TIDMCEY
RNS Number : 9768A
Centamin PLC
27 March 2013
For immediate release 27 March 2013
Centamin plc ("Centamin" or "the Company")
(LSE:CEY, TSX:CEE)
2012 Annual Results
Centamin is pleased to announce its audited annual results for
the period ended 31 December 2012.
HIGHLIGHTS FOR THE YEAR (1) (2) (3)
Centamin delivered strong operational and financial results in
2012, producing 262,828 ounces of gold (2011: 202,699 ounces) and
generating profit after tax for the year of US$199 million (2011:
US$194.0 million). Through the Group's emphasis on rigorous cost
control, Centamin has continued to reap the benefits of the high
gold price, and this was enhanced further by its debt-free and
unhedged position. Now in its third year of production, the Sukari
Gold Mine is highly cash generative, providing EBITDA of US$233.3
million (2011: US$211.4 million), a 10% increase on 2011, and a
robust cash and cash equivalents balance of US$147.1 million (2011:
US$164.2 million) as at 31 December 2012.
2012 presented some operating environment challenges, however a
solid second quarter and a record fourth quarter of production have
shown that a substantially larger production profile is achievable
for Sukari. This potential for production growth combined with the
Group's reserves, a significant expansion programme, a solid
financial position, and an experienced team means Centamin is well
positioned for 2013, as is shown by the following:
-- Basic earnings per share 18.27 cents, up 2% on prior year.
-- Record EBITDA US$233.3 million, up 10% on the prior year.
-- Full year production was 262,828 ounces, a 30% increase on
2011 and above guidance of 250,000 ounces.
-- Cash costs of production of US$669 per ounce (equivalent to
US$530 per ounce versus US$556 per ounce in 2011 at subsidized fuel
prices).
-- Stage 4 plant expansion (to 10Mtpa) commissioning activities
began in Q1 2013 with the new power station commissioned in January
2013 and new blowers and compressors to be commissioned in Q2 2013.
The bulk of commissioning will commence, and be complete, in the
second half of 2013. Expenditure to date is US$228.5 million of the
total forecast US$325 million including contingency.
-- Centamin remains debt-free and unhedged with cash, bullion on
hand, gold sales receivable and available-for-sale financial assets
of US$219.4 million as at 31 December 2012.
-- Drilling continued at the V-Shear porphyry and commenced at the Kurdeman prospect.
-- A gravity survey, aimed at targeting and defining porphyries
beneath the wadi sediments was completed late in 2012 with results
due in Q2 2013.
-- Results in Ethiopia confirm the existence of low grade
mineralisation, with drilling continuing.
During the year Centamin was involved in two separate court
cases directly relevant to the operation of the mine at Sukari. The
first of these was triggered by a decision taken by the Egyptian
General Petroleum Company (EGPC) to charge international prices,
not local (subsidised) prices for the supply of Diesel Fuel Oil
("DFO"). The second case saw a judgment by an Egyptian
Administrative Court in relation to the validity of the Company's
160km(2) exploitation lease; although on 20 March 2013 the Supreme
Administrative Court upheld the Company's application to suspend
this decision until the merits of the Company's appeal are
considered and ruled on, thus providing assurance that normal
operations would be able to continue during this process. Both of
these cases are described in detail elsewhere in this report (refer
to Note 20 to the Financial Statements). Every action is being
taken to contest the decisions, including the making of formal
legal appeals and, although their resolution may take some time, we
remain confident that a satisfactory outcome will ultimately be
achieved. With respect to the DFO case, management however
recognises the practical difficulties associated with re-claiming
funds from the government and, for this reason, have fully provided
against the prepayment of US$41.4 million as an exceptional item
(refer to Note 6 to the Financial Statements). In the meantime the
Group is continuing to pay international prices for DFO.
In addition the Group during the year received a demand from
Chevron for the repayment of fuel subsidies received in the period
from late 2009 through to January 2012, amounting to some US$60
million (EGP403 million). No provision has been made in respect of
the historic subsidies prior to January 2012 as, based on legal
advice that it has received to date, the Company believes that the
prospects of a court finding in its favour in relation to this
matter remain strong.
(1) Cash cost of production, EBITDA and cash, bullion on hand
and available-for-sale financial assets are non-GAAP measures. For
further information and a detailed reconciliation refer to the
"Non-Gaap Financial Measures" at the end of the Financial
Statements.
(2) Basic EPS, EBITDA, Cash costs of Production reported
includes an exceptional provision against prepayments recorded in
Q4 to reflect the removal of fuel subsidies which occurred in
January 2012 (refer to Note 6 of the Financial Statements for
further details). The provision had no impact on the 2011
results.
(3) Historic cash cost of production, EBITDA and Basic EPS now
reflect adoption of IFRIC 20 (refer to Note 3 of the Financial
Statements for further details).
Centamin will host a conference call on Wednesday, 27 March at
8.00am (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: 08082380673 Canada: +18664949885 Rest of world: +44 (0) 1452
569335
Participant pass code: 24856273
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: +18664949885 US: +18666551591 Rest of world: +44 (0) 1452
569335
Participant pass code: 24859029
STRATEGIC REVIEW
Our growth strategy seeks to optimise exposure through the
mining value chain: exploration, development and operations. Whilst
disciplined and sustainable growth on our existing projects remains
a key focus, we continue to evaluate potential opportunities to
grow through the acquisition of projects which offer the potential
for the Company to realise strong investment returns.
2013 will mark the year when the Stage 4 plant expansion is
commissioned, the Sukari project concludes its investment phase and
our annual capital expenditure requirements for the mine begin to
reduce significantly.
Based on the Company's calculation there was no 'Net Profit
Share' due to EMRA as at 30 June 2012, nor is any likely to be due
as at 30 June 2013. Furthermore, it is expected that there will be
profit share due to EMRA for the SGM financial year ending 30 June
2014, based on production, gold price and operating expense
forecasts. Following discussions with EMRA and with a view to
demonstrating goodwill toward the Egyptian government, an advance
payment has been made subsequent to year end to the value of US$8.2
million.
Maintaining our Social License
Maintaining good community relations is a core part of our
operational strategy and corporate governance standards. As the
first mining company in Egypt in modern times, we strive to set an
example of a socially responsible industry through adopting a good
neighbour policy. We take every action to ensure Sukari has the
minimum impact on the social environment, as well as to deliver
positive benefits to Egypt and the community as a result of our
investment.
In 2012 we nurtured dialogue, maintained open channels of
communication and built positive and constructive relations with
all our stakeholders including the community in areas in which we
operate. The Board approved principles and strategies for the
pursuit of corporate sustainable development (CSD) initiatives.
Our work force is remunerated well above the average for Egypt
and our career development programmes are highly valued. In general
we enjoy a very positive and constructive relationship with our
employees. Unfortunately, however, we had two strikes at Sukari
during the year. The first was a legal strike and was settled on
the basis of a broad and above-inflation increase in employee
allowance payments. The second strike was illegal, involving only a
small element of our work force, and was settled with no pay
increases and with the help of the Ministry of Labour. These
disputes are set against a background of multiple and prolonged
industrial disputes in many quarters of the Egyptian economy.
Targets for 2013
For the year 2013, we project production of 320,000 ounces at a
cash operating cost of US$700 per ounce, at international fuel
prices, which will mark the third year of successive growth in
output from Sukari, and another step on the way to our long-term
target for the project of 450-500,000 ounces per annum from 2015
onwards at an industry-competitive cost of production. The key
drivers of production growth this year will be a continued period
of elevated head grades from both the open pit and underground
mines and increasing the underground ore tonnes mined to 500,000t,
as well as commissioning of the Stage 4 plant expansion to double
the processing plant's nameplate capacity to 10 million tonnes per
annum.
Although construction of Stage 4 was steady during the first
half of 2012, the second half saw an impact from strikes at Sukari,
in some of the ports and at some of the local Egyptian suppliers,
as well as temporary disruptions to the operation's fuel supply and
gold exports, hence our in-country working capital position. This
translated to delivery delays for key items, materials and services
and thus a delay to the anticipated commissioning of the expanded
plant, the bulk of which is now expected to commence in the second
half of 2013 and with completion before the end of the year. As
part of the implementation of Stage 4 the Company is in discussions
with EMRA and other government departments in relation to securing
the necessary permits to increase daily ammonium nitrate ("AN")
consumption and blasting accessories in order to increase open pit
mining rates to the required level to feed the expanded plant. This
process is expected to be completed during the year.
The capital expenditure programme for 2013 has two key focus
areas: completion of the Stage 4 plant expansion and the on-going
development of the underground mine. The total Stage 4 capital
expenditure estimate is US$325 million including contingency, with
US$228.5 million spent by the end of 2012 and the bulk of the
remaining capital expenditure due in 2013. The budget for the
underground expansion is US$20 million and will take the new
decline ("Ptah") to its target depth below the existing area of
operation. Underground drilling will continue to test the potential
for significant resource and reserve expansion and the development
of multiple production sources.
CHAIRMAN'S STATEMENT
Dear Shareholders
2012 represented the third full year of production at Sukari, a
period in which your company further extended its track record of
successive annual production growth. The operation delivered a
record 262,828 ounces of gold at a cash cost of production of
US$669 per ounce, which was ahead of guidance of 250,000 ounces at
US$700 per ounce (with fuel at international prices) set out at the
beginning of the year. The operating team in Egypt deserve immense
credit for this performance in a year where challenges were again
presented and overcome. The ability to perform well in all
circumstances is key to a successful operation, particularly one
that is growing as rapidly as Sukari, and shareholders should take
comfort from the team's demonstrated ability to deliver growth,
whilst maintaining a strong emphasis on rigorous cost control.
Sukari's safety performance was also a significant improvement
on the previous year with a lost time injury frequency rate of 0.69
per 200,000 man-hours achieved during the period. It was again
pleasing to note that no significant environmental incidents have
taken place.
The Stage 4 expansion to double the processing plant's nameplate
capacity to 10 million tonnes per annum is the key to the next
stage of output growth and delivery of our stated long-term
production target for Sukari of 450-500,000 ounces per annum from
2015 onwards. The construction team made great inroads through 2012
on what is a major construction effort, which continued to be
funded out of the proceeds of production at Sukari. Although
construction was steady during the first half of the year, the
second half saw an impact from strikes, both at Sukari and within
the local supply chain, and also disruptions to gold exports and
hence our in-country working capital position. This translated to
delivery delays for key items, materials and services, with the
effect that the bulk of commissioning will commence in the second
half of 2013 and be complete before year end. The capital cost
estimate of the Stage 4 expansion which is funded by PGM out of
cost recoveries, is US$325 million including contingency, with
expenditure at the end of 2012 of US$228.5 million.
Production growth was complemented by continued drilling of
Sukari Hill from both surface and underground, with the aim of
replenishing and increasing the resource and reserve base, and an
update resource and reserve statement will be delivered in the
second half of 2013. The expanding underground development in
particular provides increasing drilling access to the northern and
depth extents of the deposit.
Exploration activities continued on the seven other prospects in
the 160km(2) Sukari exploitation lease within trucking distance of
the Sukari plant. The first significant signs of low grade porphyry
away from Sukari Hill were identified at the V-Shear prospect and
work continues to determine the extents and controls on this
mineralisation. Elsewhere, on-going drilling at the Kurdeman
prospect offers the potential to fast-track high grade ore to
supplement the existing underground production. Further regional
drilling of the Sukari licence is planned for 2013.
Drilling in Ethiopia continued on our four exploration licences
in the north of the country. Centamin intends to continue to grow
and diversify its project pipeline through targeted acquisitions of
exploration and development prospects in the region and beyond.
Despite the negative effect of having to pay higher costs for
fuel for much of 2012, costs that were incurred as direct
consequence of a decision taken by EGPC, which we are robustly
contesting in Court, financially, our position remains strong with
approximately US$220 million held in cash, bullion, gold sales
receivables and available-for-sale financial assets, no debt and no
hedging. With revenues of US$426 million and a profit for the year
of US$199 million, Sukari continued to demonstrate in 2012 that it
remains highly cash generative and well placed to fund its growth
from cost recoveries. We have exited the year as we had planned
with a strong cash position and having made a significant
investment and progress toward completing Stage 4. Completion of
Stage 4 will mark the end of a major expansion and investment
programme at Sukari.
Our appeal against the 30 October 2012 ruling by the Egyptian
Administrative Court, which we believe is based on an incorrect
assertion that there was a lack of evidence with respect to our
exploitation lease at Sukari, remains on-going. Very importantly on
20 March 2013 the Supreme Administrative Court approved our
application to suspend enforcement of the 30 October ruling until
the conclusion of the appeal process and this will allow operations
at Sukari to continue whilst the court process runs its course. We
have full confidence in our legal title and our appeal case and
also highlight the separate supporting appeals lodged by the
Ministry of Petroleum and the Egyptian Mineral Resource Authority
(EMRA). It is our belief that this re-enforces the government's
publicly-stated view that the terms of our Concession Agreement are
fair and that Centamin's continued investment and operation at
Sukari are both necessary and welcome. I would like to thank the
Minister of Petroleum and EMRA for standing by us throughout the
year and I look forward to the continued co-operation as we deliver
on our stated goals.
I would like to close by thanking all those at Sukari, in
Alexandria, London, Jersey and Perth for their efforts in 2012 as
Centamin continued on its journey to becoming an established gold
producer. In a year where there were many events that required your
Board's attention it was a year that the depth, professionalism and
dedication of your Non-Executive Directors came to the fore. I
would like to thank deeply the Board for their counsel.
Despite and because of the challenges that we have faced in
2012, your company remains well positioned to deliver outstanding
growth and shareholder returns in the coming years. I look forward
to updating you further over the course of 2013 either at our AGM,
which this year will be held in Jersey on 23 May, or at our
presentation to shareholders that will be held in London on 16
May.
Josef El-Raghy
Chairman
OPERATIONAL REVIEW
Production
Sukari Gold Mine production summary:
Year Q4 2012 Q3 2012 Q2 2012 Q1 2012 Year Q4 2011
ended ended
31 Dec 31 Dec
2012 2011
--------------------------- ------------ --------- --------- --------- --------- --------- --------- ---------
Ore Mined - Open Pit(1) ('000t) 6,377 1,905 1,653 1,816 1,003 6,306 1,988
--------------------------- ------------ --------- --------- --------- --------- --------- --------- ---------
Ore Grade Mined - Open
Pit (Au g/t) 1.04 1.15 1.00 1.07 0.83 1.07 1.12
--------------------------- ------------ --------- --------- --------- --------- --------- --------- ---------
Ore Grade Milled -
Open Pit (Au g/t) 1.35 1.56 1.34 1.19 1.21 NR NR
--------------------------- ------------ --------- --------- --------- --------- --------- --------- ---------
Total Open Pit Material
Mined ('000t) 25,108 6,740 6,970 6,579 4,819 21,248 7,701
--------------------------- ------------ --------- --------- --------- --------- --------- --------- ---------
Strip Ratio (waste/ore) 2.9 2.5 3.2 2.6 3.8 2.34 2.9
--------------------------- ------------ --------- --------- --------- --------- --------- --------- ---------
Ore Mined - Underground
Development ('000t) 203 63 40 53 47 172 45
--------------------------- ------------ --------- --------- --------- --------- --------- --------- ---------
Ore Mined - Underground
Stopes ('000t) 190 49 53 63 25 40 25
--------------------------- ------------ --------- --------- --------- --------- --------- --------- ---------
Ore Grade Mined -
Underground (Au g/t) 8.96 9.76 9.01 8.68 8.11 13.51 13.31
--------------------------- ------------ --------- --------- --------- --------- --------- --------- ---------
Ore Processed ('000t) 4,526 1,233 1,004 1,269 1,020 3,612 1,066
--------------------------- ------------ --------- --------- --------- --------- --------- --------- ---------
Head Grade (g/t) 2.04 2.31 2.10 1.99 1.69 1.91 2.02
--------------------------- ------------ --------- --------- --------- --------- --------- --------- ---------
Gold Recovery (%) 86.0 87.7 86.7 84.3 85.0 85.30 84.0
--------------------------- ------------ --------- --------- --------- --------- --------- --------- ---------
Gold Produced - Dump
Leach (oz) 6,686 1,848 1,617 1,318 1,903 10,664 2,302
--------------------------- ------------ --------- --------- --------- --------- --------- --------- ---------
Gold Produced - Total(2) (oz) 262,828 85,413 60,922 67,422 49,071 202,699 58,965
--------------------------- ------------ --------- --------- --------- --------- --------- --------- ---------
Cash Costs of Production(3)
(4) (US$/oz) 669 558 724 729 717 556 560
--------------------------- ------------ --------- --------- --------- --------- --------- --------- ---------
Open Pit Mining (US$/oz) 199 163 243 250 203 NR NR
--------------------------- ------------ --------- --------- --------- --------- --------- --------- ---------
Underground Mining (US$/oz) 49 43 36 52 53 NR NR
--------------------------- ------------ --------- --------- --------- --------- --------- --------- ---------
Processing (US$/oz) 354 281 378 369 385 NR NR
--------------------------- ------------ --------- --------- --------- --------- --------- --------- ---------
G&A (US$/oz) 67 71 67 58 76 NR NR
--------------------------- ------------ --------- --------- --------- --------- --------- --------- ---------
Gold Sold (oz) 254,959 82,316 60,794 60,751 51,098 214,763 56,513
--------------------------- ------------ --------- --------- --------- --------- --------- --------- ---------
Average Realised Sales
Price (US$/oz) 1,667 1,697 1,680 1,599 1,683 1,555 1,666
--------------------------- ------------ --------- --------- --------- --------- --------- --------- ---------
Notes:-
(1) Ore mined includes 0kt delivered to the dump leach in Q4
2012 (11kt @ 0.48g/t in Q3 2012; 104kt @ 0.50g/t in Q2 2012; 264kt
@ 0.42g/t in Q1 2012; 473kt @ 0.48g/t in Q4 2011; 977kt @ 0.55g/t
in Q3 2011; 224kt @ 0.5g/t in Q2 2011 and 435kt @ 0.6g/t in Q1
2011). Ore mined in Q4 2011 includes 472,568t @ 0.48g/t delivered
to the dump leach. Gold produced is gold poured and does not
include gold-in-circuit at period end. Cash operating costs exclude
royalties, exploration and corporate administration
expenditure.
(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. Cash cost is a non-GAAP financial
performance measure with no standard meaning under GAAP. For
further information refer to the "Non-Gaap Financial Measures" at
the end of the Financial Statements.
(4) Historic Cash costs of Production now reflect adoption of
IFRIC 20 and an an exceptional provision against prepayments
recorded in Q4 to reflect the removal of fuel subsidies which
occurred in January 2012 (refer to Notes 3 and 6 respectively of
the Financial Statements for further details). The historic cash
costs have been presented for comparative purposes to reflect the
fuel price differential had the prepayments been expensed during
the year (refer to Note 6 of the Financial Statements for further
details). The provision had no impact on the 2011 results.
NR - Not Reported.
Centamin produced 262,828 ounces of gold in 2012, which is a 30%
increase on 202,699 ounces in 2011. The higher year-on-year
production was a result of: (a) a 25% increase in tonnes milled (to
4.5Mt) due to the improved plant productivity and availability, (b)
an 18% increase in production from the underground due to improved
underground mining contractor equipment availability, and (c) a 7%
higher feed grade to the mills (2.04g/t in 2012 compared to 1.91g/t
in 2011) as underground and open pit head grades increased in line
with the budget.
Open Pit
The open pit delivered total material movement of 25,108kt for
the year, an increase of 18% on the prior year, although impacted
by stoppages in December due to a temporary disruption to the fuel
supply.
Ore production from the open pit was 6.4Mt at 1.04g/t with an
average head grade fed to the plant of 1.35g/t. The ROM ore
stockpile balance increased by 1kt to 722kt by the end of the year.
Mining was primarily from the Stage 2 area, with the completion of
Stage 2A and Stage 2B down to the 1040RL and 1016RL respectively.
In Stage 3 development work progressed in the Gazelle area and the
new face shovel commenced in the Eastern Hills area of Stage 3.
Underground Mine
Ore production from the underground mine was 393kt. The ratio of
ore from stoping versus development decreased during the year, with
52% of development ore (203kt) and 48% of stoping ore (190kt).
Production from stoping was affected by the availability of the
teleremote bogging system in quarters three and four, which was
offset by increased ore deliveries from development as a result of
an increased development effort.
A total of 2,934.8m of diamond drilling was completed for both
short-term stope definition and underground resource development,
of which 2,532m were driven through ore. The project development
total to date is 10,248m, of which 5,414m were through ore.
Development of the Ptah Decline had reached the position of the
first drill cuddy and was connected to the exhaust system by the
end of 2012. The anticipated first-phase capital cost of the Ptah
Decline is US$18 million, with expenditure to date of US$17.5
million, which will see the decline reach the first ore blocks to
be developed below the middle of Sukari Hill. It is expected that
this initial development work will be complete in early 2013.
Processing
The annual throughput in the Sukari plant was 4.5Mt in 2012, a
25% increase on 2011 (3.6Mt). Industrial disputes affected
availability during the first and third quarters although the
nameplate rate of 5Mtpa was achieved in the second and fourth
quarters. Productivity of the processing plant averaged 656tph for
the year, 5% above the nameplate design rate of 625tph, as the
operations team continued to optimise availability and
throughput.
Plant metallurgical recoveries were 86.0% in the year, a 1.0%
increase on 2011. Tighter operational controls and improved circuit
stability resulted in the recovery steadily increasing throughout
the year. Whilst operational improvements continue to have some
impact, recoveries are expected to remain consistent until the new
carbon regeneration kiln is commissioned in 2013.
The dump leach operation produced 6,686oz in 2012, a 37%
decrease from 2011.
Fuel Costs
In light of the on-going dispute with the Egyptian Government
regarding the price at which Diesel Fuel Oil is supplied to the
mine at Sukari, it has been necessary since January 2012 to advance
funds to our fuel supplier, Chevron, based on the international
price for diesel. Management however have fully provided against
the prepayment of US$41.4 million, as an exceptional item, during
Q4. Refer to Note 6 of the Financial Statements for further details
on the impact of this exceptional provision on the Group's results
for 2012. For comparative purposes, had these prepayments been
expensed during the year, the fuel cost differential would have had
the following impact on the cash costs: the cash costs for Q1
increased by US$108 to US$717 per ounce, Q2 increased by US$164 per
ounce to US$729 per ounce, Q3 increased by US$185 to US$724 per
ounce and Q4 increased by US$112 to US$558 per ounce.
As noted previously, the Company has commenced proceedings in
the Administrative Court in Egypt in relation to this matter. The
Company remains of the view that an instant move to international
fuel prices is not a reasonable outcome and will look to recover
any funds advanced thus far at the higher rate should the court
proceedings be successfully concluded. Please refer to Note 20 to
the Financial Statements for further information.
In addition the Group during the year received a demand from
Chevron for the repayment of fuel subsidies received in the period
from late 2009 through to January 2012, amounting to some US$60
million (EGP403 million). No provision has been made in respect of
the historic subsidies prior to January 2012 as, based on legal
advice that it has received to date, the Company believes that the
prospects of a court finding in its favour in relation to this
matter remain strong.
STAGE 4 EXPANSION
Construction continued on Stage 4 of the process plant
expansion, which commenced in late 2011, which will expand Sukari
nameplate capacity from 5Mtpa to 10Mtpa. The estimated capital cost
of the Stage 4 expansion which is funded by PGM out of cost
recoveries, is US$325 million including contingency, with
expenditure to date of US$228.5 million.
Some unforeseen delays have meant that commissioning of the
plant is now expected to commence in the second half of 2013
(previously the bulk of commissioning was expected in Q2 2013) and
be complete by year end. These delays have been caused by:
-- strikes at Sukari, in some of the ports and at some of the local suppliers, and
-- suspension of operations at Sukari due to lack of fuel and a
temporary prohibition of gold exports, resulting in delays for
critical path items, materials and services
Main Plant
Detail engineering of the main plant is complete and 85% of the
mechanical equipment has now arrived on site. All major civil works
have been completed, the erection of structural steel and
installation of mechanical equipment is in progress. Procurement of
electrical equipment, cables and instrumentation is proceeding and
the piping contractor is mobilising to site. Installation of both
sag and ball mills is in progress, however late arrival of
structural steel is impacting on the schedule in this area.
Power Station
The fifth MAK engine has been installed, commissioned and is
fully operational in the existing plant. The new Wartsila plant has
been completed, load bank commissioned and is ready to operate,
although the cables to the new plant still have to be
installed.
Sea Water Pipeline
Excavation of the trench for the new pipeline has been
completed. Welding and installation of the pipe is continuing,
approximately 50% is complete. Construction of the booster station
is proceeding with most of the civil work completed. Delivery of
the intake and booster pumps is scheduled to take place in April
and May.
Tailings Storage Facility
Construction of the embankment is 100% complete and installation
of the HDPE liner has commenced.
New Primary Crusher
Excavation has been completed and construction of the crusher
building is 20% complete. Some delays with cement deliveries have
been experienced due to diesel shortages in Egypt.
Capital Expenditure
A breakdown of the major cost areas up to 31 December 2012 is as
follows:
-- Mining Equipment US$ 34.9 million
-- Processing Plant US$ 115.5 million
-- Power Plant US$ 43.5 million
-- Other US$ 34.6 million
US$ 228.5 million
Major contributors to the payments made in 2012 were as
follows:
-- Mining Equipment US$ 28.9 million
-- Processing Plant US$ 85.2 million
-- Power Plant US$ 32.5 million
-- Other US$ 29.3 million
US$ 175.9 million
EXPLORATION UPDATE
Sukari Hill
Centamin has resources (inclusive of production since 30
September 2011) of 13.13 million ounces Measured and Indicated, and
2.3 million ounces Inferred, and reserves (inclusive of production
since 31 December 2011) of 10.1 million ounces. Underground
drilling was progressively stepped-up during the year as new
development provided improved access from below surface to test
potential high grade extensions of the deposit. The ore body has
not yet been closed off by drilling to the north, or at depth.
Further exploration of the Sukari deposit will take place during
2013, predominantly from both the Amun and Ptah declines.
We aim to provide an updated resource and reserve statement
during the second half of 2013.
Regional Exploration
Geochemistry, reverse circulation and diamond drilling
programmes have been underway on the Quartz Ridge and V-Shear
prospects to the east and north-east of the hill respectively
during 2012. The first significant signs of low grade porphyry away
from Sukari Hill were identified at the V-Shear prospect. On-going
drilling to the south at the Kurdeman prospect offers the potential
to fast-track near surface high grade ore to supplement the
existing production. Further regional drilling of the Sukari
licence is planned for 2013.
A gravity survey, aimed at targeting and defining porphyries
beneath the wadi sediments, was completed in late 2012 with results
due in early 2013.
Growth Beyond Sukari
Centamin continued exploration on its four tenements in northern
Ethiopia where drilling commenced in the first half of 2012.
Results to date have confirmed the presence of mineralisation and
follow-up drilling continues.
We will continue to grow and diversify our asset base through
targeted acquisitions in this region and beyond in the coming
years.
SELECTED ANNUAL FINANCIAL INFORMATION
The following table, which is reflective of an exceptional
provision against prepayments recorded in Q4 to reflect the removal
of fuel subsidies which occurred in January 2012 (refer to Note 6
of the Financial Statements), provides a guide to a summary of the
financial results of the Group's operation for the years ended 31
December 2012, 2011 and the period ended 31 December 2010:
Summary of Financial Performance
2012 2011* 2010 2012 vs 2012 2011 2011
(4) 2011 vs 2011 vs 2010 vs
2010
--------------- --------- ---------- -------- -------- -------- --------- --------- ------
Revenue US$'000 426,133 340,479 86,882 85,654 25% 253,597 292%
--------------- --------- ---------- -------- -------- -------- --------- --------- ------
Profit before
tax US$'000 198,594 193,993 32,042 4,601 2% 161,952 505%
--------------- --------- ---------- -------- -------- -------- --------- --------- ------
Basic EPS
(cps) (2) Cents 18.27 17.90 3.10 0.37 2% 14.8 477%
--------------- --------- ---------- -------- -------- -------- --------- --------- ------
Diluted EPS
(cps) (2) Cents 18.26 17.88 3.09 0.38 2% 14.79 479%
--------------- --------- ---------- -------- -------- -------- --------- --------- ------
EBITDA (3) US$'000 233,333 211,347 52,782 21,986 10% 158,565 300%
--------------- --------- ---------- -------- -------- -------- --------- --------- ------
Total assets US$'000 1,084,956 846,572 640,832 238,384 28% 205,740 32%
--------------- --------- ---------- -------- -------- -------- --------- --------- ------
Non -current
liabilities US$'000 5,544 2,630 2,624 2,914 111% 6 1%
--------------- --------- ---------- -------- -------- -------- --------- --------- ------
Cash Dividend Cents - - - - - - -
declared
--------------- --------- ---------- -------- -------- -------- --------- --------- ------
(1) Results now reflect an exceptional provision against
prepayments recorded in Q4 to reflect the removal of fuel subsidies
which occurred in January 2012, refer to Note 6 of the Financial
Statements for further details. The provision had no impact on the
2011 results.
(2) Calculated using weighted average number of shares outstanding under the basic method.
(3) EBITDA is a non-GAAP financial performance measure with no
standard meaning under IFRS. For further information and a detailed
reconciliation, see "Non-GAAP Financial Measures" section
below.
(4) This column shows data for the financial period immediately
prior to the year ended 31 December 2011, which was a short period
of six months ended on 31 December 2010, due to the company
changing its year end from June to December.
* The Group changed its accounting policy on production-phase
stripping costs with effect from 1 January 2012. As a result, the
2011 results have been restated. Refer to Note 3 of the Financial
Statements for further details.
RESULTS OF OPERATIONS
The Group recorded net profit before tax for the year ended 31
December 2012 of US$198.6 million
(2011: US$194.0 million). The increase is driven by higher
volumes of gold sold, higher gold prices obtained and lower costs
due to management's rigorous cost control offset by the inclusion
of an exceptional provision against prepayments recorded in Q4 to
reflect the removal of the fuel subsidy which occurred in January
2012 (refer to Note 6 of the Financial Statements).
Set out below are the audited consolidated Financial Statements
for the Group, including notes thereto, for the year ended 31
December 2012. The independent auditors report on these Financial
Statements was unmodified and contained an emphasis of matter
paragraph relating to the significant uncertainty over the
Concession Agreement court case referred to above and in Note
20.
Consolidated Statement of Comprehensive Income
for the year ended 31 December 2012
31 December 31 December
2012 2011(2)
-------------------------------------- -----------
Before
Exceptional Exceptional
items Items (1) Total Restated
US$'000 US$'000 US$'000 US$'000
------------ ------------- --------- -----------
Revenue 5 426,133 - 426,133 340,479
Cost of sales 6 (169,814) (33,118) (202,932) (128,202)
------------ ------------- --------- -----------
Gross profit 256,319 (33,118) 223,201 212,277
Other operating costs (25,505) - (25,505) (19,572)
Finance income 6 898 - 898 1,288
Profit before tax 6 231,712 (33,118) 198,594 193,993
Tax 7 444 - 444 -
Profit for the year attributable
to the Company 232,156 (33,118) 199,038 193,993
------------ ------------- --------- -----------
Other comprehensive income
Items that may be reclassified
subsequently to profit
or loss:
Losses on available for
sale financial assets (net
of tax) (2,804) - (2,804) (3,957)
------------ ------------- --------- -----------
Other comprehensive income
for the year (2,804) - (2,804) (3,957)
------------ ------------- --------- -----------
Total comprehensive income
attributable to the Company 229,352 (33,118) 196,234 190,036
------------ ------------- --------- -----------
Earnings per share:
Basic (cents per share) 24 21.305 (3.039) 18.266 17.900
Diluted (cents per share) 24 21.299 (3.038) 18.261 17.881
(1) Refer to Note 6 for further details.
(2) The Group changed its accounting policy on production-phase
stripping costs with effect from 1 January 2012. As a result, the
2011 results have been restated. Refer to Note 3 for further
details.
Consolidated Statement of Financial Position
As at 31 December 2012
31 December 31 December Change 31 December
2012 2011 in accounting 2011
US$'000 US$'000 policy Restated
Note 3 US$'000
US$'000
NON-CURRENT ASSETS
Property, plant and equipment 12 747,571 532,727 9,169 541,896
Exploration and evaluation
asset 13 45,669 31,113 - 31,113
Available-for-sale financial
assets 14.1 5,613 1,831 - 1,831
Interests in associates 14.2 3,132 3,296 - 3,296
----------- ----------- -------------- -----------
Total non-current assets 801,985 568,967 9,169 578,136
----------- ----------- -------------- -----------
CURRENT ASSETS
Inventories 10 94,636 69,751 2,880 72,631
Trade and other receivables 9 40,736 29,998 - 29,998
Prepayments 11 466 1,576 - 1,576
Cash and cash equivalents 25 147,133 164,231 - 164,231
----------- ----------- -------------- -----------
Total current assets 282,971 265,556 2,880 268,436
----------- ----------- -------------- -----------
Total assets 1,084,956 834,523 12,049 846,572
----------- ----------- -------------- -----------
NON-CURRENT LIABILITIES
Provisions 16 5,544 2,630 - 2,630
----------- ----------- -------------- -----------
Total non-current liabilities 5,544 2,630 - 2,630
----------- ----------- -------------- -----------
CURRENT LIABILITIES
Trade and other payables 15 54,606 24,509 - 24,509
Tax liabilities 7 - 444 - 444
Provisions 16 4,962 717 - 717
----------- ----------- -------------- -----------
Total current liabilities 59,568 25,670 - 25,670
----------- ----------- -------------- -----------
Total liabilities 65,112 28,300 - 28,300
----------- ----------- -------------- -----------
-
----------- ----------- -------------- -----------
Net assets 1,019,844 806,223 12,049 818,272
----------- ----------- -------------- -----------
EQUITY
Issued capital 17 612,463 608,596 - 608,596
Share option reserve 18 3,477 2,006 - 2,006
Other reserves 18 - - - -
Accumulated profits 403,904 195,621 12,049 207,670
----------- ----------- -------------- -----------
Total equity 1,019,844 806,223 12,049 818,272
----------- ----------- -------------- -----------
Consolidated Statement of Changes in Equity
for the year ended 31 December 2012
Issued Other Share options Accumulated
Capital reserves reserve profits Total
US$'000 US$'000 US$'000 US$'000 US$'000
-------- --------- ------------- ----------- ---------
Balance as at 1 January
2012 608,596 - 2,006 195,621 806,223
Change in accounting policy* - - - 12,049 12,049
As restated 608,596 - 2,006 207,670 818,272
Profit for the year - - - 199,038 199,038
Other comprehensive loss
for the year - - - (2,804) (2,804)
-------- --------- ------------- ----------- ---------
Total comprehensive income
for the year - - - 196,234 196,234
Issue of shares under LFSP 3,367 - - - 3,367
Recognition of share based
payments - - 1,981 - 1,981
Transfer from share options
reserve 510 - (510) - -
Share issue costs (10) - - - (10)
Balance as at 31 December
2012 612,463 - 3,477 403,904 1,019,844
-------- --------- ------------- ----------- ---------
Issued Other Share options Accumulated
Capital reserves reserve profits Total
US$'000 US$'000 US$'000 US$'000 US$'000
Balance as at 1 January
2011 600,500 2,295 1,050 15,251 619,096
Profit for the year* - - - 193,993 193,993
Other comprehensive loss
for the year - - - (3,957) (3,957)
-------- --------- ------------- ----------- ---------
Total comprehensive income
for the year - - - 190,036 190,036
Transfer to accumulated
profits - (2,295) (88) 2,383 -
Share options exercised 1,568 - - - 1,568
Issue of shares under LFSP 2,038 - - - 2,038
Recognition of share based
payments - - 1,496 - 1,496
Transfer from share options
reserve 452 - (452) - -
Other placements 4,152 - - - 4,152
Share issue costs (114) - - - (114)
Balance as at 31 December
2011 608,596 - 2,006 207,670 818,272
-------- --------- ------------- ----------- ---------
* The Group changed its accounting policy on production-phase
stripping costs with effect from 1 January 2012. As a result, the
2011 results have been restated. Refer to Note 3 for further
details.
Consolidated Statement of Cash Flows
for the year ended 31 December 2012
31 December 31 December
2012 Restated
Note 2011
US$'000 US$'000
Cash flows from operating activities
Cash generated in operating activities 25(b) 221,405 154,830
Finance income (898) (1,288)
Net cash generated by operating activities 220,507 153,542
------------------ -----------
Cash flows from investing activities
Acquisition of property, plant and equipment 12 (223,567) (116,401)
Exploration and evaluation expenditure 13 (14,556) (23,209)
Acquisition of financial assets 14 (6,427) (17,403)
Acquisition of interests in associates 14 (166) (3,296)
Proceeds from sale of available-for-sale
financial assets - 11,191
Finance income 898 1,288
Net cash used in investing activities (243,818) (147,830)
------------------ -----------
Cash flows from financing activities
Proceeds from the issue of equity and conversion
of options 17 3,367 3,606
Share issue costs 17 (10) (114)
Net cash provided by financing activities 3,357 3,492
------------------ -----------
Net (decrease)/increase in cash and cash
equivalents (19,954) 9,204
Cash and cash equivalents at the beginning
of the period 25 164,231 154,338
Effect of foreign exchange rate changes 2,856 689
------------------ -----------
Cash and cash equivalents at the end of
the period 25 147,133 164,231
------------------ -----------
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2012
1. General information
Centamin plc (the Company) is a listed public company,
incorporated in Jersey and through subsidiaries operating in Egypt,
Ethiopia, United Kingdom and Australia. It is the parent company of
the Group, comprising the Company and its subsidiaries.
Registered Office Principal Place of Business
Centamin plc 2 Mulcaster Street
Ogier House, The Esplanade St Helier
St Helier, Jersey JE4 9WG Jersey JE2 3NJ
The audited financial information for the year ended 31 December
2012 contained in this document does not constitute statutory
accounts as defined in Article 105 of Companies (Jersey) Law 1991.
The financial information for the year ended 31 December 2012 has
been extracted from the financial statements of Centamin plc which
will be delivered to the Registrar in due course. The independent
auditors report on these financial statements was unmodified and
contained an emphasis of matter paragraph relating to significant
uncertainty over the Concession Agreement court case referred to
above and in Note 20.
2. Adoption of new and revised accounting standards
In the current year, the following new and revised Standards and
Interpretations have been adopted and have affected the amounts
reported in these financial statements.
Standards affecting the financial statements
IFRIC 20 Stripping Costs IFRIC 20 provides clarity on how
in the Production Phase to account for and measure the removal
of a Surface Mine of mine waste materials which provide
access to mineral ore deposits.
Refer to Changes in Accounting Policy
in Note 3 for further information.
------------------------- ----------------------------------------
Standards not affecting the reported results nor the financial
position
The following new and revised Standards and Interpretations have
been adopted in the current year. Their adoption has not had any
significant impact on the amounts reported in these financial
statements but, with the exception of the amendment to IFRS 1, may
impact the accounting for future transactions and arrangements.
IFRS 7 (amended) The amendments introduce additional disclosures,
Disclosures - Transfers designed to allow users of financial statements
of Financial Assets to improve their understanding of transfer
transactions of financial assets, including
understanding the possible effects of any
risks that may remain with the entity that
transferred the assets. The amendments also
require additional disclosures if a disproportionate
amount of transfer transactions are undertaken
around the end of a reporting period.
------------------------- ------------------------------------------------------
IAS 12 (amended) The amendment provides an assumption that
Deferred Tax: Recovery recovery of the carrying amount of an asset
of Underlying Assets measured using the fair value model in IAS
40 Investment Property will, normally, be
through sale.
------------------------- ------------------------------------------------------
IFRS 1 (amended) The amendment replaces references to a fixed
Severe Hyperinflation date with the date of transition to IFRSs'
and Removal of and provides guidance on how an entity should
Fixed Dates for resume presenting financial statements in
First-time Adopters accordance with IFRSs after a period when
the entity was unable to comply with IFRSs
because its functional currency was subject
to sever hyperinflation.
------------------------- ------------------------------------------------------
IAS 19 (revised) The amendments provide revised requirements
Employee Benefits for pensions and other post-retirement benefits,
termination benefits and other changes.
------------------------- ------------------------------------------------------
IAS 1 (amended) The amendment revises the way other comprehensive
Presentation of income is presented.
Items of Other
Comprehensive Income
---------------------- --------------------------------------------------
At the date of authorisation of these financial statements, the
following Standards and Interpretations which have not been applied
in these financial statements were in issue but not yet effective
(and in some cases had not yet been adopted by the EU):
IFRS 1 (amended) Government Loans
IFRS 7 (amended) Disclosures - Offsetting Financial Assets and
Financial Liabilities
IFRS 9 Financial Instruments
IFRS 10 Consolidated Financial Statements
IFRS 11 Joint Arrangements
IFRS 12 Disclosure of Interests in Other Entities
IFRS 13 Fair Value Measurement
IAS 27 (revised) Separate Financial Statements
IAS 28 (revised) Investments in Associates and Joint Ventures
(2011)
IAS 32 (revised) Offsetting Financial Assets and Financial
Liabilities
Improvements to IFRSs 2009 - Annual Improvements 2009 - 2011 Cycle
2011
The directors do not expect that the adoption of the standards
listed above will have a material impact on the financial
statements of the Group in future periods, except as follows:
-- IFRS 9 will impact both the measurement and disclosures of Financial Instruments;
-- IFRS 11 will affect joint venture accounting, however will
have no impact on the accounting of the Concession Agreement;
-- IFRS 12 will impact the disclosure of interests Group has in other entities;
-- IFRS 13 will impact the measurement of fair value for certain
assets and liabilities as well as the associated disclosures.
Beyond the information above, it is not practicable to provide a
reasonable estimate of the effect of these standards until a
detailed review has been completed.
3. Summary of significant accounting policies
Basis of preparation
The financial statements have been prepared in accordance with
International Financial Reporting Standards (IFRSs) adopted by the
European Union ('EU IFRS') and therefore the Group financial
statements comply with Article 4 of the EU IAS Regulation
There are no changes in these accounting policies for the year
ended 31 December 2012 except as disclosed in Note 3 below "Changes
in accounting policy".
Changes in accounting policy
IFRIC 20 "Stripping Costs in the Production Phase of a Surface
Mine"
The Group changed its accounting policy on stripping costs in
the production phase of a surface mine effective 1 January 2012.
IFRIC 20 provides clarity on how to account for and measure the
removal of mine waste materials which provide access to mineral ore
deposits. This waste removal activity is known as 'stripping'.
There can be two benefits accruing to the entity from the stripping
activity:
-- usable ore that can be used to produce inventory; and
-- improved access to further quantities of material that will be mined in future periods.
IFRIC 20 considers when and how to account separately for these
two benefits arising from the stripping activity, as well as how to
measure these benefits both initially and subsequently.
The costs of stripping activity to be accounted for in
accordance with the principles of IAS 2 Inventories to the extent
that the benefit from the stripping activity is realised in the
form of inventory produced.
The costs of stripping activity which provides a benefit in the
form of improved access to ore is recognised as a non-current
'stripping activity asset' where the following criteria are
met:
i. it is probable that the future economic benefit (improved
access to the ore body) associated with the stripping activity will
flow to the entity;
ii. the entity can identify the component of the ore body for
which access has been improved; and
iii. the costs relating to the stripping activity associated
with that component can be measured reliably.
When the costs of the stripping activity asset and the inventory
produced are not separately identifiable, production stripping
costs are allocated between the inventory produced and the
stripping activity asset by using an allocation basis that is based
on a relevant production measure.
A stripping activity asset is accounted for as an addition to,
or as an enhancement of, an existing asset and classified as
tangible or intangible according to the nature of the existing
asset of which it forms part.
A stripping activity asset is initially measured at cost and
subsequently carried at cost or its revalued amount less
depreciation or amortisation and impairment losses. A stripping
activity asset is depreciated or amortised on a systematic basis,
over the expected useful life of the identified component of the
ore body that becomes more accessible as a result of the stripping
activity. The stripping activity asset is depreciated using a units
of production method based on the total ounces to be produced over
the life of the component of the ore body.
IFRIC 20 includes transitional provisions which permit the Group
to reclassify any 'predecessor stripping asset' at the start of the
earliest period presented as part of the existing asset to which
the stripping activity is related, which will be 1 January
2011.
In line with IFRIC 20, our 2012 results now include a
restatement of the 2011 year as follows:
Impact of IFRIC 20 Year ended
31 December
2011 US$'000
2011 US$'000
----------------------------------------------------------- --------------
Increase in Profit for the period and Total comprehensive
income 12,049
----------------------------------------------------------- --------------
Increase in Net Assets 12,049
----------------------------------------------------------- --------------
Increase in basic earnings per share (cents per
share) 1.11
----------------------------------------------------------- --------------
Increase in fully diluted earnings per share (cents
per share) 1.11
----------------------------------------------------------- --------------
The adoption of IFRIC 20 had no impact on the Group's retained
earnings as at 1 January 2011.
These financial statements are denominated in United States
Dollars, which is the functional currency of Centamin plc. All
companies in the Group use the United States Dollar as their
functional currency except for Sheba Exploration (UK) plc and Sheba
Exploration Limited that use Great British Pound. All financial
information presented in United States Dollars has been rounded to
the nearest thousand dollars, unless otherwise stated.
These financial statements have been prepared on the basis of
historical cost, except for the revaluation of certain non-current
assets and financial instruments. Cost is based on the fair values
of the consideration given in exchange for assets.
Principles of consolidation
The consolidated financial statements are prepared by combining
the financial statements of all the entities that comprise the
consolidated entity, being the company (the parent entity) and its
subsidiaries as defined in IAS 27 "Consolidated and Separate
Financial Statements". Consistent accounting policies are employed
in the preparation and presentation of the consolidated financial
statements.
The consolidated financial statements include the information
and results of each subsidiary from the date on which the company
obtains control and until such time as the company ceases to
control such entity. Control is achieved where the Company has the
power to govern the financial and operating policies of an entity
so as to obtain benefits from its activities.
In preparing the consolidated financial statements, all
intercompany balances and transactions, and unrealised profits
arising within the consolidated entity are eliminated in full.
Sukari Gold Mines ("SGM") is jointly controlled by PGM and EMRA
on a 50% equal basis. For accounting purposes, SGM is wholly
consolidated within the Centamin Group of companies reflecting the
substance and economic reality of the Concession Agreement (see
note 23). Pursuant to the Concession Agreement, PGM solely funds
SGMs activities. PGM is also entitled to recover the following
costs and expenses payable from sales revenue (excluding the
royalty payable to ARE) (a) all current operating expenses incurred
and paid after the initial commercial production; (b) exploration
costs, including those accumulated to the commencement of
commercial production (at the rate of 33.3% of total accumulated
cost per annum); and (c) exploitation capital costs, including
those accumulated prior to the commencement of commercial
production (at the rate of 33.3% of total accumulated cost per
annum).
EMRA is entitled to a share of SGM's net production surplus
(defined as revenue less payment of the fixed royalty to ARE and
recoverable costs. Accordingly, no EMRA entitlement has been
recognised to date. Any payment made to EMRA pursuant to these
provisions of the Concession Agreement will be recognised as a
variable charge in the income statement.
Going concern
These financial statements for the year ended 31 December 2012
have been prepared on a going concern basis, which contemplate the
realisation of assets and liquidation of liabilities during the
normal course of operations.
As discussed in Note 20, during the year the operation of the
mine was affected by two legal actions. The first of these followed
from a decision taken by EGPC to charge international, not local
(subsidised) prices for the supply of Diesel Fuel Oil, and the
second arose as a result of judgment of an Administrative Court of
first instance in relation to, amongst other matters, the Company's
160km2 exploitation lease. In relation to the first decision, the
Company remains confident that in the event that it is required to
continue to pay international prices, the mine at Sukari will
remain commercially viable. Similarly, the Company remains
confident that the appeal it has lodged in relation to the decision
of the Administrative Court will ultimately be successful, although
final resolution of it may take some time. On 20 March 2013 the
Supreme Administrative Court upheld the Company's application to
suspend the decision until the merits of the Company's appeal are
considered and ruled on, thus providing assurance that normal
operations would be able to continue during this process.
In the unlikely event that the Group is unsuccessful in either
or both of its legal actions, and that the operating activities are
restricted to a reduced area, it is the Director's belief that the
Group will be able to continue as going concern.
The directors have a reasonable expectation that the Group will
have adequate resources to continue in operational existence for
the foreseeable future. Thus they continue to adopt the going
concern basis of accounting in preparing the Annual Financial
Statements.
Accounting policies
Accounting policies are selected and applied in a manner which
ensures that the resulting financial statements satisfy the
concepts of relevance and reliability, thereby ensuring that the
substance of the underlying transactions or other events is
reported. The following significant policies have been adopted in
the preparation and presentation of these financial statements:
Cash and cash equivalents
Cash comprises cash on hand and demand deposits. Cash
equivalents are short term, highly liquid investments that are
readily convertible to known amounts of cash and which are subject
to an insignificant risk of changes in value.
Financial instruments
Financial assets and financial liabilities are recognised in the
Group's balance sheet when the Group becomes a party to the
contractual provisions of the instrument.
Financial liabilities and equity
Debt and equity instruments are classified as either financial
liabilities or as equity in accordance with the substance of the
contractual arrangement.
Equity instruments
An equity instrument is any contract that evidences a residual
interest in the assets of an entity after deducting all of its
liabilities. Equity instruments issued by the Group are recognised
at the proceeds received, net of direct issue costs.
Financial liabilities
Financial liabilities are classified as either financial
liabilities 'at FVTPL' or 'other financial liabilities'.
Financial liabilities at FVTPL
Financial liabilities are classified as at FVTPL when the
financial liability is either held for trading or it is designated
as at FVTPL.A financial liability is classified as held for trading
if:
-- it has been incurred principally for the purpose of repurchasing it in the near term; or
-- on initial recognition it is part of a portfolio of
identified financial instruments that the Group manages together
and has a recent actual pattern of short-term profit-taking; or
-- it is a derivative that is not designated and effective as a hedging instrument.
-- A financial liability other than a financial liability held
for trading may be designated as at FVTPL upon initial recognition
if:
-- such designation eliminates or significantly reduces a
measurement or recognition inconsistency that would otherwise
arise; or
-- the financial liability forms part of a Group of financial
assets or financial liabilities or both, which is managed and its
performance is evaluated on a fair value basis, in accordance with
the Group's documented risk management or investment strategy, and
information about the grouping is provided internally on that
basis; or
-- it forms part of a contract containing one or more embedded
derivatives, and IAS 39 Financial Instruments: Recognition and
Measurement permits the entire combined contract (asset or
liability) to be designated as at FVTPL.
Financial liabilities at FVTPL are stated at fair value, with
any gains or losses arising on re-measurement recognised in profit
or loss. The net gain or loss recognised in profit or loss
incorporates any interest paid on the financial liability and is
included in the 'other gains and losses' line item in the income
statement.
Other financial liabilities
Other financial liabilities, including borrowings, are initially
measured at fair value, net of transaction costs. Other financial
liabilities are subsequently measured at amortised cost using the
effective interest method, with interest expense recognised on an
effective yield basis. The effective interest method is a method of
calculating the amortised cost of a financial liability and of
allocating interest expense over the relevant period. The effective
interest rate is the rate that exactly discounts estimated future
cash payments through the expected life of the financial liability,
or, where appropriate, a shorter period.
Derecognition of financial liabilities
The Group derecognises financial liabilities when, and only
when, the Group's obligations are discharged, cancelled or they
expire.
Financial assets
Financial assets are recognised and derecognised on trade date
where the purchase or sale of a financial asset is under a contract
whose terms require delivery of the financial asset within the
timeframe established by the market concerned, and are initially
measured at fair value, net of transaction costs except for those
financial assets classified as at fair value through the profit or
loss which are initially measured at fair value.
Subsequent to initial recognition, investments in subsidiaries
are measured at cost in the company financial statements. Other
financial assets are "loans and receivables". The classification
depends on the nature and purpose of the financial assets and is
determined at the time of initial recognition.
Effective interest method
The effective interest method is a method of calculating the
amortised cost of a financial asset and of allocating interest
income over the relevant period. The effective interest rate is the
rate that exactly discounts estimate future cash receipts through
the expected life of the financial asset, or, where appropriate, a
shorter period, to the net carrying amount on initial
recognition.
Available for sale financial assets
Listed shares and listed redeemable notes held by the Group that
are traded in an active market are classified as being AFS and are
stated at fair value. The Group also has investments in unlisted
shares that are not traded in an active market but that are
classified as AFS financial assets and stated at fair value
(because the directors consider that fair value can be reliably
measured). Fair value is determined in the manner described in Note
26. Gains and losses arising from changes in fair value are
recognised in other comprehensive income and accumulated in the
investments revaluation reserve with the exception of impairment
losses, interest calculated using the effective interest method and
foreign exchange gains and losses on monetary assets, which are
recognised directly in profit or loss. Where the investment is
disposed of or is determined to be impaired, the cumulative gain or
loss previously recognised in the investments revaluation reserve
is reclassified to profit or loss.
Dividends on AFS equity instruments are recognised in profit or
loss when the Group's right to receive the dividends is
established.
The fair value of AFS monetary assets denominated in a foreign
currency is determined in that foreign currency and translated at
the spot rate at the balance sheet date. The foreign exchange gains
and losses that are recognised in profit or loss are determined
based on the amortised cost of the monetary asset. Other foreign
exchange gains and losses are recognised in other comprehensive
income.
Loans and receivables
Trade receivables, loans and other receivables that have fixed
or determinable payments that are not quoted in an active market
are classified as "loans and receivables". Loans and receivables
are measured at amortised cost using the effective interest rate
method less impairment. Interest is recognised by applying the
effective interest rate except for short-term receivables when the
recognition of interest would be immaterial.
Impairment of financial assets
Financial assets, other than those at fair value through profit
or loss, are assessed for indicators of impairment at each
reporting date. Financial assets are impaired where there is
objective evidence that as a result of one or more events that
occurred after the initial recognition of the financial asset the
estimated future cash flows of the investment have been impacted.
For financial assets carried at amortised cost, the amount of the
impairment is the difference between the asset's carrying amount
and the present value of estimated future cash flows, discounted at
the original effective interest rate.
The carrying amount of the financial asset is reduced by the
impairment loss directly for all financial assets with the
exception of trade receivables where the carrying amount is reduced
through the use of an allowance account. When a trade receivable is
uncollectible, it is written off against the allowance account.
Subsequent recoveries of amounts previously written off are
credited against the allowance account. Changes in the carrying
amount of the allowance account are recognised in profit or
loss.
With the exception of available-for-sale equity instruments, if,
in a subsequent period, the amount of the impairment loss decreases
and the decrease can be related objectively to an event occurring
after the impairment was recognised, the previously recognised
impairment loss is reversed through profit or loss to the extent
the carrying amount of the investment at the date the impairment is
reversed does not exceed what the amortised cost would have been
had the impairment not been recognised.
In respect of available-for-sale equity instruments, any
subsequent increase in fair value after an impairment loss is
recognised in other comprehensive income.
Derecognition of financial assets
The Group derecognises a financial asset only when the
contractual rights to the cash flows from the asset expire, or when
it transfers the financial asset and substantially all the risks
and rewards of ownership of the asset to another entity. If the
Group neither transfers nor retains substantially all the risks and
rewards of ownership and continues to control the transferred
asset, the Group recognises its retained interest in the asset and
an associated liability for amounts it may have to pay. If the
Group retains substantially all the risks and rewards of ownership
of a transferred financial asset, the Group continues to recognise
the financial asset and also recognises a collateralised borrowing
for the proceeds received.
Employee benefits
A liability is recognised for benefits accruing to employees in
respect of wages and salaries, annual leave, long service leave and
sick leave when it is probable that settlement will be required and
they are capable of being measured reliably.
Liabilities recognised in respect of employee benefits expected
to be settled within 12 months, are measured at their nominal
values using the remuneration rate expected to apply at the time of
settlement. Liabilities recognised in respect of employee benefits
which are not expected to be settled within 12 months are measured
as the present value of the estimated future cash flows to be made
by the consolidated entity in respect of services provided by
employees up to reporting date.
Superannuation
The Company contributes to, but does not participate in,
compulsory superannuation funds on behalf of the Employees and
Directors in respect of salaries and directors' fees paid.
Contributions are charged against income as they are made.
Exploration, evaluation and development expenditure
Exploration and evaluation expenditures in relation to each
separate area of interest are recognised as an exploration and
evaluation asset in the year in which they are incurred where the
following conditions are satisfied:
i) the rights to tenure of the area of interest are current; and
ii) at least one of the following conditions is also met:
a) the exploration and evaluation expenditures are expected to
be recouped through successful development and exploration of the
area of interest, or alternatively, by its sale; or
b) exploration and evaluation activities in the area of interest
have not at the reporting date reached a stage which permits a
reasonable assessment of the existence or otherwise of economically
recoverable reserves, and active and significant operations in, or
in relation to, the area of interest are continuing.
Exploration and evaluation assets are initially measured at cost
and include acquisition of rights to explore, studies, exploration
drilling, trenching and sampling and associated activities. General
and administrative costs are only included in the measurement of
exploration and evaluation costs where they are related directly to
operational activities in a particular area of interest.
Exploration and evaluation assets are assessed for impairment
when facts and circumstances (as defined in IFRS 6 "Exploration for
and Evaluation of Mineral Resources") suggest that the carrying
amount of exploration and evaluation assets may exceed its
recoverable amount. The recoverable amount of the exploration and
evaluation assets (or the cash-generating unit(s) to which it has
been allocated, being no larger than the relevant area of interest)
is estimated to determine the extent of the impairment loss (if
any). Where an impairment loss subsequently reverses, the carrying
amount of the asset is increased to the revised estimate of its
recoverable amount, but only to the extent that the increased
carrying amount does not exceed the carrying amount that would have
been determined had no impairment loss been recognised for the
asset in previous years.
Where a decision is made to proceed with development in respect
of a particular area of interest, the relevant exploration and
evaluation asset is tested for impairment, reclassified to
development properties, and then amortised over the life of the
reserves associated with the area of interest once mining
operations have commenced.
Development expenditure is recognised at cost less accumulated
amortisation and any impairment losses. When commercial production
in an area of interest has commenced, the associated costs are
amortised over the estimated economic life of the mine on a units
of production basis.
Changes in factors such as estimates of proved and probable
reserves that affect unit of production calculations are dealt with
on a prospective basis.
Foreign currencies
The individual financial statements of each Group entity are
presented in its functional currency being the currency of the
primary economic environment in which the entity operates. For the
purpose of the consolidated financial statements, the results and
financial position of each entity are expressed in United States
dollars, which is the functional currency of the Group and the
presentation currency for the consolidated financial statements.
All companies in the group use the United States Dollar as their
functional currency except for Sheba Exploration Holdings Limited
(previously, Sheba Exploration (UK) plc) and Sheba Exploration
Limited that use Great British Pound.
In preparing the financial statements of the individual
entities, transactions in currencies other than the entity's
functional currency are recorded at the rates of exchange
prevailing on the dates of the transactions. At each reporting
date, monetary items denominated in foreign currencies are
retranslated at the rates prevailing at the reporting date.
Non-monetary items carried at fair value that are denominated in
foreign currencies are retranslated at the rates prevailing on the
date when the fair value was determined. Non-monetary items that
are measured in terms of historical cost in a foreign currency are
not retranslated. Exchange differences are recognised in profit or
loss in the period in which they arise.
Inventories
Inventories are valued at the lower of cost and net realisable
value. Costs including an appropriate portion of fixed and variable
overhead expenses are assigned to inventory on hand by the method
appropriate to each particular class of inventory, with the
majority being valued on a weighted average cost basis. Net
realisable value represents the estimated selling price less all
estimated costs of completion and costs necessary to make the
sale.
Ore stockpiles, gold in circuit and bullion are valued applying
absorption costing.
Interests in joint ventures
Jointly controlled entities
Where the Group is a venturer (and so has joint control) in a
jointly controlled entity, the Group recognises its share of the
assets, liabilities, income and expenses, line by line, in the
consolidated financial statements.
SGM is wholly consolidated within the Centamin Group of
companies, reflecting the substance and economic reality of the
Concession Agreement (see note 23).
Leased assets
Leased assets are classified as finance leases when the terms of
the lease transfer substantially all the risks and rewards
incidental to ownership of the leased asset to the lessee. All
other leases are classified as operating leases.
Operating lease payments are recognised as an expense on a
straight-line basis over the lease term, except where other
systematic basis is more representative of the time pattern in
which economic benefits from the leased asset are consumed.
Contingent rentals arising under operating leases are recognised as
an expense in the period in which they are incurred.
Property, plant and equipment ('PPE')
Plant and equipment is stated at cost less accumulated
depreciation and impairment. Plant and equipment will include
capitalised development expenditure. Cost includes expenditure that
is directly attributable to the acquisition of the item as well as
the estimated cost of abandonment. In the event that settlement of
all or part of the purchase consideration is deferred, cost is
determined by discounting the amounts payable in the future to
their present value as at the date of acquisition.
Depreciation is provided on plant and equipment. Depreciation is
calculated on a straight line basis so as to write off the net cost
or other revalued amount of each asset over its expected useful
life to its estimated residual value.
The estimated useful lives, residual values and depreciation
method are reviewed at the end of each annual financial period,
with the effect of any changes recognised on a prospective
basis.
Freehold land is not depreciated.
The following estimated useful lives are used in the calculation
of depreciation:
Plant and Equipment - 2- 50 years
Office Equipment - 3 - 7 years
Motor Vehicles - 2 - 13 years
Land and Buildings - 4 - 20 years
The gain or loss arising on the disposal or scrappage of an
asset is determined as the difference between the sales proceeds
and the carrying amount of the asset and is recognised in
income.
Mine development properties
Where mining of a mineral resource has commenced, the
accumulated costs are transferred to mine properties.
Amortisation is first charged to new mine development ventures
from the date of first commercial production. Amortisation of mine
properties is on a unit of production basis resulting in an
amortisation charge proportional to the depletion of the proved and
probable ore reserves. The unit of production can be on a tonnes or
an ounce depleted basis.
Capitalised underground development costs incurred to enable
access to specific ore blocks or areas of the underground mine, and
which only provide an economic benefit over the period of mining
that ore block or area, are depreciated on a units of production
basis, whereby the denominator is estimated ounces of gold in
proven and probable reserves within that ore block or area where it
is considered probable that those resources will be extracted
economically.
Stripping activity assets
The group defers stripping costs incurred (removal of mine waste
materials which provide improved access to further quantities of
material that will be mined in future periods). During the current
year, the group changed its accounting policy on stripping costs in
the production phase of a surface mine "IFRIC 20" effective 1
January 2012. IFRIC 20 provides clarity on how to account for and
measure the removal of mine waste materials which provide access to
mineral ore deposits. This waste removal activity is known as
'stripping'. There can be two benefits accruing to the entity from
the stripping activity:
-- usable ore that can be used to produce inventory; and
-- improved access to further quantities of material that will be mined in future periods.
The costs of stripping activity to be accounted for in
accordance with the principles of IAS 2 Inventories to the extent
that the benefit from the stripping activity is realised in the
form of inventory produced. The costs of stripping activity which
provides a benefit in the form of improved access to ore is
recognised as a non-current 'stripping activity asset' where the
following criteria are met:
i. it is probable that the future economic benefit (improved
access to the ore body) associated with the stripping activity will
flow to the entity;
ii. the entity can identify the component of the ore body for
which access has been improved; and
iii. the costs relating to the stripping activity associated
with that component can be measured reliably.
When the costs of the stripping activity asset and the inventory
produced are not separately identifiable, production stripping
costs are allocated between the inventory produced and the
stripping activity asset by using an allocation basis that is based
on a relevant production measure. A stripping activity asset is
accounted for as an addition to, or as an enhancement of, an
existing asset and classified as tangible or intangible according
to the nature of the existing asset of which it forms part. A
stripping activity asset is initially measured at cost and
subsequently carried at cost or its revalued amount less
depreciation or amortisation and impairment losses. A stripping
activity asset is depreciated or amortised on a systematic basis,
over the expected useful life of the identified component of the
ore body that becomes more accessible as a result of the stripping
activity. The stripping activity asset is depreciated using a units
of production method based on the total ounces to be produced over
the life of the component of the ore body.
Deferred stripping costs are included in 'Stripping Assets',
within tangible assets. These form part of the total investment in
the relevant cash-generating unit, which is reviewed for impairment
if events or a change in circumstances indicate that the carrying
value may not be recoverable. Amortisation of deferred stripping
costs is included in operating costs.
Impairment of assets (other than exploration and evaluation and
financial assets)
At each reporting date, the Group reviews the carrying amounts
of its tangible and intangible assets to determine whether there is
any indication that those assets have suffered an impairment loss.
If any such indication exists, the recoverable amount of the asset
is estimated in order to determine the extent of the impairment
loss (if any). Where the asset does not generate cash flows that
are independent from other assets, the Group estimates the
recoverable amount of the cash-generating unit to which the asset
belongs.
Recoverable amount is the higher of fair value less costs to
sell and value in use. In assessing value in use, the estimated
future cash flows are discounted to their present value using a
pre-tax discount rate that reflects current market assessment of
the time value of money and the risks specific to the asset for
which the estimates of future flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit)
is estimated to be less than its carrying amount, the carrying
amount of the asset (cash-generating unit) is reduced to its
recoverable amount. Where an impairment loss subsequently reverses,
the carrying amount of the asset (cash-generating unit) is
increased to the revised estimate of its recoverable amount, but
only to the extent that the increased carrying amount does not
exceed the carrying amount that would have been determined had no
impairment loss been recognised for the asset (cash generating
unit) in prior years.
A reversal of an impairment loss is recognised immediately in
profit or less, unless the relevant asset is carried at a revalued
amount, in which case the reversal of an impairment loss is treated
as a revaluation increase.
Revenue
Revenue is measured at the fair value of the consideration
received or receivable for goods and services in the normal course
of business, net of discounts, VAT and other sales-related
taxes.
Sale of goods
Revenue from the sale of mineral production is recognised when
the Group has passed the significant risks and rewards of ownership
of the mineral production to the buyer, it is probable that
economic benefits associated with the transaction will flow to the
Group, the sales price can be measured reliably, and the Group has
no significant continuing involvement and the costs incurred or to
be incurred in respect of the transaction can be measured reliably.
This is when insurance risk has passed to the buyer and the goods
have been collected at the agreed location.
Where the terms of the executed sales agreement allow for an
adjustment to the sales price based on a survey of the mineral
production by the buyer (for instance an assay for gold content),
recognition of the revenue from the sale of mineral production is
based on the most recently determined estimate of product
specifications.
Pre-production revenues
Income derived by the entity prior to the date of commercial
production (being 1 April 2010) was offset against the expenditure
capitalised and carried in the Consolidated Statement of Financial
Position. All revenues recognised after 1 April 2010 are recognised
in accordance with the revenue policy stated above. 1 April 2010
was selected as the commencement date of commercial production due
to the fact that sufficient, stable and sustained production
capacity had been achieved as at that date.
Interest revenue
Interest income is recognised when it is probable that the
economic benefits will flow to the Group and the amount of revenue
can be measured reliably.
Interest revenue is accrued on a time basis, by reference to the
principal outstanding and at the effective interest rate
applicable, which is the rate that exactly discounts estimated
future cash receipts through the expected life of the financial
asset to that asset's net carrying amount.
Production royalty
The Arab Republic of Egypt ("ARE") is entitled to a royalty of
3% of net sales revenue as defined from the sale of gold and
associated minerals from the Sukari Project. This royalty is
calculated and recognised on receipt of the final certificate of
analysis document received from the refinery. Due to its nature,
the production is not recognised in cost of sales.
Business combinations
Acquisitions of subsidiaries and businesses are accounted for
using the acquisition method. The consideration for each
acquisition is measured at the aggregate of the fair values (at the
date of exchange) of assets given, liabilities incurred or assumed,
and equity instruments issued by the Group in exchange for control
of the acquiree. Acquisition-related costs are recognised in profit
or loss as incurred.
Where applicable, the consideration for the acquisition includes
any asset or liability resulting from a contingent consideration
arrangement, measured at its acquisition-date fair value.
Subsequent changes in such fair values are adjusted against the
cost of acquisition where they qualify as measurement period
adjustments (see below). All other subsequent changes in the fair
value of contingent consideration classified as an asset or
liability are accounted for in accordance with relevant IFRSs.
Changes in the fair value of contingent consideration classified as
equity are not recognised.
Where a business combination is achieved in stages, the Group's
previously-held interests in the acquired entity are remeasured to
fair value at the acquisition date (i.e. the date the Group attains
control) and the resulting gain or loss, if any, is recognised in
profit or loss. Amounts arising from interests in the acquiree
prior to the acquisition date that have previously been recognised
in other comprehensive income are reclassified to profit or loss,
where such treatment would be appropriate if that interest were
disposed of.
The acquiree's identifiable assets, liabilities and contingent
liabilities that meet the conditions for recognition under IFRS
3(2008) are recognised at their fair value at the acquisition date,
except that:
-- deferred tax assets or liabilities and liabilities or assets
related to employee benefit arrangements are recognised and
measured in accordance with IAS 12 Income Taxes and IAS 19 Employee
Benefits respectively;
-- liabilities or equity instruments related to the replacement
by the Group of an acquiree's share based
-- payment awards are measured in accordance with IFRS 2 Share-based Payment; and
-- assets (or disposal Groups) that are classified as held for
sale in accordance with IFRS 5 Noncurrent.
Assets Held for Sale and Discontinued Operations are measured in
accordance with that Standard. If the initial accounting for a
business combination is incomplete by the end of the reporting
period in which the combination occurs, the Group reports
provisional amounts for the items for which the accounting is
incomplete. Those provisional amounts are adjusted during the
measurement period (see below), or additional assets or liabilities
are recognised, to reflect new information obtained about facts and
circumstances that existed as of the acquisition date that, if
known, would have affected the amounts recognised as of that
date.
Business combinations (continued)
The measurement period is the period from the date of
acquisition to the date the Group obtains complete information
about facts and circumstances that existed as of the acquisition
date, and is subject to a maximum of one year.
Investments in associates
An associate is an entity over which the Group has significant
influence and that is neither a subsidiary nor an interest in a
joint venture. Significant influence is the power to participate in
the financial and operating policy decisions of the investee but is
not control or joint control over those policies.
The results and assets and liabilities of associates are
incorporated in these financial statements using the equity method
of accounting, except when the investment is classified as held for
sale, in which case it is accounted for in accordance with IFRS 5
Non-current Assets Held for Sale and Discontinued Operations.
Under the equity method, investments in associates are carried
in the consolidated balance sheet at cost as adjusted for
post-acquisition changes in the Group's share of the net assets of
the associate, less any impairment in the value of individual
investments. Losses of an associate in excess of the Group's
interest in that associate (which includes any long-term interests
that, in substance, form part of the Group's net investment in the
associate) are recognised only to the extent that the Group has
incurred legal or constructive obligations or made payments on
behalf of the associate.
Any excess of the cost of acquisition over the Group's share of
the net fair value of the identifiable assets, liabilities and
contingent liabilities of the associate recognised at the date of
acquisition is recognised as goodwill. The goodwill is included
within the carrying amount of the investment and is assessed for
impairment as part of that investment. Any excess of the Group's
share of the net fair value of the identifiable assets, liabilities
and contingent liabilities over the cost of acquisition, after
reassessment, is recognised immediately in profit or loss.
Where a Group entity transacts with an associate of the Group,
profits and losses are eliminated to the extent of the Group's
interest in the relevant associate.
Share-based payments
Equity-settled share-based payments with employees and others
providing similar services are measured at the fair value of the
equity instrument at grant date. Fair value is measured by the use
of the Black and Scholes model. Where share-based payments are
subject to market conditions, fair value was measured by the use of
a Monte-Carlo simulation. The fair value determined at the grant
date of the equity-settled share-based payments is expensed over
the vesting period, based on the consolidated entity's estimate of
shares that will eventually vest.
Equity-settled share based transactions with other parties are
measured at the fair value of the goods or services received,
except where the fair value cannot be estimated reliably, in which
case they are measured at the fair value of the equity instruments
granted, measured at the date the entity obtains the goods or the
counter party renders the service.
The expected life used in the model has been adjusted, based on
management's best estimate, for the effects of non-transferability,
exercise restrictions, and behavioural considerations. Further
details on how the fair value of equity-settled share-based
transactions has been determined can be found in Notes 27. At each
reporting date, the Group revises its estimate of the number of
equity instruments expected to vest. The impact of the revision of
the original estimates, if any, is recognised in profit or loss
over the remaining vesting period, with corresponding adjustment to
the equity-settled employee benefits reserve.
Issued capital
Incremental costs directly attributable to the issue of new
shares or options are shown in equity as a deduction, net of tax,
from the proceeds.
Where the Company or other members of the consolidated Group
purchases the Company's equity share capital, the consideration
paid is deducted from the total shareholders' equity of the Group
and/or of the Company as treasury shares until they are cancelled.
Where such shares are subsequently sold or reissued, any
consideration received is included in shareholders' equity of the
Group and/or the Company.
Taxation
Income tax expense represents the sum of the tax currently
payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the
period. Taxable profit differs from profit as reported in the
consolidated statement of comprehensive income because of items of
income or expense that are taxable or deductible in other periods
and items that are never taxable or deductible. The Group's
liability for current tax is calculated using tax rates that have
been enacted or substantively enacted by the end of the reporting
period.
Deferred tax
Deferred tax is recognised on temporary differences between the
carrying amounts of assets and liabilities in the financial
statements and the corresponding tax bases used in the computation
of taxable profit. Deferred tax liabilities are generally
recognised for all taxable temporary differences. Deferred tax
assets are generally recognised for all deductible temporary
differences to the extent that it is probable that taxable profits
will be available against which those deductible temporary
differences can be utilised. Such deferred tax assets and
liabilities are not recognised if the temporary difference arises
from goodwill or from the initial recognition (other than in a
business combination) of other assets and liabilities in a
transaction that affects neither the taxable profit nor the
accounting profit.
Deferred tax liabilities are recognised for taxable temporary
differences associated with investments in subsidiaries and
associates, and interests in joint ventures, except where the Group
is able to control the reversal of the temporary difference and it
is probable that the temporary difference will not reverse in the
foreseeable future. Deferred tax assets arising from deductible
temporary differences associated with such investments and
interests are only recognised to the extent that it is probable
that there will be sufficient taxable profits against which to
utilise the benefits of the temporary differences and they are
expected to reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at the
end of each reporting period and reduced to the extent that it is
no longer probable that sufficient taxable profits will be
available to allow all or part of the asset to be recovered.
Deferred tax assets and liabilities are measured at the tax
rates that are expected to apply in the period in which the
liability is settled or the asset realised, based on tax rates (and
tax laws) that have been enacted or substantively enacted by the
end of the reporting period. The measurement of deferred tax
liabilities and assets reflects the tax consequences that would
follow from the manner in which the Group expects, at the end of
the reporting period, to recover or settle the carrying amount of
its assets and liabilities.
Deferred tax assets and liabilities are offset when there is a
legally enforceable right to set off current tax assets against
current tax liabilities and when they relate to income taxes levied
by the same taxation authority and the Group intends to settle its
current tax assets and liabilities on a net basis.
Special considerations
In Australia, Centamin Egypt Limited and Pharaoh Gold Mines NL
have elected to form a tax consolidated group and therefore are
treated as a single entity for Australian income tax purposes.
Pharaoh Gold Mines NL has elected into the 'Branch Profits
Exemption' whereby foreign branch income will generally not be
subject to Australian income tax.
In Egypt, Centamin has entered into a concession agreement that
provides that the income generated by Sukari Gold Mining Company's
activities is granted a long-term tax exemption from all taxes
imposed in Egypt.
Restoration and rehabilitation
A provision for restoration and rehabilitation is recognised
when there is a present obligation as a result of exploration,
development and production activities undertaken, it is probable
that an outflow of economic benefits will be required to settle the
obligation, and the amount of the provision can be measured
reliably. The estimated future obligations include the costs of
dismantling and removal of facilities, restoration and monitoring
of the affected areas. The provision for future restoration costs
is the best estimate of the present value of the expenditure
required to settle the restoration obligation at the reporting
date. Future restoration costs are reviewed annually and any
changes in the estimate are reflected in the present value of the
restoration provision at each reporting date.
The initial estimate of the restoration and rehabilitation
provision relating to exploration, development and mining
production activities is capitalised into the cost of the related
asset and amortised on the same basis as the related asset, unless
the present obligation arises from the production of the inventory
in the period, in which case the amount is included in the cost of
production for the period. Changes in the estimate of the provision
of restoration and rehabilitation are treated in the same manner,
except that the unwinding of the effect of discounting on the
provision is recognised as a finance cost rather than being
capitalised into the cost of the related asset.
4. Critical accounting judgements
i) Critical Judgements in Applying the Entity's Accounting Policies
The following are the critical judgements that management has
made in the process of applying the Group's accounting policies and
that have the most significant effect on the amounts recognised in
the financial statements:
Litigation
The Group is currently a party to two legal actions both of
which could, affect its ability to operate the mine at Sukari in
the manner in which it is currently operated and adversely affect
its profitability. The details of this litigation, which relate to
the loss of the Egyptian national subsidy for Diesel Fuel Oil and
the ability of the Group to operate outside the area of 3km(2)
determined by the Administrative Court of first instance to be the
area of the Sukari exploitation lease, are given in Note 20 to the
Financial Statements and in the most recently filed Annual
Information Form ('AIF') which is available on SEDAR at
www.sedar.com. Although it is possible to quantify the effects of
the loss the national fuel subsidy, it is not currently possible to
quantify with sufficient precision the effect of restricting
operations to an area of 3km(2) .
Every action is being taken to contest these decisions,
including the making of formal legal appeals and, although their
resolution may take some time, management remain confident that a
satisfactory outcome will ultimately be achieved. In the meantime,
however, the Group is continuing to pay international prices for
Diesel Fuel Oil. With respect to the Administrative Court ruling,
on 20 March 2013 the Supreme Administrative Court upheld the
Company's application to suspend this decision until the merits of
the Company's appeal are considered and ruled on, thus providing
assurance that normal operations would be able to continue during
this process.
In the unlikely event that the Group is unsuccessful in either
or both of its legal actions, and that the operating activities are
restricted to a reduced area, it is management's belief that the
Group will be able to continue as going concern.
Accounting treatment of Sukari Gold Mines (SGM)
SGM is wholly consolidated within the Centamin Group of
companies, reflecting the substance and economic reality of the
Concession Agreement (see Note 23).
Recovery of Capitalised Exploration Evaluation and Development
Expenditure
The Group's accounting policy for exploration and evaluation
expenditure results in exploration and evaluation expenditure being
capitalised for those projects where such expenditure is considered
likely to be recoverable through future extraction activity or sale
or where the exploration activities have not reached a stage which
permits a reasonable assessment of the existence of reserves. This
policy requires management to make certain estimates and
assumptions as to future events and circumstances, in particular
whether the Group will proceed with development based on existence
of reserves or whether an economically viable extraction operation
can be established. Such estimates and assumptions may change from
period to period as new information becomes available. If,
subsequent to the exploration and evaluation expenditure being
capitalised, a judgement is made that recovery of the expenditure
is unlikely or the project is to be abandoned, the relevant
capitalised amount will be written off to the income statement.
ii) Key Sources of Estimation Uncertainty
The following are the key assumptions concerning the future, and
other key sources of estimation uncertainty at the reporting date,
that have a significant risk of causing a material adjustment to
the carrying amounts of assets and liabilities within the next
financial year:
Provision for restoration and rehabilitation costs
The Group is required to decommission, rehabilitate and restore
mines and processing sites at the end of their producing lives to a
condition acceptable to the relevant authorities. The provision has
been calculated taking into account the estimated future
obligations including the costs of dismantling and removal of
facilities, restoration and monitoring of the affected areas. The
provision for future restoration costs is the best estimate of the
present value of the expenditure required to settle the restoration
obligation at the reporting date.
Ore reserve estimates
Estimates of recoverable quantities of reserves include
assumptions on commodity prices, exchange rates, discount rates and
production costs for future cashflows. It also involves assessment
and judgement of difficult geological models. The economic,
geological and technical factors used to estimate ore reserves may
change from period to period. Changes in ore reserves affect the
carrying values of mine properties, property, plant and equipment,
provision for rehabilitation assets and deferred taxes. Ore
reserves are integral to the amount of depreciation and
amortisation charged to the Statement of Comprehensive Income and
the calculation of inventory.
Production forecasts from the underground mine at Sukari are
partly based on estimates regarding future resource and reserve
growth. It is the opinion of management and Directors that these
estimates are both realistic and conservative, based on current
information. However, as the mine relies on continued deeper
development and exploration drilling for further reserve
definition, the life of this part of the mine remains limited and
there is a risk that some or all of this growth will not
materialise with a consequent negative impact on current production
forecasts.
5. Revenue
An analysis of the Group's and Company's revenue for the year,
from continuing operations, is as follows:
31 December 31 December
2012 2011
US$'000 US$'000
Gold sales 425,812 339,779
Silver sales 321 700
426,133 340,479
Finance income 898 1,288
----------- -----------
427,031 341,767
----------- -----------
6. Profit before tax
Profit for the year has been arrived at after
crediting/(charging) the following gains/(losses) and expenses:
31 December 2012 31 December
Before 2011
exceptional Exceptional
items items Total
US$'000 US$'000 US$'000 US$'000
Cost of sales
Mine production costs (140,067) (36,654) (176,721) (112,393)
Movement in inventory 5,854 3,572 9,426 2,833
Depreciation and Amortisation (35,601) (36) (35,637) (18,642)
------------ ------------- --------- -----------
(169,814) (33,118) (202,932) (128,202)
------------ ------------- --------- -----------
31 December 31 December
2012 2011
US$'000 US$'000
Finance income
Interest received 898 1,288
31 December 31 December
2012 2011
US$'000 US$'000
Other operating costs
Corporate compliance (2,956) (1,506)
Corporate consultants (772) (383)
Employee entitlements (141) (33)
Salary and wages (8,314) (1,598)
Travel and accommodation (956) (694)
Other administration expenses (1,887) (1,090)
Employee equity settled share based payments (1,981) (1,496)
Fixed royalty - Attributable to the Egyptian
government (12,769) (13,360)
Foreign exchange gain, net 5,170 584
Investment loss, net of tax - 93
Provision for restoration and rehabilitation
- unwinding of discount (263) (89)
Share of loss in associate (330) -
Lease payments (306) -
Exceptional items
The Directors consider that items of income or expense which are
material by virtue of their unusual, irregular or non-recurring
nature should be disclosed separately if the consolidated financial
statements are to fairly present the financial position and
underlying business performance. In order to allow a better
understanding of the financial information presented within the
consolidated financial statements, and specifically the Group's
underlying business performance, the effect of exceptional items
are shown below.
31 December 31 December
2012 2011
US$'000 US$'000
Included in Cost of sales
Mine production costs (36,654) -
Movement in inventory 3,572 -
Depreciation and Amortisation (36) -
(33,118) -
-------- -------
In January 2012 the Company received a letter from Chevron to
the effect that Chevron would not be able to continue supplying
Diesel Fuel Oil (DFO) to the mine at Sukari at local subsidised
prices. It is understood that the reason that this letter was
issued was that Chevron had received a letter instructing it to do
so from the Egyptian General Petroleum Corporation ("EGPC"). It is
further understood that EGPC itself took the decision to issue this
instruction because it had received legal advice from the Legal
Advice Department of the Council of State (an internal government
advisory department) that the companies operating in the gold
mining sector in Egypt were not entitled to such subsidies. In
addition, the Company during the year received a demand from
Chevron for the repayment of fuel subsidies received in the period
from late 2009 through to January 2012, amounting to some US$60
million (EGP403 million).
The Group has taken detailed legal advice on this matter (and,
in particular, on the opinion given by Legal Advice Department of
the Council of State) and in consequence in June lodged an appeal
against EGPC's decision in the Administrative Courts. Again, the
Group believes that its grounds for appeal are strong and that
there is every prospect of success. However, as a practical matter,
and in order to ensure the continuation of supply, the Group has
since January advanced funds to our fuel supplier, Chevron, based
on the international price for diesel.
As at the date of this document, no final decision had been
taken by the courts regarding this matter. Furthermore, the Group
remains of the view that an instant move to international fuel
prices is not a reasonable outcome and will look to recover funds
advanced thus far should the court proceeding be concluded in its
favour. However, Management recognises the practical difficulties
associated with re-claiming funds from the government and for this
reason have, fully provided against the prepayment of US$41.4
million, as an exceptional item, as follows:
(a) a US$33.1 million increase in cost of sales,
(b) a US$0.6 million increase in stores inventories,
(c) a US$3.6 million increase in mining stockpiles and ore in circuit, and
(d) a US$4.1 million increase in property, plant and equipment (capital WIP).
This has resulted in a net decrease of US$33.1 million in the
profit and loss.
31 December 31 December
2012 2011
US$'000 US$'000
Included in Other operating costs
Re-domicile costs (564) (2,645)
The re-domicile costs relate to the expenses incurred in moving
the Group from Australia to Jersey by means of the Company becoming
the holding company of the Group.
7. Tax
Tax recognised in profit is summarised as follows:
31 December 31 December
2012 2011
US$'000 US$'000
(a) Tax expense
Current tax
Current tax expense in respect of the current - -
year
Adjustments recognised in the current year in
relation to the current tax in prior periods (444) -
------------- -------------
(444) -
Deferred tax
Deferred tax expense relating to the origination
and reversal of temporary differences - 222
Tax losses and temporary differences not recognized - (222)
------------- -------------
Total tax expense (444) -
------------- -------------
The tax expense for the year can be reconciled
to the profit per the consolidated statement
of comprehensive income as follows:
31 December 31 December
2012 2011
US$'000 US$'000
Profit before income tax 198,594 193,994
Add: Share of loss in Associate 330 -
------------- -------------
198,924 193,994
Tax expense calculated at 0% (2011 : 30%)(1)
of profit before tax - 58,198
Tax effect of amounts which are not deductible/taxable
in calculating taxable income:
Non-deductible expenses - 48,703
Tax effect of income not taxable in determining
taxable profit - (107,209)
Tax Losses and temporary differences not recognized - 308
Adjustments recognised in the current year in
relation to the current tax in prior periods (444) -
Tax expense for the year (444) -
------------- -------------
(1) The tax rate used in the above reconciliation is the
corporate tax rate of 0% payable by Jersey corporate entities under
the Jersey tax law (2011 : 30% payable by Australian corporate
entities on taxable profits under the Australian tax law). There
has been no change in the underlying corporate tax rates when
compared to the previous financial period.
31 December 31 December
2012 2011
US$'000 US$'000
Current tax liabilities
Current tax payable - 444
----------- -----------
Tax consolidation
Relevance of tax consolidation to the consolidated entity
Companies within the Groups wholly-owned Australian resident
entities formed a tax-consolidated Group with effect from 1 July
2003. The head entity within the tax-consolidated Group is Centamin
Egypt Limited. The members of the tax-consolidated Group are
identified at Note 21.
Nature of tax funding arrangements and tax sharing
agreements
Entities within the tax-consolidated Group have entered into a
tax funding arrangement and a tax-sharing agreement with the head
entity. Under the terms of the tax funding agreement, Centamin
Egypt Limited and each of the entities in the tax-consolidated
Group has agreed to pay a tax equivalent payment to or from the
head entity, based on the current tax liability or current tax
asset of the entity. Such amounts are reflected in amounts
receivable from or payable to other entities in the
tax-consolidated Group.
The tax sharing agreement entered into between members of the
tax-consolidated Group provides for the determination of the
allocation of income tax liabilities between the entities should
the head entity default on its tax payment obligations. No amounts
have been recognised in the financial statements in respect of this
agreement as payment of any amounts under the tax sharing agreement
is considered remote.
8. Segment reporting
The Group is engaged in the business of exploration and mining
of precious and base metals only, which represents a single
operating segment. The Board is the Group's chief operating
decision maker within the meaning of IFRS 8.
9. Trade and other receivables
31 December 31 December
2012 2011
US$'000 US$'000
Gold sales debtors 40,736 29,976
Other receivables - 22
----------- -----------
40,736 29,998
----------- -----------
Trade and other receivables are classified as loans and
receivables and are therefore measured at amortised cost. The
average age of the receivables is 35 days (2011: 32 days). No
interest is charged on the receivables. There are no trade
receivables past due and impaired at the reporting date, and thus
no allowance for doubtful debts has been recognised. Of the trade
receivables balance, the gold sales debtor is all receivable from
Johnson Matthey of Canada. The amount due has been received
subsequent to year-end and was considered to be fully
recoverable.
The directors consider that the carrying amount of trade and
other receivables is approximately equal to their fair value.
10. Inventories
31 December 31 December
2012 2011*
US$'000 US$'000
Mining stockpiles and ore in circuit 22,800 13,374
Stores 71,836 59,257
----------- -----------
94,636 72,631
----------- -----------
* The Group changed its accounting policy on production-phase
stripping costs with effect from 1 January 2012. As a result, the
2011 results have been restated. Refer to Note 3 for further
details.
During the year US$20,493 (2011: US$295,000) of inventory has
been written off to other operating costs.
11. Prepayments
31 December 31 December
2012 2011
US$'000 US$'000
Prepayments 466 1,576
Fuel prepayments - -
----------- -----------
466 1,576
----------- -----------
Movement in fuel prepayments
Balance at the beginning of the year - -
Fuel prepayment recognised 41,417 -
Less: Provision charged to (1) :
Mine production costs (see Note 6) (36,654) -
Property, plant and equipment (see Note 6) (4,157) -
Inventories (see Note 6) (606) -
Balance at the end of the year - -
----------- -----------
(1) Refer to Note 6, Exceptional Items, for further details.
12. Property, plant and equipment
Land Mine
Office and Plant Motor Development Stripping Capital
equipment buildings and equipment vehicles properties(1) Asset(1) WIP Total
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Cost
Balance at 31
December 2011 2,727 14 273,940 77,074 119,837 - 108,767 582,359
Additions 220 - - - 56,570 - 184,522 241,312
Transfers 648 157 4,426 28,202 - - (33,433) -
----------- ----------- -------------- ---------- -------------- ---------- --------- --------
Balance at 31
December 2012 3,595 171 278,366 105,276 176,407 - 259,856 823,671
----------- ----------- -------------- ---------- -------------- ---------- --------- --------
Accumulated
depreciation
Balance at 31
December 2011 (1,926) (9) (14,883) (19,510) (4,135) - - (40,463)
Depreciation
and
amortisation (590) (7) (13,369) (10,197) (11,474) - - (35,637)
----------- ----------- -------------- ---------- -------------- ---------- --------- --------
Balance at 31
December 2012 (2,516) (16) (28,252) (29,707) (15,609) - - (76,100)
----------- ----------- -------------- ---------- -------------- ---------- --------- --------
Cost
Balance at 31
December 2010 2,243 14 241,140 56,338 125,947 - 40,276 465,958
Additions 9 - - - - - 122,502 122,511
Transfers 475 - 32,800 20,736 (6,110) - (54,011) (6,110)
----------- ----------- -------------- ---------- -------------- ---------- --------- --------
Balance at 31
December 2011 2,727 14 273,940 77,074 119,837 - 108,767 582,359
----------- ----------- -------------- ---------- -------------- ---------- --------- --------
Accumulated
depreciation
Balance at 31
December 2010 (1,417) (8) (6,242) (12,073) (2,081) - - (21,821)
Depreciation
and
amortisation (509) (1) (8,641) (7,437) (2,054) - - (18,642)
----------- ----------- -------------- ---------- -------------- ---------- --------- --------
Balance at 31
December 2011 (1,926) (9) (14,883) (19,510) (4,135) - - (40,463)
----------- ----------- -------------- ---------- -------------- ---------- --------- --------
Net book value
As at 31
December
2011 801 5 259,057 57,564 115,702 - 108,767 541,896
----------- ----------- -------------- ---------- -------------- ---------- --------- --------
As at 31
December
2012 1,079 155 250,114 75,569 160,798 - 259,856 747,571
----------- ----------- -------------- ---------- -------------- ---------- --------- --------
(1) The Group changed its accounting policy on production-phase
stripping costs with effect from 1 January 2012. As a result, the
2011 results have been restated. Refer to Note 3 for further
details.
13. Exploration and evaluation ASSET
31 December 31 December
2012 2011
US$'000 US$'000
Balance at the beginning of the period 31,113 3,752
Acquisition of Sheba Exploration (UK) plc - exploration
rights - 10,413
Expenditure for the period 14,556 16,948
Balance at the end of the period 45,669 31,113
----------- -----------
The exploration and evaluation asset relates to the drilling,
geological exploration and sampling of potential ore reserves.
During the prior year the Group acquired the exploration rights in
Sheba Exploration Holdings Limited (previously, Sheba Exploration
(UK) plc) of US$10.2 million for the licences of Werie Lehe and
Saharti Licences, granted until 29 November 2013, and the Una
Deriam Licence, granted until 19 March 2014. Both licences are
renewable for a period of one year.
14. Available-for- sale financial assets and Interests in associates
14.1 Available-for-sale financial assets
31 December 31 December
2012 2011
US$'000 US$'000
Balance at the beginning of the period 1,831 -
Acquisitions 6,427 17,403
Disposals - (11,408)
Profit/(Loss) on foreign exchange movement 159 (207)
Loss on fair value of investment - other comprehensive
income (2,804) (3,957)
Balance at the end of the period 5,613 1,831
----------- -----------
The available for sale financial asset at year-end relates to a
14% equity interest in Nyota Minerals Limited ("NYO"), a listed
public company. Management are not planning on divesting from this
investment in the foreseeable future.
During 2011 the Group acquired shares in Auryx Gold Corporation
("AYX") a listed public company for US$11,408,000 and the
investment was sold for US$11,191,490 during the prior year. A
profit on disposal of US$92,754 and a foreign exchange loss of
US$207,000 wererealised.
14.2 Interests in associates
31 December 31 December
2012 2011
US$'000 US$'000
Balance at the beginning of the period 3,296 -
Acquisitions 166 3,296
Share of loss in associate (330) -
Balance at the end of the period 3,132 3,296
----------- -----------
The interest in associate relate to the Group's 36% equity
interest in Sahar Minerals Limited, of which 33% was acquired in
July 2011, and an additional 3% was acquired in December 2012. The
associate holds exploration rights and continues to explore.
In 2011, the interest in associate was held at the cost of
US$3,296,000 at year-end and no movement in the investment was
recorded as there was no financial information available for the
associate since acquisition.
15. Trade and other payables
31 December 31 December
2012 2011
US$'000 US$'000
Trade payables 21,121 12,909
Other creditors and accruals 33,485 11,600
----------- -----------
54,606 24,509
----------- -----------
Trade payables principally comprise the amounts outstanding for
trade purchases and ongoing costs. The average credit period taken
for trade purchases is 38 days (2011: 45 days). Trade payables are
interest free for periods ranging from 30 to 180 days. Thereafter
interest is charged at commercial rates. The Group has financial
risk management policies in place to ensure that all payables are
paid within the credit timeframe.
The directors consider that the carrying amount of trade
payables approximate their fair value.
16. Provisions
31 December 31 December
2012 2011
US$'000 US$'000
Current
Employee benefits (i) 625 717
Bonus provision 4,337 -
----------- -----------
4,962 717
----------- -----------
Non-current
Employee benefits - -
Restoration and rehabilitation (ii) 5,544 2,630
----------- -----------
5,544 2,630
----------- -----------
Movement in restoration and rehabilitation provision
Balance at beginning of the year 2,630 2,541
Additional provision recognised 2,651 -
Interest expense - unwinding of discount 263 89
----------- -----------
Balance at end of the year 5,544 2,630
----------- -----------
Movement in bonus provision
Balance at beginning of the year - -
Provision recognised 4,337 -
Balance at end of the year 4,337 -
----------- -----------
(i) Employee benefits relate to annual, sick and long service
leave entitlements. The current provision for employee benefits as
at 31 December 2012 includes US$625,118 (31 December 2011:
US$707,780) of annual leave entitlements.
(ii) The provision for restoration and rehabilitation represents
the present value of the directors' best estimate of the future
outflow of economic benefits that will be required to remove the
facilities and restore the affected areas at the Group's sites
discounted by 10%. This estimate has been made on the basis of
benchmark assessments of restoration works required following mine
closure and after taking into account the projected area to be
disturbed over the life of the mine.
17. Issued capital
31 December 31 December
2012 2011
US$'000 US$'000
Balance at beginning of the period 608,596 600,500
Issue of shares upon exercise of options and
warrants - 3,606
Transfer from share options reserve 510 452
Other placements 3,367 4,152
Share issue costs (10) (114)
----------- -----------
Balance at end of the period 612,463 608,596
----------- -----------
During 2011 the Company re-domiciled to Jersey and the
presentation below is line with the requirements of the Jersey
Companies Act.
31 December 2012 31 December 2011
Number $'000 Number $'000
Fully paid ordinary shares
Balance at beginning of the
period 1,096,297,381 608,596 1,081,946,250 600,500
Issue of shares upon exercise
of options - - 11,312,500 3,606
Transfer from share option
reserve - 510 - 452
Other placements (net of share
issue costs) 5,100,000 3,357 3,038,631 4,038
---------------- ------- ------------- -------
Balance at end of the period 1,101,397,381 612,463 1,096,297,381 608,596
---------------- ------- ------------- -------
At 31 December 2012 the Company held 11,347,222 ordinary shares
in treasury (2011: 8,840,000 ordinary shares).
Fully paid ordinary shares carry one vote per share and carry
the right to dividends. See Note 27 for more details of the share
options.
18. Reserves
31 December 31 December
2012 2011
US$'000 US$'000
Option reserve - -
Asset realisation reserve - -
----------- -----------
Other reserves - sub-total - -
Share option reserve 3,477 2,006
----------- -----------
3,477 2,006
----------- -----------
The option reserve and share option reserve have been created
from the issuing of options for a consideration greater than their
then nominal or par value.
The asset realisation reserve has been created from the
realisation of particular assets.
The capital reserve was created from the cancellation of shares
in the Company held by Pharaoh Gold Mines NL.
31 December 31 December
2012 2011
US$'000 US$'000
Option reserve
Balance at beginning of the period - 1,857
Movements during the period - (1,857)
----------- -----------
Balance at the end of the period - -
----------- -----------
31 December 31 December
2012 2011
US$'000 US$'000
Share option reserve
Balance at beginning of the period 2,006 1,050
Cost of share-based payments 1,981 1,496
Transfer to issued capital (510) (452)
Transfer to retained earnings - (88)
----------- -----------
Balance at the end of the period 3,477 2,006
----------- -----------
The share option reserve arises on the grant of share options to
employees under the employee share option plan and on grant of
broker warrants. Amounts are transferred out of the reserve and
into issued capital when the options and warrants are
exercised.
19. Commitments for expenditure
31 December 31 December
2012 2011
US$'000 US$'000
(a) Capital expenditure commitments
Plant and equipment
Not longer than 1 year 56,297 40,026
Longer than 1 year and not longer than 5 years - -
Longer than 5 years - -
----------- -----------
56,297 40,026
----------- -----------
31 December 31 December
2012 2011
US$'000 US$'000
(b) Operating lease commitments
Office premises
Not longer than 1 year 319 56
Longer than 1 year and not longer than 5 years 486 -
Longer than 5 years 60 -
----------- -----------
865 56
----------- -----------
Operating lease commitments are limited to office premises in
London and Jersey.
20. Contingent liabilities and contingent assets
Contingent Liabilities
Fuel Supply
In January 2012, the Group received a letter from Chevron to the
effect that Chevron would only be able to supply Diesel Fuel Oil
("DFO") to the mine at Sukari at international prices rather than
at local subsidised prices, which had the effect of adding
approximately US$150 per ounce to the cost of production. It is
understood that the reason that this letter was issued was that
Chevron had received a letter instructing it to do so from the
Egyptian General Petroleum Corporation ("EGPC"). It is further
understood that EGPC itself issued this instruction because it had
received legal advice from the Legal Advice Department of the
Council of State (an internal government advisory department) that
the companies operating in the gold mining sector in Egypt were not
entitled to such subsidies. In November, the Group received a
further demand from Chevron for the repayment of fuel subsidies
received during the period from late 2009 through to January 2012,
amounting to EGP403 million (approximately US$60 million at current
exchange rates).
The Group has taken detailed legal advice on this matter (and,
in particular, on the opinion given by the Legal Advice Department
of the Council of State) and in June 2012 lodged an appeal against
EGPC's decision in the Administrative Courts. Again, the Group
believes that its grounds for appeal are strong and that there is a
good prospect of success. However, as a practical matter, and in
order to ensure the continuation of supply whilst the matter is
resolved, the Group has since January advanced funds to our fuel
supplier, Chevron, based on the international price for fuel.
As at the date of this document, no decision had been taken by
the courts regarding this matter. The Group remains of the view
that an instant move to international fuel prices is not a
reasonable outcome and will look to recover funds advanced thus far
should the court proceeding be successfully concluded. However,
Management recognises the practical difficulties associated with
re-claiming funds from the government and for this reason have
fully provided against the prepayment of US$41.4 million, as an
exceptional item. Refer to Note 6 of the financial statements for
further details on the impact of this exceptional provision on the
Group's results for 2012.
No provision has been made in respect of the historic subsidies
prior to January 2012 as, based on legal advice, the Company
believes that the prospects of a court finding in its favour in
relation to this matter remain very strong.
Egyptian Court Litigation
On 30 October 2012, the Administrative Court in Egypt handed
down a judgment in relation to a claim brought by, amongst others,
an independent member of the previous parliament, in which he
argued for the nullification of the agreement that confers on the
Group rights to operate in Egypt. This agreement, the Concession
Agreement, was entered into between the Arab Republic of Egypt, the
Egyptian Mineral Resources Authority ("EMRA") and Centamin's wholly
owned subsidiary Pharaoh Gold Mines ("PGM"), and was approved by
the People's Assembly as law 222 of 1994.
In summary that judgment states that, although the Concession
Agreement itself remains valid and in force, sufficient evidence
had not been submitted to Court in order to demonstrate that the
160km(2) "exploitation lease" between PGM and EMRA had received
approval from the relevant Minister as required by the terms of the
Concession Agreement. Accordingly, the Court found that the
exploitation lease in respect of the area of 160km(2) was not valid
although it stated that there was in existence such a lease in
respect of an area of 3km(2) . Centamin, however, is in possession
of the executed original lease documentation which clearly shows
that the 160km(2) exploitation lease was approved by the Minister
of Petroleum and Mineral Resources. It appears that an executed
original document was not supplied to the Court.
Upon notification of the judgment the Group took various steps
to protect its ability to continue to operate the mine at Sukari.
These included both lodging a formal appeal before the Supreme
Administrative Court on 26 November 2012 and, in the first
instance, lodging an "Objection to Enforcement" with the Civil
Court on 31 October 2012; this was an interim measure which had the
effect of "staying" (postponing) implementation of the original
ruling until such time as the Objection is heard. In addition, in
conjunction with the formal appeal the Group applied to the Supreme
Administrative Court to suspend the initial decision until such
time as the court is able to consider and rule on the merits of the
appeal. On 20 March 2013 the Court upheld this application thus
suspending the initial decision and providing assurance that normal
operations would be able to continue whilst the appeal process is
underway.
EMRA lodged its own appeal in relation to this matter on 27
November 2012, the day after the Company's appeal was lodged.
Furthermore, in late December 2012, the Minister of Petroleum
lodged a supporting appeal and shortly thereafter publicly
indicated that, in his view, the terms of the Concession Agreement
were fair and that the "exploitation" lease was valid. The Minister
of Petroleum also expressed support for the investment and
expertise that Centamin brings to the country. We believe this
demonstrates the government's commitment to our investment at
Sukari and the desire to stimulate further investment in the
Egyptian mining industry.
We do not yet know when the appeal will conclude, although are
aware of the potential for the process in Egypt to be lengthy. The
Company has taken extensive legal advice on the merits of its
appeal from two leading Egyptian law firms who have confirmed that
the proper steps were followed with regard to the grant of the
160km(2) lease. We therefore remain of the view that the appeal is
based on strong legal grounds and will ultimately be successful. In
the event that the appellate court fails to be persuaded of the
merits of the case put forward by the Group, the operations at
Sukari may be adversely effected to the extent that the companies
operation exceeded the exploitation lease area of 3 km2 referred to
in the original court decision.
The Company remains confident that normal operations at Sukari
will be maintained whilst the appeal case is heard.
Contingent Assets
There were no contingent assets at year-end (31 December 2011:
nil).
21. Subsidiaries
The parent entity of the Group is Centamin plc, incorporated in
Jersey, and the details of its subsidiaries are as follows:
Ownership interest
31 December 31 December
2012 2011
Country of incorporation % %
Centamin Egypt Limited Australia 100 100
Viking Resources Limited Australia 100 100
North African Resources NL Australia 100 100
Pharaoh Gold Mines NL Australia 100 100
Egyptian Pharaoh Investments(1) Egypt 50 50
Sukari Gold Mining Co Egypt 50 50
Centamin UK Limited United Kingdom 100 100
Sheba Exploration Holdings Limited(2) United Kingdom 100 100
Centamin Group Services Limited Jersey 100 -
Centamin Holdings Limited Jersey 100 -
Sheba Exploration Limited Ethiopia 100 100
Centamin Limited Bermuda 100 100
(1) Dormant company.
(2) Previously Sheba Exploration (UK) Plc.
22. Auditor's remuneration
The analysis of the auditor's remuneration is as follows:
31 December 31 December
2012 2011
US$'000 US$'000
Fees payable to the company's auditor and their
associates for the audit of the company's annual
accounts 210 231
Additional fees relating to the prior year* 191 -
Fees payable to the company's auditor and their
associates for other services to the group
- The audit of the company's subsidiaries 48 -
Total audit fees 449 231
----------- -----------
Non audit fees:
Audit related assurance services 126 -
Other assurance services - 308
Tax compliance services 79 90
Tax advisory services 122 247
Total non-audit fees 327 645
----------- -----------
* Additional one-off fees incurred as a result of the
re-domicile process.
The auditor of the Centamin plc Group of companies is Deloitte
LLP. During 2011 Deloitte performed tax advisory services for the
various tax implications and considerations for the re-domicile,
and for the IPO and related services.
Deloitte obtained pre-approval from the Audit Committee for
performing these services and have used separate teams for the tax
advisory services, than the team performing the audit.
The Audit Committee and the external auditor have safeguards in
place to avoid the possibility that the auditor's objectivity and
independence could be compromised. These safeguards include the
implementation of a policy on the use of the external auditor for
non-audit related services.
Where it is deemed that the work to be undertaken is of a nature
that is generally considered reasonable to be completed by the
auditor of the Company for sound commercial and practical reasons,
the conduct of such work will be permissible provided that it has
been pre-approved. All these services are also subject to a
predefined fee limit. Any work performed in excess of this limit
must be approved by the Audit Committee.
23. Jointly controlled entities
The consolidated entity has material interests in the following
ventures:
Name of joint venture Principal activities Percentage Interest
31 December 31 December
2012 2011
% %
Egyptian Pharaoh Investments(1) Exploration 50 50
Exploration and
Sukari Gold Mines Production 50 50
(1) Dormant company.
The Group's interest as a joint venture partner, in the above
jointly controlled entities, is detailed below. The amounts are
included in the consolidated financial statements of the Group
using the line-by-line reporting format.
31 December 31 December
2012 2011
Statement of financial position US$'000 US$'000
Current assets
Cash 32,107 32,100
Trade and other receivables 40,734 29,976
Inventories 94,636 72,631
Prepayments 289 247
----------- -----------
167,766 134,954
----------- -----------
Non-current assets
Exploration, evaluation and development 32,002 18,699
------ ------
32,002 18,699
------ ------
Current liabilities
Trade and other payables 53,601 21,639
------ ------
53,601 21,639
------ ------
Statement of comprehensive income
Revenue 426,133 340,479
Cost of sales (204,109) (128,201)
--------- ---------
Gross profit 222,024 212,278
Other operating income 37 700
Other operating costs 4,096 (1,631)
--------- ---------
Profit before income tax 226,157 211,347
Tax expenses - -
--------- ---------
Net profit for the year 226,157 211,347
--------- ---------
Capital commitments arising from the Group's interests in joint
ventures are disclosed in Note 19.
Through its wholly owned subsidiary, PGM, the Company entered
into the Concession Agreement with EMRA and the Arab Republic of
Egypt granting PGM and EMRA the right to explore, develop, mine and
sell gold and associated minerals in specific concession areas
located in the Eastern Desert of Egypt. The Concession Agreement
came into effect under Egyptian law on 13 June 1995.
In 2001 PGM, together with EMRA, were granted an Exploitation
Lease over 160 square kilometres surrounding the Sukari Project
site. The Exploitation Lease was signed by PGM, EMRA and the
Egyptian Minister of Petroleum and gives tenure for a period of 30
years, commencing 24 May 2005 and extendable by PGM for an
additional 30 years upon PGM providing reasonable commercial
justification.
In 2006 SGM, was incorporated under the laws of Egypt. SGM was
formed to conduct exploration, development, exploitation and
marketing operations in accordance with the Concession Agreement.
Responsibility for the day-to-day management of the Project rests
with the General Manger, who is appointed by PGM.
The fiscal terms of the Concession Agreement require that PGM
solely funds the SGM. PGM is however entitled to recover from sales
revenue recoverable costs, as defined in the Concession Agreement.
EMRA is entitled to a share of SGM's net production surplus or
profit share (defined as revenue less payment of the fixed royalty
to ARE and recoverable costs). As at 31 December 2012, PGMs has not
recovered its cost and accordingly, no EMRA entitlement has been
recognized to date, It is anticipated that the first payment to
EMRA will become payable during 2013, Any payment made to EMRA
pursuant to these provisions of the Concession Agreement will be
recognised as a variable royalty charge to the income
statement.
The Concession Agreement grants certain tax exemptions,
including the following:
-- From 1 April 2010, being the date of Commercial Production,
the Sukari Project is entitled to a 15 year exemption from any
taxes imposed by the Egyptian government on the revenues generated
from the Sukari Project. PGM and EMRA intend that SGM will in due
course file an application to extend the tax-free period for a
further 15 years. The extension of the tax-free period requires
that there has been no tax problems or disputes in the initial
period and that certain activities in new remote areas have been
planned and agreed by all parties;
-- PGM and SGM are exempt from custom taxes and duties with
respect to the importation of machinery, equipment and consumable
items required for the purpose of exploration and mining activities
at the Sukari Project. The exemption shall only apply if there is
no local substitution with the same of similar quality to the
imported machinery, equipment or consumables. Such exemption will
also be granted if the local substitution is more than 10% more
expensive than the imported machinery, equipment or consumables
after the additional of the insurance and transportation costs;
-- PGM, EMRA and SGM and their respective buyers will be exempt
from any duties or taxes on the export of gold and associated
minerals produced from the Sukari Project;
-- PGM at all times is free to transfer in US dollars or other
freely convertible foreign currency any cash of PGM representing
its share of net proceeds and recovery of costs, without any
Egyptian government limitation, tax or duty; and
-- PGM's contractors and sub-contractors are entitled to import
machinery. Equipment and consumable items under the "Temporary
Release System" which provided exemption from Egyptian customs
duty.
24. Earnings per share
Consolidated
31 December 31 December
2012 2011
Cents Per Cents Per
Share Share
Basic earnings per share 18.27 17.90
----------- -----------
Diluted earnings per share 18.26 17.88
----------- -----------
Basic earnings per share
The earnings and weighted average number of ordinary shares used
in the calculation of basic earnings per share are as follows:
Consolidated
31 December 31 December
2012 2011
$'000 US$'000
Earnings used in the calculation of basic EPS 199,038 193,993
----------- -----------
Consolidated
31 December 31 December
2012 2011
No. No.
Weighted average number of ordinary shares for
the purpose of basic EPS 1,089,653,789 1,083,738,358
------------- -------------
Diluted earnings per share
The earnings and weighted average number of ordinary shares used
in the calculation of diluted earnings per share are as
follows:
Consolidated
31 December 31 December
2012 2011
$'000 US$'000
Earnings used in the calculation of diluted EPS 199,038 193,993
----------- -----------
Consolidated
31 December 31 December
2011 Restated
2010
12 months 6 months
No. No.
Weighted average number of ordinary shares for
the purpose of diluted EPS 1,089,977,621 1,084,906,503
------------- -------------
Weighted average number of ordinary shares for
the purpose of basic EPS 1,089,653,789 1,083,738,358
Shares deemed to be issued for no consideration
in respect of employee options 323,832 1,168,145
------------- -------------
Weighted average number of ordinary shares used
in the calculation of diluted EPS 1,089,977,621 1,084,906,503
------------- -------------
No potential ordinary shares were excluded from the calculation
of weighted average number of ordinary shares for the purpose of
diluted earnings per share.
25. Notes to the statements of cash flows
(a) Reconciliation of cash and cash equivalents
For the purpose of the statement of cash flows, cash and cash
equivalents includes cash on hand and at bank and deposits.
31 December 31 December
2012 2011
US$'000 US$'000
Cash and cash equivalents 147,133 164,231
----------- -----------
(b) Reconciliation of profit for the year to cash flows from
operating activities
31 December 31 December
2012 2011
US$'000 US$'000
Profit for the year 199,038 193,993
Add/(less) non-cash items:
Depreciation/ amortisation of property, plant
and equipment 35,637 18,642
Stock write-off 20 295
Increase in provisions 7,159 171
Foreign exchange rate gain, net (4,320) (584)
Listed shares - unrealized gain - (93)
Share of loss in associate 330 -
Share based payments 1,981 1,496
Changes in working capital during the period
:
Increase in trade and other receivables (10,738) (29,870)
Increase in inventories (22,005) (34,612)
Decrease in prepayments 1,110 (1,116)
Increase in trade and other payables 13,193 6,508
----------- -----------
Cash flows generated from operating activities 221,405 154,830
----------- -----------
(c) Non-cash financing and investing activities
During the year there have been no non-cash financing and
investing activities. During the prior year 3,038,631 ordinary
shares valued at US$4.2 million and cash of US$6.2 million
totalling US$10,413,000 as per note 13 and were issued/paid to the
owners of Sheba Exploration Holdings Limited (previously, Sheba
Exploration (UK) plc) as consideration for the acquisition of
interests in four exploration licences in Ethiopia.
26. Financial instruments
(a) Group risk management
The Group manages its capital to ensure that entities within the
Group will be able to continue as a going concern while maximising
the return to stakeholders through the optimisation of the cash and
equity balance. The Group's overall strategy remains unchanged from
the previous financial period.
The Group has no debt and thus not geared at year-end or in the
prior year. The capital structure consists of cash and cash
equivalents and equity attributable to equity holders of the
parent, comprising issued capital and reserves as disclosed in
Notes 17 and 18. The Group operates in Australia, London, Jersey,
Egypt and Ethiopia. None of the Group's entities are subject to
externally imposed capital requirements.
The Group utilises inflows of funds toward the ongoing
exploration and development of the Sukari Gold Project in
Egypt.
Categories of financial assets and liabilities:
31 December 31 December
2012 2011
US$'000 US$'000
Financial assets
Available for sale assets 5,613 1,831
Cash and cash equivalents 147,133 164,231
Trade and other receivables 40,736 29,998
----------- -----------
193,482 196,060
----------- -----------
Financial liabilities
Other financial liabilities
Trade and other payables 54,606 24,509
----------- -----------
54,606 24,509
----------- -----------
(b) Financial risk management and objectives
The Group's overall risk management program focuses on the
unpredictability of financial markets and seeks to minimise
potential risk adverse effects and ensure that net cash flows are
sufficient to support the delivery of the Group's financial targets
whilst protecting future financial security. The Group continually
monitors and tests its forecast financial position against these
objectives.
The Group's activities expose it to a variety of financial
risks: market; commodity; credit; liquidity; foreign exchange; and
interest rate. These risks are managed under Board approved
directives through the Audit Committee. The Group's principal
financial instruments comprise interest bearing cash and cash
equivalents. Other financial instruments include trade receivables
and trade payables, which arise directly from operations.
It is, and has been throughout the period under review, Group
policy that no speculative trading in financial instruments be
undertaken.
(c) Market risk
The Group operates internationally and is exposed to foreign
exchange risk arising from various currency exposures, primarily
with respect to the Australian dollar, Great British pound and
Egyptian pound. Exposure to Canadian dollars has diminished
considerably when compared to prior periods. Foreign exchange risk
arises from future commercial transactions and recognised assets
and liabilities that are denominated in a currency that is not the
entity's functional currency. The risk is measured by regularly
monitoring, forecasting and performing sensitivity analyses on the
Group's financial position.
Financial instruments denominated in Great British pound,
Australian dollar and Eqyptian pound are as follows:
Great British Australian dollar Egyptian Pound
Pound
31 December 31 December 31 December 31 December 31 December 31 December
2012 2011 2012 2011 2012 2011
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Financial assets
Cash and cash equivalents 1,055 3,046 21,963 31,567 3,648 7,713
Available for sale
assets 4,062 - 1,550 1,831 - -
----------- ----------- ----------- ----------- ----------- -----------
5,117 3,046 23,513 33,398 3,648 7,713
----------- ----------- ----------- ----------- ----------- -----------
Financial liabilities
Trade and other payables 6,585 211 11,361 671 6,268 27,594
----------- ----------- ----------- ----------- ----------- -----------
6,585 211 11,361 671 6,268 27,594
----------- ----------- ----------- ----------- ----------- -----------
Net exposure (1,468) 2,835 12,152 32,727 (2,620) (19,881)
----------- ----------- ----------- ----------- ----------- -----------
The following table summarises the sensitivity of financial
instruments held at the reporting date to movements in the exchange
rate of the Great British and Egyptian pounds and Australian dollar
to the United States dollar, with all other variables held
constant. The sensitivities are based on reasonably possible
changes over a financial period, using the observed range of actual
historical rates.
Impact on profit Impact on equity
31 December 31 December 31 December 31 December
2012 2011 2012 2011
US$'000 US$'000 US$'000 US$'000
US$/GBGBP increase by 10% 133 (108) (155) (108)
US$/GBGBP decrease by 10% (133) 108 155 108
US$/A$ increase by 10% (1,105) (2,961) (144) (2,961)
US$/A$ decrease by 10% 1,105 2,961 144 2,961
US$/EGBP increase by 10% 238 (127) - (127)
US$/EGBP decrease by 10% (238) 127 - 127
The Group's sensitivity to foreign currency has decreased at the
end of the current period mainly due to the decrease in foreign
currency cash holdings in Australian dollars and Great British
pounds and a corresponding increase in US dollar cash holdings.
The Group has not entered into forward foreign exchange
contracts. Natural hedges are utilised wherever possible to offset
foreign currency liabilities. The Company maintains a policy of not
hedging its currency positions and maintains currency holdings in
line with underlying requirements and commitments.
(d) Commodity price risk
The Group's future revenue forecasts are exposed to commodity
price fluctuations, in particular gold prices. The Group has not
entered into forward gold hedging contracts.
(e) Interest rate risk
The Group's main interest rate risk arises from cash and short
term deposits and is not considered to be a material risk due to
the short term nature of these financial instruments. Cash deposits
are placed on term period of no more than 30 days at a time.
The financial instruments exposed to interest rate risk and the
Group's exposure to interest rate risk as at balance date were as
follows:
Weighted
Average
Effective
Interest Less than
Rate 1 month 1-12 months >12 months Total
% US$'000 US$'000 US$'000 US$'000
Consolidated
31 December 2012
Financial assets
Variable interest
rate instruments 0.64 33,251 111,898 - 145,149
Non- interest bearing - 48,333 - - 48,333
---------- ------------ ----------- --------
81,584 111,898 - 193,482
---------- ------------ ----------- --------
Financial liabilities
Variable interest - - - - -
rate instruments
Non-interest bearing - 54,606 - - 54,606
---------- ------------ ----------- --------
54,606 - - 54,606
---------- ------------ ----------- --------
31 December 2011
Financial assets
Variable interest
rate instruments 0.75 - 147,970 - 147,970
Non- interest bearing - 16,261 - - 16,261
---------- ------------ ----------- --------
16,261 147,970 - 164,231
---------- ------------ ----------- --------
Financial liabilities
Variable interest - - - - -
rate instruments
Non-interest bearing - 24,323 1,346 - 25,669
---------- ------------ ----------- --------
24,323 1,346 - 25,669
---------- ------------ ----------- --------
(f) Liquidity risk
The Group's liquidity position is managed to ensure that
sufficient funds are available to meet its financial commitments in
a timely and cost effective manner.
Ultimate responsibility or liquidity risk management rests with
the Board of Directors, who has established an appropriate
management framework for the management of the Group's funding
requirements. The Group manages liquidity risk by maintaining
adequate cash reserves and management monitors rolling forecasts of
the Group's liquidity on the basis of expected cash flow. The
tables above reflect a balanced view of cash inflows and outflows
and shows the implied risk based on those values. Trade payables
and other financial liabilities originate from the financing of
assets used in the Group's on-going operations. These assets are
considered in the Group's overall liquidity risk. Management
continually reviews the Group liquidity position including cash
flow forecasts to determine the forecast liquidity position and
maintain appropriate liquidity levels.
Liquidity risk: Less than
1 month 1-12 months >12 months Total
US$'000 US$'000 US$'000 US$'000
Consolidated
31 December 2012
Financial assets
Variable interest rate instruments 33,251 111,898 - 145,149
Non- interest bearing 48,333 - - 48,333
---------- ------------ ----------- --------
81,584 111,898 - 193,482
Financial liabilities
Variable interest rate instruments - - - -
Non-interest bearing 54,606 - - 54,606
---------- ------------ ----------- --------
54,606 - - 54,606
---------- ------------ ----------- --------
31 December 2011
Financial assets
Variable interest rate instruments - 147,970 - 147,970
Non- interest bearing 16,261 - - 16,261
---------- ------------ ----------- --------
16,261 147,970 - 164,231
---------- ------------ ----------- --------
Financial liabilities
Variable interest rate instruments - - - -
Non-interest bearing 24,323 1,346 - 25,670
---------- ------------ ----------- --------
24,323 1,346 - 25,670
---------- ------------ ----------- --------
(g) Credit risk
Credit risk refers to the risk that a counter-party will default
on its contractual obligations resulting in financial loss to the
Group. The Group has adopted a policy of only dealing with
credit-worthy counter-parties and obtaining sufficient collateral
or other security where appropriate, as a means of mitigating the
risk of financial loss from defaults. The Group measures credit
risk on a fair value basis. The Group's credit risk is concentrated
on one entity, but the Group has good credit checks on customers
and none of the trade receivables from the customer has been past
due. Also, the cash balances held in Canadian and Australian
dollars which are held with a financial institution with a high
credit rating.
The gross carrying amount of financial assets recorded in the
financial statements represents the Group's maximum exposure to
credit risk without taking account of the value of collateral or
other security obtained.
(h) Fair value
The carrying amount of financial assets and financial
liabilities recorded in the financial statements represents their
respective fair values, principally as a consequence of the short
term maturity thereof.
(i) Fair value measurements recognised in the statement of
financial position
The following table provides an analysis of financial
instruments that are measured subsequent to initial recognition at
fair value, Grouped into Levels 1 to 3 based on the degree to which
the fair value is observable:
-- Level 1 fair value measurements are those derived from quoted
prices (unadjusted) in active markets for identical assets or
liabilities;
-- Level 2 fair value measurements are those derived from inputs
other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly (i.e. as
prices) or indirectly (i.e. derived from prices); and
-- Level 3 fair value measurements are those derived from
valuation techniques that include inputs for the asset or liability
that are not based on observable market data (unobservable
inputs).
2012
------------------------------------
Level 1 Level 2 Level 3 Total
Available for sale financial
assets 5,613 - - 5,613
-------- -------- -------- ------
2011
------------------------------------
Level 1 Level 2 Level 3 Total
Available for sale financial
assets 1,831 - - 1,831
-------- -------- -------- ------
There were no financial assets or liabilities subsequently
measured at fair value on Level 3 fair value measurement bases.
27. Share based payments
Employee Share Option Plan (ESOP)
The consolidated entity had an Employee Share Option Plan (ESOP)
in place for executives and employees. Options were issued to key
management personnel under the Employee Option Plan 2006
(previously the Employee Option Plan 2002) as part of their
remuneration. Options were offered to key management personnel at
the discretion of the Directors, having regard, among other things,
to the length of service with the consolidated entity, the past and
potential contribution of the person to the consolidated entity and
in some cases, individual performance. Each share option converts
into one ordinary share of the Company on exercise. The options
carry neither rights to dividends nor voting rights and are not
transferable. Options vest over a period of 12 months, with 50%
vesting and exercisable after six months and the other 50% vesting
and exercisable after 12 months of issue. All options are issued
with a term of three years. At the discretion of the Directors part
or all of the options issued to an executive or employee may be
subject to performance based hurdles. No performance based hurdles
have been applied for options granted to date. Upon exercise of the
options the ordinary shares received rank equally with the existing
ordinary shares. No options have been offered under the ESOP in
2011 or 2012.
Executive Directors Loan Funded Share Plan (EDLFSP) &
Employee Loan Funded Share Plan (ELFSP)
Shares were issued to Executive Directors under the Executive
Directors Loan Funded Share Plan EDLFSP 2011 and Employees under
the ELFSP as part of their remuneration package.
Under the terms of the EDLFSP and ELFSP, the Company has
provided a limited recourse and interest free loan to certain
employees of the Company for the purpose of acquiring the New
Shares (the "Loan"). The purchase of the shares has been funded by
the Loan and the shares will not vest until certain performance
conditions are met. In the event the performance conditions are not
met, or the shares are forfeited by the participant, the Company
can either re-acquire the shares or direct the trustee to sell them
on, offsetting the proceeds against the outstanding loan amount and
waiving the remainder of the loan. Subject to performance
conditions and time based hurdles being met, the loan will be
repayable by the relevant employee in full on the earlier of the
termination date of the loan (three years from the date of issue)
or the date on which the shares are disposed of.
Further details of the EDLFSP and ELFSP can be found in the
Notice of General Meeting for the shareholder meeting held on
Tuesday, 15 February 2011, and full copies of the plan are
available upon request.
Further details of the performance conditions can be found in
the remuneration report.
2011 Employee Option Scheme
Options were issued under the 2011 Option Scheme (EOS) made in
accordance with thresholds set in plans approved by shareholders at
the Extraordinary General Meeting of Shareholders on 14 December
2011. All employees of the Group other than directors shall be able
to participate in the 2011 EOS. The Committee shall select from
time to time from such group the actual participants in the 2011
EOS.
The 2011 EOS provides for employees (other than Directors) to
receive up to an annual aggregate of options over ordinary shares,
with an exercise price calculated by either the volume weighted
average closing price of Ordinary Shares sold on an exchange for
the five trading days most recently preceding the day as at which
the market value is calculated or if market value is required to be
determined in another manner or another amount for the purposes of
tax legislation in another jurisdiction, then the value is so
determined at the date of issue. The ability to exercise the
options is conditional on the Group achieving its performance
hurdles. For the initial grants to be made under the 2011 EOS it is
the current intention that the performance criteria will be the TSR
performance criteria as detailed in the 2011 Executive LFSP.
Further details of the performance conditions can be found in the
remuneration report.
Under the 2011 EOS the exercise price of the options is
denominated in pound sterling. All options expire on the earlier of
their expiry date or termination of the individual's
employment.
Deferred Bonus Share Plan
During the year the Company implemented a Deferred Bonus Share
Plan (DBSP) which is a long term share incentive arrangement for
senior management (but not executive directors) and other employees
(participants).
Under the DBSP, the Board shall, at its absolute discretion,
require such eligible participants to defer up to one hundred per
cent (100%) of their bonus opportunity and such eligible
participants shall not be paid their deferred bonus in cash but
shall instead be granted a Deferred Bonus Award over such number of
Shares provided that the eligible participant remains in employment
on the date of grant (effectively the vesting date). The award of
the deferred shares will not have any performance criteria
attached. They will however be subject to a service period.
The total share-based payment charge relating to Centamin plc
shares for the year is split as follows:
31 December 31 December
2012 20121
US$'000 US$'000
2011 EOS 110 -
LFSP 1,650 1,496
DBSP 221 -
------------ -------------------
1,981 1,496
------------ -------------------
LFSP awards and EOS options granted during the year:
The fair value of the share-based payments awarded under the
LFSP and granted under the 2011 EOS was measured by the use of the
Black and Scholes model where share-based payments have non-market
based performance conditions. Where share-based payments are
subject to market conditions, fair value was measured by the use of
a Monte-Carlo simulation. The Monte-Carlo simulation has been used
to model the Company's share prices against the performance of the
chosen comparator group and the FTSE 250 at the relevant vesting
dates.
The assumptions used in these are set out below:
LFSP 2012 EOS 2012(1) LFSP 2011
------------ ------------------------------------
Date of Grant 05-Apr 05-Apr 15-Aug 21-Mar 21-Jun 30-Sep
Series number 31-34 35-40 41-46 21-25 26-29 30
------------------------- ------------ ------------ ------------ ------------ ------------ --------
Number of Instruments 5,100,000 750,000 800,000 8,742,500 825,000 400,000
------------------------- ------------ ------------ ------------ ------------ ------------ --------
Share price at
date of Grant
(GBP) 0.6380 0.6380 0.6950 1.2590 1.1710 1.1710
------------------------- ------------ ------------ ------------ ------------ ------------ --------
Exercise price
(GBP) 0.6754 0.6754 0.6823 1.2590 1.1710 1.1710
------------------------- ------------ ------------ ------------ ------------ ------------ --------
Vesting conditions(2) 1-3 1-3 1-3 1-3 1-3 1-3
------------------------- ------------ ------------ ------------ ------------ ------------ --------
Expected volatility(3) 51.67% 51.67% 51.48% 50.08% 47.05% 47.05%
------------------------- ------------ ------------ ------------ ------------ ------------ --------
Risk Free interest
rate(4) 0.41%-0.52% 0.41%-0.52% 0.18%-0.25% 0.78%-1.65% 0.56%-1.13% 1.13%
------------------------- ------------ ------------ ------------ ------------ ------------ --------
Expected departures 0% 0% 0% 0% 0% 0%
------------------------- ------------ ------------ ------------ ------------ ------------ --------
Expected outcomes
of meeting performance
targets at grant
date 100% 100% 100% 100% 100% 100%
------------------------- ------------ ------------ ------------ ------------ ------------ --------
FV at grant date
(weighted average)
(GBP) 0.2022 0.1300 0.1939 0.4364 0.3134 0.3842
------------------------- ------------ ------------ ------------ ------------ ------------ --------
(1) There were no options granted under the 2011 EOS during
2011.
(2) Variable vesting dependent on one to three years of
continuous employment and, for certain series, market based
performance conditions being achieved.
(3) The expected volatility of Centamin and each company in the
chosen comparator group and the FTSE 250 Index Companies (FTSE 250)
has been calculated using approximately 2 years of historical price
data.
(4) The expected rate of return used in the valuations for
Centamin and other UK comparator companies was set to equal the UK
government bond rate with a yield-to-maturity that is equivalent to
the tenor of the Options. When modelling the share price of
Canadian comparator companies, the Canadian government bond rate
was used.
Deferred share awards granted during the year:
DBSP 2012
------------------------------- -----------
Grant date 11 October
2012
------------------------------- -----------
Number of instruments 1,000,000
------------------------------- -----------
Share price at grant date GBP 1.0060
------------------------------- -----------
Share price at grant date US$ 1.6265
------------------------------- -----------
Vesting period (years) (1) 1-3
------------------------------- -----------
Expected dividend yield (%) n/a
------------------------------- -----------
Fair value (GBP) (2) 1.0060
------------------------------- -----------
Fair value (US$) (2) 1.6265
------------------------------- -----------
(1) Variable vesting dependent on one to three years of
continuous employment.
(2) The fair value of shares in the DBSP was calculated by using
the closing share price on grant date, converted at the closing
GBP:US$ foreign exchange rate on that day, no other factors were
taken into account in determining the fair value.
The following table reconciles the outstanding share options
granted under the Employee Share Option Plan at the beginning and
end of the reporting period:
31 December 2012 31 December 2011
US$ Weighted US$ Weighted
average average
Number exercise Number exercise
of options price of options price
----------- ------------ ----------- ------------
Balance at beginning of the period 1,630,150 1.20 3,325,150 1.2432
Granted during the period (a) - - - -
Expired/Lapsed during the period
(b) (1,630,150) 1.9228 (350,000) 1.8658
Exercised during the period - - (1,345,000) 1.1334
Balance at the end of the period
(c) - - 1,630,150 1.20
----------- ------------ ----------- ------------
Exercisable at the end of the
period - - 1,630,150 1.20
----------- ------------ ----------- ------------
The following table reconciles the outstanding share options
granted under 2011 Employee Option Scheme, at the beginning and end
of the reporting period:
31 December 2012 31 December 2011
US$ Weighted US$ Weighted
average average
Number exercise Number exercise
of options price of options price
----------- ------------ ----------- ------------
Balance at beginning of the period - - - -
Granted during the period (a) 1,550,000 1.0718 - -
Expired/Lapsed during the period
(b) (150,000) 1.0730 - -
Exercised during the period - - - -
Balance at the end of the period
(c) 1,400,000 1.0716 - -
----------- ------------ ----------- ------------
Exercisable at the end of the
period 1,400,000 1.0716 - -
----------- ------------ ----------- ------------
The following reconciles the outstanding share options granted
under the EDLFSP and ELFSP at the beginning and end of the
reporting period:
31 December 2012 31 December 2011
US$ Weighted US$ Weighted
average average
Number exercise Number exercise
of shares price of shares price
----------- --------------- ---------- --------------
Balance at beginning of the period 7,472,222 2.00547 - -
Granted during the period (a) 5,100,000 1.0730 9,967,500 2.01195
Expired/Lapsed during the period
(b) (2,435,000) 1.8169 (2,495,278) 2.03138
Exercised during the period - - - -
Balance at the end of the period
(c) 10,137,222 1.5808 7,472,222 2.00547
----------- ----------- ------------- ------------
Exercisable at the end of the
period 275,000 1.9435 - -
----------- ----------- ------------- ------------
The following reconciles the outstanding share awards granted
under the DBSP at the beginning and end of the reporting
period:
31 December 31 December
2012 2011
Number Number of
of awards awards
----------- -----------
Balance at beginning of the period - -
Granted during the period 1,000,000 -
Expired/Lapsed during the period - -
Exercised during the period - -
Balance at the end of the period 1,000,000 -
----------- -----------
Exercisable at the end of the period - -
----------- -----------
28. Key management personnel compensation
Key management personal are persons having authority and
responsibility for planning, directing and controlling the
activities of the Group, directly or indirectly, including any
director (executive or otherwise) of the Group.
The aggregate compensation made to key management personnel of
the consolidated entity and the Company is set out below:
31 December 31 December
2012 2011
US$ US$
----------- -----------
Short-term employee benefits 7,916,848 2,257,547
Long-term employee benefits 116,226 40,216
Post-employment benefits 78,295 33,215
Share-based payments 1,209,491 1,495,506
Total 9,320,860 3,826,484
----------- -----------
29. Related party transactions
a) Equity interests in related parties
Equity interests in subsidiaries
Details of the percentage of ordinary shares held in
subsidiaries are disclosed in Note 21.
Equity interests in associates and joint ventures
Details of interests in joint ventures are disclosed in Note
23.
b) Key management personnel compensation
Details of key management personnel compensation are disclosed
below.
c) Key management personnel equity holdings
The details of the movement in key management personnel equity
holdings of fully paid ordinary shares in Centamin plc during the
financial period are as follows:
Balance Granted Granted Balance
at as as remuneration Received Net other at
1 January remuneration (DBSP) on exercise change 31 December Balance
31 December 2012 2012(2) (LFSP) of options (1) 2012 held nominally
---------- ------------- ---------------- ------------ --------- ------------ ---------------
J El-Raghy 71,445,086 - - - (500,000) 70,945,086 -
T Schultz 1,000,000 - - - 30,000 1,030,000 -
G Haslam 50,000 - - - 52,056 102,056 -
M Arnesen 15,000 - - - - 15,000 -
M Bankes 60,000 - - - 30,000 90,000 -
K Tomlinson - - - - - - -
P Louw 637,500 600,000 500,000 - - 1,737,500 -
A Pardey 775,000 510,000 500,000 - - 1,785,000 -
H Brown 475,000 - - - - 475,000 -
C Aujard - - - - - - -
Y El-Raghy - 510,000 - - - 510,000 -
A Davidson - - - - - - -
Balance Granted Granted Balance
at as as remuneration Received Net other at
1 January remuneration (DBSP on exercise change 31 December Balance
31 December 2011 2011(2) (LFSP) of options (1) 2011 held nominally
---------- ------------- --------------- ------------ ----------- ------------ ---------------
J El-Raghy 69,195,086 1,000,000 - - 1,250,000 71,445,086 -
H Michael - - - - - - -
T Schultz - 1,000,000 - 1,000,000 (1,000,000) 1,000,000 -
C Cowden - - - - - - -
H Bottomley - - - - - - -
G Haslam - - - - 50,000 50,000 -
M Arnesen - - - - 15,000 15,000 -
M Bankes - - - - 60,000 60,000 -
K Tomlinson - - - - - - -
P Louw - 600,000 - - 37,500 637,500 -
M DiSilvio - - - - - - -
H Brown 250,000 225,000 - - - 475,000 -
C Aujard - - - - - - -
Y El-Raghy - - - - - - -
(1) 'Net other change' relates to the on market acquisition or
disposal of fully paid ordinary share, including the forfeiture of
shares awarded under the LFSP and DBSP.
(2) includes shares held under LFSP/DBSP
d) Key management personnel share option holdings
The details of the movement in key management personnel options
to acquire ordinary shares in Centamin plc are as follows:
Balance
Balance -
Balance Balance vested vested
at Granted at during and exercisable
31 December 1 January as 31 December the financial at 31 December
2012 2012 remuneration Exercised Other changes 2012 period 2012
---------- ------------- --------- ------------- ------------ -------------- ----------------
J El-Raghy - - - - - - -
T Schultz - - - - - - -
G Haslam - - - - - - -
M Arnesen - - - - - - -
M Bankes - - - - - - -
K Tomlinson - - - - - - -
P Louw - - - - - - -
A Pardey - - - - - - -
H Brown - - - - - - -
C Aujard - 600,000 - - 600,000 - -
Y El-Raghy - - - - - - -
A Davidson - 500,000 - - 500,000 - -
Balance
Balance -
Balance Balance vested vested
at Granted at during and exercisable
31 December 1 January as 31 December the financial at 31 December
2011 2011 remuneration Exercised Other changes 2011 period 2011
---------- ------------- ----------- ------------- ------------ -------------- ----------------
J El-Raghy - - - - - - -
H Michael - - - - - - -
C Cowden - - - - - - -
H Bottomley - - - - - - -
T Schultz 1,000,000 - (1,000,000) - - - -
G Haslam - - - - - - -
M Arnesen - - - - - - -
M Bankes - - - - - - -
K Tomlinson - - - - - - -
P Louw - - - - - - -
M Di Silvio 475,000 - (125,000) (350,000) - - -
H Brown - - - - - - -
C Aujard - - - - - - -
Y El-Raghy - - - - - - -
Apart from the details disclosed in this note, no key management
personnel has entered into a material contract with the Company or
the economic entity since the end of the previous financial year
and there were no material contracts involving key management
personnel interests at year-end.
e) Other transactions with key management personnel
The related party transactions for the year ended 31 December
2012 are summarised below:
Mr J El-Raghy is a director and shareholder of El-Raghy
Kriewaldt Pty Ltd ("El-Raghy Kriewaldt"). El-Raghy Kriewaldt
provides office premises to the Company. All dealings with El-Raghy
Kriewaldt are in the ordinary course of business and on normal
terms and conditions. Rent and office outgoings paid to El-Raghy
Kriewaldt during the period were A$21,499 or US$22,103 (31 December
2011: A$33,480 or US$32,192).
Mr C Cowden, a Non Executive Director until his resignation on
26 May 2011, was also a director and shareholder of Cowden Limited,
which provided insurance broking services to the Company. All
dealings with Cowden Limited were on normal terms and conditions.
Cowden Limited was paid A$2,293 or US$2,397 during the period for
which Mr C Cowden was a related party during the year ended 31
December 2011, with A$11,815 or US$12,349 paid to Cowden Limited to
be passed on to underwriters for premiums during the period for
which Mr C Cowden was a related party during the year ended 31
December 2011.
f) Transactions with the Government of Egypt
Royalty costs attributable to the Government of Egypt of
US$12,769,084 (2011: US$13,360,000) were incurred in 2012.
g) Transactions with other related parties
Other related parties include the parent entity, subsidiaries,
and other related parties.
During the prior financial period, the Company recognised tax
payable in respect of the tax liabilities of its wholly owned
subsidiaries. Payments to/from the Company are made in accordance
with terms of the tax funding arrangement.
During the financial period the Company provided funds to and
received funding from subsidiaries.
All amounts advanced to related parties are unsecured. No
expense has been recognised in the period for bad or doubtful debts
in respect of amounts owed by related parties.
Transactions and balances between the Company and its
subsidiaries were eliminated in the preparation of consolidated
financial statements of the Group.
30. Subsequent events
As referred to in Note 20, the Group is involved in on-going
litigation in respect of the both the price at which Diesel Fuel
Oil is supplied to the mine at Sukari and the validity of the
160km(2) exploitation lease.
Subsequent to year end the Company acquired a further interest
in Nyota Minerals Limited and Sahar Minerals Limited for
US$1,163,969 and US$500,000 respectively.
Pursuant to the provisions of the Concession Agreement, any
profit share payments made to EMRA are due on an annual basis at
the end of SGM's financial year, being 30 June. Based on the
Company's calculation there was no Net Profit Share due to EMRA as
at 30 June 2012, nor is any likely to be due as at 30 June 2013.
Furthermore, it is expected that there will be Profit Share due to
EMRA for the SGM financial year ending 30 June 2014, based on
budgeted production, gold price and operating expense forecasts.
Following discussions with EMRA, and with a view to demonstrating
goodwill toward the Egyptian government, PGM has made an advance
payment in relation to the future Net Profit Share to the value of
US$8,200,000. Calculations for the share of Net Profit Share will
be done annually on the audited accounts of SGM and this advance
payment will be netted off against any future Net Profit Share that
becomes payable to EMRA.
There were no other significant events occurring after the
reporting date requiring disclosure in the Financial
Statements.
NON-GAAP FINANCIAL MEASURES
Three non-GAAP financial measures are used in this report:
1) EBITDA: "EBITDA" is a non-GAAP financial measure, which
excludes the following from profit before tax:
-- Finance costs;
-- Finance income; and
-- Depreciation and amortisation.
Management believes that EBITDA is a valuable indicator of the
Group's ability to generate liquidity by producing operating cash
flow to fund working capital needs and fund capital expenditures.
EBITDA is also frequently used by investors and analysts for
valuation purposes whereby EBITDA is multiplied by a factor or
"EBITDA multiple" that is based on an observed or inferred
relationship between EBITDA and market values to determine the
approximate total enterprise value of a company. EBITDA is intended
to provide additional information to investors and analysts and
does not have any standardized definition under IFRS and should not
be considered in isolation or as a substitute for measures of
performance prepared in accordance with IFRS. EBITDA excludes the
impact of cash costs and income of financing activities and taxes,
and therefore is not necessarily indicative of operating profit or
cash flow from operations as determined under IFRS. Other companies
may calculate EBITDA differently. The following table provides a
reconciliation of EBITDA to profit for the year attributable to the
Company.
Reconciliation of profit before tax to EBITDA:
Year ended Year ended Year ended
31 December 31 December 31 December
2012 2012 2011
Before Exceptional Including Exceptional
items items(1)
------------------- -------------------- ----------------------- -------------
US$'000 US$'000 US$'000
------------------- -------------------- ----------------------- -------------
Profit before tax 231,712 198,594 193,993
------------------- -------------------- ----------------------- -------------
Finance income (898) (898) (1,288)
------------------- -------------------- ----------------------- -------------
Depreciation and
amortisation 35,637 35,637 18,642
------------------- -------------------- ----------------------- -------------
EBITDA 266,451 233,333 211,347
------------------- -------------------- ----------------------- -------------
(1) Profit before tax, Depreciation and amortisation and EBITDA
includes an exceptional provision to reflect the removal of fuel
subsidies (refer to Note 6 of the financial statements for further
details).
2) Cash Cost per Ounce Calculation: "Cash cost per ounce" is a
non-GAAP financial measure. Cash Cost per ounce is a measure of the
average cost of producing an ounce of gold, calculated by dividing
the operating costs in a period by the total gold production over
the same period. Operating costs represent total operating costs
less administrative expenses, royalties, depreciation and
amortization. Management uses this measure internally to better
assess performance trends for the Company as a whole. The Company
believes that, in addition to conventional measures prepared in
accordance with GAAP, certain investors use such non-GAAP
information to evaluate the Company's performance and ability to
generate cash flow. The Company believes that these measures
provide an alternative reflection of the Group's performance for
the current period and are an alternative indication of its
expected performance in future periods. Cash cost is intended to
provide additional information, does not have any standardized
meaning prescribed by GAAP and should not be considered in
isolation or as a substitute for measures of performance prepared
in accordance with GAAP. This measure is not necessarily indicative
of operating profit or cash flow from operations as determined
under GAAP. Other companies may calculate these measures
differently.
Reconciliation of Cash Cost per Ounce:
Year ended Year ended Year ended
31 December 31 December 31 December
2012 2012 2011
Before Including
Exceptional Exceptional
items items(1)
----------------------- ---------- ------------- ------------- -------------
Mine production costs
(Note 6) (US$) 140,067 176,721 112,393
----------------------- ---------- ------------- ------------- -------------
Less: Refinery and
transport (US$) (848) (848) 202
----------------------- ---------- ------------- ------------- -------------
Cash costs (US$) 139,219 175,873 112,595
----------------------- ---------- ------------- ------------- -------------
Gold Produced - Total (oz) 262,828 262,828 202,699
----------------------- ---------- ------------- ------------- -------------
Cash cost per ounce (US$/oz) 530 669 556
----------------------- ---------- ------------- ------------- -------------
(1) Mine production costs, Cash costs and Cash cost per ounce
includes an exceptional provision against prepayments recorded in
Q4 to reflect the removal of fuel subsidies (refer to Note 6 of the
financial statements for further details).
3) Cash, Bullion, Gold Sales Receivables and Available-for-sale
Financial Assets: Cash, Bullion, Gold Sales Receivables and
Available-for-sale Financial Assets include Cash and cash
equivalents, bullion on hand, gold sales receivables and
available-for-sale financial assets (equities). This is a non-GAAP
financial measure any other companies may calculate these measures
differently.
Reconciliation to cash, bullion, gold sales receivables and
available-for-sale financial assets:
Year ended Year ended
31 December 31 December
2012 2011
--------------------------------------- ------------- -------------
US$'000 US$'000
--------------------------------------- ------------- -------------
Cash and cash equivalents (Note
25) 147,133 164,231
--------------------------------------- ------------- -------------
Bullion on hand 25,915 12,380
--------------------------------------- ------------- -------------
Gold Sales Receivable (Note 9) 40,736 29,976
--------------------------------------- ------------- -------------
Available-for-sale financial assets
(Note 14.1) 5,613 1,831
--------------------------------------- ------------- -------------
Cash, Bullion, Gold Sales Receivables
and Available-for-sale Financial
Assets 219,397 208,418
--------------------------------------- ------------- -------------
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.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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