TIDMCEY
RNS Number : 9671D
Centamin PLC
03 May 2017
For immediate release 3 May 2017
Centamin plc ("Centamin" or "the Company")
(LSE:CEY, TSX:CEE)
Centamin plc Results for the First Quarter and Three Months
Ended 31 March 2017
Centamin plc ("Centamin", the "Group" or "the Company") (LSE:
CEY, TSX: CEE) is pleased to announce its results for the first
quarter ended 31 March 2017.
Q1 2017 Operational Highlights (1),(2)
-- Gold production of 109,187 ounces was a 20% decrease on Q4
2016 and 13% lower than Q1 2016 in line with the Company's
forecast.
-- Cash cost of production of US$734 per ounce and all-in
sustaining costs (AISC) of US$887 per ounce.
-- Sukari process plant throughput of 2.91 million tonnes (Mt),
a 1% decrease on the previous quarter. Metallurgical recovery of
88.8% was down from 89.9% in Q4 2016.
-- Sukari underground mine delivered 252 thousand tonnes (kt) of
ore, an 11% increase on Q4 2016, at a grade of 7.44g/t (down 29% on
Q4 2016).
-- Open pit mine material movement of 17,129kt, an 8% increase
on Q4 2016, with milled grades of 0.72g/t (down 15% on Q4 2016).
Following reconciliation, the open pit plant feed grade has been
adjusted upwards from the figure reported in the Q1 2017
preliminary production results.
-- Full year 2017 guidance maintained at 540,000 ounces, with
US$580 per ounce cash cost of production and US$790 per ounce
AISC.
-- Continued positive results from underground exploration
drilling at Sukari. An updated resource and reserve estimate is
planned during the first half of 2017.
-- Development of the Cleopatra exploration decline, located in
the north-east of Sukari Hill, advanced 810 metres. Encouraging
initial results from diamond drilling over 4,074 metres.
-- A maiden resource of 0.3Moz Indicated and 1.0Moz Inferred at
the Doropo project in Côte d'Ivoire.
-- Exploration drilling continued in both Burkina Faso and Côte d'Ivoire.
Financial Highlights (1),(2)
-- EBITDA of US$53.1 million was down 35% on Q4 2016, driven by
a decrease in gold sales volumes in line with lower production
(marginally offset by an increase in realised gold prices) and
higher production costs due to increased material movement.
-- Centamin remains debt-free and un-hedged with cash, bullion
on hand, gold sales receivable and available-for-sale financial
assets of US$290.9 million at 31 March 2017. This marked a decrease
of US$137.2 million during the quarter, following payment of
US$155.4 million for the 2016 final dividend.
-- Basic earnings per share (after profit share) of 1.16 US
cents; down 63% on Q4 2016, primarily due to the factors effecting
EBITDA. Earnings per share (before profit share) of 2.557 US cents
was down 50% on Q4 2016.
Legal Developments in Egypt
-- The Supreme Administrative Court (SAC) appeal and Diesel Fuel
Oil court case are both still on-going. The Concession Agreement
appeal remains stayed until the Supreme Constitutional Court rules
on the validity of Law 32 of 2014. Developments in the DFO case are
set out further below.
Q1 2017 Q4 2016 Q1 2016
-------------------------------- ----------- -------- -------- --------
Gold produced ounces 109,187 136,787 125,268
Gold sold ounces 115,052 130,959 123,668
Cash cost of production US$/ounce 734 536 603
AISC US$/ounce 887 720 758
Average realised gold
price US$/ounce 1,220 1,207 1,196
-------------------------------- ----------- -------- -------- --------
Revenue US$'000 140,724 158,307 148,107
EBITDA US$'000 53,058 81,762 67,484
Profit before tax US$'000 29,467 58,870 40,864
EPS (before profit share) US cents 2.56 5.09 3.56
EPS (after profit share) US cents 1.16 3.15 3.56
Cash generated from operations US$'000 58,341 69,869 60,482
-------------------------------- ----------- -------- -------- --------
(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 Statements. AISC is defined by the World Gold Council,
the details of which can be found at www.gold.org.
(2) Basic EPS, EBITDA, AISC, cash cost of production reflects a
provision against prepayments, recorded since Q4 2012, to reflect
the removal of fuel subsidies which occurred in January 2012 (see
Note 6 of the financial statements)
Andrew Pardey, CEO, commented: "As forecast, production rates
decreased in the first quarter mainly driven by a planned reduction
in average grade from the open pit. Despite lower production rates
Sukari generated US$58m of cash from operations during the quarter.
During the second quarter, we expect to see open pit ore grades
increase towards the reserve average as the cutback in the east
wall of the pit is further progressed. With the processing and
underground mining operations also continuing to deliver strong
levels of productivity, we remain on course to meet our full year
2017 production guidance of 540,000 ounces at a cash operating cost
of US$580 per ounce and all-in-sustaining cost of US$790 per
ounce."
Centamin will host a conference call on Wednesday 3rd May at
9.00am (London, UK time) to update investors and analysts on its
results. Participants may join the call by dialling one of the
following three numbers, approximately 10 minutes before the start
of the call.
UK Toll Free: 080 8237 0040
International Toll number: +44 20 3428 1542
Canada Toll free: 1866 404 5783
Participant code: 67616298#
A recording of the call will be available four hours after the
completion of the call on:
UK Toll Free: 0808 237 0026
International Toll number: +44 20 3426 2807
Playback Code: 686887#
Via audio link at
http://www.centamin.com/media/press-releases/2017
________________________________
CHIEF EXECUTIVE OFFICER'S REPORT
First quarter gold production from Sukari of 109,187 ounces was
a 20% decrease on Q4 2016, mainly driven by a 20% reduction of the
average processed grade. Lower head grades were delivered from both
the open pit and underground mines, in line with the respective
mine plans. Following quarter-end reconciliation, open pit milled
grade of 0.72g/t was higher than that reported in the Q1 2017
preliminary production results (0.58g/t). Grades from the open pit
are expected to increase towards the reserve average during
subsequent quarters with further cutback in the east wall of the
pit.
The unit cash cost of production was US$734 per ounce, a US$198
per ounce increase over the previous quarter due to a decrease in
gold ounces produced and an increase in mine production costs.
The AISC was US$887 per ounce, a US$167 per ounce increase over
the previous quarter. The increase was mainly due to the factors
affecting the unit cash cost of production.
Revenues were 11% lower than the previous quarter, due to a 12%
reduction in gold sales volumes offset by a 2% rise in realised
gold prices. For the reasons set out above, EBITDA of US$53.1
million was down 35% on Q4 2016.
Centamin's balance sheet ended the period with US$290.9 million
of cash, bullion on hand, gold sales receivable and
available-for-sale financial assets. This marked a decrease of
US$137.2 million during the quarter, following payment to
shareholders during the period of US$155.4 million in respect of
the 2016 final dividend. Centamin remains committed to its policy
of being 100% exposed to the gold price through its un-hedged
position.
The lost time injury (LTI) frequency rate at Sukari for Q1 was
0.61 per 200,000 man-hours. This was an increase from zero LTIs in
Q4 2016. We continue to review and address training requirements to
ensure we achieve our long term target of zero LTIs.
Processing rates were 1% lower than the prior quarter and
remained on target to achieve the 11.75Mtpa forecast rate for 2017,
with the fourth secondary crusher scheduled to come online in Q4
2017. Recoveries of 88.8% were below our forecast average of 89.5%
for the full year and are expected to increase in line with the
average plant head grade during the remainder of the year. Work
continues to develop the potential to improve and sustain
recoveries at the 90% level, with increasing throughput rates.
The open pit delivered record quarterly total material movement
of 17,129kt, an 8% increase on the previous quarter, with 2,478kt
of ore, an increase of 14% on the previous quarter. The average
head grade to the plant from the open pit was 0.72g/t, down 15%
from Q4 2016 which, as noted above, has been adjusted upwards from
the figure of 0.58g/t which was reported in the Q1 2017 preliminary
production results. This was below both the reserve grade and our
forecast average grade for the full year 2017, as the open pit
continued to develop a low-grade cutback in the east wall of the
pit in line with the mine plan.
The underground mine delivered 252kt of ore, an 11% increase on
Q4 2016, at a grade of 7.44g/t (down 29% on Q4 2016). The focus for
the operation during 2017 remains to deliver a minimum of 1Mt per
annum of ore at an average grade of at least 7.26g/t.
We maintain our full year production forecast of 540,000 ounces
at a cash cost of production of US$580 per ounce and AISC of US$790
per ounce. We remain focussed on realising further increases in
productivity and cost efficiencies and continue to note that
optimisation of the mining and processing operations is ongoing and
offers the potential in the coming quarters to deliver higher gold
output and lower costs than our base case outlook.
As a result of the significant cash generation from Sukari,
profit share continued during the quarter, with advance
distributions to EMRA totalling US$18.6m during the period. Both
EMRA and PGM will continue to 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. Profit share payments will be reconciled in
full against SGM's audited June 2017 financial statements.
Further support for resource expansion and the long-term
sustainability of high-grade production at Sukari from the
underground mine continues to be provided by results from on-going
exploration drilling, as highlighted in the following pages of this
report. A resource and reserve update is planned during the first
half of 2017.
During August 2016 we began development of a new exploration
decline within the north-eastern Cleopatra zone of Sukari Hill. The
initial phase of development was completed during the quarter, with
the establishment of three drilling platforms. The second phase of
development has continued with production of 35,963 tonnes of
mineralised development ore, at an average grade of 1.75g/t.
Drilling to date has been encouraging and has confirmed and defined
the geometry of the high-grade zones on the eastern contact of the
porphyry. Drill testing of the western contact of the porphyry will
commence during Q2 2017. As was the case with the Amun and Ptah
declines, the initial Cleopatra project is being developed with
infrastructure capable of supporting mining rates of up to 1
million tonnes per annum 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 underground
ore production from the Amun and Ptah declines.
As announced earlier in the year, exploration drilling in West
Africa has led to a maiden resource of 0.3Moz Indicated and 1.0Moz
Inferred at the Doropo project in north-eastern Côte d'Ivoire.
Initial metallurgical test work has indicated that all oxide,
transition and primary materials are non-refractory, with high
leaching recoveries. Further resource drilling is ongoing and
follow-up metallurgical and geotechnical test work is planned,
aimed at completing preliminary pit optimisation studies during the
year.
In Burkina Faso, a thorough regional prospectivity review was
completed during the quarter, aimed at developing a focused
exploration programme for 2017. The review highlighted the
district-scale controls on mineralisation in the Batie-Doropo
system, and the regional predictability of the main gold trends and
occurrences. One of the main focuses of the 2017 exploration
programs will be to develop the potential between the Doropo and
Konkera deposit clusters. In total, 23 targets have been reviewed
and ranked for exploration in 2017.
Developments in the two litigation actions, Diesel Fuel Oil and
Concession Agreement, are described in further detail in Note 8 to
the financial statements. In respect of the Concession Agreement
case, the Supreme Administrative Court has stayed the Concession
Agreement appeal until the Supreme Constitutional Court has ruled
on the validity of Law 32 of 2014. The Company continues to believe
that it has a strong legal position and, in addition, that it will
ultimately benefit from Law 32 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. In the event that the Supreme
Constitutional Court rules that Law 32 is invalid, the Group
remains confident that its appeal will be successful on the
merits.
No final decision has been taken by the courts regarding the
Diesel Fuel Oil case. The Egyptian 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 Company's legal
advisers do not believe the report properly addresses the
substantive merits of the Group's case and, as such, we continue to
vigorously pursue the claim. The Group has prepared a response to
the report which will be submitted at the next hearing in the
case.
Finally, I am pleased to welcome two new additions to our senior
management team. Norm Bailie joins as Group Exploration Manager and
Jonathan Stephens joins as Chief Development Officer.
OPERATIONAL REVIEW
Sukari Gold Mine:
Q1 2017 Q4 2016 Q1 2016
---------------------------------- ------- ------- -------
OPEN PIT MINING
Ore mined (1) ('000t) 2,478 2,183 2,405
Ore grade mined (Au g/t) 0.47 0.85 0.87
Ore grade milled (Au g/t) 0.72 0.85 0.83
Total material mined ('000t) 17,129 15,810 15,157
Strip ratio (waste/ore) 5.91 6.24 5.30
---------------------------------- ------- ------- -------
UNDERGROUND MINING
Ore mined from development
('000t) 99 103 145
Ore mined from stopes ('000t) 153 125 136
Ore grade mined (Au g/t) 7.44 10.43 7.77
---------------------------------- ------- ------- -------
Ore processed ('000t) 2,908 2,948 2,876
Head grade (g/t) 1.29 1.62 1.49
Gold recovery (%) 88.8 89.9 88.5
Gold produced - dump leach
(oz) 2,048 2,550 2,993
Gold produced - total (2) (oz) 109,187 136,787 125,268
Cash cost of production(3)
(4) (US$/oz) 734 536 603
Open pit mining 286 198 213
Underground mining 55 46 44
Processing 347 254 307
G&A 46 38 39
AISC(3) (4) (US$/oz) 887 720 758
---------------------------------- ------- ------- -------
Gold sold (oz) 115,052 130,959 123,668
Average realised sales price
(US$/oz) 1,220 1,207 1,196
---------------------------------- ------- ------- -------
(1) Ore mined includes 457kt delivered to the dump leach pad in
Q1 2017 (0kt in Q1 2016).
(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 cost of production and
AISC are non-GAAP financial performance measures with no standard
meaning under GAAP. For further information and a detailed
reconciliation, please see "Non-GAAP Financial Measures" section
below.
(4) 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 6 to the financial statements for
further details).
Health and safety - Sukari
The lost time injury (LTI) frequency rate for Q1 2017 was 0.61
per 200,000 man-hours (0.00 in Q4 2016), with a total of 1,308,441
man-hours worked (1,324,119 in Q1 2016). This represents an
increase from zero LTIs in Q4 2016 and we continue to develop the
health and safety culture onsite and address training requirements
to ensure we achieve our long term target of zero LTIs.
Open pit
The open pit delivered total material movement of 17,129kt in
the quarter, an increase of 8% on Q4 2016 due to improvement on
fleet utilisation, and a 13% increase on the prior year period. The
waste to ore strip ratio was 5.91 compared with 6.24 in the
previous quarter. Mining continued to focus on the Stage 3A and 3B
areas of the open pit.
Ore production from the open pit was 2,478kt at 0.47g/t with an
average head grade to the plant of 0.72 g/t, in line with the mine
plan. The average head grade to the plant from the open pit was
0.72g/t, down 15% from Q4 2016. Following quarter-end
reconciliation, the reported average head grade has been adjusted
upwards from the figure of 0.58g/t reported in the Q1 2017
preliminary production results. The ROM ore stockpile decreased by
191kt to 386kt at the end of the period.
A change in the explosive supply contractor also took place
during the quarter with a smooth transition to the new
supplier.
During the second quarter, ore mining is scheduled to progress
the middle benches of the stage 3B and upper portions of the stage
4 of pit development. We continue to expect grades to increase
towards the reserve average of 1.03g/t.
Underground mine
Ore production from the underground mine was 252kt, in line with
the forecast annualised rate of 1Mt. The ratio of
stoping-to-development ore remained constant with 60% of ore from
stoping (153kt) and 40% of ore from development (99kt). Ore
tonnages from stopes increased by 22% on Q4 2016.
The average mined grade was 7.44 g/t, comprising ore from
stoping at 6.90 g/t and ore from development at 8.27 g/t.
Total development during the quarter, including the Amun, Ptah
and Horus declines, was 1,635 metres. The Horus decline continued
towards connecting the Amun and Ptah zones. Development within
mineralised areas of Amun accounted for 875 metres and took place
between the 830 and 665 levels (210 to 395 metres below the
underground portal). Ptah development in mineralised porphyry
totalled 200 metres on the P790 and P675 levels.
Work on the exhaust ventilation circuits for both the Amun and
Ptah declines progressed, ensuring sufficient ventilation as the
decline continues to extend deeper into the orebody. The base of
the exhaust system is now at the 665 level. Design work is
continuing to extend the ventilation circuit to the lower levels of
the mine.
A total of 2,629 metres of grade control diamond drilling were
completed, aimed at short-term stope definition, drive direction
optimisation and underground resource development. Positive results
continue and support extensions of development drives and stoping
blocks. A further 6,036 metres of drilling continued to test for
extensions of the orebody at depth, below the current Amun and Ptah
zones and to the north from the Cleopatra exploration decline.
Results are discussed in the following section.
Processing
Quarterly throughput at the Sukari process plant was 2,908kt, a
1% decrease on Q4 2016 and a 1% increase on the prior year period.
Plant productivity of 1,420 tonnes per hour (tph) was in line with
both Q4 2016 and the prior year period.
Plant metallurgical recovery was 88.8%, compared with 89.9% in
Q4 2016 and a 88.5% in the prior year period. There was a continued
focus on maximising flotation mass pull, utilisation for the
Stirred Media Detritors (SMDs) in the fine-grinding circuit and
leaching recoveries.
The dump leach operation produced 2,048oz, 20% lower than Q4
2016.
Exploration
Centamin's "explore to develop" strategy is focussed on
defining, through the exploration process, the optimal path to
development for projects which can provide material returns on
shareholder's capital. The Company aims to undertake systematic
exploration programmes over large-area licence packages within
geologically prospective regions; and will only operate within
stable jurisdictions offering a fiscally-attractive framework for
mining investment. Development decisions are made on the basis that
Centamin will take a self-performing, self-funding and staged
approach to project construction and operation. Through this
value-driven and long-term growth objective, and with its strong
cash flows and healthy balance sheet, the Company believes that it
is well positioned to become a multi-asset gold producer
maintaining a lowest-quartile cost profile and peer-leading
shareholder returns.
Sukari
Drilling from underground remains a focus of the Sukari
exploration programme. Drilling took place from the Ptah 875 level
with the drill rigs then moving to the new development drill
platforms on the Amun 655 and Ptah 735 level, allowing for deeper
exploration and resource definition. Drilling also took place from
the Cleopatra development, targeting high grade mineralisation on
the eastern contact of the porphyry. A total of 6,036m of
exploration drilling was completed for the quarter.
Selected results received during the third quarter from the
underground drilling programme in the Amun and Ptah regions, which
are in addition to those previously disclosed, include the
following:
Hole Number From Interval Grade
(m) (m) (Au g/t)
-------------- ------ --------- ----------
UGRSD0222 243.5 0.5 134.0
-------------- ------ --------- ----------
UGRSD0592 260 1.0 17.0
-------------- ------ --------- ----------
UGRSD0593_W1 316 2.0 20.2
-------------- ------ --------- ----------
UGRSD0601 267.4 3.6 8.3
-------------- ------ --------- ----------
UGRSD0619 263.6 0.4 72.6
-------------- ------ --------- ----------
299 2.8 39.6
-------------- ------ --------- ----------
360 1.3 20.8
-------------- ------ --------- ----------
UGRSD0729 69 0.6 11.2
-------------- ------ --------- ----------
257 1.0 7.7
-------------- ------ --------- ----------
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 named Cleopatra, Julius and Antoine.
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. In addition to providing
geological information, exploration drilling will be carried out
from this central drive. The initial project is being developed in
two phases, with 1,370 metres of development and 96,422 tonnes of
mined material movement in phase 1 and 1,057 metres of development
and 54,409 tonnes of mined material in phase 2. US$5.3m has been
spent on the initial project to date, before any credit for ore
production.
Phase 1 has been completed, with 86 metres of development during
the quarter, and the establishment of three drilling platforms.
Phase 2 continued with 724 metres of development and production of
35,963 tonnes of mineralised development ore, at an average grade
of 1.75g/t.
A total of 3,606 m of exploration drilling was completed from
1130mRL, in addition to 468 metres of shorter exploration drill
holes utilising the MCR drill rig. Drilling to date has confirmed
and defined the geometry of the high-grade zones on the eastern
side of the porphyry. Drill testing of the western contact of the
porphyry will commence during Q2 2017.
Selected results received during the first quarter from
Cleopatra include the following:
Hole Number From Interval Grade
(m) (m) (Au g/t)
------------- ------ --------- ----------
CUD024 25.2 2.1 4.4
------------- ------ --------- ----------
CRSD002 261 4.5 5.9
------------- ------ --------- ----------
291 0.5 20.1
------------- ------ --------- ----------
CRSD003 236 1.0 8.5
------------- ------ --------- ----------
CRSD004 260.4 2.7 8.5
------------- ------ --------- ----------
CRSD005 18.1 3.5 12.2
------------- ------ --------- ----------
101 2.7 5.5
------------- ------ --------- ----------
252.5 2.5 7.6
------------- ------ --------- ----------
CRSD006 254 3.5 4.7
------------- ------ --------- ----------
CRSD007 19.4 3.4 13.0
------------- ------ --------- ----------
CRSD008 23.0 10.7 3.6
------------- ------ --------- ----------
231.6 2.7 4.4
------------- ------ --------- ----------
CRSD010 39 2.0 7.1
------------- ------ --------- ----------
CRSD011 271 0.8 569.5
------------- ------ --------- ----------
284 1.0 40.1
------------- ------ --------- ----------
Other prospects
Whilst exploration remains focused on Sukari Hill, there are
seven other prospects that have been identified within the 160km(2)
Sukari tenement area which are close enough such that ore could be
trucked to the existing processing plant. No exploration drilling
was completed on these prospects during the period.
Resource and Reserve
An updated resource and reserve estimate is expected to be
completed during the first half of 2017.
Burkina Faso
During the quarter, exploration in Burkina Faso continued to
focus on the Napelepera, Tiopolo, Kpere Batie and Tonior permits.
First-pass reconnaissance surveying and sampling was also carried
out on the Kpere Batie South and Konkera West areas, covering the
unexplored gaps between the existing Doropo (northeast Côte
d'Ivoire) and Batie surveys.
At Napelepera reconnaissance work has demonstrated geological
correlation between anomalous soils and aircore results on a new
north-south "Napelepera West" trend, which is sub-parallel to the
existing Napelepera resource to the east. At the other prospect
areas, mapping, geophysical surveys and sampling programmes
continued to develop further new targets for aircore and RC/DD
testing during the second half of the year.
A thorough regional prospectivity review was completed during
the quarter, aimed at developing a focused exploration programme
for 2017. The review highlighted the district-scale controls on
mineralisation in the Batie-Doropo system, and the regional
predictability of the main gold trends and occurrences. The locally
named Golden Valley (GV) trends, which strike 040-065, are
fundamental controls to gold deposition in the district, both
hosting the Doropo deposits and compartmentalising the main Konkera
belt deposits.
One of the main focuses of the 2017 exploration programs will be
to develop the potential between the Doropo and Konkera deposit
clusters. The unexplored or anomalous sites which form at the
interaction nodes of the orthogonal GV and Belt fabrics will be
drill tested. In total, 23 targets have been reviewed and ranked
for exploration in 2017.
Côte d'Ivoire
Centamin has currently nine permits in Côte d'Ivoire covering a
total 2,855 km(2) area. Ten permits covering a further 3,530 km(2)
are also under application. Two new permits at the Doropo Project
in north-east Côte d'Ivoire were granted during the quarter, Tehini
1 and Tehini 2.
During the quarter, exploration in Côte d'Ivoire focussed on the
Varale, Kalamon, Danoa and Bouna Nord permits (within the Doropo
Project), and first-pass reconnaissance mapping and prospecting at
the Kona and Gogo ABC projects.
Doropo Project
A maiden resource of 0.3Moz Indicated and 1.0Moz Inferred was
announced during the quarter at the Kalamon permit, within the
Doropo project in north-eastern Côte d'Ivoire.
0.5g/t cutoff
-------------------------------------------------------------------------------
Indicated Inferred Total
--------
Mt g/t Au (koz) Mt g/t Au (koz) Mt g/t Au (koz)
-------- ----- ----- --------- ---- ---- --------- ---- ---- ---------
Souwa 3.41 1.71 187 12 1.4 540 15 1.5 728
Nokpa 2.34 1.49 112 3.5 1.3 146 5.8 1.4 258
Chegue - - - 1.2 0.9 35 1.2 0.9 35
Kekeda - - - 4.0 1.1 141 4.0 1.1 141
Han - - - 4.8 1.1 170 4.8 1.1 170
-------- ----- ----- --------- ---- ---- --------- ---- ---- ---------
Total 5.75 1.62 300 26 1.3 1,032 31 1.3 1,332
-------- ----- ----- --------- ---- ---- --------- ---- ---- ---------
Preliminary metallurgical test work was performed at Veritas
Laboratory in Abidjan. Bulk Leach Extractable Gold (BLEG) tests on
1kg samples indicates that all oxide, transition and primary
materials are non-refractory with all recoveries exceeding 90%.
Diamond core drilling will be completed in the second quarter, to
provide samples for full diagnostic comminution and metallurgical
characterisation test work at a laboratory in Australia.
Infill resource drilling and preliminary geotechnical logging,
hardness test work and RMR classification will commence in the
second quarter. This data will feed into preliminary pit
optimisation studies which are planned to be conducted during the
year.
A table of the significant intercepts reported from the Doropo
drilling during the quarter is summarised below:
Hole ID Type From Interval Grade
(m) (m) (Au
Prospect g/t)
---------- ---------- ------ ------ --------- ------
SOUWA DPRC1177 RC 165 6 2.7
---------- ---------- ------ ------ --------- ------
SOUWA DPRD1075 DD 89 10.2 2.1
---------- ---------- ------ ------ --------- ------
SOUWA DPRD1102 DD 128 3 5.9
---------- ---------- ------ ------ --------- ------
SOUWA DD 137 8.85 2.1
---------------------- ----- ------ --------- ------
SOUWA DPRD1151 DD 138 12 2.2
---------- ---------- ------ ------ --------- ------
SOUWA DPRC1275 RC 42 3 15.3
---------- ---------- ------ ------ --------- ------
NOKPA DPRD1070 DD 126.8 3.4 6.3
---------- ---------- ------ ------ --------- ------
NOKPA DD 159 13 2.3
---------------------- ----- ------ --------- ------
CHEGUE DPRC1217 RC 69 6 3.5
---------- ---------- ------ ------ --------- ------
CHEGUE DPRC1218 RC 90 4 6.6
---------- ---------- ------ ------ --------- ------
KEKEDA DPRC0632 RC 36 12 2.35
---------- ---------- ------ ------ --------- ------
TCHOU DPRC1187 RC 37 2 10.2
---------- ---------- ------ ------ --------- ------
HINDA DPRC0585 RC 39 11 1.4
---------- ---------- ------ ------ --------- ------
HINDA DPRC0588 RC 51 2 7.7
---------- ---------- ------ ------ --------- ------
SUNKOLA DPAC1475 AC 28 8 1.68
---------- ---------- ------ ------ --------- ------
ATTIRE DPRC0638 RC 49 2 7.12
---------- ---------- ------ ------ --------- ------
ATTIRE DPRC0643 RC 39 23 0.63
---------- ---------- ------ ------ --------- ------
ABC Project
A reconnaissance sampling program started on the Kona permit
during the quarter. Two anomalous trends of gold-arsenopyrite
mineralisation have been highlighted over 1,300m and 2,500m. The
width of the mineralized corridor averages 150m. Infill trenching
and RC drilling is planned for Q2.
FINANCIAL REVIEW
In its eighth year of production, the Sukari Gold Mine is highly
cash generative as reflected in the Group's financial results for
the quarter ended 31 March 2017:
-- Q1 2017 revenues of US$140.7 million were down 5% compared
with Q1 2016, due to a 7% decrease in gold sales volumes, offset by
a 2% rise in average realised gold prices.
-- Cash cost of production increased to US$734 per ounce from
US$603 per ounce in Q1 2016, mainly due to a 13% decrease in gold
production and a 5% increase in mine production costs due to
increased material movement.
-- AISC increased to US$887 per ounce sold from $758 per ounce
in Q1 2016, mainly due to the factors described affecting the cash
cost of production.
-- EBITDA of US$53.1 million was down by 21% compared to Q1 2016
due to lower gross operating margins. The main factors were higher
production costs, as noted above, as well as movement in gold in
circuit, ROM pad and ore stockpile inventories.
-- Operational cash flow of US$58.3 million was 4% lower than Q1
2016, due to the factors affecting EBITDA, offset by a decrease in
working capital outflows.
-- Profit before tax of US$29.5 million was 28% lower than Q1
2016, mainly due to the factors affecting EBITDA.
-- Earnings per share of 1.16 US cents (after profit share), was
67% lower than Q1 2016, mainly due to the factors affecting EBITDA
and a US$16.1 million charge for EMRA profit share (zero in Q1
2016).
Revenue
Revenue from gold and silver sales for the quarter decreased by
5% to US$140.7 million (US$148.1 million in Q1 2016), with a 2%
increase in the average realised gold sales price to US$1,220 per
ounce (US$1,196 per ounce in Q1 2016) and a 7% decrease in gold
sold to 115,052 ounces (123,668 ounces in Q1 2016).
Cost of sales
Cost of sales represents the cost of mining, processing,
refining, transport, site administration, depreciation,
amortisation and movement in production inventories. Cost of sales
is inclusive of US$7.6 million in relation to fuel charges (refer
to Note 6 of the financial statements for further information) and
up 4% compared with the prior year period to US$106.1 million,
mainly as a result of:
(a) a 5% increase in total mine production costs from US$71.6
million to US$75.5 million, due to a 14% increase in mined tonnes
combined with a 1% increase in processed tonnes; and
(b) a 10% decrease in depreciation and amortisation charges from
US$26.7 million to US$23.9 million as higher production physicals,
and lower reclassification of exploration & evaluation
expenditure to mine development, decreased the associated
amortisation charges.
Other operating costs
Other operating costs comprises 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 and the 3%
production royalty payable to the Egyptian government. Other
operating costs decreased by 3% on the prior year period to US$5.4
million, as a result of:
(a) a US$1.2 million increase in net foreign exchange movements
from a US$0.8 million gain to a US$2.0 million gain;
(b) a US$0.2 million decrease in royalty paid to the government
of the Arab Republic of Egypt in line with the decrease in gold
sales revenue; and
(c) a US$1.2 million increase in corporate costs.
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 quarter ended 31 March 2017 of US$29.5
million (Q1 2016 US$40.9 million).
EMRA profit share
During the quarter ended 31 March 2017, US$18.6 million was paid
to EMRA, a charge of US$16.1 million is reflected in the income
statement after offsetting US$2.5 million of the US$4 million
accrual from the quarter ended 31 December 2016.
Profit share payments made to EMRA, pursuant to these provisions
of the Concession Agreement, are recognised as a variable charge in
the income statement (below profit after tax) of Centamin,
resulting in a reduction in 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.
Earnings per share
Earnings per share of 1.161 US cents (after profit share) has
decreased significantly when compared with 3.564 US cents per share
for Q1 2016. The decrease was driven by the factors outlined above,
but is primarily due to the effect of profit share.
Financial position
Centamin has a strong and flexible financial position with no
debt, no hedging and cash, bullion on hand, gold sales receivables
and available-for-sale financial assets of US$290.9 million at 31
March 2017, up from US$275.7 million at 31 March 2016.
31 March 31 December 31 March
2017 2016 2016
US$'000 US$'000 US$'000
Cash at Bank 265,984 399,873 234,461
Bullion on hand 12,536 4,998 16,746
Gold sales receivable 12,214 23,009 24,252
Available-for-sale-financial
assets 124 130 192
--------- ------------ ---------
290,858 428,010 275,651
--------- ------------ ---------
The majority of funds have been invested in international
rolling short-term interest money market deposits.
Current assets have decreased from Q4 2016 to Q1 2017 by
US$157.3 million or 28% to US$406.1 million, as a result of:
(a) a US$14.4 million decrease in inventory driven by a US$7.7
million decrease in collective stores inventory value to US$94.6
million and a US$6.7 million decrease in overall mining stockpiles
and gold in circuit levels to US$27.5 million;
(b) a US$10.8 million decrease in gold sale receivables; and
(c) a decrease in net cash of US$133.9 million (net of foreign
exchange movements) driven by a US$155.4 million final dividend
payment to external shareholders and a US$18.6 million payment to
EMRA as profit share during the period.
Non-current assets have decreased from Q4 2016 to Q1 2017 by
US$3.9 million to US$1,019 million, as a result of:
(a) US$11.9 million expenditure for property, plant and equipment;
(b) US$23.9 million charge for depreciation and amortisation; and
(c) US$8.1 million increase in exploration and evaluation
assets, as a result of the drilling programmes in Sukari Hill,
Burkina Faso and Côte d'Ivoire.
Current liabilities have decreased from Q4 2016 to Q1 2017 due
to a US$19.7 million decrease in payables and accrual balances.
Non-current liabilities have increased from Q4 2016 to Q1 2017
by US$0.2 million to US$7.9 million as a result of an increase in
the rehabilitation provision.
The value of issued capital has remained the same from Q4 2016
to Q1 2017.
Share option reserves reported have increased from Q4 2016 to Q1
2017 by US$0.4 million to US$3.4 million as a result of the
forfeiture and vesting of awards and the resultant transfer to
accumulated profits, offset by the recognition of the share-based
payments expenses for the period.
Accumulated profits decreased from Q4 2016 to Q1 2017 by
US$142.1 million as a result of:
(a) US$29.6 million profit for the period attributable to the
shareholders of the Company; offset by a
(b) US$155.4 million final dividend payment in respect of the year ended 31 December 2016; and a
(c) US$16.1 million profit share charge to EMRA in the first quarter of the year.
Cashflow
Net cash flows generated by operating activities comprise
receipts from gold and silver sales and interest income, offset by
operating and corporate administration costs. Cash flows have
decreased from Q1 2016 to Q1 2017 by US$2.4 million to US$58.0
million, primarily attributable to a decrease in revenue, due to a
decrease 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
decreased by US$5.0 million from Q1 2016 to Q1 2017 to US$19.6
million. The primary use of the funds in the first quarter was for
investment in underground development at the Sukari site in Egypt
and exploration expenditures incurred in West Africa.
Net cash flows generated by financing activities comprise a
US$155.4 million final dividend payment to external shareholders
and a US$18.6 million payment to EMRA as profit share during the
period.
Effects of exchange rate changes have increased by US$2.7
million as a result of movements of some of the functional
currencies used within the operation in the quarter.
Capital Expenditure
Q1 2017 Capital Expenditure
A breakdown of capital expenditure for the Group during Q1 2017
is as follows:
US$ million
Open pit development -
Underground mine development(1) 8.4
Other sustaining capital
expenditure 4.5
Total Sustaining Capex 12.9
(1) Includes underground
exploration drilling
Cleopatra underground
mine development 2.3
Total Non-sustaining
Capex 2.3
Cumulative exploration expenditure for Cleopatra at Sukari is
US$5.3 million to date.
Q1 2017 Exploration Expenditure
A breakdown of exploration expenditure for the Group during Q1
2017 is as follows:
Exploration Expenditure US$ million
Burkina Faso 1.9
Côte d'Ivoire 3.0
Sukari Tenement (Regional) 0.9
Total Exploration Expenditure 5.8
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 cost of production 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:
Quarter ended Quarter ended
31 March 31 March
2017(1) 2016(1)
US$'000 US$'000
Profit before tax 29,467 40,864
Finance income (350) (126)
Depreciation and amortisation 23,941 26,746
EBITDA 53,058 67,484
-------------- --------------
(1) Profit before tax, Depreciation and amortisation and EBITDA
includes a charge to reflect the removal of fuel subsidies (refer
to Note 6).
2) Cash cost of production and all-in sustaining costs per ounce
calculation: Cash cost of production and AISC are non-GAAP
financial measures. Cash cost of production 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 cost
of production 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.
During June 2013 the World Gold Council (WGC), an industry body,
published a Guidance Note on 'all in sustaining costs' 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 cost associated with
developing and maintaining gold mines. In addition, this metric
includes the cost associated with 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 US$/oz is arrived at by dividing the dollar value of the sum
of these cost metrics, by the ounces of gold sold.
Reconciliation of cash cost of production per ounce:
Quarter ended Quarter ended
31 March 31 March
2017 (1) 2016 (1)
US$'000 US$'000
Mine production costs
(Note 4) 75,454 71,641
Less: Refinery and
transport (378) (384)
Movement in inventory 5,042 4,297
-------------- --------------
Cash cost of production 80,118 75,554
-------------- --------------
Gold Produced - Total
(oz) 109,187 125,268
Cash cost of production US$734/oz US$603/oz
per ounce
(1) Cash cost of production includes a charge to reflect the
removal of fuel subsidies (refer to Note 6).
Reconciliation of AISC per ounce:
Quarter ended Quarter ended
31 March 31 March
2017 (1) 2016 (1)
US$'000 US$'000
Mine production costs(2)
(Note 4) 75,454 71,641
Movement in inventory 6,686 3,340
Royalties 4,210 4,432
Corporate administration
costs 3,009 1,800
Rehabilitation costs 157 145
Underground development 8,356 9,169
Other sustaining
capital exp. 4,539 3,442
By-product credit (332) (255)
-------------- --------------
AISC 102,079 93,714
-------------- --------------
Gold Sold - Total
(oz) 115,052 123,668
AISC per ounce US$887/oz US$758/oz
(1) Mine production costs, cash cost of production, AISC, cash
cost of production per ounce, and AISC per ounce includes
prepayments recorded since Q4 2012 to reflect the removal of fuel
subsidies (refer to Note 6 of the financial statements for further
details).
(2) Includes refinery and transport.
3) Cash and cash equivalents, bullion on hand, gold sales
receivables and available-for-sale financial assets: This is a
non-GAAP financial measure any other companies may calculate these
measures differently.
Reconciliation to cash and cash equivalents, bullion on hand,
gold sales receivables and available-for-sale financial assets:
Quarter ended Quarter ended
31 March 31 March 2016
2017
US$'000 US$'000
Cash and cash equivalents (Note 17(a)) 265,984 234,461
Bullion on hand (valued at the period-end
spot price) 12,536 16,746
Gold sales receivable 12,214 24,252
Available-for-sale financial assets 124 192
Cash, bullion, gold sales receivables
and available-for-sale financial assets 290,858 275,651
-------------- ---------------
CORPORATE UPDATE
Following the results of AGM which was held on 21 March 2017,
the Board resolved to re-appoint Trevor Schultz as a director of
the Company. Trevor was also re-appointed as chair of the HSES
committee and a member of the nomination committee but did not
re-join the remuneration committee. The Company will continue to
consult with major shareholders and proxy advisory groups to ensure
that concerns raised on composition of the board and committees
have been adequately addressed.
PRINCIPAL RISKS AFFECTING THE CENTAMIN 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.
There have been no changes in the Company's risks and
uncertainties during the three month period ended 31 March 2017
from those described in the Group's annual management discussion,
analysis and business review for the year ended 31 December 2016,
and the Company does not anticipate any changes in the Company's
risks and uncertainties during the next three months to 30 June
2017. The key principal risks relate to the following:
-- Single project dependency
-- Sukari Project joint venture risk and relationship with EMRA
-- Gold price and currency exposure
-- Jurisdictional taxation exposure
-- Political risk - Sukari
-- Political risk - West Africa
-- Reserve and resource estimations
-- Exploration development
-- Failure to achieve production estimates
-- Litigation risks
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 a 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.
LEGAL ACTIONS
As detailed in Note 8 of the accompanying interim condensed
consolidated financial statements, the Group's appeal against the
30 October 2012 ruling by the Egyptian Administrative Court remains
on-going. The Supreme Administrative Court have stayed the
Concession Agreement appeal until the Supreme Constitutional Court
rules on the validity of Law 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 32 is invalid, the Group
remains confident that its appeal against the 30 October 2012
ruling will be successful on its merits. Centamin does not
currently see the need to take the matter to proceedings outside of
Egypt as Centamin remains of the belief that the Egyptian Supreme
Administrative Court will rule in Centamin's favour, based on the
legal merits of the case.
The Group continues to benefit from the full support of the
Ministry of Petroleum and EMRA, both in the appeal and at the
operational level.
In light of the on-going dispute with the Egyptian Government
regarding the price at which diesel fuel oil (DFO) is supplied to
the mine at Sukari, it has been necessary since January 2012 to
advance funds to the fuel supplier based on the international price
for diesel. The Company has fully provided against the prepayment
of US$242 million, of which US$7.6 million was provided for in Q1
2017. Refer to Note 6 of the accompanying interim condensed
consolidated financial statements for further details on the impact
of this provision on the Group's results for Q1 2017.
In November 2012 the Group received a further demand from its
fuel supplier for the repayment of fuel subsidies received in the
period from late 2009 through to January 2012, for EGP403 million
(approximately US$23 million at current exchange rates). No
provision has been made in respect of the historic subsidies prior
to January 2012 as, based on legal advice that it has received to
date, the Company believes that, notwithstanding the unfavourable
State Commissioner's report, the prospects of a court finding in
its favour in relation to this matter are strong.
As disclosed previously, the Company has commenced proceedings
in the Administrative Court in Egypt in relation to these matters.
The Company remains of the view that an instant move to
international fuel prices is not a reasonable outcome and will look
to recover any funds advanced thus far at the higher rate should
the court proceedings be successfully concluded. Please refer to
Note 8 to the accompanying interim condensed consolidated financial
statements and the most recently filed Annual Information Form
(AIF) for further information.
With the exception of the relationships with EMRA and the
Egyptian government referred to above, we do not believe there are
any third party relationships which are critical to the Group's
success or which would have a material impact upon the Group's
position if the relationship broke down.
Andrew Pardey
Chief Executive Officer
Set out below are the unaudited consolidated Financial
Statements for the Group, including notes thereto, for the quarter
and three months ended 31 March 2017.
RESPONSIBILITY STATEMENT
We confirm that to the best of our knowledge:
(a) the condensed set of interim consolidated financial
statements for the quarter and three months ended 31 March 2017 has
been prepared in accordance with International Accounting Standard
34 'Interim Financial Reporting' as adopted by the European Union
and as issued by the International Accounting Standards Board
("IASB");
(b) the condensed set of interim consolidated financial
statements, which has been prepared in accordance with the
applicable set of accounting standards, gives a true and fair view
of the assets, liabilities, financial position and profit or loss
of the issuer, or the undertakings included in the consolidation as
a whole as required by DTR 4.2.4;
(c) the interim management report includes a fair review of the
information required by DTR 4.2.7R (indication of important events
during the first three months and description of principal risks
and uncertainties for the remaining nine months of the year);
and
(d) the interim management report includes a fair review of the
information required by DTR 4.2.8R (disclosure of related parties'
transactions and changes therein).
By order of the Board,
Chief Executive Officer Chief Financial Officer
Andrew Pardey Ross Jerrard
3 May 2017 3 May 2017
UNAUDITED INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE QUARTERED
31 MARCH 2017
CONTENTS
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 22
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL
POSITION 23
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN
EQUITY 24
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
25
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS 26
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME FOR THE THREE MONTHSED 31 MARCH 2017
Note 31 March 31 March
2017 (Unaudited) 2016 (Unaudited)
US$'000 US$'000
Revenue 3 140,724 148,107
Cost of sales 4 (106,069) (101,700)
----------------- -----------------
Gross profit 34,655 46,407
Other operating costs 4 (5,425) (5,602)
Impairment of available-for-sale financial assets (113) (67)
Finance income 4 350 126
Profit before tax 29,467 40,864
Tax 84 (14)
----------------- -----------------
Profit for the period after tax 29,551 40,850
----------------- -----------------
EMRA profit share 5 (16,140) -
----------------- -----------------
Profit for the period after EMRA profit share 13,411 40,850
----------------- -----------------
Profit for the period attributable to:
* the owners of the parent 13,411 40,850
Other comprehensive income
Items that may be reclassified subsequently to
profit or loss:
Profits/(losses) on available for sale financial
assets (net of tax) 14 (91) 21
----------------- -----------------
Other comprehensive income for the period (91) 21
----------------- -----------------
Total comprehensive income for the period attributable
to:
- the owners of the parent 13,320 40,871
----------------- -----------------
Earnings per share before profit share:
Basic (cents per share) 11 2.557 3.564
Diluted (cents per share) 11 2.537 3.513
Earnings per share after profit share:
Basic (cents per share) 11 1.161 3.564
Diluted (cents per share) 11 1.152 3.513
The above Unaudited Interim Condensed Consolidated Statement of
Comprehensive Income should be read in conjunction with the
accompanying notes.
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL
POSITION
AS AT 31 MARCH 2017
Note 31 March 31 December
2016
2017 (Audited)
(Unaudited) US$'000
US$'000
NON-CURRENT ASSETS
Property, plant and equipment 12 856,891 868,926
Exploration and evaluation asset 13 161,988 153,918
Prepayments and other receivables 379 376
Total non-current assets 1,019,258 1,023,220
------------ -----------
CURRENT ASSETS
Inventories 18 122,172 136,562
Available-for-sale financial assets 124 130
Trade and other receivables 14,210 24,870
Prepayments 6 3,638 2,028
Cash and cash equivalents 17(a) 265,984 399,873
------------ -----------
Total current assets 406,128 563,463
------------ -----------
Total assets 1,425,386 1,586,683
------------ -----------
NON-CURRENT LIABILITIES
Provisions 7,877 7,697
------------ -----------
Total non-current liabilities 7,877 7,697
------------ -----------
CURRENT LIABILITIES
Trade and other payables 28,270 47,991
Provisions 6,451 6,476
------------ -----------
Total current liabilities 34,721 54,467
------------ -----------
Total liabilities 42,598 62,164
------------ -----------
Net assets 1,382,788 1,524,519
------------ -----------
EQUITY
Issued capital 9 667,472 667,472
Share option reserve 3,434 3,048
Accumulated profits 711,882 853,999
------------ -----------
Total Equity 1,382,788 1,524,519
------------ -----------
The above Unaudited Interim Condensed Consolidated Statement of
Financial Position should be read in conjunction with the
accompanying notes.
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN
EQUITY FOR THE THREE MONTHSED 31 MARCH 2017
Share option Accumulated
Issued Capital reserve profits Total Equity
US$'000 US$'000 US$'000 US$'000
-------------- ------------ ----------- --------------
Balance as at 1 January 2017 667,472 3,048 853,999 1,524,519
Profit for the period - - 29,551 29,551
Other comprehensive income for
the period - - (91) (91)
-------------- ------------ ----------- --------------
Total comprehensive income for
the period - - 29,460 29,460
Dividend paid - shareholders - - (155,437) (155,437)
EMRA profit share - - (16,140) (16,140)
Transfer of share based payments - - - -
Recognition of share based payments - (386) - (386)
Balance as at 31 March 2017 667,472 3,434 711,882 1,382,788
-------------- ------------ ----------- --------------
Share option Accumulated
Issued Capital reserve profits Total Equity
US$'000 US$'000 US$'000 US$'000
-------------- ------------ ----------- --------------
Balance as at 1 January 2016 665,590 2,469 685,273 1,353,332
Profit for the period - - 40,850 40,850
Other comprehensive income for
the period - - 21 21
-------------- ------------ ----------- --------------
Total comprehensive income for
the period - - 40,871 40,871
Dividend paid - - - -
Transfer of share based payments - - - -
Recognition of share based payments - (339) - (339)
Balance as at 31 March 2016 665,590 2,130 726,144 1,393,864
-------------- ------------ ----------- --------------
The above Unaudited Interim Condensed Consolidated Statement of
Changes in Equity should be read in conjunction with the
accompanying notes.
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE THREE MONTHSED 31 MARCH 2017
Note 31 March 31 March
2017 2016
(Unaudited) (Unaudited)
US$'000 US$'000
Cash flows from operating activities
Cash generated in operating activities 17(b) 58,341 60,482
Finance income (350) (126)
Net cash generated by operating activities 57,991 60,356
------------ ------------
Cash flows from investing activities
Acquisition of property, plant and equipment (11,907) (11,691)
Exploration and evaluation expenditure (8,070) (13,100)
Finance income 350 126
Net cash used in investing activities (19,627) (24,665)
------------ ------------
Cash flows from financing activities
Dividend paid (155,437) -
EMRA profit share paid 5 (18,640) -
Net cash provided by financing activities (174,077) -
------------ ------------
Net (decrease)/increase in cash and cash
equivalents (135,713) 35,691
Cash and cash equivalents at the beginning
of the period 399,873 199,616
Effect of foreign exchange rate changes 1,824 (846)
------------ ------------
Cash and cash equivalents at the end of
the period 17(a) 265,984 234,461
------------ ------------
The above Unaudited Condensed Consolidated Statement of Cash
Flows should be read in conjunction with the accompanying
notes.
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS FOR THE THREE MONTHSED 31 MARCH 2017 (CONTINUED)
NOTE 1: ACCOUNTING POLICIES
Basis of preparation
These unaudited interim condensed consolidated financial
statements have been prepared in accordance with IAS 34 "Interim
Financial Reporting" (IAS 34) as adopted by the European Union and
as issued by the International Accounting Standards Board ("IASB")
and the requirements of the Disclosure and Transparency Rules (DTR)
of the Financial Conduct Authority (FCA) in the United Kingdom as
applicable to interim financial reporting. These unaudited interim
condensed consolidated financial statements are not affected by
seasonality.
The unaudited interim condensed consolidated financial
statements represent a 'condensed set of financial statements' as
referred to in the DTR issued by the FCA. Accordingly, they do not
include all of the information required for a full annual financial
report and are to be read in conjunction with the Group's financial
statements for the year ended 31 December 2016, which were 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 IFRS as
issued by the IASB. The financial statements for the year ended 31
December 2016 have been filed with the Jersey Financial Services
Commission. The financial information contained in this report does
not constitute statutory accounts under the Companies (Jersey) Law
1991, as amended. The financial information for the year ended 31
December 2016 is based on the statutory accounts for the year ended
31 December 2016. Readers are referred to the auditor's report to
the Group financial statements as at 31 December 2016 (available at
www.centamin.com).
The accounting policies applied in these interim financial
statements are consistent with those used in the annual
consolidated financial statements for the year ended 31 December
2016 except for the adoption of a number of amendments issued by
the IASB and endorsed by the EU which apply for the first time in
2017. The new pronouncements do not have a significant impact on
the accounting policies, methods of computation or presentation
applied by the Group and therefore the prior period consolidated
financial statements have not been restated. The Group has not
early adopted any amendments, standards or interpretations that
have been issued but are not yet effective.
The preparation of these interim condensed consolidated
financial statements requires the use of certain significant
accounting estimates and judgment by management in applying the
Group's accounting policies. There have been no changes to the
areas involving significant judgement and estimates that have been
set out in Note 4 of the Group's annual audited consolidated
financial statements for the year ended 31 December 2016.
Going concern
These financial statements for the period ended 31 March 2017
have been prepared on a going concern basis, which contemplate the
realisation of assets and liquidation of liabilities during the
normal course of operations.
As discussed in Note 8, during 2012 the operation of the mine
was 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 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.
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS FOR THE THREE MONTHSED 31 MARCH 2017 (CONTINUED)
NOTE 1: ACCOUNTING POLICIES (CONTINUED)
The directors have a reasonable expectation that the Group will
have adequate resources to continue in operational existence for
the foreseeable future. Thus they continue to adopt the going
concern basis of accounting in preparing these interim condensed
consolidated financial statements.
NOTE 2: SEGMENT REPORTING
The Group is engaged in the business of exploration for and
mining of 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,
is as follows:
31 March 31 December
2017
(Unaudited) 2016
US$'000 (Audited)
US$'000
Egypt 890,958 899,852
Burkina Faso 107,417 105,432
Côte d'Ivoire 20,827 17,870
Australia 3 3
Jersey 53 63
--------- ---------
1,019,258 1,023,220
--------- ---------
NOTE 3: REVENUE
An analysis of the Group's revenue for the period, from
continuing operations, is as follows:
Three Months Three Months
Ended 31 Ended 31
March 2017 March 2016
(Unaudited) (Unaudited)
US$'000 US$'000
Gold sales 140,391 147,852
Silver sales 332 255
140,724 148,107
------------ ------------
NOTE 4: PROFIT BEFORE TAX
Profit for the period has been arrived at after
crediting/(charging) the following gains/(losses) and expenses:
Three Months Three Months
Ended 31 Ended 31
March 2017 March 2016
(Unaudited) (Unaudited)
US$'000 US$'000
Finance income
Interest received 350 126
------------ ------------
Expenses
Cost of sales
Mine production costs (75,454) (71,641)
Movement in inventory (6,686) (3,340)
Depreciation and amortisation (23,929) (26,719)
--------- ---------
(106,069) (101,700)
--------- ---------
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS FOR THE THREE MONTHSED 31 MARCH 2017 (CONTINUED)
NOTE 4: PROFIT BEFORE TAX (CONTINUED)
Three Months Three Months
Ended 31 Ended 31
March 2017 March 2016
(Unaudited) (Unaudited)
US$'000 US$'000
Other operating costs
Fixed royalty - attributable to the Egyptian
government (4,210) (4,432)
Corporate costs (3,009) (1,800)
Other expenses (34) (45)
Foreign exchange gain, net 1,999 847
Provision for restoration and rehabilitation
- unwinding of discount (157) (145)
Depreciation (13) (27)
(5,425) (5,602)
------------ ------------
Impairment of available for sale financial
assets (114) (67)
------------ ------------
NOTE 5: EMRA PROFIT SHARE
EMRA is entitled to a share of 50% of SGM's net production
surplus which can be defined as 'revenue less payment of the fixed
royalty to Arab Republic of Egypt ("ARE") and recoverable costs'.
However, in accordance with the terms of the Concession Agreement,
in the first and second years in which there is a profit share, PGM
will be entitled to an additional 10% of net production surplus and
an additional 5% in the third and fourth years.
Three Months Three Months
Ended 31 Ended 31
March 2017 March 2016
(Unaudited) (Unaudited)
US$'000 US$'000
Income statement
EMRA profit share (14,640) -
------------ ------------
Balance sheet
EMRA advance profit share prepayment - 28,750
EMRA profit share accrual 1,500 -
------------ ------------
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 the payments amounted to
US$28.75 million. These payments were recovered by PGM during the
2016 financial year by way of net off against EMRA's entitlement to
profit share during that period.
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS FOR THE THREE MONTHSED 31 MARCH 2017 (CONTINUED)
NOTE 5: EMRA PROFIT SHARE (CONTINUED)
Three Months Three Months
Ended 31 Ended 31
March 2017 March 2016
(Unaudited) (Unaudited)
US$'000 US$'000
Cash flows
EMRA cash payments during the
period (18,640) -
Offset by:
EMRA accrual /(release) 2,500 -
------------ ------------
EMRA profit share (16,140) -
------------ ------------
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 period will be
reconciled against SGM's audited June 2017 financial
statements.
Subsequent to period end, further profit share advance
distributions totalling US$4.3m have been made to EMRA.
NOTE 6: PREPAYMENTS
31 March 31 December
2017
(Unaudited) 2016
US$'000 (Audited)
US$'000
Non-current Prepayments
EMRA - -
Other 296 295
--- ---
Current Prepayments
Prepayments 664 1,151
Fuel prepayments 2,974 877
----- -----
3,638 2,028
----- -----
The cumulative fuel prepayment recognised and provision charged
as at 31 March 2017 is as follows:
Movement in fuel prepayments
Balance at the beginning of the period 877 3,169
Fuel prepayment recognised 10,439 23,014
Less: Provision charged to :
Mine production costs (8,435) (22,844)
Property, plant and equipment (7) (2,269)
Inventories 100 (193)
------- --------
(8,342) (25,306)
Balance at the end of the period 2,974 877
------- --------
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS FOR THE THREE MONTHSED 31 MARCH 2017 (CONTINUED)
NOTE 6: PREPAYMENTS (CONTINUED)
Diesel fuel oil ("DFO") dispute
As more fully described in note 8 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 through 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$242 million to 31 March 2017 of which
US$7.6 million was provided during 2017.
In order to allow a better understanding of the financial
information presented within the consolidated financial statements,
and specifically the group's underlying business performance, the
effect of the Diesel Fuel Oil dispute is shown below.
Three months ended Three months ended 31
31 March 2017 March 2016
Before Before
adjustment Adjustment Total adjustment Adjustment Total
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Expenses
Cost of sales
Mine production costs (67,019) (8,435) (75,454) (65,709) (5,932) (71,641)
Movement in inventory (7,488) 802 (6,686) (2,831) (509) (3,340)
Depreciation and amortisation (23,929) - (23,929) (26,719) - (26,719)
----------- ---------- --------- ----------- ---------- ---------
(98,436) (7,633) (106,068) (95,259) (6,441) (101,700)
----------- ---------- --------- ----------- ---------- ---------
This has resulted in a net charge of US$7.6 million in the
profit and loss for the current quarter.
The effect on earnings per share is shown below:
Three months ended 31 Three months ended 31
March 2017 March 2016
Before Before
adjustment Adjustment Total adjustment Adjustment Total
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Earnings per share
before profit share:
Basic (cents per share) 3.218 (0.661) 2.557 4.126 (0.562) 3.564
----------- ---------- ------- ----------- ---------- -------
Diluted (cents per
share) 3.193 (0.656) 2.537 4.067 (0.554) 3.513
----------- ---------- ------- ----------- ---------- -------
Earnings per share
after profit share:
Basic (cents per share) 1.821 (0.660) 1.161 4.126 (0.562) 3.564
----- ------- ----- ----- -------- -----
Diluted (cents per
share) 1.807 (0.655) 1.152 4.067 (0.554) 3.513
----- ------- ----- ----- -------- -----
NOTE 7: COMMITMENTS
The following is a summary of the Company's outstanding
commitments as at 31 March 2017:
Payments due Total < 1 year 1 to 5 >5 years
US$'000 US$'000 years US$'000
US$'000
Operating Lease Commitments(1) 92 61 31 -
--------- --------- --------- ---------
Total commitments 92 61 31 -
--------- --------- --------- ---------
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS FOR THE THREE MONTHSED 31 MARCH 2017 (CONTINUED)
(1) Operating lease commitments are limited to office premises
in Jersey.
NOTE 8: CONTINGENT LIABILITIES AND CONTINGENT ASSETS
Contingent Liabilities
Fuel Supply
As set out in note 6 above, in January 2012, the Group received
a letter from Chevron to the effect that Chevron would only be able
to supply DFO (Diesel Fuel Oil) to the mine at Sukari at
international prices rather than 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
EGPC. It is further understood that EGPC itself issued this
instruction because it had received legal advice from the Legal
Advice Department of the Council of State (an internal government
advisory department) that companies operating in the gold mining
sector in Egypt were not entitled to such subsidies. In November
2012, the Group received a further demand from Chevron for the
repayment of fuel subsidies received during the period from late
2009 through to January 2012, for EGP403 million (approximately
US$23.0 million at current exchange rates).
The Group has taken detailed legal advice on this matter (and,
in particular, on the opinion given by the Legal Advice Department
of the Council of State) and in June 2012 lodged an appeal against
EGPC's decision in the Administrative Courts. Again, the Group
believes that its grounds for appeal are strong and that there is a
good prospect of success. However, as a practical matter, and in
order to ensure the continuation of supply whilst the matter is
resolved, the Group has since January 2012 advanced funds to its
fuel supplier, based on the international price for fuel.
As at the date of this document, no decision had been taken by
the courts regarding this matter. The Group has received an
unfavourable State Commissioner's report in the case, however, the
report is non-binding and the Group's legal advisors remain of the
view that the Group has a strong 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 action 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$242.0 million. Refer to Note
6 of these financial statements for further details on the impact
of this provision on the Group's results for Q1 2017.
No provision has been made in respect of the historic subsidies
prior to January 2012 as, based on legal advice, the Company
believes that, notwithstanding the unfavourable State
Commissioner's report, the prospects of a court finding in its
favour in relation to this matter remain very strong.
Supreme Administrative Court Appeal
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 and Centamin's wholly--owned
subsidiary Pharaoh Gold Mines, and was approved by the People's
Assembly as Law 222 of 1994.
In summary that judgment states that, although the Concession
Agreement itself remains valid and in force, 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 in the first
instance.
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS FOR THE THREE MONTHSED 31 MARCH 2017 (CONTINUED)
NOTE 8: CONTINGENT LIABILITIES AND CONTINGENT ASSETS
(CONTINUED)
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 was
under way.
EMRA lodged its own appeal in relation to this matter on 27
November 2012, the day after the Company's appeal was lodged,
supporting the Group's view 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 the Group's investment at Sukari and the
government's desire to stimulate further investment in the Egyptian
mining industry.
The Supreme Administrative Court has stayed the Concession
Agreement appeal until the Supreme Constitutional Court has ruled
on the validity of Law 32 of 2014. The Company continues to believe
that it has a strong legal position and, in addition, that it will
ultimately benefit from Law 32 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. If the Supreme Constitutional Court
rules that Law 32 is invalid, the Group remains confident that its
appeal will be successful on the merits.
The Company does not yet know when the appeal will conclude,
although it is aware of the potential for the process in Egypt to
be lengthy. The Company has taken extensive legal advice on the
merits of its appeal from 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. It therefore remains of the
view that the appeal is based on strong legal grounds and will
ultimately be successful. In the event that the appellate court
fails to be persuaded of the merits of the case put forward by the
Group, the operations at Sukari may be adversely effected to the
extent that the 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 case is heard.
Contingent Assets
There were no contingent assets at period-end (31 March 2017:
nil, 31 December 2016: nil).
NOTE 9: ISSUED CAPITAL
Fully Paid Ordinary Three Months Ended Year Ended
Shares
31 March 2017 31 December 2016
(Unaudited) (Audited)
Number US$'000 Number US$'000
Balance at beginning of
the period 1,152,107,984 667,472 1,152,107,984 665,590
Issue of shares (1) - - - (17)
Transfer from share options
reserve - - - 1,899
Balance at end of the
period 1,152,107,984 667,472 1,152,107,984 667,472
------------- ------- -------------- --------
(1) Fully paid ordinary shares carry one vote per share and
carry the right to dividends.
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS FOR THE THREE MONTHSED 31 MARCH 2017 (CONTINUED)
NOTE 10: RELATED PARTY TRANSACTIONS
The related party transactions for the three months ended 31
March 2017 are summarised below:
- Salaries, superannuation contributions, bonuses, LTI's,
consulting and directors' fees paid to Directors during the three
months ended 31 March 2017 amounted to US$168,280 (31 March 2016:
US$608,048).
- Mr J El-Raghy is a director and shareholder of El-Raghy
Kriewaldt Pty Ltd ("ELK"), which provides office premises to the
Company in Australia. All dealings with ELK are in the ordinary
course of business and on normal terms and conditions. Rent paid to
ELK during the three months ended 31 March 2017 amounted to
US$12,650 (31 March 2016: US$11,011).
NOTE 11: EARNINGS PER SHARE
Basic earnings per share are calculated using the weighted
average number of shares outstanding. Diluted earnings per share
are calculated using the treasury stock method. In order to
determine diluted earnings per share, the treasury stock method
assumes that any proceeds from the exercise of dilutive stock
options and warrants would be used to repurchase common shares at
the average market price during the period, with the incremental
number of shares being included in the denominator of the diluted
earnings per share calculation. The diluted earnings per share
calculation exclude any potential conversion of options and
warrants that would increase earnings per share.
Three Months
Ended 31 Three Months
March 2017 Ended 31 March
(Unaudited) 2016 (Unaudited)
Cents Per Cents Per
Share Share
Basic EPS (before profit
share) 2.557 3.564
Diluted EPS (before profit
share) 2.537 3.513
--------------- --------------------
Basic EPS (after profit
share) 1.161 3.564
Diluted EPS (after profit
share) 1.152 3.513
--------------- --------------------
Basic earnings per share
The earnings and weighted average number of ordinary shares used
in the calculation of basic earnings per share are as follows:
Three Months Three Months
Ended 31 March Ended 31
2017 (Unaudited) March 2016
US$'000 (Unaudited)
US$'000
Earnings used in the calculation of basic
EPS(1) 29,551 40,850
-------------------- ---------------
Earnings used in the calculation of basic
EPS(2) 13,411 40,850
-------------------- ---------------
(1) Before profit share
(2) After profit share
Three Months
Three Months Ended 31
Ended 31 March March 2016
2017 (Unaudited) (Unaudited)
No. No.
Weighted average number of ordinary shares
for the purpose of basic EPS 1,155,537,983 1,146,114,943
-------------------- ---------------
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS FOR THE THREE MONTHSED 31 MARCH 2017 (CONTINUED)
NOTE 11: EARNINGS PER SHARE (CONTINUED)
Diluted earnings per share
Three Months Three Months
Ended 31 March Ended 31
2017 (Unaudited) March 2016
US$'000 (Unaudited)
US$'000
The earnings and weighted average number
of ordinary shares used in the calculation
of diluted earnings per share are as follows:
Earnings used in the calculation of diluted
EPS(1) 29,551 40,850
-------------------- ---------------
Earnings used in the calculation of diluted
EPS(2) 13,411 40,850
-------------------- ---------------
(1) Before profit share
(2) After profit share
Three Months
Three Months Ended 31
Ended 31 March March 2016
2017 (Unaudited) (Unaudited)
No. No.
Weighted average number of ordinary shares
for the purpose of diluted EPS 1,164,616,977 1,162,764,445
-------------------- ---------------
Weighted average number of ordinary shares
for the purpose of basic EPS 1,155,537,983 1,146,114,943
Shares deemed to be issued for no consideration
in respect of employee options 9,078,994 16,649,502
------------- -------------
Weighted average number of ordinary shares
used in the calculation of diluted EPS 1,164,616,977 1,162,764,445
------------- -------------
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS FOR THE THREE MONTHSED 31 MARCH 2017 (CONTINUED)
NOTE 12: PROPERTY, PLANT AND EQUIPMENT
Three Months
Ended
31 March 2017 Office Land Plant Mining Mine Development Capital
(Unaudited) equipment and buildings and equipment equipment properties WIP Total
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Cost
Balance at 31
December 2016 6,052 2,019 584,113 249,491 365,902 75,775 1,283,352
Additions 323 - 2,799 4,405 3,965 414 11,906
Balance at 31
March 2017 6,375 2,019 586,912 253,896 369,867 76,189 1,295,258
----------- --------------- --------------- ----------- ----------------- -------- ---------
Accumulated
depreciation
Balance at 31
December 2016 (5,400) (412) (127,913) (129,610) (151,091) - (414,426)
Depreciation and
amortisation (148) (34) (7,572) (8,063) (8,124) - (23,941)
Balance at 31
March 2017 (5,548) (446) (135,485) (137,673) (159,215) - (438,367)
----------- --------------- --------------- ----------- ----------------- -------- ---------
Year Ended 31
December 2016
(Audited)
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 59,960
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)
-------- ------ ---------- ---------- ---------- ------- ---------
Net book value
As at 31 December
2016 652 1,607 456,200 119,882 214,811 75,775 868,926
-------- ------ ---------- ---------- ---------- ------- ---------
As at 31 March
2017 827 1,573 451,427 116,223 210,652 76,189 856,891
-------- ------ ---------- ---------- ---------- ------- ---------
NOTE 13: EXPLORATION AND EVALUATION ASSETS
Three Months Year Ended
Ended 31 December
31 March 2017 2016
(Unaudited) (Audited)
US$'000 US$'000
Balance at the beginning of the period 153,918 152,077
Expenditure for the period 8,070 49,487
Transfer to Property Plant & Equipment - (47,524)
Impairment of exploration and evaluation asset - (122)
-------------- ------------
Balance at the end of the period 161,988 153,918
-------------- ------------
The exploration and evaluation asset relates to the drilling,
geological exploration and sampling of potential ore reserves and
can be attributed to Egypt (US$33.8m) Burkina Faso (US$107.4m) and
Côte d'Ivoire (US$20.8m).
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS FOR THE THREE MONTHSED 31 MARCH 2017 (CONTINUED)
NOTE 14: AVAILABLE-FOR-SALE FINANCIAL ASSETS
The unrealised gains/(losses) on available-for-sale investments
recognised in other comprehensive income were as follows:
Three Months Three Months
Ended Ended
31 March 2017 31 March 2016
(Unaudited) (Unaudited)
US$'000 US$'000
Profit / (Loss) on fair value
of investment - other comprehensive
income (91) 21
-------------- --------------
The available for sale financial asset at period-end relates to
a 5.33% (2016: 11.34%) equity interest in Nyota Minerals Limited
("NYO"), a listed public company, as well as a 0.29% (2016: 1.6%)
equity interest in KEFI Minerals plc ("KEFI").
NOTE 15: SHARE BASED PAYMENTS
No share based payments were awarded or granted to Employees
during the first quarter.
NOTE 16: FINANCIAL INSTRUMENTS' FAIR VALUE DISCLOSURES
The Group has no financial instruments with fair values that are
determined by reference to significant unobservable inputs, i.e.
those that would be classified as level 3 in the fair value
hierarchy, nor have there been any transfers of assets or
liabilities between levels of the fair value hierarchy.
The Group's interest in Nyota Minerals Limited and KEFI Minerals
plc is classified as an available for sale financial asset. The
Group carries its interest in Nyota Minerals Limited and KEFI
Minerals plc at fair value, and measures its interest using Level 1
unadjusted quoted prices.
The directors consider that the carrying amounts of financial
assets and financial liabilities carried at amortised cost
approximate their fair value.
NOTE 17: NOTES TO THE STATEMENTS OF CASH FLOWS
(a) Reconciliation of cash and cash equivalents
For the purpose of the statements of cash flows, cash and cash
equivalents includes cash on hand and at bank and deposits.
Three Months
Ended Three Months
31 March Ended
2017 31 March 2016
(Unaudited) (Unaudited)
US$'000 US$'000
Cash and cash equivalents 265,984 234,461
------------ --------------
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS FOR THE THREE MONTHSED 31 MARCH 2017 (CONTINUED)
NOTE 17: NOTES TO THE STATEMENTS OF CASH FLOWS (CONTINUED)
(b) Reconciliation of profit for the period to cash flows from
operating activities
Three Months
Ended Three Months
31 March Ended
2017 31 March 2016
(Unaudited) (Unaudited)
US$'000 US$'000
Profit for the period 29,551 40,850
Add/(less) non-cash items:
Depreciation / amortisation of
property, plant and equipment 23,941 26,746
Increase in provisions 155 419
Foreign exchange rate (loss),
net (1,823) (809)
Impairment of exploration and
evaluation assets - 85
Impairment of available-for-sale
financial assets (91) 67
Share based payment (expense)/income 386 (339)
Changes in working capital during
the period :
Decrease/(Increase) in trade
and other receivables 10,660 (3,623)
Decrease in inventories 14,391 9,009
(Increase) in prepayments (1,610) (906)
(Increase) in trade and other
payables (17,219) (11,017)
Cash flows generated from operating
activities 58,341 60,482
------------ --------------
(c) Non-cash financing and investing activities
There have been no non-cash financing and investing activities
during the current or comparative period quarter.
NOTE 18: INVENTORIES
Three Months Year Ended
Ended 31 December
31 March 2016
2017
(Unaudited) (Audited)
US$'000 US$'000
Mining stockpiles and ore in circuit 27,531 34,217
Stores inventory 94,641 102,345
------------ ------------
122,172 136,562
------------ ------------
NOTE 19: SUBSEQUENT EVENTS
Subsequent to the period end a further distribution of profit
share of US$4.3m was made to EMRA. Further details are set out in
Note 5 of these financial statements.
Other than the above, there has not arisen in the interval
between the end of the financial period and the date of this report
any item, transaction or event of a material and unusual nature
likely in the opinion of the Directors of the Company to affect
significantly the operations of the company, the results of those
operations, or the state of affairs of the Company in subsequent
financial period.
CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS
This document contains "forward-looking information" which may
include, but is not limited to, statements with respect to the
future financial or operating performance of Centamin plc
("Centamin" or the "Company"), its subsidiaries (together the
"group"), affiliated companies, its projects, the future price of
gold, the estimation of mineral reserves and mineral resources, the
realization of mineral reserve and resource estimates, the timing
and amount of estimated future production, revenues, margins, costs
of production, estimates of initial capital, sustaining capital,
operating and exploration expenditures, costs and timing of the
development of new deposits, costs and timing of future
exploration, requirements for additional capital, foreign exchange
risks, governmental regulation of mining operations and exploration
operations, timing and receipt of approvals, consents and permits
under applicable mineral legislation, environmental risks, title
disputes or claims, limitations of insurance coverage and
regulatory matters. Often, but not always, forward-looking
statements can be identified by the use of words such as "plans",
"expects", "is expected", "budget", "scheduled", "estimates",
"forecasts", "intends", "targets", "aims", "anticipates" or
"believes" or variations (including negative variations) of such
words and phrases, or may be identified by statements to the effect
that certain actions, events or results "may", "could", "would",
"should", "might" or "will" be taken, occur or be achieved.
Forward-looking statements involve known and unknown risks,
uncertainties and a variety of material factors, many of which are
beyond the Company's control which may cause the actual results,
performance or achievements of Centamin, its subsidiaries and
affiliated companies to be materially different from any future
results, performance or achievements expressed or implied by the
forward-looking statements. Readers are cautioned that
forward-looking statements may not be appropriate for other
purposes than outlined in this document. Such factors include,
among others, future price of gold; general business, economic,
competitive, political and social uncertainties; the actual results
of current exploration and development activities; conclusions of
economic evaluations and studies; fluctuations in the value of the
US 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
filed on SEDAR. The reader is also cautioned that the foregoing
list of factors is not exhausted of the factors that may affect the
Company's forward-looking statements.
Although the Company has attempted to identify important factors
that could cause actual actions, events or results to differ
materially from those described in forward-looking statements,
there may be other factors that cause actions, events or results to
differ from those anticipated, estimated or intended.
Forward-looking statements contained herein are made as of the date
of this document and, except as required by applicable law, the
Company disclaims any obligation to update any forward-looking
statements, whether as a result of new information, future events
or results or otherwise. There can be no assurance that
forward-looking statements will prove to be accurate, as actual
results and future events could differ materially from those
anticipated in such statements. Accordingly, readers should not
place undue reliance on forward-looking statements.
QUALIFIED PERSON AND QUALITY CONTROL
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 NI 43-101.
LEI: 213800PDI9G7OUKLPV84
Company No: 109180-------------------------------------------End
of Announcement------------------------------------------
This information is provided by RNS
The company news service from the London Stock Exchange
END
QRFFMGGKVZGGNZM
(END) Dow Jones Newswires
May 03, 2017 02:00 ET (06:00 GMT)
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