TIDMCEY
RNS Number : 7353S
Centamin PLC
13 July 2020
13 July 2020
Centamin plc
("Centamin" or "the Company")
(LSE:CEY, TSX:CEE)
QUARTERLY Report
for the three months ended 30 June 2020 [1](,4)
HIGHLIGHTS [2]
-- Group lost time injury frequency rate ("LTIFR") for the
second quarter ("Q2") of 0.21 per 200,000 workplace hours
-- To date the operations, supply chain and gold shipments have
not been materially impacted by COVID-19. Safeguarding the health
and wellbeing of our workforce is the top priority, and the Company
has implemented a preventative internal COVID-19 screening
programme for all personnel at the Sukari Gold Mine ("Sukari"),
utilising the track, trace, isolate approach
-- Gold production [3] for Q2 of 130,994 ounces from Sukari was
above forecast primarily due to higher mill feed grades and, as a
precautionary measure due to COVID-19, the deferral of plant
maintenance shutdowns to Q3 and therefore reducing the volume of
third-party on-site access. This brings production for the first
six months of the year ("H1") to 256,084 ounces
-- Cash costs for Q2 of US$625 per ounce produced (H1:
US$642/oz) and all-in sustaining costs ("AISC") of US$900 per ounce
sold (H1: US$901/oz), ahead of schedule and reflecting increased
production volumes
-- On track to meet 2020 full year guidance [4] . Full year
production range narrowed to between 510,000-525,000 ounces of
gold; cost guidance is unchanged with cash costs forecasted between
US$630-680 per ounce produced and AISC forecasted between
US$870-920 per ounce sold
-- Key projects progress as planned, including the underground
infrastructure upgrades and construction of the second tailings
storage facility ("TSF2")
-- Adjusted free cash flow of US$56 million generated for Q2 (H1: US$102m)
-- The Company has a strong balance sheet with cash and liquid
assets ([5]) of US$367 million, as at 30 June 2020, after payment
of the first interim dividend of $69million on 15 May 2020
-- Half-year financial results, including the second interim
dividend declaration, for the six months ended 30 June 2020, will
be published on Tuesday 4 August 2020
MARTIN HORGAN, CEO, commented :
"Today's results reflect a good first half performance for 2020.
Despite the considerable challenges presented by COVID-19, the
operating team at Sukari have been fast-acting and agile in their
response to protect the health, safety and wellbeing of our
workforce, inclusive of contractors, while maintaining the
continuity of our operations through extended staff rosters, supply
chain micro-management and operational planning. I would like to
thank them for their commitment which has enabled us to deliver
this positive performance.
Whilst we continue to actively manage the potential future
impacts of COVID-19, we remain confident we are on track to meet
guidance and have narrowed the production range to 510,000 to
525,000 ounces and kept cost guidance unchanged.
Finally, I wish to thank our Sukari stakeholders, inclusive of
the Egyptian government, our partners EMRA and the local community
of Marsa Alam - their support has enabled us to operate safely and
responsibly and the strength of our partnership will be a key
aspect of our continued joint success."
GROUP PRODUCTION SUMMARY (1,2,3)
Quarter on quarter Year on year
comparative comparative
------------------ ------------------ ----------------- ------------------------ ----------------
units Q2 2020 Q1 2020 % Q2 2019 %
------------------- ------------------ ----------------- ---------------- ------ -------- ------
Open pit
Total material
mined kt 20,266 20,501 (1%) 20,255 1%
Ore mined kt 4,122 4,176 (1%) 3,615 14%
Ore grade mined g/t Au 0.98 1.11 (12%) 0.70 40%
Ore grade milled g/t Au 1.27 1.32 (4%) 0.76 66%
------------------- ----------------- ---------------- ------ -------- ------
Underground
Ore mined kt 168 154 9% 310 (46%)
Ore grade mined g/t Au 5.99 4.98 20% 4.83 24%
------------------- ------------------- ----------------- ---------------- ------ -------- ------
Processing
Ore processed kt 2,994 3,077 (3%) 3,359 (11%)
Feed grade g/t Au 1.52 1.5 1% 1.16 31%
Gold recovery % 88 87.5 0.5% 88 0%
------------------- ------------------- ----------------- ---------------- ------ -------- ------
Gold production oz 130,994 125,090 5% 117,913 11%
Gold sold oz 130,745 139,784 (6%) 112,764 16%
------------------- ------------------- ----------------- ---------------- ------ -------- ------
Cash costs US$'000 produced 81,868 82,417 (1%) 87,553 (6%)
AISC US$'000 sold 117,685 126,089 (7%) 109,319 8%
Unit cash costs US$/oz produced 625 659 (5%) 752 (17%)
Unit AISC US$/oz sold 900 902 0% 982 (8%)
------------------- ------------------- ----------------- ---------------- ------ -------- ------
Avg realised
sales price US$/oz 1,731 1,587 9% 1,307 32%
CONFERENCE CALL
The Company will be hosting a conference call today, Monday, 13
July at 12.30 BST (UK time) to discuss the results with investors
and analysts, followed by an opportunity to ask questions.
Please find below the required participation details for the
call:
Dial-in telephone numbers:
United Kingdom +44 (0) 203 936 2999
United States +1 646 664 1960
South Africa +27 (0)87 550 8441
All other locations +44 (0) 203 936 2999
Participation access code: 178368
A replay will be made available on the Company website by the
close of business today.
FOR MORE INFORMATION please visit the website www.centamin.com or contact:
Centamin plc Buchanan
Alexandra Carse, Investor Relations Bobby Morse
+44 (0) 7700 713 738 Chris Judd
alexandra.carse@centamin.je Kelsey Traynor
+ 44 (0) 20 7466 5000
centamin@buchanan.uk.com
________________________________________________________________________________________________
OPERATIONAL REVIEW
Sukari Gold Mine, Egypt
Q2 2020 vs Q2 2019
Production
Gold production was 130,994 ounces for the quarter, a 11%
improvement compared to the corresponding quarter in 2019 ("YoY").
The outperformance in the quarter is as a result of an increase in
mill feed head grade and the deferral of planned maintenance
programmes from Q2 to H2, resulting in more tonnes processed and
greater production volumes. The deferred maintenance was a
precautionary measure due to COVID-19, to reduce non-essential
third-party traffic on site, and will be carried out in H2.
Open Pit Mining
Total open pit ore mined was 4.1Mt at an average grade of
0.98g/t, a 14% increase in tonnes YoY and a 40% improvement in
grade YoY, predominantly driven by mining in the higher-grade Stage
4 North and West areas of the open pit.
Total open pit waste material mined of 16.1Mt, was 3% less YoY,
and excluded 890kt scheduled as waste material but was reclassified
as low-grade ore and stockpiled, increasing ore tonnes and reducing
both the mined grade and strip ratio. The adjusted strip ratio for
the quarter was 3.9:1.
The open pit delivered 2.8Mt of ore to the mill, at an average
milled grade of 1.27g/t, and 265kt to the dump leach pads, at an
average grade of 0.41g/t. In Q2, stockpiles increased from 14.8Mt
at 0.48g/t to 15.8Mt at an average grade of 0.47g/t.
Underground Mining
Underground mining in the quarter focussed in Ptah. Total ore
mined was 168kt at an average total grade of 5.99g/t. This
represented a 46% decrease in tonnes YoY and a 24% improvement in
grade YoY. The underground ore split was:
-- Ore mined from stoping was 100kt at 7.3g/t, and
-- Ore mined from development was 68kt at an average grade of 4.0g/t.
The underground production benefited from improvements in mine
planning and operations that realised better dilution control which
in turn reduced tonnes mined while improving the grade delivered to
the run-of-mine pad. A number of planned stoping areas were
deferred until H2 and commensurately a number of higher grade
stopes brought forward into Q2 as a result of operating
considerations to optimise the mining sequence. This has meant that
the underground production has been more weighted to H1 than
originally planned.
In addition to ore development and production, underground
operations focussed on infrastructure upgrades and waste
development with progress made on both the ventilation system
upgrades and access decline development.
Processing
The plant processed 3.0Mt of ore, a 11% decrease YoY, at a
higher average feed grade of 1.52g/t, a 31% improvement YoY. A
number of routine plant maintenance activities were deferred from
Q2 to H2 as a response to COVID-19 planning that resulted in a
longer processing run-time and contributed in part to the higher
than guided production for the quarter. Metallurgical recovery
rates were consistent YoY at 88.0%. Dump leach operations
contributed 2,562 ounces.
FINANCIAL POSITION (Unaudited)
Balance Sheet
Centamin is committed to its policy of being 100% exposed to the
gold price through an unhedged position and no debt. The Company is
in a strong financial position, building cash and liquid assets to
US$367 million, as at 30 June 2020, after the first interim
dividend distribution of US$69 million on 15 May 2020.
Gold Sales
Gold sold of 130,745 ounces, a 16% improvement YoY, in line with
higher production. Stronger gold price resulted in a 32% increase
YoY in the average realised price of gold to US$1,731 per ounce.
Gross revenue for the quarter was US$227 million, a 54% improvement
YoY.
Free Cash Flow
Net cash generated from operating activities was US$144 million,
a 151% improvement YoY. After Sukari profit share distribution and
Group investing activities, Group adjusted free cash flow was US$56
million, a 196% improvement YoY, driven by increased gold sales and
increased gold price.
Under the terms of the Concession Agreement with our Egyptian
partners, EMRA, on 1 July 2020, the profit share mechanism changed
to 50:50, from 55:45 in favour of Centamin, and will remain at this
level for the remainder of the tenure.
ENVIRONMENTAL AND SOCIAL REVIEW
Health and Safety
The health and safety of our people remains our highest
priority, which is reinforced by a committed and visible leadership
group who are continuously engaging with the workforce while
reviewing work areas and tasks to ensure that all policies and
procedures are complied with and remain relevant.
The Group lost time injury frequency rate ("LTIFR") for Q2 is
0.21 per 200,000 workplace hours (Q1: 0.31) as a result of two lost
time injuries at Sukari. The focus remains on reducing the number
of injuries and incidents with the objective of zero harm.
COVID-19 update
Centamin has been proactive in how it manages and mitigates the
impacts within its control and Sukari operations continue
uninterrupted, with no material disruption to our gold production
or shipments.
At the centre of our decision-making process is the health,
safety and wellbeing of our employees and the communities we work
in. We have stringent safety protocols across all sites, including
clear operating standards on workplace conduct. In response to
COVID-19, early action was taken at Sukari, in line with our Sukari
COVID-19 Emergency Response Plan and in accordance with the advice
of governments and health authorities. For further detail please
refer to the 2019 Annual Report and 2019 Sustainability Report,
published on the Company's website: www.centamin.com .
During Q2, the Company moved from Phase 1 (Prevent and Maintain)
to Phase 2 (Protect and Transition) of the Sukari COVID-19
Emergency Response Plan. We have implemented an internal
pre-screening programme, supported by a 'test, track, trace and
isolate' approach, with mandatory testing of employees and
contractors at and before entering site, as we prepare for the
likely global co-existence with the COVID-19 virus for a prolonged
period of time.
To date the Company's protocols have been successful in managing
the process without any material impact on operations or
production, by isolating suspected personnel, monitoring their
conditions, tracking and tracing their contacts.
Our COVID-19 Executive Committee continues to provide oversight
during the pandemic, supported by multifunctional teams and a
framework led by Risk and Operations. At a minimum, the Board are
updated weekly, the Executive Committee meets three times a week
and the support team provide daily workforce updates and supply
chain assessment.
Environmental
Tailings Storage Facility ("TSF")
Centamin is committed to the highest standards of tailings
management. The Company's current downstream TSF ("TSF1") is
regularly reviewed according to regulatory and internal
requirements, including routine monitoring of wells and boreholes
for seepage. Construction of a second downstream TSF ("TSF2") is
underway and progresses on schedule for Q4 commissioning. Based on
current production rates, this will extend tailings deposition
beyond 2030.
Social and Economic Contribution
Centamin's mining operations, including exploration projects,
generate economic benefit for the countries and communities where
we operate through payments to government, employee and contractor
wages, payments to suppliers and contractors, vocational training,
community investment and academic investment.
Foreign Direct Investment
In Q2, as per the terms of the Concession Agreement [6] , the
Egyptian government earned US$6.8million [7] in royalty payments
and Sukari's operational performance resulted in profit share
payments of US$58.5 million to our partners, the Egyptian Mineral
Resource Authority ("EMRA").
Community Project
The local community to Sukari is Marsa Alam. During Q2, the
Company installed a computer lab at the city library, donating
computers and associated equipment for community use.
Local to our projects in Burkina Faso and Côte d'Ivoire in West
Africa, while non-critical community programmes were reduced,
projects completed included constructing and commissioning water
bore holes and constructing a new roof for the local school to the
Batie West Project. In Côte d'Ivoire, in partnership with GIZ
(German International Cooperation Agency) fertiliser, equipment and
supplies need for the rice season were provided.
Centamin is working with its stakeholders to identify the
immediate needs to mitigate the impact of the COVID-19 pandemic and
providing financial and logistical support to help our local
communities. Activities during Q2 include:
-- Working with the local health authorities in Marsa Alam to
assess the ability to provide enhanced health care testing and
facilities in the region;
-- Assistance in the local community through the provision of
PPE for local health authorities, emergency services and City of
Marsa Alam plus support to families economically disadvantaged by
the pandemic;
-- Provided sanitary materials and medical supplies, including
masks, disinfectants, thermometers and sterilizers, to assist in
managing the COVID 19 pandemic centrally in Abidjan and for our
local communities in Doropo and ABC in C ôte d'Ivoire; and
-- Provided sanitary materials and medical supplies to three
government selected medical facilities in Ouagadougou and the local
medical centre for Batie in Burkina Faso.
GOVERNANCE REVIEW
Board of Directors
The annual general meeting ("AGM") was held on 29 June 2020,
where all resolutions were passed. At the AGM three directors
retired from the Board: Josef El-Raghy, Gordon Edward Haslam and
Mark Arnesen. The new Technical Committee and Sustainability
Committee have been established.
During the quarter it was announced that Hendrik "Hennie" Faul
would join the Board as an independent non-executive director on 1
July. Hennie is an engineer and brings extensive technical and
corporate experience from his impressive 30-year career.
The Board currently comprises the Chairman, two executive
directors and six non-executive directors and is compliant with the
2018 UK Corporate Governance Code.
Senior Management
John "Howard" Bills joined the Company in Q2 as Group
Exploration Manager. As an exploration geologist, Howard has over
40 years' experience working in predominantly sub-Saharan African
gold projects. Most recently as the co-founder of gold producer,
Toro Gold, where he discovered and was part of the team that
developed the Mako mine in Senegal.
EXPLORATION REVIEW
S ukari Gold Mine, Egypt
During Q2 systematic underground drilling continued at Sukari,
targeting a combination of infill drilling, strike and depth
extensions to the Sukari orebody.
A total of 9,936 metres of underground diamond drilling was
completed in Q2, with drilling was focused on grade control to
support mine planning, resource conversion and step-out exploration
drilling.
Egyptian Exploration Licensing round
EMRA launched an exploration bid round process at the end of Q1
this year for a series of blocks covering the Eastern Desert in
Egypt. This process was initially scheduled to close in mid-July
but due to circumstances around COVID-19, EMRA extended the first
round submission deadline to 15 September 2020. This is the first
bid round under the proposed new tax, rent, royalty framework that
will be applied to new applications in the country. It is important
to note that the terms of the Concession Agreement on our 160km(2)
Sukari tenement remains unchanged.
Centamin, with the only commercial gold mine in Egypt, believes
there is significant untapped gold resources within the Arabian
Nubian Shield, and is currently evaluating the opportunities
presented by the current bid round. We look forward to updating our
stakeholders in due course.
West Africa Exploration
During Q2 the Company has continued to focus exploration
evaluation work on its two principal projects in Côte d'Ivoire -
the Doropo Project, located in the northeast and the
Archaean-Birimian Contact ("ABC") Project located in the west.
At Doropo, in H1, approximately 28,000 metres of step-out and
infill RC drilling had been completed on several of the Doropo
prospects including over 15,000 metres along the 10km long
Kilosegui structure. The main drilling works planned for 2020 will
be completed during Q3 with the objective of carrying out a Mineral
Resource Estimation update by year end.
At the ABC Project is located within the Sassandra Shear
Corridor and comprises of two exploration permits, FarakoNafana and
Kona. In H1 approximately 2,300 metres of core drilling has been
completed on the southern zone along the Lolosso corridor. Drilling
data from the last 18 months of exploration at ABC will be
incorporated into a Mineral Resource Estimation update scheduled
for completion by year end.
Forward-looking Statements
This announcement (including information incorporated by
reference) contains "forward-looking statements" and
"forward-looking information" under applicable securities laws
(collectively, "forward-looking statements"), including statements
with respect to future financial or operating performance.
Generally, these forward-looking statements can be identified by
the use of forward-looking terminology such as "believes",
"expects", "expected", "budgeted", "forecasts" and "anticipates".
Although Centamin believes that the expectations reflected in such
forward-looking statements are reasonable, Centamin can give no
assurance that such expectations will prove to be correct.
Forward-looking statements are prospective in nature and are not
based on historical facts, but rather on current expectations and
projections of the management of Centamin about future events and
are therefore subject to known and unknown risks and uncertainties
which could cause actual results to differ materially from the
future results expressed or implied by the forward-looking
statements. In addition, there are a number of factors that could
cause actual results, performance, achievements or developments to
differ materially from those expressed or implied by such
forward-looking statements; general business, economic,
competitive, political and social uncertainties; the results of
exploration activities and feasibility studies; assumptions in
economic evaluations which prove to be inaccurate; currency
fluctuations; changes in project parameters; future prices of gold
and other metals; possible variations of ore grade or recovery
rates; accidents, labour disputes and other risks of the mining
industry; climatic conditions; political instability; decisions and
regulatory changes enacted by governmental authorities; delays in
obtaining approvals or financing or completing development or
construction activities; and discovery of archaeological ruins.
There can be no assurance that forward-looking statements will
prove to be accurate, as actual results and future events could
differ materially from those anticipated in such information or
statements. Forward-looking statements contained herein are made as
of the date of this announcement and the Company disclaims any
obligation to update any forward-looking statement, whether as a
result of new information, future events or results or otherwise.
Accordingly, readers should not place undue reliance on
forward-looking statements.
[1] Accounts included within this report are unaudited
[2] Cash costs of production, AISC, adjusted EBITDA, Cash,
bullion on hand, gold and silver sales debtor, financial assets at
fair value through profit and loss (also known as cash and liquid
assets) and adjusted free cash flow are Non-GAAP Financial Measures
as defined in the 2019 Annual Report
[3] Gold produced is gold poured and does not include
gold-in-circuit at period end
[4] The Company is actively monitoring the developments of the
COVID-19 pandemic and guidance may be impacted if the workforce or
operation are disrupted
[5] Cash, bullion on hand, gold and silver sales debtor,
financial assets at fair value through profit and loss (also known
as cash and liquid assets)
[6] The royalty due to the Government under Article III (1)
shall not be recoverable and shall be paid in cash by Operating
Company to a bank designated by EGSMA within thirty (30) days after
the end of each calendar half, or at such earlier time as may be
agreed upon, (2) an amount equal to three percent, and (3) of Sale
Revenue during such calendar half
[7] Accrued royalties are paid every six months in arrears
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
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