Centamin PLC: Results for the quarter ended 30 June 2012
14.08.2012 | Marketwired
PERTH, AUSTRALIA -- (Marketwire) -- 08/14/12 --
For immediate release 14 August 2012
Results for the Second Quarter and Half Year Ended 30 June 2012
Centamin plc ("Centamin" or "the Company") (LSE: CEY, TSX: CEE) is
pleased to announce its results for the second quarter ended 30June
2012.
To view the full document please follow the link below:
http://www.rns-pdf.londonstockexchange.com/rns/9329J_-2012-8-13.pdf
HIGHLIGHTS[1]
* Q2 gold production reached a record level of 67,422 ounces from
the Sukari Gold Mine ("Sukari"), a 40% increase on Q2 2011
* Cash costs[2] of US$565 per ounce (US$729 inclusive of fuel
prepayments, see main text)
* Engagement on fuel subsidy ongoing
* Average gold sales price received of US$1,610 per ounce
* Underground mine achieved record quarterly ore production of
116kt, a 269% increase on Q2 2011
* Record mill utilisation of 89%, a 7% increase on Q2 2011
* Record mill throughput of 1,269kt, an increase of 49% on Q2 2011
with record monthly mill throughput in May of 453,457t
* Stage 4 (plant expansion to 10Mtpa) continues to progress well
and is on track for commissioning to begin in Q1 2013. Expenditure to
date is US$138.7 million
* With cash, bullion, gold sales receivable and liquid assets[2] of
US$183 million as at 30 June 2012, Centamin remains debt-free and
unhedged
* 2012 production guidance of 250,000 ounces maintained, with cash
costs of US$550 per ounce at subsidised fuel prices
* Drilling continued at Una Deriam, the first of Centamin's four
exploration licenses in Ethiopia with drilling results expected in H2
2012
Q2 2012 Q1 2012 Q2 2011 Q1 2011
Total Gold Production (oz) 67,422 49,071 47,991 45,204
Cash Cost of Production[1,4](US$/oz) 565 609 498 501
Average Sales Price(US$) 1,610 1,694 1,545 1,405
Revenue (US$M) 96.8 87.7 77.9 89.0
EBITDA[2,3,4](US$M) 54.9 55.2 59.6 59.9
Basic EPS[4] (cents) 3.87 4.67 5.15 5.65
-------------
[1]Results and highlights for the first quarter ended 31 March 2012 are
available at www.centamin.com.
[2]Cash cost of Production, EBITDA and cash, bullion and liquid assets
are a non-GAAP measure defined on pages 17 - 18 of this news release.
[3]EBITDA reported is on the basis of subsidised fuel costs.
[4]Historic Cash cost of production, EBITDA and EPS now reflect adoption
of IFRIC 20.
Josef El-Raghy, Chairman of Centamin, said: "Our team at Sukari has
delivered a record quarter on tonnes mined from the underground and
tonnes processed through the plant. Open pit tonnes mined increased
significantly from Q1 as staged development in line with the optimised
mine plan announced in May opened up additional mining faces. We have
delivered our strongest operating quarter to date and remain on track
to deliver our full year production guidance of 250,000 ounces."
Centamin will host a conference call on Tuesday, 14 August at 9.00am
(London, UK time) to update investors and analysts on its results.
Participants may join the call by dialling one of the following three
numbers, approximately 10 minutes before the start of the call.
From UK: (toll free) 0800 368 1895
From Canada: (toll free) 1866 561 8617
From rest of world: +44 (0) 203 140 0693
Participant pass code: 401548#
A live audio webcast of the call will be available on:
http://mediaserve.buchanan.uk.com/2012/centamin140812/registration.asp
A group analyst briefing with be held simultaneously at 9.00am at the
offices of Buchanan, 107 Cheapside, London, EC2V 6DN
A second call (Q&A only) will be held for North American analysts and
investors at 2.00pm (London, UK time) / 9.00am EST. Participants may
join the call by dialling one of the following three numbers,
approximately 10 minutes before the start of the call.
From Canada: (toll free) 1866 561 8617
From US: (toll free) 1866 928 6049
From rest of world: +44 (0) 203 140 0693
Participant pass code: 925269#
For more information please contact:
Centamin plc +44 (0) 20 7569 1670
Josef El-Raghy, Chairman
Andrew Davidson, Head of Investor Relations and +44 (0) 20 7569 1671
Business Development
Buchanan +44 (0) 20 7466 5000
Bobby Morse
Gabriella Clinkard
About Centamin plc
Centamin is a mining company that has been actively exploring in Egypt
since 1995. The principal asset of Centamin is its interest in the
large scale, low cost Sukari Gold Mine, located in the Eastern Desert
of Egypt. 2010 was Sukari's maiden year of production, with 150,000
ounces of gold produced. In 2011, production expanded to over 200,000
ounces, with production forecast to increase further in the following
years.
The Sukari Gold Mine is the first large-scale modern gold mine in
Egypt. Centamin's operating experience in Egypt gives it a significant
first-mover advantage in acquiring and developing other gold projects
in the prospective Arabian-Nubian Shield.
In 2011 the Group acquired Sheba Exploration Plc ("Sheba") and now has
interests in four mineral licences in Ethiopia where it is conducting
further exploration activities.
CHAIRMAN'S STATEMENT
We have delivered our strongest operating quarter to date and remain on
track to deliver our full year production guidance of 250,000 ounces.
Sukari continues to be highly cash generative, with EBITDA of US$54.9
million in the quarter and cash, bullion and liquid assets of US$183
million as at 30 June 2012. Centamin remains 100% exposed to the high
gold price environment through its unhedged position and the Company is
projected to have sufficient funding from its cash flow and cash
balance to fund its capex projects, including the Stage 4 expansion.
Our exploration and development strategy in Ethiopia progressed during
the quarter, as drilling continued at the first of our four exploration
licences in northern Ethiopia.
The full year cash cost guidance remains at US$550 per ounce at
subsidised fuel prices and would increase by circa US$150 per ounce in
the event that international fuel prices are levied.
OPERATIONAL REVIEW
Production
Sukari Gold Mine production summary:
Q2 2012 Q1 2012 HY 2012 Q2 2011 Q1 2011 HY 2011
Ore Mined ('000t) 1,816 1,003 2,819 1,039 1,212 2,251
- Open Pit
Ore Grade (Au g/t) 1.07 0.83 0.99 NR NR NR
Mined
- Open Pit
Ore Grade (Au g/t) 1.19 1.21 1.20 NR NR NR
Milled
- Open Pit
Total ('000t) 6,579 4,819 11,398 3,030 4,552 7,582
Open Pit
Material
Mined
Strip (waste/ore) 2.6 3.8 3.0 1.9 2.8 2.4
Ratio
Ore ('000t) 53 47 100 39 41 80
Mined -
Underground
Development
Ore ('000t) 63 25 88 4 - 4
Mined -
Underground
Stopes
Ore Grade (Au g/t) 8.68 8.11 8.46 NR NR NR
Mined -
Underground
Ore ('000t) 1,269 1,020 2,289 850 741 1,591
Processed
Head Grade (g/t) 1.99 1.69 1.86 1.82 1.94 1.88
Gold (%) 84.3 85.0 84.6 85.0 86.7 85.8
Recovery
Gold (oz) 1,318 1,903 3,221 2,765 2,676 5,441
Produced
- Dump
Leach
Gold (oz) 67,422 49,071 116,493 47,991 45,204 93,195
Produced
- Total
Cash (US$/oz) 565 609 584 498 501 499
Cost of
Production
Open (US$/oz) 194 166 NR NR NR NR
Pit
Mining
Underground (US$/oz) 50 52 NR NR NR NR
Mining
Processing (US$/oz) 263 315 NR NR NR NR
G&A (US$/oz) 58 76 NR NR NR NR
Gold Sold (oz) 60,673 52,701 113,374 50,262 63,240 113,502
Average (US$/oz) 1,610 1,694 1,649 1,545 1,405 1,467
Realized
Sales Price
Notes:-
(1) Ore mined includes 104kt @ 0.50g/t delivered to the
dump leach in Q2 2012 (264kt @ 0.42g/t in Q1 2012;
224kt @ 0.5g/t in Q2 11 and 435kt @ 0.6g/t in Q1 11).
(2) Gold produced is gold poured and does not include gold-in-circuit
at period end.
(3) Cash costs exclude royalties, exploration and corporate
administration expenditure.
(4) Realised Sales Price reflects actual sales price realised during
the period i.e. excludes Gold receivable.
(5) Historic Cash cost of production now reflect adoption of IFRIC 20.
NR - Not Reported.
Centamin delivered a record 67,422 ounces of gold production in Q2
2012, which is a 40% increase on Q2 2011.
Sukari's production profile for the year will see a larger proportion
of ounces delivered in Q3 and Q4 due to increasing overall headgrade
and as such our full year production guidance of 250,000 ounces remains
intact.
On 30 May 2012, Centamin released an optimised 5 year mine plan
highlighting the following:
* Increased mining rates of ore in the open pit in years 2014 and
2015
* Reduced strip ratio in 2014 to 6.72:1 (previously 14.5:1)
* Open pit mine life of 30 years at average grade of 1.09g/t
* Faster ramp up to 10Mtpa processing capacity following
completion of Stage 4 expansion
Open Pit
The open pit delivered total material movement of 6.6Mt for the
quarter, a significant increase of 37% on Q1 2012 as additional mining
faces opened up and an increase of 117% on the corresponding quarter in
2011.
Ore production from the open pit was 1.8Mt at 1.07g/t with average head
grade of ore fed to the plant of 1.19g/t. The ROM ore stockpile balance
increased by 278kt to 497kt by the end of the quarter.
Mining continued to focus in Stage 2A and Stage 2B down to the 1040RL
and 1076RL respectively. In Stage 3 development work continued wit
h
minor production commencing in preparation for large scale load and
haul activities.
Underground Mine
The underground mine achieved a record quarterly ore production with
116kt hauled to surface and ore production continues to ramp up whilst
a significant focus on longer term development is also maintained.
Grades continued to be reasonably high, with a headgrade of 8.68g/t
from the underground mine in Q2. The grade was below the annual
production guidance range of 10-12g/t as the majority of the stope
material for the quarter continued to be mined from the lower grade
stockwork stopes. However, during the last part of the quarter, higher
grade stope material was mined and development of access to the higher
grade areas continues. Higher grade material is scheduled for mining in
the remaining quarters and the annual grade guidance of 10-12g/t is
maintained. The ratio of stoping ore to development ore mined increased
this quarter, with 46% of development ore (53kt) and 53% of stoping ore
(63kt) in Q2 2012.
A further 707.1 metres of development took place on the 875, 860, 850
and 845 levels to access additional stoping blocks that will be mined
during 2012. A total of 2,922.9 metres of diamond drilling was done
during the quarter for both short term stope definition and development
whilst a further 1,978 metres of drilling to test the depth extensions
below the current Amun zone and into the Horus zone was completed.
Development of the Ptah Decline, which will move towards the north of
the Sukari deposit and provide access to the high grade Julius zone,
began in October 2011 and had advanced 296.4 metres by the quarter end.
The Ptah Decline will take underground activity away from the pit shell
over the next two years, allowing Centamin to maintain two separate
underground production sources once the Amun Decline becomes part of
the open pit.
The anticipated capital cost of the Ptah Decline is US$18 million,
which will see the decline reach the first ore blocks to be developed
below the middle of the hill. It is expected that this initial
development work will be complete in late 2012.
Processing
The plant performed at an annualised rate of 5 million tonnes per annum
(Mtpa) consistently throughout the quarter, with productivity of 652
tonnes per hour(tph) for the quarter.
The quarterly throughput in the Sukari processing plant was 1,269kt,
49% higher than the corresponding quarter in 2011 and 24% higher thanQ1.
Plant metallurgical recoveries were 84.3%, which is a 1% decrease on
Q1. Recoveries are expected to increase with improvements to plant
automation, which ensures we are operating within a tight band of pH
control and thus optimising leach conditions on a continual basis.
Centamin is also looking to improve its efficiency of carbon management
and a short term measure is to replace some of the older fouled carbon
with new virgin carbon on a periodic basis, which helps to maintain a
higher amount of gold absorbed onto carbon and recovered. It has been
identified that the existing carbon regeneration plant is unable to
sufficiently regenerate the carbon. A new plant has been ordered and
this will be installed in Q1 2013. This plant will have sufficient
capacity to ensure all the carbon is regenerated effectively and is
expected to improve recoveries by 3-5%.
The dump leach operation produced 1,318oz in Q2, a 31% decrease on Q1.
104kt of low grade oxide ore at 0.50g/t was delivered to the pads in
preparation for irrigation, bringing the total ore placed on the dump
leach to approximately 6.0Mt at 0.50g/t. Dump leach volumes pumped back
to the CIL Plant were deliberately reduced to minimise issues
associated with the carbon fouling and carbon regeneration and the
impact on recoveries.
Fuel Costs
As explained in the announcement on 28 March 2012, Sukari has benefited
from the national industry subsidy in Egypt for diesel. As compared
with international prices this has a beneficial effect of approximately
US$150/oz. on the forecast cash costs of US$550/oz. for 2012 based on
250,000 ounces of production. The cash cost of US$565 per ounce for
the quarter does not include the cost of purchasing fuel for the
quarter at international prices.
Given the challenging political and fiscal conditions that Egypt is
currently experiencing it was necessary during Q2 to continue to
advance funds to our fuel supplier Chevron based on the international
price of fuel to ensure continuous operations whilst negotiations are
ongoing with the Egyptian Government on the path forward for fuel
subsidies. Management are treating these fund advances as prepayments
being calculated at the international fuel price approximately 85 cents
/litre and at this stage are not expensed, however they represent
roughly half of our fuel supply for Q1 and all the usage for Q2.
Should these prepayments be expensed, the cash cost for Q1 would
increase by US$108 to US$717 per ounce and for Q2 would increase by
US$164 per ounce to US$729 per ounce and for the half year would
increase by US$141 per ounce to US$725 per ounce.
Negotiations are ongoing with the Egyptian Government on the path
forward for fuel subsidies but given the slow progress and short time
periods for commencing legal action, the Board agreed to commence
judicial review proceedings in Egypt. The Company, which has the
support of the Egyptian Mineral Resource Authority in these
negotiations and judicial review proceedings, does not believe that an
instant move to international fuel prices is a reasonable outcome. The
Company will look to recover any funds advanced thus far at this higher
rate should negotiations or proceedings be concluded successfully.
Centamin will update shareholders on these negotiations and proceedings
and update full year cash cost guidance if necessary.
STAGE 4 EXPANSION
Construction continues on Stage 4 of the process plant expansion which
will expand the Sukari capacity from 5Mtpa to 10Mtpa. The capital cost
of the Stage 4 expansion is budgeted at US$287.6 million (excluding
contingency) with expenditure to date of US$138.7 million.
Main Plant
Detailed engineering is 94% complete and the final issue, evaluation
and award of equipment packages is ongoing.
Power Station
The engineering design and procurement are 100% complete. Civil,
structural and mechanical works continue around power house, fuel
treatment, workshop buildings and day tank area. Electrical work on
cable tray installation and earthing are ongoing.
Sea Water Pipeline
Orders have been placed for motorized valves, flanges and above ground
pipe work. The installation contract tender has been completed and
awarded to Egyptian Maintenance Co. (EMC). Engineering for the
Petroleum & Process Industries (ENPPI) are finalising the electrical
equipment supply.
Tailings Storage Facility
The construction process for the Tailings Storage Facility ("TSF") is
85% complete. Construction by earthworks contractor together with
mining is ongoing.
Costing
A breakdown of the major cost areas to date are as follows:
* Mining Equipment US$19.5M
* Processing Plant US$72.9M
* Power Plant US$33.1M
* Other US$13.2M
US$138.7M
Major contributors to the payments made in Q2 were as follows:
* Mining Equipment US$9.1M
* Processing Plant US$26.6M
* Power Plant US$1.2M
* Other US$2.5M
US$39.4M
The Stage 4 expansion project remains on schedule for commissioning in
Q1 2013.
EXPLORATION UPDATE
Sukari Hill
Centamin's resources at Sukari are 13.13Moz Measured & Indicated and
2.3Moz Inferred, which include reserves of 10.1Moz. Drilling continued
from the underground development drives and the drilling programme will
build up to four underground based exploration/resource drill rigs
throughout 2012.
We aim to continue adding ounces to Sukari's already significant
resource base.
Regional Exploration
Drilling continued in the V- Shear and Kurdeman prospects. Drilling at
V- Shear continued to test the extent of the porphyry as this
represents the first significant zones of porphyry encountered away
from the Sukari Hill. Assays are promising and the materiality of this
discovery is currently being reviewed.
Growth Beyond Sukari
The third pillar of Centamin's growth strategy is growth beyond
Sukari. Centamin has interests in 4 exploration licences in northern
Ethiopia and drilling at the first property, Una Deriam, began in Q1.
Ethiopia is a geologically prospective terrain that is historically
underexplored. There is an emerging gold mining industry and
significant artisanal gold mining activities. Through a well-funded and
focused exploration effort, Centamin hopes to replicate its success in
Egypt in exploring and developing gold assets.
During Q2 the Company continued diamond drilling at Una Deriam and
samples have been dispatched to South Africa. Previous work on the
tenement had outlined a8km long gold in soil anomaly. Several
historical open hole percussion drill holes confirmed the existence of
significant sub-surface gold mineralisation with +20 metre
intersections.
The acquisition of Sheba was part of the Company's plan to diversify
into other countries in the prospective Arabian-Nubian Shield.
Centamin intends to continue to grow and diversify its asset base
through targeted acquisitions in the region and beyond.
FINANCIAL REVIEW
Centamin has a strong and flexible financial position with no debt, no
hedging and cash, bullion and liquid assets of US$182.7m at 30June
2012. Cash, bullion and liquid assets is a non-GAAP financial measure
and includes cash, bullion, gold sales receivable and liquid assets.
* Cash at Bank US$127.7 million
* Gold Sales Receivable US$27.3 million
* Liquid assets - listed equities US$7.7 million
* Bullion US$20.0million
Sukari generated revenue of US$96.8 million in Q2, a 10% increase on
Q1. Revenue reported comprises proceeds from gold and silver sales.
Centamin's cash costs per ounce were lower than in Q1 primarily as a
result of higher production and improved productivities compared to
those reported in Q1. The production increase of 37% over Q1 was also
driven to some extent by the higher grade ore being fed to the mills,
(1.99g/t in Q2 compared to 1.69g/t in Q1) resulting in higher ounces
produced (67,422 ounces in Q2 compared to 49,071 ounces in Q1) from a
28% increase in tonnes milled (circa 1Mt). Cash costs increased by 27%
($38.1 million in Q2 compared to $29.9 million in Q1). The major
contributor to the higher costs in Q2 was the increase in production.
The Company reported a 9% decrease in EBITDA on Q2 2011 and a 1%
decrease on Q1. Basic Earnings per Share for the quarter was 3.87
cents. Whilst there was a moderate decrease in the unit cash cost of
production there was not a significant corresponding increase in EBITDA
due to a build-up of gold inventory during the period (gold sales of
60,673 ounces versus production of 67,422 ounces).
CORPORATE UPDATE
Chief Executive Officer Appointment Process
Having reviewed the market for potential candidates, the Board is
currently re-assessing its options for ensuring that the Company has
the right leadership to best further its future development. A further
update will be given in due course.
Investor Relations and Business Development Officer Appointment
Andrew Davidson, a qualified geologist and formerly Director of Equity
Research, Metals and Mining at Numis Securities joined the Company as
Head of Investor Relations and Business Development on 13 August 2012.
Outlook
Centamin remains focused on progressing all three pillars of our growth
strategy. At Sukari, we are committed to delivering on our full year
production guidance of 250,000 ounces, a 25% increase in production
from 2011. The full year cash cost forecast remains at US$550 per
ounce at subsidised fuel prices and in the event that international
fuel prices are levied, would increase to approximately US$700 per
ounce. Even with these higher costs, Centamin is still projected to be
able to fund its 2012 capex projects from Sukari cash flow and we
remain a relatively low cost operation. With the ramp up of the
construction efforts on the Stage 4 expansion, we are on track to
become a significant mid-tier gold producer from the large scale Sukari
gold deposit. The regional exploration efforts within the 160km2
Sukari tenement continue to look promising and with the commencement of
drilling at Una Deriam in Ethiopia our diversification within the
highly prospective and under-explored Arabian Nubian Shield is
underway.
Josef El-Raghy
Chairman
14 August 2012
CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS
This document contains "forward-looking information" which may include,
but is not limited to, statements with respect to the future financial
or operating performance of Centamin plc ('Centamin' or 'the Company'),
its subsidiaries (together 'the Group'), affiliated companies, its
projects, the future price of gold, the estimation of mineral reserves
and mineral resources, the realization of mineral reserve and resource
estimates, the timing and amount of estimated future production,
revenues, margins, costs of production, estimates of initial capital,
sustaining capital, operating and exploration expenditures, costs and
timing of the development of new deposits, costs and timing of future
exploration, requirements for additional capital, foreign exchange
risks, governmental regulation of mining operations and exploration
operations, timing and receipt of approvals, consents and permits under
applicable mineral legislation, environmental risks, title disputes or
claims, limitations of insurance coverage and regulatory matters.
Often, but not always, forward-looking statements can be identified by
the use of words such as "plans", "expects", "is expected", "budget",
"scheduled", "estimates", "forecasts", "intends", "targets", "aims",
"anticipates" or "believes" or variations (including negative
variations) of such words and phrases, or may be identified by
statements to the effect that certain actions, events or results "may",
"could", "would", "should", "might" or "will" be taken, occur or be
achieved.
Forward-looking statements involve known and unknown risks,
uncertainties and a variety of material factors, many of which are
beyond the Company's control which may cause the actual results,
performance or achievements of Centamin, its subsidiaries and
affiliated companies to be materially different from any future
results, performance or achievements expressed or implied by the
forward-looking statements. Readers are cautioned that forward-looking
statements may not be appropriate for other purposes than outlined in
this document. Such factors include, among others, future price of
gold; general business, economic, competitive, political and social
uncertainties; the actual results of current exploration and
development activities; conclusions of economic evaluations and
studies; fluctuations in the value of the U.S. dollar relative to the
local currencies in the jurisdictions of the Company's key projects;
changes in project parameters as plans continue to be refined; possible
variations of ore grade or projected recovery rates; accidents, labour
disputes or slow-downs and other risks of the mining industry; climatic
conditions; political instability, insurrection or war, civil unrest or
armed assault; labour force availability and turnover; delays in
obtaining financing or governmental approvals or in the completion of
exploration and development activities; as well as those factors
referred to in the section entitled "Risks and Uncertainties" section
of the Management discussion & analysis. The reader is also cautioned
that the foregoing list of factors is not exhausted of the factors that
may affect the Company's forward-looking statements.
Although the Company has attempted to identify important factors that
could cause actual actions, events or results to differ materially from
those described in forward-looking statements, there may be other
factors that cause actions, events or results to differ from those
anticipated, estimated or intended. Forward-looking statements
contained herein are made as of the date of this document and, except
as required by applicable law, the Company disclaims any obligation to
update any forward-looking statements, whether as a result of new
information, future events or results or otherwise. 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 statements. Accordingly, readers should not place
undue reliance on forward-looking statements.
QUALIFIED PERSON AND QUALITY CONTROL
Information of a scientific or technical nature in this document was
prepared under the supervision of Andrew Pardey, BSc. Geology, Chief
Operating Officer of Centamin plc and a qualified person under the
Canadian National Instrument 43-101.
Refer to the technical report entitled "Mineral Resource and Reserve
Estimate for the Sukari Gold Project, Egypt" dated 14 March 2012 and
filed on SEDAR at www.sedar.com, for further discussion of the extent
to which the estimate of mineral resources/reserves may be materially
affected by any known environmental, permitting, legal, title,
taxation, socio-political, or other relevant issues.
This information is provided by RNS
The company news service from the London Stock Exchange
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