TIDMCEY
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 . 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 .
-- 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/
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$956 per gold ounce sold, placing
Sukari in the bottom half of the global cost curve, driving margins
and free cash flow generation.
The total life of mine is 11 years (2024-2034), producing an
estimated 5.2Moz in addition to the 5.5Moz produced since 2009, as
of 30 June 2023.
SUKARI LIFE OF MINE SUMMARY
For full life of mine schedules (link here )
units LOM Plan (Reserve + LOM Plan (Reserve case) % change
Resource conversion case)
============================= ==================== ============================ ======================== =========
PHYSICALS
Mine life years 11 11 0%
Total OP material mined Mt 824 824 0%
Total OP ore mined Mt 110 110 0%
Avg strip ratio waste:ore 6.5 6.5 0%
Total UG ore mined Mt 14.6 8.1 80%
Total ore processed Mt 136 129 5%
Avg feed grade g/t 1.32 1.19 11%
Avg gold recovery rate % 89.8 89.4 0%
============================= ==================== ============================ ======================== =========
PRODUCTION & COSTS
Total gold production koz 5,229 4,447 18%
Avg annual gold production koz 475 404 18%
Avg annual cash costs US$/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 )
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
-- Centamin Decarbonisation Roadmap: HERE
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
or contact:
Centamin plc FTI Consulting
Alexandra Barter-Carse, Head of Corporate Ben Brewerton / Sara Powell
Communications / Nick Hennis
investor@centaminplc.com +442037271000
centamin@fticonsulting.com
NOTES
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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