REG - Centamin PLC - Sukari Underground Transitions to Owner Mining

CentaminAnnouncement

08/02/2022 07:00

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RNS Number : 9444A  Centamin PLC  08 February 2022

8 February 2022

Centamin plc

("Centamin" or "the Company")

LSE: CEY / TSX: CEE

 

sukari UNDERGROUND reserve growth supports TRANSITION TO OWNER MINING,
delivering COST SAVINGS and increased flexibility

Centamin announces that, following an independently managed contractor tender
process, the underground operations at its Sukari Gold Mine ("Sukari") will
transition from contractor-mining to owner-operator mining with immediate
effect. This change will deliver significant cost savings and improve
operational control and mining flexibility, whilst also enabling the company
to upskill the local workforce.

The decision to move to owner mining, following the expiry of the current
five-year contract, has been based on the following:

·     Reserve growth - the 200% increase in Sukari underground Proven
and Probable Reserves, as announced in December 2021, underpins an eight-year
underground life of mine, with identified near-term growth targets to extend
beyond a ten-year life of mine

·    Leadership team - the operational leadership at Sukari has been
significantly strengthened, with experienced underground expertise and
increased investment in the development of the national workforce

·    Operational benefits - an owner-operator model including risk-based
analysis against the submitted contractor-mining tender proposals identified
significant operating synergies for the broader Sukari operations

·    Cost savings - the transition to owner-operator mining is expected to
generate long-term cost savings of an average US$19 million(1) per annum from
2023 onwards compared to the 2021 cost base, and

·     Mine life extension and upside - 90,000 metres of underground
drilling is budgeted for 2022, including identified near-term growth targets
to extend the underground beyond a ten-year life of mine and helping to
support the underground expansion study which is due for completion in H2
2022.

UNDERGROUND MINING

A detailed transition plan to owner-operator mining is in place with
implementation underway, including utilising a third-party underground mining
specialist to assist with workforce training. The Company has also executed
its contractual right to purchase the current underground mining fleet from
the incumbent contractor for a total capital cost of US$10.5 million to be
paid this quarter, Q1 2022.

UNDERGROUND DRILLING

Following the completion of an independent tender process, the Company has
awarded Geodrill Limited ("Geodrill") a five-year contract to provide
underground drilling services, including a minimum of 90,000 metres of
drilling per annum and introducing reverse circulation ("RC") drilling to the
underground which is faster and enables larger samples to be taken. The
contract is to commence this quarter, Q1 2022.

2022 GUIDANCE

There is no change to the 2022 annual production and cost guidance. As a
result of purchasing the incumbent contractor underground mining fleet, the
annual capital expenditure guidance for 2022 is increased by US$10.5 million
to US$225.5 million.

Martin Horgan, CEO, commented: "The decision to transition the underground to
owner mining reflects extensive planning and evaluation to determine the most
effective operating model as we continue to grow and maximise the value of the
Sukari orebody. Following a 200% increase in underground reserves with further
identified growth opportunities and an underground expansion study underway,
we believe this move best places us to extract the maximum value safely,
efficiently and cost-effectively from the expanding underground operations. In
addition, we welcome Geodrill to Sukari and look forward to working with the
team as a key partner and contractor as we continue to explore and develop the
full potential of the underground operations."

 

About Centamin

Centamin is an established gold producer, with premium listings on both 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 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 Côte d'Ivoire, and over 3,000km(2) of highly
prospective exploration ground in Egypt's Arabian Nubian Shield.

Centamin practices responsible mining activities, recognising its
responsibility to 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, Corporate Communications             Bobby Morse/Ariadna Peretz/James Husband

 +44 (0) 7700 713 738                                         + 44 (0) 20 7466 5000

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

ENDNOTES

Cost savings

Cost savings were calculated relative to the incumbent underground contractor
contract terms, all things being equal, and include the initial equipment
purchase required to maintain current production levels and future capital
cost estimates related to any near-term fleet replacement.

Guidance

The Company actively monitors the developments of the COVID-19 pandemic and
guidance may be impacted if the workforce or operation are disrupted.

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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