 14.6                                           8.1                      80%
 Total ore processed                Mt                 136                                            129                      5%
 Avg feed grade                     g/t                1.32                                           1.19                     11%
 Avg gold recovery rate             %                  89.8                                           89.4                     0%
 PRODUCTION & COSTS
 Total gold production              koz                5,229                                          4,447                    18%
 Avg annual gold production         koz                475                                            404                      18%
 Avg annual cash costs              US$/oz produced    757                                            818                      -7%
 Avg annual AISC                    US$/oz sold        922                                            992                      -7%
 EMISSIONS
 Avg annual GHG emissions           tonnes CO(2)-e     332,146                                        318,780                  4%
 Avg annual GHG emission intensity  tonnes CO(2)-e/oz  0.69                                           0.84                     -18%

KEY outputs

The new LOM Plan incorporates the following key areas of optimisation driving
growth:

Optimised open pit

·      Redesign: Improved geological and geotechnical understanding of
the orebody, alongside improved ground conditions following the incorporation
of paste fill has resulted in a re-optimised open pit design.

·      Reduced strip ratio as a component of the redesign: Optimisation
of the open pit wall angles alongside an increase in ore tonnes has resulted
in a reduced strip ratio of 6.5x.

·      Deferred processing of stockpiles: The updated approach to mine
design and pit sequencing has improved earlier access to ore. As a result,
there is a reduced reliance on low-grade stockpiles to supplement mill feed
from 2025-2028 when compared with the 2021 LOM plan.

·      Optimised fleet strategy: An additional five trucks will be
purchased in 2024 to support the LOM Plan, at an approximate cost of US$13
million taking the Sukari fleet capacity from approximately 90Mt to 110Mt per
annum. This coincides with the completion of the 120Mt contractor
waste-stripping programme mid-2024.

Underground expansion

·      Increased mining rates: The underground expansion study completed
in Q4 2022 outlined an optimal 1.5Mt per annum ore mining rate for a capital
requirement of US$25-35 million.

·      Reduced risk: Following full engineering of the expansion,
opportunities arose to simplify the mine plan by removing the requirement to
expand production by developing underground portals in the open pit, and
therefore further reducing the delivery risk.

·      Lower capital costs: The LOM Plan has scheduled increased ore
mining rates of 1.4Mt per annum by 2026 (up from current peak mining rates of
1Mt per annum) at a reduced capital cost of US$16 million primarily for
equipment.

50MW national grid connection

·      Significant carbon abatement: The Egyptian government have made
significant investments into power infrastructure including extending a high
voltage power line within 25km of Sukari. Establishing a 50MW connection to
the grid, in combination with the existing 30MW Sukari solar power plant will
enable full displacement of diesel used for stationary power generation at
Sukari.

·      Reduced maintenance: Following completion of the tender process
and further project design work the decision has been made to proceed with a
buried cable connection rather than overhead. This reduces ongoing maintenance
and associated costs and environmental impact. The project capital cost is
estimated at US$46 million and grid connection is expected from the end of
2024.

·      Quick payback: Removing diesel from the Sukari power supply is
expected to deliver an annual saving of approximately US$41 million (at
current diesel prices and expected tariffs). The operation will also benefit
from reduced operating cost volatility because of lower exposure to the diesel
price.

Gold gravity circuit

·      Following completion of the conceptual design work and site
selection a decision has been made to add a gold gravity circuit to the
processing facility to improve the recovery of the coarse gold found in the
higher grade ore from both the underground and open pit.

·      Improve gold recovery: Study work indicates this will improve
gold metallurgical recoveries to 89.8%, compared to the 2022 full year average
of 88.2%.

·      Construction is expected to be completed in H1 2025 for an
estimated capital cost of up to US$20 million.

ONGOING UPSIDE opportinuties

There remains a number of opportunities for further optimisation of the LOM
Plan. The following initiatives are not included  in the new LOM Plan are
expected to be assessed as part of ongoing optimisation of the asset:

Mineral Resource and reserve growth

·      The Sukari orebody remains open at depth and along strike. The
MRM team continue to implement a rolling strategy to support near term
production by upgrading existing resources and support growth by testing known
limits of mineralisation through discovery.

·      Small surface satellite deposits across the Sukari concession
area are not included in the new LOM Plan, therefore discovery and development
present an upside opportunity

·      The Company's EDX Nugrus block is adjacent to the Sukari Mining
Concession and is within trucking distance to the Sukari processing facility.
The first drill programme on the Nugrus block is currently underway.

Dump leach expansion

·      The LOM Plan schedules that up to 2Mt per annum of low grade
stockpiles (0.3-0.4g/t) will be processed on the dump leach for the next four
years, producing an average of 10-12koz per annum.

·      There is an opportunity to expand the dump leach operation to
process additional transitional (oxide/sulphide) material and rehandle current
marginal grade stockpiles.

·      Study works to commence in 2024, defining the potential scale and
design of an expanded dump leach.

Open pit optimisation

·      Ongoing slope angle optimisation with a potential to further
reduce waste-stripping.

·      Haulage and waste dump optimisation, assessing the potential
relocation of low-grade stockpiles and infrastructure as well as dumping waste
at the southern end of the open pit in the latter years of the mine life, to
shorten haulage distances. These two initiatives could deliver further cost
savings and reduce emissions.

Plant optimisation

·      Ongoing test work on new reagents. Subject to the results, there
is a potential to deliver further cost savings, improved metallurgical
recoveries and therefore gold production, and could improve detoxification of
the tailings and return water.

·      Continued focus on more efficient use of reagents and consumables
further reducing costs.

Solar expansion

·      As part of the Company's Decarbonisation Roadmap (link here
(https://tools.eurolandir.com/tools/Pressreleases/GetPressRelease/?ID=4267402&lang=en-GB&companycode=au-cey&v=)
) the intention is to expand the existing 30MW solar plant to 45-50MW,
delivering further reductions to carbon emissions and cost savings relative to
grid.

·      A feasibility study is currently underway to identify the optimal
location of the facility on the mining lease and define the optimal
integration strategy with the current solar facility and future grid
connection.

·      Associated capital expenditure for the project is not included in
current forecasts, pending completion of the feasibility study.

REFERENCED DOCUMENTS

·      Sukari Gold Mine new life of mine schedules: HERE
(https://gbr01.safelinks.protection.outlook.com/?url=https%3A%2F%2Fwww.centamin.com%2Fmedia%2F2996%2Fsukari-life-of-mine-summary-oct-23.pdf&data=05%7C01%7CAlexandra%40centaminplc.com%7C5176dd68f439476ab21908dbca6836e6%7Ca02403da39374fe8917b48e08012a5e7%7C0%7C0%7C638326321203100147%7CUnknown%7CTWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0%3D%7C3000%7C%7C%7C&sdata=iBVjjEXRDUT73zKWcqT4%2BoHHmDLhjDwSNW5Vdi7csA0%3D&reserved=0)

·      Centamin Decarbonisation Roadmap: HERE
(https://tools.eurolandir.com/tools/Pressreleases/GetPressRelease/?ID=4267402&lang=en-GB&companycode=au-cey&v=)

FOOTNOTES

1.     Defined as an asset producing 500koz over the long-term with costs
in the bottom half of the global cost curve

2.     Source: S&P Global Market Intelligence - 2025 gold production
cost curve ranked on all-in-sustaining cost  (co-product)

3.     Calculation excludes the solar expansion as study work is underway

4.     Reserve plus resource conversion case assumes 25% conversion of
underground resources (Measured & Indicated) to Mineral Reserves, that are
not already included in the underground Reserve Case plan. This plan includes
limited material from unclassified resource targets where drill spacing
between holes is greater than that required for Inferred Resource
classification. Underground Mineral Resource cut-off grades is 1.0g/t

5.     Subject to final budget and board approval

 

 

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.

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

 

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