TIDMCEY
RNS Number : 9927F
Centamin PLC
01 November 2018
For immediate release 1 November 2018
Centamin plc ("Centamin" or "the Company")
(LSE:CEY, TSX:CEE)
Centamin plc Results for the Third Quarter and Nine Months Ended
30 September 2018
Financial Highlights(1,2,3,4)
Q3 2018 compared with Q2 2018
-- Sukari Gold Mine ("Sukari") produced 117,720 ounces, a 27%
improvement on the second quarter ("Q2") QoQ, resulting from month
on month operational improvements in the open pit and
underground;
-- Gold sales of 106,798 ounces, a 9% increase QoQ. The
increased difference between gold produced and gold sold is due to
the timing of final month end gold pour and the gold shipment
schedule; The 20,163 unsold ounces were sold at the next shipment,
contributing to fourth quarter ("Q4") revenue;
-- Average realised gold price of US$1,206 per ounce, a decrease of approximately 7% QoQ;
-- Revenue of US$125.1 million, a 1% increase QoQ, due to the 9%
increase in ounces sold offset by 7% decrease in gold price;
Revenue of US$421.5 million generated YTD from gold sales of
328,433 ounces (Excl. Cleopatra ounces) at an average realised gold
price of US$1,281 per ounce;
-- EBITDA (1,2,4) of US$48.7 million, a 6% increase QoQ,
resulting in EBITDA of US$178.5 million YTD;
-- Profit before tax(4) of US$21.8 million, a 1% decrease QoQ, and US$102.2 million YTD;
-- Basic earnings per share after profit share(2,4) ("EPS") of
0.93 US cents, a 29% decrease QoQ, largely reflecting the Sukari
profit share mechanism as per the Concession Agreement with
Egyptian Minerals Resources Authority ("EMRA"), Centamin's state
partners, which from July 2018 moved from a ratio of 60:40 to 55:45
(Centamin:EMRA); YTD EPS of 4.80 US cents;
-- Operational cash flow of US$27.3 million, a 27% decrease QoQ,
due to the factors mentioned above and an 8% increase in operating
costs driven by increased volumes of material moved; Operational
cash flow YTD of US$150.0 million;
-- Royalties of US$3.9 million payable to Arab Republic of Egypt
("ARE") and profit share of US$10.6 million paid to EMRA, resulting
in a US$62.7 million YTD direct financial contribution to
Egypt;
-- Sustaining capital expenditure of US$21.8 million, a 24%
decrease QoQ; YTD capital expenditure of US$75.7 million;
-- Negative Group free cash flow(1) of US$1.0 million, largely
driven by timing of gold sales resulting in increased bullion
inventory and the phased Sukari profit share mechanism, referred to
above;
-- Group free cash flow generated YTD is US$35.1 million;
-- Cash and liquid assets(1,3) of US$292.2 million, at 30
September 2018, after payment of the interim dividend of US$28.9
million (2.5 US cents per share) on 28 September 2018; and
-- The Company remains debt-free and unhedged.
Quarter on quarter Year on year 9 months
comparative comparative ended
30 Sept.
2018
------------------------------------------- ------------------------------ ------------------- ----------
units Q3 2018 Q2 2018 % change Q3 2017 % change YTD 2018
------------------------------- ----------- --------- -------- --------- -------- --------- ----------
Gold produced oz 117,720 92,803 27 156,533 (25) 334,819
Gold sold oz 106,798 97,628 9 150,273 (29) 335,470
Cash cost of production
(1,2) US$'000 70,874 64,630 10 75,658 (6) 206,816
Unit cash cost of US$/oz
production produced 619 714 (13) 483 28 631
AISC (1,2) US$'000 92,056 102,211 (10) 109,952 (16) 301,206
US$/oz
Unit AISC (1,2) sold 889 1,073 (17) 732 21 917
Average realised
gold price US$/oz 1,206 1,298 (7) 1,283 (6) 1,281
------------------------------- ------------ --------- -------- --------- -------- --------- ----------
Revenue US$'000 125,127 123,929 1 193,092 (35) 421,518
EBITDA (1,2) US$'000 48,746 45,774 6 98,155 (50) 178,474
Profit before tax(4) US$'000 21,836 21,977 (1) 70,003 (69) 102,212
Basic EPS (2) (4) US cents 0.93 1.32 (29) 2.96 (69) 4.80
Sustaining capex
incl. Sukari exploration(4) US$'000 21,812 28,798 (24) 24,296 (10) 75,689
Operating cash flow(4) US$'000 27,303 37,247 (27) 104,737 (74) 149,963
Free cash flow (1)
(4) US$'000 (989) 1,594 (162) 45,625 (102) 35,085
------------------------------- ------------ --------- -------- --------- -------- --------- ----------
Operational Highlights(1,2)
Q3 2018 compared with Q2 2018
-- Group Lost Time Injury Frequency Rate ("LTIFR") of 0.13 per
200,000 man hours, with one lost-time injury in Q3, a reflection of
our ongoing focus and commitment on health and safety;
-- Sukari Gold Mine ("Sukari") produced 117,720 ounces, a 27%
improvement QoQ, resulting from month on month operational
improvements in the open pit and underground; September was a
significant improvement on July and August, producing 48,511
ounces, driven by good underground grades and reduction in stope
dilution; Underground operational improvements have taken longer
than planned to materialise and are expected to continue to flow
through in Q4;
-- Group production for the first nine months, year-to-date ("YTD") is 334,819 ounces;
-- Cash costs of production(1,2) of US$70.9 million, a 10%
increase QoQ, primarily driven by increased volumes of material
movement, in particular the combined mining stockpile build-up of
US$32.7 million, due to increased material mined from the open pit,
offsetting a collective stores inventory reduction of US$10.9
million;
-- Unit cash cost (1,2) reduced by 13% QoQ to US$619 per ounce
produced, driven by increased production; Unit cash costs YTD are
US$631 per ounce produced;
-- AISC (1,2) of US$92.1 million, a 10% decrease QoQ driven by
an increase in inventory (stockpiles and bullion in safe) and
scheduled reduction in sustaining capital expenditure over the
period. Maintenance and equipment rebuild programmes are on
schedule;
-- Unit All-in sustaining costs ("AISC" (1,2) ) reduced 17% QoQ
to US$889 per ounce sold; Unit AISC YTD are US$917 per ounce
sold;
-- Record open pit material movement of 19.9Mt, an 8% increase
QoQ, totalling 56.8Mt YTD, including record open pit ore mined of
6.6Mt, a 19% increase QoQ, totalling 18.1Mt YTD as mining of the
Stage 4 transitional zone was completed and progressed into the
higher-grade sulphide material, the predominant source of ore from
the open pit for the next three years.
-- Open pit average milled grade was 0.81g/t, a 37% increase
QoQ, and lifting the average milled grade YTD to 0.70g/t;
-- The run of mine ("ROM") ore stockpile increased from 6.45Mt
(at 0.44 g/t) at the end of Q2, to 10.13Mt (at 0.47g/t) at the end
of Q3, a 57% increase in tonnes QoQ, with 8.0Mt at 0.42g/t now
classified as longer term stockpiles;
-- Total underground ore mining of 327kt, a 13% increase QoQ, at
an average mined grade of 5.18 g/t, a 12% increase QoQ due to the
successful ongoing implementation of changes initiated in Q2, in
particular the reduction in tonnes impacted by dilution from
cascade stoping; YTD 928kt ore mined at an average mined grade of
5.52gt;
-- There has been no underground equipment utilisation or
availability disruptions; the backup long-haul drill rig ("LHDR")
is in transit and expected to arrive on site in Q4; and
-- Plant throughput of 3.1Mt, a 1% reduction QoQ, at a head
grade of 1.29g/t, a 31% increase QoQ.
Exploration Highlights(4)
The Group exploration programme has delivered strong results
across the portfolio in Q3.
-- A comprehensive drilling programme at the Sukari underground
continues to return excellent results;
-- These results, whilst outside the existing Mineral Resource,
are largely near to existing development and infrastructure thereby
expanding the structural architecture of the orebody and in turn,
supporting increased mine life potential. Drill highlights
include:
Ptah: 3m @ 428 g/t
43m @ 8.2 g/t, including 15m @ 12 g/t
22m @ 8.5 g/t
21m @ 8.1 g/t
3.9m @ 20.4 g/t
0.8m @ 106 g/t
10.7m @ 9.26g/t
4.2m @ 9.9 g/t, including 3.8m @ 10.5 g/t
Amun: 8m @ 180 g/t, including 1m @ 259 g/t
9m @ 51.9 g/t
9.2m @ 25.8 g/t, including 2.7m @ 20 g/t
0.7m @ 15.9 g/t, including 1.2m @ 563 g/t
4m @ 18.9 g/t, including 0.9m @ 287.2 g/t
Top of Horus: 0.7m @ 213 g/t
6m @ 26 g/t
0.8 m @ 25.8 g/t
-- Cleopatra exploration continued to return solid results, as
further drilling systematically tested the contacts and internal
geological structures during the quarter. Drill highlights
include:
1m @ 110.94g/t
2m @ 6.3g/t, including 0.7m @ 9.3g/t
1.4m @ 12.8 g/t
1m @ 11.5 g/t
0.9m @ 9.5 g/t
10m @ 3.9 g/t
4m @ 5.4 g/t
15m @ 3 g/t
10m @ 3.9 g/t
Total spend of US$2.8 million on Cleopatra exploration and
development has generated pre-production revenue of US$2.7
million;
-- West Africa exploration expenditure(4) was US$4.7 million,
progressing the Doropo Preliminary Economic Assessment ("PEA")
study, which is on schedule for H1 2019, and further drilling at
ABC Project targeting a maiden resource; and
Doropo Project, Côte d'Ivoire, resource extension and infill
drilling returned positive results. Drill highlights include:
Nopka deposit: 37m @ 6.4 g/t
40m @ 2.7 g/t
12m @ 6.5 g/t
10m @ 6.4 g/t
6m @ 9.4 g/t
Chegue South deposit:
15m @ 8.4 g/t
9m @ 9.7 g/t
11m @ 5.5 g/t
5m @ 10.7 g/t
Kekeda, Enioda, Hinda, Tchouahinin deposits:
13m @ 11.2 g/t
3m @ 30.5 g/t
4m @ 16.1 g/t
10m @ 5.8 g/t
7m @ 8.1 g/t
2m @ 19 g/t
ABC Project, Côte d'Ivoire, early stage reconnaissance
exploration has identified some very encouraging mineralised zones.
Drill highlights include:
Kona Project: 44m @ 2.5 g/t
100m @ 0.8 g/t
60m @ 1.2 g/t
36m @ 1.4 g/t
30m @ 1.5 g/t
83m @ 0.8 g/t
Q4 Update and 2018 Guidance
-- To date, in Q4, operational sections are performing in line
with the plan and the Company remains on track to produce 145,000
ounces;
-- Whilst the Company continues to realise further improvements
from the underground, production guidance for 2018 has been revised
to 480,000 ounces;
-- Notwithstanding the reduced annual production profile, the
cash cost of production guidance remains unchanged with unit cash
cost of production on track to deliver between US$625-US$640 per
ounce produced, resulting from a positive impact from increased
inventory;
-- The Company expects AISC per ounce sold to continue to trend
downwards in Q4 and expects to be at the top end of the guidance
range of US$875-US$890 per ounce sold, and benefitting from the
unsold ounces at the end of Q3 and therefore we expect gold sales
to exceed gold produced;
-- Reduced total 2018 capital expenditure to US$125 million; and
-- Updated Sukari Mineral Reserve and Resource estimates
scheduled to be published with year-end results.
_________________________________________________________________________________________________________
(1) Cash cost of production, AISC, EBITDA and cash, bullion on
hand, gold sales receivables, financial assets at fair value
through other comprehensive income and free cash flow are non-GAAP
measures and are defined at the end of the Financial Review
section.
(2) Basic EPS, EBITDA, cash cost of production and AISC reflect
a provision against prepayments to reflect the removal of fuel
subsidies which occurred in January 2012 (refer to note 8 of the
financial statements for further details).
(3) Cash and cash equivalents, bullion on hand, gold sales
receivables and financial assets at fair value through other
comprehensive income.
(4) The Group accounting policy for Greenfield exploration
expenditure, has been updated in line with market practice. This
has resulted in prior period results being restated. Accordingly,
YoY comparatives are on a consistent basis. For full details,
please refer to Note 1 of the Financial Statements.
Conference Call
A conference call will be hosted by the Company at 08.30 GMT
(UK) today to discuss the results with investors and analysts.
Please find below the required dial-in details. Where possible,
please dial in 10 minutes before. The Results Presentation can be
found on the Company website:
www.centamin.com/investors/presentations/2018 ahead of the
call.
Participant code: 72669053#
UK Toll: +44 (0)203 428 1542
UK Toll-Free: 0808 237 0040
A replay will be made available on the Company website from
12.00 GMT (UK) today for 30 days.
For further information, please visit the website
www.centamin.com or contact:
Centamin plc Buchanan
Andrew Pardey, Chief Executive Officer Bobby Morse
Alexandra Carse, Investor Relations Chris Judd
alexandra.carse@centamin.je centamin@buchanan.uk.com
CHIEF EXECUTIVE OFFICER'S REVIEW
These results demonstrate a material operational improvement on
Q2. We are extremely pleased with the operational performance from
the open pit and were pleased to see the underground returning
towards expected production levels. The open pit, following another
record quarter for material moved, is now through the transitional
ore, grades are improving and are expected to continue to improve
throughout Q4. The underground has shown month on month
improvements throughout Q3, with production contribution from
cascading stopes declining from 49% in Q2 to 34% in Q3 as stopes in
upper Amun levels were progressively completed. By September,
cascade stopes contributed less than 20% of production ore as
higher-grade stopes were commenced in the Amun zone along the
western contact. There are additional modifications underway as we
return operations to their steady state.
We are committed to maintaining a tight cost base, with costs
remaining firmly in the bottom half of the global gold producing
cost curve with unit cash costs of production of US$619/oz and
all-in sustaining costs of US$889/oz, down 13% and 17% QoQ,
respectively, despite sector wide supply chain pressures. This has
underpinned what is a profitable business, generating US$21.8
million for Q3 (US$102.2 million 2018 YTD) in what has been a
sustained weak gold market.
The build-up in stockpiles has helped to reduce costs which have
been further contained by improvements to fleet scheduling and
utilisation, resulting in less trucks per unit moved, ongoing
improvements in working capital, negotiation of improved commercial
terms on some key supply contracts and deferral of non-critical
sustaining capex items. Of note, fuel costs have been stable for
the quarter.
The Company maintains a strong financial position, with cash and
liquid assets of US$292.2 million as at 30 September 2018, after
paying out US$28.9m for the interim dividend. Group free cash flow
was negative US$1m for the quarter, after generating US$27.3m in
operating activities, investing US$17.7 million in sustaining and
exploration capex and distributing US$10.6 million to our local
partners, EMRA, in profit share. We expect Q4 to be highly cash
flow generative, including the benefit from the unsold ounces
produced in Q3, where we expect gold sales to exceed gold
produced.
The exploration programme has returned another quarter of strong
results. Sukari is a world class asset with untapped growth
potential as demonstrated by the continued excellent high-grade
underground drill results in Q3. The underground drill results
largely sit outside of the existing Sukari resource, yet are near
to current underground development. Some of the results are also
from less well understood extensions to the orebody, generating
ample drill targets for Q4 and beyond. We look forward to providing
our updated reserve and resource numbers with year-end results.
At Doropo in Côte d'Ivoire, the Preliminary Economic Assessment
is on track for H1 2019. Geotechnical and hydrological studies are
complete with the full metallurgical studies scheduled for
completion in Q4. Environmental and community studies are underway
and are scheduled for completion in H1 2019 along with the updated
resource estimation. Based on ongoing drilling and work done to
date, the Doropo Project is demonstrating increasing potential to
be Centamin's next development project.
During the quarter, we were delighted to welcome Dr Ibrahim
Fawzy to our Board as Independent Non-Executive Director and Raitt
Marshall as General Manager of Sukari Gold Mines. Raitt brings a
wealth of experience and joins us from Kinross Gold, where he was
the General Manager of Tasiast Gold Mine, Mauritania.
Centamin's corporate strategy remains focused on the delivery of
low cost operations at our world class Sukari Gold Mine; from this
solid foundation we are able to generate significant cash flow,
driving shareholder returns whilst simultaneously progressing
multiple stages of future potential growth within our exploration
and development pipeline.
OPERATING REVIEW
Quarter on quarter Year on year 9 months
comparative comparative ended
30 Sept.
2018
------------------------------------------- ----------------------------- ------------------- ----------
units Q3 2018 Q2 2018 % change Q3 2017 % change YTD 2018
------------------------------- ----------- -------- -------- --------- -------- --------- ----------
Open pit mining
Total material mined kt 19,891 18,415 8 18,602 7 56,802
Ore mined kt 6,562 5,532 19 4,825 36 18,141
g/t
Ore grade mined Au 0.64 0.51 25 0.76 (16) 0.55
g/t
Ore grade milled Au 0.81 0.59 37 1.11 (27) 0.70
Strip ratio waste/ore 2.03 2.33 (13) 2.86 (29) 2.13
-------- -------- --------- -------- ---------
Underground mining
- Amun/Ptah
Ore mined from stoping kt 199 180 11 189 5 539
Ore mined from development kt 128 109 17 113 13 389
g/t
Ore grade mined Au 5.18 4.62 12 7.97 (35) 5.52
------------------------------- ------------ -------- -------- --------- -------- --------- ----------
Processing
Ore processed kt 3,129 3,172 (1) 2,996 4 9,370
g/t
Head grade Au 1.29 0.99 30 1.82 (29) 1.20
Gold recovery % 88.7 87.3 2 88.3 0 88.6
Gold produced -
dump leach oz 3,894 3,028 29 1,692 130 9,077
Total gold production(1) oz 117,720 92,803 27 156,533 (25) 334,819
------------------------------- ------------ -------- -------- --------- -------- --------- ----------
Cash cost of production(2,3) US$'000 70,874 64,630 10 75,658 (6) 206,816
Unit Cash cost of
production(2,3) US$/oz 619 714 (13) 483 28 631
AISC(3) US$'000 92,056 102,211 (10) 109,952 (16) 301,206
Unit AISC(3) US$/oz 889 1,073 (17) 732 21 917
------------------------------- ------------ -------- -------- --------- -------- --------- ----------
Gold sold oz 106,798 97,628 9 150,273 (29) 335,470
Average realised
sales price US$/oz 1,206 1,298 (7) 1,283 (6) 1,281
------------------------------- ------------ -------- -------- --------- -------- --------- ----------
(1) Gold produced is gold poured and does not include gold-in-circuit at period end.
(2) Cash cost of production exclude royalties, exploration and
corporate administration expenditure. Cash costs of production
reflect a provision against prepayments to reflect the removal of
fuel subsidies which occurred in January 2012 (refer to note 8 of
the financial statements for further details).
(3) Cash cost of production and all-in sustaining costs are
non-GAAP financial performance measures with no standard meaning
under GAAP. Please see the financial review for details of non-GAAP
measures.
Health and safety
The Group Lost Time Injury Frequency Rate ("LTIFR") for Q3 was
0.13, with one lost-time injury over a total of 1,590,855 man hours
worked. The Company remains committed to further improving this
health and safety measure towards our zero--harm target with
details of the safety initiatives and employee welfare set out in
the CSR report, which can be found on our website
www.centamin.com.
Sukari Gold Mine, Egypt
Overview
Sukari had one lost-time injury over 1,441,307 man hours worked
in Q3, resulting in an LTIFR of 0.14. The site continues to focus
on leading indicators such as hazard reporting and regular routine
training.
Sukari produced 117,720 ounces in Q3, a 27% increase on the
previous quarter, reflecting operational improvements across all
sections of the mine. Significant month on month improvements
delivered total production for September of 48,511 ounces, more
than a 50% increase compared to July production. This was due to
mining of the high-grade stopes along the western contact in the
Amun zone and some small high-grade stopes in the Ptah
sediments.
Whilst many of the changes implemented in Q2 successfully
resulted in improved performance, focus firmly remains on realising
further improvements and ensuring consistency of performance.
Open pit mining of the transitional zone was completed in the
quarter, with mined grades improving month on month, slightly ahead
of expectations. Underground operations delivered the most improved
month on month performance, with September production of 23,601
ounces greater than 70% increase compared to July production.
Underground stope production continued to improve during the
quarter, although slower than expected, as cascade stopes in the
upper levels were completed and progressively replaced with higher
grade stopes with lower dilution. In addition to completing a
number of cascade stopes in July and August, there were some issues
opening up new stopes in August which were resolved by the end of
the month, enabling September to record a much-improved
performance.
Open pit
The open pit delivered a total material movement of 19.9Mt. A
total of 6.6Mt of ore was mined at 0.64g/t, of which 2.7Mt was
milled at an average head grade of 0.81 g/t; 189kt at 0.35 g/t was
delivered to the dump leach pad; the balance of approximately 3.7Mt
at 0.52g/t was delivered to the stockpiles. The run of mine ("ROM")
ore stockpile at the end of Q3 was 10.1Mt at 0.47g/t, with 8.0Mt at
0.42g/t now classified as longer term stockpiles;
The open pit achieved another record quarter for ore mined and
material moved. Additional ore tonnes were mined at medium grade
slightly ahead of expectations. More ore tonnes were delineated
from the grade control drilling, as we mined into the sulphide
material.
Open pit mined grade for Q3 was 0.64 g/t, a 25% improvement QoQ,
with September grade of 0.74 g/t, a 29% increase on July. In line
with the mine plan, ore mining reduced in September with 17% less
ore tonnes mined than in July.
Stage 4 mining is now into the higher-grade sulphide material,
which will be the primary source of ore for at least the next three
years. In Q4, the mine plan forecasts lower tonnage at higher
grades of ore mined, as mining in the sulphides progresses at
depth.
Underground
The underground delivered ore mined of 327kt, at an average
grade of 5.18 g/t for the quarter; of which 199kt at 6.16 g/t was
from stoping and 128kt at 3.65g/t was from development. The ratio
of stoping-to-development ore for the period was 60:40. There have
been no material equipment utilisation or availability issues and
the backup LHDR is in transit and expected on site in Q4.
During Q3, the total tonnes mined from cascade stoping reduced
from 49% to 34%, as mining commenced in the lower levels of the
Amun zone where conventional open stoping is the suitable mining
method for that section of the orebody.
Stope production in Amun amounted to 155kt at 6.71g/t, whilst
development was 47kt at 3.18g/t. In the Ptah zone, stope production
amounted to 44kt at 4.37g/t, whilst development was 81kt at
3.94g/t.
In Q4, approximately 15% of total stoping tonnage scheduled is
exposed to increased dilution due to cascading material. The
underground mine plan schedules for stoping to development in a
split of 60:40.
Total underground development was 1,759m, a 2% decrease QoQ.
Decline development contributed 88m, with the remainder ore drive
and cross-cut development in the Amun (593m) between 590 and 695
levels and Ptah (1,078m) on the P615 to P700 levels. Development in
Q4 is forecast at 2,000m, of which 450m is waste in the Ptah and
Horus (below Amun) declines.
Processing
The plant processed 3.1Mt of ore at a head grade of 1.29g/t, a
31% increase QoQ, in line with annual budget expectations.
Metallurgical recovery averaged 88.7%, a 1.6% improvement on the
prior quarter.
Cleopatra decline development in mineralised material produced
3,223 ounces. The dump leach operations produced 3,894 ounces.
Sukari Exploration
Exploration primarily focused within the mine site, to further
unlocking underground resource potential at Amun, Ptah, Cleopatra
and Top of Horus. A total of 9,286 diamond drill metres were
completed, targeting Amun near development reserve and resource
extensions, Cleopatra and Ptah resource drilling and Top of Horus
extensions. A further 10,000 metre drill programme is underway for
Q4.
Amun / Ptah
During Q3, exploration within the Amun zone was focussed on
resource extension along the southern strike of the mine. A total
of 1,783 metres were drilled from the Amun 650 level, targeting
reserve and resource extensions within the Osiris flat structure
and resource extensions to the south of the Top of Horus zone.
The Osiris zone is characterised by a major, low-angle thrust
rotating the major W-WNW gently dipping porphyry block. The main
high-grade veins occur on the upper and lower contacts of the
porphyry with high-angle steeper dipping secondary veins ramping
up, linking through to the western porphyry contact. The Top of
Horus, forms on the contacts and develops within the steeply
dipping Horus porphyry. The Top of Horus high grade veins are
typically high-angle dipping towards the Northwest. This structural
setting, where the low-angle Osiris thrust caps and possibly shifts
laterally the top of the sub-vertical Horus porphyry, is open up
and down plunge along strike.
Results confirmed the high-grade consistency along the southern
and western extension of the Osiris zone. This is proximal to the
current decline development drives and outside the existing reserve
and resource. Top of Horus zone is still open to the south with
higher grade located at the brecciated contact. More drilling is
required but this is an area of high potential for reserve and
resource growth.
OPERATING REVIEW
Table 1. Amun Underground Exploration Significant Drill
Intercepts - Q3 2018 Highlights
TENEMENT ID PROSPECT ID HOLE ID Level (mRL) Interval (m) Grade (Au g/t)
------------------- ------------- ------------------------ ------------ ------------- ---------------
SUKARI GOLD MINE AMUN UGRSD0843 641.7 4.0 18.9
------------------- ------------- ------------------------ ------------ ------------- ---------------
SUKARI GOLD MINE AMUN including 635.9 0.9 287.2
------------------- -------------------------- ---------- ------------ ------------- ---------------
SUKARI GOLD MINE AMUN UGRSD0844 648.85 8.0 180.1
------------------- ------------- ------------------------ ------------ ------------- ---------------
SUKARI GOLD MINE AMUN including 640.4 1.0 259.0
------------------- -------------------------- ---------- ------------ ------------- ---------------
SUKARI GOLD MINE AMUN UGRSD0845 640.37 9.0 51.9
------------------- ------------- ------------------------ ------------ ------------- ---------------
SUKARI GOLD MINE AMUN UGRSD0849 634.04 9.2 25.8
------------------- ------------- ------------------------ ------------ ------------- ---------------
SUKARI GOLD MINE AMUN including 629.45 2.7 20.0
------------------- -------------------------- ---------- ------------ ------------- ---------------
SUKARI GOLD MINE AMUN UGRSD0850 655.68 0.7 15.9
------------------- ------------- ------------------------ ------------ ------------- ---------------
SUKARI GOLD MINE AMUN 637.01 1.2 563.0
------------------- --------------------------------------- ------------ ------------- ---------------
SUKARI GOLD MINE AMUN UGRSD0843 539.24 0.7 213.2
------------------- ------------- ------------------------ ------------ ------------- ---------------
SUKARI GOLD MINE AMUN 520.81 2.0 5.4
------------------- --------------------------------------- ------------ ------------- ---------------
SUKARI GOLD MINE AMUN UGRSD0844 525.54 0.8 25.8
------------------- ------------- ------------------------ ------------ ------------- ---------------
SUKARI GOLD MINE AMUN 500.57 6.0 26.0
------------------- --------------------------------------- ------------ ------------- ---------------
SUKARI GOLD MINE AMUN 492.96 3.0 5.8
------------------- --------------------------------------- ------------ ------------- ---------------
During Q3, the Company completed more than 3,800m of drilling in
the Ptah zone with the focus on resource definition drilling and
infill drilling on the Ptah Keel as well as the ongoing exploration
drilling to support the current underground development in front of
and below P605/P615 at Western contact and below P660 at Eastern
contact. Drilling from Ptah 660 level, and later in September from
Ptah 735 level, where a second rig commenced drilling, targeted the
Ptah East Contact Stockworks Zone, Ptah West Contact Stockworks
Zone, Ptah Western Contact High-grade Quartz-Veins and the Ptah
Keel.
Results demonstrated grade continuity along the North-South
strike of the ore zones on both the Eastern and Western Contacts.
The quartz lodes on the Western contact remain a very prospective
high-grade zone where the interaction between Hapi structure with
western contact shear. Porphyry Keel drill results confirm resource
extension potential at depth towards the north.
Table 2. Ptah Underground Exploration Significant Drill
Intercepts - Q3 2018 Highlights
TENEMENT ID PROSPECT ID HOLE ID Level (mRL) Interval (m) Grade (Au g/t)
------------------- ------------ ---------------------- ----------- ------------ --------------
SUKARI GOLD MINE PTAH UGRSD0951 587.57 2.0 6.8
------------------- ------------ ---------------------- ----------- ------------ --------------
SUKARI GOLD MINE PTAH UGRSD0952 602.6 3.6 8.7
------------------- ------------ ---------------------- ----------- ------------ --------------
SUKARI GOLD MINE PTAH including 1.0 17.2
------------------- ------------------------ --------- ----------- ------------ --------------
SUKARI GOLD MINE PTAH UGRSD0955 592.37 0.8 106.0
------------------- ------------ ---------------------- ----------- ------------ --------------
SUKARI GOLD MINE PTAH UGRSD0956 600.29 3.0 428.0
------------------- ------------ ---------------------- ----------- ------------ --------------
SUKARI GOLD MINE PTAH UGRSD0957 590.81 2.4 12.0
------------------- ------------ ---------------------- ----------- ------------ --------------
SUKARI GOLD MINE PTAH UGRSD0958 587.23 0.6 27.0
------------------- ------------ ---------------------- ----------- ------------ --------------
SUKARI GOLD MINE PTAH UGRSD0929 447.1 2.0 5.1
------------------- ------------ ---------------------- ----------- ------------ --------------
SUKARI GOLD MINE PTAH 429.5 2.3 9.8
------------------- ------------------------------------ ----------- ------------ --------------
SUKARI GOLD MINE PTAH 416.4 43.0 8.2
------------------- ------------------------------------ ----------- ------------ --------------
SUKARI GOLD MINE PTAH including 400.6 15.0 12.0
------------------- ------------------------ --------- ----------- ------------ --------------
SUKARI GOLD MINE PTAH 354.8 1.8 5.2
------------------- ------------------------------------ ----------- ------------ --------------
SUKARI GOLD MINE PTAH UGRSD0930 468.9 23.0 4.2
------------------- ------------ ---------------------- ----------- ------------ --------------
SUKARI GOLD MINE PTAH 441.1 1.0 5.3
------------------- ------------------------------------ ----------- ------------ --------------
SUKARI GOLD MINE PTAH 434.9 1.0 5.9
------------------- ------------------------------------ ----------- ------------ --------------
SUKARI GOLD MINE PTAH UGRSD0929 586.7 1.0 18.8
------------------- ------------ ---------------------- ----------- ------------ --------------
SUKARI GOLD MINE PTAH UGRSD0935 625 2.0 9.2
------------------- ------------ ---------------------- ----------- ------------ --------------
SUKARI GOLD MINE PTAH 617.3 0.6 34.9
------------------- ------------------------------------ ----------- ------------ --------------
SUKARI GOLD MINE PTAH 562.7 1.5 9.4
------------------- ------------------------------------ ----------- ------------ --------------
SUKARI GOLD MINE PTAH 557.7 3.3 6.1
------------------- ------------------------------------ ----------- ------------ --------------
SUKARI GOLD MINE PTAH UGRSD0926 590.4 2.0 26.1
------------------- ------------ ---------------------- ----------- ------------ --------------
SUKARI GOLD MINE PTAH PUD7800 665.08 10.7 9.3
------------------- ------------ ---------------------- ----------- ------------ --------------
SUKARI GOLD MINE PTAH PUD7801 671.49 13.0 6.5
------------------- ------------ ---------------------- ----------- ------------ --------------
SUKARI GOLD MINE PTAH UGRSD0951 610.14 2.0 13.9
------------------- ------------ ---------------------- ----------- ------------ --------------
SUKARI GOLD MINE PTAH UGRSD0956 616.06 2.0 4.9
------------------- ------------ ---------------------- ----------- ------------ --------------
SUKARI GOLD MINE PTAH PUD7772 673.56 7.0 9.6
------------------- ------------ ---------------------- ----------- ------------ --------------
SUKARI GOLD MINE PTAH PUD7773 655.99 42.0 6.1
------------------- ------------ ---------------------- ----------- ------------ --------------
SUKARI GOLD MINE PTAH PUD7774 660.22 23.5 5.1
------------------- ------------ ---------------------- ----------- ------------ --------------
SUKARI GOLD MINE PTAH PUD7775 661 3.9 20.4
------------------- ------------ ---------------------- ----------- ------------ --------------
SUKARI GOLD MINE PTAH PUD7791 652.7 21.0 8.1
------------------- ------------ ---------------------- ----------- ------------ --------------
SUKARI GOLD MINE PTAH PUD7792 639 22.0 8.5
------------------- ------------ ---------------------- ----------- ------------ --------------
SUKARI GOLD MINE PTAH PUD7795 659.4 4.2 9.9
------------------- ------------ ---------------------- ----------- ------------ --------------
SUKARI GOLD MINE PTAH 638.7 3.8 10.5
------------------- ------------------------------------ ----------- ------------ --------------
The drilling from the Ptah P660 and P735 levels is currently
targeting the Eastern and Western contacts in Ptah to convert and
extend our reserves to the North and South. The Porphyry-keel
remains a potential target for resource growth with further infill
drilling planned for the North extension. Amun exploration remains
focussed on resource growth and testing extensions along the
southern strike of the mine. In Q4, drilling will focus along the
structural contacts at Osiris and top of Horus zones, with the aim
to unlock the underground resource potential to South.
EXPLORATION REVIEW
Cleopatra Exploration Decline
The Cleopatra Zone consists of a set of three stacked, northwest
dipping mineralised zones in the northern section of Sukari, named
from surface as Cleopatra, Antony and Julius. Exploration continues
to focus on the development and exploration of the Upper Cleopatra
Zone to provide more detailed geological information and establish
drill platforms targeting the Lower Cleopatra, Antony, Julius, Ptah
Keel and Ptah Deeps ore zones.
During Q3, Cleopatra exploration completed 865m of development
extracting 70,897 tonnes of mineralised development ore at an
average grade of 1.6 g/t, producing 3,223 ounces. Cleopatra
exploration drilling continues to test the contact zones and at
depth.
One LM90 rig operated full-time drilling Cleopatra, completing
3,683 metres from the C 1150RL S2 platform. The principle focus of
the Q3 program was targeting the high-grade mineralisation on the
eastern contact ahead of the Antony Decline along the southern
strike and the high-grade extension of the northern end of the Keel
spine expressed there as the Ptah Deeps.
Results received from the Antony infill drilling show
medium-grade near the eastern contact along the North-South strike
of the zone. Other intercepts show both Cleopatra zone and Antony
zone extensions are open down dip to the west.
Table 3. Cleopatra Exploration Decline - Underground Exploration
Significant Drill Intercepts - Q3 2018 Highlights
TENEMENT ID PROSPECT ID HOLE ID Level (mRL) Interval (m) Grade (Au g/t)
------------------- ------------- --------- ------------ ------------- ---------------
SUKARI GOLD MINE CLEO CRSD112 908.07 1.0 110.9
------------------- ------------- --------- ------------ ------------- ---------------
SUKARI GOLD MINE CLEO CRSD108 982.84 15.1 3.0
------------------- ------------- --------- ------------ ------------- ---------------
SUKARI GOLD MINE CLEO CRSD124 1010.7 10.0 3.9
------------------- ------------- --------- ------------ ------------- ---------------
SUKARI GOLD MINE CLEO 1004.6 4.0 5.4
------------------- ------------------------ ------------ ------------- ---------------
SUKARI GOLD MINE CLEO CRSD095 1008.21 3.7 5.1
------------------- ------------- --------- ------------ ------------- ---------------
SUKARI GOLD MINE CLEO CRSD115 597.2 1.4 12.8
------------------- ------------- --------- ------------ ------------- ---------------
SUKARI GOLD MINE CLEO 943.55 3.2 5.5
------------------- ------------------------ ------------ ------------- ---------------
SUKARI GOLD MINE CLEO CRSD113 927.62 3.0 4.8
------------------- ------------- --------- ------------ ------------- ---------------
SUKARI GOLD MINE CLEO CRSD120 849.64 3.4 4.0
------------------- ------------- --------- ------------ ------------- ---------------
SUKARI GOLD MINE CLEO CRSD102 1064.65 2.0 6.3
------------------- ------------- --------- ------------ ------------- ---------------
SUKARI GOLD MINE CLEO 936.49 3.0 4.0
------------------- ------------------------ ------------ ------------- ---------------
SUKARI GOLD MINE CLEO CRSD114 650.23 1.0 11.5
------------------- ------------- --------- ------------ ------------- ---------------
SUKARI GOLD MINE CLEO 961.94 2.0 5.5
------------------- ------------------------ ------------ ------------- ---------------
SUKARI GOLD MINE CLEO CRSD121 527.2 1.3 7.5
------------------- ------------- --------- ------------ ------------- ---------------
SUKARI GOLD MINE CLEO 910.47 2.3 3.8
------------------- ------------------------ ------------ ------------- ---------------
SUKARI GOLD MINE CLEO CRSD114 1059.17 0.9 9.5
------------------- ------------- --------- ------------ ------------- ---------------
SUKARI GOLD MINE CLEO 553.5 2.0 4.2
------------------- ------------------------ ------------ ------------- ---------------
SUKARI GOLD MINE CLEO 1034.48 0.7 9.3
------------------- ------------------------ ------------ ------------- ---------------
SUKARI GOLD MINE CLEO CRSD114 932.76 2.0 3.2
------------------- ------------- --------- ------------ ------------- ---------------
SUKARI GOLD MINE CLEO CRSD107 968.32 1.3 4.3
------------------- ------------- --------- ------------ ------------- ---------------
SUKARI GOLD MINE CLEO 544.32 1.0 4.7
------------------- ------------------------ ------------ ------------- ---------------
SUKARI GOLD MINE CLEO 931.72 1.4 3.3
------------------- ------------------------ ------------ ------------- ---------------
SUKARI GOLD MINE CLEO 558.28 1.0 4.0
------------------- ------------------------ ------------ ------------- ---------------
SUKARI GOLD MINE CLEO 925.98 1.0 3.9
------------------- ------------------------ ------------ ------------- ---------------
Sukari Tenement Area
Sukari is a gold deposit hosted on a major Arabian Nubian Shield
terrane boundary. The Sukari Resources are currently drill defined
around the 2.7km long by 0.6km deep Sukari porphyry that sits
axially within a much wider 17km long by 3.7km ophiolite shear
zone. There are 7 surface prospects hosted along this trend within
the license. All surface prospects are within trucking distance to
the existing processing plant and infrastructure,
In Q2 initial work commenced to construct a robust district 3D
geo-seismic architecture of the license area to depths greater than
1.5km, targeting potential new Sukari-style porphyries.
During Q3, detailed preliminary work was completed to calibrate
the technology with the ground conditions and Sukari core. This is
to be followed by further down the hole ("DTH") geophysics in Q4
and to then begin 2D seismic sections in Q1 2019.
Cote d'Ivoire
The Company has eleven exploration permits, covering circa
3,472km(2) land holding and a further ten permits under
application. During the quarter, the exploration team achieved zero
lost-time injuries over a total of 135,090 man-hours worked during
Q3. The overall exploration work focussed on resource growth as
well as on extending the surface detailed geochemistry coverage at
both the Doropo Project and the ABC Project.
Doropo Project
At Doropo drilling focused on the end of year resource upgrade
targeting the shallow mineralisation along the Enioda, Tchouahinin,
Hinda and Chegue structures and elevating the classification in the
core of the two main reserve blocks at Nokpa and Souwa to support
the forthcoming PEA study in H1 2019.
A total of 15,970m of RC and 6,543m of auger drilling was
completed. The RC drilling was conducted on the Kalamon and Danoa
permits and the auger drilling on the Tehini 1 and Tehini 2
permits.
Following encouraging preliminary test work on the oxide
material, full laboratory metallurgical results will be received in
Q4.
The Nokpa deposit is one of the key deposits in the 2017
resource update. The drilling completed in Q3 focused on resource
expansion. Some of the intercepts include 10m at 6.4 g/t (from 26m
downhole depth), 12m at 6.5 g/t (from 69m downhole depth), 40m at
2.7 g/t (from 71m downhole depth) and 37m at 6.4 g/t (from 70m
downhole depth).
The Chegue South resource was extended southward during the
quarter, with the discovery of several new mineralised shoots of
high grade hidden under a thin veneer of barren, transported
alluvium, that masked the original surface signature. The
mineralisation extends from surface and includes intercepts up to
15m at 8.4 g/t (from 12m downhole depth) and 9m at 9.7 g/t (from
13m downhole depth).
The 2017 Chegue Main resource was composed of two main
mineralised shoots plunging off a 2 km section of a regional 060(o)
trending shear zone. In 2018, a further three new mineralised
shoots have been identified between the existing mineralised shoots
which the shoots into one continuous, coherent deposit. The shoots
are stacked parallel, plunging shallowly towards 330(o) WNW and
extend from surface. Representative intercepts include 15m at 1.9
g/t (from 50m downhole depth), 7m at 2.2 g/t (from 43m downhole
depth) and 11m at 5.5 g/t (from 46m downhole depth).
The Enioda resource continues to grow and consolidate with a
number of significant mineralised intercepts being reported in Q3,
including 13m at 3.6 g/t (from 70m downhole depth),11m at 3.3 g/t
(from 17m downhole depth) and 4m at 16.1g/t (from 21m downhole
depth).
Q4 drilling will focus on completing the resource upgrade on
Souwa and Nokpa. All the results will be submitted for the 2018
resource estimation and optimisation studies.
Below is a table of significant Doropo drill intercepts reported
during the quarter.
Table 4. Doropo Project - Exploration Significant Drill
Intercepts (0.5 g/t cut off) - Q3 2018 Highlights
TENEMENT ID PROSPECT ID HOLE ID From To Interval (m) Grade (Au g/t)
------------- -------------- ---------- ----- ---- ------------- ---------------
DANOA Enioda DPRC2156 21 25 4 16.1
------------- -------------- ---------- ----- ---- ------------- ---------------
DANOA Enioda DPRC2159 17 28 11 3.3
------------- -------------- ---------- ----- ---- ------------- ---------------
DANOA Enioda DPRC2160 28 34 6 3.8
------------- -------------- ---------- ----- ---- ------------- ---------------
DANOA Enioda DPRC2162 77 83 6 1.7
------------- -------------- ---------- ----- ---- ------------- ---------------
DANOA Enioda DPRC2171 19 30 11 1.4
------------- -------------- ---------- ----- ---- ------------- ---------------
DANOA Enioda DPRC2172 45 57 12 1.5
------------- -------------- ---------- ----- ---- ------------- ---------------
DANOA Enioda DPRC2173 74 80 6 2.2
------------- -------------- ---------- ----- ---- ------------- ---------------
DANOA Enioda DPRC2174 24 32 8 1.4
------------- -------------- ---------- ----- ---- ------------- ---------------
DANOA Enioda DPRC2175 7 16 9 2.8
------------- -------------- ---------- ----- ---- ------------- ---------------
DANOA Enioda DPRC2177 70 83 13 3.6
------------- -------------- ---------- ----- ---- ------------- ---------------
DANOA Enioda DPRC2178 104 110 6 7.0
------------- -------------- ---------- ----- ---- ------------- ---------------
DANOA Enioda DPRC2183 67 76 9 1.2
------------- -------------- ---------- ----- ---- ------------- ---------------
KALAMON Chegue Main DPRC2062 50 65 15 1.9
------------- -------------- ---------- ----- ---- ------------- ---------------
KALAMON Chegue Main DPRC2066 23 36 13 1.4
------------- -------------- ---------- ----- ---- ------------- ---------------
KALAMON Chegue Main DPRC2068 107 123 16 1.3
------------- -------------- ---------- ----- ---- ------------- ---------------
KALAMON Chegue Main DPRC2069 93 97 4 6.3
------------- -------------- ---------- ----- ---- ------------- ---------------
KALAMON Chegue Main DPRC2120 43 50 7 2.2
------------- -------------- ---------- ----- ---- ------------- ---------------
KALAMON Chegue Main DPRC2120 93 95 2 7.1
------------- -------------- ---------- ----- ---- ------------- ---------------
KALAMON Chegue Main DPRC2125 123 134 11 1.5
------------- -------------- ---------- ----- ---- ------------- ---------------
KALAMON Chegue Main DPRC2131 84 93 9 4.3
------------- -------------- ---------- ----- ---- ------------- ---------------
KALAMON Chegue Main DPRC2135 82 89 7 2.4
------------- -------------- ---------- ----- ---- ------------- ---------------
KALAMON Chegue Main DPRC2136 9 17 8 1.8
------------- -------------- ---------- ----- ---- ------------- ---------------
KALAMON Chegue Main DPRC2138 72 89 17 1.1
------------- -------------- ---------- ----- ---- ------------- ---------------
KALAMON Chegue Main DPRC2139 46 57 11 5.5
------------- -------------- ---------- ----- ---- ------------- ---------------
KALAMON Chegue Main DPRC2140 16 22 6 2.0
------------- -------------- ---------- ----- ---- ------------- ---------------
KALAMON Chegue Main DPRC2147 85 93 8 2.3
------------- -------------- ---------- ----- ---- ------------- ---------------
KALAMON Chegue South DPRC2103 12 27 15 8.4
------------- -------------- ---------- ----- ---- ------------- ---------------
KALAMON Chegue South DPRC2105 13 22 9 9.7
------------- -------------- ---------- ----- ---- ------------- ---------------
KALAMON Chegue South DPRC2106 45 52 7 2.5
------------- -------------- ---------- ----- ---- ------------- ---------------
KALAMON Chegue South DPRC2106 57 62 5 2.4
------------- -------------- ---------- ----- ---- ------------- ---------------
KALAMON Chegue South DPRC2110 21 30 9 1.7
------------- -------------- ---------- ----- ---- ------------- ---------------
KALAMON Chegue South DPRC2112 112 115 3 3.5
------------- -------------- ---------- ----- ---- ------------- ---------------
KALAMON Chegue South DPRC2116 66 71 5 10.7
------------- -------------- ---------- ----- ---- ------------- ---------------
KALAMON Hinda DPRC2204 71 73 2 6.5
------------- -------------- ---------- ----- ---- ------------- ---------------
KALAMON Hinda DPRC2208 37 41 4 2.6
------------- -------------- ---------- ----- ---- ------------- ---------------
KALAMON Hinda DPRC2209 58 64 6 1.7
------------- -------------- ---------- ----- ---- ------------- ---------------
KALAMON Hinda DPRC2213 13 23 10 5.8
------------- -------------- ---------- ----- ---- ------------- ---------------
KALAMON Kekeda DPDD1438 59.6 74 14 1.0
------------- -------------- ---------- ----- ---- ------------- ---------------
KALAMON Kekeda DPDD1439 44.6 58 13 11.2
------------- -------------- ---------- ----- ---- ------------- ---------------
KALAMON Kekeda DPRC2272 17 26 9 4.4
------------- -------------- ---------- ----- ---- ------------- ---------------
KALAMON Kekeda DPRC2275 107 110 3 7.0
------------- -------------- ---------- ----- ---- ------------- ---------------
KALAMON Nokpa DPRC2241 26 36 10 6.4
------------- -------------- ---------- ----- ---- ------------- ---------------
KALAMON Nokpa DPRC2242 24 26 2 11.4
------------- -------------- ---------- ----- ---- ------------- ---------------
KALAMON Nokpa DPRC2242 69 81 12 6.5
------------- -------------- ---------- ----- ---- ------------- ---------------
KALAMON Nokpa DPRC2243 9 16 7 6.7
------------- -------------- ---------- ----- ---- ------------- ---------------
KALAMON Nokpa DPRC2245 51 55 4 3.8
------------- -------------- ---------- ----- ---- ------------- ---------------
KALAMON Nokpa DPRC2246 67 75 8 2.1
------------- -------------- ---------- ----- ---- ------------- ---------------
KALAMON Nokpa DPRC2248 114 120 6 9.4
------------- -------------- ---------- ----- ---- ------------- ---------------
KALAMON Nokpa DPRC2252 20 23 3 3.9
------------- -------------- ---------- ----- ---- ------------- ---------------
KALAMON Nokpa DPRC2252 76 81 5 2.0
------------- -------------- ---------- ----- ---- ------------- ---------------
KALAMON Nokpa DPRC2254 110 114 4 8.8
------------- -------------- ---------- ----- ---- ------------- ---------------
KALAMON Nokpa DPRC2255 2 11 9 1.3
------------- -------------- ---------- ----- ---- ------------- ---------------
KALAMON Nokpa DPRC2258 104 106 2 19.0
------------- -------------- ---------- ----- ---- ------------- ---------------
KALAMON Nokpa DPRC2260 15 19 4 3.5
------------- -------------- ---------- ----- ---- ------------- ---------------
KALAMON Nokpa DPRC2261 12 18 6 3.5
------------- -------------- ---------- ----- ---- ------------- ---------------
KALAMON Nokpa DPRC2262 46 67 21 0.9
------------- -------------- ---------- ----- ---- ------------- ---------------
KALAMON Nokpa DPRC2262 79 89 10 1.7
------------- -------------- ---------- ----- ---- ------------- ---------------
KALAMON Nokpa DPRC2263 71 111 40 2.7
------------- -------------- ---------- ----- ---- ------------- ---------------
KALAMON Nokpa DPRC2265 70 107 37 6.4
------------- -------------- ---------- ----- ---- ------------- ---------------
KALAMON Nokpa DPRC2266 86 92 6 2.1
------------- -------------- ---------- ----- ---- ------------- ---------------
KALAMON Nokpa DPRC2266 114 120 6 7.4
------------- -------------- ---------- ----- ---- ------------- ---------------
KALAMON Souwa DPRC2078 95 105 10 1.2
------------- -------------- ---------- ----- ---- ------------- ---------------
KALAMON Souwa DPRC2084 15 21 6 4.2
------------- -------------- ---------- ----- ---- ------------- ---------------
KALAMON Souwa DPRC2086 27 46 19 1.6
------------- -------------- ---------- ----- ---- ------------- ---------------
KALAMON Souwa North DPRC2089 8 11 3 30.5
------------- -------------- ---------- ----- ---- ------------- ---------------
KALAMON Souwa North DPRC2090 81 86 5 2.2
------------- -------------- ---------- ----- ---- ------------- ---------------
KALAMON Souwa North DPRC2097 17 22 5 2.4
------------- -------------- ---------- ----- ---- ------------- ---------------
KALAMON Tchouahinin DPRC2216 41 48 7 8.1
------------- -------------- ---------- ----- ---- ------------- ---------------
At the regional scale, the auger program completed on the Tehini
1 and Tehini 2 permits has confirmed the in situ mineralised
structure, along approximately 8km of strike. This anomaly is well
correlated with a strong magnetic feature and is scheduled drill
tested by RC in Q4.
The detailed surface geochemical program will continue in Q4
into the Kalamon and Danoa permits.
PEA Update
The PEA remains on schedule for completion by H1 2019.The
geotechnical and hydrogeology studies were completed in Q3 and did
not raise any areas of concern. The metallurgical study is awaiting
the final reporting of the 10kg Bottle Rolls and Column Leach test
work on the upper and lower oxide material from the deposits.
Centamin is working with Digby Wells Environmental ("Digby Wells"),
to assist with the PEA study and assist in the execution of wider
social initiatives throughout the Group.
ABC "Archaean-Birimian Contact" Project
We have defined two priority prospects on the Lolosso corridor
for resource drilling the "Central Zone" and the "Southern Zone".
Both outcrop at surface. Work has subsequently infilled the rest of
the structure with soils in the residual regolith and auger
drilling in the areas of transported alluvium. The Southern Zone
hosts a 2km by 100m wide mineralised, west dipping shear package,
which has produced the majority of the better intercepts reported
in 2018 from the ABC Project. The Central Zone is currently drill
defined over a similar strike length of 2km but is nominally wider
at an average width of 200m and is generally lower grade. The
mineralisation in both areas is open and the strike length between
the two prospects is geochemically anomalous but currently
undrilled.
A total of 4,589m of RC and 2,177m of diamond drilling was
completed for the quarter.
The drilling completed until the end of Q3 covers the majority
of the Southern zone with 100m spaced sections (that will be
infilled in Q4). The mineralisation is hosted by psammitic facies,
sandwiched between calc-silicates to the West in the hanging wall
and a progressively gneissified foot wall to the east. Some of the
representative intercepts include 30m at 1.5 g/t, 100m at 0.8 g/t
and 44m at 2.5 g/t.
The Central zone is currently drill tested on 200m and 400m
spaced drill sections. The lithological profile is similar to the
Southern zone with calc-silicate hanging wall and gneiss footwall
with a further interbedded quartzitic facies that also hosts
mineralisation.
One sample of the Fresh ABC ore was composited from drill core
from the Southern Zone and sent to AMMTEC for metallurgical
characterisation in Q2. Results received in Q3 indicate the fresh
material is non-refractory with the total gold extraction,
following a simple gravity-direct feed CIL process, of 88.9%. The
QEMSCAN report indicates the gold deportment is primarily free and
structurally hosted within micro-fractures in the arsenopyrite and
pyrite. No significant gold is locked in the sulphides or
quartz.
Below is a table of significant ABC drill intercepts reported
during the quarter.
Table 5. ABC Project - Exploration Significant Drill Intercepts
(0.3 g/t cut off) - Q3 2018 Highlights
TENEMENT ID PROSPECT ID HOLE ID From To Interval (m) Grade (Au g/t)
------------- ------------- ---------- ------- ------ ------------- ---------------
KONA Lolosso KNDD0006 155 164 9 1.4
------------- ------------- ---------- ------- ------ ------------- ---------------
KONA Lolosso KNDD0006 171 177 6 2.4
------------- ------------- ---------- ------- ------ ------------- ---------------
KONA Lolosso KNDD0007 30 66 36 1.4
------------- ------------- ---------- ------- ------ ------------- ---------------
KONA Lolosso KNDD0007 84 104 20 0.7
------------- ------------- ---------- ------- ------ ------------- ---------------
KONA Lolosso KNDD0007 124 163 39 0.6
------------- ------------- ---------- ------- ------ ------------- ---------------
KONA Lolosso KNDD0007 168 184 16 0.9
------------- ------------- ---------- ------- ------ ------------- ---------------
KONA Lolosso KNDD0009 102 149 47 0.6
------------- ------------- ---------- ------- ------ ------------- ---------------
KONA Lolosso KNDD0009 178 195 17 1.3
------------- ------------- ---------- ------- ------ ------------- ---------------
KONA Lolosso KNDD0013 172 180.5 9 2.7
------------- ------------- ---------- ------- ------ ------------- ---------------
KONA Lolosso KNDD0013 182.75 209 26 1.5
------------- ------------- ---------- ------- ------ ------------- ---------------
KONA Lolosso KNRC0073 1 26 25 1.5
------------- ------------- ---------- ------- ------ ------------- ---------------
KONA Lolosso KNRC0074 1 30 29 1.5
------------- ------------- ---------- ------- ------ ------------- ---------------
KONA Lolosso KNRC0076 62 87 25 1.1
------------- ------------- ---------- ------- ------ ------------- ---------------
KONA Lolosso KNRC0077 122 153 31 1.4
------------- ------------- ---------- ------- ------ ------------- ---------------
KONA Lolosso KNRC0078 128 158 30 1.5
------------- ------------- ---------- ------- ------ ------------- ---------------
KONA Lolosso KNRC0079 16 76 60 1.2
------------- ------------- ---------- ------- ------ ------------- ---------------
KONA Lolosso KNRC0081 5 88 83 0.8
------------- ------------- ---------- ------- ------ ------------- ---------------
KONA Lolosso KNRC0082 20 120 100 0.8
------------- ------------- ---------- ------- ------ ------------- ---------------
KONA Lolosso KNRC0083 14 38 24 1.2
------------- ------------- ---------- ------- ------ ------------- ---------------
KONA Lolosso KNRC0084 41 66 25 0.8
------------- ------------- ---------- ------- ------ ------------- ---------------
KONA Lolosso KNRC0084 69 90 21 1.2
------------- ------------- ---------- ------- ------ ------------- ---------------
KONA Lolosso KNRC0089 88 126 38 1.0
------------- ------------- ---------- ------- ------ ------------- ---------------
KONA Lolosso KNRC0091 39 83 44 2.5
------------- ------------- ---------- ------- ------ ------------- ---------------
KONA Lolosso KNRC0092 23 50 27 1.1
------------- ------------- ---------- ------- ------ ------------- ---------------
KONA Lolosso KNRC0093 103 127 24 1.2
------------- ------------- ---------- ------- ------ ------------- ---------------
After the first pass auger reconnaissance drilling completed in
Q2, we commenced to infill the auger starting in the south in Q3.
The auger drilling was stopped in August due to the wet season. The
auger program will resume at the end of Q4. Results received
highlight the strike continuity between the prospects and beyond.
The auger drilling and soils sampling has defined a coherent
anomalous corridor with targets located on each of the gneissic
contacts and on, what are interpreted from the coincident GAIP to
be, an anastomosing array of intervening facies-shear contacts. A
significant number of new targets are expected to be developed with
the on-going surface geochemical program.
Drilling will continue in Q4 with a focus on delivering a maiden
ABC resource by end of year.
Burkina Faso
The Group's Batie West project in south-west Burkina Faso
comprises one exploitation (mining) licence and nine exploration
permits (including one permit for which notification of grant has
been received) which cover a total of approximately 1,100km(2) .
The 64km(2) Konkera exploitation permit holds a NI43-101 compliant
Indicated resource of 1.9Moz at a grade of 1.7g/t in addition to
Inferred resources of 1.3Moz at a grade of 1.7g/t. Beyond Konkera,
the Group's drill programmes have identified significant additional
potential resources across the exploration areas, most notably at
Napelapera (ca.10km south of Konkera), and Wadarado (ca. 35km north
of Konkera).
There were zero lost-time injuries across all project areas in
Burkina Faso during Q3. The Group undergoes regular routine
training and a focus on leading indicators to maintain the highest
standards of health and safety.
No material operational updates for the quarter.
The condensed consolidated financial statements have been
prepared in accordance with International Financial Reporting
Standards ("IFRS") as adopted for use by the European Union and in
accordance with the Companies (Jersey) Law 1991.
Now in its ninth year of production, Sukari remains cash
generative and this is reflected in the Group's financial results
for the nine months ended 30 September 2018:
-- Revenue of US$421.5 million, a 13% decrease compared to the
nine months ended 30 September 2017 ("YoY") (nine months ended 30
September 2017: US$485.1 million); Gold sales of 328,433 ounces
(excl. 7,038 ounces attributable to Cleopatra), a 15% decrease YoY.
Average realised gold price of US$1,281 per ounce approximately 2%
increase YoY;
-- EBITDA(1,2,4) of US$178.5 million, a 15% decrease YoY as a
result of lower revenue, lower cash costs of production lower other
operating costs offset by an increase of 8% in exploration and
evaluation costs, please note the change in accounting policy where
all greenfield exploration costs are now being expensed as
incurred;
-- In line with the Group's updated accounting policy, operating
costs include greenfield exploration expenses of US$16.5 million
(2017 figures have been restated to include US$15.3 million of
exploration expenditure);
-- Profit before tax(4) of US$102.2 million, a 21% decrease YoY,
due to the factors outlined above;
-- Basic earnings per share after profit share(2) ("EPS") of
4.80 US cents, a 5% increase YoY, due to lower revenue, lower cost
of sales, lower other operating costs and lower profit share
partially offset by an increase in exploration and evaluation costs
(nine months ended 30 September 2017: 4.60 US cents);
-- Operational cash flow of US$150.0 million, a 35% decrease
YoY, due to decreased revenues and higher cash operating costs per
ounce sold;
-- Free cash flow(1) of US$35.1 million generated, down 64% YoY
(nine months ended 30 September 2017: US$96.5 million) due to the
impact of the factors outlined above;
-- Cash costs of production(1,2) of US$206.8 million, a 11%
decrease in cost profile YoY, resulting in a unit cost of US$631
per ounce produced, a 6% increase YoY;
-- AISC(1,2) of US$301.2 million, a 4% decrease YoY, resulting
in a unit cost of US$917 per ounce sold, a 13% increase YoY, mainly
due to higher unit production costs, higher sustaining capital
costs resulting from the scheduled fleet rebuild programme and
underground mine development and lower gold ounces sold YoY;
-- Royalties of US$12.9 million to Arab Republic of Egypt
("ARE") and profit share(1) of US$49.8 million paid to Egyptian
Minerals Resources Authority ("EMRA"), our state partners;
-- Gross capital expenditure of US$75.7 million, a 29% increase
YoY, in line with the US$103 million(4) expected for the full
year;
-- Cash and liquid assets(1,3) of US$292.2 million at 30
September 2018, the Company remains debt-free and unhedged; and
-- Consistent with the dividend policy, the Board paid an
interim dividend of 2.5 US cents per share ("Interim Dividend") on
28 September 2018, US$28.9 million, equivalent to returning 80% of
free cash flow generated in H1.
____________________________________________________________________________________________________________
(1) Cash cost of production, AISC, EBITDA and cash, bullion on
hand, gold sales receivables, financial assets at fair value
through other comprehensive income and free cash flow are non-GAAP
measures, please refer to pages 16-18.
(2) Basic EPS, EBITDA, cash cost of production and AISC reflect
a provision against prepayments to reflect the removal of fuel
subsidies which occurred in January 2012 (refer to note 8 of the
financial statements for further details).
(3) Cash and cash equivalents, bullion on hand, gold sales
receivables and financial assets at fair value through other
comprehensive income.
(4) The Group accounting policy for greenfield exploration
expenditure, has been updated in line with market practice. For
full details, please refer to Note 1 of the Financial
Statements.
Centamin remains committed to its policy of being 100% exposed
to the gold price through its unhedged position, and maintained a
healthy cash, bullion on hand, gold sales receivables and
available--for--sale financial assets balance of US$292.2 million,
as at 30 September 2018, after the interim dividend pay out of 2.5
US cents per share which equates to US$28.9 million on 28 September
2018.
Revenue
Revenue from gold and silver sales for the period decreased by
13% to US$421.5 million (US$485.1 million in nine months ended 30
September 2017), with a 2% increase in the average realised gold
sales price to US$1,281 per ounce (US$1,254 per ounce for the nine
months ended 30 September 2017) and a 13% decrease in gold sold to
335,470 ounces, including 7,038 ounces attributable to Cleopatra
(386,237 ounces in the nine months ended 30 September 2017).
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$33.1 million categorised as fuel pre-payments
(refer to Note 8 of the financial statements for further
information) and is down 9% compared with the nine months ended 30
September 2017 to US$285.2 million, mainly as a result of:
-- A positive movement in inventory adjustment of US$32.7
million compared to negative movement in inventory adjustment of
US$1.4 million in the nine months ended 30 September 2017
reflecting the significant increase in ore stockpiles over the year
to date;
-- 3% increase in total mine production costs from US$232.3
million to US$238.3 million, due to a 7% increase in mined tonnes
combined with a 5% increase in processed tonnes and an increase in
unit costs mainly due to increased fuel and reagent costs;
-- 2% decrease in depreciation and amortisation charges from
US$81.5 million in the nine months ended 30 September 2017 to
US$79.6 million at 30 September 2018 due to lower production
effecting amortisation rates and US$44.5 million of additions
(excl. capital work in progress) which increased the associated
amortisation charges; and
-- The positive impact on unit costs of production has been
predominantly driven by the increase in ore stockpiles. As per Note
7, the processing of ore in stockpiles occurs in accordance with
the Life of Mine (LoM) processing plan based on the known mineral
reserves, current plant capacity and mine design. Ore tonnes
contained in the stockpile which exceed the annual tonnes to be
milled as per the mine plan in the following year, are classified
as non-current in the statement of financial position.
Other operating costs
Other operating costs comprise expenditure incurred for
communications, consultants, directors' fees, stock exchange
listing fees, share registry fees, employee entitlements, general
office administration expenses, the unwinding of the restoration
and rehabilitation provision, foreign exchange movements and the 3%
production royalty payable to the ARE. Other operating costs
decreased by US$5.7 million or 21% from US$27.0 million in the nine
months ended 30 September 2017 to US$21.2 million in the nine
months ended 30 September 2018, mainly as a result of:
-- US$3.4 million increase in net foreign exchange gains (-ve);
-- US$1.6 million decrease in royalty paid to the government of
the ARE in line with the decrease in gold sales revenue (-ve);
-- US$3.7 million decrease in inventory obsolescence costs (-ve);
-- US$2.7 million increase in corporate and other costs (+ve)
mainly due to increased payroll and compliance costs; and
-- US$0.3 million increase in other expenses (+ve).
Exploration and evaluation expenditure
Exploration and evaluation expenditure comprise expenditure
incurred for exploration activities in Côte d'Ivoire and Burkina
Faso. Exploration and evaluation costs increased by US$1.2 million
or 8% from US$15.3 million in the nine months ended 30 September
2017 to US$16.5 million in the nine months ended 30 September 2018.
These expenses are now shown on the income statement after the
change in accounting policy regarding the treatment of Greenfield
exploration and evaluation costs, please refer to note 1 of the
financial statements for the change in accounting policy regarding
exploration and evaluation expenditure.
Finance income
Finance income comprises interest income 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, Centamin recorded a
profit before tax for the nine months ended 30 September 2018 of
US$102.2 million (nine months ended 30 September 2017: US$130.0
million).
Tax
The group operates in several countries and, accordingly, it is
subject to the various tax regimes in the countries in which it
operates. The tax expense of US$0.01 million for the nine months
ended 30 September 2018 was associated with timings in income taxes
provisions and charges.
EMRA profit share
During the nine months ended 30 September 2018, US$49.8 million
was paid as profit share payments to the Egyptian Mineral Resources
Authority ("EMRA").
Profit share payments made to EMRA, pursuant to the provisions
of the Concession Agreement, are recognised as a variable charge in
the income statement (below profit after tax) of Centamin,
resulting in a reduction in earnings per share. The profit share
payments during the year will be reconciled against SGM's audited
June financial statements. Any variation between payments made
during the year (which are based on the Company's estimates) and
the audited financial statements, may result in a balance due and
payable to EMRA or advances to be offset against future
distributions.
Earnings per share
Earnings per share (after profit share) of 4.80 US cents for the
nine months ended 30 September 2018 increased by 5% when compared
with the same period in 2017 of 4.60 US cents. The increase was
driven by the factors outlined above.
Comprehensive income
Other comprehensive income movement was the result of the
revaluation of financial assets at fair value through other
comprehensive income to US$nil.
Financial position
Centamin has a strong and flexible financial position with no
debt, no hedging and cash, bullion on hand, gold sales receivables
and financial assets of US$292.2 million at 30 September 2018 (30
September 2017: US$345.8 million).
As at As at As at
30 September 30 June 30 September
2018 2018 2017
US$'000 US$'000 US$'000
-------------------------------------------- ------------- --------- -------------
Cash and cash equivalents (note 20) 254,094 282,764 313,003
Bullion on hand (valued at the period-end
spot price) 23,948 11,565 14,858
Gold and silver sales debtor (note 6) 14,184 8,926 17,803
Financial assets at fair value through
other comprehensive income (note 11) - - 125
-------------------------------------------- ------------- --------- -------------
Cash and cash equivalents, bullion on
hand, gold sales receivables
and available--for--sale financial assets 292,226 303,255 345,789
-------------------------------------------- ------------- --------- -------------
The majority of funds have been invested in international
rolling short-term interest money market deposits.
Current assets have decreased by US$127.1 million or 25% from
US$502.6 million at 31 December 2017 to US$375.5 million at 30
September 2018, as a result of:
-- US$0.9 million decrease (-ve) in inventory driven by a
US$10.9 million decrease (-ve) in collective stores inventory (due
to cost reduction and minimisation initiatives), a US$8.8 million
increase (+ve) in overall combined mining stockpiles and gold in
circuit levels and a US$1.2 million decrease in the provision for
obsolete stores inventory (+ve);
-- US$15.2 million decrease in trade and other receivables
(including gold sale receivables) (-ve);
-- US$5.3 million decrease in prepayments (-ve);
-- US$0.1 million decrease in the financial assets at fair value
through other comprehensive income (-ve); and
-- US$105.6 million decrease in net cash (net of foreign
exchange movements) (-ve) driven by the profit for the period less
the payment of the 2017 final dividend of US$115.6 million, payment
of the 2018 interim dividend of US$28.9 million and a US$49.8
million payment to EMRA as profit share for the year to date.
Non--current assets have increased by US$12.9 million or 1.4% to
US$934.4 million from US$921.7 million at 31 December 2017, as a
result of:
-- US$65.9 million increase in the cost of property, plant and equipment (+ve);
-- US$79.6 million charge for depreciation and amortisation (-ve);
-- US$23.9 million increase in mining stockpiles that will not
be processed in the next 12 months (+ve), refer to Note 7; and
-- US$2.7 million increase in exploration and evaluation assets,
as a result of the drilling programmes in Sukari Hill (+ve). With
the change in accounting policies all Greenfield exploration is no
longer capitalised to the balance sheet and this has been
retrospectively restated.
Current liabilities have decreased by US$28.3 million or 43% to
US$38.1 million, as a result of:
-- US$17.2 million decrease in trade payables and a US$9.3 million decrease in accruals (-ve);
-- US$0.5 million decrease in tax liabilities accrued during the period (-ve); and
-- US$1.3 million decrease in current provisions primarily
driven by a US$5.1 million increase in the fuel provision, a US$4.3
million decrease in withholding tax, customs and rebate provisions
and a US$2.1 million decrease in employee benefit provisions held
at period end (-ve).
Non--current liabilities have increased by US$1.1 million to
US$12.1 million as a result of an increase in the rehabilitation
provision.
There has been a 2.615 million increase in the number of issued
shares over the period due to share-based payment awards
vesting.
Share option reserves reported have increased by US$0.5 million
to US$4.8 million as result of the vesting of the 2015 RSP awards
on 4 June 2018 offset by the recognition of the share--based
payment expenses for the period and new share-based payment awards
granted in 2018.
Accumulated profits decreased by US$89.3 million to US$584.6
million as a result of:
-- US$102.2 million profit for the period after tax (+ve); offset by
-- US$46.8 million profit share charge to EMRA in the period (-ve);
-- US$115.6 million 2017 shareholder approved final dividend
(-ve) and US$28.9 million 2018 interim dividend (-ve); and
-- US$0.2 million decrease in the value of the financial asset held at fair value through other comprehensive income (-ve).
Cash flow
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 from
operating activities decreased by US$80.6 million to US$150.0
million for the nine months ended 30 September 2018 compared to the
nine months ended 30 September 2017, primarily attributable to the
decrease in revenue, driven by a large decrease in ounces sold
marginally offset by a higher average realised price, as well as a
decrease in costs as explained above.
Net cash flows used in investing activities comprise exploration
expenditure and capital development expenditures including the
acquisition of financial and mineral assets. Cash outflows have
increased by US$7.5 million for the nine months ended 30 September
2018 to US$65.0 million from US$57.5 million in the nine months
ended 30 September 2017. The primary use of the funds in the period
was for purchase of property, plant and equipment and investment in
underground development at the Sukari site in Egypt.
Net cash flows used in financing activities decreased by US$66.6
million in the nine months ended 30 September 2018 to US$194.4
million (from US$261.0 million in the nine months ended 30
September 2017) due to US$39.8 million decrease in dividends being
paid in 2018 relating to the 2017 final dividend, and a US$26.7
million decrease in payments to EMRA as profit share.
Effects of exchange rate changes have increased by US$2.9
million as a result of movements of the currencies used across the
operations in the year.
Capital expenditure
The following table provides a breakdown of the total capital
expenditure of the group during Q3 2018:
Quarter Quarter Nine months Nine months
ended ended ended ended
30 September 30 September 30 September 30 September
2018 2017 2018 2017
US$'000 Restated US$'000 Restated
US$'000 US$'000
------------------------------ -------------- -------------- -------------- --------------
Underground exploration 1,077 1,837 4,460 4,189
Underground mine development 9,091 8,318 28,241 23,769
Other sustaining capital
expenditure 8,820 13,531 37,671 26,521
------------------------------ -------------- -------------- -------------- --------------
Total sustaining capital
expenditure 18,988 23,686 70,372 54,479
------------------------------ -------------- -------------- -------------- --------------
Non-sustaining exploration
capitalised(1) (2) 2,824 610 5,317 4,266
(1) Only includes US$2.8 million of Sukari expenditure relating
to Cleopatra in non-sustaining capital expenditure.
(2) Please refer to note 1 of the financial statements for the
change in accounting policy regarding exploration and evaluation
expenditure.
Cumulative exploration expenditure capitalised for Cleopatra at
Sukari is US$12.9 million (project to date) offset by
pre-production net revenues of US$11.9 million (refer to notes 2
and 3 to the financial statements for further details) resulting in
US$1.0 million remaining on the statement of financial position at
30 September 2018.
Exploration expenditure
The following table provides a breakdown of the total
exploration expenditure of the group during Q3 2018:
Quarter Quarter Nine months Nine months
ended ended ended ended
30 September 30 September 30 September 30 September
2018 2017 2018 2017
US$'000 Restated US$'000 Restated
US$'000 US$'000
------------------------------- -------------- -------------- -------------- --------------
Burkina Faso 475 1,402 4,139 4,811
Côte d'Ivoire 4,196 4,041 12,364 10,454
Sukari Tenement 1,077 1,837 4,460 4,189
Cleopatra 2,824 610 5,317 4,266
------------------------------- -------------- -------------- -------------- --------------
Total exploration expenditure 8,572 7,890 26,280 23,720
------------------------------- -------------- -------------- -------------- --------------
Exploration and evaluation assets - impairment
considerations
As discussed in note 10 to the financial statements, in
consideration of the requirements of IFRS 6, management is not
aware of any information that would otherwise suggest that an
impairment trigger has occurred which would require a full
impairment test to be carried out at 30 September 2018.
Exchange rates
Foreign exchange gains/(losses) have increased from a US$1.3
million gain to a US$4.7 million gain, resulting in a US$3.4
million increase on the nine months ended 30 September 2017.
Non--GAAP financial measures
Four non--GAAP financial measures are used in this report:
1) EBITDA
EBITDA is a non--GAAP financial measure, which excludes the
following from profit before tax:
-- Finance costs;
-- Finance income; and
-- Depreciation and amortisation.
Management believes that EBITDA is a valuable indicator of the
group's ability to generate liquidity by producing operating cash
flow to fund working capital needs and fund capital expenditures.
EBITDA is also frequently used by investors and analysts for
valuation purposes whereby EBITDA is multiplied by a factor or
"EBITDA multiple" that is based on an observed or inferred
relationship between EBITDA and market values to determine the
approximate total enterprise value of a company. EBITDA is intended
to provide additional information to investors and analysts and
does not have any standardised definition under IFRS and should not
be considered in isolation or as a substitute for measures of
performance prepared in accordance with IFRS. EBITDA excludes the
impact of cash cost of production and income of financing
activities and taxes, and therefore is not necessarily indicative
of operating profit or cash flow from operations as determined
under IFRS. Other companies may calculate EBITDA differently. The
following table provides a reconciliation of EBITDA to profit for
the period before tax.
Reconciliation of profit before tax to EBITDA:
Quarter Quarter Nine months Nine months
ended ended ended ended
30 September 30 September 30 September 30 September
2018(1) 2017(1) 2018(1) 2017(1)
US$'000 Restated US$'000 Restated
US$'000 US$'000
------------------------------ ------------ ------------ ------------ ------------
Profit before tax 21,836 70,003 102,212 88,224
Finance income (1,336) (607) (3,582) (2,250)
Depreciation and amortisation 28,246 28,759 79,844 60,807
------------------------------ ------------ ------------ ------------ ------------
EBITDA 48,746 98,155 178,474 146,781
------------------------------ ------------ ------------ ------------ ------------
(1) Profit before tax, depreciation and amortisation and EBITDA
includes a charge to reflect the removal of fuel subsidies (refer
to note 8 to the financial statements for further details).
2) Cash cost of production per ounce produced and sold and
all-in sustaining costs per ounce sold 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 the '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 (as compared to
using ounces produced which is used in the cash cost of production
calculation).
FINANCIAL REVIEW
Reconciliation of cash cost of production per ounce
produced:
Quarter Quarter Nine months Nine months
ended ended ended ended
30 September 30 September 30 September 30 September
2018(1) 2017(1) 2018(1) 2017(1)
------------------------------- --------- ------------- ------------ ------------ --------------
Mine production costs (note
3) US$'000 81,540 80,653 238,279 232,293
Less: Refinery and transport US$'000 (358) (445) (1,095) (1,142)
Movement of inventory(1) US$'000 (10,308) (4,550) (30,368) 590
------------------------------- --------- ------------- ------------ ------------ --------------
Cash cost of production
- gold produced US$'000 70,874 75,658 206,816 231,741
Gold produced - Total (oz.)
(Excluding Cleopatra) oz 114,497 156,534 327,781 390,361
Cash cost of production
per ounce produced US$/oz 619 483 631 594
------------------------------- --------- ------------- ------------ ------------ --------------
(1) The movement in inventory on ounces produced is only the movement
on mining stockpiles and ore in circuit while the movement on ounces
sold is the net movement on mining stockpiles, ore in circuit and
gold in safe inventory.
A reconciliation has been included below to show the cash cost
of production metric should gold sold ounces be used as a denominator.
Reconciliation of cash cost of production per ounce sold:
Quarter Quarter Nine months Nine months
ended ended ended ended
30 September 30 September 30 September 30 September
2018(1) 2017(1) 2018(1) 2017(1)
------------------------------- --------- ------------- ------------ ------------ --------------
Mine production costs (note
3)(1) US$'000 81,540 80,653 238,279 232,293
Royalties US$'000 3,858 5,779 12,885 14,519
Movement in inventory(2) US$'000 (16,409) (3,900) (32,717) 1,365
------------------------------- --------- ------------- ------------ ------------ --------------
Cash cost of production
- gold sold(1) US$'000 68,989 82,532 218,447 248,177
------------------------------- --------- ------------- ------------ ------------ --------------
Gold sold - Total (oz.)
(Excluding Cleopatra) oz 103,575 150,273 328,433 386,237
Cash cost of production
per ounce sold US$/oz 666 549 665 643
------------------------------- --------- ------------- ------------ ------------ --------------
(1) Mine production costs and cash cost of production includes a
charge to reflect the removal of fuel subsidies (refer to note 8 to
the financial statements for further details).
(2) The movement in inventory on ounces produced is only the
movement on mining stockpiles and ore in circuit while the movement
on ounces sold is the net movement on mining stockpiles, ore in
circuit and gold in safe inventory.
Reconciliation of AISC per ounce sold:
Quarter Quarter Nine months Nine months
ended ended ended ended
30 September 30 September 30 September 30 September
2018(1) 2017(1) 2018(1) 2017(1)
------------------------------- -------- ------------ ------------ ------------ ------------
Mine production costs
(note 3)(1) US$'000 81,540 80,653 238,279 232,293
Movement in inventory US$'000 (16,409) (3,900) (32,717) 1,365
Royalties US$'000 3,858 5,779 12,885 14,519
Corporate administration
costs US$'000 4,056 3,836 12,519 9,889
Rehabilitation costs US$'000 218 157 653 471
Sustaining underground
development and exploration US$'000 10,168 10,155 32,701 27,959
Other sustaining capital
expenditure US$'000 8,820 13,531 37,671 26,521
By--product credit US$'000 (195) (259) (785) (798)
All--in sustaining costs(1)(2) US$'000 92,056 109,952 301,206 312,219
Gold sold - Total (oz.)
(Excluding Cleopatra sales
capitalised) oz 103,575 150,273 328,433 386,237
AISC per ounce sold(1) US$/oz 889 732 917 808
------------------------------- -------- ------------ ------------ ------------ ------------
(1) Mine production costs, cash cost of production, cash cost of
production per ounce, AISC and AISC per ounce sold includes
prepayments recorded since Q4 2012 to reflect the removal of fuel
subsidies (refer to note 8 to the financial statements for further
details).
(2) Includes refinery and transport.
3) Cash and cash equivalents, bullion on hand, gold sales
receivables and financial assets at fair value through other
comprehensive income
Cash and cash equivalents, bullion on hand, gold sales
receivables and financial assets at fair value through other
comprehensive income is a non-GAAP financial measures. Cash and
cash equivalents, bullion on hand, gold sales receivables and
financial assets at fair value through other comprehensive income
is a measure of the available cash and liquid assets at a point in
time. 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 and cash equivalents, bullion
on hand, gold sales receivables and financial assets at fair value
through other comprehensive income 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 cash and
cash equivalents as determined under GAAP. This is a non--GAAP
financial measure and other companies may calculate these measures
differently.
Reconciliation to cash and cash equivalents, bullion on hand,
gold sales receivables and financial assets at fair value through
other comprehensive income:
As at As at
30 September 30 September
2018 2017
US$'000 US$'000
---------------------------------------------------------------------------- -------------- ------------
Cash and cash equivalents (note 20) 254,094 313,003
Bullion on hand (valued at the period end spot price) 23,948 14,858
Gold sales receivable (note 6) 14,184 17,803
Financial assets at fair value through other comprehensive income (note 11) - 125
---------------------------------------------------------------------------- -------------- ------------
Cash and cash equivalents, bullion on hand, gold sales receivables
and financial assets at fair value through other comprehensive income 292,226 345,789
---------------------------------------------------------------------------- -------------- ------------
4) Free cash flow
Free cash flow is a non-GAAP financial measure. Free cash flow
is a measure of the available cash after EMRA profit share payments
that the group has at its disposal to use for capital reinvestment
and to distribute to shareholders as dividends in accordance with
the Company's dividend policy. 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. Free cash
flow 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. This is a non-GAAP financial
measure and other companies may calculate these measures
differently.
Quarter Quarter Nine months Nine months
ended ended ended ended
30 September 30 September 30 September 30 September
2018 2017 2018 2017
Restated Restated
US$'000 US$'000 US$'000 US$'000
-------------------------------------- ------------ ------------ ------------ ------------
Net cash generated from operating
activities 27,303 104,737 149,963 230,529
Less:
Net cash used in investing activities (17,717) (23,688) (65,037) (57,459)
EMRA profit share payments (10,575) (35,424) (49,841) (76,577)
-------------------------------------- ------------ ------------ ------------ ------------
Free cash flow (989) 45,625 35,085 96,493
-------------------------------------- ------------ ------------ ------------ ------------
Legal Developments in Egypt
Concession Agreement Appeal
All material has been submitted by the Company to the courts.
The appeal has been stayed pending the decision on Law No. 32 as
referred to below. Consequently, there will be no further hearings
on the Concession Agreement Appeal until a judgment is given on the
Law No. 32 Appeal in the Supreme Constitutional Court. Note. The
Law No. 32 Appeal is independent from the Group and neither Pharaoh
Gold Mine ("PGM") nor Sukari Gold Mine ("SGM") are a party.
The Law No. 32 Appeal is awaiting the State Commissioner to
submit their report to the Supreme Constitutional Court. This is
expected in H1 2019 but subject to change.
Law No. 32 is legislation, enforced and ratified by Parliament
in 2014. The law is designed to protect and encourage foreign
investment in the Arab Republic of Egypt ("ARE") by restricting the
capacity for third parties to challenge contractual agreements
between the Egyptian government and an investor.
Diesel Fuel Oil Litigation
All required documentation has been submitted by the Company to
the courts. EGPC, the counterparty, has the opportunity to submit
the requested documentation before the Court can deliver a
judgment.
Andrew Pardey
Chief Executive Officer
1 November 2018
Set out below are the unaudited consolidated Financial
Statements for the Group, including notes thereto, for the quarter
and nine months ended 30 September 2018.
DIRECTORS' RESPONSIBILITY STATEMENT
RESPONSIBILITY STATEMENT OF THE DIRECTORS IN RESPECT OF THE
QUARTER AND NINE MONTHSED 30 SEPTEMBER 2018 FINANCIAL REPORT
We confirm that to the best of our knowledge:
(a) the condensed set of interim consolidated financial
statements for the quarter and nine months ended 30 September 2018
has been prepared in accordance with International Accounting
Standard 34 'Interim Financial Reporting' as adopted by the
European Union;
(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 nine months and description of principal risks and
uncertainties for the remaining three 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).
The board of directors that served during all or part of the
quarter and nine month period ended on 30 September 2018 and their
respective responsibilities can be found on pages 82 to 93 of the
2017 annual report of Centamin plc.
By order of the Board,
Chief Executive Officer Chief Financial Officer
Andrew Pardey Ross Jerrard
1 November 2018 1 November 2018
UNAUDITED INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE QUARTER AND NINE MONTHSED
30 SEPTEMBER 2018
Unaudited condensed consolidated statement of comprehensive
income
for the quarter and nine months ended 30 September 2018
Quarter Quarter Nine months Nine months
ended ended ended ended
30 September 30 September 30 September 30 September
2018 2017 2018 2017
(Unaudited) Restated(1) (Unaudited) Restated(1)
(Unaudited) (Unaudited)
Notes US$'000 US$'000 US$'000 US$'000
----------------------------------- ------ -------------- -------------- -------------- --------------
Revenue 2 125,127 193,093 421,518 485,097
Cost of sales 3 (93,300) (105,499) (285,179) (315,105)
----------------------------------- ------ -------------- -------------- -------------- --------------
Gross profit 31,827 87,594 136,339 169,992
Other income 13 242 37 667
Finance income 3 1,336 607 3,582 1,603
Other operating costs 3 (6,669) (12,997) (21,243) (26,980)
Exploration and evaluation
expenditure (4,671) (5,443) (16,503) (15,265)
Profit for the period
before tax 21,836 70,003 102,212 130,017
Tax (33) (566) (43) (1,580)
----------------------------------- ------ -------------- -------------- -------------- --------------
Profit for the period
after tax 21,803 69,437 102,169 128,437
EMRA profit share 4 (11,075) (35,424) (46,841) (75,577)
Profit for the period
after EMRA profit share 10,728 34,013 55,328 52,860
Profit for the period
attributable to:
- the owners of the parent 10,728 34,013 55,328 52,860
----------------------------------- ------ -------------- -------------- -------------- --------------
Other comprehensive income/(loss)
Items that may be reclassified
subsequently to profit
or loss:
Profit/(loss) on financial
assets at fair value
through other comprehensive
income (net of tax) 11 - - (125) (91)
----------------------------------- ------ -------------- -------------- -------------- --------------
Other comprehensive income/(loss)
for the period - - (125) (91)
----------------------------------- ------ -------------- -------------- -------------- --------------
Total comprehensive income
attributable to:
- the owners of the parent 10,728 35,013 55,203 52,769
----------------------------------- ------ -------------- -------------- -------------- --------------
Earnings per share after
profit share:
Basic (cents per share) 19 0.930 2.956 4.805 4.596
Diluted (cents per share) 19 0.820 2.928 4.768 4.561
----------------------------------- ------ -------------- -------------- -------------- --------------
(1) Restated due to the change in accounting policy, refer to note 1 for further information.
The above unaudited interim condensed consolidated statement of
comprehensive income should be read in conjunction with the
accompanying notes.
Unaudited condensed consolidated statement of financial
position
as at 30 September 2018
30 September 31 December 1 January
2018 2017 2017
(Unaudited) Restated(1) Restated(1)
(Unaudited) (Unaudited)
Notes US$'000 US$'000 US$'000
---------------------------------------- ------ ------------- ------------- -------------
Non--current assets
Property, plant and equipment 9 837,425 851,099 868,926
Exploration and evaluation asset 10 66,593 63,885 65,700
Inventories 7 30,548 6,651 -
Prepayments - - 295
Other receivables 90 96 81
---------------------------------------- ------ ------------- ------------- -------------
Total non--current assets 934,380 921,731 935,002
---------------------------------------- ------ ------------- ------------- -------------
Current assets
Inventories 7 97,660 98,559 128,582
Financial assets at fair value through
other comprehensive income 11 - 125 130
Trade and other receivables 6 19,253 34,467 24,870
Prepayments 8 4,504 9,793 7,508
Cash and cash equivalents 20(a) 254,094 359,680 399,873
---------------------------------------- ------ ------------- ------------- -------------
Total current assets 375,787 502,624 560,963
---------------------------------------- ------ ------------- ------------- -------------
Total assets 1,310,167 1,424,355 1,495,965
---------------------------------------- ------ ------------- ------------- -------------
Non--current liabilities
Provisions 13 12,054 10,961 7,697
---------------------------------------- ------ ------------- ------------- -------------
Total non--current liabilities 12,054 10,961 7,697
---------------------------------------- ------ ------------- ------------- -------------
Current liabilities
Trade and other payables 12 30,124 56,585 47,991
Tax liabilities 3 469 -
Provisions 13 7,991 9,311 3,976
---------------------------------------- ------ ------------- ------------- -------------
Total current liabilities 38,118 66,365 51,967
---------------------------------------- ------ ------------- ------------- -------------
Total liabilities 50,172 77,326 59,664
---------------------------------------- ------ ------------- ------------- -------------
Net assets 1,259,995 1,347,029 1,436,301
---------------------------------------- ------ ------------- ------------- -------------
Equity
Issued capital 14 670,589 668,732 667,472
Share option reserve 15 4,796 4,323 3,048
Accumulated profits 584,610 673,974 765,781
---------------------------------------- ------ ------------- ------------- -------------
Total equity attributable to:
- owners of the parent 1,259,995 1,347,029 1,436,301
---------------------------------------- ------ ------------- ------------- -------------
Total equity 1,259,995 1,347,029 1,436,301
---------------------------------------- ------ ------------- ------------- -------------
(1) Restated due to the change in accounting policy, refer to note 1 for further information.
The above unaudited interim condensed consolidated statement of
financial position should be read in conjunction with the
accompanying notes.
The unaudited interim condensed consolidated financial
statements were approved by the board of directors on 1 November
2018 and signed on its behalf by:
Andrew Pardey Ross Jerrard
Chief executive officer Chief financial officer
1 November 2018 1 November 2018
Unaudited condensed consolidated statement of changes in
equity
for the nine months ended 30 September 2018
Issued Share option Accumulated Total
capital reserve profits equity
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Notes US$'000 US$'000 US$'000 US$'000
----------------------------------- ------ ------------- ------------- ------------- -------------
Balance as at 1 January 2018 668,732 4,323 778,921 1,451,976
Impact of change in accounting
policy 1 - - (104,947) (104,947)
----------------------------------- ------ ------------- ------------- ------------- -------------
Restated balance as at 1 January
2018 668,732 4,323 673,974 1,347,029
Profit for the period after
tax - - 102,169 102,169
EMRA profit share - - (46,841) (46,841)
Other comprehensive (loss)
for the period - - (125) (125)
----------------------------------- ------ ------------- ------------- ------------- -------------
Total comprehensive income
for the period - - 55,203 55,203
Recognition of share based
payments - 2,330 - 2,330
Transfer of share based payments 1,857 (1,857) - -
Dividend paid - shareholders - - (144,567) (144,567)
Balance as at 30 September
2018 670,589 4,796 584,610 1,259,995
----------------------------------- ------ ------------- ------------- ------------- -------------
Issued Share option Accumulated Total
capital reserve profits equity
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Notes US$'000 US$'000 US$'000 US$'000
----------------------------------- ------ ------------- ------------- ------------- -------------
Balance as at 1 January 2017 667,472 3,048 853,999 1,524,519
Impact of change in accounting
policy 1 - - (88,218) (88,218)
----------------------------------- ------ ------------- ------------- ------------- -------------
Restated balance as at 1 January
2017 667,472 3,048 765,781 1,436,301
Profit for the period after
tax - - 128,437 128,437
EMRA profit share - - (75,577) (75,577)
Other comprehensive (loss)
for the period - - (91) (91)
----------------------------------- ------ ------------- ------------- ------------- -------------
Total comprehensive income
for the period - - 52,769 52,769
Recognition of share based
payments - 1,731 - 1,731
Transfer of share based payments 1,272 (1,272) - -
Dividend paid - shareholders - - (184,389) (184,389)
----------------------------------- ------ ------------- ------------- ------------- -------------
Balance as at 30 September
2017 668,744 3,507 634,161 1,306,412
----------------------------------- ------ ------------- ------------- ------------- -------------
The above unaudited interim condensed consolidated statement of
changes in equity should be read in conjunction with the
accompanying notes.
Unaudited condensed consolidated statement of cash flows
for the quarter and nine months ended 30 September 2018
Quarter Quarter Nine months Nine months
ended ended ended ended
30 September 30 September 30 September 30 September
2018 2017 2018 2017
(Unaudited) Restated(1) (Unaudited) Restated(1)
(Unaudited) (Unaudited)
Notes US$'000 US$'000 US$'000 US$'000
------------------------------- ------ -------------- -------------- -------------- --------------
Cash flows from operating
activities
Cash generated in operating
activities 20(b) 27,085 104,737 150,245 231,520
Income tax refund received - - - 107
Income tax paid (218) - (282) (1,098)
Net cash generated by
operating activities 27,303 104,737 149,963 230,529
------------------------------- ------ -------------- -------------- -------------- --------------
Cash flows from investing
activities
Acquisition of property,
plant and equipment (17,911) (21,849) (65,912) (50,606)
Exploration and evaluation
expenditure (1,142) (2,446) (2,707) (8,456)
Finance income 3 1,336 607 3,582 1,603
------------------------------- ------ -------------- -------------- -------------- --------------
Net cash used in investing
activities (17,717) (23,688) (65,037) (57,459)
------------------------------- ------ -------------- -------------- -------------- --------------
Cash flows from financing
activities
Dividend paid (28,938) (28,952) (144,567) (184,389)
EMRA profit share paid 4 (10,575) (35,424) (49,841) (76,577)
------------------------------- ------ -------------- -------------- -------------- --------------
Net cash used in financing
activities (39,513) (64,376) (194,408) (260,966)
------------------------------- ------ -------------- -------------- -------------- --------------
Net (decrease)/increase
in cash and cash equivalents (29,927) 16,673 (109,482) (87,896)
Cash and cash equivalents
at the beginning of the
period 282,765 296,981 359,680 399,873
Effect of foreign exchange
rate changes 1,256 (651) 3,896 1,026
------------------------------- ------ -------------- -------------- -------------- --------------
Cash and cash equivalents
at the end of the period 20(a) 254,094 313,003 254,094 313,003
------------------------------- ------ -------------- -------------- -------------- --------------
(1) Restated due to the change in accounting policy, refer to note 1 for further information.
The above unaudited interim condensed consolidated statement of
cash flows should be read in conjunction with the accompanying
notes
NOTE 1: ACCOUNTING POLICIES
Basis of preparation
These unaudited condensed consolidated financial statements have
been prepared in accordance with IAS 34 "Interim Financial
Reporting" (IAS 34) as adopted by the European Union and the
requirements of the Disclosure and Transparency Rule sourcebook
(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 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 2017, which were prepared in
accordance with International Financial Reporting Standards
("IFRS") as adopted for use by the European Union. The financial
statements for the year ended 31 December 2017 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 2017 is based on the
statutory accounts for the year ended 31 December 2017. Readers are
referred to the auditor's report to the Group financial statements
as at 31 December 2017 (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
2017 except for the change in accounting policies regarding the
treatment of greenfield exploration costs, see below, and adoption
of new standards and endorsed by the EU which apply for the first
time in 2018 as referred to in the 31 December 2017 Annual Report.
The new pronouncements, IFRS 9 and IFRS 15, do not have a
significant impact on the accounting policies, methods of
computation or presentation applied by the Group, however the
change in accounting policy does have a significant impact and
therefore the prior period consolidated financial statements have
been restated. IFRS 16 is only effective from 1 January 2019 and
its impact on the financial statements is currently being assessed.
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 judgements 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 2017.
Change in accounting policy - Exploration and evaluation
asset
On 1 January 2006 the Group adopted IFRS 6 Exploration for and
Evaluation of Mineral Resources and in accordance with the standard
applied the policy of capitalising all Exploration Expenditure
(both Greenfield and Brownfield Exploration and Evaluation
expenditure).
The Greenfield and Brownfield terms are generally used in the
minerals sector and have been adopted to differentiate high risk
remote exploration activity from near-mine exploration
activity.
a) Greenfield exploration refers to territory, where mineral
deposits are not already developed and has the goal of establishing
a new mine requiring new infrastructure, regardless of it being in
an established mining field or in a remote location. Greenfield
exploration projects can be subdivided into grassroots and advanced
projects embracing prospecting, geoscientific surveys, drilling,
sample collection and testing, but excludes work of brownfields
nature, pit and shaft sinking and bulk sampling.
b) Brownfield exploration, also known as near-mine exploration,
refers to areas where mineral deposits were previously developed.
In brownfield exploration, geologists look for deposits near or
adjacent to an already operating mine with the objective of
extending its operating life and taking advantage of the
established infrastructure.
On review of the accounting policies and to make the financial
statements more relevant to the economic decision-making needs of
users no less reliable and comparable to other companies, it has
been determined that the exploration and evaluation assets
previously recognised for Greenfield exploration is not attributed
any value by the users when assessing the Group, as due to the
early stage of the projects there is a greater risk that the
projects will ultimately become viable and hence economic benefits
will flow to the Group.
To align the financial statements with the needs of the users,
management have decided to change the accounting policy as regards
to Greenfield exploration where all costs will be expensed as
incurred and will not be capitalised to the balance sheet until a
decision is made to pursue a commercially viable project.
Brownfield exploration costs will continue to be capitalised to the
statement of financial position
In accordance with IAS 8 Accounting Policies, Changes in
Accounting Estimates and Errors this revised accounting policy has
to be applied retrospectively. Please also refer to note 10
Exploration and evaluation asset.
The following table summarises the adjustments made to the
statement of financial position on implementation of the change in
accounting policy.
Exploration Accumulated
and evaluation profits
asset (Unaudited) (Unaudited)
US$'000 US$'000
------------------------------------------------- ------------------ ------------
Balance at 1 January 2017 as previously reported 153,918 853,999
Impact of change in accounting policy (88,218) (88,218)
Restated balanced at 1 January 2017 65,700 765,781
------------------------------------------------- ------------------ ------------
Exploration Accumulated
and evaluation profits
asset (Unaudited) (Unaudited)
US$'000 US$'000
--------------------------------------------------- ------------------ ------------
Balance at 31 December 2017 as previously reported 168,832 778,921
Impact of change in accounting policy at 1 January
2017 (88,218) (88,218)
Impact of change in accounting policy during 2017 (16,729) (16,729)
Restated balanced at 31 December 2017 63,885 673,974
--------------------------------------------------- ------------------ ------------
The effects on the statement of comprehensive income and
earnings per share were as follows:
Quarter Quarter Nine months Nine months
ended ended ended ended
30 September 30 September 30 September 30 September
2018 2017 2018 2017
(Unaudited) Restated (Unaudited) Restated
(Unaudited) (Unaudited)
Notes US$'000 US$'000 US$'000 US$'000
------------------------------- ----- ------------- ------------- ------------- -------------
(Increase) in exploration
and evaluation costs 3 (4,671) (5,443) (16,503) (15,265)
Decrease in impairment
of exploration and evaluation
assets - - - 2,550
(Decrease) in profit for
the period before tax (4,671) (5,443) (16,503) (12,715)
Earnings per share before
profit share as previously
reported:
Basic (cents per share) 2.295 6.507 10.306 12.273
Diluted (cents per share) 2.271 6.446 10.228 12.180
Earnings per share after
profit share as previously
reported:
Basic (cents per share) 1.335 3.429 6.238 5.702
Diluted (cents per share) 1.321 3.396 6.191 5.658
Restated earnings per share
before profit share:
Basic (cents per share) 19 1.890 6.034 8.873 11.168
Diluted (cents per share) 19 1.870 5.977 8.805 11.083
Restated earnings per share
after profit share:
Basic (cents per share) 19 0.930 2.956 4.805 4.596
Diluted (cents per share) 19 0.920 2.928 4.768 4.561
------------------------------- ----- ------------- ------------- ------------- -------------
Comparative figures
Certain comparative figures have been reclassified to conform to
the financial statement presentation adopted for the current year.
These are categorisation changes for comparison purposes only and
have no effect on results as previously reported. The changes
included:
Nine months Year
ended ended
30 September 31 December
2018 2017
US$'000 US$'000
------------------------------------------------------------------------------------------- ------------ -----------
Mine stockpile inventory reallocated from current asset inventories to non-current asset
inventories(1)
(Decrease) in inventory (current assets) (30,548) (6,651)
Increase in inventory (non-current assets) 30,548 6,651
------------------------------------------------------------------------------------------- ------------ -----------
(1) Per note 7 Inventories below, the processing of ore in
stockpiles occurs in accordance with the Life of Mine (LoM)
processing plan that has recently been optimised based on the known
mineral reserves, current plant capacity and mine design. Ore
tonnes contained in the stockpile which exceed the annual tonnes to
be milled as per the mine plan in the following year, are
classified as non-current in the statement of financial position.
Currently at Sukari, low grade low-low (0.3 to 0.4g/t) and low
grade low (0.4 to 0.5g/t) open pit stockpile material above the
cut-off grade of 0.3g/t has been reclassified to non-current assets
as these ore tonnes are not planned to be processed within the next
12 months.
Going concern
These financial statements for the period ended 30 September
2018 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 18, 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 Diesel Fuel Oil ("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 directors' belief that the
Group will be able to continue as going concern.
The directors have a reasonable expectation that the Group will
have adequate resources to continue in operational existence for
twelve months from the date of approval of this report. Thus they
continue to adopt the going concern basis of accounting in
preparing these interim condensed consolidated financial
statements.
2. Revenue
An analysis of the group's revenue for the period, from
continuing operations, is as follows:
Quarter Quarter Nine months Nine months
ended ended ended ended
30 September 30 September 30 September 30 September
2018 2017 2018 2017
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
US$'000 US$'000 US$'000 US$'000
------------------------------------- ------------- ------------- ------------- -------------
Gold sales (Including pre-production
gold sales related to Cleopatra) 128,784 192,834 429,883 484,300
Less: Pre-production gold sales
related to Cleopatra - transferred
to exploration and evaluation asset (3,852) - (9,150) -
------------------------------------- ------------- ------------- ------------- -------------
Gold sales (Excluding pre-production
gold sales related to Cleopatra) 124,932 192,834 420,733 484,300
Silver sales 195 259 785 797
------------------------------------- ------------- ------------- ------------- -------------
125,127 193,093 421,518 485,097
------------------------------------- ------------- ------------- ------------- -------------
All gold and silver sales during the year were made to a single
customer in North America.
3. Profit before tax
Profit for the period has been arrived at after
crediting/(charging) the following gains/(losses) and
income/(expenses):
Quarter Quarter Nine months Nine months
ended ended ended ended
30 September 30 September 30 September 30 September
2018 2017 2018 2017
(Unaudited) Restated (Unaudited) Restated
(Unaudited) (Unaudited)
US$'000 US$'000 US$'000 US$'000
-------------------------------------------- ------------- ------------- ------------- -------------
Finance income
Interest received 1,336 607 3,582 2,250
-------------------------------------------- ------------- ------------- ------------- -------------
Expenses
Cost of sales
Mine production costs (Including
costs related to gold produced from
Cleopatra) (82,633) (80,653) (240,360) (232,293)
Mine production costs related to
gold produced from Cleopatra - transferred
to exploration and evaluation asset 1,093 - 2,081 -
-------------------------------------------- ------------- ------------- ------------- -------------
Mine production costs (81,540) (80,653) (238,279) (232,293)
Movement in inventory 16,409 3,900 32,717 (1,365)
Depreciation and amortisation (28,169) (28,746) (79,617) (81,447)
-------------------------------------------- ------------- ------------- ------------- -------------
(93,300) (105,499) (285,179) (315,105)
-------------------------------------------- ------------- ------------- ------------- -------------
Other operating costs
Corporate costs (4,056) (3,836) (12,519) (9,889)
Other expenses (183) (160) (833) (574)
Office related depreciation (77) (13) (227) (38)
Fixed royalty - attributable to the
ARE government (3,858) (5,779) (12,885) (14,519)
Inventory obsolescence - (2,517) 1,217 (2,517)
Foreign exchange gain/(loss), net 1,723 (535) 4,657 1,246
Impairment of financial assets at
fair value through other comprehensive
income - - - (218)
Provision for restoration and rehabilitation
- unwinding of discount (218) (157) (653) (471)
--------------------------------------------- ------- -------- -------- --------
(6,669) (12,997) (21,243) (26,980)
--------------------------------------------- ------- -------- -------- --------
4. 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 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.
Payments made to EMRA pursuant to the provisions of the
Concession Agreement are recognised as a variable charge in the
income statement (below profit after tax) of Centamin, which leads
to a reduction in the earnings per share. The profit share payments
during the year will be reconciled against SGM's audited financial
statements. The SGM financial statements for the year ended 30 June
2018 are in the process of being audited.
Certain terms of the Concession Agreement and amounts in the
cost recovery model may also vary depending on interpretation of
management and the Board making various judgements and estimates
that can affect the amounts recognised in the financial
statements.
a) Income statement and balance sheet impact
Quarter Quarter Nine months Nine months
ended ended ended ended
30 September 30 September 30 September 30 September
2018 2017 2018 2017
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
US$'000 US$'000 US$'000 US$'000
------------------------------------ ------------- ------------- ------------- -------------
Income statement
EMRA profit share(1) (11,075) (35,424) (46,841) (75,577)
------------------------------------ ------------- ------------- ------------- -------------
Balance sheet
EMRA opening profit share accrual 1,500 3,000 5,000 4,000
EMRA profit share (release)/accrual 500 - (3,000) (1,000)
EMRA closing profit share accrual 2,000 3,000 2,000 3,000
------------------------------------ ------------- ------------- ------------- -------------
(1) Profit share commenced during the third quarter of 2016. The
first two years was a 60:40 split of net production surplus to PGM
and EMRA respectively, from 1 July 2018 this changed to a 55:45
split for the next two year period until 30 June 2020, after which
all net production surpluses are split 50:50.
Quarter Quarter Nine months Nine months
ended ended ended ended
30 September 30 September 30 September 30 September
2018 2017 2018 2017
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
US$'000 US$'000 US$'000 US$'000
-------------------------------------------- ------------- ------------- ------------- -------------
EMRA profit share (per income statement)(1) (11,075) (35,424) (46,841) (75,577)
EMRA profit share (release)/accrual
(per balance sheet) 500 - (3,000) (1,000)
-------------------------------------------- ------------- ------------- ------------- -------------
EMRA cash payments during the period
(per cash flow statement)(1) (10,575) (35,424) (49,841) (76,577)
-------------------------------------------- ------------- ------------- ------------- -------------
(1) Profit share commenced during the third quarter of 2016. The
first two years was a 60:40 split of net production surplus to PGM
and EMRA respectively, from 1 July 2018 this changed to a 55:45
split for the next two year period until 30 June 2020, after which
all net production surpluses are split 50:50.
Any variation between payments made during the year (which are
based on the Company's estimates) and the SGM audited financial
statements, may result in a balance due and payable to EMRA or
advances to be offset against future distributions. This will be
reflected as an accrual or prepayment in each reporting period.
4. EMRA profit share (continued)
b) Cash flow statement impact
Quarter Quarter Nine months Nine months
ended ended ended ended
30 September 30 September 30 September 30 September
2018 2017 2018 2017
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
US$'000 US$'000 US$'000 US$'000
---------------------------------------- ------------- ------------- ------------- -------------
Cash flows
EMRA cash payments during the period(1) 10,575 35,424 49,841 76,577
---------------------------------------- ------------- ------------- ------------- -------------
(1) Profit share commenced during the third quarter of 2016. The
first two years was a 60:40 split of net production surplus to PGM
and EMRA respectively, from 1 July 2018 this changed to a 55:45
split for the next two year period until 30 June 2020, after which
all net production surpluses are split 50:50.
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, historical
costs that are still to be recovered and any future capital
expenditure. All profit share payments will be reconciled against
SGM's audited June financial statements for current and future
periods.
5. Segment reporting
The group is engaged in the business of exploration and mining
of precious metals, which represents three operating segments, two
in the business of exploration and one in mining of precious
metals. The board is the group's chief operating decision maker
within the meaning of IFRS 8. Management has determined the
operating segments based on the information reviewed by the board
for the purposes of allocating resources and assessing
performance.
The board considers the business from a geographic perspective
and a mining of precious metals versus exploration for precious
metals perspective. Geographically, management considers the
performance in the Egypt, Burkina Faso, Côte d'Ivoire and Corporate
(which includes Jersey, United Kingdom and Australia). From a
mining of precious metals versus exploration for precious metals
perspective, management separately considers the Egyptian mining of
precious metals from the West African exploration for precious
metals in these geographies. The Egyptian mining operations derive
its revenue from sale of gold while the West African entities are
currently only engaged in precious metal exploration and do not
currently produce any revenue.
The board assesses the performance of the operating segments
based on profits and expenditure incurred as well as exploration
expenditure in each region. Egypt is the only operating segment
mining precious metals and therefore has revenue and cost of sales
whilst the remaining operating segments do not. All operating
segments are reviewed by the board as presented and are key to the
monitoring of ongoing performance and assessing plans of the
Company.
Non--current assets other than financial instruments by
country:
As at As at
30 September 31 December
2018 2017
(Unaudited) Restated
(Unaudited)
US$'000 US$'000
------------------- ------------- -------------
Egypt 898,065 885,158
Burkina Faso 35,990 36,094
Côte d'Ivoire 579 451
Corporate 22 27
934,656 921,730
------------------- ------------- -------------
5. Segment reporting (continued)
Statement of financial position by operating segment:
As at As at As at As at As at
30 September 30 September 30 September 30 September 30 September
2018 2018 2018 2018 2018
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
US$'000 US$'000 US$'000 US$'000 US$'000
----------------------- ------------- ------------- ------------- ------------- -------------
Total Egypt Burkina Côte Corporate
Faso d'Ivoire
Statement of Financial
Position
Total assets 1,310,167 1,020,489 37,496 1,085 251,097
Total liabilities (50,172) (46,412) (250) (874) (2,636)
----------------------- ------------- ------------- ------------- ------------- -------------
Net assets / Total
Equity 1,259,995 974,077 37,246 211 248,461
----------------------- ------------- ------------- ------------- ------------- -------------
As at As at As at As at As at
31 December 31 December 31 December 31 December 31 December
2017 2017 2017 2017 2017
Restated Restated Restated Restated Restated
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
US$'000 US$'000 US$'000 US$'000 US$'000
----------------------- ------------- ------------- ------------- ------------- -------------
Total Egypt Burkina Côte Corporate
Faso d'Ivoire
----------------------- ------------- ------------- ------------- ------------- -------------
Statement of Financial
Position
Total assets 1,424,355 1,028,927 37,621 888 356,919
Total liabilities (77,326) (73,655) (787) (307) (2,577)
----------------------- ------------- ------------- ------------- ------------- -------------
Net assets / Total
Equity 1,347,029 955,272 36,834 581 354,342
----------------------- ------------- ------------- ------------- ------------- -------------
Statement of comprehensive income by operating segment:
Quarter ended Quarter ended Quarter Quarter ended Quarter
30 September 30 September ended 30 September ended
30 September 30 September
2018 2018 2018 2018 2018
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
US$'000 US$'000 US$'000 US$'000 US$'000
--------------------------- ------------- ------------- ------------- ------------- -------------
Total Egypt Burkina Côte Corporate
Faso d'Ivoire
--------------------------- ------------- ------------- ------------- ------------- -------------
Statement of Comprehensive
Income
Revenue 125,127 125,127 - - -
Cost of sales (93,300) (93,300) - - -
Gross profit 31,827 31,827 - - -
Other income 13 13 - - -
Finance income 1,336 10 - - 1,326
Other operating costs (6,669) (2,807) (92) (53) (3,717)
Exploration and evaluation
costs (4,671) - (475) (4,196) -
Profit/(loss) for the
period before tax 21,836 29,043 (567) (4,249) (2,391)
Tax (33) (33) - - -
--------------------------- ------------- ------------- ------------- ------------- -------------
Profit/(loss) for the
period after tax 21,803 29,010 (567) (4,249) (2,391)
--------------------------- ------------- ------------- ------------- ------------- -------------
EMRA profit share (11,075) (11,075) - - -
--------------------------- ------------- ------------- ------------- ------------- -------------
Profit/(loss) for the
period after EMRA profit
share 10,728 17,935 (567) (4,249) (2,391)
--------------------------- ------------- ------------- ------------- ------------- -------------
5. Segment reporting (continued)
Quarter ended Quarter ended Quarter Quarter ended Quarter
30 September 30 September ended 30 September ended
30 September 30 September
2017 2017 2017 2017 2017
Restated Restated Restated Restated Restated
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
US$'000 US$'000 US$'000 US$'000 US$'000
--------------------------- ------------- ------------- ------------- ------------- -------------
Total Egypt Burkina Côte Corporate
Faso d'Ivoire
--------------------------- ------------- ------------- ------------- ------------- -------------
Statement of Comprehensive
Income
Revenue 193,093 193,093 - - -
Cost of sales (105,499) (105,499) - - -
Gross profit 87,594 87,594 - - -
Other income 242 1 - - 241
Finance income 607 11 - - 596
Other operating costs (12,997) (9,501) 3 40 (3,539)
Exploration and evaluation
costs (5,443) - (1,402) (4,041) -
Profit/(loss) for the
period before tax 70,003 78,105 (1,399) (4,001) (2,702)
Tax (566) (566) - - -
--------------------------- ------------- ------------- ------------- ------------- -------------
Profit/(loss) for the
period after tax 69,437 77,539 (1,399) (4,001) (2,702)
EMRA profit share (35,424) (35,424) - - -
--------------------------- ------------- ------------- ------------- ------------- -------------
Profit/(loss) for the
period after EMRA profit
share 34,013 42,115 (1,399) (4,001) (2,702)
--------------------------- ------------- ------------- ------------- ------------- -------------
Nine months Nine months Nine months Nine months Nine months
ended ended ended ended ended
30 September 30 September 30 September 30 September 30 September
2018 2018 2018 2018 2018
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
US$'000 US$'000 US$'000 US$'000 US$'000
--------------------------- ------------- ------------- ------------- ------------- -------------
Total Egypt Burkina Côte Corporate
Faso d'Ivoire
--------------------------- ------------- ------------- ------------- ------------- -------------
Statement of Comprehensive
Income
Revenue 421,518 421,518 - - -
Cost of sales (285,179) (285,179) - - -
Gross profit 136,339 136,339 - - -
Other income 37 37 - - -
Finance income 3,582 32 - - 3,550
Other operating costs (21,243) (10,117) (231) (502) (10,393)
Exploration and evaluation
costs (16,503) - (4,139) (12,364) -
Profit/(loss) for the
period before tax 102,212 126,291 (4,370) (12,866) (6,843)
Tax (43) (43) - - -
--------------------------- ------------- ------------- ------------- ------------- -------------
Profit/(loss) for the
period after tax 102,169 126,248 (4,370) (12,866) (6,843)
EMRA profit share (46,841) (46,841) - - -
--------------------------- ------------- ------------- ------------- ------------- -------------
Profit/(loss) for the
period after EMRA profit
share 55,328 79,407 (4,370) (12,866) (6,843)
--------------------------- ------------- ------------- ------------- ------------- -------------
5. Segment reporting (continued)
Nine months Nine months Nine months Nine months Nine months
ended ended ended ended ended
30 September 30 September 30 September 30 September 30 September
2017 2017 2017 2017 2017
Restated Restated Restated Restated Restated
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
US$'000 US$'000 US$'000 US$'000 US$'000
--------------------------- ------------- ------------- ------------- ------------- -------------
Total Egypt Burkina Côte Corporate
Faso d'Ivoire
--------------------------- ------------- ------------- ------------- ------------- -------------
Statement of Comprehensive
Income
Revenue 485,097 485,097 - - -
Cost of sales (315,105) (315,105) - - -
Gross profit 169,992 169,992 - - -
Other income 667 11 - - 656
Finance income 1,603 32 - - 1,571
Other operating costs (26,980) (18,344) 120 (27) (8,729)
Exploration and evaluation
costs (15,265) - (4,811) (10,454) -
Profit/(loss) for the
period before tax 130,017 151,691 (4,691) (10,481) (6,502)
Tax (1,580) (590) - - (990)
--------------------------- ------------- ------------- ------------- ------------- -------------
Profit/(loss) for the
period after tax 128,437 151,101 (4,691) (10,481) (7,492)
EMRA profit share (75,577) (75,577) - - -
--------------------------- ------------- ------------- ------------- ------------- -------------
Profit/(loss) for the
period after EMRA profit
share 52,860 75,524 (4,691) (10,481) (7,492)
--------------------------- ------------- ------------- ------------- ------------- -------------
Exploration expenditure by operating segment
The following table provides a breakdown of the total
exploration expenditure of the group by operating segment:
Quarter Quarter Nine months Nine months
ended ended ended ended
30 September 30 September 30 September 30 September
2018 2017 2018 2017
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
US$'000 US$'000 US$'000 US$'000
--------------------------------- ------------- ------------- ------------- -------------
Burkina Faso 475 1,402 4,139 4,811
Côte d'Ivoire 4,196 4,041 12,364 10,454
Egypt (Sukari tenement including
Cleopatra) 3,901 2,447 9,777 8,455
Total exploration expenditure 8,572 7,890 26,280 23,720
--------------------------------- ------------- ------------- ------------- -------------
6. Trade and other receivables
As at As at
30 September 31 December
2018 2017
(Unaudited) (Unaudited)
US$'000 US$'000
----------------------------- ------------- ------------
Current
Gold and silver sales debtor 14,184 31,007
Other receivables 5,069 3,460
----------------------------- ------------- ------------
19,253 34,467
----------------------------- ------------- ------------
Trade and other receivables are classified as financial assets
subsequently measured at amortised cost.
All gold and silver sales during the period were made to a
single customer in North America and are neither past due nor
impaired.
The average age of the receivables is eight days (2017: nine
days). No interest is charged on the receivables. There are no
trade receivables past due or impaired at the reporting date, and
thus no allowance for doubtful debts has been recognised. Of the
trade receivables balance, the gold and silver sales debtor is all
receivable from Asahi Refining of Canada. The amount due has been
received in full subsequent to period end. Other receivables
represent GST and VAT amounts owing from the various jurisdictions
that the group operates in and inventory returns to vendors where
refunds are expected to occur.
The directors consider that the carrying amount of trade and
other receivables is approximately equal to their fair value.
7. Inventories
As at As at
30 September 31 December
2018 2017
(Unaudited) (Unaudited)
US$'000 US$'000
------------------ ------------- ------------
Non-current
Mining stockpiles 30,548 6,651
------------------ ------------- ------------
30,548 6,651
------------------ ------------- ------------
Non-current ore stockpiles reflect ore tonnes not planned to be
processed within the next 12 months.
As at As at
30 September 31 December
2018 2017
(Unaudited) (Unaudited)
US$'000 US$'000
---------------------------------------- ------------- ------------
Current
---------------------------------------- ------------- ------------
Mining stockpiles and ore in circuit 33,897 25,077
Stores inventory 67,682 78,618
Provision for obsolete stores inventory (3,919) (5,136)
---------------------------------------- ------------- ------------
97,660 98,559
---------------------------------------- ------------- ------------
Inventories are carried at the lower of costs and net realisable
value.
Inventories include mining stockpiles, gold in process and dóre
supplies, stores and materials, and are stated at the lower of cost
or net realisable value. The cost of mining stockpiles and gold
produced is determined principally by the weighted average cost
method using related production costs.
Cost of mining stockpiles include costs incurred up to the point
of stockpiling, such as mining and grade control costs, but exclude
future costs of production. Ore extracted is allocated to
stockpiles based on estimated grade, with grades below defined
cut-off levels treated as waste and expensed. While held in
physically separate stockpiles, the group blends the ore from each
stockpile when feeding the processing plant to achieve the
resultant gold content. In such circumstances, lower and higher
grade ore stockpiles each represent a raw material, used in
conjunction with each other, to deliver overall gold production, as
supported by the relevant feed plan.
The processing of ore in stockpiles occurs in accordance with
the Life of Mine (LoM) processing plan is currently being optimised
based on the known mineral reserves, current plant capacity and
mine design. Ore tonnes contained in the stockpile which exceed the
annual tonnes to be milled as per the mine plan in the following
year, are classified as non-current in the statement of financial
position. Currently at Sukari, low grade low-low (0.3 to 0.4g/t)
and low grade low (0.4 to 0.5g/t) open pit stockpile material above
the cut-off grade of 0.3g/t has been reclassified to non-current
assets as these ore tonnes are not planned to be processed within
the next 12 months.
The net realisable value of mining stockpiles is determined with
reference to estimated contained gold and market gold prices
applicable. Mining stockpiles which are blended together or with
future ore mined when fed to the plant are assessed as an input to
the gold production process to ensure the combined stockpiles are
carried at the lower of cost and net realisable value. Mining
stockpiles which are not blended in production are assessed
separately to ensure they are carried at the lower of cost and net
realisable value, although no such stockpiles are currently
held.
Costs of gold inventories include all costs incurred up until
production of an ounce of gold such as milling costs, mining costs
and directly attributable mine general and administration costs but
exclude transport costs, refining costs and royalties. Net
realisable value is determined with reference to estimated
contained gold and market gold prices.
Stores and materials consist of consumable stores and are valued
at weighted average cost after appropriate impairment of redundant
and slow moving items. Consumable stock for which the group has
substantially all the risks and rewards of ownership are brought
onto the statement of financial position as current assets.
8. Prepayments
As at As at
30 September 31 December
2018 2017
(Unaudited) (Unaudited)
US$'000 US$'000
----------------- ------------- ------------
Current
Prepayments 4,504 7,546
Fuel prepayments - 2,247
----------------- ------------- ------------
4,504 9,793
----------------- ------------- ------------
8. Prepayments (continued)
Movement in fuel prepayments
Nine months Year ended
ended 31 December
30 September
2018 2017
(Unaudited) (Unaudited)
US$'000 US$'000
--------------------------------------- ------------- ------------
Balance at the beginning of the period 2,247 877
Fuel prepayment recognised 32,934 42,869
Less: Provision charged to:
Mine production costs (33,849) (39,030)
Property, plant and equipment (4,338) (2,761)
Inventories (228) 292
Fuel advance down payment 3,234 -
Balance at the end of the period - 2,247
--------------------------------------- ------------- ------------
Cumulative fuel prepayment and provision recognised
As at As at
30 September 31 December
2018 2017
(Unaudited) (Unaudited)
US$'000 US$'000
------------------------------ ------------- ------------
Fuel prepayment recognised 310,191 274,088
Less: Provision charged to:
Mine production costs (290,879) (257,030)
Property, plant and equipment (21,218) (16,880)
Inventories (1,328) (1,098)
Fuel advance down payment 3,234 3,167
------------------------------ ------------- ------------
Diesel Fuel Oil ("DFO") dispute
As more fully described in note 18 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
the funds and for this reason has fully provided against the
prepayment of US$310.2 million to 30 September 2018 of which
US$32.9 million was provided for in the nine months ended 30
September 2018. In the event the appeal is successful a separate
claim would then need to be brought in order to recover funds.
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.
This has resulted in a net charge of US$8.5 million in the
profit and loss for the quarterly period and US$33.1 million for
the year to date period.
Quarter ended 30 September Quarter ended 30 September
2018 2017
---------------------------------------- ----------------------------------------
Before Before
Adjustment Adjustment Total Adjustment Adjustment Total
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
------------------------------ ------------ ------------ ------------ ------------ ------------ ------------
Expenses
Cost of sales
Mine production costs (71,241) (10,299) (81,540) (70,738) (9,915) (80,653)
Movement in inventory 14,560 1,849 16,409 6,213 (2,313) 3,900
Depreciation and amortisation (28,169) - (28,169) (28,746) - (28,746)
------------------------------ ------------ ------------ ------------ ------------ ------------ ------------
(84,850) (8,450) (93,300) (93,271) (12,228) (105,499)
------------------------------ ------------ ------------ ------------ ------------ ------------ ------------
8. Prepayments (continued)
Nine months ended 30 September Nine months ended 30 September
2018 2017
-------------------------------- ------------------------------------------------------
Before Before
Adjustment Adjustment Total Adjustment Adjustment Total
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
------------------------ --------------- --------------- ------------ ------------ ------------ ------------
Expenses
Cost of sales
Mine production costs (204,430) (33,849) (238,279) (199,942) (32,351) (232,293)
Movement in inventory 31,924 793 32,717 (1,954) 589 (1,365)
Depreciation and
amortisation (79,617) - (79,617) (81,447) - (81,447)
------------------------ --------------- --------------- ------------ ------------ ------------ ------------
(252,123) (33,056) (285,179) (283,343) (31,762) (315,105)
------------------------ --------------- --------------- ------------ ------------ ------------ ------------
9. Property, plant and equipment
Mine Capital
Nine months ended 30
September 2018 Office Plant Mining Development work
(Unaudited) equipment Buildings and equipment equipment properties in progress Total
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
----------------------- ---------- --------- -------------- ---------- ----------- ------------ ---------
Cost
Balance at 31 December
2017 6,796 2,051 591,101 274,976 457,113 37,998 1,370,035
Transfers from capital
work in progress - - - - 16,411 (16,411) -
Additions 272 273 4,312 23,219 - 38,146 66,222
Disposals - - (149) (160) - - (309)
Balance at 30 September
2018 7,068 2,324 595,264 298,035 473,524 59,733 1,435,948
----------------------- ---------- --------- -------------- ---------- ----------- ------------ ---------
Accumulated
depreciation
Balance at 31 December
2017 (5,890) (548) (156,921) (163,902) (191,675) - (518,936)
Depreciation and
amortisation (357) (108) (21,086) (29,862) (28,432) - (79,845)
Disposals - - 98 160 - - 258
Balance at 30 September
2018 (6,247) (656) (177,909) (193,604) (220,107) - (598,523)
----------------------- ---------- --------- -------------- ---------- ----------- ------------ ---------
Year ended 31 December
2017 (Unaudited)
Cost
Balance at 31 December
2016 6,052 2,019 584,113 249,491 365,902 75,775 1,283,352
Additions 744 32 7,304 25,485 3,186 40,122 76,873
Increase in
rehabilitation
asset - - - - 2,542 - 2,542
Transfers from capital
work in progress - - - - 77,899 (77,899) -
Transfers from
exploration
and evaluation asset - - - - 7,584 - 7,584
Disposals - - (316) - - - (316)
Balance at 31 December
2017 6,796 2,051 591,101 274,976 457,113 37,998 1,370,035
----------------------- ---------- --------- -------------- ---------- ----------- ------------ ---------
Accumulated
depreciation
Balance at 31 December
2016 (5,400) (412) (127,913) (129,610) (151,091) - (414,426)
Depreciation and
amortisation (490) (136) (29,060) (34,292) (40,584) - (104,562)
Disposals - - 52 - - - 52
----------------------- ---------- --------- -------------- ---------- ----------- ------------ ---------
Balance at 31 December
2017 (5,890) (548) (156,921) (163,902) (191,675) - (518,936)
----------------------- ---------- --------- -------------- ---------- ----------- ------------ ---------
Net book value
As at 31 December 2017 906 1,503 434,180 111,074 265,438 37,998 851,099
----------------------- ---------- --------- -------------- ---------- ----------- ------------ ---------
As at 30 September 2018 821 1,668 417,355 104,431 253,417 59,733 837,425
----------------------- ---------- --------- -------------- ---------- ----------- ------------ ---------
The devaluation of the share price of the company has been
considered, however it was concluded that this was not an
impairment indicator. No impairment review has been performed in
2017 or 2018 as no impairment indicators were identified in each
period.
Assets that have been cost recovered under the terms of the
Concession Agreement in Egypt are included on the statement of
financial position under property, plant and equipment due to the
Company having right of use of these assets. These rights will
expire together with the Concession Agreement and are for the life
of the mine.
10. Exploration and evaluation asset
As at As at
30 September 31 December
2018 2017
(Unaudited) Restated
(Unaudited)
US$'000 US$'000
---------------------------------------------------- -------------- -------------
Balance at the beginning of the period 63,885 65,700
Expenditure for the period 9,777 10,610
Net pre-production gold sales related to Cleopatra (7,069) (4,841)
Transfer to property, plant and equipment - (7,584)
Balance at the end of the period 66,593 63,885
---------------------------------------------------- -------------- -------------
The exploration and evaluation asset relates to the drilling,
geological exploration and sampling of potential ore reserves and
can be attributed to Egypt (US$31.4 million), Burkina Faso (US$35.2
million) and Côte d'Ivoire (US$0.0 million). Please refer to note 1
for the change in accounting policy regarding the treatment of
Greenfield exploration expenditure.
In consideration of the requirements of IFRS 6 and IAS 36,
management is not aware of any information that would otherwise
suggest that an impairment trigger has occurred which would require
a full impairment test to be carried out at 30 September 2018.
11. Financial assets at fair value through other comprehensive
income
As at As at
30 September 31 December
2018 2017
(Unaudited) (Unaudited)
US$'000 US$'000
--------------------------------------------------------- ------------- ------------
Balance at the beginning of the period 125 130
Gain on foreign exchange movement - 86
(Loss) on fair value of investment - other comprehensive
income (125) (91)
Balance at the end of the period - 125
--------------------------------------------------------- ------------- ------------
The financial assets at fair value through other comprehensive
income at period end relates to a 5.33% (2017: 5.33%) equity
interest in Nyota Minerals Limited ("NYO"), a listed public
company, as well as a 0.29% (2017: 0.53%) equity interest in KEFI
Minerals plc ("KEFI"), an AIM listed company.
12. Trade and other payables
As at As at
30 September 31 December
2018 2017
(Unaudited) (Unaudited)
US$'000 US$'000
----------------------------- ------------- ------------
Trade payables 15,356 32,540
Other creditors and accruals 12,768 19,045
EMRA profit share accrual 2,000 5,000
----------------------------- ------------- ------------
30,124 56,585
----------------------------- ------------- ------------
Trade payables principally comprise the amounts outstanding for
trade purchases and ongoing costs. The average credit period taken
for trade purchases is 11 days (2017: 29 days). Trade payables are
interest free for periods ranging from 30 to 180 days. Thereafter
interest is charged at commercial rates. The group has financial
risk management policies in place to ensure that all payables are
paid within the credit timeframe.
The directors consider that the carrying amount of trade
payables approximate their fair value.
13. Provisions
As at As at
30 September 31 December
2018 2017
(Unaudited) (Unaudited)
US$'000 US$'000
--------------------------------------------------------- ------------- ------------
Current
Employee benefits(1) 411 2,510
Fuel(2) 7,050 2,000
Customs, rebates and withholding tax 530 4,801
7,991 9,311
--------------------------------------------------------- ------------- ------------
Non--current
Restoration and rehabilitation(3) 11,520 10,868
Other non-current provisions 534 93
--------------------------------------------------------- ------------- ------------
12,054 10,961
--------------------------------------------------------- ------------- ------------
Movement in restoration and rehabilitation provision
Balance at beginning of the year 10,868 7,697
Additional provision recognised/(provision derecognised) - 2,542
Interest expense - unwinding of discount 652 629
--------------------------------------------------------- ------------- ------------
Balance at end of the period 11,520 10,868
--------------------------------------------------------- ------------- ------------
(1) Employee benefits relate to annual, sick and long service leave entitlements and bonuses.
(2) Fuel provision relates to a backdated fuel charge for Q3 of 2018.
(3) The provision for restoration and rehabilitation represents
the present value of the directors' best estimate of the future
outflow of economic benefits that will be required to remove the
facilities and restore the affected areas at the group's sites
discounted by 8.01% (2017: 8.01%). This restoration and
rehabilitation estimate, which is reviewed on an annual basis, has
been made on the basis of benchmark assessments of restoration
works required following mine closure and after taking into account
the projected area to be disturbed over the life of the mine, being
20 years. The annual review undertaken as at 31 December 2017
resulted in a US$2.542m increase in the provision.
14. Issued capital
As at As at
30 September 2018 31 December
2017
(Unaudited) (Unaudited)
---------------------- ----------------------
Number US$'000 Number US$'000
---------------------------------------- ------------- ------- ------------- -------
Fully paid ordinary shares
Balance at beginning of the period 1,152,107,984 668,732 1,152,107,984 667,472
Employee share option scheme - Proceeds
from shares issued 2,615,000 1,406 - -
Transfer from share option reserve - 451 - 1,260
---------------------------------------- ------------- ------- ------------- -------
Balance at end of the period 1,154,722,984 670,589 1,152,107,984 668,732
---------------------------------------- ------------- ------- ------------- -------
The authorised share capital is an unlimited number of no par
value shares.
At 30 September 2018 the trustee of the deferred bonus share
plan held 839,716 ordinary shares (2017: 939,716 ordinary shares)
pursuant to the plan rules.
Fully paid ordinary shares carry one vote per share and carry
the right to dividends.
15. Share option reserve
As at As at
30 September 31 December
2018 2017
(Unaudited) (Unaudited)
US$'000 US$'000
----------------------------------- ------------- ------------
Share option reserve
Balance at beginning of the period 4,323 3,048
Share--based payments expense 2,330 3,156
Transfer to accumulated profits - (621)
Transfer to issued capital (1,857) (1,260)
----------------------------------- ------------- ------------
Balance at the end of the period 4,796 4,323
----------------------------------- ------------- ------------
The share option reserve arises on the grant of share options to
employees under the employee share option plan. Amounts are
transferred out of the reserve and into issued capital when the
options and warrants are exercised/vested. Amounts are transferred
out of the reserve into accumulated profits when the options and
warrants are forfeited.
16. Share--based payments
No share based payments were awarded or granted to Employees
during the third quarter.
17. Commitments
The following is a summary of the Company's outstanding
commitments as at 30 September 2018:
(a) Operating lease commitments
The future aggregate minimum lease payments under
non--cancellable operating leases are as follows:
As at As at
30 September 31 December
2018 2017
(Unaudited) (Unaudited)
US$'000 US$'000
---------------------------------------------------- ------------- ------------
Office premises
No longer than one year 111 115
Longer than one year and not longer than five years 445 459
Longer than five years 417 516
---------------------------------------------------- ------------- ------------
973 1,090
---------------------------------------------------- ------------- ------------
Operating lease commitments are limited to office premises in
Jersey. IFRS 16 is only effective from 1 January 2019 and its
impact on the financial statements is currently being assessed.
18. Contingent liabilities and contingent assets
Contingent liabilities
Fuel supply
As set out in note 8 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$22.7 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 the funds and for this reason has fully provided against
the prepayment of US$310.2 million. In the event the appeal is
successful a separate claim would then need to be brought in order
to recover funds. Refer to Note 8 of these financial statements for
further details on the impact of this provision on the group's
results for 30 September 2018.
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.
Concession Agreement court case
On 30 October 2012, the Administrative Court in Egypt handed
down a judgment in relation to a claim brought by, amongst others,
an independent member of a previous parliament, in which he argued
for the nullification of the agreement that confers on the group
rights to operate in Egypt. This agreement, the Concession
Agreement, was entered into between the Arab Republic of Egypt, the
Egyptian Mineral Resources Authority 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
18. Contingent liabilities and contingent assets (continued)
Contingent liabilities (continued)
Concession Agreement court case (continued)
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.
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. Law 32 of 2014 restricts the
capacity for third parties to challenge contractual agreements
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 (SCC). During Q2 2017,
the SCC re-referred the case to the state commissioner to prepare a
complementary report to an initial report provided by the state
commissioner in Q1 2017 which found Law 32 to be unconstitutional.
The state commissioner's report and complementary report are
advisory and non-binding on the SCC. The Company continues to
believe that it has a strong legal position and that in the event
that the SCC rules that Law 32 is invalid, the group remains
confident that its own 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 affected 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 December 2017:
nil).
19. Earnings per share ("EPS")
Quarter Quarter Nine months Nine months
ended ended ended ended
30 September 30 September 30 September 30 September
2018 2017 2018 2017
(Unaudited) Restated (Unaudited) Restated
(Unaudited) (Unaudited)
US cents US cents US cents US cents
per share per share per share per share
------------------------------ ------------- ------------- ------------- -------------
Basic earnings per share(1) 1.890 6.034 8.873 11.168
Diluted earnings per share(1) 1.870 5.977 8.805 11.083
------------------------------ ------------- ------------- ------------- -------------
Basic earnings per share(2) 0.930 2.956 4.805 4.596
Diluted earnings per share(2) 0.920 2.928 4.768 4.561
------------------------------ ------------- ------------- ------------- -------------
(1) Before profit share.
(2) After profit share.
19. Earnings per share ("EPS") (continued)
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:
Quarter Quarter Nine months Nine months
ended ended ended ended
30 September 30 September 30 September 30 September
2018 2017 2018 2017
(Unaudited) Restated (Unaudited) Restated
(Unaudited) (Unaudited)
US$'000 US$'000 US$'000 US$'000
--------------------------------- ------------- ------------- ------------- -------------
Earnings used in the calculation
of basic EPS(1) 21,803 69,437 102,169 128,437
Earnings used in the calculation
of basic EPS(2) 10,728 34,013 55,328 52,860
--------------------------------- ------------- ------------- ------------- -------------
(1) Before profit share.
(2) After profit share.
Quarter Quarter Nine months Nine months
ended ended ended ended
30 September 30 September 30 September 30 September
2018 2017 2018 2017
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Number Number Number Number
-------------------------- ------------- ------------- ------------- -------------
Weighted average number
of ordinary shares for
the purpose of basic EPS 1,153,663,269 1,150,714,936 1,151,506,466 1,150,054,939
-------------------------- ------------- ------------- ------------- -------------
Diluted earnings per share
The earnings and weighted average number of ordinary shares used
in the calculation of diluted earnings per share are as
follows:
Quarter Quarter Nine months Nine months
ended ended ended ended
30 September 30 September 30 September 30 September
2018 2017 2018 2017
(Unaudited) Restated (Unaudited) Restated
(Unaudited) (Unaudited)
US$'000 US$'000 US$'000 US$'000
--------------------------------- ------------- ------------- ------------- -------------
Earnings used in the calculation
of diluted EPS(1) 21,803 69,437 102,169 128,437
Earnings used in the calculation
of diluted EPS(2) 10,728 34,013 55,328 52,860
--------------------------------- ------------- ------------- ------------- -------------
(1) Before profit share.
(2) After profit share.
Quarter Quarter Nine months Nine months
ended ended ended ended
30 September 30 September 30 September 30 September
2018 2017 2018 2017
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Number Number Number Number
------------------------------------ ------------- ------------- ------------- -------------
Weighted average number of ordinary
shares for the purpose of basic
EPS 1,153,663,269 1,150,714,936 1,151,506,466 1,150,054,939
Shares deemed to be issued for
no consideration in respect of
employee options 11,990,334 10,959,667 8,809,807 8,825,436
------------------------------------ ------------- ------------- ------------- -------------
Weighted average number of ordinary
shares used in the calculation
of diluted EPS 1,165,653,603 1,161,674,603 1,160,316,272 1,158,880,375
------------------------------------ ------------- ------------- ------------- -------------
No potential ordinary shares were excluded from the calculation
of weighted average number of ordinary shares for the purpose of
diluted earnings per share.
20. Notes to the statements of cash flows
(a) Reconciliation of cash and cash equivalents
For the purpose of the statement of cash flows, cash and cash
equivalents includes cash on hand and at bank and deposits.
As at As at
30 September 30 September
2018 2017
(Unaudited) (Unaudited)
US$'000 US$'000
-------------------------- ------------- -------------
Cash and cash equivalents 254,094 313,003
-------------------------- ------------- -------------
(b) Reconciliation of profit for the year to cash flows from
operating activities
Quarter Quarter Nine months Nine months
ended ended ended ended
30 September 30 September 30 September 30 September
2018 2017 2018 2017
(Unaudited) Restated (Unaudited) Restated
(Unaudited) (Unaudited)
US$'000 US$'000 US$'000 US$'000
------------------------------------ ------------- ------------- ------------- -------------
Profit for the period before
tax 21,836 70,003 102,212 130,017
Add/(less) non--cash items:
Depreciation/amortisation of
property, plant and equipment 28,246 28,759 79,844 81,486
Inventory written off 154 121 451 135
Foreign exchange (gain)/loss (1,723) 535 (4,657) (1,246)
Share--based payments expense 618 701 2,330 1,731
Finance income (1,336) (607) (3,582) (1,603)
Provision for obsolete stores
inventory - 3,000 (1,217) 8,685
Loss on disposal of property,
plant and equipment 51 - 51 263
Changes in working capital during
the period:
Decrease/(increase) in trade
and other receivables (6,925) 2,372 15,213 3,880
(Increase)/decrease in inventories (14,371) 4,156 (21,781) 21,257
(Increase)/decrease in prepayments 6,629 (3,674) 5,295 (1,770)
Increase/(decrease) in trade
and other payables (6,241) (3,520) (23,461) (8,953)
(Decrease) in provisions 147 2,891 (453) (2,362)
------------------------------------ ------------- ------------- ------------- -------------
Cash flows generated from operating
activities 27,085 104,737 150,245 231,520
------------------------------------ ------------- ------------- ------------- -------------
(c) Non--cash financing and investing activities
During the period there have been no non--cash financing and
investing activities.
21. 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 financial assets at fair value through other
comprehensive income. 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.
The impact of IFRS 9 has been assessed and does not have a
significant impact on the financial statements of the Group.
22. Related party transactions
The related party transactions for the three months ended 30
September 2018 is summarised below:
- Salaries, superannuation contributions, bonuses, LTI's,
consulting and directors' fees of Directors during the three months
ended 30 September 2018 amounted to US$923,056 (30 September 2017:
US$635,278).
- Josef El--Raghy is a director and shareholder of El--Raghy
Kriewaldt Pty Ltd ("El--Raghy Kriewaldt"). El--Raghy Kriewaldt
provides office premises to the Company. All dealings with
El--Raghy Kriewaldt are in the ordinary course of business and on
normal terms and conditions. No rent and office outgoings to
El--Raghy Kriewaldt during the three months ended 30 September 2018
(30 September 2017: AU$15,338 or US$12,157) as this lease ended in
May 2018.
The related party transactions for the nine months ended 30
September 2018 is summarised below:
- Salaries, superannuation contributions, bonuses, LTI's,
consulting and directors' fees of Directors during the nine months
ended 30 September 2018 amounted to US$2,862,607 (30 September
2017: US$1,837,548).
- Josef El--Raghy is a director and shareholder of El--Raghy
Kriewaldt Pty Ltd ("El--Raghy Kriewaldt"). El--Raghy Kriewaldt
provides office premises to the Company. All dealings with
El--Raghy Kriewaldt are in the ordinary course of business and on
normal terms and conditions. Rent and office outgoings to El--Raghy
Kriewaldt during the nine months ended 30 September 2018 were
AU$26,100 or US$21,013 (30 September 2017: AU$46,013 or US$35,388),
this lease ended in May 2018.
Gold sales agreement
On 20 December 2016, SGM entered into a contract with the
Central Bank of Egypt ("CBE"). The agreement provides that the
parties may elect, on a monthly basis, for the CBE to supply SGM
with its local Egyptian currency requirements for that month (to a
maximum value of EGP50 million). In return, SGM facilitates the
purchase of refined gold bullion for the CBE from SGM's refiner,
Asahi Refining. This transaction has been entered into as SGM
requires local currency for its operations in Egypt (it receives
its revenue for gold sales in US dollars). Twelve transactions have
been entered into at the date of this report, ten in 2018 and two
in 2017 to a total value of US$33.9 million.
23. Subsequent events
There were no other significant events occurring after the
reporting date requiring disclosure in the financial
statements.
This report contains certain forward--looking statements. These
statements are made by the directors in good faith based on the
information available to them up to the time of their approval of
this report and such statements should be treated with caution due
to the inherent uncertainties, including both economic and business
risk factors, underlying any such forward--looking information.
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.
Investors should be aware that the reserve and resource estimate
dated 30 June 2017, and announced on 10 January 2018 does not
constitute a material change on the prior reserve and resource
estimate and an updated NI 43-101 resource and reserve report was
not required to be prepared.
Information of a scientific or technical nature in this document
was prepared under the supervision of Quinton De Klerk of Cube
Consulting Pty Ltd, Australia, a qualified person under the
Canadian National Instrument 43-101.
The total mineral resource was prepared by Norman Bailie of
Centamin plc. The open pit mineral reserve and underground mineral
reserve were prepared by Quinton De Klerk of Cube Consulting Pty
Ltd, Australia. The underground mineral resource was prepared by
Mark Zammit of Cube Consulting Pty Ltd, Australia. Mr Bailie, Mr
Zammit and Mr De Klerk are Qualified Persons under the Canadian
National Instrument 43-101.
Such qualified persons have verified the data disclosed,
including sampling, analytical, and test data underlying the
information or opinions contained in this announcement in
accordance with standards appropriate to their qualifications.
Cautionary note regarding forward--looking statements
There are risks associated with an investment in the shares of
Centamin. Recipients of this presentation should review the risk
factors and other disclosures regarding Centamin contained in the
preliminary prospectus and subsequent annual reports and Management
Discussion and Analysis reports of Centamin that have been filed
with Canadian securities regulators and are available at
www.sedar.com.
This announcement contains "forward-looking information" (or
"forward-looking statements") which may include, but are not
limited to, statements with respect to the future financial or
operating performance of the Company, its subsidiaries and its
projects (including the Sukari Project), the future price of gold,
the estimation of mineral reserves and resources, the realisation
of mineral reserve estimates, the timing and amount of estimated
future production, revenues, margins, costs of production, capital,
operating and exploration expenditures, costs and timing of the
development of new deposits, costs and timing of construction,
costs and timing of future exploration, the timing for delivery of
plant and equipment, requirements for additional capital, foreign
exchange risk, government regulation of mining and exploration
operations, environmental risks, reclamation expenses, title
disputes or claims, insurance coverage and the timing and possible
outcome of pending litigation and regulatory matters. Often, but
not always, forward-looking statements can be identified by the use
of words such as "plans", "hopes", "expects", "is expected",
"budget", "scheduled", "estimates", "forecasts", "intends",
"anticipates", or "believes" or variations (including negative
variations) of such words and phrases, or state that certain
actions, events or results "may", "could", "would", "might" or
"will" be taken, occur or be achieved.
Forward-looking information involves and is subject to known and
unknown risks, uncertainties and other factors which may cause the
actual results, performance or achievements of the Company and/or
its subsidiaries to be materially different from any future
results, performance or achievements expressed or implied by the
forward-looking information. Such factors include, among others,
general business, economic, competitive, political and social
uncertainties; the actual results of current exploration activities
and feasibility studies; assumptions in economic evaluations which
prove to be inaccurate; fluctuations in the value of the United
States dollar and the Canadian dollar relative to each other, to
the Australian dollar and to other local currencies in the
jurisdictions in which the Company operates; changes in project
parameters as plans continue to be refined; future prices of gold
and other metals; possible variations of ore grade or recovery
rates; failure of plant, equipment or processes to operate as
anticipated; accidents, labour disputes or slow downs and other
risks of the mining industry; climatic conditions; political
instability, insurrection or war; arbitrary decisions by
governmental authorities; delays in obtaining governmental
approvals or financing or in the completion of development or
construction activities. Discovery of archaeological ruins of
historical value could lead to uncertain delays in the development
of the mine at the Sukari Project.
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 information,
there may be other factors that cause actions, events or results to
differ from those anticipated, estimated or intended.
Forward-looking information contained herein is made as of the date
of this announcement and the Company disclaims any obligation to
update any forward-looking information, whether as a result of new
information, future events or results or otherwise. There can be no
assurance that forward-looking information or statements will prove
to be accurate, as actual results and future events could differ
materially from those anticipated in such information or
statements. Accordingly, readers should not place undue reliance on
forward-looking statements.
This announcement contains periodic regulated information.
LEI: 213800PDI9G7OUKLPV84
Company No: 109180
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
QRTUGGBPGUPRUQG
(END) Dow Jones Newswires
November 01, 2018 03:00 ET (07:00 GMT)
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