TIDMCEY
RNS Number : 0351T
Centamin PLC
20 July 2022
20 July 2022
Centamin plc
("Centamin", "Group" or "the Company")
LSE: CEY / TSX: CEE
QUARTERLY Report
for the three months ended 30 June 2022
MARTIN HORGAN, CEO, commented: "Sukari delivered the planned
increase in production during Q2 2022 and we remain on track to
meet full year production and cost guidance. Q2 2022 was the first
full quarter of underground owner operations at Sukari following
the transition from contractor operations during Q1 2022 and the
Sukari team delivered significant improvements in both productivity
and costs. Continued progress was made at our key projects and we
remain focussed on cost control across all our operations with a
number of initiatives targeting completion in H2 2022 that are
expected to partially offset the current inflationary environment .
We look forward to announcing our detailed half-year financials and
declaring the interim dividend on 4 August 2022."
Q2 2022 HIGHLIGHTS
Quarterly operational performance in line with guidance
-- Ongoing safety performance: The Company recorded one lost
time injury ("LTI") for the three months to 30 June 2022 ("Q2
2022"), with a lost time injury frequency rate ("LTIFR") of 0.32
per 1,000,000 hours worked which remains ahead of our target of
0.68 for the year
-- Production on track for 2022 guidance : Increased gold
production of 110,788 ounces ("oz") for Q2 2022, an 11% increase
YoY and 19% increase on Q1 2022, which reflects the benefits of the
underground transition and improved open pit grade
-- Strong revenue generation: Revenue of US$207.2 million,
generated from gold sales of 111,027 oz at an average realised gold
price of US$1,863/oz sold
-- Costs: Cash costs of US$868/oz produced and all-in sustaining
costs ("AISC") of US$1,357/oz sold were 2% lower and 5% higher than
in Q1 2022, respectively. This reflects the improved production
rate and an ongoing focus on cost control
-- Progressing capital projects: Capital expenditure ("capex")
of US$67.3 million reflects the ongoing investment in establishing
the long term foundation for the operation; which includes
significant investment in the paste fill plant and solar power
station
-- Robust balance sheet: Cash and liquid assets of US$176.4
million, as at 30 June 2022, with an update on the capital
structure review due in Q3 2022
Full Year 2022 OUTLOOK
Reaffirmed production and cost guidance for 2022 while investing
for operational consistency and growth
-- Gold production of 430,000 to 460,000 oz for the year
-- Cash costs of US$900-1,000/oz produced
-- AISC of US$1,275-1,425/oz sold. Given the current
inflationary operating environment we continue to monitor
consumables pricing and review opportunities to offset price
increases with cost savings initiatives such as the solar power
plant
-- Acknowledging inflationary pressures continuing through H2
2022 we now anticipate cash costs and AISC for 2022 in the upper
end of the guidance range
-- Capex budget of US$225.5 million
-- Exploration expenditure for the year is expected to total US$25 million
Full Year 2022 Milestones & Targets
-- Solar power plant commissioning - Q3 2022
-- Capital structure review - Q3 2022
-- Underground expansion study - Q3 2022
-- Doropo Project (Côte d'Ivoire) pre-feasibility study - Q4 2022
-- Sukari Resource & Reserve update - Q4 2022
RESULTS SUMMARY
YoY comparative QoQ comparative
------------------------------ --------------------
Q2 2022 Q2 2021 % <DELTA> Q1 2022 % <DELTA>
============================== ======== ======== ========== ======== ==========
SAFETY
LTIFR (1m hours) 0.32 1.19 (73%) 0.00 100%
===============================
OPEN PIT
Total material mined (kt) 33,371 25,585 30% 31,001 8%
Ore mined (kt) 2,767 3,031 (9%) 2,970 (7%)
Ore grade mined (g/t Au) 1.07 0.76 41% 0.92 17%
===============================
UNDERGROUND
Ore mined (kt) 231 223 4% 154 50%
Ore grade mined (g/t Au) 4.74 4.67 1% 3.55 33%
=============================== ========
PROCESSING
Ore processed (kt) 2,884 2,804 3% 2,954 (2%)
Feed grade (g/t Au) 1.36 1.19 14% 1.07 27%
Gold recovery (%) 88.3 89.3 (1%) 88.1 0%
Gold production (oz) 110,788 100,228 11% 93,109 19%
===============================
COST & SALES
Gold sold (oz) 111,027 97,229 14% 92,559 20%
Cash costs (US$/oz produced) 868 883 (2%) 1,006 (14%)
AISC (US$/oz sold) 1,357 1,290 5% 1,558 ( 13%)
Realised gold price (US$/oz) 1,863 1,822 2% 1,883 (1%)
Revenue (US$m) 207.2 177.5 17% 174.6 19%
Capex (US$m) 67 .3 41.3 63 % 71.4 (6%)
------------------------------- -------- -------- ---------- -------- ----------
WEBCAST AND CONFERENCE CALL
The Company will host a webcast and conference call today,
Wednesday, 20 July at 09.30 BST to discuss the results, followed by
an opportunity to ask questions.
Webcast link :
https://www.investis-live.com/centamin/62bc4def59bc74140011cdcb/qgoo
Dial-in telephone numbers:
United Kingdom (and all other locations) +44 (0) 203 936 2999
United States +1 646 664 1960
Participation access code: 696872
HEALTH AND SAFETY
Operational safety continues to be a key focus across the Group.
Prioritised management oversight and empowering employees to be
safety leaders has resulted in an improved safety performance. In
Q2, there was one lost time injury ("LTI") (H1 2022: 1) resulting
in a lost time injury frequency rate ("LTIFR") of 0.32 per
1,000,000 site-based hours worked (H1 2022: 0.16), compared to the
corresponding 1.19 for the second quarter of 2021. The total
recordable injury frequency rate ("TRIFR") for Q2 was below our
2022 target of 3.99 at 2.54 per 1,000,000 site-based hours worked,
down 21% quarter on quarter ("QoQ") and down 50% year on year
("YoY").
Sukari Gold mine, egypt
(Q2 2022 vs Q2 2021)
Production
Sukari Gold Mine ("Sukari") production for Q2 2022 totalled
110,788 oz (H1 2022: 203,898oz), an 11% increase YoY and 19%
increase on Q1 2022. The production increase was attributable to
the successful transition to owner mining alongside ongoing
productivity improvements such as the use of lightweight
high-capacity truck trays in the open pit.
Open Pit Mining
Total material moved (waste and ore) increased by 30% YoY to
33.4Mt (H1 2022: 64.4Mt) a new record for total material moved
during a quarter, resulting from improved operating efficiencies
and productivity and includes the contractor waste stripping
programme.
Total open pit waste material mined for the quarter was 30.6Mt
(H1 2022: 58.6Mt), a 36% increase YoY, driven largely by the
ongoing execution of the contractor waste-stripping programme
(9.6Mt), designed to improve the long-term mining flexibility
within the open pit. The strip ratio for the quarter was 11.1:1
(waste:ore) (H1 2022: 10.2:1).
Open pit ore mining activity continued to focus primarily on the
Stage 5 North during Q2 2022, with ore contributions from Stage 4.
Total open pit ore mined for the quarter was 2.8Mt (H1 2022:
5.7Mt), a 9% reduction YoY, at an average mined grade of 1.07 grams
of gold per tonne ("g/t Au") (H1 2022: 0.99g/t Au), a 41%
improvement YoY, driven by ore from Stage 4 and improved grades
with depth from the primary mining area of Stage 5 North.
During the quarter, the low-grade stockpiles remained broadly
unchanged at 18.7Mt at a grade of 0.46g/t Au.
Underground Mining
Q2 represented the first full quarter of owner mining operations
in the underground and it delivered a significant improvement in
productivity relative to recent performance. As planned, volumes
increased and grades improved as mining activities progressed into
higher grade areas. We expect to see further improvements in the
underground performance as we continue to optimise operations, in
parallel with the underground expansion study which is planned to
be finalised in Q3 2022.
Total material mined (waste and ore) was 295kt (H1: 509kt), a 5%
reduction YoY. Total ore mined was 231kt (H1: 385kt) at an average
combined (stoping and development) grade of 4.74g/t Au (H1: 4.26g/t
Au). This represented a 4% increase in ore tonnes YoY and a 1%
increase in grade YoY.
The underground ore was made up of 142 kt of ore mined from
stopes, at an average grade of 5.61g/t Au, and 89kt of ore mined
from development, at an average grade of 3.36g/t Au.
Processing
During Q2 2022 the plant processed 2.9Mt of ore (H1: 5.8Mt), a
3% increase YoY, at an average feed grade of 1.36 g/t Au (H1:
1.22g/t Au), a 16% increase YoY reflecting the mined material
grades over the period delivered to the plant.
The metallurgical gold recovery rate was 88.3% for the quarter
(H1: 88.2%), in line with budget but a 1% reduction YoY, with the
reduction resulting from a planned mill reline and commissioning of
certain process plant upgrades.
During the period, a series of optimisation studies progressed
with the aim of improving overall plant performance including the
assessment of gravity gold recovery, flotation, and reagent dosing
optimisation.
Capital Projects
Total capex in Q2 was US$67.3 million (H1: US$138.7m), which was
a 62% increase YoY. Significant investment was made in key capital
projects during the quarter. The solar power project, underground
development and paste fill plant all progressed as planned. Solar
power project activities completed in the period saw the continued
drilling and installation of the tracker posts as well as ongoing
installation of solar modules with over 80% installed. The Solar
project remains on track for commissioning during Q3 2022. The
paste fill plant civil works were completed and structural steel
works were well advanced.
EXPLORATION PROJECTS
A comprehensive exploration update was published on 7(th) July
2022. A link to "Group Exploration Update Confirming Growth
Potential Across the Portfolio" is available here .
Sukari Exploration
The Sukari exploration spend for the quarter was US$1.1 million.
This brownfield exploration cost is capitalised and sits within the
US$225m capital guidance for 2022. Highlights during the quarter
include;
-- Sukari underground drilling. The underground exploration
programme at Sukari continued to focus on our strategy of
delineating the full potential of the underground orebody to
deliver both mine life extension and operational expansion.
Drilling was completed across all areas of the underground,
including at Horus Deeps where drilling intersected the
highest-grade mineralisation in that area to date. Horus Deeps
remains open to the north, south and down dip and represents the
long-term future of the underground operation.
-- Sukari Bonanza zones. The Bast area between Ptah and Amun
continues to return high grade underground zones of Bonanza style
mineralisation. Drilling in this area demonstrates a consistent
geological host within 100m of existing infrastructure which could
improve underground operational flexibility through the development
of a new high-grade mining area.
-- Sukari surface exploration. An exploration programme has
identified multiple shallow open pit gold satellite targets within
the mining concession which have the potential to supplement Sukari
mill feed in the short to medium term, improving operational
flexibility.
Group Exploration
The total greenfield exploration spend for the quarter was
US$8.2 million (H1: US$17.6 million). Per the group accounting
policy all greenfield exploration expenditure is expensed in the
period it is incurred.
-- Eastern Desert Exploration ("EDX"). Fieldwork has commenced
with a systematic exploration approach aimed at identifying and
prioritising commercial scale opportunities. EDX covers 3,000km(2)
of highly prospective and under explored land across three blocks.
Six high priority targets already identified within the Nugrus
block will be subject to geological sampling and mapping, ahead of
drill testing at the earliest opportunity. These priority targets
contain more than 20km of alluvial artisanal workings and over 300
hard rock artisanal sites
-- West Africa. Work is continuing towards the delivery of the
Doropo pre-feasibility study ("PFS") by the end of the year. The
field programme has seen the completion of more than 100,000 metres
of drilling which is expected to convert the majority of the
Inferred Resource to the Indicated Resource category and support
the completion of the PFS by the end of Q4 2022.
SALES AND COSTS
Gold sales for the quarter were 111,027 oz (H1: 203,587oz), a
14% increase YoY. The average realised gold price for the quarter
was US$1,863/oz (H1: US$1,872/oz), up 2% YoY. Revenues generated of
US$207.2 million (H1: US$381.8m), increased by 17% YoY, driven by
higher gold sales, and a marginally higher realised gold price.
Cash costs of production were US$96.2 million for the quarter
(H1: US$189.8m), a 9% increase YoY, with lower underground costs
partially offsetting higher fuel prices and decreased open pit
costs due to the increase in the stripping ratio resulting in
higher amounts being capitalised to the balance sheet related to
waste mining costs. Unit cash costs of production were US$868/oz
produced (H1: US$931/oz), a 2% decrease YoY.
Total all-in sustaining costs ("AISC") were US$150.7 million for
the quarter (H1: US$294.9m), a 26% increase YoY, resulting from
inventory movements and capitalising of waste mining due to an
above life of mine strip ratio being realised during the quarter.
The AISC of US$1,357/oz sold (H1: US$1,449/oz) increased 10% YoY,
reflecting the increase in costs.
In light of the ongoing inflationary environment we remain
focussed on stringent cost control and improving productivity at
Sukari. There are a number of initiatives due to be implemented
during H2 2022 which are anticipated to partially offset cost
pressures, including:
-- Implementation of power savings - The solar power plant is
expected to be commissioned during Q3 2022 and the on-site team is
currently investigating the potential to connect to the national
grid. These two initiatives are expected to deliver cost savings
and decarbonisation
-- Open pit productivity - The final delivery of the lightweight
truck trays is expected during Q3 2022
-- Underground productivity - New underground equipment being delivered H2 2022 and Q1 2023
FINANCIAL POSITION
Free Cash Flow
Under the terms of the Sukari Concession Agreement, the Egyptian
government earned US$6.2m in royalty payments (H1: US$11.7m) and
received US$13.0m in profit share payments during the quarter
(H1:US$21.5m). After Sukari profit share distribution, Group
exploration expenditure and corporate investing activities, Group
free cash flow for the quarter was negative US$2.4 m (H1: negative
US$25.2m), due to the continued investment in waste stripping and
other capital projects. Capital expenditure continues in key areas
that will improve the long-term profitability and operability of
Sukari, such as the solar plant, waste stripping programme and
paste fill plant.
Balance Sheet
Centamin is in a strong financial position, with net cash and
liquid assets to US$176.4m million as at 30 June 2022. The Company
remains unhedged and debt-free, with an update on the capital
structure review expected in Q3 2022.
About Centamin
Centamin is an established gold producer, with a premium listing
on 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 approximately 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
or contact:
Centamin plc Buchanan
Michael Stoner, Group Corporate Manager Bobby Morse/Ariadna Peretz/George
investor@centaminplc.com Cleary
+ 44 (0) 20 7466 5000
centamin@buchanan.uk.com
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 non-GAAP measures. 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 2021 Annual Report
https://www.centamin.com/investors/results-reports/ .
Exploration expenditure
Exploration expensed covers all exploration activities excluding
the Sukari Concession Agreement.
Royalties
Royalties are accrued and paid six months in arrears.
Cash and liquid assets
Cash and liquid assets include cash, bullion on hand and gold
sales receivables.
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.
Qualified Person
Information of a scientific or technical nature in this document
was prepared under the supervision of Craig Barker, an employee of
the Company and a Qualified Person, as such term is defined by
National Instrument 43-101 Standards of Disclosure for Mineral
Projects of the Canadian Securities Administrators.
The Qualified Person has verified the data disclosed, including
sampling, analytical, and test data underlying the information or
opinions contained in this announcement in accordance with
standards appropriate to their qualifications.
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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