TIDMCEY
RNS Number : 6587V
Centamin PLC
01 February 2017
For immediate release 1 February 2017
Centamin plc ("Centamin" or "the Company")
(LSE:CEY, TSX:CEE)
Centamin plc results for the year ended 31 December 2016
Josef El-Raghy, Chairman of Centamin, commented: "During 2016
Centamin's flagship Sukari Gold Mine continued to deliver
substantial free cash flows, driven by a seventh successive year of
production growth and through reductions in operating costs. This
performance has allowed Centamin to maintain its strategic focus on
generating shareholder returns and value-accretive growth. A
significant milestone was achieved during the year, as the capital
investment in the Sukari operation by Centamin's wholly-owned
subsidiary Pharaoh Gold Mines ("PGM") was recovered from cash flows
to the extent that profit share commenced with the Egyptian
Government during the third quarter. Centamin ended the year with
US$428 million in cash, bullion on hand, gold sales receivables and
available-for-sale financial assets, an increase of US$197 million
during the year. I am pleased to announce that a final dividend for
2016 of 13.5 US cents per share has been proposed, representing a
full year pay-out of US$178 million, equivalent to approximately
70% of our net free cash flow in 2016. This follows the update to
our dividend policy announced on 9 January 2017 to pay out at least
30% of our net free cash flow. This policy and the proposed full
year payment for 2016 reflects our commitment to maintain strong
fiscal discipline in managing our existing portfolio of assets, and
to return to shareholders any cash reserves above those required to
sustain Centamin's value-driven growth strategy."
Operational Highlights(1),(2)
-- Production of 551,036 ounces, a 26% increase on 2015 and above the revised guidance range.
-- Cash cost of production of US$513 per ounce, down from US$713
per ounce in 2015 and below the revised guidance range, driven by
higher production and reductions in mine production costs, mainly
due to lower fuel prices.
-- All-in sustaining costs (AISC) of US$694 per ounce, down from
US$885 per ounce in 2015 and below the revised guidance range, due
to the factors affecting the cash cost of production.
-- Record processing throughput of 11.6Mt, an increase of 9% on
2015 and above our base case forecast rate of 11Mtpa.
-- Record open pit total material movement (waste plus ore) of
62.2Mt, an increase of 8% on 2015.
-- Underground ore mined 1.02Mt (down 12% 2015) at a grade of
9.04g/t (up 40% on 2015), achieving a sustained annualised rate
above our base case forecast of 1Mt per annum at a grade of at
least 6g/t.
-- 2017 guidance of 540,000 ounces of gold at US$580 per ounce
cash cost of production and US$790 AISC.
-- A new discovery from exploration in Côte d'Ivoire, with a
maiden resource of 0.3Moz at 1.6g/t Indicated and 1.0Moz at 1.3g/t
Inferred covering five prospects within a 5km radius area and
remaining open at depth and along strike.
-- Evaluation of results from Burkina Faso is ongoing, which
will guide further drilling planned for 2017.
Financial Highlights(1),(2)
-- EBITDA US$373 million, up 145% on 2015, due to higher gold
prices, increased production and lower costs.
-- Basic earnings per share of 18.61 US cents, up 313% on the
prior year. Profit sharing with the Egyptian Mineral Resources
Authority ("EMRA") commenced during Q3 2016, with earnings per
share (before profit share) of 23.05 US cents, up 411% on the prior
year.
-- Centamin remains debt-free and unhedged with cash, bullion on
hand, gold sales receivable and available-for-sale financial assets
of US$428 million at 31 December 2016, up 85% (2015 US$231
million).
-- Proposed final dividend of 13.5 US cents per share; total
2016 dividend payout of 15.5 US cents per share (c.US$178
million).
Legal Developments in Egypt
-- The Supreme Administrative Court appeal and Diesel Fuel Court
Case are both on-going. With the potential for the legal process in
Egypt to be lengthy there may be a number of hearings and
adjournments before decisions are reached. Any enforcement of the
Administrative Court decision has been suspended pending the appeal
ruling.
Q4 2016 Q4 2015 2016 2015
-------------------------------- ----------- -------- -------- -------- --------
Gold produced ounces 136,787 117,644 551,036 439,072
Gold sold ounces 130,959 117,351 546,630 437,571
Cash cost of production US$/ounce 536 667 513 713
AISC US$/ounce 720 842 694 885
Average realised gold
price US$/ounce 1,207 1,103 1,256 1,159
-------------------------------- ----------- -------- -------- -------- --------
Revenue US$'000 158,307 130,196 687,387 508,396
EBITDA US$'000 81,762 30,589 372,885 152,189
Profit before tax US$'000 58,870 4,747 266,829 58,407
Basic EPS US cents 5.09 (0.19) 18.61 4.51
Cash generated from operations US$'000 69,869 48,277 366,295 185,542
-------------------------------- ----------- -------- -------- -------- --------
(1) Cash cost of production, AISC, EBITDA and cash, bullion on
hand, gold sales receivables and available-for-sale financial
assets are non-GAAP measures and are defined at the end of the
Financial Review.
(2) Basic EPS, EBITDA, cash cost of production and AISC reflect
a provision against prepayments to reflect the removal of fuel
subsidies which occurred in January 2012 (refer to note 12 of the
financial statements for further details).
Centamin will host a conference call and webcast on Wednesday, 1
February 2017 at 9.00am (London, UK time) to update investors and
analysts on its results. Centamin will also be hosting a Capital
Markets Day for analysts and investors simultaneously with the
preliminary results. Participants may join the call by dialling one
of the following two numbers, approximately 10 minutes before the
start of the call. The live webcast will be available on Centamin's
website at http://www.centamin.com/media/press-releases and on the
link below.
UK Toll Free: 0800 358 6377
International Toll number: +44 (0)330 336 9411
Participant code: 7525185
Webcast link:
http://vm.buchanan.uk.com/2017/centamin010217/registration.htm
A recording of the webcast will be available from 1:00pm GMT on
1 February 2017 on the website and on the link above.
________________________________
Chairman's statement
Centamin ended the year with US$428 million in cash, bullion on
hand, gold sales receivables and available-for-sale financial
assets. The increase of US$197 million during the twelve-month
period highlights the continued potential of the business to
self-fund its next stages of growth from cash flows, whilst at the
same time sustaining industry-leading dividend returns to
shareholders.
The board of directors approved an interim 2016 payment of 2.00
US cents per share (versus a 2015 interim payment of 0.97 US cents
per share). I am pleased to announce that, with the strong
performance of our flagship asset and solid cash flows carrying
through into the second half, a final dividend for 2016 of 13.5 US
cents per share has been proposed for approval at the forthcoming
AGM on 21 March 2017. This represents a full year pay-out of US$178
million, which is equivalent to approximately 70% of our net free
cash flow in 2016 and follows the update to our dividend policy
which was announced on 9th January 2017, as follows:
The Company's dividend policy sets a minimum payout level
relative to cash flow while considering the financial condition of,
and outlook for, the Company. When determining the amount to be
paid the board will take into consideration the underlying
profitability of the Company and significant known or expected
funding commitments. Specifically, the board will aim to approve an
annual dividend of at least 30% of the Company's net cash flow
after sustaining capital costs and following the payment of Profit
Share due to the Government of Egypt.
This dividend policy and the proposed full year payment for 2016
reflects our commitment to maintain strong fiscal discipline in
managing our existing portfolio of assets, and to return to
shareholders any cash reserves above those required to sustain our
value-driven growth strategy. We also remain committed to our
policy of being 100% exposed to the gold price through an unhedged
position and with a zero-debt balance sheet.
During the year both the processing and underground mining
operations at Sukari achieved levels of productivity that were
above our base case annualised forecasts. As a result, full-year
production of 551,036 ounces was above the revised guidance range
of 520,000 to 540,000 ounces.
The cash cost of production improved significantly to US$513 per
ounce from US$713 per ounce in 2015, below our revised forecast of
between US$530 and US$550 per ounce, due to the above-forecast gold
production and an 8% reduction in mine production costs. The main
positive impact on costs was from reductions in the price set by
government for fuel, which remained below originally forecast
levels throughout the year in line with lower international oil
prices. In addition, during the fourth quarter local costs in Egypt
were reduced in US Dollar terms following a devaluation of the
Egyptian Pound. In line with the reduction in operating costs, the
AISC of US$694 per ounce marked an improvement on US$885 per ounce
in 2015, and was below our revised forecast of between US$720 and
US$750 per ounce.
We expect the strong levels of productivity to be maintained in
2017, with forecast production of 540,000 ounces at a cash cost of
production of US$580 per ounce and an all-in sustaining cost of
US$790 per ounce. Ongoing optimisation of the Sukari operation, in
particular within the processing and underground mining functions,
continues to offer scope for further production growth and
reductions in cash costs and AISC.
2016 revenues of US$687.4 million were up 35% year-on-year, with
an 8% increase in realised gold prices and a 25% increase in gold
sales. EBITDA increased by 145% to US$372.9 million, with an
increase of gross operating margin resulting from the higher
revenue and decreased mine production costs, discussed above.
Also in line with this increased margin, profit before tax of
US$266.8 million was up 357% on 2015 and earnings per share (before
profit share) for 2016 was US23.05 cents, compared with US4.51
cents in 2015. Profit for the year following deduction of profit
share was US$214.8 million, equating to US18.61 cents basic
earnings per share (compared with US4.51 cents in 2015).
The underground operation at Sukari is an important value-driver
for our business and we expect further growth of the reserve over
the coming years as development and exploration continues. In
August, we commenced development of a new exploration decline
within the north-eastern Cleopatra zone of Sukari Hill. Whilst the
infrastructure is being developed with the capacity to support
mining rates of up to 1 million tonnes per annum from this area,
ultimate production rates will depend on future results from the
drilling programme and development.
Centamin remains in a strong position to continue investing in
its long-term growth throughout the cycle. Beyond Sukari we remain
focussed on our extensive licence holdings in West Africa. Momentum
continues to build in Côte d'Ivoire, with further prospective
licence holdings added to our portfolio and a new discovery at the
Doropo project in the northeast of the country, where drilling to
date has led to a maiden resource estimate of 0.3Moz Indicated and
1.0Moz Inferred. Further work in 2017 will aim to upgrade and
expand on this positive start towards project development. In
Burkina Faso, we continue to evaluate data from the extensive
drilling programs carried out to date and further work is being
planned for the year ahead. I look forward to updating you further
in due course with our progress towards unlocking the Company's
next stage of growth from these highly prospective regions.
Whilst disciplined and sustainable growth on our existing
projects remains a key focus, we continue to evaluate opportunities
to grow through the acquisition of projects that offer the
potential for the Company to deliver on its strategic
objectives.
Developments in the two litigation actions, Diesel Fuel Oil and
Concession Agreement, are described in further detail in Note 21 to
the financial statements. In respect of the latter, the Company
continues to believe that it has a strong legal position and, in
addition, that it will ultimately benefit from Law no. 32 of 2014,
which came into force in April 2014 and which restricts the
capacity for third parties to challenge any contractual agreement
between the Egyptian government and an investor. This law, whilst
in force and ratified by the new parliament, is currently under
review by the Supreme Constitutional Court of Egypt. After a series
of delays and adjournments, the Concession Agreement appeal has now
been stayed until the Supreme Constitutional Court has ruled on the
validity of Law no. 32.
I would like to close by thanking all those at Sukari, in
Alexandria, Burkina Faso, Côte d'Ivoire, Jersey and Perth for their
efforts in 2016 as Centamin continued on its path to becoming an
established, cash-generative and growing gold producer.
Your Company remains well positioned to deliver outstanding
shareholder returns in the coming years. I look forward to updating
you further over the course of 2017, and would welcome you to join
us at our AGM, which this year will be held in Jersey on 21 March
2017.
Josef El--Raghy
Chairman
________________________________
Final Dividend
The Directors proposed a final dividend of 13.5 US cents per
share on Centamin plc ordinary shares (totalling approximately
US$155.5 million) for a full year total of 15.5 US cents per share
for a totally pay-out of US$178 million. The final dividend for
2016 will be paid to shareholders on 31 March 2017, subject to
shareholder approval at the AGM to be held in Jersey on 21 March
2017. The dividend will be paid to shareholders on the register on
the Record Date of 3 March 2017.
The key dates with respect to the dividend are as follows:
London Stock Exchange (T+2)
EX-DIV DATE: 2 March 2017
RECORD DATE: 3 March 2017
LAST DATE FOR RECEIPT OF CURRENCY ELECTIONS: 10 March 2017
PAY DATE: 31 March 2017
Toronto Stock Exchange (T+3)
EX-DIV DATE: 1 March 2017
RECORD DATE: 3 March 2017
PAY DATE: 31 March 2017
The dates set out above are based on the Directors' current
expectations and may be subject to change. If any of the dates
should change, the revised dates will be announced by press release
and will be available at www.centamin.com
As a Jersey incorporated company, there is no requirement for
Centamin plc to make any withholding or deduction on account of
Jersey tax in respect of the dividend.
Shareholders who wish to elect to receive sterling dividends can
mandate payments directly to their UK bank or building society by
visiting the Investor Centre website at www.investorcentre.co.uk/je
or by completing the dividend mandate form which is available at
www.centamin.com and posting it back to the registrars in
accordance with the instructions set out in the form. The
registrars retain the mandates previously provided by shareholders
and will apply the instructions for this and future dividends.
Our registrars have also arranged a global payment service
allowing payment directly to your designated account, please visit
www.investorcentre.co.uk/je or www.centamin.com for details. The
currency election mandate will be applicable for shareholders with
a UK bank account. The global payment service is a service provided
by the registrars for shareholders registered on the LSE and
transfer charges may apply.
The last date for shareholder currency elections and dividend
mandates to be received by the Company will be 10 March 2017. The
currency conversion rate for those electing to receive Sterling
will be based on the foreign currency exchange rates on 10 March
2017. The rate applied will be published on the Company's website
on 13 March 2017.
________________________________
Chief Executive Officer's report
Whilst the gold market conditions improved during the first half
of 2016, Centamin remained focussed on its drive for productivity
and efficiency at the Sukari Gold Mine, and undertook a growth
strategy aimed at enhancing shareholder returns over the
long-term.
A seventh successive year of growth in 2016 saw production of
551,036 ounces increase by 26% over 2015 and exceed the top end of
our revised annual guidance range of between 520,000 and 540,000
ounces. Fourth quarter production was 136,787 ounces, an 8%
reduction on the previous quarter, mainly due a lower average head
grade of open pit ore of 0.85g/t (versus 1.14g/t in the third
quarter), in line with the mining plan as a low-grade cutback in
the east wall of the pit was developed.
Safety is a critical area of Centamin's performance and our aim
is to ensure that every person returns safe at the end of each
shift. Continued development of the onsite health and safety
culture at Sukari has resulted in a low LTIFR for 2016 of 0.27 per
200,000 man-hours. Centamin remains committed to further improving
health and safety during 2017 towards our 'zero-harm' target.
The open pit total material movement in 2016 was 62.2Mt, an
increase of 8% on the prior year, due to improved mining
productivity and equipment utilisation, at an average mined grade
of 0.93g/t. During the third quarter of 2016, open pit mining rates
had achieved our annualised base case rate of approximately 65Mt of
total material movement (ore plus waste) and mined grades had
progressed towards the reserve average. During Q1 2017 the open pit
is scheduled to develop a low-grade east wall cutback and planned
gold production will be lower than in Q4 2016. Grades are forecast
to return towards the reserve average from Q2 2017 and the
operation remains on a secure footing to deliver the scheduled
material movements for the remaining mine life.
The underground mine delivered 1.02Mt of ore (a 12% decrease on
2015) at a grade of 9.04g/t (up 40% on 2015), achieving a sustained
annualised rate in excess of our base case forecast of 1Mt per
annum of ore at a grade of at least 6g/t.
The process plant also continued to operate at levels above our
base case forecast rate of 11Mtpa, with 11.6Mt of ore processed in
2016 (a 9% increase on 2015). The average metallurgical recovery
was 89.4%, an increase of 0.6% on 2015. Work continues to develop
the potential to improve and sustain recoveries at the 90% level
with increasing throughput rates.
Sukari's cost performance during 2016 provides a strong
indication for the potential of the operation to generate
significant free cash flow over the coming years. There was a
year-on-year decrease in operating costs per tonne in both the open
pit mining and processing areas, principally driven by reductions
in the local diesel price during the first half of 2016, driven by
international fuel price movements. During the fourth quarter, a
devaluation of the Egyptian Pound versus US Dollar also had a
positive impact on local costs.
As a result of these factors, the cash cost of production of
US$513 was below guidance of between US$530 and $550 per ounce. The
AISC of US$694 was similarly below guidance of between US$720 and
$750 per ounce, despite an increase in sustaining capital
expenditure of US$27m (a 74% increase on 2015), mainly due to a
planned increase in fleet maintenance costs.
Centamin had previously elected to make advance payments against
future profit share from 2013 onwards, to demonstrate goodwill
towards the Egyptian government. The total value of these payments,
amounting to US$28.75 million, was recovered against entitlement to
profit share by the EMRA. To the end of 2016, further distributions
of profit share amounting to a total of US$18.5m had subsequently
been made to EMRA. Both EMRA and PGM will benefit from advance
distributions of profit share on a proportionate basis in
accordance with the terms of the Concession Agreement and
considering ongoing cash flows, historic costs that are still to be
recovered and any future capital expenditure.
Free cash flow generation from Sukari of approximately US$200
million has further strengthened Centamin's financial position
during 2016, a trend we expect to continue as we forecast 2017
production of 540,000 ounces at a cash cost of production of US$580
per ounce and an all-in sustaining cost of US$790 per ounce. This
guidance is based on a plant throughput of 11.75Mt and
approximately 1Mt of underground ore mined at a grade of
7.26g/t.
Ongoing optimisation of the processing and mining operations
continues to offer scope for further increases in productivity and
production growth. At the underground mine, we see potential for
further increases in mined tonnages whilst retaining a priority on
stable grade delivery. The additional shareholder value that can be
gained through improving the delivery of high-grade underground ore
has the potential to be significant and requires no material
capital expenditure. At the process plant, further planned upgrades
to the secondary crushing circuit with an estimated capital cost of
c.US$6 million offer the potential for throughput rates to exceed
12Mtpa. In parallel with these productivity improvements, there
remains scope for lower unit costs as the expanded operation
continues to be optimised and further efficiency gains are
realised.
We expect further growth of the Sukari reserve over the coming
years as underground development and exploration continues, and the
numerous regional prospects are evaluated. An updated resource and
reserve estimate for Sukari is expected in 2017.
The objective of our producing asset, as always, is to generate
substantial free cash flow even under challenging gold price
assumptions. In line with our updated dividend policy, and
supported by the board's proposal for a final 2016 dividend of 13.5
US cents per share (equating to a full year dividend of 15.5 US
cents per share), we intend to return at least 30% of this cash
flow to our shareholders. The remaining cash flows are allocated
towards our medium and long-term objective of organic growth, which
is aimed at realising incremental shareholder value and
returns.
We remain committed to our disciplined approach to capital
allocation, as well as the potential for exploration to deliver
significant shareholder value over the long-term. Results from our
programmes in Burkina Faso and Côte d'Ivoire continue to build
momentum and warrant further investment, and we again exit the year
with a robust financial and operating base on which to continue
delivering our growth strategy.
Exploration at Sukari continues to prioritise extensions of the
high-grade underground resource and reserve, as the development and
drilling extends along strike and at depth. We expect to continue
to deliver positive news in line with our strong results to date
and a further resource and reserve update is planned during
2017.
During August we began development of a new exploration decline
within the north-eastern Cleopatra zone of Sukari Hill. The total
project expenditure is expected to be US$11.5 million, of which
US$3 million has been spent to date. A portal has been established
and approximately 900 metres of development completed to the end of
the year. Initial exploration drilling has commenced to target
multiple zones of high-grade mineralisation, as interpreted from
existing data. The initial project is aimed at developing
infrastructure with the capacity to support mining rates of up to
1Mtpa from this area. Ultimate production rates will depend on
future results from the programme and further development, and
would be in addition to the current 1Mtpa underground ore
production from the Amun and Ptah declines.
In Côte d'Ivoire, exploration drilling over targets defined by
geochemical and geophysical surveys has led to a new discovery at
the Doropo project in the northeast of the country, adjacent to our
licence holding across the border in Burkina Faso. A maiden
resource of 0.3Moz at 1.6g/t Indicated and 1.0Moz at 1.3g/t
Inferred has been estimated from drilling results over five
prospects within a 5km radius area. Preliminary metallurgical test
work has returned positive results, indicating mineralisation is
amenable to conventional leaching. Mineralisation at these
prospects remains open along strike and at depth and drilling in
2017 will focus on expanding and upgrading this initial resource in
these areas. Regional exploration will also continue to test
existing and new prospects for laterally extensive and near-surface
mineralisation. We have continued to expanded our portfolio of
highly prospective licence holdings in Côte d'Ivoire and, with
licence applications pending, we expect to increase this further
during 2017.
In Burkina Faso, exploration during 2016 continued to test the
potential for lateral and depth extensions of the more advanced
targets, with priority on the Wadaradoo and Napalapera prospect
areas. We continue to evaluate the results from these programmes,
and the resulting interpretation will guide further drilling to be
carried out in 2017. There remains potential to add significant
shareholder value from this district-scale licence holding as we
continue to make progress towards developing our next stage of
growth in West Africa.
We expect a total exploration expenditure of c. US$25 million in
2017, split between Côte d'Ivoire and Burkina Faso. In line with
our overall exploration strategy, the actual expenditure on these
projects is results driven and the current estimated expenditures
are therefore subject to ongoing revisions.
We will continue to evaluate potential opportunities to grow the
business through the acquisition of projects offering the potential
for the Company to deliver on its strategic objectives.
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, and further details of our various initiatives can be
found in the CSR report.
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.
We welcome Ross Jerrard who was appointed as our new Chief
Financial Officer ("CFO"). Ross joined Centamin from Deloitte
Australia. He has worked in Southern Africa and the Middle East,
including a three-and-a-half-year period based in Egypt, servicing
a range of multinational and natural resources companies. I am
pleased to report that during his first year as CFO, Ross has
overseen continued improvements in the Company's financial control
and reporting functions.
Finally, I would like to thank all my colleagues for their hard
work over the years including the employees onsite at Sukari, those
on the exploration sites in Burkina Faso and Côte d'Ivoire as well
as those in the corporate and administration offices in Jersey and
Australia. I would also like to thank your board of directors for
their continued support and I am very much looking forward to
another prosperous year for Centamin and its stakeholders in
2017.
Andrew Pardey
Chief executive officer
OPERATIONAL REVIEW
In this section we feature our operational performance and
exploration review for 2016.
Health and safety - Sukari
The Lost Time Injury Frequency Rate ("LTIFR") for 2016 was 0.27
per 200,000 man hours (2015: 0.12 per 200,000 man hours), with a
total of 5,187,635 man hours worked during 2016 (2015: 5,032,828).
Continued development of the onsite health and safety culture has
resulted in improved reporting of incidents.
Centamin remains committed to further improving health and
safety during 2017 towards our zero harm target.
Open pit
The open pit delivered total material movement of 62.2Mt, an
increase of 8% on the prior year (2015: 57.8Mt). This increase was
related to improved mining productivity and equipment utilisation.
The strip ratio was 4.68, a reduction on 5.60 in 2015 as ore mining
focussed on the Stage 3A and 3B areas and the next stages of the
northern and eastern walls of the open pit, which were progressed
in line with the mine plan.
Ore production from the open pit was 10.95Mt at 0.93g/t, with an
average head grade to the plant of 0.95g/t. The ROM ore stockpile
balance decreased by 128kt to 577kt by the end of the year. Ore
mining was primarily from the Stage 3A area, which provided access
to higher-grade sulphide portions of the ore body during 2016.
In 2017 mining activities will be conducted in Stage 3 and Stage
4 along with pioneering activities in Stage 5. Ore will be supplied
from Stage 3B whilst developing the elevated benches from Stage 4.
Expected ore mined is 10.7Mt at an average grade of 1.06g/t. The
strip ratio is planned to be 5.23 during 2017. During Q1 2017 the
open pit is scheduled to develop a low-grade east wall cutback and
planned gold production will be lower than Q4 2016.
Underground mine
The underground mine produced 1.02Mt of ore, a 12% decrease on
2015 (1.16Mt). Ore from stoping accounted for 55% (0.56Mt) of the
total, with the balance of ore (0.45Mt) from development. The
average mined head grade was 9.0g/t, above our forecast. The
average grade from stoping was 9.1g/t (an increase of 32% on 2015)
and the average grade from development was 9.0g/t (an increase of
49% on 2015).
During the first quarter, higher tonnage and lower-grade
stockwork stopes on the western contact and in the central zone
were completed. Thereafter, stoping was carried out predominately
from the eastern side of the deposit, where higher-grade
mineralisation typically occurs in laminated quartz veins, with
sulphide stockworks trailing out westward into the porphyry mass.
This, together with local geotechnical variations, requires a
narrower and more selective mining method, thus reducing the
available tonnes per vertical metre. This has resulted in a higher
average grade for the year, coupled with a slight reduction in
productivity.
Underground development advanced 7,880 metres, including
progression of the Amun, Horus and Ptah declines. This development
comprised 4,557 metres in Amun and 3,323 metres in Ptah.
The exhaust circuit for the Ptah decline was progressed,
ensuring sufficient ventilation as the decline extends deeper into
the orebody.
A total of 9,691 metres of grade control drilling were
completed, aimed at short--term mine planning and resource
development. A further 25,670 metres of underground diamond
drilling continued to test for reserve extensions below the current
Amun and Ptah zones. A new exploration decline also commenced
within the north-eastern Cleopatra zone of Sukari Hill. Further
details and underground drilling results are discussed in the
Exploration section of this report.
Processing
The Sukari plant processed 11.56Mt of ore in 2016, a 9% increase
on 2015 and 5% above our base case of 11.0Mtpa, as forecast at the
beginning of the year. Productivity continued to increase
throughout the year, with 2.95Mt processed during the fourth
quarter, reflecting the ongoing ramp up of the expanded
circuit.
Metallurgical recovery averaged 89.4%, a 0.6% increase on 2015.
Work is continuing to optimise the operational controls and improve
circuit stability to ensure recoveries are maintained at
approximately 90% at the increased rate of throughput.
The dump leach operation produced 9,872oz during the year.
The 2017 production guidance is based on a forecast production
rate of 11.75Mt, with an annual average gold recovery of 89.75%.
Grades are expected to show a rising trend throughput the year,
starting the first quarter at 1.33g/t and rising to 1.78g/t in the
final quarter of the year, averaging 1.57g/t.
An expansion of the secondary crusher system is planned during
2017, with an expected capital cost of US$6 million. This is
expected in due course to increase the grinding capacity of Plant
1, and thus lead to further overall plant throughput increases to
above 12Mtpa.
Year ended Year ended
31 December 31 December
Sukari Gold Mine production summary 2016 Q4 2016 2015 Q4 2015
---------------------------------------- ------------ -------- ------------ --------
Open pit mining
Ore mined(1) ('000t) 10,949 2,183 8,746 2,229
Ore grade mined (g/t Au) 0.93 0.85 0.75 0.77
Ore grade milled (g/t Au) 0.95 0.85 0.78 0.75
Total material mined ('000t) 62,238 15,810 57,766 13,754
Strip ratio (waste/ore) 4.68 6.24 5.6 5.17
---------------------------------------- ------------ -------- ------------ --------
Underground mining
Ore mined from development ('000t) 454 103 560 151
Ore mined from stoping ('000t) 565 125 598 149
Ore grade mined (g/t Au) 9.04 10.43 6.47 7.05
---------------------------------------- ------------ -------- ------------ --------
Ore processed ('000t) 11,559 2,948 10,575 2,758
Head grade (g/t) 1.65 1.62 1.40 1.47
Gold recovery (%) 89.4 89.9 88.8 88.5
Gold produced - dump leach (oz) 9,872 2,550 15,642 3,417
Gold produced - total(2) (oz) 551,036 136,787 439,072 117,644
---------------------------------------- ------------ -------- ------------ --------
Cash cost of production(3)(4) (US$/oz) 513 536 713 667
Open pit mining 179 198 243 232
Underground mining 43 46 46 42
Processing 253 254 367 338
General and administrative 38 38 56 54
---------------------------------------- ------------ -------- ------------ --------
Gold sold (oz) 546,630 130,959 437,571 117,351
All-in sustaining cost (US$/oz)(4) 694 720 885 842
Average realised sales price (US$/oz) 1,256 1,207 1,159 1,103
1) Ore mined includes 117kt @ 0.21g/t delivered to the dump
leach in Q4 2016 (54kt @ 0.54g/t in Q4 2015).
2) Gold produced is gold poured and does not include gold-in-circuit at period end.
3) Cash cost of production exclude royalties, exploration and
corporate administration expenditure. Cash costs of production
reflect a provision against prepayments to reflect the removal of
fuel subsidies which occurred in January 2012 (refer to note 12 of
the financial statements for further details).
4) Cash cost of production and all-in sustaining costs are
non-GAAP financial performance measures with no standard meaning
under GAAP. Please see the financial review for details of non-GAAP
measures.
Exploration
Sukari
Drilling from underground remains a focus of the Sukari
exploration programme as new development provides improved access
to test for high-grade extensions of the deposit. The ore body
remains open to the north, south and at depth and further
underground drilling of the Sukari deposit will take place during
2017, from across the existing and planned areas of
development.
Selected underground drilling results received during the year
(including from the fourth quarter), include the following:
Amun
Interval Au
Hole number (m) (g/t)
------------ -------- -----
UGRSD0064 1.1 30.6
UGRSD0082 2.6 108.2
UGRSD0201 9.5 78.4
UGRSD0229 18.4 12.6
UGRSD0237 4.0 56.5
------------ -------- -----
Ptah
Interval Au
Hole number (m) (g/t)
------------- -------- ------
UGRSD0155 6.3 13.6
UGRSD0585 2.3 110.7
UGRSD0589_W1 3.0 40.0
UGRSD0708_W1 2.0 160.8
0.4 22.8
1.8 73.4
UGRSD0714_W1 3.0 147.6
UGRSD0596 2.8 65.1
UGRSD0710 2.2 88.3
UGRSD0713 3.0 87.8
UGRSD0716 0.7 2745.0
UGRSD0614 2.3 43.0
UGRSD0615 3.0 47.5
UGRSD0609 1.4 313.5
UGRSD0618 1.0 61.5
UGRSD0720 1.0 28.1
------------- -------- ------
Cleopatra
Interval Au
Hole number (m) (g/t)
------------ -------- -----
CRSD001 6.7 3.1
INCLUDING 0.7 6.2
CRSD002 4.5 5.9
0.5 20.1
------------ -------- -----
Cleopatra Exploration Decline
The existing underground operations at Sukari have demonstrated
that the western contact zone between the main porphyry and the
surrounding metasedimentary rock units is highly prospective for
high-grade gold mineralisation. This contact has limited drilling
in the north-western portion of Sukari Hill, where the porphyry is
approximately three hundred metres wide and access for surface
drill rigs is limited.
High grades have been observed along the north-eastern flank of
Sukari Hill, where an interpreted en-echelon set of three
mineralised zones are located, namely Cleopatra, Julius and Antoine
zones. Cleopatra outcrops as two distinct quartz veins on the north
eastern flank of Sukari Hill, whereas Julius and Antoine do not
outcrop. The zones are interpreted as commencing on the eastern
porphyry contact, dipping broadly to the west.
This project is designed to commence development along strike
within the upper Cleopatra zone and set up four drill sites in the
centre of the porphyry. The drives will provide a large quantity of
geological data in addition to that gained from the drilling.
The initial project will be developed in two phases. Phase 1 has
a projected cost of US$5 million, with 1,370 metres of development
and 96,422 tonnes of mined material to be completed over a 5-month
period. Phase 1 commenced during the third quarter, with the portal
established and 893 metres of development completed to year-end
2016. This development produced 21,078 tonnes of low-grade
mineralised material. The first drill cuddy has been established
and exploration drilling commenced during December 2016. The
initial target is a westerly-dipping dilation of stock work
porphyry which located on the eastern contact.
Phase 2 has a projected cost of US$6.5 million, with 1,057
metres of development and 54,409 tonnes of mined material to be
completed over a 5-month period. Grade control diamond drilling has
commenced for three proposed strike drives.
The initial project is aimed at developing infrastructure with
the capacity to support mining rates of up to 1Mtpa from this area.
Ultimate production rates will depend on future results from the
development, exploration drilling and further development. It will
be in addition to the current underground ore production from the
Amun and Ptah declines.
Côte d'Ivoire
Centamin has seven permits covering circa 2,334km(2) . Six of
these are part of the Doropo Project across the border from Batie
West in Burkina Faso and the other is in the west of the country.
Eight permits are currently under application and, once these are
awarded, exploration will focus on regional surface geochemistry
and mapping aimed at identifying anomalies for first--pass
drilling.
Drilling within the Doropo Project area gained momentum during
2016, with the fleet increasing from one to three rigs by the last
quarter. The initial areas of focus is a 5km radius area,
containing five prospects: Souwa, Nokpa, Kekeda, Han and Chegue.
Systematic drill-testing of these prospects, together with infill
drilling towards the end of the year, has led to a new discovery
and a maiden resource of 0.3Moz at 1.6g/t Indicated and 1.0Moz at
1.3g/t Inferred. This resource is summarised in the table
below.
Mineral Resource for Côte d'Ivoire
0.5 g/t cut off
-----------------------------------------------------------------------
Indicated Inferred
Mt Au g/t Au koz Mt Au g/t Au koz
-------- ------- ----------- ------- -------- ----------- -------
Souwa 3.41 1.71 187 12 1.4 540
Nokpa 2.34 1.49 112 3.5 1.3 146
Chegue - - - 1.2 0.9 35
Kekeda - - - 4 1.1 141
Han - - - 4.8 1.1 170
-------- ------- ----------- -------
Total 5.75 1.62 300 26 1.26 1,032
-------- ------- ----------- ------- -------- ----------- -------
0.8 g/t cut off
-----------------------------------------------------------------------
Indicated Inferred
Mt Au g/t Au koz Mt Au g/t Au koz
-------- ------- ----------- ------- -------- ----------- -------
Souwa 2.37 2.19 167 6.7 1.9 409
Nokpa 1.5 1.97 95 2.3 1.7 126
Chegue - - - 0.5 1.2 19
Kekeda - - - 2 1.6 103
Han - - - 2.6 1.6 134
-------- ------- ----------- ------- -------- ----------- -------
Total 3.87 2.1 262 14 1.74 791
-------- ------- ----------- ------- -------- ----------- -------
Exploration during 2016, including soil geochemistry, auger
drilling and ground IP surveys, also provided evidence of
higher-grade mineralisation on several other prospects (Dilly,
Hinda, Atirré and Enioda). The Enioda prospect is believed to be
the strike extension of the Napelepera mineralised structure,
within Centamin's Burkina Faso licences, as discussed below.
Work in 2017 will focus on expanding and upgrading the initial
resource, in addition to first-pass drilling on newly defined
prospects.
The Nokpa prospect hosts high-grade mineralisation from three
cross cutting structures near a dyke swarm. It currently has a 150m
diameter footprint, a shallow plunge along the fault plans and is
open in all directions.
Nokpa significant mineralised RC and DD drill intersections
Interval
Hole ID From (m) (m) Au (g/t)
---------- --------- --------- ---------
DPRC0191 41 10 3.3
DPRC0192 36 10 10.1
DPRC0192 68 14 4.3
DPRC0193 82 11 5.0
DPRC0194 122 16 3.3
DPRC1051 13 7 11.1
DPRC1052 22 5 5.4
DPRC1053 99 5 6.9
DPRC1057 112 5 8.5
DPRC1065 74 24 2.6
DPRC1066 124 20 2.0
DPRC1069 170 12 4.8
DPRC1138 118 22 1.6
DPRC1139 127 14 2.7
DPRD1070 159 13 2.3
DPRD1140 153.7 17.3 1.7
DPRD1143 149.9 12.1 2.3
DPRD1145 210.6 15.9 2.2
---------- --------- --------- ---------
At the Souwa prospect, mineralisation has been tested over a
1,700m strike length and 200m vertical depth. Several large
high-grade mineralised shoots are hosted by a shallow-dipping shear
zone.
Souwa significant mineralised RC and DD drill intersections
Interval
Hole ID From (m) (m) Au (g/t)
---------- --------- --------- ---------
DPRC0039 44 10 22.0
DPRC0041 73 17 2.3
DPRC0042 21 33 2.2
DPRC0061 11 20 3.0
DPRC0173 96 17 4.7
DPRC0185 42 6 4.0
DPRC0487 52 14 4.5
DPRC1047 219 8 9.0
DPRC1083 91 14 3.1
DPRC1086 35 17 3.5
DPRC1088 83 21 2.6
DPRC1089 105 21 6.8
DPRC1091 11 17 2.3
DPRC1099 113 7 6.2
DPRC1100 27 12 3.4
DPRC1108 47 26 8.4
DPRC1109 73 17 2.5
DPRC1110 109 12 2.5
DPRC1114 42 6 11.0
DPRC1116 140 10 6.0
DPRC1118 61 5 11.3
DPRC1120 78 14 6.2
DPRC1121 98 22 5.4
DPRC1124 101 10 5.1
DPRC1126 48 11 6.0
DPRC1162 14 19 10.5
DPRD0503 149 9 3.0
DPRD1037 223 6 11.3
---------- --------- --------- ---------
The Kekeda and Han prospects are both well-defined shallow
dipping shear zones showing a high sulphide content associated with
strong sericite-silica alterations.
Han and Kekeda significant mineralised RC and DD drill
intersections
Prospect Interval
Hole ID From (m) (m) Au (g/t)
--------- ---------- --------- --------- ---------
Han DPRC0198 16 10 5.3
Han DPRC0226 129 7 3.9
Han DPRC0228 108 9 2.5
Han DPRC0235 70 10 5.4
Han DPRC0433 30 4 51.2
Han DPRC0434 54 14 2.4
Han DPRC0454 86 10 2.1
Han DPRC0465 74 10 3.0
Han DPRC0566 23 5 8.0
Han DPRC0570 23 11 16.9
Kekeda DPRC0018 36 7 5.7
Kekeda DPRC0019 0 7 5.0
Kekeda DPRC0525 10 10 3.9
Kekeda DPRC0535 50 14 4.0
Kekeda DPRC0540 64 9 2.7
Kekeda DPRC0561 71 9 4.2
--------- ---------- --------- --------- ---------
The other tested prospects also returned significant results
during the year, which will be followed up by further drilling in
2017.
Other prospects with significant mineralised RC and DD drill
intersections
Prospect Interval
Hole ID From (m) (m) Au (g/t)
------------ ---------- --------- --------- ---------
Atirré DPRC0347 44 5 8.8
Chegue DPRC0393 10 8 8.8
Chegue DPRC0475 53 9 2.9
Chegue DPRC0477 38 12 3.1
Chegue DPRC0478 6 8 3.9
Dilly DPRC0264 86 2 10.1
Dilly DPRC0265 72 4 3.2
Enioda DPRC1016 136 7 3.0
Enioda DPRC0107 30 9 3.1
Enioda DPRC0129 24 9 3.3
Enioda DPRC0110 76 17 1.8
Hinda DPRC0343 94 3 15.5
Solo DPRC0206 53 8 5.8
Solo DPRC0209 112 4 5.0
------------ ---------- --------- --------- ---------
Summary details in relation to the HSES aspects of exploring in
Côte d'Ivoire are set out in the CSR report.
Burkina Faso
In Burkina Faso, the strategy during 2016 was to continue to
systematically explore and drill-test the numerous targets along
the 160km length of greenstone belt contained within our extensive
2,200km(2) licence holding. Results from this programme will lead
to further drilling and resource development during 2017.
Exploration remains focussed on developing new zones of near
surface and high-grade mineralisation, as defined by geochemical
sampling, geophysical surveys and analysis of an in-house
structural model.
Exploration during 2016 prioritised two main prospect areas,
Wadaradoo and Napelapera. During 2016 there were 164,333m of RC,
6,633m of diamond, 69,370m of aircore and 27,810m of auger drilled.
Drilling activities were scaled down during the second half of the
year to allow for analysis of the assay results.
At Wadaradoo, drilling outlined both structurally-controlled
mineralisation (Wadaradoo Main and Wadaradoo North) and broad
disseminated zones of mineralisation (Wadaradoo East and Wadaradoo
Far East).
At Wadaradoo Main, high-grade north plunging shoots were
identified on both the main 020deg trending structure and 320(o)
trending splay structures. These structures have all been drilled
on a 50m x 50m or greater spacing and remain open at depth. At
Wadaradoo North, mineralisation is hosted by a tightly confined,
high-grade structure with narrow, more discontinuous zones in the
hanging wall. Drilling during the year closed off this structure
along strike and at depth.
Exploration is continuing at several other target areas, where
major cross-cutting structures coincide with demagnetised and
altered zones. This includes the Gongombili anticline (the southern
continuity of the Wadaradoo Main structure).
Wadaradoo significant mineralised RC and DD drill intersections,
downhole
Interval
Hole ID From (m) (m) Au (g/t)
---------- --------- --------- ---------
WDRC0564 216 6 11.0
WDRC0143 114 4 15.7
WDRC0670 81 9 3.0
WDRC0671 130 6 13.3
WDRC0763 58 15 2.3
WDRD0592 353 11 3.0
WDRD0598 98 2 19.2
WDRC0941 3 20 2.9
WDRC0970 156 5 15.1
WDRD0350 147 23 3.4
WDRC1300 238 8 3.9
WDRC0238 41 19 3.1
WDRC0971 143 9 4.4
WDRD0349 198 7 6.5
WDRD1408 292 12 3.4
WDRD0491 270 19 3.3
WDRD1230 201 2 42.1
---------- --------- --------- ---------
At Napelepera, our exploration licence holdings were extended to
the Côte d'Ivoire border. Gold mineralisation at this prospect area
is typically hosted within a broad alteration halo around the main
NE-SW structure. Cross-cutting structures 'compartmentalise' the
granodiorite host rock into broad dilation zones of higher-grade
mineralisation along the main structural trend. This trend was
drilled out to the southwest, where higher grades are observed,
with drilling covering a strike length of over 4km. Mineralisation
remains open at depth.
Napelapera significant mineralised RC and DD drill
intersections, downhole
Interval
Hole ID From (m) (m) Au (g/t)
----------- --------- --------- ---------
NPRD449 120 6 2.1
NPRD457 127 3 5.6
NPRD459 107 4 3.3
NPRC468 38 10 1.8
NPRD455W1 118 4 51.6
NPRD471 150 6 8.4
NPRD472 170 17 3.6
NPRD480 234 10 1.9
NPRC487 50 4 17.5
NPRD511 261 19 2.0
NPRD546 181 6 3.8
----------- --------- --------- ---------
The Poni prospect on the Danhal permit consists of a narrow
600m-length mineralised structure, which is open to the north and
south and at depth. Initial drilling was conducted in early 2016.
At Tiopolo, a small narrow mineralised structure has been
identified over a strike length of 450m, with consistent
mineralisation which is open along strike and at depth. Follow--up
work is planned in these areas.
Significant mineralised RC and DD drill intersections, downhole,
from Farmstead, Poni, Tokera and Tonior prospects
Interval
Prospect HoleID From (m) (m) Au (g/t)
---------- ---------- --------- --------- ---------
PONI PNRC049 24 2 5.5
PONI PNRC048 2 3 2.1
PONI PNRC053 16 3 1.6
PONI PNRC053 29 4 4.3
PONI PNRD047 49 2 1.5
PONI PNRD047 57 5 4.5
PONI PNRD012 80 8 3.0
PONI PNRD046 56 15 1.0
TIOPOLO TIAC3259 7 2 2.0
TIOPOLO TIRC146 91 4 1.2
TIOPOLO TIRC173 19 3 3.5
TIOPOLO TIRC178 76 3 3.1
---------- ---------- --------- --------- ---------
Continuous updates and improvements in our Health and Safety
management systems are being implemented into our operations in
Burkina Faso. This process includes an orientation and induction
for employees and contractors to ensure adherence to our strict
policies and procedures. The Batie West camp site has a
well--equipped clinic managed by International Medical Company ISOS
which includes a full--time paramedic. Summary details in relation
to the HSES aspects of exploring in Burkina Faso are set out in the
CSR report.
FINANCIAL REVIEW
Centamin has continued to return strong earnings and cash flow
generation.
The consolidated financial statements have been prepared in
accordance with International Financial Reporting Standards
("IFRS") as issued by the International Accounting Standards Board
("IASB") and adopted for use by the European Union and in
accordance with the Companies (Jersey) Law 1991. The group
financial statements comply with Article 4 of the EU IAS
Regulation.
Now in its seventh year of production, the Sukari Gold Mine
remains highly cash generative and this is reflected in the group's
financial results for the year ended 31 December 2016:
-- 2016 revenues of US$687.4 million were up 35% year on year
with an 8% increase in realised gold prices and a 25% increase in
gold sales;
-- cash costs decreased to US$513 per ounce produced from US$713
in 2015, driven predominantly by the decrease in fuel price and
other cost savings, as well as higher production than originally
forecast;
-- AISC of US$694 per ounce sold was below our forecast of
US$720-750 per ounce mainly due to the higher gold production base
and the rescheduling of certain capital cost items;
-- EBITDA increased by 145% to US$372.9 million, mainly due to
higher gross operating margins as a result of the gold price and
also a decreased production cost associated with net changes in
production inventories;
-- profit before tax increased by 357% to US$266.8 million, due to the factors above;
-- earnings per share before profit share of 23.05 US cents were
up 412% on 4.51 US cents per share in 2015; and
-- operational cash flow of US$366.3 million was 97% higher than
2015, due to the higher gold production base, gold prices and much
lower cost base achieved.
The board of directors approved an interim 2016 payment of 2.00
US cents per share (versus a 2015 interim payment of 0.97 US cents
per share). With the strong performance of our flagship asset and
solid cash flows carrying through into the second half, a final
dividend for 2016 of 13.5 US cents per share has been proposed for
approval at the AGM on 21 March 2017. This represents a full year
pay-out of approximately US$178 million, which is equivalent to
approximately 70% of our net free cash flow for 2016 and follows
the update to our policy announced on 9th January 2017.
Centamin remains committed to its policy of being 100% exposed
to the gold price through its unhedged position, and maintained a
healthy cash, bullion on hand, gold sales receivables and
available--for--sale financial assets balance of US$428 million as
at 31 December 2016.
Revenue
Revenue from gold and silver sales has increased by 35% to
US$687.4 million (US$508.4 million in 2015), with an 8% increase in
the average realised gold price to US$1,256 per ounce (US$1,159 per
ounce in 2015) assisted by a 25% increase in gold sold to 546,630
ounces (437,571 ounces in 2015).
Cost of sales
Cost of sales represents the cost of mining, processing,
refinery, transport, site administration and depreciation and
amortisation, and movement in production inventory. Cost of sales
is inclusive of US$24.6 million in relation to disputed fuel
charges (refer to note 12 to the financial statements for further
information) and has decreased by 6% to US$389.3 million, as a
result of:
a) a 8% decrease in total mine production costs from US$314.8
million to US$288.3 million, despite a 5% increase in processed
tonnes offset with a 7% decrease in mined tonnes as a result of
improved operational efficiencies and lower overall cost;
b) a 14% increase in depreciation and amortisation from US$93.9
million to US$107.0 million due to higher production physicals,
reclassification of exploration & evaluation expenditure to
mine development and an increase in the associated amortisation
charges; and
c) a 179% decrease in movement in production inventories costs
from US$7.5 million to (US$5.9) million.
Other operating costs
Other operating costs reported comprise expenditure incurred for
communications, consultants, directors' fees, stock exchange
listing fees, share registry fees, employee entitlements, general
office administration expenses, the unwinding of the restoration
and rehabilitation provision, foreign exchange movements, the share
of profit/loss in associates and the 3% production royalty payable
to the Egyptian government. Other operating costs increased by 16%
to US$32.1 million, as a result of:
a) a US$2.9 million increase in net foreign exchange movements
from a US$2.1 million gain to a US$5.0 million gain;
b) a US$1.0 million decrease in corporate costs;
c) a US$5.4 million increase in royalty paid to the government
of the ARE in line with the increase in gold sales revenue; and
d) a US$2.5 million provision for stock obsolescence against stores inventory in Egypt.
Finance income
Finance income reported comprises interest revenue applicable on
the Company's available cash and term deposit amounts. The
movements in finance income are in line with the movements in the
Company's available cash and term deposit amounts.
Profit before tax
As a result of the factors outlined above, the group recorded a
profit before tax for the year ended 31 December 2016 of US$266.8
million (2015: US$58.4 million).
Tax
The group operates in several countries and, accordingly, it is
subject to, the various tax regimes in the countries in which it
operates.
31 December 31 December
2016 2015
US$'000 US$'000
------------------------------------------------------------- ----------- -----------
Profit before income tax 266,829 58,407
Tax expense calculated at 0% (2015: 0%) of profit before tax - -
Tax effect of amounts which are not deductible/taxable in
calculating taxable income:
Effect of tax different tax rates of subsidiaries operating
in other jurisdictions (821) (6,837)
------------------------------------------------------------- ----------- -----------
Tax expense for the year (821) (6,837)
------------------------------------------------------------- ----------- -----------
Earnings per share
Earnings per share (after profit share) of 18.61 US cents
compare with 4.51 US cents in 2015. The increase was driven by the
factors outlined above.
Comprehensive income
Other comprehensive income movement was the result of the
revaluation of available-for-sale financial assets.
Financial position
At 31 December 2016, the group had cash and cash equivalents of
US$399.9 million compared to US$199.6 million at 31 December 2015.
The majority of funds have been invested in international rolling
short--term higher interest money market deposits.
Current assets have increased by US$200.8 million or 55% to
US$563.5 million, as a result of:
(a) an increase in net cash inflows of US$200.3 million (net of
foreign exchange movements);
(b) a US$4.2 million decrease in stores inventory to US$102.3
million;
(c) a US$2.3 million decrease in prepayments;
(d) a US$1.1 million increase in gold sale receivables; and
(e) a US$5.9 million increase in overall mining stockpiles, gold
in circuit levels and finished goods inventory
values to US$34.2 million.
Non--current assets have decreased by US$29.1 million or 2.8% to
US$1,023 million, as a result of:
(a) US$56.9 million expenditure for property, plant and
equipment (comprising of plant and mining equipment and
rehabilitation asset);
(b) US$107.0 million charges for depreciation and
amortisation;
(c) US$49.6 million increase in exploration and evaluation
assets, as a result of the drilling programmes in Sukari Hill, the
Sukari tenement area, Burkina Faso and Côte d'Ivoire; and
(d) a US$28.8 million decrease in prepayments due to the
utilisation of the prior year cumulative advance payments made to
EMRA.
Current liabilities are unchanged at US$54.5 million. Change in
underlying balances include:
(a) US$4.9 million decrease in trade payables offset by a $5.8m
increase in accruals, primarily as a result of a $4m EMRA accrual
in trade payables and accruals;
(b) US$6.8 million decrease in tax liabilities that were settled
during the year; and a
(c) US$5.9 million increase in current provisions primarily
driven by stock obsolescence and withholding tax provisions held at
year end.
Non-current liabilities have increased by US$0.6 million to
US$7.7 million as a result of an increase in the rehabilitation
provision.
The value of issued capital has increased by US$1.9 million due
to the vesting of awards.
Share option reserves reported have increased by US$0.6 million
to US$3.0 million as result of the forfeiture and vesting of awards
and the resultant transfer to accumulated profits and issued
capital respectively, offset by the recognition of the share--based
payments expense for the year.
Accumulated profits increased by US$168.7 million as a result of
a:
(a) US$266.0 million profit for the year attributable to the
shareholders of the Company; offset by
(b) US$46.1 million in dividend payments to external
shareholders; comprising a US$22.9 million final dividend payment
for 2015 and a US$23.1 million interim dividend payment for 2016;
and
(c) US$51.3 profit share charge for EMRA for the year.
Capital expenditure
The following table provides a breakdown of the total capital
expenditure:
31 December 31 December
2016 2015
US$ million US$ million
----------------------------------------- ----------- -----------
Operational fleet expansion - 4.5
Total expansion - Sukari - 4.5
----------------------------------------- ----------- -----------
Underground mine development - Sukari(1) 39.9 31.4
Other sustaining capital expenditure 23.7 5.1
----------------------------------------- ----------- -----------
Total sustaining 63.6 36.5
----------------------------------------- ----------- -----------
Exploration capitalised (2) 49.5 34.4
----------------------------------------- ----------- -----------
(1) Includes underground exploration drilling
2) Includes expenditure in West Africa (US$39 million) and
Sukari underground (US$10.5 million of which US$7.5 million is
included in AISC).
Diesel Fuel Dispute
The group is currently involved in a dispute regarding the price
at which Diesel Fuel Oil ("DFO") is supplied to the Sukari mine.
The nature of this dispute is set out more fully in note 21.
However, in brief, in January 2012 the group was told by its fuel
supplier (acting on the instruction of the Egyptian General
Petroleum Corporation ("EGPC")), that it would no longer be able to
receive DFO at local (subsidised) prices. The group subsequently
received a demand from its fuel supplier for repayment of subsidies
received from 2009.
The group has issued court proceedings in relation to these
demands. However, the group has, since January 2012, had to pay the
full international price for DFO to ensure continuity of supply.
The group remains of the view that an instant move to international
prices is not a reasonable outcome and will look to recover funds
advanced thus far should the court proceedings be concluded in its
favour. Management recognises the practical difficulties associated
with reclaiming funds from the government and for this reason has
fully provided against the prepayment of US$231.2 million to 31
December 2016 of which US$24.6 million was provided for during 2016
as follows:
31 December 31 December
2016 2015
US$'000 US$'000
--------------------------- ----------- -----------
Included in cost of sales:
Mine production costs (22,844) (43,808)
Movement in inventory (1,784) (2,931)
--------------------------- ----------- -----------
(24,628) (46,739)
--------------------------- ----------- -----------
Cash flows
Net cash flows generated by operating activities comprise
receipts from gold and silver sales and interest revenue, offset by
operating and corporate administration costs. Cash flows have
increased by US$181.4 million to US$366.3 million, primarily
attributable to an increase in revenue, due to an increase in gold
sold ounces combined with a higher average realised price.
Net cash flows used in investing activities comprise exploration
expenditure and capital development expenditures including the
acquisition of financial and mineral assets. Cash outflows have
increased by US$35.1 million to US$105.8 million. The primary use
of the funds was for investment in underground development at the
Sukari site in Egypt and exploration expenditures incurred in West
Africa.
Net cashflows generated by financing activities comprise the
dividend payments made to external shareholders and profit share to
EMRA in Egypt. During the year US$46.1 million was paid comprising
the final dividend for 2015 of US$22.9 million and the interim
dividend for 2016 of US$23.1 million. A profit share charge of
US$51.3 million was recorded to EMRA during the year with US$18.5
million paid in cash during the period. Taxes paid related
predominantly to settling a liability with the Australian Tax
Office of US$7.6 million.
Exchange rates
Effects of positive exchange rate changes have increased by
US$6.5 million as a result of movements of some of the functional
currencies used within the operation in the year.
The group receives its income from gold sales in US dollars,
however, it is off-set by the fact that in November 2016, the
Egyptian government floated the Egyptian pound in an attempt to
stabilize its economy. This has led to a significant devaluation of
the currency which has led to an increase in inflation. This is a
potential risk for the group as it has led to increases in the
prices of fuel, raw materials and other goods as well as pressure
to increase staff wages.
EMRA
A significant milestone was achieved during the year, as the
capital investment in the Sukari operation by Centamin's
wholly-owned subsidiary Pharaoh Gold Mines ("PGM") was recovered
from cash flows to the extent that profit share commenced during
the third quarter. Centamin had previously elected to make advance
payments against future profit share from 2013 onwards, to
demonstrate goodwill towards the Egyptian government. The total
value of these payments, amounting to US$28.75 million, were
recovered against entitlement to profit share by the Egyptian
Mineral Resources Authority ("EMRA"). To the end of 2016, further
distributions of profit share amounting to a total of US$18.5
million had subsequently been paid to EMRA with another US$4
million accrued at year end. Both EMRA and PGM will benefit from
advance distributions of profit share on a proportionate basis in
accordance with the terms of the Concession Agreement and
considering ongoing cash flows, historic costs that are still to be
recovered and any future capital expenditure.
Ross Jerrard
Chief financial officer
1 February 2017
Non--GAAP financial measures
Three non--GAAP financial measures are used in this report:
(1) EBITDA
"EBITDA" is a non--GAAP financial measure, which excludes the
following from profit before tax:
-- finance costs;
-- finance income; and
-- depreciation and amortisation.
Management believes that EBITDA is a valuable indicator of the
group's ability to generate liquidity by producing operating cash
flow to fund working capital needs and fund capital expenditures.
EBITDA is also frequently used by investors and analysts for
valuation purposes whereby EBITDA is multiplied by a factor or
"EBITDA multiple" that is based on an observed or inferred
relationship between EBITDA and market values to determine the
approximate total enterprise value of a company. EBITDA is intended
to provide additional information to investors and analysts and
does not have any standardised definition under IFRS and should not
be considered in isolation or as a substitute for measures of
performance prepared in accordance with IFRS. EBITDA excludes the
impact of cash costs and income of financing activities and taxes,
and therefore is not necessarily indicative of operating profit or
cash flow from operations as determined under IFRS. Other companies
may calculate EBITDA differently. The following table provides a
reconciliation of EBITDA to profit for the year attributable to the
Company.
Reconciliation of profit before tax to EBITDA
Year ended Year ended
31 December 31 December
2016(1) 2015 (1)
US$'000
------------------------------ ----------- -----------
Profit before tax 266,829 58,407
Finance income (917) (269)
Depreciation and amortisation 106,973 94,051
-------------------------------- ----------- -----------
EBITDA 372,885 152,189
-------------------------------- ----------- -----------
1) Profit before tax, depreciation and amortisation and EBITDA
includes a provision to reflect the removal of fuel subsidies
(refer to note 12 to the financial statements for further
details).
(2) Cash cost per ounce calculation:
"Cash costs 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 amortisation. 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
costs is intended to provide additional information, does not have
any standardised 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
31 December 31 December
2016(1) 2015(1)
Mine production costs (note 6) US$'000 288,317 314,827
Less: refinery and transport US$'000 (1,564) (1,840)
Movement of inventory US$'000 (3,876) -
------------------------------- ----------- ----------- -----------
Cash costs US$'000 282,877 312,987
Gold produced - total (oz) 551,036 439,072
Cash cost per ounce (US$/oz) 513 713
------------------------------- ----------- ----------- -----------
1) Mine production costs, cash costs and cash cost per ounce
includes a provision against prepayments recorded commencing in Q4
2012 and going forward to reflect the removal of fuel subsidies
(refer to note 12 to the financial statements for further
details).
In June 2013 the World Gold Council ("WGC"), an industry body,
published a Guidance Note on the AISC metric, which gold mining
companies can use to supplement their overall non--GAAP disclosure.
AISC is an extension of the existing 'cash cost' metric and
incorporates all costs related to sustaining production and in
particular recognising the sustaining capital expenditure
associated with developing and maintaining gold mines. In addition,
this metric includes the costs associated with developing and
maintaining gold mines, corporate office structures that support
these operations, the community and rehabilitation costs attendant
with responsible mining and any exploration and evaluation costs
associated with sustaining current operations. AISC per ounce is
arrived at by dividing the dollar value of the sum of these cost
metrics, by the ounces of gold produced.
Reconciliation of AISC per ounce
Year ended Year ended
31 December 31 December
2016(1) 2015(1)
Mine production costs (note 6) US$'000 288,317 314,827
Royalties US$'000 20,575 15,198
Corporate and administration costs US$'000 13,521 14,533
Rehabilitation costs US$'000 581 369
Underground development US$'000 39,864 31,409
Other sustaining capital expenditure US$'000 23,762 5,145
By--product credit US$'000 (1,080) (1,433)
Change of inventories US$'000 (5,910) 7,476
------------------------------------- ----------- ----------- -----------
All--in sustaining costs(2) US$'000 379,630 387,524
Gold sold - total (oz) 546,630 437,571
AISC per ounce (US$/oz) 694 885
------------------------------------- ----------- ----------- -----------
1) Mine production costs, cash costs, AISC, AISC per ounce and
cash cost per ounce, includes a provision against prepayments
recorded since Q4 2012 to reflect the removal of fuel subsidies
(refer to note 12 of the Financial Statements for further
details).
2) Includes refinery and transport.
(3) Cash and cash equivalents, bullion on hand, gold sales
receivables and available--for--sale financial assets:
This is a non--GAAP financial measure any other companies may
calculate these measures differently.
Reconciliation to cash and cash equivalents, bullion on hand,
gold sales receivables and available--for--sale financial
assets
Year ended Year ended
31 December 31 December
2016 2015
US$'000 US$'000
------------------------------------------------------- ----------- -----------
Cash and cash equivalents (note 26) 399,873 199,616
Bullion on hand (valued at the year--end spot price) 4,998 10,492
Gold sales receivable (note 10) 23,009 20,472
Available--for--sale financial assets (note 15) 130 163
------------------------------------------------------- ----------- -----------
Cash and cash equivalents, bullion on hand, gold
sales
receivables and available--for--sale financial assets 428,010 230,743
------------------------------------------------------- ----------- -----------
PAYMENTS TO GOVERNMENT
The Reports on Payments to Governments Regulations ("the
Regulations") came into force on 1 December 2014. Whilst the
Regulations are part of UK law, they apply to the Company by virtue
of its listing on the London Stock Exchange (pursuant to Disclosure
and Transparency Rule 4.3A). The Regulations require companies
active in the extractive industries to report any payments they
have made to their host governments in the form of taxes, bonuses,
royalties, fees and support for infrastructure payments. The
Regulations implement Chapter 10 of the EU Accounting Directive.
The Regulations are part of an EU-wide effort to curb corruption
and promote transparency in the energy and extractives sector.
Their stated objectives are to provide citizens of resource-rich
countries with the information they need to hold their governments
to account; and to provide greater insight (for investors and all
other stakeholders) into how the sector operates and the range of
economic contributions that can result.
The Regulations require disclosure of the following:
a) production entitlements;
b) taxes levied on the income, production or profits of
companies, excluding taxes levied on consumption such as value
added taxes, personal income taxes or sales taxes;
c) royalties;
d) dividends, other than dividends paid to a government as an
ordinary shareholder unless they are paid in lieu of a production
entitlement or royalty;
e) signature, discovery and production bonuses;
f) licence fees, rental fees, entry fees and other
considerations for licences and/or concessions; and
g) payments for infrastructure improvements.
Where a payment or series of related payments do not exceed
GBP86,000 they do not need to be disclosed but, in the interests of
transparency, the Company has included these costs.
The Company is also subject to equivalent Canadian legislation -
the Extractive Sector Transparency Measures Act (ESTMA) which came
into force on June 1, 2015. Canada's requirements are aligned with
those in the EU Directive and this report is deemed equivalent for
Canadian purposes.
Payments in this report have been disclosed in US dollars which
is the Company's reporting currency. Where actual payments have
been made in a local currency they have been converted using the
prevailing exchange rate at the time of the payment.
Summary table showing payments to governments made during the
year ended 31 December 2016 in US$
Type Notes Burkina Côte Australia
Egypt Faso d'Ivoire Total
Profit Share (i) 18,503,333 - - - 18,503,333
Corporate taxes (ii) 621,956 - - 7,599,793 8,221,749
Royalties 17,314,743 - - - 17,314,743
Exploration licence
fees - 22,468 70,353 - 92,821
Mining and other
licence fees 231,536 776,153 - - 1,007,689
Infrastructure
improvements (iii) 1,095,868 - - - 1,095,868
--------------------- ------- ----------- -------- ---------- ---------- -----------
(iv) 37,767,436 798,621 70,353 7,599,793 46,236,203
----------------------------- ----------- -------- ---------- ---------- -----------
(i) With a view to demonstrating goodwill towards the Egyptian
government, Centamin (through its subsidiary PGM), made advance
payments to the Egyptian Mineral Resources Authority (EMRA)
totalling US$28,750,000 between 2013 and 2016. These payments have
since been netted off against profit share with EMRA. The balance
represents the cash amount paid to EMRA during the period.
(ii) In accordance with the Regulations, this figure excludes
taxes levied on consumption such as VAT, personal income or sales
taxes. The Australian tax payment relates to foreign exchange gains
realised that were assessable for tax.
(iii) This is the value of generators donated to the Marsa Alam power station
(iv) Other types of payments that are required to be disclosed
in accordance with the Regulations include production entitlements;
signature, discovery and production bonuses; and dividends. The
Company and its subsidiaries did not make any such payments to
governments during the year.
Payments split by payee during the year ended 31 December 2016
in US$
Licence
Profit or permit
Country Notes Payee Royalties share Taxes fees Other Total
--------------- ------- ---------------- ----------- ----------- ---------- ----------- ---------- -----------
Egypt: Sukari Arab Republic
project of Egypt - 18,503,333 - - - 18,503,333
EMRA 17,314,743 - - - - 17,314,743
Egyptian
Tax Authority - - 621,956 - - 621,956
Other payees - - - 231,536 1,095,868 1,327,404
---------------------------------------- ----------- ----------- ---------- ----------- ---------- -----------
Burkina
Faso: Konkera Ministry
project (i) of Mines - - - 776,153 - 776,153
Burkina
Faso Tax
Office - - - - - -
--------------- ------- ---------------- ----------- ----------- ---------- ----------- ---------- -----------
Burkina
Faso: Exploration Ministry
projects of Mines - - - 22,468 - 22,468
Burkina
Faso Tax
Office - - - - - -
--------------- ------- ---------------- ----------- ----------- ---------- ----------- ---------- -----------
Côte
d'Ivoire:
Exploration Ministry
projects (i) of Mines - - - 70,353 - 70,353
Côte
d'Ivoire
Tax Office - - - - - -
--------------- ------- ---------------- ----------- ----------- ---------- ----------- ---------- -----------
Australia: Australian
Corporate Tax Office - - 7,599,793 - - 7,599,793
------------------------ --------------- ----------- ----------- ---------- ----------- ---------- -----------
17,314,743 18,503,333 8,221,749 1,100,510 1,095,868 46,236,203
---------------------------------------- ----------- ----------- ---------- ----------- ---------- -----------
(i) In accordance with the definition of 'project' in the
Regulations, the Company treats its exploration licence holding
areas in Côte d'Ivoire and Burkina Faso as one project each for the
purposes of the Regulations. This is because the licence areas are
operationally and geographically linked.
PRINCIPAL RISKS AFFECTING THE GROUP
The operations of the Company are speculative due to the high
risk nature of its business which includes the acquisition,
financing, exploration, development and operation of mining
properties. These risk factors could materially affect the
Company's future operations and could cause actual events to differ
materially from those described in forward-looking statements
relating to the Company.
Set out below are the Company's principal risks and
uncertainties for the year ended 31 December 2016 which relate
to:
-- Single project dependency
The Sukari Project currently constitutes Centamin's main mineral
resource and sole mineral reserve and near-term production and
revenue. The resource in Burkina Faso is not currently of a
sufficient size to convert into a reserve. Until further production
growth beyond Sukari is identified the potential impact remains
high and safeguarding the project is paramount to the Company.
-- Sukari Project joint venture risk and relationship with EMRA
Whilst Centamin retains control over the project, the joint
venture holding company, Sukari Gold Mines ("SGM"), is jointly
owned with EMRA with equal board representation from both parties.
The board of SGM operates by way of simple majority. As such,
should the board of SGM be unable to reach consensus on a matter
requiring board level approval or in the event of any dispute that
may arise which can't otherwise be amicably resolved, arbitration
or other proceedings may need to be employed to resolve any
disputes. The successful management of the Sukari gold mine is in
part dependent on maintaining a good working relationship with
EMRA. The group has regular meetings with officials from EMRA and
invests time in liaising with relevant ministry and other
governmental representatives.
-- Gold price and currency exposure
The extent of the Company's financial performance is due in part
to the price of gold, which the Company has no influence over.
Revenues from gold sales are in US dollars and Centamin has
exposure to costs in other currencies including Egyptian pounds,
Australian dollars and sterling. Centamin manages its exposure to
gold price by keeping operating costs as low as possible.
-- Jurisdictional taxation exposure
-- The group's corporate structure includes operational activity
in Egypt and West Africa held through holding companies in
Australia and the United Kingdom. Exposure to changing cross
jurisdictional tax legislation could have an adverse effect of the
Company's ability to repatriate revenues.
-- Political risk - Sukari
The Company's operational activities are primarily in Egypt a
country which has been subject to civil and military disturbance.
Future political and economic conditions in Egypt could change with
future governments adopting different policies that may impact the
development and ownership of mineral resources. Policy changes and
licencing may also impact the use of explosives, tenure of mineral
concessions, taxation, royalties, exchange rates, environmental
protection, labour relations, repatriation of income and capital.
Changes may also impact the ability to import key supplies and
export gold. The potential for serious impact should be balanced
against the Egyptian government's support of Centamin's investment
and contribution to both revenue and development of the mining
industry. New laws have been introduced to protect and therefore
encourage foreign investment which is a positive step for the
country. Law no. 32 has been confirmed by Parliament, although it
remains subject to a challenge in the Supreme Court.
-- Political risk - West Africa
The Company operates in Burkina Faso and Côte d'Ivoire. There
are no assurances that future political and economic conditions in
these countries will not result in the governments adopting
different policies in respect to foreign development and ownership
of exploration and exploitation licences.
-- Reserve and resource estimations
Mineral resource and reserve figures are prepared by Centamin
personnel and reviewed by externally appointed independent
geologists. By their nature, mineral resources and reserves are
estimates based on a range of assumptions, including geological,
metallurgical technical and economic factors. Other variables
include expected costs, inflation rates, gold price and production
outputs. There can be no guarantee that the anticipated tonnages or
grades expected by Centamin will be achieved both from the
underground operation or open pit.
-- Exploration development
Time and costs of exploration activity are recognised as
exploration and evaluation assets (E&E Assets) on the balance
sheet. E&E Assets continue to be carried on the balance sheet
where there is ongoing planned activity and the right of tenure is
current. There can be no guarantee that an exploration project
progresses to an economic resource and therefore there remains a
risk that E&E Assets are partially or fully impaired during a
financial period where either a decision is made to discontinue a
project or no further activity is scheduled.
-- Failure to achieve production estimates
Centamin prepares annual estimates for future gold production
from the Sukari Gold Mine. There can be no assurance that Centamin
will achieve its production estimates and such failure could have a
material and adverse effect on Centamin's future cash flows,
profitability, results of operations and financial condition. It
should be specifically noted that the potential quantity and grade
from the Sukari underground mine is conceptual in nature, that
there has been insufficient exploration to define a mineral
resource and that it is uncertain if further exploration will
result in the target being delineated as a mineral resource.
-- Litigation risks
Centamin's finances, and its ability to operate in Egypt, may be
severely adversely affected by current and any future litigation
proceedings and it is possible that further litigation could be
initiated against Centamin at any time. Centamin is currently
involved in litigation that relates both to (a) the validity of its
exploitation lease at Sukari and (b) the price at which it can
purchase Diesel Fuel Oil.
Of the principal risks set out above, exploration development
has been categorised as a principal risk this year. All other
principal risks are the same as previously disclosed in the 2015
annual report and accounts.
Centamin takes a number of measures to mitigate risks associated
with its underlying operational and exploration activity which are
monitored and evaluated regularly. Due to the nature of these
inherent risks, it is not possible to give absolute assurance that
mitigating actions will be wholly effective. The Company is exposed
to changes in the economic environment through its operations in
Egypt, as well as its operations in West Africa (Burkina Faso and
Côte d'Ivoire). Relationships with governments and the maintenance
of exploration permits and licence areas remain key risks and key
focus for all exploration, development and operational
projects.
One of the Company's main objectives is to achieve a target of
zero injuries and for every employee to be safe every day. The
control environment and operating practices in place at the mining
and exploration operations helps reduce the likelihood of harm to
employees. Centamin is committed to attracting, energising,
developing and training its workforce to ensure they are highly
skilled and motivated.
Centamin recognises the value of being a socially responsible
employer and the importance of engaging with the wider community in
the areas in which it operates. By investing in the community and
engaging in projects that directly and positively impact local
people, Centamin can foster a cooperative working environment.
DIRECTORS' RESPONSIBILITIES
Directors' responsibilities in respect of the annual report and
financial statements
The directors are responsible for preparing the annual report(1)
and financial statements in accordance with the Companies (Jersey)
Law, 1991 (the "Law") and applicable laws and regulations. The Law
requires the Company to prepare financial statements in accordance
with generally accepted accounting principles and the Company has
chosen to prepare the accounts in accordance with International
Financial Reporting Standards ("IFRS") as adopted by the European
Union and applicable law.
Under the Law, the directors must not approve the accounts
unless they are satisfied that they give a true and fair view of
the state of affairs of the group and of the profit or loss of the
group for that period. In preparing these financial statements,
accounting standards require that directors:
-- select suitable accounting policies and apply them consistently;
-- make judgments and accounting estimates that are reasonable and prudent;
-- provide additional disclosures when compliance with the
specific requirements in IFRS are insufficient to enable users to
understand the impact of particular transactions, other events and
conditions on the entity's financial position and financial
performance; and
-- make an assessment of the Company's ability to continue as a going concern.
The directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the group and
Company's transactions and disclose with reasonable accuracy at any
time the financial position of the group and Company and enable
them to ensure that the financial statements comply with the Law.
They are also responsible for safeguarding the assets of the
Company and for taking reasonable steps for the prevention and
detection of fraud and other irregularities.
The directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
Company's website. Due to the Company's place of incorporation and
its dual listing, it is subject to legislation in the United
Kingdom, Canada and Jersey governing the preparation and
dissemination of financial statements, which may differ from
legislation in other jurisdictions.
The directors are also responsible for the preparation of the
strategic report (including the business model and risk management
report), directors' report, directors' remuneration report,
nomination report and corporate governance statement. These reports
are contained within the annual report and financial
statements.
These financial statements for the year ended 31 December 2016
have been prepared on a going concern basis, which contemplate the
realisation of assets and liquidation of liabilities during the
normal course of operations, in preparing the financial
statements.
The directors consider that the annual report and financial
statements, when taken as a whole, are fair, balanced and
understandable and provides the information necessary for
shareholders to assess the Company's position and performance,
business model and strategy. The directors have undertaken a robust
assessment of the principal risks impacting the Company. The
assessment identified strategic and operational risks at a
corporate level and principal risks impacting our operations in
Egypt and West Africa.
The board receives written assurances from the CEO and CFO that
to the best of their knowledge and belief, the group's financial
position presents a true and fair view and that the financial
statements are founded on a sound system of risk management,
internal compliance and control. Further, they confirm that the
group's risk management and internal compliance is operating
efficiently and effectively. The board recognises that internal
control assurances from the CEO and CFO can only be reasonable
rather than absolute, and therefore they are not and cannot be
designed to detect all weaknesses in control procedures.
The financial statements have been audited by the independent
audit and accounting firm, PricewaterhouseCoopers LLP, who were
given unrestricted access to all financial records and related
information, including minutes of all shareholder, board and
committee meetings.
The financial statements were approved by the board of directors
on 1 February 2017 and signed on their behalf by:
Andrew Pardey Ross Jerrard
Chief executive officer Chief financial officer
1 February 2017 1 February 2017
(1) The annual report is due to be released on 20 February 2017.
Set out below are the audited consolidated Financial Statements
for the Group, including notes thereto, for the year ended 31
December 2016. The independent auditors report on these Financial
Statements was unmodified.
The financial statements have been prepared in accordance with
International Financial Reporting Standards ("IFRS") as issued by
the International Accounting Standards Board ("IASB") and adopted
for use by the European Union and in accordance with the Companies
(Jersey) Law 1991. The group financial statements comply with
Article 4 of the EU IAS Regulation.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 December 2016
31 December 31 December
2016 2015
Notes US$'000 US$'000
Revenue 5 687,387 508,396
Cost of sales 6 (389,276) (416,242)
------------------------------------ ------ ------------ ------------
Gross profit 298,111 92,154
Other operating costs 6 (32,077) (27,722)
Impairment of exploration
and
evaluation assets 14 (122) (6,294)
Finance income 6 917 269
------------------------------------ ------ ------------ ------------
Profit before tax 266,829 58,407
Tax 8 (821) (6,837)
------------------------------------ ------ ------------ ------------
Profit after tax 266,008 51,570
EMRA profit share 7 (51,253) -
------------------------------------ ------ ------------ ------------
Profit for the year
after
EMRA profit share 214,755 51,570
Profit for the year
attributable to:
- the owners of the
parent 214,755 51,570
------------------------------------ ------ ------------ ------------
Other comprehensive
income
Items that may be reclassified
subsequently to profit
or loss:
Profit / (Loss) on
available--for--sale
financial assets (net
of tax) 15 45 (212)
------------------------------------ ------ ------------ ------------
Other comprehensive
income for the year 45 (212)
------------------------------------ ------ ------------ ------------
Total comprehensive
income
attributable to:
- the owners of the
parent 214,800 51,358
------------------------------------ ------ ------------ ------------
Earnings per share
before profit share:
Basic (cents per share) 25 23.049 4.506
Diluted (cents per
share) 25 22.935 4.441
Earnings per share
after profit share:
Basic (cents per share) 25 18.608 4.506
Diluted (cents per
share) 25 18.516 4.441
The above audited Consolidated Statement of Comprehensive Income
should be read in conjunction with the accompanying notes.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 31 December 2016
31 December 31 December
2016 2015
Notes US$'000 US$'000
--------------------------------------- ------ ------------ ------------
Non--current assets
Property, plant and equipment 13 868,926 871,467
Exploration and evaluation asset 14 153,918 152,077
Prepayments 12 295 28,750
Other receivables 10 81 60
--------------------------------------- ------ ------------ ------------
Total non--current assets 1,023,220 1,052,354
--------------------------------------- ------ ------------ ------------
Current assets
Inventories 11 136,562 134,775
Available--for--sale financial assets 15 130 163
Trade and other receivables 10 24,870 23,784
Prepayments 12 2,028 4,330
Cash and cash equivalents 26 399,873 199,616
--------------------------------------- ------ ------------ ------------
Total current assets 563,463 362,668
--------------------------------------- ------ ------------ ------------
Total assets 1,586,683 1,415,022
Non--current liabilities
Provisions 17 7,697 7,139
--------------------------------------- ------ ------------ ------------
Total non--current liabilities 7,697 7,139
--------------------------------------- ------ ------------ ------------
Current liabilities
Trade and other payables 16 47,991 47,138
Tax liabilities 8 - 6,837
Provisions 17 6,476 576
--------------------------------------- ------ ------------ ------------
Total current liabilities 54,467 54,551
--------------------------------------- ------ ------------ ------------
Total liabilities 62,164 61,690
--------------------------------------- ------ ------------ ------------
Net assets 1,524,519 1,353,332
--------------------------------------- ------ ------------ ------------
Equity
Issued capital 18 667,472 665,590
Share option reserve 19 3,048 2,469
Accumulated profits 853,999 685,273
--------------------------------------- ------ ------------ ------------
Total equity attributable to:
- owners of the parent 1,524,519 1,353,332
--------------------------------------- ------ ------------ ------------
Total equity 1,524,519 1,353,332
--------------------------------------- ------ ------------ ------------
The above audited Consolidated Statement of Financial Position
should be read in conjunction with the accompanying notes.
The consolidated financial statements were approved by the board
of directors and authorised for issue on 1 February 2017 and signed
on its behalf by:
Andrew Pardey Ross Jerrard
Chief executive officer Chief financial officer
1 February 2017
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2016
Share
Issued option Accumulated Total
capital reserve profits Equity
US$'000 US$'000 US$'000 US$'000
-------------------------------------- -------- -------- ------------ ----------
Balance as at 1 January 2016 665,590 2,469 685,273 1,353,332
Profit for the year - - 266,008 266,008
EMRA profit share - - (51,253) (51,253)
Other comprehensive income for
the year - - 45 45
-------------------------------------- -------- -------- ------------ ----------
Total comprehensive income for
the year - - 214,800 214,800
Issue of shares (17) - - (17)
Transfer of share--based payments 1,899 (1,899) - -
Recognition of share--based payments - 2,478 - 2,478
Dividend paid - - (46,073) (46,073)
Balance as at 31 December 2016 667,472 3,048 853,999 1,524,519
-------------------------------------- -------- -------- ------------ ----------
Share Total
Issued option Accumulated
capital reserve profits Equity
US$'000 US$'000 US$'000 US$'000
-------------------------------------- -------- -------- ------------ ----------
Balance as at 1 January 2015 661,573 4,098 667,702 1,333,373
Profit for the year - - 51,570 51,570
Other comprehensive income for
the year - - (212) (212)
-------------------------------------- -------- -------- ------------ ----------
Total comprehensive income for
the year - - 51,358 51,358
Issue of shares 38 - - 38
Transfer of share--based payments 3,979 (3,979) - -
Recognition of share--based payments - 2,350 - 2,350
Dividend paid - - (33,787) (33,787)
-------------------------------------- -------- -------- ------------ ----------
Balance as at 31 December 2015 665,590 2,469 685,273 1,353,332
-------------------------------------- -------- -------- ------------ ----------
The above audited Consolidated Statement of Changes in Equity
should be read in conjunction with the accompanying notes.
CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 31 December 2016
31 December 31 December
2016 2015
Notes US$'000 US$'000
---------------------------------------------- ------ ------------ ------------
Cash flows from operating activities
Cash generated in operating activities 26(b) 374,811 185,811
Taxes paid (7,599) -
Finance income (917) (269)
---------------------------------------------- ------ ------------ ------------
Net cash generated by operating activities 366,295 185,542
---------------------------------------------- ------ ------------ ------------
Cash flows from investing activities
Acquisition of property, plant and equipment (57,204) (36,554)
Exploration and evaluation expenditure (49,487) (34,372)
Finance income 6 917 269
---------------------------------------------- ------ ------------ ------------
Net cash used in investing activities (105,774) (70,657)
---------------------------------------------- ------ ------------ ------------
Cash flows from financing activities
EMRA prepayment 7 - (5,000)
Dividend paid (46,073) (33,787)
EMRA profit share 7 (18,503) -
---------------------------------------------- ------ ------------ ------------
Net cash provided by financing activities (64,576) (38,787)
---------------------------------------------- ------ ------------ ------------
Net increase in cash and cash equivalents 195,945 76,098
Cash and cash equivalents at the beginning
of the period 199,616 125,659
Effect of foreign exchange rate changes 4,312 (2,141)
---------------------------------------------- ------ ------------ ------------
Cash and cash equivalents at the end of the
period 26 399,873 199,616
---------------------------------------------- ------ ------------ ------------
The above audited Consolidated Statement of Cash Flows should be
read in conjunction with the accompanying notes.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2016
1. General information
Centamin plc (the "Company") is a listed public company,
incorporated in Jersey and operating through subsidiaries and
jointly controlled entities operating in Egypt, Burkina Faso, Côte
d'Ivoire, United Kingdom and Australia. It is the parent company of
the group, comprising the Company and its subsidiaries and joint
arrangements.
Registered office and principal place of business:
Centamin plc
2 Mulcaster Street
St Helier, Jersey JE2 3NJ
The nature of the group's operations and its principal
activities are set out in the directors' report and the strategic
report of the annual report.
2. Adoption of new and revised accounting standards
Standards not affecting the reported results nor the financial
position
In the current year, the new and revised Standards and
Interpretations that have been adopted have not had a significant
impact on the amounts reported in these financial statements.
New standards, amendments and interpretations not yet
adopted
Standards and interpretations issued but not yet effective up to
the date of issuance of the financial statements are listed below.
This listing of standards and interpretations issued are those that
the group reasonably expects to have an impact on disclosures,
financial position or performance when applied at a future
date.
IFRS 15 'Revenue from contracts with customers'. The new
standard replaces IAS 18 'Revenue' and IAS 11 'Construction
contracts' and provides a five step framework for application to
customer contracts: identification of customer contract,
identification of the contract performance obligations,
determination of the contract price, allocation of the contract
price to the contract performance obligations, and revenue
recognition as performance obligations are satisfied. A new
requirement where revenue is variable stipulates that revenue may
only be recognised to the extent that it is highly probable that
significant reversal of revenue will not occur. The group is
currently assessing the impact of IFRS 15 but as the majority of
gold sales are not subject to pricing adjustments, a significant
impact is not anticipated. The new standard will be effective for
annual periods beginning on or after 1 January 2018.
IFRS 9 'Financial instruments'. IFRS 9 addresses the financial
reporting of financial assets and financial liabilities. This
standard replaces IAS 39 'Financial instruments: recognition and
measurement'. IFRS 9 requires financial assets to be classified
into two measurement categories: those measured at fair value and
those measured at amortised cost. The determination is made at
initial recognition. The classification depends on the entity's
business model for managing its financial instruments and the
contractual cash flow characteristics of the instrument. For
financial liabilities, the standard retains most of the IAS 39
requirements. The main change is that, in cases where the fair
value option is taken for financial liabilities, the part of a fair
value change due to an entity's own credit risk is recorded in
other comprehensive income rather than in net earnings, unless this
creates an accounting mismatch. The impairment model and hedging
rules have also been amended under IFRS 9 but the derecognition
rules remain the same. The group does not expect a significant
impact from IFRS 9 at the moment as it does not enter into formal
hedge accounting arrangements, has no long-term trade or other
receivables and does not hold financial liabilities at fair value.
However, the group will need to consider the accounting for assets
currently held as available-for-sale. The new standard will be
effective for annual periods beginning on or after 1 January
2018.
IFRS 16 'Leases'. The new standard will replace IAS 17 'Leases'
and eliminates the classification of leases as either operating or
finance leases by the lessee. Classification of leases by the
lessor under IFRS 16 continues as either an operating or a finance
lease, as was the treatment under IAS 17 'Leases'. The treatment of
leases by the lessee will require capitalisation of all leases
resulting in accounting treatment similar to finance leases under
IAS 17 'Leases'. Exemptions for leases of very low value or
short-term leases will be applicable. The new standard will result
in an increase in lease assets and liabilities for the lessee.
Under the new standard the treatment of all lease expense is
aligned in the statement of earnings with depreciation, and an
interest expense component recognised for each lease, in line with
finance lease accounting under IAS 17 'Leases'. The group's office
building leases will come on balance sheet on adoption of IFRS 16
but this is not expected to have a significant impact on either the
balance sheet or KPI reporting. IFRS 16 will be applied
prospectively for annual periods beginning on or after 1 January
2019.
3. Summary of significant accounting policies
Basis of preparation
These financial statements are denominated in US dollars
("US$"), which is the presentational currency of Centamin plc. All
companies in the group use the US$ as their functional currency
except for the UK subsidiaries which are denominated in Great
British pounds ("GBP") and the Australian subsidiaries which are
denominated in Australian dollars ("A$"). All financial information
presented in United States dollars has been rounded to the nearest
thousand dollars, unless otherwise stated.
The financial statements have been prepared in accordance with
International Financial Reporting Standards ("IFRS") as issued by
the International Accounting Standards Board ("IASB") and adopted
for use by the European Union and interpretations issued from time
to time by the IFRS Interpretations Committee ("IFRS IC") both as
adopted by the European Union (EU) and which are mandatory for EU
reporting as at 31 December 2016, the Companies (Jersey) Law 1991,
and IFRS as issued by the IASB and interpretations issued from time
to time by the IFRS IC which are mandatory as at 31 December 2016,
therefore the group financial statements comply with Article 4 of
the EU IAS Regulation. The group has not early adopted any other
amendments, standards or interpretations that have been issued but
are not yet mandatory.
The consolidated financial statements have been prepared on a
going concern basis and under the historical cost convention, as
modified by available-for-sale financial assets, and financial
assets and financial liabilities (including derivative) instruments
at fair value through profit and loss.
Comparative figures
Certain comparative figures have been reclassified to conform
with the financial statement presentation adopted for the current
year. These are categorisation changes for comparison purposes only
and have no effect on results as previously reported.
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. Subsidiaries are all entities (including structured
entities) over which the group has control, as defined in IFRS 10
'Consolidated 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. The group controls an entity when the group is
exposed to, or has rights to, variable returns from its involvement
with the entity and has the ability to affect those returns through
its power over the entity.
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 owned by PGM and EMRA on a
50% 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 22) and will
therefore recognise a non-controlling interest ("NCI") for EMRA's
participation. Furthermore based on the requirements of the
Concession Agreement, payments to NCI meet the definition of a
liability and will be recorded in the income statement and
statement of financial position (below profit after tax), as the
EMRA profit share, on the date that a net production surplus
becomes available. Payment made to EMRA pursuant to the provisions
of the Concession Agreement is based on the net production surplus
available as at 30 June, being SGM's financial year end. Pursuant
to the Concession Agreement, the provisions of which are described
more fully below, whilst PGM is responsible for funding SGM's
activities, PGM is also entitled to recover the following costs and
expenses payable from sales revenue (excluding the royalty payable
to the Arab Republic of Egypt ("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 50% of SGM's net production
surplus which is defined as 'revenue less payment of the fixed
royalty to Arab Republic of Egypt ("ARE") and recoverable costs'.
However, in accordance with the terms of the Concession Agreement,
in the first and second years in which there is a Profit Share, PGM
will be entitled to an additional 10% of net production surplus and
an additional 5% in the third and fourth years. Any payment made to
EMRA pursuant to these provisions of the Concession Agreement will
be recognised as a variable charge in the income statement (below
profit after tax) of Centamin, which will lead to a reduction in
the earnings per share.
Going concern
These financial statements for the year ended 31 December 2016
have been prepared on a going concern basis, which contemplate the
realisation of assets and liquidation of liabilities during the
normal course of operations.
The group meets its day-to-day working capital requirements
through existing cash resources. As discussed in Note 21, the
operation of the mine has been affected by two legal actions. The
first of these followed from a decision taken by Egyptian General
Petroleum Corporation ("EGPC") to charge international, not local
(subsidised) prices for the supply of DFO, and the second arose as
a result of a judgment of the Administrative Court of first
instance in relation to, amongst other matters, the Company's
160km(2) 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 were
considered and ruled on, thus providing assurance that normal
operations will 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.
Having assessed the principal risks and the other matters
discussed in connection with the long term viability statement
(refer to the risk management report included within the annual
report), the directors considered it appropriate to adopt the going
concern basis of accounting in preparing the 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. These policies have been consistently applied to all the
years presented, unless otherwise stated.
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 fair value through profit or loss ("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 estimated 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 ("AFS")
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. Fair value is determined in the manner
described in note 27. Gains and losses arising from changes in fair
value are recognised in other comprehensive income and accumulated
profits 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 FVTPL, 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 twelve 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 twelve 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 (defined contribution schemes) 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:
1) the rights to tenure of the area of interest are current; and
2) at least one of the following conditions is also met:
i. 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
ii. 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 mine
development properties, and then amortised over the life of the
reserves associated with the area of interest once mining
operations have commenced.
Mine 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
except for the UK subsidiaries which are denominated in Great
British pounds and the Australian subsidiaries which are
denominated in Australian dollars.
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 finished goods are valued
applying absorption costing.
Interests in joint arrangements
The group applies IFRS 11 'Joint arrangements'. Under IFRS 11
investments in joint arrangements are classified as either joint
operations or joint ventures depending on the contractual rights
and obligations each investor. Joint ventures are accounted for
using the equity method. In relation to its interests in joint
operations, the group recognises its share of assets and
liabilities; revenue from the sale of its share of the output; and
its share of expenses.
SGM is wholly consolidated within the Centamin group of
companies, reflecting the substance and economic reality of the
Concession Agreement (see note 22).
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")
PPE is stated at cost less accumulated depreciation and
impairment. PPE 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. Subsequent costs are included
in the asset's carrying amount or recognised as a separate asset,
as appropriate, only when it is probable that future economic
benefits associated with the item will flow to the group and the
cost of the item can be measured reliably. The carrying amount of
the replaced part is derecognised. All other repairs and
maintenance are charged to the income statement during the
financial period in which they are incurred. The cost of PPE
includes the estimated restoration costs associated with the
asset.
Depreciation is provided on PPE. 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 - 20 years
Office equipment 3 - 7 years
Mining equipment 2 - 13 years
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 from exploration and evaluation
assets to mine development 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). 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:
a) it is probable that the future economic benefit (improved
access to the ore body) associated with the stripping activity will
flow to the entity;
b) the entity can identify the component of the ore body for
which access has been improved; and
c) 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). For the purposes of assessing impairment, assets are
grouped at the lowest levels for which there are largely
independent cash inflows (cash generating units).
Recoverable amount is the higher of fair value loss 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 a cash generating unit is estimated
to be less than its carrying amount, the carrying amount of the
cash generating unit is reduced to its recoverable amount. Where an
impairment loss subsequently reverses, the carrying amount of the
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 cash
generating unit in prior years.
A reversal of an impairment loss is recognised immediately in
profit or loss, 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 is offset against the expenditure capitalised and
carried in the consolidated statement of financial position. All
revenues recognised after commencement of commercial production are
recognised in accordance with the revenue policy stated above. The
commencement date of commercial production is determined when
stable and sustained production capacity has been achieved.
Production royalty
The Arab Republic of Egypt ("ARE") is entitled to a royalty of
3% of net sales revenue (revenue net of freight and refining costs)
as defined from the sale of gold and associated minerals from the
Sukari Gold Mine. This royalty is calculated and recognised on
receipt of the final certificate of analysis document received from
the refinery. Due to its nature, this royalty is not recognised in
cost of sales but rather in other operating costs.
Other income
Interest income
Interest income is recognised when it is probable that the
economic benefits will flow to the group and the amount of income
can be measured reliably. Interest income 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.
Business combinations
Acquisitions of businesses as defined by IFRS 3 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 IFRS 3 either in
profit or loss or as a change to other comprehensive income.
Changes in the fair value of contingent consideration classified as
equity are not remeasured, and its subsequent settlement is
accounted for within equity.
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 'Non--current assets held for
sale'.
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.
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 a joint arrangement.
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, 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.
The group determines at each reporting date whether there is any
objective evidence that the investment in the associate is
impaired. If this is the case, the group calculates the amount of
impairment as the difference between the recoverable amount of the
associate and its carrying value and recognises the amount adjacent
to share of profit and loss of associates in the income
statement.
Dilution gains and losses arising in investments in associates
are recognised in the income statement.
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--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
counterparty renders the service. The fair value of the employee
services received in exchange for the grant of the options is
recognised as an expense. The total amount to be expensed is
determined by reference to the fair value of the options
granted:
-- including any market performance conditions (for example, an entity's share price);
-- excluding the impact of any service and non--market
performance vesting conditions (for example,
profitability and remaining an employee of the entity over a specified time period); and
-- including the impact of any non--vesting conditions (for
example, the requirement for employees to
save or holding shares for a specific period of time).
When the options are exercised, the Company issues new shares.
The proceeds received net of any directly attributable transaction
costs are credited to share capital (nominal value) and share
premium.
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 note 28. 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
Ordinary shares are classified as equity. 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.
Restoration and rehabilitation
A provision for restoration and rehabilitation is recognised
when there is a present legal or constructive 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 within other operating
costs rather than being capitalised into the cost of the related
asset.
4. Critical accounting judgments
Critical judgments in applying the entity's accounting
policies
The following are the critical judgments 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:
Management has discussed its critical accounting judgments and
associated disclosures with the Company's audit and risk
committee.
Impairment of assets (other than exploration and evaluation and
financial assets)
IFRS requires management to test for impairment if events or
changes in circumstances indicate that the carrying amount of a
finite lived asset may not be recoverable. Management has concluded
that there is no indication that an impairment exists, nor have any
indicators arisen after the reporting period and are therefore not
required to perform a full impairment review under IAS 36.
In making its assessment as to the possibility of whether
impairments losses having arisen, management considered the
following indications:
-- internal sources of information;
-- external sources of information;
-- litigation;
The key assumptions previously applied in impairment reviews
are:
-- forecast gold prices;
-- discount rate;
-- production volumes;
-- reserves and resources report; and
-- costs and recovery rates.
Litigation
The group exercises judgment in measuring and recognising
provisions and the exposures to contingent liabilities related to
pending litigation, as well as other contingent liabilities (see
note 21 to the financial statements). Judgment is necessary in
assessing the likelihood that a pending claim will succeed, or a
liability will arise, and to quantify the possible range of the
financial settlement.
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 21 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 still 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 will 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.
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 judgment 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.
Going concern
Under guidelines set out by the UK Financial Reporting Council
("FRC") the directors of UK listed companies are required to
consider whether the going concern basis is the appropriate basis
of preparation of financial statements.
Based on a detailed cash flow forecast prepared by management,
in which it included any reasonably possible change in the key
assumptions on which cash flow forecast is based, the directors
have a reasonable expectation that the group will have adequate
resources to continue in operational existence for the foreseeable
future. Key assumptions underpinning this forecast include:
-- litigation as discussed in note 21 to the financial statements;
-- forecast gold price;
-- production volumes; and
-- costs and recovery rates.
These financial statements for the year ended 31 December 2016
have therefore been prepared on a going concern basis, which
contemplate the realisation of assets and liquidation of
liabilities during the normal course of operations, in preparing
the financial statements.
Accounting treatment of Sukari Gold Mines ("SGM")
SGM is consolidated within the Centamin group of companies,
reflecting the substance and economic reality of the Concession
Agreement (see note 22 to the financial statements).
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 cash flows. It also involves assessment
and judgment of complex 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 consolidated statement of comprehensive income and the
calculation in the valuation of inventory.
Production forecasts from the underground mine at Sukari are
partly based on estimates regarding future resource and reserve
growth. It should be specifically noted that the potential quantity
and grade from the Sukari underground mine is conceptual in nature,
that there has been insufficient exploration to define a mineral
resource and that it is uncertain if further exploration will
result in the target being delineated as a mineral resource.
Depreciation of capitalised underground mine development
costs
Depreciation of capitalised underground mine development costs
at the Sukari mine is based on reserve estimates. Management and
directors believe that these estimates are both realistic and
conservative, based on current information.
EMRA profit share
Payments made to EMRA pursuant to the provisions of the
Concession Agreement are recognised as a variable charge in the
income statement (below profit after tax) of Centamin, which leads
to a reduction in the earnings per share. The profit share payments
during the year will be reconciled against SGM's audited June 2017
financial statements. Any variation between payments made during
the year (which are based on the Company's estimates) and the
audited financial statements, may result in a balance due and
payable to EMRA or advances to be offset against future
distributions.
Egyptian Pound
The group operates predominantly in Egypt. The group receives
its income from gold sales in US dollars, however, it is off-set by
the fact that in November 2016, the Egyptian government floated the
Egyptian pound in an attempt to stabilize its economy. This has led
to a significant devaluation of the currency which has led to an
increase in inflation. This is a potential risk for the group as it
has led to increases in the prices of fuel, raw materials and other
goods as well as pressure to increase staff wages.
5. Revenue
An analysis of the group's revenue for the year, from continuing
operations, is as follows:
31 December 31 December
2016 2015
US$'000 US$'000
-------------- ------------ ------------
Gold sales 686,306 506,963
Silver sales 1,081 1,433
-------------- ------------ ------------
687,387 508,396
-------------- ------------ ------------
All gold and silver sales during the year were made to a single
customer in North America.
6. Profit before tax
Profit for the year has been arrived at after
crediting/(charging) the following gains/(losses) and expenses:
31 December 31 December
2016 2015
Total Total
US$'000 US$'000
----------------------- ------------ ------------
Cost of sales
Mine production costs (288,317) (314,827)
Movement in inventory 5,926 (7,476)
Depreciation and
amortisation (106,885) (93,939)
--------------------------- ------------ ------------
(389,276) (416,242)
----------------------- ------------ ------------
31 December 31 December
2016 2015
US$'000 US$'000
--------------------------------------------------------- ------------ ------------
Finance income
Interest received 917 269
--------------------------------------------------------- ------------ ------------
Other operating costs
Corporate compliance (1,746) (1,556)
Office related depreciation (87) (111)
Auditing fees (641) (573)
Corporate consultants (370) (751)
Communications and IT (169) (206)
Salary and wages (5,353) (6,929)
Travel, accommodation and entertainment (859) (1,212)
Office rents and lease payment (156) (185)
Other administration expenses (207) (140)
Impairment reversal 484 526
Insurances (225) (120)
Other taxes (1,400) (516)
Stock obsolescence (2,500) -
Employee equity settled share--based payments (2,478) (2,350)
Fixed royalty - attributable to the Egyptian government (20,575) (15,198)
Foreign exchange gain/(loss), net 5,025 2,141
Finance charges (239) (180)
Provision for restoration and rehabilitation -
unwinding of discount (581) (362)
(32,077) (27,722)
--------------------------------------------------------- ------------ ------------
31 December 31 December
2016 2015
US$'000 US$'000
---------------------------------------------------- ------------ ------------
Impairment of exploration and evaluation assets(1) (122) (6,294)
---------------------------------------------------- ------------ ------------
1) Refer to note 14 for further details.
7. EMRA profit share
EMRA is entitled to a share of 50% of SGM's net production
surplus which can be defined as 'revenue less payment of the fixed
royalty to Arab Republic of Egypt ("ARE") and recoverable costs'.
However, in accordance with the terms of the Concession Agreement,
in the first and second years in which there is a Profit Share, PGM
will be entitled to an additional 10% of net production surplus and
an additional 5% in the third and fourth years.
31 December 31 December
2016 2015
US$'000 US$'000
-------------------------------------- ------------- ------------
Income statement
EMRA profit share (51,253) -
Balance sheet
EMRA advance profit share prepayment - 28,750
EMRA profit share accrual 4,000 -
-------------------------------------- ------------- ------------
Entitlements to EMRA pursuant to the provisions of the
Concession Agreement are recognised as a variable charge in the
income statement (below profit after tax) of Centamin, which leads
to a reduction in the earnings per share. The profit share payments
during the year will be reconciled against SGM's audited June 2017
financial statements.
Any variation between payments made during the year (which are
based on the Company's estimates) and the audited financial
statements, may result in a balance due and payable to EMRA or
advances to be offset against future distributions. This will be
reflected as an accrual or prepayment in each reporting period.
Centamin elected to make advance payments against future profit
share from 2013 onwards and the value of these payments amounted to
US$28.75 million. These payments were recovered by PGM during the
year by way of net off against EMRA's entitlement to profit share
during the period.
31 December 31 December
2016 2015
US$'000 US$'000
-------------------------------------- ------------ ------------
Cash flows
EMRA profit share entitlement 51,253 -
EMRA prepayment - 5,000
EMRA recovery of prepayment (28,750) -
EMRA accrual (4,000) -
-------------------------------------- ------------ ------------
EMRA cash payments during the period 18,503 5,000
-------------------------------------- ------------ ------------
EMRA and PGM benefit from advance distributions of profit share
which are made on a weekly/fortnightly basis and proportionately in
accordance with the terms of the Concession Agreement. Future
distributions will take into account ongoing cash flows, historic
costs that are still to be recovered and any future capital
expenditure. The profit share payments during the year will be
reconciled against SGM's audited June 2017 financial
statements.
Subsequent to year end further profit share advance
distributions totalling US$7m has been made to EMRA.
8. Tax
The group operates in several countries and, accordingly, it is
subject to, the various tax regimes in the countries in which it
operates. From time to time the group is subject to a review of its
related tax filings and in connection with such reviews, disputes
can arise with the taxing authorities over the interpretation or
application of certain rules to the group's business conducted
within the country involved. If the group is unable to resolve any
of these matters favourably, there may be an adverse impact on the
group's financial performance, cash flows or results of operations.
In the event that management's estimate of the future resolution of
these matters changes, the group will recognise the effects of the
changes in its consolidated financial statements in the period that
such changes occur.
In Australia, Centamin Egypt Limited and Pharaoh Gold Mines NL
have elected to form a tax-consolidated group and therefore are
treated as a single entity for Australian income tax purposes.
Pharaoh Gold Mines NL benefits from the "Branch Profits Exemption"
whereby foreign branch income will generally not be subject to
Australian income tax. In Egypt, Centamin has entered into a
concession agreement that provides that the income generated by
Sukari Gold Mining Company's activities is granted a long--term tax
exemption from all taxes imposed in Egypt.
Tax recognised in profit is summarised as follows:
Tax expense
31 December 31 December
2016 2015
US$'000 US$'000
Current tax
Current tax expense in respect of the current year (821) (6,837)
Deferred tax - -
---------------------------------------------------- ------------ ------------
Total tax expense (821) (6,837)
---------------------------------------------------- ------------ ------------
The tax expense for the year can be reconciled to the profit per
the consolidated statement of comprehensive income as follows:
31 December 31 December
2016 2015
US$'000 US$'000
-------------------------------------------------------- ------------ ------------
Profit before income tax 266,829 58,407
Tax expense calculated at 0% (2015: 0%)(1) of profit - -
before tax
Tax effect of amounts which are not deductible/taxable
in calculating taxable income:
Effect of tax different tax rates of subsidiaries
operating in other jurisdictions (821) (6,837)
-------------------------------------------------------- ------------ ------------
Tax expense for the year (821) (6,837)
-------------------------------------------------------- ------------ ------------
1) The tax rate used in the above reconciliation is the
corporate tax rate of 0% payable by Jersey corporate entities under
the Jersey tax law (2015: 0%). There has been no change in the
underlying corporate tax rates when compared to the previous
financial period.
Tax recognised in the balance sheet is summarised as
follows:
31 December 31 December
2016 2015
US$'000 US$'000
------------------------- ------------- ------------
Current tax liabilities - (6,837)
Current tax payable - -
------------------------- ------------- ------------
Tax consolidation
Relevance of tax consolidation to the consolidated entity
Companies within the group's wholly owned Australian resident
entities formed a tax--consolidated group with effect from 1 July
2003. The head entity within the tax--consolidated group is
Centamin Egypt Limited. The members of the tax--consolidated group
are Pharaoh Gold Mines NL, Viking Resources NL and North African
Resources NL.
Nature of tax funding arrangements and tax sharing
agreements
Entities within the tax--consolidated group have entered into a
tax funding arrangement and a tax--sharing agreement with the head
entity. Under the terms of the tax--funding agreement, Centamin
Egypt Limited and each of the entities in the tax--consolidated
group has agreed to pay a tax--equivalent payment to or from the
head entity, based on the current tax liability or current tax
asset of the entity. Such amounts are reflected in amounts
receivable from or payable to other entities in the
tax--consolidated group.
The tax--sharing agreement entered into between members of the
tax--consolidated group provides for the determination of the
allocation of income tax liabilities between the entities should
the head entity default on its tax payment obligations. No amounts
have been recognised in the financial statements in respect of this
agreement as payment of any amounts under the tax--sharing
agreement is considered remote.
9. Segment reporting
The group is engaged in the business of exploration and mining
of precious metals only, which represents a single operating
segment. The board is the group's chief operating decision maker
within the meaning of IFRS 8.
Non-current assets other than financial instruments by
country:
31 December 31 December
2016 2015
US$'000 US$'000
-------------------- ------------ ------------
Egypt 899,852 970,376
Ethiopia - 336
Burkina Faso 105,432 76,209
Côte d'Ivoire 17,870 5,316
Australia 3 2
Jersey 63 115
-------------------- ------------ ------------
1,023,220 1,052,354
-------------------- ------------ ------------
10. Trade and other receivables
31 December 31 December
2016 2015
US$'000 US$'000
------------------------------ ------------ ------------
Non--current
Other receivables - deposits 81 60
81 60
------------------------------ ------------ ------------
31 December 31 December
2016 2015
US$'000 US$'000
------------------------------- ------------ ------------
Current
Gold and silver sales debtors 23,009 20,472
Other receivables 1,861 3,312
------------------------------- ------------ ------------
24,870 23,784
------------------------------- ------------ ------------
Trade and other receivables are classified as loans and
receivables and are therefore measured at amortised cost.
All gold and silver sales during the year were made to a single
customer in North America and are neither past due or impaired.
The average age of the receivables is 9 days (2015: 14 days). No
interest is charged on the receivables. There are no trade
receivables past due and impaired at the reporting date, and thus
no allowance for doubtful debts has been recognised. Of the trade
receivables balance, the gold sales debtor is all a receivable from
Asahi Refining of Canada. The amount due has been received in full
subsequent to year end. Other receivables represent GST and VAT
amounts owing from the various jurisdictions that the group
operates in and inventory returns to vendors where refunds are
expected to occur.
The directors consider that the carrying amount of trade and
other receivables is approximately equal to their fair value.
11. Inventories
31 December 31 December
2016 2015
US$'000 US$'000
-------------------------------------- ------------ ------------
Mining stockpiles and ore in circuit 34,217 28,291
Stores inventory 102,345 106,484
-------------------------------------- ------------ ------------
136,562 134,775
-------------------------------------- ------------ ------------
12. Prepayments
31 December 31 December
2016 2015
US$'000 US$'000
-------------------------------------- ------------ ------------
Current
Prepayments 1,151 1,161
Fuel prepayments 877 3,169
-------------------------------------- ------------ ------------
2,028 4,330
-------------------------------------- ------------ ------------
31 December 31 December
2016 2015
US$'000 US$'000
-------------------------------------- ------------ ------------
Non-current
EMRA - 28,750
Others 295 -
-------------------------------------- ------------ ------------
295 28,750
-------------------------------------- ------------ ------------
Movement in fuel prepayments
31 December 31 December
2016 2015
US$'000 US$'000
-------------------------------------- ------------ ------------
Balance at the beginning of the year 3,169 -
Fuel prepayment recognised 23,014 42,472
Less: provision charged to:(1)
Mine production costs (22,844) (43,808)
Property, plant and equipment (2,269) -
Inventories (193) 1,336
Fuel advance down payment - 3,169
-------------------------------------- ------------ ------------
Balance at the end of the year 877 3,169
-------------------------------------- ------------ ------------
1) The cumulative fuel prepayment recognised and provision
charged as at 31 December 2016 is as follows:
Fuel prepayment recognised (US$'000) 231,218
Provision charged to:
Mine production costs (US$'000) (218,000)
Property, plant and equipment (US$'000) (14,120)
Inventories (US$'000) (1,390)
Fuel advance down payment (US$'000) 3,169
Diesel Fuel Dispute
As more fully described in note 21 below, the group is currently
involved in court action concerning the price at which it is
supplied with DFO. Since January 2012, the group has had to pay for
DFO at the international price rather than the subsidised price
which it believes it is entitled to. It is seeking recovery of the
funds advanced since 2012 though the court action. However,
management recognises the practical difficulties associated with
reclaiming funds from the government and for this reason has, fully
provided against the prepayment of US$231.2 million to 31 December
2016 of which US$24.6 million was provided for during 2016.
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 the Diesel Fuel Dispute is shown below.
This has resulted in a net charge of US$24.6 million in the
profit and loss.
31 December 2016 31 December 2015
------------------------------------ ------------------------------------
Before Before
adjustment Adjustment Total adjustment Adjustment Total
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
----------------------- ----------- ----------- ---------- ----------- ----------- ----------
Cost of sales
Mine production costs (265,473) (22,844) (288,317) (271,019) (43,808) (314,827)
Movement in inventory 7,710 (1,784) 5,926 (4,545) (2,931) (7,476)
Depreciation and
amortisation (106,885) - (106,885) (93,939) - (93,939)
----------------------- ----------- ----------- ---------- ----------- ----------- ----------
(364,648) (24,628) (389,276) (369,503) (46,739) (416,242)
----------------------- ----------- ----------- ---------- ----------- ----------- ----------
12. Prepayments (continued)
The effect on earnings per share is shown below.
31 December 2016 31 December 2015
---------------------------------- ----------------------------------
Before Total Before
Adjustment Adjustment adjustment Adjustment Total
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Earnings per share
before profit share:
Basic (cents per
share) 25.183 (2.134) 23.049 8.590 (4.084) 4.506
Diluted (cents per
share) 25.058 (2.123) 22.935 8.467 (4.025) 4.441
Earnings per share
after profit share:
Basic (cents per
share) 20.742 (2.134) 18.608 8.590 (4.084) 4.506
Diluted (cents per
share) 20.639 (2.123) 18.516 8.467 (4.025) 4.441
13. Property, plant and equipment
Mine Capital
Office Plant Mining development work in
and
equipment Buildings equipment equipment properties progress Total
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
-------------------- ---------- ---------- ---------- ---------- ------------ ---------- ----------
Cost
Balance at
31 December
2015 5,535 1,194 582,854 241,316 316,304 32,469 1,179,672
Additions 547 825 1,474 8,733 2,075 43,306 56,960
Disposals (30) - (215) (558) - - (803)
Transfers - - - - 47,523 - 47,523
-------------------- ---------- ---------- ---------- ---------- ------------ ---------- ----------
Balance at
31 December
2016 6,052 2,019 584,113 249,491 365,902 75,775 1,283,352
-------------------- ---------- ---------- ---------- ---------- ------------ ---------- ----------
Accumulated depreciation
Balance at
31 December
2015 (4,867) (293) (98,504) (100,826) (103,715) - (308,205)
Depreciation
and amortisation (558) (119) (29,496) (29,424) (47,376) - (106,973)
Disposals 25 - 87 640 - - 752
-------------------- ---------- ---------- ---------- ---------- ------------ ---------- ----------
Balance at
31 December
2016 (5,400) (412) (127,913) (129,610) (151,091) - (414,426)
-------------------- ---------- ---------- ---------- ---------- ------------ ---------- ----------
Cost
Balance at
31 December
2014 5,401 1,186 565,836 221,178 232,921 116,772 1,143,294
Additions 103 8 147 3,779 - 28,781 32,818
Increase
in rehabilitation
asset - - - - 3,762 - 3,762
Disposals - - - (202) - - (202)
Transfers 31 - 16,871 16,561 79,621 (113,084) -
Balance at
31 December
2015 5,535 1,194 582,854 241,316 316,304 32,469 1,179,672
-------------------- ---------- ---------- ---------- ---------- ------------ ---------- ----------
Accumulated depreciation
Balance at
31 December
2014 (4,280) (234) (67,980) (72,339) (69,497) - (214,330)
Depreciation
and amortisation (587) (59) (30,524) (28,663) (34,218) - (94,051)
Disposals - - - 176 - - 176
-------------------- ---------- ---------- ---------- ---------- ------------ ---------- ----------
Balance at
31 December
2015 (4,867) (293) (98,504) 100,826 (103,715) - 308,205
-------------------- ---------- ---------- ---------- ---------- ------------ ---------- ----------
Net book
value
As at 31
December
2015 668 901 484,350 140,490 212,589 32,469 871,467
-------------------- ---------- ---------- ---------- ---------- ------------ ---------- ----------
As at 31
December
2016 652 1,607 456,200 119,882 214,811 75,775 868,926
-------------------- ---------- ---------- ---------- ---------- ------------ ---------- ----------
No impairment review was performed in 2015 or 2016 as no
indicators of impairment were identified.
14. Exploration and evaluation asset
31 December 31 December
2016 2015
US$'000 US$'000
------------------------------------------------ ------------ ------------
Balance at the beginning of the period 152,077 123,999
Expenditure for the period 49,487 34,372
Transfer to property plant and equipment (47,524) -
Impairment of exploration and evaluation asset (122) (6,294)
------------------------------------------------ ------------ ------------
Balance at the end of the period 153,918 152,077
------------------------------------------------ ------------ ------------
The exploration and evaluation asset relates to the drilling,
geological exploration and sampling of potential ore reserves and
can be attributed to Egypt (US$30.5m) Burkina Faso (US$105.6m) and
Côte d'Ivoire (US$17.8m).
15. Available-for-sale financial assets
31 December 31 December
2016 2015
US$'000 US$'000
-------------------------------------------------------- ------------ ------------
Balance at the beginning of the period 163 409
Gain/(loss) on foreign exchange movement (78) (560)
Loss on fair value of investment - other comprehensive
income 45 (212)
Impairment reversal/(loss) - 526
-------------------------------------------------------- ------------ ------------
Balance at the end of the period 130 163
-------------------------------------------------------- ------------ ------------
The available-for-sale financial asset at period end relates to
a 5.33% (2015: 6.66% equity interest in Nyota Minerals Limited
("Nyota"), a listed public company and a 0.43% interest in Kefi
Minerals plc an AIM listed company.
Management made the decision to sell its interest in Nyota and
the financial asset is classed as a current asset.
16. Trade and other payables
31 December 31 December
2016 2015
US$'000 US$'000
------------------------------ ------------ ------------
Trade payables 23,734 28,630
Other creditors and accruals 24,257 18,508
------------------------------ ------------ ------------
47,991 47,138
------------------------------ ------------ ------------
Trade payables principally comprise the amounts outstanding for
trade purchases and ongoing costs. The average credit period taken
for trade purchases is 22 days (2015: 22 days). Trade payables are
interest free for periods ranging from 30 to 180 days. Thereafter
interest is charged at commercial rates. The group has financial
risk management policies in place to ensure that all payables are
paid within the credit timeframe. The directors consider that the
carrying amount of trade payables approximate their fair value.
17. Provisions
31 December 31 December
2016 2015
US$'000 US$'000
---------------------------------------------------------- ------------ ------------
Current
Employee benefits(1) 367 456
Withholding tax 3,609 120
Stock obsolescence 2,500 -
---------------------------------------------------------- ------------ ------------
6,476 576
---------------------------------------------------------- ------------ ------------
Non-current
Restoration and rehabilitation(2) 7,697 7,139
---------------------------------------------------------- ------------ ------------
7,697 7,139
---------------------------------------------------------- ------------ ------------
Movement in restoration and rehabilitation provision
Balance at beginning of the year 7,139 3,015
Additional provision recognised/(provision derecognised) (23) 3,762
Interest expense - unwinding of discount 581 362
---------------------------------------------------------- ------------ ------------
Balance at end of the year 7,697 7,139
---------------------------------------------------------- ------------ ------------
1) Employee benefits relate to annual, sick and long service leave entitlements.
2) The provision for restoration and rehabilitation represents
the present value of the directors' best estimate of the future
outflow of economic benefits that will be required to remove the
facilities and restore the affected areas at the group's sites
discounted by 8.17% (2015: 8.17%). This restoration and
rehabilitation estimate, which is reviewed on annual basis, has
been made on the basis of benchmark assessments of restoration
works required following mine closure and after taking into account
the projected area to be disturbed over the life of the mine, being
20 years. The annual review undertaken as at 31 December 2016 has
resulted in no change to the provision.
18. Issued capital
31 December 2016 31 December 2015
Number US$'000 Number US$'000
------------------------------------ -------------- ----------- -------------- --------
Fully paid ordinary shares
Balance at beginning of the period 1,152,107,984 665,590 1,152,107,984 661,573
Issue/(Cancelled) of shares - (17) - 38
Transfer from share option reserve - 1,899 - 3,979
------------------------------------ -------------- ----------- -------------- --------
Balance at end of the period 1,152,107,984 667,472 1,152,107,984 665,590
------------------------------------ -------------- ----------- -------------- --------
The authorised share capital is an unlimited number of no par
value shares.
At 31 December 2016 the Company held 2,109,710 ordinary shares
in treasury (2015: 5,659,709 ordinary shares). These shares are
held by the trustee pursuant to the deferred bonus share plan.
Fully paid ordinary shares carry one vote per share and carry the
right to dividends. See note 29 for more details of the share
options.
19. Share option reserve
31 December 31 December
2016 2015
US$'000 US$'000
---------------------- ------------ ------------
Share option reserve 3,048 2,469
---------------------- ------------ ------------
31 December 31 December
2016 2015
US$'000 US$'000
------------------------------------ ------------ ------------
Share option reserve
Balance at beginning of the period 2,469 4,098
Share--based payments expense 2,937 2,456
Transfer to accumulated profits (459) (106)
Transfer to issued capital (1,899) (3,979)
------------------------------------ ------------ ------------
Balance at the end of the period 3,048 2,469
------------------------------------ ------------ ------------
The share option reserve arises on the grant of share options to
employees under the employee share option plan. Amounts are
transferred out of the reserve and into issued capital when the
options and warrants are exercised/vested. Amounts are transferred
out of the reserve into accumulated profits when the options and
warrants are forfeited.
20. Commitments for expenditure
(a) Capital expenditure commitments
31 December 31 December
2016 2015
US$'000 US$'000
---------------------------------------------------- ------------------- ------------
Plant and equipment(1)
No longer than one year - -
Longer than one year and not longer than five years - -
Longer than five years - -
---------------------------------------------------- ------------------- ------------
- -
---------------------------------------------------- ------------------- ------------
(1) As a result of the completion of Stage 4, the group had no
commitments for capital expenditure as at 31 December 2016.
(b) Operating lease commitments
The future aggregate minimum lease payments under
non--cancellable operating leases are as follows:
31 December 31 December
2016 2015
US$'000 US$'000
----------------------------------------------------- ------------ ------------
Office premises
No longer than one year 56 68
Longer than one year and not longer than five years 47 119
----------------------------------------------------- ------------ ------------
103 187
----------------------------------------------------- ------------ ------------
Operating lease commitments are limited to office premises in
Jersey.
21. Contingent liabilities and contingent assets
Contingent liabilities
Fuel supply
In January 2012, the group received a letter from Chevron (its
then fuel supplier) 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 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, during 2012, the Company received a
demand from Chevron for the repayment of fuel subsidies received in
the period from late 2009 through to January 2012, for EGP403
million (approximately US$21.8 million at current exchange
rates).
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 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 every prospect of success. However, as a practical matter,
and in order to ensure the continuation of supply, the group has
since January 2012 advanced funds to its fuel supplier, Chevron,
based on the international price for diesel. As at the date of the
financial statements, no final decision had been taken by the
courts regarding this matter.
In September 2016, the State Commissioner's Office produced a
report containing non-binding recommendations for the
Administrative Court in which the case is proceeding. The report's
findings were unfavourable to the group. The group's legal advisers
do not believe the report properly addresses the substantive merits
of the group's case and, as such, the Company continues vigorously
to pursue its claim. The Company has prepared a response to the
report which it will submit at the next hearing in the case. 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 reclaiming funds from the government
and for this reason has fully provided against the prepayment of
US$231.2 million. Refer to note 12 of the accompanying financial
statements for further details on the impact of this provision on
the group's results for 2016.
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.
Concession Agreement court case
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 a 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 no. 222 of 1994.
In summary that judgment states that, although the Concession
Agreement itself remains valid and in force, insufficient evidence
had 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 lodging a formal appeal before the Supreme
Administrative Court on 26 November 2012. 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 was 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 has lodged its own appeal in relation to this matter which
is supportive of the Company's position in this matter.
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. The Company believes
this demonstrates the government's commitment to its investment at
Sukari and the desire to stimulate further investment in the
Egyptian mining industry.
21. Contingent liabilities and contingent assets (continued)
The Company has taken extensive legal advice on the merits of
its appeal from a number of leading Egyptian law firms who have
confirmed that the proper steps were followed with regard to the
grant of the 160km(2) lease. In addition, the Company has been
advised that it should benefit from Law no. 32 of 2014, which came
into force in April 2014 and which restricts the capacity for third
parties to challenge any contractual agreement between the Egyptian
government and an investor. This law, whilst in force and ratified
by the new parliament, is currently under review by the Supreme
Constitutional Court of Egypt. It therefore remains of the view
that the appeal is based on strong legal grounds and will
ultimately be successful. The appeal was stayed by the Supreme
Administrative Court in June 2016 until the Supreme Constitutional
Court rules on the validity of Law no. 32 of 2014. If the Supreme
Constitutional Court upholds Law 32, the group is advised that it
will benefit from its provisions. In the event that the Supreme
Constitutional Court rules that Law no. 32 is invalid, the group
remains confident that its appeal will be successful on the
merits.
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 group's
operation exceeds the exploitation lease area of 3km(2) referred to
in the original court decision.
The Company remains confident that normal operations at Sukari
will be maintained whilst the appeal process is underway. Centamin
does not currently see the need to take the matter to a court
outside of Egypt as Centamin remains of the belief that the
Egyptian Court will rule in Centamin's favour.
Contingent assets
There were no contingent assets at year-end (31 December 2015:
nil).
22. 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
Country 2016 2015
of
incorporation % %
---------------------------------------------- --------------- ------------ ------------
Centamin Egypt Limited Australia 100 100
Pharaoh Gold Mines NL (holder of an Egyptian
branch) Australia 100 100
Sukari Gold Mining Co Egypt 50 50
Viking Resources Limited (in liquidation) Australia 100 100
North African Resources NL (in liquidation) Australia 100 100
Centamin West Africa Holdings Limited UK 100 100
Sheba Exploration Limited (holder of an
Ethiopia branch) UK 100 100
Sheba Exploration Holdings Limited(1) UK 100 100
Centamin Group Services Limited Jersey 100 100
Centamin Holdings Limited Jersey 100 100
Centamin Limited Bermuda 100 100
Ampella Mining Limited Australia 100 100
Ampella Share Plan Ltd Australia 100 100
Ampella Mining Gold Pty Ltd Australia 100 100
West African Gold Reserve Pty Ltd Australia 100 100
Burkina
Ampella Mining Gold SARL Faso 100 100
Burkina
Ampella Mining SARL Faso 100 100
Côte
Ampella Mining Côte d'Ivoire d'Ivoire 100 100
Côte
Centamin Côte d'Ivoire d'Ivoire 100 100
Côte
Ampella Mining Exploration CDI d'Ivoire 100 100
Côte
Centamin Exploration CI d'Ivoire 100 100
Burkina
Ampella Resources Burkina Faso Faso 100 100
Burkina
Konkera SA Faso 90 90
---------------------------------------------- --------------- ------------ ------------
1) Previously Sheba Exploration (UK) Plc.
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 2005 PGM, together with EMRA, were granted an exploitation
lease over 160km(2) 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 manager, who is appointed by PGM.
The fiscal terms of the Concession Agreement require that PGM
solely funds 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 2015, PGM had not
recovered its cost and accordingly, no EMRA entitlement had been
recognised at that date. During 2016 payments to EMRA commenced as
advance profit share distributions. Any payment made to EMRA
pursuant to these provisions of the Concession Agreement will be
recognised as a variable charge in 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 Gold Mine. The exemption shall only apply if there is
no local substitution with the same or 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 Gold Mine;
-- PGM at all times is free to transfer in US$ 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;
-- 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; and
-- legal title of all operating assets of PGM will pass to EMRA
when cost recovery is completed. The right of use of all fixed and
movable assets remains with PGM and SGM.
23. Auditors' remuneration
The analysis of the auditors' remuneration is as follows:
31 December 31 December
2016 2015
US$'000 US$'000
---------------------------------------------------------- ------------ ------------
Fees payable to the Company's auditor and its associates
for the audit of the Company's annual financial
statements 386 375
Additional fees relating to the prior year 10 -
Fees payable to the Company's auditors' and its
associates for other services to the group
- the audit of the Company's subsidiaries 94 150
---------------------------------------------------------- ------------ ------------
Total audit fees 490 525
---------------------------------------------------------- ------------ ------------
Non--audit fees:
Audit related assurance services - interim review 109 104
Other assurance services 15 22
Tax compliance services - -
Tax advisory services - -
Other expenses 27 14
---------------------------------------------------------- ------------ ------------
Total non--audit fees 151 140
---------------------------------------------------------- ------------ ------------
The audit and risk 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
auditors 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 and risk committee.
24. Joint arrangements
The consolidated entity has an interest in the following joint
arrangement:
Percentage interest
--------------------------
31 December 31 December
2016 2015
--------------------------------- ------------ ------------
Name of joint operation % %
Egyptian Pharaoh Investments(1) 50 50
--------------------------------- ------------ ------------
1) Dormant company.
The group has a US$1 (cash) interest in the above joint
operation. The amount is included in the consolidated financial
statements of the group. There are no capital commitments arising
from the group's interests in the joint operation as disclosed in
note 21.
25. Earnings per share
31 December 31 December
2016 2015
Cents Cents
per share per share
-------------------------------- ------------ ------------
Basic earnings per share (1) 23.049 4.506
Diluted earnings per share (1) 22.935 4.441
-------------------------------- ------------ ------------
Basic earnings per share (2) 18.608 4.506
Diluted earnings per share (2) 18.516 4.441
-------------------------------- ------------ ------------
(1) Before profit share
(2) After profit share
Basic earnings per share
The earnings and weighted average number of ordinary shares used
in the calculation of basic earnings per share are as follows:
31 December 31 December
2016 2015
US$'000 US$'000
-------------------------------------------------- ------------ ------------
Earnings used in the calculation of basic EPS(1) 266,008 51,570
Earnings used in the calculation of basic EPS(2) 214,755 51,570
-------------------------------------------------- ------------ ------------
(1) Before profit share
(2) After profit share
31 December 31 December
2016 2015
Number Number
------------------------------------------------ -------------- --------------
Weighted average number of ordinary shares for
the purpose of basic EPS 1,154,085,388 1,144,499,697
------------------------------------------------ -------------- --------------
Diluted earnings per share
The earnings and weighted average number of ordinary shares used
in the calculation of diluted earnings per share are as
follows:
31 December 31 December
2016 2015
US$'000 US$'000
---------------------------------------------------- ------------ ------------
Earnings used in the calculation of diluted EPS(1) 266,008 51,570
Earnings used in the calculation of diluted EPS(2) 214,755 51,570
---------------------------------------------------- ------------ ------------
(1) Before profit share
(2) After profit share
31 December 31 December
2016 2015
Number Number
------------------------------------------------- -------------- --------------
Weighted average number of ordinary shares for
the purpose of basic EPS 1,154,085,388 1,144,499,697
Shares deemed to be issued for no consideration
in respect of employee options 5,755,404 16,649,502
------------------------------------------------- -------------- --------------
Weighted average number of ordinary shares used
in the calculation of diluted EPS 1,159,840,792 1,161,149,199
------------------------------------------------- -------------- --------------
No potential ordinary shares were excluded from the calculation
of weighted average number of ordinary shares for the purpose of
diluted earnings per share.
26. Notes to the statements of cash flows
(a) Reconciliation of cash and cash equivalents
For the purpose of the statement of cash flows, cash and cash
equivalents includes cash on hand and at bank and deposits.
31 December 31 December
2016 2015
US$'000 US$'000
--------------------------- ------------ ------------
Cash and cash equivalents 399,873 199,616
--------------------------- ------------ ------------
(b) Reconciliation of profit for the year to cash flows from
operating activities
31 December 31 December
2016 2015
US$'000 US$'000
------------------------------------------------------- ------------ ------------
Profit for the year 266,008 51,570
Add/(less) non--cash items:
Depreciation/amortisation of property, plant and
equipment 106,973 94,051
Increase/(decrease) in provisions 6,458 11,231
Foreign exchange rate (gain)/loss (4,312) (3,471)
Impairment (reversal of)/loss on available--for--sale
financial assets 45 (526)
Impairment of exploration and evaluation assets 122 6,294
Share--based payments expense 2,478 2,350
Changes in working capital during the period:
(Increase)/decrease in trade and other receivables (1,085) 1,188
(Increase)/decrease in inventories (1,787) 5,853
Decrease in prepayments 2,302 549
Decrease/(increase) in trade, tax and other payables (2,391) 16,722
------------------------------------------------------- ------------ ------------
Cash flows generated from operating activities 374,811 185,811
------------------------------------------------------- ------------ ------------
(c) Non-cash financing and investing activities
During the year there have been no non--cash financing and
investing activities.
27. 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 18 and 19. The group operates in Australia, Jersey, Egypt,
Burkina Faso and Côte d'Ivoire. 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 Mine in Egypt, and
the exploration projects in Burkina Faso and Côte d'Ivoire.
Categories of financial assets and liabilities:
31 December 31 December
2016 2015
US$'000 US$'000
----------------------------- ------------ ------------
Financial assets
Available-for--sale assets 130 163
Cash and cash equivalents 399,873 199,616
Trade and other receivables 24,870 23,784
----------------------------- ------------ ------------
424,873 223,563
----------------------------- ------------ ------------
Financial liabilities
Trade and other payables 47,991 47,138
----------------------------- ------------ ------------
27. Financial instruments (continued)
(b) Financial risk management and objectives
The group's overall risk management programme 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. 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 Egyptian pound are as follows:
Great British Australian dollar Egyptian pound
pound
-------------------------- -------------------------- --------------------------
31 December 31 December 31 December 31 December 31 December 31 December
2016 2015 2016 2015 2016 2015
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
--------------------------- ------------ ------------ ------------ ------------ ------------ ------------
Financial assets
Cash and cash equivalents 1,303 332 4,114 2,800 705 1,411
Available-for--sale
assets 113 146 17 17 - -
--------------------------- ------------ ------------ ------------ ------------ ------------ ------------
1,416 478 4,131 2,817 705 1,411
--------------------------- ------------ ------------ ------------ ------------ ------------ ------------
Financial liabilities
Trade and other payables 391 390 628 10,905 7,780 9,402
--------------------------- ------------ ------------ ------------ ------------ ------------ ------------
391 390 628 10,905 7,780 9,402
--------------------------- ------------ ------------ ------------ ------------ ------------ ------------
Net exposure 1,025 88 3,503 (8,088) (7,075) (7,991)
--------------------------- ------------ ------------ ------------ ------------ ------------ ------------
The following table summarises the sensitivity of financial
instruments held at the reporting date to movements in the exchange
rate of the Great British pound, Egyptian pound and Australian
dollar to the United States dollar, with all other variables held
constant. The sensitivities are based on reasonably possible
changes over a financial period, using the observed range of actual
historical rates.
Impact on profit Impact on equity
-------------------------- --------------------------
31 December 31 December 31 December 31 December
2016 2015 2016 2015
US$'000 US$'000 US$'000 US$'000
--------------------------- ------------ ------------ ------------ ------------
US$/GBGBP increase by 10% (81) (35) (10) (13)
US$/GBGBP decrease by 10% 81 35 10 13
US$/A$ increase by 10% (314) 737 (2) (1)
US$/A$ decrease by 10% 314 (737) 2 1
US$/EGBP increase by 10% 639 726 - -
US$/EGBP decrease by 10% (639) (726) - -
--------------------------- ------------ ------------ ------------ ------------
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 a corresponding
increase in US dollar cash holdings.
The amounts shown above are the main currencies which the group
is exposed to. Centamin also has small deposits in Euro
(US$114,553) and West African Franc (US$505,182), and net payables
of US$593,457 in Euro and US$1,134,928 in West African Franc. A
movement of 10% up or down in these currencies would have a
negligible effect on the assets/liabilities.
The group has not entered into forward foreign exchange
contracts. Natural hedges are utilised wherever possible to offset
foreign currency liabilities. The Company maintains a policy of not
hedging its currency positions and maintains currency holdings in
line with underlying requirements and commitments.
27. Financial instruments (continued)
(d) Commodity price risk
The group's future revenue forecasts are exposed to commodity
price fluctuations, in particular gold prices. The group has not
entered into forward gold hedging contracts.
(e) Interest rate risk
The group's main interest rate risk arises from cash and
short--term deposits and is not considered to be a material risk
due to the short--term nature of these financial instruments. Cash
deposits are placed on term period of no more than 30 days at a
time.
The financial instruments exposed to interest rate risk and the
group's exposure to interest rate risk as at balance date were as
follows:
Weighted
average One to More than
effective Less than twelve twelve
interest one month months months Total
rate
% US$'000 US$'000 US$'000 US$'000
------------------------------------ ---------- ---------- -------- ---------- --------
31 December 2016
Financial assets
Variable interest rate instruments 0.24 200,330 200,223 - 400,553
Non--interest bearing - 24,320 - - 24,320
------------------------------------ ---------- ---------- -------- ---------- --------
224,650 200,223 - 424,873
------------------------------------ ---------- ---------- -------- ---------- --------
Financial liabilities
Variable interest rate instruments - - - - -
Non--interest bearing - 47,991 - - 47,991
------------------------------------ ---------- ---------- -------- ---------- --------
47,991 - - 47,991
------------------------------------ ---------- ---------- -------- ---------- --------
31 December 2015
Financial assets
Variable interest rate instruments 0.22 53,471 146,093 - 199,564
Non-interest bearing - 24,059 - - 24,059
------------------------------------ ---------- ---------- -------- ---------- --------
77,530 146,093 - 223,623
------------------------------------ ---------- ---------- -------- ---------- --------
Financial liabilities
Variable interest rate instruments - - - - -
------------------------------------ ---------- ---------- -------- ---------- --------
Non-interest bearing - 47,138 - - 47,138
------------------------------------ ---------- ---------- -------- ---------- --------
(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 ongoing 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.
27. Financial instruments (continued)
One to More than
Less than twelve twelve
one month months months Total
US$'000 US$'000 US$'000 US$'000
------------------------------------ ---------- -------- ---------- --------
31 December 2016
Financial assets
Variable interest rate instruments 200,330 200,223 - 400,553
Non-interest bearing 24,320 - - 24,320
------------------------------------ ---------- -------- ---------- --------
224,650 200,223 - 424,873
------------------------------------ ---------- -------- ---------- --------
Financial liabilities
Variable interest rate instruments - - - -
Non-interest bearing 47,991 - - 47,991
------------------------------------ ---------- -------- ---------- --------
47,991 - - 47,991
------------------------------------ ---------- -------- ---------- --------
31 December 2015
Financial assets
Variable interest rate instruments 53,471 146,093 - 199,564
Non-interest bearing 25,531 - - 25,531
------------------------------------ ---------- -------- ---------- --------
79,002 146,093 - 225,095
------------------------------------ ---------- -------- ---------- --------
Financial liabilities
Variable interest rate instruments - - - -
Non-interest bearing 47,138 - - 47,138
------------------------------------ ---------- -------- ---------- --------
47,138 - - 47,138
------------------------------------ ---------- -------- ---------- --------
(g) Credit risk
Credit risk refers to the risk that a counterparty 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 counterparties 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 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).
2016
------------------------------
Level Level Level Total
1 2 3
--------------------------------------- ------ ------ ------ ------
Available--for--sale financial assets 130 - - 130
2015
------------------------------
Level Level Level Total
1 2 3
--------------------------------------- ------ ------ ------ ------
Available--for--sale financial assets 163 - - 163
There were no financial assets or liabilities subsequently
measured at fair value on Level 3 fair value measurement bases.
28. Share--based payments
Restricted share plan
The Company's shareholder approved restricted share plan (RSP)
allows the Company the right to grant Awards (as defined below) to
employees of the Group. Awards may take the form of either
conditional share awards, where shares are transferred
conditionally upon the satisfaction of performance conditions; or
share options, which may take the form of nil cost options or have
a nominal exercise price, the exercise of which is again subject to
satisfaction of applicable performance conditions.
The awards to be granted in June 2017 will vest in June 2020
(with 50% of the vested shares deferred for a further two years)
and will be subject to satisfaction of the performance conditions
over the three year financial period ended 31 December 2019.
- TSR: 20% of the award shall be assessed by reference to a
target total shareholder return ("TSR"). If the top end of the TSR
target is met (if the Company is ranked equal to or better than the
upper quarter total shareholder return of selected comparator
companies, see below) all 20% of the award tranche shall vest. If
the Company is ranked at the median level in a table of comparator
companies by reference to TSR, 25% of the award tranche shall vest
(i.e. 5% of the award). Proportionate amounts of the award tranche
will vest for results in between.
The comparator group is as follows: Agnico Eagle Mines Ltd,
AngloGold Ashanti, Centerra Gold, Eldorado Gold, Gold Fields Ltd,
Kinross Gold Corporation, IAMGOLD Resources Inc, Petropavlovsk,
Randgold Resources, Yamana Gold, Inc, Acacia Mining plc, Alacer
Gold, B2 Gold Corp and Endeavour Mining.
- Mineral Reserves: 30% of the award shall be assessed by
reference to mineral reserve replacement and growth. Reserve
replacement is calculated based on the cumulative reserve estimates
(from June 2016 to the most recent reserve estimate prior to
vesting) compared with the cumulative reserves mined from 31
December 2016 to 31 December 2019. All 30% of the award will vest
if the ratio is 100%. 25% of the award tranche will vest if the
ratio is at least 75% (i.e. 7.5% of the award).
- EBITDA: 20% of the award shall be assessed by reference to
compound growth in EBIDTA over the three year period to December
2019. If a compound annual growth rate of 3.5% of EBITDA is
achieved by 2019, all 20% of the award tranche shall vest. If
EBIDTA in 2019 is maintained at the levels achieved in 2016, 25% of
the award tranche shall vest (i.e. 5% of the award). Proportionate
amounts of the award tranche will vest for results in between. The
performance criteria will be assessed based on the financial year
ended 31 December 2019.
- Gold Production: 30% of the award shall be assessed by
reference to compound growth in gold production over the three year
period to December 2019. If a compound annual growth rate of 3.5%
of gold production is achieved by 2019, all 30% of the award
tranche shall vest. If gold production in 2019 is maintained at the
levels achieved in 2016, 25% of the award tranche shall vest (i.e.
7.5% of the award). Proportionate amounts of the award tranche will
vest for results in between.
As Sukari reaches optimum production rates, the relative
year-on-year rate of growth slows. Maintaining production rates at
this optimum level still represents an award, with an appropriate
incentive to further improve production rates through efficiency
and optimization.
To date the Company has granted the following conditional awards
to employees of the Group.
June 2015 Awards
Of the 5,145,000 awards granted on 4 June 2015 under the RSP,
3,845,000 awards remain granted to eligible participants (18 in
total) and apply the following performance criteria:
- 20% of the Award shall be assessed by reference to a target total shareholder return.
- 50% of the Award shall be assessed by reference to absolute
growth in earnings per share.
- 30% of the Award shall be assessed by reference to compound growth in gold production.
June 2016 Awards
Of the 4,999,000 awards granted on 4 June 2016 under the RSP,
4,704,000 awards remain granted to eligible participants (31 in
total) applying the following performance criteria:
- 20% of the award shall be assessed by reference to a target total shareholder return.
- 30% of the award shall be assessed by reference to mineral reserve replacement and growth.
- 20% of the award shall be assessed by reference to compound growth in EBIDTA.
- 30% of the award shall be assessed by reference to compound growth in gold production.
Conditional share awards and options together constitute
"Awards" under the Plan and those in receipt of Awards are "Award
Holders".
A detailed summary of the scheme rules is set out in the 2015
AGM proxy materials which are available at www.centamin.com. In
brief, Awards will vest following the passing of three years from
the date of the Award and vesting will be subject to satisfaction
of Performance Conditions. The above measures are assessed by
reference to current market practice and the Remuneration Committee
will have regard to market practice when establishing the precise
Performance Conditions for future Awards.
Where the performance conditions have been met, in the case of
Conditional Awards, 50% of the total shares under the Award will be
issued or transferred to the Award Holders on or as soon as
possible following the specified Vesting Date, with the remaining
50% being issued or transferred on the second anniversary of the
Vesting Date.
Restricted Share Plan awards granted during the period:
RSP 2016
--------------------------------------- ------------
Grant date 4 June 2016
--------------------------------------- ------------
Number of instruments 4,999,000
--------------------------------------- ------------
TSR : Fair value at grant date GBP
(1) 0.6300
--------------------------------------- ------------
TSR : Fair value at grant date US$
(1) 0.9107
--------------------------------------- ------------
Reserve : Fair value at grant date
GBP (1) 1.0100
--------------------------------------- ------------
Reserve : Fair value at grant date
US$ (1) 1.4600
--------------------------------------- ------------
EBITDA : Fair value at grant date GBP
(1) 1.0100
--------------------------------------- ------------
EBITDA : Fair value at grant date US$
(1) 1.4600
--------------------------------------- ------------
Gold Production : Fair value at grant
date GBP (1) 1.0100
--------------------------------------- ------------
Gold Production : Fair value at grant
date US$ (1) 1.4600
--------------------------------------- ------------
Vesting period (years) 3.0
--------------------------------------- ------------
Expected volatility 42.14%
--------------------------------------- ------------
Expected dividend yield (%) 1.84%
--------------------------------------- ------------
(1) The vesting of 20% the awards granted under this plan are
dependent on a TSR performance condition. As relative TSR is
defined as a market condition under IFRS 2 "Share-based Payment",
this requires that the valuation model used takes into account the
anticipated performance outcome. We have therefore applied a Monte
Carlo simulation model. The simulation model takes into account the
probability of performance based on the expected volatility of
Centamin and the peer group companies and the expected correlation
of returns between the companies in the comparator group.
The remaining 80% of the awards are subject to Reserve, EBITDA
and gold production performance conditions. As these are classified
as non-market conditions under IFRS 2 they do not need to be taken
into account when determining the fair value. These grants have
been valued using a Black-Scholes model.
The fair value calculated was then converted at the closing
GBP:US$ foreign exchange rate on that day.
28. Share--based payments (continued)
Deferred bonus share plan ("DBSP")
In 2012, the Company implemented the DBSP which is a long term
share incentive arrangement for senior management (but not
executive directors) and other employees (participants).
On 4 June 2013, the group offered to both the beneficiaries of
the shares awarded under the ELFSP and to the majority of the
beneficiaries of the options granted under the EOS the choice to
replace their awards and options with awards under the DBSP. The
group has accounted for this change as modifications to the
share--based payment plans and will be recognising the incremental
fair value granted, measured in accordance with IFRS 2, by this
replacement over the vesting period of the new DBSP awards.
Under this offer, each participant has been granted a number of
awards under the DBSP equivalent to the number of shares or options
held under the ELFSP and EOS respectively. Such DBSP awards shall
be subject to the terms and conditions of the DBSP and shall
ordinarily vest in three equal tranches on the anniversary of the
grant date, conditional upon the continued employment with the
group. All offers made to participants were accepted. The award of
the deferred shares will not have any performance criteria
attached. They will however be subject to a service period.
DBSP awards granted during the period:
DBSP 2016
---------------------------------------- ------------
Grant date 4 June 2016
---------------------------------------- ------------
Number of instruments 1,200,000
---------------------------------------- ------------
Share price / Fair value at grant date
GBP (2) 1.0600
---------------------------------------- ------------
Share price / Fair value at grant date
US$ (2) 1.5323
---------------------------------------- ------------
Vesting period (years) (3) 1-3
---------------------------------------- ------------
Expected dividend yield (%) n/a
---------------------------------------- ------------
(2) The fair value of the shares awarded under the DBSP were
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 of the shares awarded under the DBSP.
(3) Variable vesting dependent on one to three years of
continuous employment.
Historic plans
The historic plans, namely the executive directors loan funded
share plan ("EDLFSP") and employee loan funded share plan ("ELFSP")
2011 Employee Option Scheme ("EOS") are no longer in use and all
shares awarded have either being forfeited, lapsed or transferred
to other schemes. The residual accrual in relation to these schemes
has been expensed to the consolidated statement of comprehensive
income.
29. Key management personnel compensation
Key management personnel 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
2016 2015
US$ US$
------------------------------- ------------ ------------
Short--term employee benefits 8,011,016 6,184,750
Long--term employee benefits - -
Post--employment benefits 7,764 22,025
Share--based payments 2,310,743 1,810,805
------------------------------- ------------ ------------
10,329,523 8,017,580
------------------------------- ------------ ------------
30. 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 22.
Equity interests in associates and jointly controlled
arrangements
Details of interests in joint ventures are disclosed in note
24.
(b) Key management personnel compensation
Details of key management personnel compensation are disclosed
above in note 29.
(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 ended 31 December 2016 are as follows:
Balance Granted Granted Balance
at as as at
1 January remuneration Remuneration Net other 31 December
31 December 2016 2016 ("DBSP") ("RSP") change(1) 2016
------------------ ----------------- ------------- ------------- ------------- ------------
J El-Raghy (2) 71,445,086 - - (17,595,714) 53,849,372
T Schultz 30,000 - - - 30,000
G Haslam 102,056 - - - 102,056
M Arnesen 49,000 - - - 49,000
M Bankes 150,000 - - - 150,000
A Pardey 2,968,800 - 690,000 (966,199) 2,692,601
R Jerrard - - 875,000 - 875,000
Y El-Raghy 780,633 - 140,000 (51,103) 869,530
T Smith 675,000 - 160,000 (175,000) 660,000
A Davidson 620,000 - 210,000 (30,000) 800,000
L Gregory 430,000 - 150,000 (80,000) 500,000
D Le Masurier 500,000 - 160,000 (120,000) 540,000
H Brown 650,000 - 60,000 (250,000) 460,000
------------------ ----------------- ------------- ------------- ------------- ------------
1) "Net other change" relates to the on market acquisition or
disposal of fully paid ordinary shares.
2) Includes the El-Raghy family
Since 31 December 2016 to the date of this report there have
been no transactions notified to the Company under DTR 3.1.2.R.
The details of the movement in key management personnel equity
holdings of fully paid ordinary shares in Centamin plc during the
financial period ended 31 December 2015 are as follows:
Balance Granted Granted Balance
at as as at
1 January remuneration Remuneration Net other 31 December
31 December 2015 2015 ("DBSP") ("RSP") change(1) 2015
------------------ ----------- ------------- ------------- ---------- ------------
J El-Raghy 71,445,086 - - - 71,445,086
T Schultz 30,000 - - - 30,000
G Haslam 102,056 - - - 102,056
M Arnesen 15,000 - - 34,000 49,000
M Bankes 150,000 - - - 150,000
K Tomlinson 24,400 - - - 24,400
A Pardey 2,185,000 - 900.000 (116,200) 2,968,800
Y El-Raghy 637,414 - 200,000 (56,781) 780,633
T Smith 300,000 - 400,000 (25,000) 675,000
A Davidson 450,000 - 200,000 (30,000) 620,000
L Gregory 300,000 - 150,000 (20,000) 430,000
D Le Masurier 300,000 - 200,000 - 500,000
H Brown 550,000 - 100,000 - 650,000
------------------ ----------- ------------- ------------- ---------- ------------
1) "Net other change" relates to the on market acquisition or
disposal of fully paid ordinary shares.
2) Includes the El-Raghy family
(d) Key management personnel share option holdings
There were no options held, granted or exercised during the year
by directors or senior management in respect of ordinary shares in
Centamin plc.
30. Related party transactions (continued)
(e) Other transactions with key management personnel
The related party transaction for the year ended 31 December
2016 is summarised below:
Josef 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$69,600 or US$51,710 (31 December
2015: A$62,595 or US$46,820).
(f) Transactions with the government of Egypt
Royalty costs attributable to the government of Egypt of
US$20,574,673 (2015: US$15,197,860) were incurred in 2016.
Profit share to EMRA of US$51,253,333 was incurred in 2016.
(g) Gold Sales Agreement
On 20 December 2016, SGM entered into a contract with the
Central Bank of Egypt ("CBE"). The agreement provides that the
parties may elect, on a monthly basis, for the CBE to supply SGM
with its local Egyptian currency requirements for that month
(approximately EGP 50 million). In return, SGM will provide the
equivalent amount in US Dollars to purchase refined gold bullion
from SGM's refiner, Asahi Refining, on CBE's behalf. This
transaction has been entered into as SGM requires local currency
for its operations in Egypt (it receives its revenue for gold sales
in US dollars). No transactions have been entered into at the date
of this report, pursuant to this agreement.
(h) Transactions with other related parties
Other related parties include the parent entity, subsidiaries,
and other related parties.
During the 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.
31. Dividends per share
The dividends paid in 2016 were US$46,072,599 and are reflected
in the consolidated statement of the changes in equity for the
period (2015: US$33,786,831).
A final dividend in respect of the year ended 31 December 2016
of 13.5 US cents per share, totalling US$155,534,578 has been
proposed by the board of directors and is subject to shareholder
approval at the annual general meeting on 21 March 2017. These
financial statements do not reflect this dividend payable.
32. Subsequent events
As referred to in note 31 subsequent to the year end, the board
of directors announced a final dividend for 2016 of 13.5 US cents
per share. Subject to shareholder approval at the annual general
meeting on 21 March 2017, the final dividend will be paid on 31
March 2017 to shareholders on the record date of 3 March 2017.
There were no other significant events occurring after the
reporting date requiring disclosure in the financial
statements.
This report contains certain forward-looking statements. These
statements are made by the directors in good faith based on the
information available to them up to the time of their approval of
this report and such statements should be treated with caution due
to the inherent uncertainties, including both economic and business
risk factors, underlying any such forward looking information.
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
realisation 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 "Principal risks affecting the
Centamin Group" 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.
Please refer to the technical report entitled "Mineral Resource
and Reserve Estimate for the Sukari Gold Project, Egypt" effective
on 30 June 2015 and issued on 23 October 2015 and filed on SEDAR at
www.sedar.com, for further discussion of the extent to which the
estimate of mineral resources/reserves may be materially affected
by any known environmental, permitting, legal, title, taxation,
socio-political, or other relevant issues as well as details of the
qualified persons and quality control.
Information of a scientific or technical nature in this document
have been prepared by qualified persons, as defined under the
Canadian National Instrument 43-101.
This announcement contains ongoing regulated information and
inside information for the purposes of Article 7 of EU Regulation
596/2014.
LEI: 213800PDI9G7OUKLPV84
Company No: 109180
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR OKDDQOBKDDDN
(END) Dow Jones Newswires
February 01, 2017 02:00 ET (07:00 GMT)
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