TIDMCEY
RNS Number : 0505G
Centamin PLC
22 July 2021
22 July 2021
Centamin plc
("Centamin" or "the Company")
LSE: CEY / TSX: CEE
QUARTERLY Report
for the three months ended 30 June 2021
MARTIN HORGAN, CEO, COMMENTED : "Centamin has delivered another
solid operational performance and we remain on track to meet full
year cost and production guidance. During the quarter, excellent
progress was made with the Sukari waste-stripping programme which
has significantly outperformed budget and resulted in record
material mined. This is testament to our team at Sukari delivering
improvements in operating efficiencies and further supported by the
quick mobilisation and ramp up of the waste-stripping contractor.
We look forward to announcing our detailed half-year financials and
declaring the interim dividend on Thursday 5(th) August."
HIGHLIGHTS
Solid operational performance
-- Gold production for the second quarter ("Q2"), was 100,228
ounces ("oz"), bringing production for the first half of the year
("H1") to 204,275 oz, and the Company remains on track to achieve
2021 guidance
-- Revenue generated of US$177.5 million from gold sales of
97,229 oz at an average realised gold price of US$1,822/oz sold
-- Cash costs of US$883/oz produced and all-in sustaining costs ("AISC") of US$1,290/oz sold
-- Open pit operational performance delivered ahead of schedule,
resulting in record quarterly total material moved of 25.6Mt (H1:
48.2Mt)
-- Better than budgeted Group free cash flow of US$6.9 million
reflected stronger gold price and lower capital expenditure
("capex"), offset by accelerated open waste-stripping programme and
increased exploration activities
-- Completed the West African portfolio strategic review,
confirming positive growth potential at the Doropo Project, and
commenced the pre-feasibility study ("PFS"), scheduled for
completion in H1 2022
-- Awarded the engineering, procurement and construction
contracts for the Sukari 36MW solar farm and 7.5 MW battery-energy
storage system, scheduled for completion in H1 2022
-- Strong balance sheet with no debt, no hedging and cash and
liquid assets of US$312.1 million, as at 30 June 2021, after
US$34.5 million dividend distribution on 15 June 2021.
OUTLOOK
On track to meet full year guidance
-- 2021 gold production and cost guidance maintained: 400,000 to
430,000 oz at cash costs of US$800-900/oz produced and AISC of
US$1,150- 1,250/oz sold
-- 2021 capex guidance maintained: US$225 million, with a 65%
spend in H2 (previously 55%) due to timing adjustments to the
payment schedule
-- 2021 exploration expenditure increased to US$17 million
(previously US$5 million), including progressing to PFS at Doropo,
following positive strategic review of the Company's West African
portfolio
-- Recently agreed exploration license terms for a total
3,164km(2) land package in Egypt's Arabian Nubian Shield subject to
final legal formalities expected to be completed in Q3
-- Sukari Life of Asset (Phase 2) optimisation work programme is
scheduled for completion in Q4 2021.
WEBCAST AND CONFERENCE CALL
The Company will host a webcast and conference call today,
Thursday, 22 July at 08.30 BST to discuss the results, followed by
an opportunity to ask questions. A replay will be made available on
the Company website.
Webcast link :
https://www.investis-live.com/centamin/60ded6b391c5c31000284e14/nfmd
Dial-in telephone numbers :
United Kingdom (and all other locations) +44 (0) 203 936 2999
United States +1 646 664 1960
South Africa +27 (0) 87 550 8441
Participation access code: 352275
RESULTS SUMMARY
QoQ comparative YoY comparative YTD
------------------ ------------------ ----------------
Q2 2021 Q1 2021 % Q2 2020 % H1 2021
======================== ================= ======== ======== ======= ========= ====== ========
Open pit
Total material mined kt 25,585 22,583 13% 20,266 26% 41,375
Ore mined kt 3,031 3,763 (19%) 4,122 (26%) 6,794
Ore grade mined g/t Au 0.76 0.77 (1%) 0.98 (22%) 0.77
Ore grade milled g/t Au 0.87 0.9 (3%) 0.98 (11%) 0.88
========================= ================= ========= ========
Underground
Ore mined kt 223 170 31% 168 33% 393
Ore grade mined g/t Au 4.67 5.84 (20%) 5.99 (22%) 5.98
========================= ========
Processing
Ore processed kt 2,804 3,018 (7%) 2,994 (6%) 5,821
Feed grade g/t Au 1.19 1.16 3% 1.52 (22%) 1.18
Gold recovery % 89.3 88.6 1% 88.0 1% 88.8%
Gold production oz 100,228 104,047 (4%) 130,994 (23%) 204,275
========================= ================= ======== ======== ========= ========
Cost & Sales
Gold sold oz 97,229 106,573 (9%) 130,745 (26%) 203,802
Cash costs US$/oz produced 883 733 20% 625 41% 807
AISC US$/oz sold 1,290 1,091 18% 896 44% 1,186
Realised gold price US$/oz 1,822 1,778 2% 1,731 5% 1,799
Revenue US$m 177.5 189.9 (7%) 226.6 (22%) 367.4
CAPEX US$m 41.3 37 12% 29.8 39% 78.3
Free Cash Flow US$m 6.9 9.4 (27%) 56.3 (88%) 16.3
========================= ================= ======== ======== ======= ========= ====== ========
FOR MORE INFORMATION please visit the website www.centamin.com or contact:
Centamin plc Buchanan
Alexandra Barter-Carse, Corporate Communications Bobby Morse / Kelsey Traynor
+44 (0) 7700 713 738 + 44 (0) 20 7466 5000
investor@centaminplc.com centamin@buchanan.uk.com
HEALTH & SAFETY
Operational safety remains a strict focus throughout the Group
in creating a safe work environment which supports a healthy and
productive workforce. In Q2, there were three lost time injuries
("LTI") (H1: four) resulting in a lost time injury frequency rate
("LTIFR") of 1.19 per one million site-based hours worked (H1:
0.81). The total recordable injury frequency rate ("TRIFR") for Q2
was 5.15 per one million site-based hours worked (H1: 3.45). Both
lagging indicators are better than the target for the year.
In Q2, Centamin experienced no material production, sales or
supply chain disruptions due to COVID-19 at Sukari or the
exploration projects in West Africa. Full COVID-19 protocols remain
in place. The Company has implemented strict test, track, isolate
and safety measures for the long-term, acknowledging the duration
of the pandemic and the lasting impacts remain uncertain.
Consequently, the Company has increased its staffing levels as
appropriate.
Production
(Q2 2021 vs Q1 2021)
Delivered as planned, Sukari gold production for the quarter was
100,228 oz. Gold production for H1 was 204,275 oz which is in line
with budget and on track to meet 2021 guidance.
Open Pit Mining
Record quarterly total material moved of 25.6Mt (H1: 48.2Mt), a
13% increase QoQ, driven by improved operating efficiencies and
productivities.
Open pit ore mining in Q2 continued to focus on the low to
medium grade Stage 5 North area. More low grade ore tonnes
continued to be mined than scheduled, driven by ongoing conversion
of waste to ore from pre-production drilling. Total open pit ore
mined for the quarter was 3.0Mt (H1: 6.8Mt), a 19% reduction QoQ,
at an average mined grade of 0.76 grams of gold per tonne ("g/t
Au") (H1: 0.77 g/t Au), unchanged QoQ.
Record total open pit waste material mined for the quarter was
22.6Mt (H1: 41.4Mt), a 20% increase QoQ, driven by operational
outperformance in the open pit waste-stripping programme, which has
ramped up ahead of schedule. The strip ratio for the quarter was
7.4:1 (waste:ore) (H1: 6.1:1).
During the period the open pit interacted with a known
underground void with no material impact on operations or
production, highlighting the effective progress of the Void
Management Plan to ensure the safety of our team and equipment, and
delivery against the open pit mine plan.
Underground Mining
Total ore mined was 223kt (H1: 393kt) at an average combined
(stoping and development) grade of 4.67g/t Au (H1: 5.18 g/t). This
represented a 31% increase in tonnes QoQ and a 20% reduction in
grade QoQ and was in line with the planned stoping sequence for
2021.
The underground ore split was 1 34kt of ore mined from stopes,
at an average grade of 5.23g/t Au, and 89kt of ore mined from
development, at an average grade of 3.84g/t Au.
Improved underground staffing levels were achieved during the
quarter, and the Company continues to work closely with the
underground contractors to mitigate the impacts of reduced staffing
levels due to COVID-19 to ensure the delivery of operating
targets.
Processing
During Q2 there was a planned maintenance shutdown to replace
the girth gear on one of the two SAG mills. This was originally
scheduled for Q3, but availability of staff, equipment and supplies
allowed the work to be brought forward to Q2.
The plant processed 2.8Mt of ore (H1: 5.8Mt), a 7% reduction
QoQ, at an average feed grade of 1.19g/t Au (H1: 1.17 g/t), a 3%
improvement QoQ. The metallurgical gold recovery rate was 89.3% for
the quarter (H1:88.8%), an improvement of 1% QoQ. During the
quarter, the low grade stockpiles increased from 18.3Mt to 18.8Mt
at 0.46g/t Au.
Mineral Resource Management
During the quarter, 66,858 metres of grade control and resource
definition drilling was completed at Sukari (41,718 metres in the
open pit and 25,140 metres in the underground). The geological
relogging programme, which commenced in Q1, progressed well,
completing 29 sections of the total 107 sections with the full
programme scheduled to be completed by H2 2022. An updated
structural model was completed in Q2 and will be integrated into
the full geological model in Q3. An updated Sukari Mineral Resource
Estimate, which will underpin the Life of Asset (Phase 2) review,
will be completed by the end of 2021.
Capital Projects
Total capex in Q2 was US$41.3 million (H1: US$78.3m), which was
an 11% increase QoQ and below budget for Q2 as certain payments
have been rescheduled to Q3. Sukari capital projects progressed
well including the second tailings storage facility ("TSF2") Stage
3 lift, final stages of the camp upgrades and commissioning,
ongoing development of the paste-fill plant and reagents handling
area at the process facility.
In Q2, the Company awarded the 36MW solar farm and 7.5MW
battery-energy storage system engineering, procurement and
construction contracts. The project is scheduled to be commissioned
by the end of H1 2022. The solar plant will provide partial power
source to the processing plant during daylight hours, reducing
diesel fuel consumption by an estimated 22 million litres per
annum, saving up to US$13 million in costs and lowering carbon
emissions by an estimated 60,000 tonnes CO2-e per annum. Project
spend in the quarter was US$4.4 million, with US$30.8 million
budgeted for H2 2021.
SALES & COSTS
Gold sales for the quarter were in line with budget at 97,229oz
(H1: 203,802 oz), a 9% decrease QoQ. The average realised gold
price for the quarter was US$1,822/oz (H1: US$1,799/oz), up 2% QoQ.
Revenues generated of US$177.5 million (H1: US$367.4m), were down
7% QoQ, driven by scheduled lower gold sales and offset by a higher
realised gold price.
Total cash costs of production were in line with budget at
US$88.5 million for the quarter (H1: US$164.8m), a 16% increase
QoQ, driven by scheduled higher mine production costs as a result
of more tonnes mined than scheduled and partially offset by
movements in inventory on ounces produced, due to the increase in
low grade stockpiles. Unit cash costs of production were US$883/oz
produced (H1: US$807/oz), a 20% increase QoQ and as scheduled.
Total all-in sustaining costs ("AISC") were better than budget
at US$125.4 million for the quarter (H1: US$241.7m), due to certain
non-critical sustaining capital items moving from Q2 to Q3. This
marked an 8% increase QoQ. Unit AISC of US$1,290/oz sold (H1:
US$1,186/oz), an 18% increase QoQ, reflecting the increased tonnes
mined and lower gold sales.
FINANCIAL POSITION
Free Cash Flow
Under the terms of the Sukari Concession Agreement, the Egyptian
government earned US$5.3 million in royalty payments (H1: US$11.0m)
and received US$24.0 million in profit share payments during the
quarter (H1: US$45.7m). After Sukari profit share distribution,
Group exploration expenditure and corporate investing activities,
Group free cash flow for the quarter was US$6.7 million (H1:
US$16.3m) and ahead of budget, driven by stronger realised gold
price.
Balance Sheet
The Company is in a strong financial position, building net cash
and liquid assets to US$312.1 million as at 30 June 2021, and after
distribution of the 2020 final dividend totalling US$34.5 million.
The Company remains unhedged and debt-free.
CORPORATE
W est Africa Exploration Programme
A strategic assessment of the Company's West African exploration
portfolio was completed in Q2 to evaluate the potential development
prospects of the portfolio, to rank each project and to define the
pathway to realising value.
-- The Doropo Project (Côte d'Ivoire) showed strong development
potential with the completion of a positive preliminary economic
assessment ("PEA"), following which the Board approved the
commencement of a pre-feasibility study ("PFS"), scheduled for
completion by H2 2022.
-- The ABC Project (Côte d'Ivoire) continues to deliver
greenfield targets along the 60km Lolosso Gold Corridor ("LGC") and
the Board has approved an exploration programme for the Kona and
FarakoNafana permits for the period to June 2022.
-- The Batie West Project (Burkina Faso) PEA demonstrated a
viable project, and the Board has approved the assessment of
third-party development options as the project does not currently
meet Centamin's investment criteria.
Egyptian Bid Round
The Company's government partners, the Ministry of Petroleum
& Natural Resources and the Egyptian Mineral Resource Authority
("EMRA") launched an international bid round process in February
2020 for the exploration of gold in a series of blocks covering the
Eastern Desert in Egypt ("Bid Round").
Centamin submitted bids for several prospective exploration
blocks in September 2020. In July 2021, Centamin agreed exploration
terms over three blocks (incorporating 19 licenses) covering 3,164
km(2) , subject to final legal formalities which are expected to be
completed in Q3. All ground in the Bid Round comes under the new
Egyptian mining code following a tax, rent, royalty framework. New
licenses are independent from, and therefore do not impact, the
Sukari Gold Mine Concession Agreement (Egyptian Law 222 of
1994).
NOTES
Guidance
The Company actively monitors the developments of the COVID-19
pandemic and guidance may be impacted if the workforce or operation
are disrupted.
Financials
Financial data points included within this report are
unaudited.
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 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 Company's 2020 Annual Report
https://www.centamin.com/investors/results-reports/ .
Royalties
Royalties are accrued and paid six months in arrears.
Cash and liquid assets
Cash and liquid assets include cash, bullion on hand, gold sales
receivables and financial assets at fair value through profit or
loss.
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.
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.
Generally, these forward-looking statements can be identified by
the use of forward-looking terminology such as "believes",
"expects", "expected", "budgeted", "forecasts" and "anticipates".
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. 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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