TIDMCEY
RNS Number : 9436S
Centamin PLC
22 March 2021
22 March 2021
Centamin plc
("Centamin" or "the Company")
(LSE:CEY, TSX:CEE)
higher gold price and cost savings drive 54% increase in
ebitda
full year results for the twelve months ended 31 December
2020
MARTIN HORGAN, CEO, commented : "Centamin delivered another
solid financial performance in 2020, driven primarily by improved
commodity pricing, our comprehensive response to COVID-19 and an
improvement in operating efficiencies and productivity. I would
like to thank our workforce for how they responded to the operating
environment in 2020, continuing to deliver results. Centamin
generated record revenue of US$829 million, a 54% increase in
EBITDA to US$439 million with an EBITDA margin of 53%. Ultimately,
the Group generated significant free cash flow, of US$142 million,
a 91% increase, making it possible to propose and pay dividends
attributable to 2020 of US$104 million further demonstrating
Centamin's commitment to delivering returns to our shareholders. We
continue to maintain a strong and flexible balance sheet, finishing
the year with US$310 million in cash and liquid assets at 31
December 2020."
financial HIGHLIGHTS
-- Record revenue generated of US$829 million from gold sales of
468,681 ounces at an average realised gold price of US$1,766 per
ounce sold
-- EBITDA of US$439 million, at a 53% EBITDA margin
-- Profit before tax of US$315 million
-- Basic earnings per share ("EPS") of 13.5 US cents per share
-- Group free cash flow of US$142 million, after a record of
US$199 million was distributed in profit share and royalties to our
partner, the Egyptian state
-- US$44 million of gross costs removed, as part of the ongoing
US$100 million cost-saving target by 2024
-- Strong balance sheet with no debt or hedging, and cash and
liquid assets of US$310 million, as at 31 December 2020
-- The Board has proposed a final dividend of 3 US cents per
share, equating to US$34.7 million to be distributed to
shareholders, subject to shareholder approval at the annual general
meeting on 11 May 2021
OUTLOOK UNCHANGED
-- 2021 gold production of 400,000 to 430,000 oz, at cash costs
of US$800-900/oz produced and AISC of US$1,150- 1,250/oz sold
-- The Board reiterates its intention to recommend a minimum
2021 dividend of US$105 million (interim and final)
GROUP FINANCIAL SUMMARY
Units FY20 FY19 % H2 20 H1 20
========================== ================= ======== ======== ==== ======== ========
Gold produced Oz 452,320 480,528 -6% 196,236 256,084
Gold sold Oz 468,681 470,020 0% 198,152 270,529
Cash cost US$'000 325,188 333,037 -2% 160,902 164,286
Unit cash cost US$/oz produced 719 699 3% 820 642
AISC US$'000 485,478 439,317 11% 242,255 243,225
Unit AISC US$/oz sold 1,036 943 10% 1,223 899
Avg realised gold
price US$/oz 1,766 1,399 26% 1,918 1,657
======== ==== ========
Revenue US$'000 828,737 652,344 27% 379,983 448,754
EBITDA US$'000 438,515 283,968 54% 182,784 255,731
Profit before tax US$'000 314,999 173,029 82% 123,851 191,148
Profit after tax attrib
to the parent US$'000 155,979 87,463 78% 81,163 74,816
Basic EPS US cents 13.53 7.59 78% 7.04 6.49
Capital expenditure US$'000 138,396 97,580 42% 86,665 51,731
Operating cash flow US$'000 453,305 249,004 82% 198,630 254,675
Adjusted free cash
flow US$'000 141,768 74,341 91% 39,813 101,955
========================== ================= ======== ======== ==== ======== ========
CONFERENCE CALL AND WEBCAST
The Company will host a conference call and webcast presentation
on the same day, at 13.30 GMT / 09.30 EDT, to discuss the results
with investors and analysts, followed by an opportunity to ask
questions. Please find below the required participation details. A
replay will be made available on the Company website.
WEBCAST PRESENTATION
To join the webcast: https://www.investis-live.com/centamin/6038c403dd22a11400517bf5/wown
Please allow a few minutes to register.
CONFERENCE 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: 289978
A copy of the results presentation can be found on the homepage
of the website: www.centamin.com
FOR MORE INFORMATION: please visit the website www.centamin.com or contact:
Centamin plc Buchanan
Alexandra Barter-Carse, Corporate Communications Bobby Morse / Kelsey Traynor
+44 (0) 7700 713 738 + 44 (0) 20 7466 5000
alexandra.carse@centamin.je centamin@buchanan.uk.com
________________________________________________________________________________________________
NOTES
Non-GAAP measures
This statement includes certain financial performance measures
which are not GAAP measures as defined under International
Financial Reporting Standards (IFRS). These include EBITDA and
adjusted EBITDA, Cash costs of production, AISC, Cash and liquid
assets, and Free cash flow. Management believes these measures
provide valuable additional information for users of the financial
statements to understand the underlying trading performance. An
explanation of the measures used along with reconciliation to the
nearest IFRS measures is provided in the Financial Review.
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; the risks and uncertainties associated
with the ongoing impacts of COVID-19 or other pandemic, 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, particularly in
light of the current economic climate and the significant
volatility, uncertainty and disruption caused by the outbreak of
COVID-19. 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.
LEI: 213800PDI9G7OUKLPV84
Company No: 109180
CEO STATEMENT
Martin Horgan
Chief Executive Officer
It is a pleasure to be providing my first CEO Statement since
joining Centamin in April 2020. It has been a year that has
presented numerous challenges as we faced the global health and
economic crisis from the COVID-19 pandemic. I am immensely proud of
the resilience and dedication of our workforce whose commitment and
proactive response has enabled the Company to successfully navigate
this period. Consequently, many of our workforce have been
separated from their families and loved ones for extended periods
and in some cases facing substantial periods in isolation, with
limited physical exercise due to travel protocols. The mental and
physical health of our people is a vital consideration and in 2020
we implemented several initiatives to help address this situation
which included improved rest accommodation, robust fatigue
management protocols, increased our health education and exercise
programmes, upgraded our workforce health insurance, and introduced
a third-party mental health and advice platform for our team.
The year also saw the commencement of a comprehensive review of
the Company with the intention of building on the successes of the
last 10 years to map out a strategy for the next decade and beyond
which will deliver an optimised Sukari and the realisation of the
value in our West African portfolio of exploration assets. I look
forward to updating you in due course as we start to deliver into
this strategy over 2021 and beyond.
COVID-19
Our priority remains the health and safety of our people and
local communities. Testament to our proactive response to the virus
outbreak, combined with our emergency preparedness framework,
Centamin experienced no material disruptions at Sukari or our
exploration projects in West Africa. Recognising that the duration
of the pandemic and the lasting impacts remain uncertain, we have
adapted our operating practices to enable the Company to co-exist
with COVID-19 for the longer term, including, but limited to,
mandatory employee screening before entering and exiting site, with
associated test, trace and isolation protocols in place and
increasing our workforce headcount and the integration of
appropriate health, safety, and wellbeing measures into our daily
operations which allows us to focus on longer horizon planning
(rosters, supplies, capital growth projects) with more
confidence.
The pandemic has also created opportunities for us, accelerating
the adoption and implementation of technologies. In 2020, we
established and transitioned the entire workforce onto a bespoke
cloud-based business environment. With more people working
remotely, this became critical, and has allowed for more efficient
dissemination of information, collaborative discussion, and more
productive working, irrespective of our physical location.
Our local communities are an extension of our workforce and we
have a clear responsibility to provide support and assistance
tackling the vulnerabilities they face. In 2020, we provided
financial and logistical support towards our host country's
COVID-19 response efforts to combat the pandemic. This included
donating to a Marsa Alam (Egypt) hospital, two state of the art
medical machines capable of testing for several life-threatening
communicable diseases, including COVID-19.
2020 PERFORMANCE
Operational safety remains a primary focus for management, and
this year's safety record is evidence of the continued progress
with a 41% improvement in LTIFR to 0.84, and a TRIFR of 5.16, per
one million site-based hours worked. While this was an improvement
on previous performance this is an area of ongoing focus and
work.
Our strong operating performance in many areas at Sukari was
overshadowed by the safety-related decision in Q4 to temporarily
suspend mining in a section of the open pit. Given a lack of
operational flexibility in the open pit operations there was
limited ability to revise the mining sequence and maintain
production. The necessity to mine in the lower-grade Stage 5 North
area of the pit therefore unfortunately impacted our guidance for
2020.
Improving mine planning to increase confidence in forecasting
while increasing operational flexibility is a key focus for the
Company, beginning with the commencement of an accelerated
waste-stripping programme utilising an independent contractor and
our own fleet, to position Sukari for stable long-term
production.
While the open pit issue dominated the year's headlines given
the impact on production, it should not be allowed to overshadow
the performance of the team at site who performed excellently -
even more so when considering the COVID-19 environment they
operated in: a record amount of material was moved in the open pit,
the underground continued its operational improvement across
production and implemented key upgrade projects and the projects
team delivered the critical TSF2 construction ahead of schedule and
under budget, while simultaneously delivering multiple other
projects.
Despite lower production output, we delivered another strong
financial performance in 2020, benefiting from improved commodity
pricing, our rapid response to COVID-19 and continuous dedication
to improve operating efficiencies and productivity. Centamin
reported a 54% increase in EBITDA to US$439 million with an EBITDA
margin of 53%. Profit after tax increased 82% to US$315 million.
Ultimately, the Group generated significant free cash flow, of
US$142 million, a 91% increase, making it possible to pay dividends
attributable to 2020 of US$104 million. We continue to maintain a
strong and flexible balance sheet, and finished the year with
US$310 million in cash and liquid assets at 31 December 2020.
RIGHT PEOPLE, RIGHT PROCESSES
Further to completing the Board succession programme in 2020,
and with a clear focus on positioning Centamin for long term
success, we completed a 'root and branch' review of our management
and operating teams. This confirmed what we already knew, Centamin
has some great people and the focus has been on upskilling and
strengthening the leadership team in a limited number of key areas
with the appointments of a Head of Risk, Head of ESG, Group
Exploration Manager, Group Mineral Resource Manager and Group
Projects Manager. I believe that the addition of these new team
members working alongside the existing high-quality team will
enable us to deliver into our long-term vision of growing Centamin
into a top tier multi-asset gold producer.
Recognising talent and ability and providing an environment for
individuals to grow and develop is a key in motivating and
retaining the best people who will deliver this vision. We have
allocated US$6 million to workplace development programmes at
Sukari in 2021, p roviding the training and tools needed to perform
to the best of their ability, with several additional workforce
initiatives and apprenticeship programmes being developed.
sustainability
Centamin's mining operations and 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. Managed correctly,
the mining sector can be a significant engine of local growth and
development providing substantial benefits to the societies in
which we operate.
In 2020, strides were made in establishing a stronger
environmental, social and governance framework, starting with the
establishment of the board-level Sustainability Committee and the
appointment of Paul Cannon as Group ESG Manager. Centamin is a
significant employer and financial economic contributor to both the
government and local communities. Over 95% of our total workforce
is employed locally and over 60% of our supplies procured within
Egypt at Sukari and 94% of our supplies procured locally to our
exploration projects in West Africa. In 2020, our employee
development training nearly doubled and further progress was made
developing talented local employees into positions of
management.
Our local communities are an extension of our workforce and
where many of our contracted workforce live. As we look to 2021 and
beyond, we are developing integrated programmes that meet the needs
of our local communities and focus on our target areas of training
and education, healthcare, gender equality and local economic
participation. I look forward to updating you more on these
initiatives in the future.
PURSUING GROWTH
As a team we spent 2020 reviewing the growth potential of
Centamin and I am excited by the number of opportunities already in
our portfolio before we even consider looking externally for new
opportunities. Our operations are hosted in two of the worlds'
great geological terranes, the under-explored Arabian-Nubian Shield
in Egypt and the Birimian terrane of West Africa. Our defined
resources at Sukari sit along a 2km surface signature within our
160km(2) licence. The Sukari orebody remains open at depth and
along strike and I believe there is great potential to further
develop the resource base at Sukari. The full potential of the
wider Sukari concession area remains untested and there is
potential for further discovery within the existing tenement. With
a new geological leadership team and a significant budget
allocation active exploration programmes are underway to unlock
that potential. Furthermore, Centamin is looking to expand its
footprint along the Arabian Nubian Shield, and participated in
Egypt's exploration bid round, launched in March. Commercial terms
are being negotiated, with the goal to increase the Company's
footprint in Egypt by way of operations, employment and further
opportunities. Our exploration portfolio in West Africa made good
progress in 2020, and despite initial disruptions caused by
COVID-19, all budgeted exploration and drilling programmes were
completed. Strategic reviews for each of the projects commenced
earlier this year and I look forward to communicating the outcomes
of those studies, and a route to value realisation next
quarter.
OUTLOOK
After a challenging 2020, Centamin has emerged with a renewed
focus on delivering the full potential of the Company. Centamin is
an established Company - ten-year operating track record,
seven-year dividend stream, premium dual-listed, FTSE 250
constituent, fully distributed capital structure with a robust
balance sheet. This is an excellent platform from which the
Centamin team can build from. In December, we presented the
conclusions of the Phase 1 Life of Asset review ("LOA") and
three-year outlook, detailing clear cost-saving, exploration, and
productivity initiatives, targeting 450-500,000 ounces production
at less than US$900/oz all-in sustaining costs from 2024. This was
the first step on the journey of our plans to unlock Sukari's full
potential. Phase 2 of the LOA is ongoing to assess and identify
further opportunities for exploration, productivity, and efficiency
improvements, giving us a fully optimised life of mine plan for
Sukari. We look forward to communicating our future progress
throughout the year and beyond.
Centamin is a company of many strengths with significant
opportunities ahead. Combining the business' asset quality,
financial flexibility and active growth pipeline, and quality
people to drive long-term value creation, we look forward to
generating sustainable returns for our shareholders and broader
stakeholders alike.
We believe we are in a strong position to navigate future
challenges within our control, presented by the continuation of
COVID-19. We continue to work closely with our government partners,
monitoring the developments and adapt our processes accordingly, to
ensure the safety of our people and local communities, and minimise
disruption to our operation.
Let me end by thanking the leadership team and all our
colleagues, contractors and partners for their steadfast support
and excellent work. And to the Board for your advice and
stewardship.
CFO STATEMENT
Ross Jerrard
Chief Financial Officer
Centamin is a financially robust, highly cash generative
business, committed to responsible mining and balanced stakeholder
returns. Our financial strategy remains consistent and while it was
tested this past year with the challenges faced from the COVID-19
pandemic, it demonstrated the strength and resilience of our
business.
ANOTHER SOLID FINANCIAL PERFORMANCE
Revenues increased by 27% to US$829 million, from annual gold
sales of 468,681 ounces, down 0.3%, at an average realised price of
US$1,766 per ounce, up 26% year-on-year. A total of 3,039 ounces of
unsold gold bullion was held on site at year end, due to timing of
gold shipments.
As a Group, underlying EBITDA improved by 54% to US$439 million,
at a 53% EBITDA margin[1], principally driven by higher gold prices
and lower fuel costs.
Profit after tax increased by 82% to US$315 million, due to the
below, with basic earnings per share ("EPS") increasing by 78% to
14 US cents.
-- a 27% increase in revenue
-- a 19% increase in other income, offset by
-- a 2% increase in cost of sales
-- a 46% increase in other operating costs, mainly due to a 26% increase in royalties
-- a 75% decrease in gains on financial assets at fair value through profit or loss, and
-- a 3% increase in exploration and evaluation expenditure.
Centamin's cash flows and earnings showed further growth in
2020. Operational cash flow improved by 82% to US$453 million,
after gross capital expenditure of US$138 million predominantly
invested in the long-term sustainability of the business. Adjusted
Group free cash flow[2] improved by 91% to US$142 million, after
profit share distribution of US$174 million to our partner, the
Egyptian state.
STRONG BALANCE SHEET
Centamin continues to maintain a robust financial strategy, with
cash and liquid assets(4) of US$310 million as at 31 December 2020.
Unique amongst our peers, Centamin has never had debt, hedging nor
streaming in place, thereby maximising the strength and flexibility
of the balance sheet today and offering shareholders gold exposure
throughout the cycle. This strong financial discipline provides the
flexibility to drive self-funded long-term organic growth and
pursue strategic opportunities that meet our corporate strategy and
investment criteria.
STRINGENT COST MANAGEMENT
A key change in 2020, is the way we make decisions.
Historically, we have been influenced by the headline ounce
production profile but now and going forward, we will always look
to prioritise value over production volume, as a means to maximise
free cash flow generation. We are optimising our business to
deliver the best value - with outcomes based on combination of
revenues, operating costs and capital invested.
A nnual costs were within the stated annual guidance published
on 2 October 2020, and whilst the average realised gold price on
sales improved 26% year-on-year, our AISC margin improved 60% to
US$730 per ounce sold. Cash costs of production[3] [4] was US$719
per ounce produced, up 3%, reflecting a 2% increase in mined tonnes
offset by a 7% decrease in processed tonnes and a 6% decrease in
gold ounces produced (excluding Cleopatra from 2019 ounces).
AISC(4) was US$1,036 per ounce sold, up 10%, mainly due to a 26%
increase in royalty costs, 29% increase in sustaining corporate
costs, 14% increase in sustaining underground development costs and
a 30% increase in sustaining capital costs complimented by a 0.3%
decrease in gold ounces sold, which were anticipated.
Excellent progress was made throughout the year against our
cost-savings programme, with US$44 million of gross savings
delivered, before unscheduled costs of US$14 million due to
COVID-19. In our 2021-2023 baseline estimates, a further US$16
million cost savings have been budgeted and as part of the Phase 2
of the Life of Asset review, we are evaluating opportunities to
extract a further US$30-40 million, in addition to the
forecasts.
iNVESTING IN THE FUTURE
Capital allocation continues to be disciplined and closely
qualified against value creation. The Company continues to exercise
a balanced approach to responsibly maximising operating cash flow
generation, reinvesting for future growth and prioritising
sustainable shareholder returns. The Company liquidity and strength
of the balance sheet is fundamental to the longevity of the
business and seriously considered when assessing capital
allocation. Centamin has an active growth pipeline through
results-driven exploration. These self-funded projects are ranked
based on results against our development criteria and prospective
returns before capital is allocated.
In 2020, as a precautionary move to protect the health and
wellbeing of the workforce, non-essential capital expenditure was
deferred, including the construction of the Sukari solar plant and
purchase and delivery of new mobile equipment. This resulted in
total capital expenditure of US$138 million, down from US$190
million guided prior to the COVID-19 outbreak. In 2020 the focus
was on improving operational efficiencies to achieve consistent
operational performance, with a split of US$103 million in
sustainable capital and US$35 million in non-sustaining capital
expenditure. Significant capital projects included the construction
of TSF 2, camp upgrades, with early works commencing on the solar
plant and continuous process plant optimisation.
In addition to capital deferral, we substantially strengthened
our project expertise - planning, execution, and leadership.
Combined with teamwork and innovation, resulted in significant
capital savings from project optimisation, taking some of the
challenges faced by COVID-19 from restricted third-party site
access, and yielding a positive outcome by utilising our skilled
workforce and equipment more efficiently on projects such as the
underground ventilation upgrades and plant maintenance.
Construction of our second tailings storage facility, which will
extend our tailings capacity to 2030, was our largest capital
project in the year, which we delivered on time and slightly ahead
of budget. Commissioning is currently underway. Preparatory works
ahead of the solar project construction, progressed well throughout
the year, with site earthworks 60% complete and the civil
engineering works for the high-voltage switchgear station nearly
complete. Our ongoing focus of creating a positive work environment
for our employees saw significant upgrades to the Sukari camp,
including new accommodation. The build is 60% complete and remains
on track for completion in Q2.
On 2 December we announced our three-year capital outlook to put
Sukari back on the front foot by improving the long-term
sustainability of the operations through increased stripping and
underground development to increase mining flexibility. Investment
in technology, people and training are additional critical areas as
the Company continues to invest to further improve operational
performance. For the years 2021 and 2022, there is a stronger focus
on growth capital investment in the business, in particular at
Sukari. Growth projects include construction of the hybrid solar
plant, reducing the reliance on fossil fuels and improving
operating costs.
Legal
We maintain close contact with our Egyptian legal team, keeping
us informed of all legal and political developments which may
impact on our current and future operations in-country. In
addition, we consult regularly with the legal team advising on the
current litigation. We are therefore in a position to take swift
and decisive action to protect our interests in Egypt, should the
need arise.
RELIABLE SHAREHOLDER RETURNS
We have a seven-year track record of returning surplus cash to
shareholders, based on our policy linked to free cash flow
generation. Maintaining a sustainable dividend policy is central to
our strategy. Our dividend policy makes firm commitments on capital
allocation, meaning shareholder interests are always at the centre
of what we do:
1. The first 30% of free cash flow is ringfenced for dividends
2. After assessing growth capital requirements, any surplus cash is returned to shareholders
Consistent with the Company's commitment to returning surplus
cash to shareholders, and in line with the Company's dividend
policy, the Board propose a 2020 final dividend, for the year ended
31 December 2020, of 3 US cents per share (c.US$35 million),
bringing the proposed total dividend for 2020 to 15 US cents per
share (c.US$173 million), of which US$69 million relates to the
2019 final proposed dividend that was changed to a first interim
dividend announced in Q1 2020:
-- First Interim 2020 dividend: 6 US cents per share, attributable to financial year 2019
-- Second Interim 2020 dividend: 6 US cents per share, attributable to financial year 2020
-- (Proposed) Final 2020 dividend: 3 US cents per share, attributable to financial year 2020
The final 2020 dividend is subject to shareholder approval at
the 2021 AGM on 11 May.
For the current year, 2021, the Board reiterates its intention
to recommend a minimum dividend of US$105 million, subject to final
Board and shareholder approvals, which will be paid as an interim
and final dividend. This reflects our confidence in the outlook for
the Company during this year of investment and the strength of the
Company's financial position. The long-term dividend policy of
paying out a minimum of 30% of free cash flow remains
unchanged.
Outlook
Our focus on cost control and productivity improvements
continues with rigour. As part of the 2021-2023 baseline guidance,
US$16 million was identified for removal from the cost base through
specific initiatives ranging from training and equipment
optimisation, improvements in the supply chain and contractor
management.
Since the outbreak of COVID-19 the priority is the safety of the
workforce and security of the operations. The Company has budgeted
US$25 million for ongoing COVID-19 costs and increased working
capital through a build-up in critical supplies. The Company has
undertaken risk analysis scenarios and has put in place contingency
plans for the business and believes it has taken prudent steps to
continue to navigate these difficult times. Centamin is closely
monitoring the situation, with an active response framework in
place to manage and mitigate future impacts within its control.
In 2021, Centamin will undertake a structured assessment of the
Financial Stability Board's Task Force on Climate-related Financial
Disclosures ("TCFD") with the aim to put in place a long-term
climate change strategy which will identify the risks associated
with climate change and the mitigations required to reduce the
risks; Understand our contribution to climate change and identify
areas where this can be reduced; Establish targets to address the
transition to net zero emissions with specific targets and actions;
and be a step change in improving our disclosure on climate
change.
I am confident in our long-term strategy and our ability to
respond quickly in this difficult environment. We continue to
operate diligently and invest prudently, and I believe Centamin is
both well equipped to navigate these challenges and remains well
positioned for the future.
FINANCIAL REVIEW
Consolidated statement of comprehensive income
Year ended Year ended
31 December 31 December
2020 2019
US$'000 US$'000
-------- ------------ ------------
Revenue 828,737 652,344
-------- ------------ ------------
Revenue from gold and silver sales for the year increased by 27%
YoY to US$829 million (2019: US$652 million), with a 26% increase
in the average realised gold sales price to US$1,766 per ounce
(2019: US$1,399 per ounce) and a 1% increase in gold sold to
468,681 ounces (2019: 465,687 ounces net of Cleopatra) with no
ounces attributable to Cleopatra in 2020.
Year ended Year ended
31 December 31 December
2020 2019
US$'000 US$'000
-------------- ------------ ------------
Cost of sales (449,441) (439,285)
-------------- ------------ ------------
Cost of sales represents the cost of mining, processing,
refining, transport, site administration, depreciation,
amortisation and movement in production inventories. Cost of sales
is up 2% YoY to US$449 million, mainly as a result of:
-- 4% decrease in total mine production costs from US$352
million to US$339 million (-ve), due to:
o a 1% decrease in open pit mining costs (-ve);
o a 10% decrease in underground mining costs (-ve);
o a 14% decrease in processing costs (-ve);
o offset by a 64% increase in finance and administration costs
(+ve) related to increased payroll and consumables and catering
costs mainly due to CV-19; and
o a 64% increase in refinery and transport costs (+ve).
-- 7% increase in depreciation and amortisation charges YoY from
US$116 million to US$124 million (+ve) due to:
o US$134 million in additions to property, plant and equipment
(excl. capital work in progress) due to increased capital
expenditure which increased the associated depreciation and
amortisation charges;
o slightly offset by lower production.
-- A positive movement in inventory adjustment of US$14 million
compared to positive movement in inventory adjustment of US$28
million in 2019 reflecting the movement in mining inventory over
the year (+ve).
Year ended Year ended
31 December 31 December
2020 2019
US$'000 US$'000
--------------------------------------- ------------ ------------
Exploration and evaluation expenditure (17,391) (16,883)
--------------------------------------- ------------ ------------
Exploration and evaluation expenditure comprise expenditure
incurred for exploration activities in Côte d'Ivoire and Burkina
Faso. Exploration and evaluation costs increased by US$0.5 million
or 3%.
Adjusted EBITDA was US$438million, an increase of 56% YoY,
mostly driven by the 27% increase in revenue, offset by an increase
in cash costs per ounce sold in the year. The EBITDA margin
increased by 23%, to 53%. Profit after tax was US$315 million, up
82% YoY. Basic earnings per share was 14 US cents, an increase of
78% YoY.
Year ended Year ended
31 December 31 December
2020 2019
US$'000 US$'000
---------------------- ------------ ------------
Other operating costs (56,392) (38,709)
---------------------- ------------ ------------
Other operating costs comprise expenditure incurred for
communications, consultants, directors' fees, stock exchange
listing fees, share registry fees, employee entitlements, general
office administration expenses, foreign exchange losses and the 3%
production royalty payable to the Arabic Republic of Egypt ("ARE").
Other operating costs increased by US$18 million or 46% from US$39
million in 2019 to US$56 million in 2020, mainly as a result
of:
-- US$1 million increase in loss on disposal of assets (+ve);
-- US$5 million increase in royalty paid to the government of
the ARE (in line with the increase in gold sales revenue)
(+ve);
-- US$10 million increase in the provision for settlement of cost recovery items (+ve);
-- US$3 million increase in the provision for stock obsolescence
and inventory written off (+ve); offset by
-- US$1 million decrease in corporate costs mainly due to the decrease in advisory costs.
Year ended Year ended
31 December 31 December
2020 2019
US$'000 US$'000
------------------------------------------------ ------------ ------------
Dividend paid - non-controlling interest in SGM
(being EMRA) (174,275) (87,075)
------------------------------------------------ ------------ ------------
Dividends paid to the non-controlling interest in SGM being
EMRA, pursuant to the provisions of the Concession Agreement, are
recognised as a non-controlling interest attributable to SGM at the
base of the income statement of Centamin. EMRA does not own shares
in Centamin, therefore Group earnings per share is calculated on
the profit attributable to the owners of the parent.
The profit share payments during the year are reconciled against
SGM's audited 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. SGM's June 2020 financial statements are currently
being audited.
Year ended Year ended
31 December 31 December
2020 2019
US cents US cents
per share per share
--------------------------------------------- ------------ ------------
Earnings per share attributable to owners of
the parent:
Basic (US cents per share) 13.531 7.588
--------------------------------------------- ------------ --------------
Basic earnings per share attributable to owners of the parent of
14 US cents for 2020 increased when compared with 2019 of 8 US
cents. The increase was driven by the factors outlined above.
Consolidated statement of financial position
Centamin has a strong and flexible balance sheet with no debt,
no hedging and cash and liquid assets of US$310 million at 31
December 2020 (31 December 2019: US$349 million).
31 December 31 December
2020 2019
US$'000 US$'000
--------------------------------------------------- ----------- -----------
Cash and cash equivalents (note 2.16(a)) 291,281 278,229
Bullion on hand (valued at the year-end spot
price) 5,747 29,562
Gold and silver sales debtor (note 2.7) 12,492 34,695
Financial assets at fair value through profit
or loss (note 2.6) - 6,454
--------------------------------------------------- ----------- -----------
Cash and cash equivalents, bullion on hand, gold
and silver sales debtor
and financial assets at fair value through profit
or loss 309,520 348,940
--------------------------------------------------- ----------- -----------
The majority of funds have been invested in international
rolling short-term interest money market deposits.
31 December 31 December
2020 2019
US$'000 US$'000
------------------------------------------------ ----------- -----------
Current assets
Inventories - mining stockpiles and consumables 118,705 108,957
Financial assets at fair value through profit
or loss - 6,454
Trade and other receivables 18,424 47,061
Prepayments 8,908 6,132
Cash and cash equivalents 291,281 278,229
------------------------------------------------ ----------- -----------
Total current assets 437,318 446,833
------------------------------------------------ ----------- -----------
Current assets have decreased by US$10 million or 2% as a result
of:
-- US$10 million increase (+ve) in inventory driven by:
-- US$9 million increase in stores inventory (+ve);
-- US$2 million increase in mining stockpiles (+ve); and
-- US$1 million increase in the provision for obsolete stores inventory (-ve).
-- US$6 million decrease in the financial assets at fair value
through profit or loss which relates to an equity interest in a
listed public company that has been fully disposed of (-ve);
-- US$29 million decrease in trade and other receivables
(including gold and silver sales debtor) (-ve);
-- US$3 million increase in prepayments (+ve); and
-- US$13 million increase in net cash (net of foreign exchange
movements) (+ve) driven by the profit for the year less the payment
of the 2020 Q1 and Q2 interim dividends of US$69 million each and a
US$174 million payment to EMRA as distributions to the NCI.
31 December 31 December
2020 2019
US$'000 US$'000
--------------------------------- ----------- -----------
Non-current assets
Property, plant and equipment 829,884 804,717
Exploration and evaluation asset 63,701 68,138
Inventories - mining stockpiles 64,870 52,658
Other receivables 103 93
--------------------------------- ----------- -----------
Total non-current assets 958,558 925,606
--------------------------------- ----------- -----------
Non-current assets have increased by US$33 million or 4% as a
result of:
-- US$148 million increase in the cost of property, plant and
equipment, this included significant capital projects namely the
construction of TSF 2, camp upgrades, work commencing on the solar
plant and continuous process plant optimisation (+ve);
-- US$125 million charge for depreciation and amortisation (-ve);
-- US$4 million decrease in exploration and evaluation assets,
as a result of the drilling programmes in Sukari Hill offset by
transfers to property, plant and equipment(-ve); and
-- US$12 million increase in inventory related to mine Run of Mine ("ROM") stockpiles (+ve).
31 December 31 December
2020 2019
US$'000 US$'000
-------------------------- ----------- -----------
Current liabilities
Trade and other payables 64,488 57,411
Tax liabilities 267 227
Provisions 7,480 8,589
-------------------------- ----------- -----------
Total current liabilities 72,235 66,227
-------------------------- ----------- -----------
Current liabilities have increased by US$6 million or 9% as a
result of:
-- US$4 million increase in trade payables (+ve);
-- US$3 million increase in accruals (-ve); offset by
-- US$1 million decrease in current provisions (-ve).
31 December 31 December
2020 2019
US$'000 US$'000
------------------------------ ----------- -----------
Non-current liabilities
Provisions 32,752 14,575
Other payables 1,437 -
------------------------------ ----------- -----------
Total non-current liabilities 34,189 14,575
------------------------------ ----------- -----------
Non-current liabilities have increased by US$19 million from
US$15 million at 31 December 2019 to US$34 million at 31 December
2020, mainly as a result of an increase in the rehabilitation
provision and the provision for the settlement of cost recovery
items. The increase in the rehabilitation provision is driven by an
increase in the mining area over the year mainly due to the
construction of TSF2 resulting in a greater affected area requiring
rehabilitation.
31 December 31 December
2020 2019
US$'000 US$'000
--------------------- ----------- -----------
Equity
Issued capital 668,807 672,105
Share option reserve 3,343 4,179
Accumulated profits 617,302 615,353
--------------------- ----------- -----------
Total equity 1,289,452 1,291,637
--------------------- ----------- -----------
Accumulated profits increased by US$2 million as a result
of:
-- US$315 million profit for the year after tax (+ve); offset by
-- US$174 million profit share paid to EMRA in the year (-ve); and
-- US$139 million interim dividends paid (-ve).
Consolidated statement of cash flows
31 December 31 December
2020 2019
US$'000 US$'000
------------------------------------------- ----------- -----------
Cash flows from operating activities
Cash generated from operating activities 453,315 249,048
Income tax refund received - 170
Income tax paid (10) (214)
------------------------------------------- ----------- -----------
Net cash generated by operating activities 453,305 249,004
------------------------------------------- ----------- -----------
Net cash flows generated by operating activities comprise
receipts from gold and silver sales and interest income, offset by
operating and corporate administration costs.
Group cash costs of production were US$719 per ounce produced,
up 3% YoY, predominantly due to a 6% decrease in gold ounces
produced. Group All In Sustaining Costs ("AISC") were US$1,036 per
ounce sold, up 10% YoY due to increased costs and increased
sustaining capital expenditure offset by increased gold ounces
sold. Both cash cost of production and AISC are within our amended
guidance range of US$740-790 per ounce produced and US$950-1,050
per ounce sold for 2020.
A stronger gold price combined with cost and capital allocation
management has almost doubled net cash generated by operating
activities YoY (82%) to US$453 million. Group capital expenditure,
including sustaining and non-sustaining capital, was US$138
million. This was lower than budgeted due to short term deferral of
non-essential capital projects, in response to COVID-19.
31 December 31 December
2020 2019
US$'000 US$'000
--------------------------------------------------- ----------- -----------
Cash flows from investing activities
Acquisition of financial assets at fair value
through profit or loss - (9,364)
Disposal of financial assets at fair value through
profit or loss 7,414 6,799
Acquisition of property, plant and equipment (127,099) (81,207)
Brownfield exploration and evaluation expenditure (11,717) (12,198)
Finance income 1,554 5,817
--------------------------------------------------- ----------- -----------
Net cash used in investing activities (129,848) (90,153)
--------------------------------------------------- ----------- -----------
Net cash flows used in investing activities comprise exploration
expenditure and capital development expenditure including the
acquisition of financial assets. The primary use of the funds in
the year was for purchase of property, plant and equipment and
investment in underground development at the Sukari site in Egypt
offset by the disposal of an equity interest in a listed public
company.
31 December 31 December
2020 2019
US$'000 US$'000
------------------------------------------------ ----------- -----------
Cash flows from financing activities
Own shares acquired (3,298) -
Dividend paid - non-controlling interest in SGM (174,275) (87,075)
Dividend paid - owners of the parent (138,725) (81,029)
------------------------------------------------ ----------- -----------
Net cash used in financing activities (316,298) (168,104)
------------------------------------------------ ----------- -----------
After distribution of profit share payments to Company's
partner, the Egyptian government ([5]) , the Group generated
adjusted free cash flow (4) of US$142 million, up 91% YoY. Profit
share payments of US$174 million and royalty payments of US$25
million were made in the year. Under the terms of the Concession
Agreement with our Egyptian partners, EMRA, on 1 July 2020, the
profit share mechanism changed to 50:50, from 55:45 in favour of
Centamin, and will remain at this level for the remainder of the
tenure.
Capital expenditure
The following table provides a breakdown of the total capital
expenditure of the Group:
Year ended Year ended
31 December 31 December
2020 2019
US$'000 US$'000
-------------------------------------------- ------------ ------------
Underground exploration 11,599 7,769
Underground mine development 39,197 36,852
Other sustaining capital expenditure 52,433 40,471
-------------------------------------------- ------------ ------------
Total sustaining capital expenditure 103,229 85,092
-------------------------------------------- ------------ ------------
Non-sustaining exploration expenditure(1) 118 8,709
Other non-sustaining capital expenditure(2) 35,049 3,779
-------------------------------------------- ------------ ------------
Total gross capital expenditure 138,396 97,580
-------------------------------------------- ------------ ------------
(1) Includes Sukari expenditure relating to Cleopatra in
non-sustaining capital expenditure before the offset of net
pre-production gold sales.
(2) Non-sustaining capital expenditure included the construction
of TSF 2, camp upgrades and work commencing on the solar plant.
Cumulative exploration expenditure capitalised for Cleopatra at
Sukari is US$23.0 million (project to date) offset by
pre-production net revenues of US$17.8 million (refer to notes 2.2
and 2.3 to the financial statements for further details) resulting
in US$5.2 million remaining on the statement of financial position
at 31 December 2020.
Exploration expenditure
The following table provides a breakdown of the total
exploration expenditure of the Group:
Year ended Year ended
31 December 31 December
2020 2019
US$'000 US$'000
----------------------------------------- ------------ ------------
Greenfield exploration
Burkina Faso 2,803 2,715
Côte d'Ivoire 14,588 14,168
----------------------------------------- ------------ ------------
Total greenfield exploration expenditure 17,391 16,883
Brownfield exploration
Sukari Tenement 11,709 8,685
Cleopatra(1) 8 7,793
----------------------------------------- ------------ ------------
Total brownfield exploration expenditure 11,717 16,478
----------------------------------------- ------------ ------------
Total exploration expenditure 29,108 33,361
----------------------------------------- ------------ ------------
(1) Cleopatra expenditure before the offset of net
pre-production gold sales.
Exploration and evaluation assets - impairment
considerations
In consideration of the requirements of the International
Financial Reporting Standards ("IFRS") 6 an impairment trigger
assessment has been performed. On review, no impairment triggers
were identified.
Subsequent events
As referred to in note 5.2, subsequent to the year end, the
Board proposed a final dividend for 2020 of 3 US cents per share.
Subject to shareholder approval at the annual general meeting on 11
May 2021, the final dividend will be paid on 15 June 2021 to
shareholders on record date of 21 May 2021.
As referred to in note 1.3.5, the Group Mineral Reserve and
Resource statement for SGM has been published with an effective
date of 31 December 2020. The changes from the previous statement
published with an effective date of 30 June 2019 will have a
prospective effect on the amortisation of the rehabilitation asset
and mine development properties. Please refer to ore reserves, note
3.1.1(i) where these sensitivities to the change has been
disclosed.
There were no other significant events occurring after the
reporting date requiring disclosure in the financial
statements.
Non -- GAAP financial measures
Four non -- GAAP financial measures are used in this report:
1) EBITDA and adjusted EBITDA
EBITDA is a non -- GAAP financial measure, which excludes the
following from profit before tax:
-- Finance costs
-- Finance income
-- Depreciation and amortisation
Management considers EBITDA a valuable indicator of the Group's
ability to generate liquidity by producing operating cash flow to
fund working capital needs and fund capital expenditures. EBITDA is
also frequently used by investors and analysts for valuation
purposes whereby EBITDA is multiplied by a factor or "EBITDA
multiple" that is based on an observed or inferred relationship
between EBITDA and market values to determine the approximate total
enterprise value of a company. EBITDA is intended to provide
additional information to investors and analysts and does not have
any standardised definition under IFRS and should not be considered
in isolation or as a substitute for measures of performance
prepared in accordance with IFRS.
EBITDA excludes the impact of cash cost of production and income
of financing activities and taxes, and therefore is not necessarily
indicative of operating profit or cash flow from operations as
determined under IFRS. Other companies may calculate EBITDA
differently. The following table provides a reconciliation of
EBITDA to profit for the year before tax.
Adjusted EBITDA removes the effect of transactions that are not
core to the Group's main operations.
Reconciliation of profit before tax to EBITDA and adjusted
EBITDA:
31 December 31 December
2020(1) 2019(1)
US$'000 US$'000
------------------------------------------------- ----------- -----------
Profit for the year before tax 314,999 173,029
Finance income (1,554) (5,817)
Interest expense 558 569
Depreciation and amortisation 124,512 116,187
------------------------------------------------- ----------- -----------
EBITDA 438,515 283,968
Add back/less:(2)
Profit on financial assets at fair value through
profit or loss (960) (3,889)
Impairments of non-current assets - -
------------------------------------------------- ----------- -----------
Adjusted EBITDA 437,555 280,079
------------------------------------------------- ----------- -----------
(1) Profit before tax, depreciation and amortisation and EBITDA
includes a charge to reflect the removal of fuel subsidies (refer
to note 2.8 to the financial statements for further details).
(2) Adjustments made to normalise earnings, for example profit
on financial assets at fair value through profit or loss,
impairments of property, plant and equipment, non-current mining
stockpiles and exploration and evaluation assets.
2) Cash cost of production per ounce produced and sold and
all-in sustaining costs ("AISC") 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 sustaining administrative expenses, royalties, depreciation
and amortisation. Management uses this measure internally to better
assess performance trends for the Company as a whole. Management
considers 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. Management considers that these measures
provide an alternative reflection of the Group's performance for
the current year 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. This metric also 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).
On 14 November 2018 the World Gold Council published an updated
Guidance Note on 'all-in sustaining costs' and 'all-in costs'
metrics. Per their press release it was expected that companies
have chosen to use the updated guidance from 1 January 2019 or on
commencement of their financial year if later. The Group have
applied the updated guidance from 1 January 2019 with no impact on
our results or comparatives.
Reconciliation of cash cost of production per ounce
produced:
31 December 31 December
2020(1) 2019(1)
---------------------------------------- -------- ----------- -----------
Mine production costs (note 2.3) US$'000 339,012 351,745
Less: Refinery and transport US$'000 (2,322) (1,415)
Movement of inventory(2) US$'000 (11,502) (17,293)
---------------------------------------- -------- ----------- -----------
Cash cost of production - gold produced US$'000 325,188 333,037
---------------------------------------- -------- ----------- -----------
Gold produced - total (oz.) (excluding
Cleopatra) oz 452,320 476,195
Cash cost of production per ounce
produced US$/oz 719 699
---------------------------------------- -------- ----------- -----------
(1) Mine production costs, cash cost of production, cash cost of
production per ounce, AISC and AISC per ounce sold includes
prepayments recorded since Q4 2012 to reflect the removal of fuel
subsidies (refer to note 2.8 to the financial statements for
further details).
(2) The movement in inventory on ounces produced is only the
movement in mining stockpiles and ore in circuit while the movement
in ounces sold is the net movement in mining stockpiles, ore in
circuit and gold in safe inventory.
A reconciliation has been included below to show the cash cost
of production metric should gold sold ounces be used as a
denominator.
Reconciliation of cash cost of production per ounce sold:
31 December 31 December
2020(1) 2019(1)
------------------------------------ -------- ----------- -----------
Mine production costs (note 2.3) US$'000 339,012 351,745
Royalties US$'000 24,792 19,701
Movement of inventory(2) US$'000 4,181 (28,254)
------------------------------------ -------- ----------- -----------
Cash cost of production - gold sold US$'000 367,985 343,192
------------------------------------ -------- ----------- -----------
Gold sold - total (oz.) (excluding
Cleopatra) oz 468,681 465,687
Cash cost of production per ounce
sold US$/oz 785 737
------------------------------------ -------- ----------- -----------
(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 2.8 to the financial statements for
further details).
(2) The movement in inventory on ounces produced is only the
movement in mining stockpiles and ore in circuit while the movement
in ounces sold is the net movement in mining stockpiles, ore in
circuit and gold in safe inventory.
31 December 31 December
2020(1) 2019(1)
---------------------------------------- -------- ----------- -----------
Movement in inventory
Movement in inventory - cash (above) US$'000 4,181 (28,254)
Effect of depreciation and amortisation
- non-cash US$'000 9,523 -
---------------------------------------- -------- ----------- -----------
Movement in inventory - cash & non-cash
(note 2.3) US$'000 13,704 (28,254)
---------------------------------------- -------- ----------- -----------
(1) In 2020 the movement of inventory on cash costs of
production per ounce produced and sold has been amended to exclude
the effect of amortisation and depreciation (non-cash items) on
those movements. This change is only being applied prospectively
from 2020 onwards.
Reconciliation of AISC per ounce sold:
31 December 31 December
2020(1) 2019(1)
------------------------------------- -------- ----------- -----------
Mine production costs (note 2.3) US$'000 339,012 351,745
Movement in inventory US$'000 4,181 (28,254)
Royalties US$'000 24,792 19,701
Sustaining corporate administration
costs US$'000 15,029 11,610
Rehabilitation costs US$'000 350 410
Sustaining underground development
and exploration US$'000 50,796 44,621
Other sustaining capital expenditure US$'000 52,433 40,471
By -- product credit US$'000 (1,115) (987)
------------------------------------- -------- ----------- -----------
All -- in sustaining costs(2) US$'000 485,478 439,317
------------------------------------- -------- ----------- -----------
Gold sold - total (oz.) (excluding
Cleopatra) oz 468,681 465,687
AISC per ounce sold US$/oz 1,036 943
------------------------------------- -------- ----------- -----------
(1) Mine production costs, cash cost of production, cash cost of
production per ounce, AISC and AISC per ounce sold includes
prepayments recorded since Q4 2012 to reflect the removal of fuel
subsidies (refer to note 2.8 to the financial statements for
further details).
(2) Includes refinery and transport.
31 December 31 December
2020 2019
US$'000 US$'000
--------------------------------------- ----------- -----------
Corporate costs
Sustaining corporate costs 15,029 11,610
Non-sustaining corporate costs(1) 2,550 7,318
--------------------------------------- ----------- -----------
Corporate costs (sub-total) (note 2.3) 17,579 18,928
--------------------------------------- ----------- -----------
(1) Non-sustaining corporate costs relate to expenses and/or
accruals recognised for work performed by the Group's advisors on
the successful defence of the third party all-share acquisition
attempt of Centamin plc. This is not a normal cost incurred in the
day to day operations of running the Group and as such has been
excluded from our Non-GAAP reporting measures.
3) Cash and cash equivalents, bullion on hand, gold and silver
sales debtor and financial assets at fair value through profit or
loss
Cash and cash equivalents, bullion on hand, gold and silver
sales debtor and financial assets at fair value through profit or
loss is a non-GAAP financial measure and 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. Management considers 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 and the measure 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 and other companies may calculate this measure
differently.
Reconciliation to cash and cash equivalents, bullion on hand,
gold and silver sales debtor and financial assets at fair value
through profit or loss:
31 December 31 December
2020 2019
US$'000 US$'000
--------------------------------------------------- ----------- -----------
Cash and cash equivalents (note 2.16(a)) 291,281 278,229
Bullion on hand (valued at the year-end spot
price) 5,747 29,562
Gold and silver sales debtor (note 2.7) 12,492 34,695
Financial assets at fair value through profit
or loss (note 2.6) - 6,454
--------------------------------------------------- ----------- -----------
Cash and cash equivalents, bullion on hand, gold
and silver sales debtor
and financial assets at fair value through profit
or loss 309,520 348,940
--------------------------------------------------- ----------- -----------
4) Free cash flow and adjusted free cash flow
Free cash flow is a non-GAAP financial measure. Free cash flow
is a measure of the available cash after distributions to the
Non-Controlling Interest ("NCI") in SGM, being EMRA, that the Group
has at its disposal to use for capital reinvestment and to
distribute to shareholders of the parent. Free cash flow is
intended to provide additional information, does not have any
standardised meaning prescribed by GAAP and should not be
considered in isolation or as a substitute for measures of
performance prepared in accordance with GAAP. This measure is not
necessarily indicative of operating profit or cash flow from
operations as determined under GAAP and other companies may
calculate this measure differently.
31 December 31 December
2020 2019
US$'000 US$'000
------------------------------------------------- ----------- -----------
Net cash generated by operating activities 453,305 249,004
Less:
Net cash used in investing activities (129,848) (90,153)
Dividend paid - non-controlling interest in SGM (174,275) (87,075)
------------------------------------------------- ----------- -----------
Free cash flow 149,182 71,776
Add back:
Net (disposals)/acquisitions of financial assets
at fair value through profit or loss(1) (7,414) 2,565
------------------------------------------------- ----------- -----------
Adjusted free cash flow 141,768 74,341
------------------------------------------------- ----------- -----------
(1) Adjustments made to free cash flow, for example acquisitions
and disposals of financial assets at fair value through profit or
loss, which are completed through specific allocated available cash
reserves.
CORPORATE GOVERNANCE Effective corporate governance begins with
a strong Board, led by the Chairman, with the appropriate skills
and experience to challenge and support the Executive team in
delivering the corporate strategy. The Board transformation
throughout 2020 reflects the Company's ongoing commitment to
achieving the highest standards of corporate governance.
annual general meeting
The 2021 Annual General Meeting ("2021 AGM") will be held at
11.00 AM BST on Tuesday, 11 May 2021 at 2 Mulcaster Street, St.
Helier, Jersey, JE2 3NJ.
The Centamin Board of Directors will be assessing UK and Jersey
Government public health guidance on COVID-19 to determine whether
physical attendance at the 2021 AGM will be possible. Shareholders
will be able to complete and submit their votes online and to
submit any questions to the registrar in advance of the 2021
AGM.
Board of Directors
At the 2020 AGM three directors retired from the Board: Josef
El-Raghy, Gordon Edward Haslam and Mark Arnesen.
-- On 1 January, James "Jim" Rutherford joined the Board as an
independent non-executive director and deputy chair. On 29 June Jim
was appointed Non-Executive Chair.
-- On 6 April, Martin Horgan joined the Company as Chief Executive Officer.
-- On 1 July, Hendrik "Hennie" Faul joined the Board as an
independent non-executive director. Hennie is chair of the new
Technical Committee and a member of the Audit and Risk and
Sustainability Committee.
The Board currently comprises the Chair, two executive directors
and six non-executive directors and the Board composition is
compliant with the 2018 UK Corporate Governance Code.
Committee restructuring
As part of the Company's Board transformation, a full
effectiveness review and refreshment was conducted across the Board
committee mandates and composition. The material changes are
outlined below:
Health, Safety, Environmental and Social Committee ("HSES")
replaced by the Sustainability Committee
-- The new Sustainability Committee focuses across the health
and safety, environmental, social (including employee engagement)
and governance. Aspects of risk associated with the Company's
licence to operate are considered by this committee. A review was
undertaken of the charters to ensure interaction with the Board,
Audit and Risk and other committees, including the new Technical
Committee.
Technical Committee established as a new committee
-- The new Technical Committee supports and advises the Board in
reviewing technical and operational matters. The committee helps in
monitoring decisions and processes designed to ensure the integrity
of the Group's reserve and resource estimations. The committee is
also responsible for technical reporting, internal quality control
and assurance over the Group's mining assets and exploration,
including oversight of the life of asset, production and
exploration.
Compliance and Corporate Governance Committee was discontinued
in its current form
-- The Compliance and Corporate Governance Committee
responsibilities have been reassigned to the Sustainability
Committee, the Audit and Risk Committee and the Board.
-- The Disclosure Committee will continue in accordance with the
Company's Continuous Disclosure policy and will report directly to
the Audit and Risk Committee and, where necessary, to the
Board.
COMMITTEE rotation
The Board understands the benefits of refreshing its
composition, committee structures as well as planning for future
succession. The changes to the committee structures illustrate the
Company's commitment to continue to evolve and strengthen our
governance model in line with the rapidly changing global
environment with which we operate. Please see the below refreshed
Board committee membership (*Dr Ibrahim Fawzy's appointment to the
Remuneration committee is effective 31 March 2021):
Audit & Risk Remuneration Nomination Sustainability Technical
==================== ==== ============= ============= =========== =============== ==========
James Rutherford NEC Member Chair
Dr Sally Eyre SID Chair Member Member
Mark Bankes NED Member Member
Marna Cloete NED Chair Member Member
Dr Catharine Farrow NED Member Chair Member
Dr Ibrahim Fawzy NED Member* Member Member
Hendrik Faul NED Member Member Chair
==================== ==== ============= ============= =========== =============== ==========
PRINCIPAL RISKS AND UNCERTAINTIES
MANAGING RISK
Centamin recognises that nothing is without risk. A successful
and sustainable business needs an effective risk management
framework as its foundation, which outlines the Company approach
and process for management of risk and opportunity. The framework
should be supported by a strong culture of risk awareness, that
encourages openness and integrity, alongside a clearly defined
appetite for risk. This enables the Board to consider risks and
opportunities to improve our decision-making process, deliver on
our objectives and improve our performance as a responsible mining
company.
Ultimate accountability for risk management lies with the Board,
supported by the Audit and Risk Committee. We continuously monitor
and refine our risk management and wider internal controls to meet
the changing requirements of the business. They incorporate
international good practice, reflect the UK 2018 Code and ISO 31000
Risk Management Guidelines. The framework adopts a top-down and
bottom-up approach, enabling thorough identification, assessment,
mitigation and monitoring of risks throughout the business. There
are three lines of defence to provide review and oversight whilst
ensuring the information that flows from the reporting lines is
relevant, timely and can genuinely support the Board's strategic
decisions.
The framework allows for the review of existing and emerging
risks in the context of both opportunities and potential threats
that informs the principal risks and uncertainties. These risks are
considered when challenging the strategic pillars of the Company
that underpin the strategy and inform the assessment of the future
prospects and long-term viability of the Group. Since the 2019
Annual Report there have been several updates in the principal
risks driven by the changes in our governance structure and senior
management, the revised strategy for the business and external
factors such as COVID-19. Any 'new' principal risks have been
elevated from the emerging risks disclosed in the 2019 Annual
Report or the 2020 Interims. The remaining principal risks which
have been refreshed, not removed, to reflect the broader
considerations of the business moving forward and the emerging
risks have also been refreshed. These changes are shown in the 2020
Annual Report.
Centamin takes several measures to mitigate risks, associated
with its underlying operational and exploration activity, which are
monitored and evaluated regularly. Due to the nature of these
inherent risks, it is not possible to give absolute assurance that
mitigating actions will be wholly effective.
The Directors confirm they have completed a robust assessment of
the principal and emerging risks facing the Company, including
those which would negatively impact its business model, future
performance, operations, solvency or liquidity. We recognise the
unique scenarios which the COVID-19 pandemic has brought as
highlighted in the earlier commentary throughout the report.
PRINCIPAL RISKS
The principal risks and uncertainties facing the Group are set
out in detail within the Strategic Report under the Risk Review of
the 2020 Annual Report. The principal risks are listed below:
Principal Nature of Risk Mitigation Measures Ongoing Strategy Risk Appetite
Risk
External Risks
Political Future political, Government policies To maintain Level:
social or economic have developed over a detailed and Balanced
changes in the the past years in host up to date understanding We will
countries in countries to incentivise of the investment not take
which we operate foreign direct framework and any unnecessary
may impact on investment climate in which risk within
the Group. and the development we operate as our control
of local mining well as a constructive - However,
The future investment industries. relationship we understand
framework and Centamin deploys a with our host that inherently
business conditions proactive government governments we have
in our operating and stakeholder liaison and local partners, limited
locations could policy and actively such as EMRA. control
change with monitors - on an ongoing over a
governments basis - legal, fiscal, The Company number
adopting different regulatory and political undertakes to of external
laws, regulations developments in its abide by the risk factors.
and policies host countries. spirit and letter
that may impact of the Concession
on the ownership, The terms of the Sukari Agreement as
development Concession Agreement, well as local
and operation (including the laws/regulations
of our Mineral applicable in Egypt and
Resources projects. tax regime and rights our other host
of tenure), were issued countries.
and ratified under
special Law No. 222
of 1994 and can,
therefore,
only be amended by
the passing of a further
law.
------------------------- ------------------------- ------------------------- -------------------
Legal and The Groups structure Centamin deploys a The Company Level:
Regulatory includes operational proactive government aims to comply Balanced
Compliance activity in and stakeholder liaison with all relevant We will
Egypt and West policy and actively regulation and not take
Africa held monitors - on an ongoing legislation any unnecessary
through companies basis - legal, fiscal, including its risk within
in Australia regulatory and political environmental our control
and the United developments in its and operational - However,
Kingdom. This host countries. commitments we understand
means we are In Egypt we have the set out in the that inherently
subject to various Sukari Concession relevant we have
legal and regulatory Agreement permits/authorisations limited
requirements which can only be and local control
across all changed laws/regulations. over a
jurisdictions, by means of another number
relating to law, so we have the of external
issues such right to export gold, risk factors.
as cross jurisdictional repatriation of funds,
taxation, related existing tax exemption
party transactions, and further
anti-bribery considerations.
and corruption In addition, the Group
Ongoing legal, engages with the
fiscal and regulatory relevant
changes may regulatory authorities
impact project and seeks appropriate
permitting, advice to ensure
tenure, taxation, compliance
exchange rates, with all relevant
environmental regulation
protection, and legislation. An
labour relations, example would be the
and the ability global tax strategy
to repatriate in place which ensures
income and capital. all taxes are paid
These measures at an operational level
may also impact and further tax
the ability requirements
to import key are met through the
supplies, export holding structure.
gold production Appropriate monitoring
and repatriate procedures are in place
revenues. and we ensure that
we manage legal and
regulatory compliance.
------------------------- ------------------------- ------------------------- -------------------
Litigation Centamin's ability In order to mitigate To minimise Level:
to operate and this risk Centamin exposure to Balanced
conduct business has (a) taken litigation and We will
in host countries, appropriate reduce the impact not take
may be adversely legal advice from of actions by any unnecessary
affected by reputable complying with risk within
current and legal advisers and all relevant our control
any future dispute continues actively laws and regulations - However,
resolution and/or to pursue its legal and to defend we understand
litigation proceedings. rights with respect and/or bring that inherently
The Group is to its existing cases; any actions we have
currently party and (b) maintains necessary to limited
to two significant regular protect the control
legal actions contact with its Company's assets, over a
in Egypt. These Egyptian rights and reputation. number
could affect legal advisers and of external
its ability actively monitors risk factors.
to operate the developments
mine at Sukari in both court and local
in the manner media for signs of
in which it any legislative or
is currently similar developments
operated (in that relate to its
the case of ongoing litigation
the challenge or which may otherwise
to the Concession threaten its operations,
Agreement under finances or prospects.
which Sukari The potential for
operates) and serious
adversely affect impact can be further
its profitability. mitigated by Centamin's
The details strict adherence to
of this litigation, local laws and
which relates agreements;
to the loss the Egyptian
of the Egyptian government's
national subsidy continuing opposition
for Diesel Fuel to the legal challenge
Oil and the to Law no. 32 of 2014,
Concession Agreement, which restricts the
are given in ability of third parties
note 5.1 of to challenge contractual
the financial agreements between
statements. the Egyptian government
and investors such
as Centamin; the
investment
protections and dispute
resolution provisions
set out in the Sukari
Concession Agreement
and the bilateral
investment
treaty between Australia
(PGM's place of
incorporation)
and the Arab Republic
of Egypt
------------------------- ------------------------- ------------------------- -------------------
Infectious In 2020, COVID-19 Safely managing the We recognise Level:
Disease significantly health and wellbeing the global pandemic Balanced
Outbreak impacted the of our workforce, in of COVID-19 We will
New Principal world, presenting line with government as a threat not take
Risk an unprecedented and public health advice bringing potential any unnecessary
medical, economic we have introduced risks to our risk within
and social challenge. covid-secure working people and business. our control
Centamin has conditions which have Management completed - However,
been proactive been paramount in a risk assessment we understand
in how it manages mitigating of the potential that inherently
and mitigates the risk. Ensuring risks, their we have
the impacts a local and global impacts to our limited
within its control. proactive approach people and business control
We have experienced to our response during and have taken over a
no material the pandemic has been steps to develop number
disruption to key. a dynamic action of external
operations, Whilst the impact and plan at a corporate risk factors.
supply chain potential duration and site level
or gold shipments. remains uncertain, supported by
The Company the Company has carried resources focusing
has, however, out scenario risk on our response
put in place analysis day to day.
contingency on the Group and
plans to deal believes
with various it is well positioned
possible disruptions. to continue to manage
Furthermore, through these difficult
we recognise times. As the pandemic
the macro-economic progresses we will
uncertainty continue to monitor
this has created the global situation,
including volatility adapting our policies,
in the markets. procedures and controls
The scale and to minimise the impacts
duration remain within our control.
uncertain but A COVID-19 Executive
we recognise Committee provide
this could impact oversight
our financial during the pandemic,
condition which supported by
we continue multifunctional
to monitor and teams within a framework
are prepared led by risk and
to manage accordingly. operations.
Further information
is shown in the
Operational
Review in the 2020
Annual Report under
Co-Existing with
COVID-19.
------------------------- ------------------------- ------------------------- -------------------
Gold Price The extent of The Group is 100% The Company Level:
the Company's exposed does not currently Balanced
financial performance to the gold price; hedge against We will
is due in part however, the cash costs the price of not take
to the price of the Sukari Gold gold or exposure any unnecessary
of gold, over Mine remain within to currencies. risk within
which the Company our budget and we were We will continue our control
has no influence. able to benefit from to allow for - However,
Revenues from the increase in the financial flexibility we understand
gold sales are gold price through when budgeting that inherently
in US dollars 2020. and forecasting we have
and Centamin using a measured limited
has exposure approach to control
to costs in the potential over a
other currencies fluctuations number
including Egyptian in gold price. of external
pounds, Australian risk factors.
dollars and
sterling.
Centamin manages
its exposure
to gold price
by keeping operating
costs as low
as possible
and continues
to consider
other options
where these
would be viewed
as beneficial
by the Board.
------------------------- ------------------------- ------------------------- -------------------
Strategic Risks
Single The Sukari Gold The project at Sukari At Sukari, the Level:
Project Mine is Centamin's has two distinct ore process plant Informed
Dependency operating asset sources (open pit and has been designed We will
accounting for underground), the with sufficient have an
all the Group's processing resilience and approach
reserves. Whilst plant has two separate redundancies that could
the resource flotation circuits within the operating deliver
base in West and two separate power cycle. reasonable
Africa is growing, stations. The exploration rewards,
the regional Whilst one project, projects across economic
exploration the nature of the design the business or otherwise,
is at the scoping of the plant provides provide a well-balanced by managing
study and feasibility adequate mitigation project pipeline, risk in
stage to assess and reduces the relative with potential an informed
viability of likelihood of dependence to add incremental way.
a potential compared to a single shareholder
development layer plant design. value by increasing
project. The second circuit production across
We recognise of the process plant the Group as
the COVID-19 has been fully highlighted
pandemic may operational in the Approach
impact this for over six years, to Geology within
risk but have which shows the the Business
provided an resilience Model section
update on the of the project. In of the 2020
impact to date addition, the plant Annual Report.
and our position is fed by both the
moving forward open pit and underground The Company
as shown in operation, providing could potentially
the Operational higher and lower-grade be awarded additional
Review in the ore to the processing exploration
2020 Annual plant. Operational areas, under
Report under activity and production the recent Egyptian
Co-Existing are expected to continue bid round, subject
with COVID-19. at above nameplate to agreement
Until further capacity. Other of mutually
production growth mitigating acceptable terms
beyond Sukari factors, outside the with the government.
is identified, single project at Further detail
the potential Sukari, is shown in
impact remains include the continued the Exploration
high and safeguarding focus on longer term Review of the
the project growth and expansion 2020 Annual
is paramount through exploration Report.
to the Company. and acquisition targets
both inside and outside
of Egypt as highlighted
in the Exploration
Review in the 2020
Annual Report.
------------------------- ------------------------- ------------------------- -------------------
Concession SGM, is 50:50 It is of key importance A key objective Level:
Governance jointly owned for Centamin to maintain of the Company Balanced
and Management by PGM (the a solid and transparent is to maintain We will
Company's wholly working relationship its licence not take
owned subsidiary) with its 50% partner, to operate in any unnecessary
and EMRA, with EMRA, through a strict its host countries. risk within
equal board adherence to the Sukari In Egypt, this our control
representation Concession Agreement. is achieved - However,
from both parties. With the onset of profit through active we understand
The board of sharing in 2019, the and ongoing that inherently
SGM operates proper application co-operation, we have
by way of simple of the cost recovery regular meetings limited
majority. and net profit share and correspondence control
payment provisions with EMRA, as over a
Should a dispute under the Concession well as making number
arise or decision-making Agreement, have become sure that the of external
become deadlocked a key priority. terms and conditions risk factors.
and cannot otherwise of the Concession
be amicably To ensure successful Agreement and
resolved by management of the Sukari applicable laws
way of commercial Gold Mine maintaining are fully complied
negotiations a good working with. Ongoing
or mediation relationship monitoring and
then time-consuming with EMRA, other review of this
and costly arbitration relevant is key and is
or other dispute ministries and wider an activity
resolution proceedings government is a key which we will
may need to focus. The Group has continue to
be initiated. regular meetings with give the required
Should a dispute officials from EMRA focus to. As
arise or decision-making and invests time in we develop our
become deadlocked liaising with relevant West African
and cannot otherwise ministry and other portfolio we
be amicably governmental need to consider
resolved by representatives. how we manage
way of commercial the requirements
negotiations of the permitting
or mediation and licensing
then time-consuming considerations.
and costly arbitration
or other dispute
resolution proceedings
may need to
be initiated.
------------------------- ------------------------- ------------------------- -------------------
Licence Centamin are Host governments and Acting in an Level:
to Operate committed to local communities expect ethical, responsible Balanced
New Principal building and our involvement to and transparent We will
Risk operating, our bring benefits socially manner is fundamental not take
mines in a safe and economically whilst to realising any unnecessary
and responsible eventually leaving the significant risk within
manner. To do them better off than business benefits our control
this, we seek when we arrived. gained from - However,
to build trust-based Centamin aims to bring building trusted we understand
partnerships enduring socio-economic and constructive that inherently
with host governments prosperity within our relationships we have
and local communities area of influence and with all our limited
to drive shared to protect the business stakeholders, control
long-term value bio-physical and to maintaining over a
while working environment. our socio-political number
to minimise The Company aims to licence to operate. of external
the social and meet its ESG commitments Strengthen our risk factors.
environmental set out in our corporate sustainability
impacts of our governance framework, governance and
activities. the management framework
True consideration permits/grants/licences at all levels
needs to be and local of the organisation,
given to the laws/regulations including reinforcement
investment in in our jurisdictions. of our performance
sustainable standards to
projects, whilst support growth.
delivering on
our stated ESG
objectives.
------------------------- ------------------------- ------------------------- -------------------
Future The way we work We aim to foster a To deliver on Level:
of our is changing. high performance, our strategy, Balanced
Workforce Embedding a inclusive we rely on a We will
New Principal clear approach culture, through an capable and not take
Risk to the development organisational structure engaged workforce any unnecessary
of nationals that is fit for purpose, that behaves risk within
supported by resourcing this ethically and our control
an understanding structure responsibly, - However,
of the required with the right consistent with we understand
cultural values capabilities Centamin's values that inherently
is pivotal to and empowering and Code of we have
the strategy. leadership Conduct; these limited
Failure to do to deliver the desired are also essential control
this increases outcomes. for us to maintain over a
the risk of Initiatives which have our licence number
churn and the been introduced include to operate. of external
loss of key the introduction of risk factors.
personnel and an employee professional
knowledge so development pathway,
retention is supervisory development
critical. programme ex-pat
We also need reduction
to consider scheme alongside ongoing
where possible training needs analysis,
the ability an annual performance
to attract adequately review process and
experienced succession planning.
personnel to
meet the future
growth aspirations
of the business.
------------------------- ------------------------- ------------------------- -------------------
Evolving Past environmental Our ability to maintain Not only comply Level:
Environmental incidents in compliance with with regulatory Controlled
Expectations the extractive regulatory obligations Controlled
New Principal industry highlight obligations and but anticipate considers
Risk the hazards alignment broader societal potential
(e.g. water with emerging industry expectations breaches
management, standards in order as it relates in our
tailings storage to protect the to responsible policies
facilities, environment environmental and controls
cyanide management) and our host communities management, to meeting
and the potential alike remains one of on aspects including our environmental
consequences our top priorities. resource efficiency expectations.
to the environment, We are in the process and pollution The Board
community, safety of strengthening our control, the invests
and health. governance and monitoring and heavily
management management of in a programme
Due to the location controls and assurance tailings storage of continuous
in particular processes to meet the facilities and improvement
of the Sukari requirements of new management of in relevant
mine in a desert, industry standards, water consumption practices
we are aware including the and discharge, and has
of the importance Responsible biodiversity an expectation
of water management Gold Mining Principles, conservation to meet
alongside our Global Industry Standard and natural the highest
reliance on Tailings Management resource management standards.
fossil fuel. and Taskforce on legal compliance,
Climate-related but broader
We recognise Financial Disclosures. societal expectations.
that climate-related Understanding
risk is likely We are committed to the effects
to have an increasing resource efficiency of climate-related
impact on our and pollution control. risk on our
operations as Preparatory works have business is
identified by commenced on a solar important as
a specific emerging plant that will reduce we strive to
risk. our GHG emissions by optimise opportunities
approximately 14% at associated with
Sukari and further the transition
investment is committed to a low-carbon
to optimise fuel future, further
efficiency information
are ongoing to fit will be provided
of light-weight trays in the 2021
to our haul fleet and Sustainability
dynamic gas blending. Report.
------------------------- ------------------------- ------------------------- -------------------
Operational Risks
Safety, It is an inherent Protecting the safety, Ensuring the Level:
Health risk in our health and wellbeing safety, health Controlled
and Wellbeing industry that of employees, and wellbeing Controlled
New Principal incidents due contractors, of our workforce considers
Risk to unsafe acts local communities and is a moral imperative potential
or conditions other stakeholders and our priority breaches
could lead to is a fundamental value of protect. in our
injuries or responsibility This requires policies
fatalities. for Centamin. We seek a focus on zero and controls
This has been continuous improvement harm whilst to safety,
heightened by of our safety and health constituting health
the ongoing risk management a direct investment and wellbeing.
COVID-19 pandemic procedures, in the productivity The Board
which highlights with particular focus of the business invests
the importance on the early and the physical heavily
of workforce identification integrity of in a programme
wellbeing. of risks and the our operations. of continuous
Our workforce prevention A safe and healthy improvement
faces risks of incidents. workforce translates in relevant
such as Examples of key into an engaged, practices
travel/transport, mitigations motivated and and has
fire, explosion, initiatives in 2020 productive workforce an expectation
and electrocution, and beyond include that mitigates to meet
as well as risks critical risk and operational the highest
specific to control stoppages, and standards.
the mine site standards supported reduces potential
and development by visible safety incidents or
project. These leadership harm.
include potential reinforced at our
slope failures operations,
or collapse proactive Covid-19
in the underground, management and enhanced
heavy or light employee medical
equipment collisions benefits
involving machinery to recognise the health
or personnel and wellbeing of our
or environmental people and delivery
incidents such of our new Tailings
as cyanide Storage Facility (
contamination. " TSF2 " ) extending
Across the industry our tailings capacity
there is increased to 2030.
focus on the We continuously seek
risks associated to incorporate
with mining technology
companies' tailings and innovation to reduce
facilities. workers' exposure to
We continue safety and health risks
to monitor this alongside introducing
risk, completing a variety of initiatives
regular internal to improve their
and external wellbeing.
technical reviews.
------------------------- ------------------------- ------------------------- -------------------
Exploration Exploration Before undertaking Ensuring we Level:
activities by any exploration have an effective Opportunistic
their very nature activities, and efficient We will
are highly speculative a risk-based approach exploration consider
with an inherent is undertaken to filter programme to opportunities
degree of risk. projects considering meet our strategic with higher
Centamin strives a number of factors. targets, long-term levels
to make new production and of risk
discoveries, This approach has been reserves goals. in exchange
growth and further enhanced in Further information for potentially
value-creation 2020, and beyond, by will be provided greater
opportunities with an overhaul of through 2021 reward,
through our the geological in updates on as long
exploration leadership the exploration as they
programme. team and a restructured activities. do not
approach. This will conflict
Whilst Egypt be supported by with our
continues to independent core values.
represent a advice and an investment
significant in technology.
opportunity,
we also recognise During 2020 we invested
our potential a total of US$17m in
organic growth exploration activities,
projects in with an initial US$5m
West Africa budgeted for exploration
as covered further expenditure in West
in the Exploration Africa in 2021.
Review in the See the Exploration
2020 Annual Review in the 2020
Report. Annual Report for more
on our exploration
programme within Egypt.
------------------------- ------------------------- ------------------------- -------------------
Geological Geological uncertainty The overhaul of the To achieve an Level:
Understanding is an inherent geological leadership accurate estimation Informed
risk which any team in 2020 and a based on geology, We will
mining company restructured approach that informs have an
faces. has led to a number improved mine approach
of changes to the planning and that could
Understanding stewardship operations to deliver
of the ore body of the orebody. deliver results. reasonable
can be influenced Upgrades to the resource Further information rewards,
by a number management processes will be provided economic
of factors which and the development in the optimised or otherwise,
can impact on of more robust resource Life of Mine by managing
the ability models have driven Plan in 2021 risk in
to estimate a review of the existing for Sukari, an informed
the location data alongside future which will be way.
of the ore and analysis. released in
the potential These changes will Q4 2021.
grade expected contribute to an
by the mining integrated
operations. approach to the mining
methods which are
As these estimations applied
are used to and inform the
inform the approach mine-to-mill
to our operations planning.
and the wider An increased
business strategy geotechnical
we need to ensure engineering programme
that we can with a focus on
make this process improving
as accurate operating confidence
as possible. has also been
introduced.
Further information
on the improvements
which have been made
are shown in our
Approach
to Geology in the 2020
Annual Report.
------------------------- ------------------------- ------------------------- -------------------
Operational By their nature, The business is To achieve reliable Level:
Performance Mineral Resources refreshing and consistent Informed
and Planning and reserves the life of mine plan production, We will
are estimates for Sukari. The plan whilst optimising have an
based on a range should provide clarity the potential approach
of assumptions, as to the strategic of the operation that could
including geological, direction of the mine as highlighted deliver
metallurgical, and the desired in the Operational reasonable
technical and production Review of the rewards,
economic factors. levels for the short, 2020 Annual economic
Other variables medium and long-term Report. The or otherwise,
include expected to give focus to the Company provides by managing
costs, inflation operational elements timely and accurate risk in
rates, gold of the mine and allow information an informed
price, grade for operational to the market way.
downgrades and flexibility. on production
production outputs. levels and forecasts.
Alongside the overhauled
Unplanned operational geological leadership The mining sector
stoppages can team and restructured continues to
impact our production. approach to geology face operating
An inability and orebody stewardship cost inflation,
to shift the we are developing a including labour
volumes of waste comprehensive mining costs, energy
required, drops engineering model, costs and the
in our operational increasing our mining natural impact
capacity in flexibility and have of ore-grade
mining, contractor identified multiple deterioration
management, initiatives to improve over time. In
supply chain operating efficiency order to deliver
disruption or and productivity. our disciplined
ground stability growth strategy
are examples An example is a and to maintain
of potential dedicated and improve
risks. contract-mining solution our competitive
on the east of the position, the
Accurate and open pit and the Group must deliver
complete planning owner-operator its financial
is pivotal to fleet utilised for improvement
informing production ore and waste mining targets and
estimates, grade on the north and west. minimise the
quality and number of unplanned
provide greater operational
clarity to stoppages.
corporate/operational
decision-making. Further information
We then need will be provided
to deliver supported in the optimised
by informed life of mine
data analysis. plan for Sukari
Further, we which will be
recognise the released in
potential impact Q4 2021.
of COVID-19
which we have
summarised throughout
the 2020 Annual
Report. As of
the time of
publishing there
were no additional
concerns.
------------------------- ------------------------- ------------------------- -------------------
EMERGING RISKS
The Audit & Risk Committee and Board regularly review the
principal risks as well as the wider operational, corporate and
general business risks including a discussion on emerging
risks.
Emerging risks are defined as circumstances or trends that could
significantly impact the Company's financial strength, competitive
position or reputation within the next three years or over a longer
term. Emerging risks may prove difficult to quantify as they are
often influenced by external factors and difficult to predict.
Below we have outlined a list of emerging risks assessed during the
year, which are set out within the Risk Review section of the 2020
Annual Report:
-- Climate related risk
-- Financial
-- Cyber security
-- Corporate development
-- Security - West Africa
-- Capital allocation and project execution
Directors' responsibilities
in respect of the Annual Report and financial statements
The Directors are responsible for preparing the Annual Report
and the financial statements in accordance with applicable law and
regulations.
Companies (Jersey) Law 1991, as amended (the "Company Law")
requires the Directors to prepare financial statements for each
financial year. Under that law the Directors have prepared the
Group financial statements in accordance with IFRS as adopted by
the European Union. Under Company Law the Directors must not
approve the Group financial statements unless they are satisfied
that they give a true and fair view of the state of affairs of the
Group and of the profit or loss of the Group for that period. In
preparing the financial statements, the Directors are required
to:
-- select suitable accounting policies and then apply them consistently
-- state whether applicable IFRS as adopted by the European
Union have been followed, subject to any material departures
disclosed and explained in the financial statements
-- make judgments and accounting estimates that are reasonable and prudent, and
-- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Group will continue
in business.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Group's
transactions and disclose with reasonable accuracy at any time the
financial position of the Group and enable them to ensure that the
financial statements and the Directors' Remuneration Report comply
with the Company Law.
The Directors are also responsible for safeguarding the assets
of the Group and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity
of the Company's website. Legislation in the United Kingdom and
Jersey governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
The Directors consider that the Annual Report and financial
statements, taken as a whole, are fair, balanced and understandable
and provides the information necessary for shareholders to assess
the Group's position and performance, business model and
strategy.
The Directors have undertaken a robust assessment of the
principal risks impacting the Company. The assessment identified
strategic and operational risks at a corporate level and principal
risks impacting our operations in Egypt and West Africa. Details of
the risk assessment can be found in the Audit and Risk Committee
Report and the risk management and principal risks section of the
Strategic Report.
The Board receives written assurances from the CEO and CFO that
to the best of their knowledge and belief, the Group's financial
position presents a true and fair view and that the financial
statements are founded on a sound system of risk management,
internal compliance and control. Further, they confirm that the
Group's risk management and internal compliance is operating
efficiently and effectively. The Board recognises that internal
control assurances from the CEO and CFO can only be reasonable
rather than absolute, and therefore they are not and cannot be
designed to detect all weaknesses in control procedures.
The financial statements have been audited by
PricewaterhouseCoopers LLP, independent auditor, who was given
unrestricted access to all financial records and related
information, including minutes of all shareholder, Board and
committee meetings.
The financial statements were authorised by the Board of
Directors for issue and signed on their behalf by Martin Horgan
(CEO) and Ross Jerrard (CFO) on 22 March 2021.
Each of the Directors, whose names and functions are listed in
the Governance Report, confirm that, to the best of their
knowledge:
-- the Group financial statements, which have been prepared in
accordance with IFRS as adopted by the European Union, give a true
and fair view of the assets, liabilities, financial position and
profit of the Group
-- the Strategic and Governance Report includes a fair review of
the development and performance of the business and the position of
the Group, together with a description of the principal risks and
uncertainties that it faces
-- In the case of each Director in office at the date the Governance Report is approved
-- so far as the Director is aware, there is no relevant audit
information of which the Group's auditor is unaware
-- they have taken all the steps that they ought to have taken
as a Director in order to make themselves aware of any relevant
audit information and to establish that the Group's auditor is
aware of that information.
On behalf of the Board:
Martin Horgan Ross Jerrard
Chief Executive Officer Chief Financial Officer
Director Director
22 March 2021 22 March 2021
FINANCIAL STATEMENTS
Consolidated statement of comprehensive income
for the year ended 31 December 2020
31 December 31 December
2020 2019
Note US$'000 US$'000
Revenue 2.2 828,737 652,344
Cost of sales 2.3 (449,441) (439,285)
------------------------------------------- ---- ----------- -----------
Gross profit 379,296 213,059
Exploration and evaluation expenditure 2.1 (17,391) (16,883)
Other operating costs 2.3 (56,392) (38,709)
Other income 2.3 6,972 5,856
Profit on financial assets at fair value
through profit or loss 2.6 960 3,889
Finance income 2.3 1,554 5,817
Profit for the year before tax 314,999 173,029
Tax 2.5 (50) (112)
------------------------------------------- ---- ----------- -----------
Profit for the year after tax 314,949 172,917
------------------------------------------- ---- ----------- -----------
Profit for the year after tax attributable
to:
- the owners of the parent 155,979 87,463
- non-controlling interest in SGM 2.4 158,970 85,454
------------------------------------------- ---- ----------- -----------
Total comprehensive income for the year 314,949 172,917
------------------------------------------- ---- ----------- -----------
Total comprehensive income for the year
attributable to:
- the owners of the parent 155,979 87,463
- non-controlling interest in SGM 2.4 158,970 85,454
------------------------------------------- ---- ----------- -----------
Earnings per share attributable to owners
of the parent:
Basic (US cents per share) 6.4 13.531 7.588
Diluted (US cents per share) 6.4 13.453 7.535
------------------------------------------- ---- ----------- -----------
The above audited consolidated statement of comprehensive income
should be read in conjunction with the accompanying notes.
FINANCIAL STATEMENTS
Consolidated statement of financial position
as at 31 December 2020
31 December 31 December
2020 2019
Note US$'000 US$'000
------------------------------------------------ ------- ----------- -----------
Non-current assets
Property, plant and equipment 2.9 829,884 804,717
Exploration and evaluation asset 2.10 63,701 68,138
Inventories - mining stockpiles 2.11 64,870 52,658
Other receivables 2.7 103 93
------------------------------------------------ ------- ----------- -----------
Total non-current assets 958,558 925,606
------------------------------------------------ ------- ----------- -----------
Current assets
Inventories - mining stockpiles and consumables 2.11 118,705 108,957
Financial assets at fair value through
profit or loss 2.6 - 6,454
Trade and other receivables 2.7 18,424 47,061
Prepayments 2.8 8,908 6,132
Cash and cash equivalents 2.16(a) 291,281 278,229
------------------------------------------------ ------- ----------- -----------
Total current assets 437,318 446,833
------------------------------------------------ ------- ----------- -----------
Total assets 1,395,876 1,372,439
------------------------------------------------ ------- ----------- -----------
Non-current liabilities
Provisions 2.13 32,752 14,575
Other payables 2.12 1,437 -
------------------------------------------------ ------- ----------- -----------
Total non-current liabilities 34,189 14,575
------------------------------------------------ ------- ----------- -----------
Current liabilities
Trade and other payables 2.12 64,488 57,411
Tax liabilities 2.5 267 227
Provisions 2.13 7,480 8,589
------------------------------------------------ ------- ----------- -----------
Total current liabilities 72,235 66,227
------------------------------------------------ ------- ----------- -----------
Total liabilities 106,424 80,802
------------------------------------------------ ------- ----------- -----------
Net assets 1,289,452 1,291,637
------------------------------------------------ ------- ----------- -----------
Equity
Issued capital 2.14 668,807 672,105
Share option reserve 2.15 3,343 4,179
Accumulated profits 617,302 615,353
------------------------------------------------ ------- ----------- -----------
Total equity attributable to:
- owners of the parent 1,306,648 1,293,528
- non-controlling interest in SGM 2.4 (17,196) (1,891)
------------------------------------------------ ------- ----------- -----------
Total equity 1,289,452 1,291,637
------------------------------------------------ ------- ----------- -----------
The above audited consolidated statement of financial position
should be read in conjunction with the accompanying notes.
The audited consolidated financial statements were authorised by
the Board of Directors for issue on 22 March 2021 and signed on its
behalf by:
Martin Horgan Ross Jerrard
Chief Executive Officer Chief Financial Officer
Director Director
22 March 2021 22 March 2021
FINANCIAL STATEMENTS
Consolidated statement of changes in equity
for the year ended 31 December 2020
Issued Share option Accumulated Non-controlling Total
capital reserve profits Total interests equity
Note US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
---------------------- ---- -------- ------------ ----------- ---------- --------------- ----------
Balance as at 1
January 2020 672,105 4,179 617,244 1,293,528 (1,891) 1,291,637
Profit for the year
after tax - - 155,979 155,979 158,970 314,949
---------------------- ---- -------- ------------ ----------- ---------- --------------- ----------
Total comprehensive
income
for the year - - 155,979 155,979 158,970 314,949
Own shares acquired (3,298) - - (3,298) - (3,298)
Net reversal of
share-based payments - (836) - (836) - (836)
Dividend paid -
non-controlling
interest in SGM 2.4 - - - - (174,275) (174,275)
Dividend paid -
owners of the parent - - (138,725) (138,725) - (138,725)
---------------------- ---- -------- ------------ ----------- ---------- --------------- ----------
Balance as at 31
December 2020 668,807 3,343 634,498 1,306,648 (17,196) 1,289,452
---------------------- ---- -------- ------------ ----------- ---------- --------------- ----------
Issued Share option Accumulated Non-controlling Total
capital reserve profits Total interests equity
Note US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
--------------------------- ---- -------- ------------ ----------- --------- --------------- ---------
Balance as at 1
January 2019 670,589 5,688 610,810 1,287,087 (270) 1,286,817
Profit for the year
after tax - - 87,463 87,463 85,454 172,917
--------------------------- ---- -------- ------------ ----------- --------- --------------- ---------
Total comprehensive
income
for the year - - 87,463 87,463 85,454 172,917
Recognition of share-based
payments - 7 - 7 - 7
Transfer of share-based
payments 1,516 (1,516) - - - -
Dividend paid -
non-controlling
interest in SGM 2.4 - - - - (87,075) (87,075)
Dividend paid -
owners of the parent - - (81,029) (81,029) - (81,029)
--------------------------- ---- -------- ------------ ----------- --------- --------------- ---------
Balance as at 31
December 2019 672,105 4,179 617,244 1,293,528 (1,891) 1,291,637
--------------------------- ---- -------- ------------ ----------- --------- --------------- ---------
The above audited consolidated statement of changes in equity
should be read in conjunction with the accompanying notes.
FINANCIAL STATEMENTS
Consolidated statement of cash flows
for the year ended 31 December 2020
31 December 31 December
2020 2019
Note US$'000 US$'000
--------------------------------------------- ------- ----------- -----------
Cash flows from operating activities
Cash generated from operating activities 2.16(b) 453,315 249,048
Income tax refund received - 170
Income tax paid (10) (214)
--------------------------------------------- ------- ----------- -----------
Net cash generated by operating activities 453,305 249,004
--------------------------------------------- ------- ----------- -----------
Cash flows from investing activities
Acquisition of financial assets at fair
value through profit or loss - (9,364)
Disposal of financial assets at fair
value through profit or loss 7,414 6,799
Acquisition of property, plant and equipment (127,099) (81,207)
Brownfield exploration and evaluation
expenditure (11,717) (12,198)
Finance income 2.3 1,554 5,817
--------------------------------------------- ------- ----------- -----------
Net cash used in investing activities (129,848) (90,153)
--------------------------------------------- ------- ----------- -----------
Cash flows from financing activities
Own shares acquired (3,298) -
Dividend paid - non-controlling interest
in SGM 2.4 (174,275) (87,075)
Dividend paid - owners of the parent (138,725) (81,029)
--------------------------------------------- ------- ----------- -----------
Net cash used in financing activities (316,298) (168,104)
--------------------------------------------- ------- ----------- -----------
Net increase/(decrease) in cash and cash
equivalents 7,159 (9,253)
Cash and cash equivalents at the beginning
of the year 278,229 282,627
Effect of foreign exchange rate changes 5,893 4,855
--------------------------------------------- ------- ----------- -----------
Cash and cash equivalents at the end
of the year 2.16(a) 291,281 278,229
--------------------------------------------- ------- ----------- -----------
The above audited consolidated statement of cash flows should be
read in conjunction with the accompanying notes.
FINANCIAL STATEMENTS
Notes to the consolidated financial statements
for the year ended 31 December 2020
Basis of preparation
These financial statements are denominated in US dollars
("US$"), which is the presentational currency of Centamin plc. All
companies in the Group use the US$ as their functional currency.
All financial statements presented in US$ have been rounded to the
nearest thousand dollars, unless otherwise stated.
These financial statements have been prepared in accordance with
International Financial Reporting Standards ("IFRS") as adopted for
use by the European Union ("EU") and interpretations issued from
time to time by the IFRS Interpretations Committee ("IFRS IC") both
as adopted by the EU and which are mandatory for EU reporting as at
31 December 2020 and the Companies (Jersey) Law 1991. The Group has
not early adopted any other amendments, standards or
interpretations that have been issued but are not yet
mandatory.
The consolidated financial statements have been prepared on a
going concern basis and under the historical cost convention, as
modified by financial assets and financial liabilities (including
derivative) instruments at fair value through profit or loss.
The consolidated financial statements for the year ended 31
December 2020 were authorised by the Board of Directors of the
Company for issue on 22 March 2020.
Accounting policies
Accounting policies are selected and applied in a manner which
ensures that the resulting financial statements satisfy the
concepts of relevance and reliability, thereby ensuring that the
substance of the underlying transactions or other events is
reported. These policies have been consistently applied to all the
years presented, unless otherwise stated.
1. Current reporting period amendments
1.1 Changes in critical judgments and estimates
There were no material updates and/or changes to critical
accounting judgments and estimates that management have made in the
year in applying the Group's accounting policies, that have the
most significant effect on the amounts recognised and the
disclosure of such amounts in the financial statements.
1.2 Changes in policies and estimates
The Group has applied the following standards and amendments for
the first time for their annual reporting period commencing 1
January 2020:
-- Definition of Material - Amendments to IAS 1 and IAS 8;
The amendments listed above did not have any impact on the
amounts recognised in prior periods and are not expected to
significantly affect the current or future periods.
For a detailed discussion about the Group's performance and
financial position, please refer to the financial review.
1.3 Critical judgments and estimates in applying the entity's
accounting policies
The following are the critical judgments and estimates that
management have made in the process of applying the Group's
accounting policies and that have the most significant effect on
the amounts recognised in the financial statements.
Management has discussed its critical accounting judgments and
estimates and associated disclosures with the Company's Audit and
Risk Committee.
The critical accounting judgments are as follows:
1.3.1 Judgment: Control
Principles of consolidation
The consolidated financial statements are prepared by combining
the financial statements of all the entities that comprise the
consolidated entity, being the Company (the parent entity) and its
subsidiaries. Subsidiaries are all entities (including structured
entities) over which the Group has control, as defined in IFRS 10
'Consolidated financial statements'. Consistent accounting policies
are employed in the preparation and presentation of the
consolidated financial statements.
The consolidated financial statements include the information
and results of each subsidiary and controlled entity from the date
on which the Company obtains control and until such time as the
Company ceases to control such entity. The Group controls an entity
when the Group is exposed to, or has rights to, variable returns
from its involvement with the entity and has the ability to affect
those returns through its power over the entity.
In preparing the consolidated financial statements, all
intercompany balances and transactions, and unrealised profits
arising within the consolidated entity, are eliminated in full.
1.3.1.1 Judgment: Accounting treatment of the Sukari Gold Mining
Company ("SGM")
Pharaoh Gold Mines NL (the holder of an Egyptian branch) ("PGM")
and EMRA are 50:50 partners in SGM. However, SGM is fully
consolidated within the Group as if it were a subsidiary due to it
being a controlled entity, reflecting the substance and economic
reality of the Concession Agreement ("CA") (see note 4.1 and note
4.2 to the financial statements).
IFRS 10 'Consolidated financial statements' defines control as
encompassing three distinct principles, which, if present, identify
the existence of control by an investor over an investee, hence
forming a parent-subsidiary relationship. The principles are:
1. power over the investee;
2. exposure, or rights, to variable returns from its involvement with the investee; and
3. the ability to use its power over the investee to affect the
amount of the investor's returns.
An investor has power over an investee when the investor has
existing rights that give it the current ability to direct the
relevant activities (i.e. the activities that significantly affect
the investee's returns).
The Company's control, through PGM, of SGM
PGM is a 100% owned subsidiary of the Company. The Company,
through PGM, has the right to appoint or remove the managing
director of SGM under the terms of the CA and in doing so controls
the activities in relation to the operation of SGM that most
significantly affect the returns of SGM. These are all illustrated
in the sections that follow:
a) The duties of PGM
-- PGM controls the appointment of the General Manager ("GM") at the Sukari Gold Mine;
o By controlling the appointment of the GM and directing their
activities, the GM will make all day-to-day decisions to allow the
mine to operate in a manner that aligns with the Company's
objectives which involve:
-- preparing SGM's work programmes through determination of the
daily and longer-term mine plans, the budgets covering the
operations to be carried out throughout the life of the mine
("LOM") and approval of the same;
-- managing capital expenditure, procurement, cost control and
treasury;
-- conducting exploration, development, production and marketing
operations;
-- co-ordinating SGM operations and activities, including its
dealings with all contractors and subcontractors;
-- bearing ultimate responsibility for all costs and expenses
required in carrying out any and all operations under the CA;
-- funding the operations of SGM and recovering costs and
expenses throughout the LOM (i.e. exploration, development and
production phases);
-- funding additional exploration and expansion programmes
within the mine during the production phase;
-- taking custody of SGM's stock and management of its
funds;
-- selling and shipping of all gold and associated metals
produced; and
-- entering into and managing gold sales or hedging contracts
and forward sale agreements.
b) The duties of EMRA
-- EMRA must, under the terms of the CA, provide the required
approvals to allow the mine to operate.
c) The duties, role, and function of the board of SGM:
-- The board of SGM has six board members:
o three of which are appointed by the Company, through PGM;
and
o three of which are appointed by EMRA:
-- the executive chairman, as one of the three EMRA appointed
board members, is a representative of EMRA and is appointed by the
Egyptian Ministry of Finance.
-- The board of SGM convenes at least twice a year to:
o facilitate a forum for sharing information between the owners
of SGM;
o provide a mechanism to scrutinise the timing and amounts of
expenses; rather than as a decision-making body over SGM's most
significant relevant activities;
o consider, review, and approve all the following in relation to
SGM:
-- the budget;
-- the annual financial statements;
-- the cost recovery position; and
-- other compliance matters.
o The board of SGM is not allowed to unreasonably withhold
approval of any of the above.
-- If there is a disputed matter or deadlock position at an SGM
board level, it is resolved as follows:
o through open discussion at board level;
o the executive chairman does not have a veto or casting
vote;
o where matters cannot be agreed upon, an ad-hoc committee is
appointed with each party having equal representation. This
committee will then recommend an appropriate course of action to
the board with the best interest of all shareholders in mind;
and
o should the board still not agree on a course of action, there
is a provision for arbitration and ultimately matters can be
presented to the International Court of Arbitration at The
Hague;
-- the board of SGM cannot appoint or remove the GM, this right
belongs solely to the Company, through PGM, under the terms of the
CA;
EMRA and/or the Egyptian government have no downside risk in
their share of SGM. If SGM were to become loss making or insolvent,
these costs are absorbed in its entirety by the Company, through
PGM, in accordance with the CA.
The Company, through PGM, is therefore exposed to the variable
returns of SGM, has the ability to affect the amount of those
returns, has power over SGM through its ability to direct its
relevant activities and therefore meets all the criteria of control
to consolidate SGM's results within the Group to reflect the
substance and economic reality of the CA.
As the Company, through PGM, is determined to be the controlling
party, it should consolidate SGM, and should apply consolidation
procedures, combining balance sheet and profit and loss items line
by line as well as applying the rest of the consolidation
procedures set out in IFRS 10 App B para B86. The Group therefore
prepares consolidated financial statements on this basis.
1.3.1.2 Judgment: Treatment and disclosure of EMRA profit
share
EMRA holds 50% of the shares in the Group controlled entity,
SGM, which are not attributable to the Company, and it is entitled
to receive net proceeds from the operations of SGM on a residual
basis in accordance with their specified shareholding per the CA
(this distribution is in accordance with the profit share mechanism
and not as a consequence of accumulated profits as defined by
accounting standards). Therefore, the Group recognises a
Non-Controlling Interest("NCI") in SGM to represent EMRA's
participation.
In terms of the CA, the NCI's rights to any profit share
payments (dividend distributions) is only triggered after the cost
recovery of all amounts invested (or spent during operations)
during the exploration, construction and development stages have
been repaid to PGM. The profit share mechanism was only triggered
in November 2016 (after all amounts due to be cost recovered were
complete). Until that time the NCI had no rights to claim any
distribution of accumulated profits or profit share.
It is important to note that the availability of cash in SGM for
distribution to its shareholders as profit share is under the
control of the Company, through PGM, by the decisions made on SGM's
strategic direction and day-to-day operational requirements of
running the mine. This is regarded as discretionary and exposes the
Company to variable returns.
Distributions to shareholders in SGM:
-- once all expenditure requirements, including current cost
recovery payments due, have been met, excess cash reserves, if any,
are distributed to both SGM shareholders:
o distributions are always made simultaneously to both
shareholders;
o the split of the distribution is in accordance with the
ratchet mechanism (i.e. the standard profit share ratios of 60/40
(first two years from 1 July 2016), 55/45 (second two years from 1
July 2018) and 50/50 (from 1 July 2020) to PGM and EMRA
respectively through time) as governed by the CA; but:
-- distributions are not mandatory, entirely discretionary and
there are only distributions if there are excess funds;
-- distributions are paid in advance on a weekly or fortnightly
basis by mutual agreement between shareholders;
-- at end of the SGM reporting period, final profits are
determined, externally audited and then approved by the board of
SGM:
o final profit distributions become payable within 60 days of
the financial year end, SGM is unable to avoid payment at this
point and the amount payable is recorded as equity attributable to
the NCI until paid;
-- the CA is merely a shareholder agreement specifying how and
when profits from SGM will be distributed to shareholders and is
typical of a minority shareholder protection mechanism.
The Group should attribute the profit or loss for the year after
tax and each component of other comprehensive income for the year
to the owners of the parent and to the NCI in SGM. The entity shall
also attribute total comprehensive income for the year to the
owners of the parent and to NCI even if this results in the NCI
having a deficit balance (IFRS 10 App B para B94). The CA only
contemplates the distribution of profit to shareholders. The NCI
would only have a deficit balance where advance distributions paid
during the year have exceeded final distributions payable after
year-end financial statements have been prepared and audited. This
deficit would be entirely funded by the Company, through PGM, and
would first be redeemed from future excess cash before regular
distributions to both parties resume. SGM has no claw back
provision for advance profits paid to the NCI. We note that annual
dividend payments, after approval of audited financial statements,
is a standard feature of transactions with an NCI and that such
payments are not normally treated as non -- discretionary payments
triggering a liability in the consolidated statement of financial
position of the parent.
Any losses generated by SGM will be entirely funded by the
Company, through PGM, but attributed to both shareholders. These
losses will first be recovered before further profit share
distributions commence.
In the Group statement of financial position, all the
accumulated profits of SGM are attributable to the Company as EMRA
have already received their share through the advance profit
distribution payments made, therefore NCI is usually disclosed in
the financial statements as nil unless there is an outstanding
distribution payable to or deficit from EMRA due to timing
differences of the cash sweep. Please refer to note 2.4 for further
information.
1.3.2 Judgment: Impairment trigger assessment
IFRS requires management to test for impairment if events or
changes in circumstances indicate that the carrying amount of a
finite life asset may not be recoverable.
Considering the requirements of IAS36 an impairment trigger
assessment has been performed.
Group operating assets
As part of the impairment trigger assessment, management have
also considered movements in the key assumptions which have
historically been used in impairment assessments and are satisfied
that there have not been any changes that would constitute an
impairment trigger. These include changes to:
-- forecast gold prices;
-- discount rates;
-- production volumes;
-- reserves and resources report; and
-- costs, taking into consideration the impact of the solar
plant on those costs and emissions targets; and
-- recovery rates.
On review, no impairment triggers were identified.
Exploration and evaluation assets
The Group's accounting policy for exploration and evaluation
expenditure results in brownfield exploration and evaluation
expenditure being capitalised to the balance sheet for those
projects where such expenditure is considered likely to be
recoverable through future extraction activity or sale or where the
exploration activities have not reached a stage which permits a
reasonable assessment of the existence of reserves.
This policy requires management to make certain judgements and
assumptions as to future events and circumstances, in particular
whether the Group will proceed with development based on existence
of reserves or whether an economically viable extraction operation
can be established. Such judgements and assumptions may change from
period to period as new information becomes available. If,
subsequent to the brownfield exploration and evaluation expenditure
being capitalised, a judgement is made that recovery of the
expenditure is unlikely or the project is to be abandoned, this
would constitute an impairment trigger which requires an impairment
assessment to be performed. The result of that impairment
assessment could be that the relevant capitalised amount will be
written off to the income statement.
-- On review, no impairment triggers were identified.
1.3.3 Judgment: Litigation
The Group exercises judgment in measuring and recognising
provisions and the exposures to contingent liabilities related to
pending litigation, as well as other contingent liabilities (see
note 5.1 to the financial statements). Judgment is necessary in
assessing the likelihood that a pending claim will succeed, or a
liability will arise, and to quantify the possible range of any
financial settlement.
The Group is currently a party to two significant legal actions
in Egypt, both of which could adversely affect its profitability
and, in the case of one of them, may affect its ability to operate
the mine at Sukari in the manner in which it is currently operated.
The details of this litigation, which relate to the loss of the
Egyptian national subsidy for Diesel Fuel Oil and the Concession
Agreement under which Sukari operates, are given in note 5.1 to the
financial statements. Although it is possible to quantify the
effects of the loss of the national fuel subsidy, it is not
currently possible to quantify with sufficient precision the impact
of any restrictions placed on the terms of the Group's operations
under the Concession Agreement.
Every action is being taken to contest these decisions,
including the making of formal legal appeals and, although their
resolution may still take some time, management remains confident
that a satisfactory outcome will ultimately be achieved. In the
meantime, however, the Group continued to pay international prices
for Diesel Fuel Oil until 2020, when the domestic subsidy on Diesel
Fuel Oil was withdrawn. Consequently, there is no longer a
distinction between domestic and international prices for Diesel
Fuel Oil, and the Group is liable to pay the price announced
quarterly by the Egyptian Ministry of Petroleum which is generally
applicable .
With respect to the Administrative Court ruling in the
Concession Agreement case (discussed in note 5.1 below), on 20
March 2013 the Supreme Administrative Court upheld the Company's
application to suspend this decision until the merits of the
Company's appeal are considered and ruled on, thus providing
assurance that normal operations will be able to continue during
this process. In 2016, the Company's appeal was indefinitely stayed
by the Supreme Administrative Court, pending judgment in a case
currently before the Supreme Constitutional Court, the outcome of
which may affect the Concession Agreement case. Further details are
provided in note 5.1 below.
In the unlikely event that the Group is unsuccessful in either
or both of its legal actions, and that the operating activities are
restricted to a reduced area, it is management's belief that the
Group will be able to continue as going concern. The Group is in
regular contact with its Egyptian lawyers, who are monitoring
developments in the litigation cases on a day-to-day basis and is
therefore in a position to react swiftly if and when action is
required.
The changes to critical accounting estimates and assumptions are
disclosed in notes 1.2 and 1.3 above. The other critical estimates
and assumptions are as follows:
1.3.4 Estimate: Mineral Reserve and Mineral Resource statement
impact on ore reserves
The Group Mineral Reserve and Resource statement for SGM with an
effective date of 31 December 2020 has been published on the same
day as this report, 22 March 2021. The Mineral Reserve estimation
has used an assumed gold price of US$1,450 per ounce as a basis of
preparation. The information on the Mineral Resources and Reserves
was prepared by Qualified Persons as defined by the National
Instrument 43-101 of the Canadian Securities Administrators.
There are numerous uncertainties inherent in estimating Mineral
Resources and Mineral Reserves. Assumptions that are valid at the
time of estimation may change significantly when new information
becomes available.
Estimates of recoverable quantities of reserves include
assumptions on commodity prices, exchange rates, discount rates and
production costs for future cash flows. It also involves assessment
and judgment of complex geological models. The economic, geological
and technical factors used to estimate ore reserves may change from
period to period. Changes in ore reserves affect the carrying
values of mine properties, property, plant and equipment, provision
for rehabilitation assets and deferred taxes. Ore reserves are
integral to the amount of depreciation and amortisation charged to
the consolidated statement of comprehensive income and the
calculation in the valuation of inventory.
Production forecasts from the underground mine at Sukari are
partly based on estimates regarding future resource and reserve
growth. It should be specifically noted that the potential quantity
and grade from the Sukari underground mine is conceptual in nature
and that it is uncertain if exploration will result in further
targets being delineated as a Mineral Resource. Please refer to the
Mineral Reserve and Resource statement impact on ore reserves
sensitivity note 3.1.1(i).
1.3.5 Estimate: Going concern
Under guidelines set out by the FRC, the Directors of UK listed
companies are required to consider whether the going concern basis
is the appropriate basis of preparation of financial
statements.
COVID-19
The FRC has released updated guidelines regarding disclosure of
"material uncertainties" related to going concern in current
circumstances. Material uncertainties refers to uncertainties
related to events or conditions that may cast significant doubt
upon the entity's ability to continue as a going concern. In other
words, if boards identify possible events or scenarios (other than
those with a remote possibility of occurring) that could lead to
corporate failure, then these should be disclosed. When assessing
whether material uncertainties exist, boards should consider both
the uncertainty and the likely success of any realistically
possible response to mitigate this uncertainty.
The economic impact of the COVID-19 pandemic has and will
continue to have its effect, but currently there are no material
financial implications to our operations, Sukari continues to
operate with confirmed cases on site, gold sales are still
commencing on a weekly basis. Weekly cash flow forecasts continue
to be performed and distributions to EMRA and PGM are continuing at
the moment, however these can be halted should cash be required
locally. To date there has been no significant impact to critical
stock on site and additional stock has been purchased where
required, this is continuously being assessed and further backup
plans are in place. Due to the current travel restrictions, the
expatriates and Egyptian nationals on site are working longer
shifts and are being compensated accordingly when this occurs,
however everything possible is being done to assist them to meet
their rotation schedules.
Management have performed detailed analyses and forecasts to
assess the economic impact of COVID-19 from a going concern and
viability perspective. The Group continues to benefit from a strong
balance sheet with large cash balances and no debt. At 31 December
2020 the Group had cash and cash equivalents of US$291 million and
therefore it is very likely that liquidity security for the Group
is given for at least 12 months after the date of approval of these
financial statements. As part of assessing the Group's ability to
continue as a going concern, management performed various stress
testing scenarios on the Group's balance sheet and the 2021 budget
to assess the potential downturn this pandemic could have on its
business, the scenarios addressed were:
-- Open pit 30% reduction in ore and waste;
-- Underground 30% reduction in stoping and development;
-- Processing 20% reduction in ore processed;
-- Processing 50% reduction in ore processed; and
-- A combination of the first three reduction scenarios above.
The sensitivities applied were informed by internal and external
data sources, including a review of the Group's most recent
production levels with reductions in production levels to various
stages of slowdown and suspension. Consultations have also been had
both with our critical suppliers and refiners. The Group doesn't
engage in any hedging activities and as such all gold sales are
exposed to movements in market prices.
In each scenario, sufficient liquidity was demonstrated, and we
have no information that a combination of the first three reduction
scenarios above is likely to occur. In the event of such further
deterioration of market conditions as a result of the COVID-19
outbreak, and implementation of the mitigating actions identified
by the Board, the Group will have sufficient liquidity to meet
obligations when they fall due for a period of at least 12 months
after 22 March 2021.
In order to secure the health and safety of our employees and
the production capabilities of Sukari, the Group established a
CV-19 Executive Committee and support team which meets and provides
daily updates on CV-19 globally to site, production, supply chain
and HSE activities. Sukari is operating a very strict three-point
check for all people movements to prevent the spread of the
disease, all corporate offices are currently open with strict CV-19
protocols for the employees that choose to work from there, however
most employees are still working from home. The Group is
continuously evaluating further potential actions to mitigate risk
due to the COVID-19 crisis. As a result, and even though globally
everyone is confronted with a high level of uncertainty, it is not
expected that the coronavirus COVID-19 will have a material
negative impact on the ability of the Group to operate as going
concern.
Based on a detailed cash flow forecast prepared by management,
in which it included any reasonably possible change in the key
assumptions on which the cash flow forecast is based and assessed
various scenarios related to COVID-19, the Directors have a
reasonable expectation that the Group will have adequate resources
to continue in operational existence for twelve months from 22
March 2021 and that at this point in time there are no material
uncertainties regarding going concern. Key assumptions underpinning
this forecast include:
-- available cash balances;
-- favourable litigation outcomes, for current litigation refer
to note 5.1 to the financial statements;
-- gold price of US$1,450/oz.; and
-- production volumes in line with 2021 guidance.
These financial statements for the year ended 31 December 2020
have therefore been prepared on a going concern basis, which
contemplate the realisation of assets and liquidation of
liabilities during the normal course of operations, in preparing
these financial statements.
1.3.6 Estimate: Long-term gold price used in the non-current
stockpiles NRV assessment
All inventories are stated at the lower of cost and net
realisable value. Management and Directors believe that the
estimates used regarding long-term gold prices in the non-current
stockpiles NRV assessment are critical estimates and are realistic
based on current information. Please refer to inventories, note
2.11.
1.3.7 Estimate: Restoration and rehabilitation provision unit
rates
Key management estimates are the unit costs used in calculating
the nominal provision amount, for various activities, namely
ripping and grading, hauling and application, regrading slopes,
construction of bunds and demolition of buildings, as well as
certain fixed costs, including labour and dismantling of equipment.
Unit costs range between $0.33/m2 to $6.62/m2. A 10% change in
these unit and fixed costs would have a US$1.8 million impact on
the provision and corresponding asset amounts, with a highly
insignificant effect on the consolidated statement of comprehensive
income. Please refer to note 2.13.
2. How numbers are calculated
2.1 Segment reporting
The Group is engaged in the business of exploration for 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 'Operating segments'.
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 separately
the performance in 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 the sale of gold while the West African entities
are currently only engaged in precious metal exploration and do not
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:
31 December 31 December
2020 2019
US$'000 US$'000
------------------- ----------- -----------
Egypt 921,427 888,681
Burkina Faso 35,766 35,845
Côte d'Ivoire 467 524
Corporate 898 556
------------------- ----------- -----------
958,558 925,606
------------------- ----------- -----------
Additions to non-current assets mainly relate to Egypt and are
disclosed in note 2.9.
Statement of financial position by operating segment:
Burkina Côte
Total Egypt Faso d'Ivoire Corporate
31 December 2020 US$'000 US$'000 US$'000 US$'000 US$'000
-------------------------------- --------- ---------- -------- --------- ---------
Statement of financial position
Total assets 1,395,876 1,077,949 37,001 1,087 279,839
Total liabilities (106,424) (101,096) (635) (390) (4,303)
-------------------------------- --------- ---------- -------- --------- ---------
Net assets/total equity 1,289,452 976,853 36,366 697 275,536
-------------------------------- --------- ---------- -------- --------- ---------
Burkina Côte
Total Egypt Faso d'Ivoire Corporate
31 December 2019 US$'000 US$'000 US$'000 US$'000 US$'000
-------------------------------- --------- --------- -------- --------- ---------
Statement of financial position
Total assets 1,372,439 1,048,764 36,904 1,282 285,489
Total liabilities (80,802) (69,002) (426) (704) (10,670)
-------------------------------- --------- --------- -------- --------- ---------
Net assets/total equity 1,291,637 979,762 36,478 578 274,819
-------------------------------- --------- --------- -------- --------- ---------
Statement of comprehensive income by operating segment:
Burkina Côte
For the year ended 31 December Total Egypt Faso d'Ivoire Corporate
2020 US$'000 US$'000 US$'000 US$'000 US$'000
---------------------------------- ---------- ---------- -------- --------- ---------
Statement of comprehensive income
Revenue 828,737 828,737 - - -
Cost of sales (449,441) (449,441) - - -
---------------------------------- ---------- ---------- -------- --------- ---------
Gross profit 379,296 379,296 - - -
Exploration and evaluation costs (17,391) - (2,803) (14,588) -
Other operating (costs)/income (56,392) (30,760) 307 (197) (25,742)
Other income 6,972 4,820 54 35 2,063
Profit on financial assets at
fair value through profit or
loss 960 - - - 960
Finance income 1,554 77 - - 1,477
Profit/(loss) for the year before
tax 314,999 353,433 (2,442) (14,750) (21,242)
Tax (50) (50) - - -
---------------------------------- ---------- ---------- -------- --------- ---------
Profit/(loss) for the year after
tax 314,949 353,383 (2,442) (14,750) (21,242)
---------------------------------- ---------- ---------- -------- --------- ---------
Profit/(loss) for the year after
tax attributable to:
- the owners of the parent(1) 155,979 194,413 (2,442) (14,750) (21,242)
- non-controlling interest in
SGM(1) 158,970 158,970 - - -
---------------------------------- ---------- ---------- -------- --------- ---------
(1) Please note that the cost recovery model on which profit
share is based under the Concession Agreement is different to the
accounting results presented above due to various adjustments and
as such the share of profit disclosed above is not reflective of
the 55%:45% split that was in place from 1 July 2018 to 30 June
2020 and 50%:50% split from 1 July 2020 onwards that occurs in
practice, refer to the statement of cash flows by operating segment
below for further information.
Burkina Côte
For the year ended 31 December Total Egypt Faso d'Ivoire Corporate
2019 US$'000 US$'000 US$'000 US$'000 US$'000
---------------------------------- --------- --------- -------- --------- ---------
Statement of comprehensive income
Revenue 652,344 652,344 - - -
Cost of sales (439,285) (439,285) - - -
---------------------------------- --------- --------- -------- --------- ---------
Gross profit 213,059 213,059 - - -
Exploration and evaluation costs (16,883) - (2,715) (14,168) -
Other operating costs (38,709) (18,492) (159) (205) (19,852)
Other income 5,856 6,105 (55) (299) 105
Profit on financial assets at
fair value through profit or
loss 3,889 - - - 3,889
Finance income 5,817 42 - - 5,775
Profit/(loss) for the year before
tax 173,029 200,714 (2,929) (14,672) (10,083)
Tax (112) (282) - - 170
---------------------------------- --------- --------- -------- --------- ---------
Profit/(loss) for the year after
tax 172,917 200,432 (2,929) (14,672) (9,913)
---------------------------------- --------- --------- -------- --------- ---------
Profit/(loss) for the year after
tax attributable to:
- the owners of the parent(1) 87,463 114,978 (2,929) (14,672) (9,913)
- non-controlling interest in
SGM(1) 85,454 85,454 - - -
---------------------------------- --------- --------- -------- --------- ---------
(1) Please note that the cost recovery model on which profit
share is based under the Concession Agreement is different to the
accounting results presented above due to various adjustments and
as such the share of profit disclosed above is not reflective of
the 55%:45% split that was in place from 1 July 2018 to 30 June
2020 and 50%:50% split from 1 July 2020 onwards that occurs in
practice, refer to the statement of cash flows by operating segment
below for further information.
Statement of cash flows by operating segment:
Burkina Côte
For the year ended 31 December Total Egypt Faso d'Ivoire Corporate
2020 US$'000 US$'000 US$'000 US$'000 US$'000
-------------------------------- ---------- ---------- -------- --------- ---------
Statement of cash flows
Net cash generated by/(used
in) operating activities(1) 453,305 517,341 343 (41) (64,338)
Net cash (used in)/generated
by investing activities (129,848) (138,722) (3) (65) 8,942
Net cash (used in)/generated
by financing activities
Own shares acquired (3,298) - - - (3,298)
Dividend paid - non-controlling
interest in SGM (174,275) (174,275) - - -
Dividend paid - controlling
interest in SGM - (196,725) - - 196,725
Dividend paid - owners of the
parent (138,725) - - - (138,725)
-------------------------------- ---------- ---------- -------- --------- ---------
Net increase/(decrease) in cash
and cash equivalents 7,159 7,619 340 (106) (694)
Cash and cash equivalents at
the beginning of the year 278,229 5,882 16 562 271,769
Effect of foreign exchange rate
changes 5,893 (3,608) (351) - 9,852
-------------------------------- ---------- ---------- -------- --------- ---------
Cash and cash equivalents at
the end of the year 291,281 9,893 5 456 280,927
-------------------------------- ---------- ---------- -------- --------- ---------
(1) Please note that the cash generated by operating activities
for Burkina Faso and Côte d'Ivoire are affected by the movements in
working capital, specifically intercompany loans, with its direct
parent entity Centamin West Africa Holdings Limited which is
included within the corporate segment.
Burkina Côte
For the year ended 31 December Total Egypt Faso d'Ivoire Corporate
2019 US$'000 US$'000 US$'000 US$'000 US$'000
--------------------------------------- -------- --------- -------- --------- ---------
Statement of cash flows
Net cash generated by/(used
in) operating activities(1) 249,004 285,534 (282) 777 (37,025)
Net cash (used in)/generated
by investing activities (90,153) (92,571) (4) (160) 2,582
Net cash (used in)/generated
by financing activities
Dividend paid - non-controlling
interest in SGM (87,075) (87,075) - - -
Dividend (paid)/received - controlling
interest in SGM - (106,425) - - 106,425
Dividend paid - owners of the
parent (81,029) - - - (81,029)
--------------------------------------- -------- --------- -------- --------- ---------
Net (decrease)/increase in cash
and cash equivalents (9,253) (537) (286) 617 (9,047)
Cash and cash equivalents at
the beginning of the year 282,627 3,714 28 241 278,644
Effect of foreign exchange rate
changes 4,855 2,704 274 (296) 2,173
--------------------------------------- -------- --------- -------- --------- ---------
Cash and cash equivalents at
the end of the year 278,229 5,881 16 562 271,770
--------------------------------------- -------- --------- -------- --------- ---------
(1) Please note that the cash generated by operating activities
for Burkina Faso and Côte d'Ivoire are affected by the movements in
working capital, specifically intercompany loans, with its direct
parent entity Centamin West Africa Holdings Limited which is
included within the corporate segment.
Exploration expenditure by operating segment:
The following table provides a breakdown of the total
exploration expenditure of the Group by operating segment:
For the year For the year
ended ended
31 December 31 December
2020 2019
US$'000 US$'000
----------------------------------------------------- ------------ ------------
Burkina Faso 2,803 2,715
Côte d'Ivoire 14,588 14,168
Egypt (Sukari tenement including Cleopatra excluding
pre-production gold sales adjustment) 11,717 16,478
----------------------------------------------------- ------------ ------------
Total exploration expenditure 29,108 33,361
----------------------------------------------------- ------------ ------------
ACCOUNTING POLICY: SEGMENT REPORTING
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision-maker.
The chief operating decision-maker, who is responsible for
allocating resources and assessing performance of the operating
segments, has been identified as the Board of Directors.
2.2 Revenue
An analysis of the Group's revenue for the year, from continuing
operations, is as follows:
For the year For the year
ended ended
31 December 31 December
2020 2019
US$'000 US$'000
----------------------------------------------------- ------------ ------------
Gold sales (Including pre-production gold sales
related to Cleopatra) 827,622 657,124
Less: Pre-production gold sales related to Cleopatra
- transferred to exploration and evaluation asset - (5,767)
----------------------------------------------------- ------------ ------------
Gold sales (Excluding pre-production gold sales
related to Cleopatra) 827,622 651,357
Silver sales 1,115 987
----------------------------------------------------- ------------ ------------
828,737 652,344
----------------------------------------------------- ------------ ------------
All gold and silver sales during the year were made to a single
customer in North America, Asahi Refining Canada Ltd.
ACCOUNTING POLICY: REVENUE
Revenue is measured at the fair value of the consideration
received or receivable for goods in the normal course of
business.
Sale of goods
Under IFRS 15, revenue from the sale of mineral production is
recognised when the Group has passed control of the mineral
production to the buyer, it is probable that economic benefits
associated with the transaction will flow to the Group, the sales
price can be measured reliably, and the Group has no significant
continuing involvement and the costs incurred or to be incurred in
respect of the transaction can be measured reliably. This is when
insurance risk has passed to the buyer and the goods have been
collected at the agreed location.
The performance obligation is satisfied when the doré bars are
packaged and delivered to the approved carrier with the appropriate
required documentation at the gold room and the approved carrier
accepts control of the shipment by signature. 98% of the payable
gold and silver content of the refined gold bars will be priced and
paid within one working day after receipt of the shipment at the
refinery with the balance being priced and paid five working days
after receipt. There are no significant judgments applied to the
determination of revenue.
Where the terms of the executed sales agreement allow for an
adjustment to the sales price based on a survey of the mineral
production by the buyer (for instance an assay for gold content),
recognition of the revenue from the sale of mineral production is
based on the most recently determined estimate of product
specifications.
Pre-production revenues
Income derived by the entity prior to the date of commercial
production is offset against the expenditure capitalised and
carried in the consolidated statement of financial position. All
revenues recognised after commencement of commercial production are
recognised in accordance with the revenue policy stated above. The
commencement date of commercial production is determined when
stable and sustained production capacity has been achieved.
Royalty
The Arab Republic of Egypt ("ARE") is entitled to a royalty of
3% of net sales revenue (revenue net of freight and refining costs)
as defined from the sale of gold and associated minerals from SGM.
This royalty is calculated and recognised on receipt of the final
certificate of analysis document received from the refinery. Due to
its nature, this royalty is not recognised in cost of sales but
rather in other operating costs.
2.3 Profit before tax
Profit for the year before tax has been arrived at after
crediting/(charging) the following gains/(losses) and
income/(expenses):
For the year For the year
ended ended
31 December 31 December
2020 2019
US$'000 US$'000
-------------------------------------------------- ------------ ------------
Other income
Net foreign exchange gains 6,922 5,806
Other income 50 50
-------------------------------------------------- ------------ ------------
6,972 5,856
-------------------------------------------------- ------------ ------------
Finance income
Interest received 1,554 5,817
-------------------------------------------------- ------------ ------------
Expenses
Cost of sales
Mine production costs (Including costs related
to gold produced from Cleopatra) (339,012) (353,232)
Mine production costs related to gold produced
from Cleopatra
- transferred to exploration and evaluation asset - 1,487
-------------------------------------------------- ------------ ------------
Mine production costs (339,012) (351,745)
Movement in inventory 13,704 28,254
Depreciation and amortisation (124,133) (115,794)
-------------------------------------------------- ------------ ------------
(449,441) (439,285)
-------------------------------------------------- ------------ ------------
For the year For the year
ended ended
31 December 31 December
2020 2019
US$'000 US$'000
------------------------------------------------- ------------ ------------
Other operating costs
Corporate compliance (3,049) (3,158)
Fees payable to the external auditors (924) (847)
Corporate consultants (4,033) (7,380)
Communications and IT (430) (295)
Salaries and wages (7,262) (5,004)
Travel, accommodation, and entertainment (397) (726)
Short term leases (146) (99)
Other administration expenses (1,270) (933)
Insurances (897) (630)
Other taxes (7) 151
Employee equity settled share-based payments 836 (7)
------------------------------------------------- ------------ ------------
Corporate costs (sub-total) (17,579) (18,928)
Other provisions (10,309) -
Net movement on provision for stock obsolescence (958) 1,500
Inventory written off (29) (594)
Prepayments written off (986) -
Office related depreciation (379) (393)
Royalty - attributable to the ARE government (24,792) (19,701)
Bank charges (179) (161)
Finance charges (558) (569)
(Loss)/gain on disposal of asset (623) 137
------------------------------------------------- ------------ ------------
(56,392) (38,709)
------------------------------------------------- ------------ ------------
ACCOUNTING POLICY: OTHER INCOME AND FOREIGN CURRENCIES
Finance income
Finance income is recognised when it is probable that the
economic benefits will flow to the Group and the amount of income
can be measured reliably. Finance income is accrued on a time
basis, by reference to the principal outstanding and at the
effective interest rate applicable, which is the rate that exactly
discounts estimated future cash receipts through the expected life
of the financial asset to that asset's net carrying amount.
Foreign currencies
The individual financial statements of each Group entity are
presented in its functional currency being the currency of the
primary economic environment in which the entity operates. For the
purpose of the consolidated financial statements, the results and
financial position of each entity are expressed in US dollars,
which is the functional currency of all companies in the Group and
the presentation currency for the consolidated financial
statements.
In preparing the financial statements of the individual
entities, transactions in currencies other than the entity's
functional currency are recorded at the rates of exchange
prevailing on the dates of the transactions. At each reporting
date, monetary items denominated in foreign currencies are
retranslated at the rates prevailing at the reporting date.
Non-monetary items carried at fair value that are denominated in
foreign currencies are retranslated at the rates prevailing on the
date when the fair value was determined.
Non-monetary items that are measured in terms of historical cost
in a foreign currency are not retranslated. Exchange differences
are recognised in profit or loss in the period in which they
arise.
2.4 Non-controlling interest in SGM
EMRA is a 50% shareholder in SGM and 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 the ARE and
recoverable costs'.
Earnings attributable to the non-controlling interest in SGM
(i.e. EMRA) are pursuant to the provisions of the CA and are
recognised as profit attributable to the non-controlling interest
in SGM in the attribution of profit section of the statement of
comprehensive income of the Group. 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
2020 have not been signed off at the date of this report and are in
the process of being audited.
Certain terms of the CA and amounts in the cost recovery model
may also vary depending on interpretation and management and the
Board making various judgments and estimates that can affect the
amounts recognised in the financial statements.
(a) Statement of comprehensive income and statement of financial
position impact
For the year For the year
ended ended
31 December 31 December
2020 2019
US$'000 US$'000
------------------------------------------------ ------------ ------------
Statement of comprehensive income
Profit for the year after tax attributable to
the non-controlling interest in SGM(1) 158,970 85,454
Statement of financial position
Total equity attributable to non-controlling
interest in SGM(1) (opening) (1,891) (270)
Profit for the year after tax attributable to
the non-controlling interest in SGM(1) 158,970 85,454
Dividend paid - non-controlling interest in SGM (174,275) (87,075)
------------------------------------------------ ------------ ------------
Total equity attributable to non-controlling
interest in SGM(1) (closing) (17,196) (1,891)
------------------------------------------------ ------------ ------------
(1) Profit share commenced during the third quarter of 2016. The
first two years was a 60:40 split of net production surplus to PGM
and EMRA respectively. From 1 July 2018 this changed to a 55:45
split for the next two-year period until 30 June 2020, after which
all net production surpluses have been split 50:50.
Any variation between payments made during the year (which are
based on the Company's estimates) and the SGM audited financial
statements, may result in a balance due and payable to EMRA or
advances to be offset against future distributions. This will be
reflected as an amount attributable to the non-controlling interest
in SGM on the statement of financial position and statement of
changes in equity.
(b) Statement of cash flows impact
For the year For the year
ended ended
31 December 31 December
2020 2019
US$'000 US$'000
--------------------------------------------------- ------------ ------------
Statement of cash flows
Dividend paid - non-controlling interest in SGM(1) (174,275) (87,075)
--------------------------------------------------- ------------ ------------
(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 will be split 50:50.
EMRA and PGM benefit from advance distributions of profit share
which are made on a weekly or fortnightly basis and proportionately
in accordance with the terms of the CA. 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.
2.5 Tax
The Group operates in several countries and, accordingly, it is
subject to the various tax regimes in the countries in which it
operates. From time to time the Group is subject to a review of its
related tax filings and in connection with such reviews, disputes
can arise with the taxing authorities over the interpretation or
application of certain rules to the Group's business conducted
within the country involved. If the Group is unable to resolve any
of these matters favourably, there may be an adverse impact on the
Group's financial performance, cash flows or results of operations.
If management's estimate of the future resolution of these matters'
changes, the Group will recognise the effects of the changes in its
consolidated financial statements in the period that such changes
occur.
In Egypt, Pharaoh Gold Mines NL ("PGM") has entered into a
Concession Agreement ("CA") that provides that the income generated
by SGM's activities is granted a long-term tax exemption from all
taxes imposed in Egypt, other than the fixed royalty attributable
to the Egyptian government, rental income on property and interest
income on cash and cash equivalents.
The CA grants certain tax exemptions, including the
following:
-- from 1 April 2010, being the date of commercial production,
SGM is entitled to a 15-year exemption from any taxes imposed by
the Egyptian government on the revenues generated from SGM. PGM and
EMRA intend that SGM will in due course file an application to
extend the tax-free period for a further 15 years. The extension of
the tax-free period requires that there have been no tax problems
or disputes in the initial period and that certain activities in
new remote areas have been planned and agreed by all parties;
-- PGM and SGM are exempt from custom taxes and duties with
respect to the importation of machinery, equipment and consumable
items required for the purpose of exploration and mining activities
at SGM. The exemption shall only apply if there is no local
substitution with the same or similar quality to the imported
machinery, equipment or consumables. Such exemption will also be
granted if the local substitution is more than 10% more expensive
than the imported machinery, equipment or consumables after the
addition of the insurance and transportation costs;
-- PGM, EMRA and SGM and their respective buyers will be exempt
from any duties or taxes on the export of gold and associated
minerals produced from SGM;
-- PGM at all times is free to transfer in US$ or other freely
convertible foreign currency any cash of PGM representing its share
of net proceeds and recovery of costs, without any Egyptian
government limitation, tax or duty;
-- PGM's contractors and subcontractors are entitled to import
machinery, equipment and consumable items under the "Temporary
Release System" which provided exemption from Egyptian customs
duty; and
-- legal title of all operating assets of PGM will pass to EMRA
when cost recovery is completed. The right of use of all fixed and
movable assets remains with PGM and SGM.
Relevance of tax consolidation to the consolidated entity
In Australia, Centamin Egypt Limited and Pharaoh Gold Mines NL,
both wholly owned Australian resident entities within the Group,
have elected to form a tax-consolidated group from 1 July 2003 and
therefore are treated as a single entity for Australian income tax
purposes. The head entity within the tax-consolidated group is
Centamin Egypt Limited. Pharaoh Gold Mines NL, which has a
registered Egyptian branch, benefits from the 'branch profits
exemption' whereby foreign branch income will generally not be
subject to Australian income tax. Ampella Mining Limited is a
single entity for Australian income tax purposes.
Nature of tax funding arrangements and tax-sharing
agreements
Entities within the tax-consolidated group have entered into a
tax funding arrangement and a tax-sharing agreement with the head
entity. Under the terms of the tax-funding agreement, Centamin
Egypt Limited and each of the entities in the tax-consolidated
group have agreed to pay a tax-equivalent payment to or from the
head entity, based on the current tax liability or current tax
asset of the entity. Such amounts are reflected in amounts
receivable from or payable to other entities in the
tax-consolidated group.
The tax-sharing agreement entered between members of the
tax-consolidated group provides for the determination of the
allocation of income tax liabilities between the entities should
the head entity default on its tax payment obligations. No amounts
have been recognised in the financial statements in respect of this
agreement as payment of any amounts under the tax-sharing agreement
is considered remote.
Tax recognised in profit is summarised as follows:
Tax expense
For the year For the year
ended ended
31 December 31 December
2020 2019
US$'000 US$'000
---------------------------------------------- ------------ ------------
Current tax
Current tax expense in respect of the current
year (50) (112)
Deferred tax - -
---------------------------------------------- ------------ ------------
Total tax expense (50) (112)
---------------------------------------------- ------------ ------------
The tax expense for the year can be reconciled to the profit per
the consolidated statement of comprehensive income as follows:
For the year For the year
ended ended
31 December 31 December
2020 2019
US$'000 US$'000
------------------------------------------------------- ------------ ------------
Profit for the year before tax 314,999 173,029
Tax expense calculated at 0%(1) (2019: 0%)(1)
of profit for the year before tax - -
Tax effect of amounts which are not deductible/taxable
in calculating taxable income:
Effect of different tax rates of subsidiaries
operating in other jurisdictions (50) (112)
------------------------------------------------------- ------------ ------------
Tax (50) (112)
------------------------------------------------------- ------------ ------------
(1) The tax rate used in the above reconciliation is the
corporate tax rate of 0% payable by Jersey corporate entities under
the Jersey tax law (2019: 0%). There has been no change in the
underlying corporate tax rates when compared with the previous
financial period.
Tax recognised in the balance sheet is summarised as
follows:
31 December 31 December
2020 2019
US$'000 US$'000
---------------------------- ----------- -----------
Current tax liabilities 267 227
Non-current tax liabilities - -
---------------------------- ----------- -----------
ACCOUNTING POLICY: TAXATION
Income tax expense represents the sum of the tax currently
payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the
period. Taxable profit differs from profit as reported in the
consolidated statement of comprehensive income because of items of
income or expense that are taxable or deductible in other periods
and items that are never taxable or deductible. The Group's
liability for current tax is calculated using tax rates that have
been enacted or substantively enacted by the end of the reporting
period.
Deferred tax
Deferred tax is recognised on temporary differences between the
carrying amounts of assets and liabilities in the financial
statements and the corresponding tax bases used in the computation
of taxable profit. Deferred tax liabilities are generally
recognised for all taxable temporary differences. Deferred tax
assets are generally recognised for all deductible temporary
differences to the extent that it is probable that taxable profits
will be available against which those deductible temporary
differences can be utilised. Such deferred tax assets and
liabilities are not recognised if the temporary difference arises
from goodwill or from the initial recognition (other than in a
business combination) of other assets and liabilities in a
transaction that affects neither the taxable profit nor the
accounting profit.
2.6 Financial assets at fair value through profit or loss
31 December 31 December
2020 2019
US$'000 US$'000
---------------------------------------------- ----------- -----------
Balance at the beginning of the year 6,454 -
Additions at cost - 9,364
Disposals at market value (7,414) (6,799)
Unrealised gain on fair value of investment -
profit or loss 960 4,041
Unrealised loss on foreign exchange movement - (152)
---------------------------------------------- ----------- -----------
- 6,454
---------------------------------------------- ----------- -----------
The financial assets at fair value through profit or loss at 31
December 2020 relates to an equity interest in a listed public
company which has been disposed of in full.
ACCOUNTING POLICY: FINANCIAL INSTRUMENTS
Financial liabilities and equity
Debt and equity instruments are classified as either financial
liabilities or as equity in accordance with the substance of the
contractual arrangement as defined below. Financial liabilities are
recognised in the Group's balance sheet when the Group becomes a
party to the contractual provisions of the instrument.
Equity instruments
An equity instrument is any contract that evidences a residual
interest in the assets of an entity after deducting all of its
liabilities. Equity instruments issued by the Group are recognised
at the proceeds received, net of direct issue costs.
Other financial liabilities
Other financial liabilities, including borrowings, are initially
measured at fair value, net of transaction costs. Other financial
liabilities are subsequently measured at amortised cost using the
effective interest method, with interest expense recognised on an
effective yield basis.
Derecognition of financial liabilities
The Group derecognises financial liabilities when, and only
when, the Group's obligations are discharged, cancelled or they
expire.
Financial assets
Classification
The Group classifies its financial assets in the following
measurement categories:
-- those to be measured subsequently at fair value (either
through OCI or through profit or loss), and
-- those to be measured at amortised cost.
The classification depends on the entity's business model for
managing the financial assets and the contractual terms of the
cash flows.
For assets measured at fair value, gains and losses will either
be recorded in profit or loss or OCI. For investments in equity
instruments that are not held for trading, this will depend on
whether the Group has made an irrevocable election at the time
of initial recognition to account for the equity investment at
Fair Value through other Comprehensive Income ("FVOCI").
Recognition and derecognition
Regular way purchases and sales of financial assets are
recognised on trade date, being the date on which the Group commits
to purchase or sell the asset.
Financial assets are derecognised when the rights to receive
cash flows from the financial assets have expired or have been
transferred and the Group has transferred substantially all the
risks and rewards of ownership. If the Group neither transfers nor
retains substantially all the risks and rewards of ownership and
continues to control the transferred asset, the Group recognises
its retained interest in the asset and an associated liability for
amounts it may have to pay. If the Group retains substantially all
the risks and rewards of ownership of a transferred financial
asset, the Group continues to recognise the financial asset and
also recognises a collateralised borrowing for the proceeds
received.
Measurement
At initial recognition, the Group measures a financial asset at
its fair value plus, in the case of a financial asset not at Fair
Value through Profit or Loss ("FVPL"), transaction costs that are
directly attributable to the acquisition of the financial asset.
Transaction costs of financial assets carried at FVPL are expensed
in profit or loss. Financial assets with embedded derivatives are
considered in their entirety when determining whether their cash
flows are solely payment of principal and interest.
Subsequent to initial recognition, investments in subsidiaries
are measured at cost in the Company's financial statements. The
classification depends on the nature and purpose of the financial
assets and is determined at the time of initial recognition.
Equity instruments
The Group subsequently measures all equity investments at fair
value. Where the Group's management has elected to present fair
value gains and losses on equity investments in OCI, there is no
subsequent reclassification of fair value gains and losses to
profit or loss following the derecognition of the investment.
Dividends from such investments continue to be recognised in profit
or loss as other income when the Group's right to receive payments
is established.
Effective interest method
The effective interest method is a method of calculating the
amortised cost of a financial asset and of allocating interest
income over the relevant period. The effective interest rate is the
rate that exactly discounts estimated future cash receipts through
the expected life of the financial asset, or, where appropriate, a
shorter period, to the net carrying amount on initial
recognition.
Loans and receivables
Trade receivables, loans and other receivables that have fixed
or determinable payments that are not quoted in an active market
are classified as loans and receivables. Loans and receivables are
measured at amortised cost using the effective interest rate method
less impairment. Interest is recognised by applying the effective
interest rate except for short term receivables when the
recognition of interest would be immaterial.
Impairment of financial assets
Financial assets, other than those at fair value through profit
or loss, are assessed for indicators of impairment at each
reporting date. Financial assets are impaired where there is
objective evidence that as a result of one or more events that
occurred after the initial recognition of the financial asset the
estimated future cash flows of the investment have been impacted.
For financial assets carried at amortised cost, the amount of the
impairment is the difference between the asset's carrying amount
and the present value of estimated future cash flows, discounted at
the original effective interest rate.
The carrying amount of the financial asset is reduced by the
impairment loss directly for all financial assets with the
exception of trade receivables where the carrying amount is reduced
through the use of an allowance account. When a trade receivable is
uncollectible, it is written off against the allowance account.
Subsequent recoveries of amounts previously written off are
credited against the allowance account. Changes in the carrying
amount of the allowance account are recognised in profit or
loss.
With the exception of financial assets at fair value through
other comprehensive income equity instruments, if, in a subsequent
period, the amount of the impairment loss decreases and the
decrease can be related objectively to an event occurring after the
impairment was recognised, the previously recognised impairment
loss is reversed through profit or loss to the extent the carrying
amount of the investment at the date the impairment is reversed
does not exceed what the amortised cost would have been had the
impairment not been recognised.
In respect of FVOCI equity instruments, any subsequent increase
in fair value after an impairment loss is recognised in other
comprehensive income.
2.7 Trade and other receivables
31 December 31 December
2020 2019
US$'000 US$'000
----------------------------- ----------- -----------
Non-current
Other receivables - deposits 103 93
----------------------------- ----------- -----------
103 93
----------------------------- ----------- -----------
31 December 31 December
2020 2019
US$'000 US$'000
------------------------------ ----------- -----------
Current
Gold and silver sales debtors 12,492 34,695
Other receivables 5,932 12,366
------------------------------ ----------- -----------
18,424 47,061
------------------------------ ----------- -----------
Trade and other receivables are classified as financial assets
subsequently measured at amortised cost.
All gold and silver sales during the year were made to a single
customer in North America, Asahi Refining Canada Ltd, and are
neither past due nor impaired.
The average age of the receivables is eight days (2019: nine
days) and expected credit losses are highly immaterial. No interest
is charged on the receivables. There are no trade receivables past
due and impaired at the reporting date, and thus no allowance for
doubtful debts has been recognised. Of the trade receivables
balance, the gold and silver sales debtor is all a receivable from
Asahi Refining Canada Ltd. The amount due has been received in full
subsequent to year end. Other receivables represent GST and VAT
owing from the various jurisdictions that the Group operates in and
amounts receivable from the sale of shares in a listed public
company.
The Directors consider that the carrying amount of trade and
other receivables is approximately equal to their fair value,
therefore no expected credit loss is recognised within this note,
see note 3.1.1 for the risk assessment related to trade
receivables.
2.8 Prepayments
31 December 31 December
2020 2019
US$'000 US$'000
----------------- ----------- -----------
Current
Prepayments 8,908 4,776
Fuel prepayments - 1,356
----------------- ----------- -----------
8,908 6,132
----------------- ----------- -----------
Diesel Fuel Oil ("DFO") dispute
As more fully described in note 5.1, the Group is currently
involved in court action concerning the price at which it is
supplied with DFO. Since January 2012, the Group has had to pay for
DFO at the international price rather than the subsidised price
which it believes it is entitled to. It is seeking recovery of the
funds advanced since 2012 through court action. However, management
recognises the practical difficulties associated with reclaiming
funds from the Egyptian government and for this reason has fully
provided against the prepayment of US$367.2 million to 31 December
2020, of which US$4.3 million relates to and was provided for
during 2020. All fuel subsidies provided by the Egyptian Government
were removed in 2020.
In order to allow a better understanding of the financial
statements presented within the consolidated financial statements,
and specifically the Group's underlying business performance, the
effect of the DFO dispute is shown below.
Movement in fuel prepayments
31 December 31 December
2020 2019
US$'000 US$'000
------------------------------------- ----------- -----------
Balance at the beginning of the year 1,356 1,547
Fuel prepayment recognised 4,342 35,922
Less: Provision charged to:
Mine production costs (2,126) (31,058)
Property, plant and equipment (4,231) (5,712)
Inventories 659 657
------------------------------------- ----------- -----------
Balance at the end of the year - 1,356
------------------------------------- ----------- -----------
Cumulative fuel prepayment and provision recognised
31 December 31 December
2020 2019
US$'000 US$'000
------------------------------ ----------- -----------
Fuel prepayment recognised 367,228 362,885
Less: provision charged to:
Mine production costs (335,231) (333,104)
Property, plant and equipment (31,997) (27,766)
Inventories - (659)
------------------------------ ----------- -----------
This has resulted in a net charge of US$11 million in the profit
and loss for the year.
For the year ended For the year ended
31 December 2020 31 December 2019
Before Before
adjustment Adjustment Total adjustment Adjustment Total
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
------------------------------ ----------- ---------- ---------- ----------- ---------- ---------
Expenses
Cost of sales
Mine production costs (336,886) (2,126) (339,012) (320,687) (31,058) (351,745)
Movement in inventory 22,397 (8,693) 13,704 25,159 3,095 28,254
Depreciation and amortisation (124,133) - (124,133) (115,794) - (115,794)
------------------------------ ----------- ---------- ---------- ----------- ---------- ---------
(438,622) (10,819) (449,441) (411,322) (27,963) (439,285)
------------------------------ ----------- ---------- ---------- ----------- ---------- ---------
2.9 Property, plant and equipment ("PPE")
Mine Capital
Office Plant and Mining development work in
equipment Buildings equipment equipment properties progress Total
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
--------------------------- ---------- --------- ---------- ---------- ------------ ---------- ----------
Year ended 31
December 2020
Cost
Balance at 1
January 2020 7,789 3,533 613,792 334,119 561,780 28,584 1,549,597
Additions 73 203 141 153 - 126,529 127,099
Additions: IFRS16
right of use
assets - 1,604 - 47 - - 1,651
Increase in rehabilitation
asset - - - - 5,574 - 5,574
Transfers from
capital work
in progress 930 480 3,784 25,787 78,988 (109,969) -
Transfers from
exploration and
evaluation asset - - - - 16,154 - 16,154
Disposals - - (110) (1,097) - (590) (1,797)
Disposals: IFRS16
right of use
assets - (130) (142) - - - (272)
--------------------------- ---------- --------- ---------- ---------- ------------ ---------- ----------
Balance at 31
December 2020 8,792 5,690 617,465 359,009 662,496 44,554 1,698,006
--------------------------- ---------- --------- ---------- ---------- ------------ ---------- ----------
Accumulated depreciation
and amortisation
Balance at 1
January 2020 (6,974) (1,097) (213,681) (250,519) (272,609) - (744,880)
Depreciation
and amortisation (568) (609) (29,303) (49,127) (44,905) - (124,512)
Disposals - 65 131 1,074 - - 1,270
--------------------------- ---------- --------- ---------- ---------- ------------ ---------- ----------
Balance at 31
December 2020 (7,542) (1,641) (242,853) (298,572) (317,514) - (868,122)
--------------------------- ---------- --------- ---------- ---------- ------------ ---------- ----------
Year ended 31
December 2019
Cost
Balance at 1
January 2019 7,307 2,347 604,158 309,788 517,629 23,482 1,464,711
Additions 73 - 59 10,069 689 68,695 79,586
Additions: IFRS16
right of use
assets - 1,229 298 95 - - 1,622
Increase in rehabilitation
asset - - - - 570 - 570
Transfers from
capital work
in progress 409 25 9,292 14,189 39,678 (63,593) -
Transfers from
exploration and
evaluation asset - - - - 3,214 - 3,214
Disposals - - (15) (22) - - (37)
Disposals: IFRS16
right of use
assets - (68) - - - - (68)
--------------------------- ---------- --------- ---------- ---------- ------------ ---------- ----------
Balance at 31
December 2019 7,789 3,533 613,792 334,119 561,780 28,584 1,549,597
--------------------------- ---------- --------- ---------- ---------- ------------ ---------- ----------
Accumulated depreciation
and amortisation
Balance at 1
January 2019 (6,384) (695) (185,075) (205,103) (231,467) - (628,724)
Depreciation
and amortisation (590) (403) (28,613) (45,438) (41,142) - (116,186)
Disposals - 1 7 22 - - 30
--------------------------- ---------- --------- ---------- ---------- ------------ ---------- ----------
Balance at 31
December 2019 (6,974) (1,097) (213,681) (250,519) (272,609) - (744,880)
--------------------------- ---------- --------- ---------- ---------- ------------ ---------- ----------
Net book value
As at 31 December
2020 1,250 4,049 374,612 60,437 344,982 44,554 829,884
As at 31 December
2019 815 2,436 400,111 83,600 289,171 28,584 804,717
--------------------------- ---------- --------- ---------- ---------- ------------ ---------- ----------
Included within the depreciation charge is US$0.5 million within
the buildings asset class and US$0.1 million related to plant and
equipment in relation to depreciation of ROU assets (2019: US$0.4
million buildings and plant and equipment).
An impairment trigger assessment was performed in 2020 on the
Sukari Cash Generating Unit ("CGU"), refer to note 1.3.2 above,
however no impairment triggers were identified in the
assessment.
Assets that have been cost recovered under the terms of the
Concession Agreement ("CA") 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 CA.
ACCOUNTING POLICY: PROPERTY, PLANT AND EQUIPMENT ("PPE")
PPE is stated at cost less accumulated depreciation and
impairment. PPE will include capitalised development expenditure.
Cost includes expenditure that is directly attributable to the
acquisition of the item as well as the estimated cost of
abandonment. In the event that settlement of all or part of the
purchase consideration is deferred, cost is determined by
discounting the amounts payable in the future to their present
value as at the date of acquisition. Subsequent costs are included
in the asset's carrying amount or recognised as a separate asset,
as appropriate, only when it is probable that future economic
benefits associated with the item will flow to the Group and the
cost of the item can be measured reliably. The carrying amount of
the replaced part is derecognised. All other repairs and
maintenance are charged to the income statement during the
financial period in which they are incurred. The cost of PPE
includes the estimated restoration costs associated with the
asset.
Depreciation is provided on PPE, except for capital work in
progress. Depreciation is calculated on a straight-line basis so as
to write off the net cost or other revalued amount of each asset
over its expected useful life to its estimated residual value.
Depreciation on capital work in progress commences on commissioning
of the asset and transfer to the relevant PPE category.
The estimated useful lives, residual values and depreciation
method are reviewed at the end of each annual financial period,
with the effect of any changes recognised on a prospective
basis.
Freehold land is not depreciated.
The following estimated useful lives are used in the calculation
of depreciation:
Plant and equipment 2-20 years
Office equipment 3-7 years
Mining equipment 2-13 years
Buildings 4-20 years
The gain or loss arising on the disposal or scrappage of an
asset is determined as the difference between the sales proceeds
and the carrying amount of the asset and is recognised in other
income or operating expenses.
Mine development properties
Where mining of a Mineral Resource has commenced, the
accumulated costs are transferred from exploration and evaluation
assets to mine development properties, net of any pre-production
revenues.
Amortisation is first charged to new mine development ventures
from the date of first commercial production. Amortisation of mine
properties is on a unit of production basis resulting in an
amortisation charge proportional to the depletion of the proved and
probable ore reserves. The unit of production can be on a tonne or
an ounce depleted basis.
Capitalised underground development costs incurred to enable
access to specific ore blocks or areas of the underground mine, and
which only provide an economic benefit over the period of mining
that ore block or area, are depreciated on a unit of production
basis, whereby the denominator is estimated ounces of gold in
proven and probable reserves within that ore block or area where it
is considered probable that those resources will be extracted
economically.
Impairment of assets (other than exploration and evaluation and
financial assets)
At each reporting date, the Group reviews the carrying amounts
of its tangible and intangible assets to determine whether there is
any indication that those assets have suffered an impairment loss.
If any such indication exists, the recoverable amount of the asset
is estimated in order to determine the extent of the impairment
loss (if any). For the purposes of assessing impairment, assets are
grouped at the lowest levels for which they potentially generate
largely independent cash inflows (cash generating units).
Recoverable amount is the higher of fair value loss costs to
sell and value in use. In assessing value in use, the estimated
future cash flows are discounted to their present value using a
pre-tax discount rate that reflects current market assessment of
the time value of money and the risks specific to the asset for
which the estimates of future flows have not been adjusted.
If the recoverable amount of a cash generating unit is estimated
to be less than its carrying amount, the carrying amount of the
cash generating unit is reduced to its recoverable amount. Where an
impairment loss subsequently reverses, the carrying amount of the
cash generating unit is increased to the revised estimate of its
recoverable amount, but only to the extent that the increased
carrying amount does not exceed the carrying amount that would have
been determined had no impairment loss been recognised for the cash
generating unit in prior years.
A reversal of an impairment loss is recognised immediately in
profit or loss, unless the relevant asset is carried at a revalued
amount, in which case the reversal of an impairment loss is treated
as a revaluation increase.
2.10 Exploration and evaluation asset
31 December 31 December
2020 2019
US$'000 US$'000
----------------------------------------------- ----------- -----------
Balance at the beginning of the year 68,138 59,154
Expenditure for the year 11,717 16,478
Pre-production gold sales net of costs related
to Cleopatra - (4,280)
Transfer to property, plant and equipment (16,154) (3,214)
----------------------------------------------- ----------- -----------
Balance at the end of the year 63,701 68,138
----------------------------------------------- ----------- -----------
The exploration and evaluation asset relates to the drilling,
geological exploration and sampling of potential ore reserves and
can be attributed to Egypt (US$28.5 million) and Burkina Faso
(US$35.2 million relating to the acquisition of Ampella Mining
Limited).
In accordance with the requirements of IAS 36 'Impairment of
assets' and IFRS 6 'Exploration for and evaluation of Mineral
Resources' exploration and evaluation assets are assessed for
impairment when facts and circumstances (as defined in IFRS 6
'Exploration for and evaluation of Mineral Resources') suggest that
the carrying amount of exploration and evaluation assets may exceed
its recoverable amount.
An impairment trigger assessment was performed in 2020 on the
Exploration and Evaluation asset ("CGU"), refer to note 1.3.2 of
above, however no impairment triggers were identified in the
assessment.
ACCOUNTING POLICY: EXPLORATION, EVALUATION AND DEVELOPMENT
EXPITURE
Exploration and evaluation expenditures in relation to each
separate area of interest are differentiated between greenfield and
brownfield exploration activities in the year in which they are
incurred.
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; and
(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.
Greenfield exploration 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.
Brownfield exploration and evaluation expenditures in relation
to each separate area of interest are recognised as an exploration
and evaluation asset in the year in which they are incurred where
the following conditions are satisfied:
-- the rights to tenure of the area of interest are current; and
-- at least one of the following conditions is also met:
o the exploration and evaluation expenditures are expected to be
recouped through successful development and exploration of the area
of interest, or alternatively, by its sale; or
o exploration and evaluation activities in the area of interest
have not at the reporting date reached a stage which permits a
reasonable assessment of the existence or otherwise of economically
recoverable reserves, and active and significant operations in, or
in relation to, the area of interest are continuing.
Exploration and evaluation assets are initially measured at cost
and include acquisition of rights to explore, studies, exploration
drilling, trenching and sampling and associated activities. General
and administrative costs are only included in the measurement of
exploration and evaluation costs where they are related directly to
operational activities in a particular area of interest.
Exploration and evaluation assets are assessed for impairment
when facts and circumstances (as defined in IFRS 6 'Exploration for
and evaluation of Mineral Resources') suggest that the carrying
amount of exploration and evaluation assets may exceed its
recoverable amount. The recoverable amount of the exploration and
evaluation assets (or the cash generating unit(s) to which it has
been allocated, being no larger than the relevant area of interest)
is estimated to determine the extent of the impairment loss (if
any). Where an impairment loss subsequently reverses, the carrying
amount of the asset is increased to the revised estimate of its
recoverable amount, but only to the extent that the increased
carrying amount does not exceed the carrying amount that would have
been determined had no impairment loss been recognised for the
asset in previous years.
Where a decision is made to proceed with development in respect
of a particular area of interest based on the commercial and
technical feasibility, the relevant exploration and evaluation
asset is tested for impairment, reclassified to mine development
properties, and then amortised over the life of the reserves
associated with the area of interest once mining operations have
commenced.
Mine development expenditure is recognised at cost less
accumulated amortisation and any impairment losses. When commercial
production in an area of interest has commenced, the associated
costs are amortised over the estimated economic life of the mine on
a units of production basis.
Changes in factors such as estimates of proved and probable
reserves that affect unit of production calculations are dealt with
on a prospective basis.
Income derived by the entity prior to the date of commercial
production is offset against the expenditure capitalised and
carried in the consolidated statement of financial position. All
revenues recognised after commencement of commercial production are
recognised in accordance with the Revenue Policy stated in note
2.2. The commencement date of commercial production is determined
when stable and sustained production capacity has been
achieved.
2.11 Inventories
The treatment and classification of mining stockpiles within
inventory is split between current and non-current assets.
Stockpiles which will not be consumed within the next twelve months
based on mining and processing forecasts have been reclassified to
non-current assets. The reason for the classification split is the
manner in which the mining stockpiles will be utilised or drawn
upon in the future within the life of mine, with priority being
placed on the higher-grade ore. The volume of ore extracted from
the open pit in the year far exceeded the volume that could be
processed, which has caused a large increase in the volume and
value of the mining stockpiles.
The carrying value of the non-current asset portion is assessed
at the lower of cost or net realisable value. The cost of the
mining stockpiles was assessed through comparing the current costs
and discounting the future processing costs at a US$ applicable
rate of 1.35% over the expected life of the asset to an future
expected selling price, this was assessed using two different
future expected selling prices:
-- US$1,891 per ounce which was the year end spot price. This
resulted in headroom of US$78 million above the cost; and
-- US$1,450 per ounce which was the three-year internal budgeted
gold price used in the going concern and viability assessments.
This resulted in headroom of US$10 million above the cost.
US$1,386 per ounce which was calculated as the breakeven selling
price. The net realisable value was the higher than the cost in of
all of the above scenarios and as such it is valued at cost.
31 December 31 December
2020 2019
US$'000 US$'000
------------------ ----------- -----------
Non-current
Mining stockpiles 64,870 52,658
------------------ ----------- -----------
64,870 52,658
------------------ ----------- -----------
31 December 31 December
2020 2019
US$'000 US$'000
--------------------------------------------- ----------- -----------
Current
Mining stockpiles, ore in circuit, doré
supplies 40,112 38,620
Stores inventory 81,383 72,169
Provision for obsolete stores inventory (2,790) (1,832)
--------------------------------------------- ----------- -----------
118,705 108,957
--------------------------------------------- ----------- -----------
Stores inventories written off in the year total US$0.03 million
as per note 2.3 (2019: US$0.6 million).
ACCOUNTING POLICY: INVENTORIES
Inventories include mining stockpiles, gold in circuit, doré
supplies and stores and materials. All inventories are stated at
the lower of cost and 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 LOM processing plan and is currently being optimised based on
the known Mineral Reserves, current plant capacity and mine design.
Ore tonnes contained in the stockpiles 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 (0.4 to 0.5g/t) open pit
stockpile material above the cut-off grade of 0.4g/t has been
reclassified to non-current assets as these ore tonnes are not
planned to be processed within the next twelve 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 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.
2.12 Trade and other payables
31 December 31 December
2020 2019
US$'000 US$'000
----------------------------- ----------- -----------
Non-current
Other creditors 1,437 -
----------------------------- ----------- -----------
31 December 31 December
2020 2019
US$'000 US$'000
----------------------------- ----------- -----------
Current
Trade payables 31,483 27,249
Other creditors and accruals 33,005 30,162
----------------------------- ----------- -----------
64,488 57,411
----------------------------- ----------- -----------
Trade payables principally comprise the amounts outstanding for
trade purchases and ongoing costs. The average credit period taken
for trade purchases is 26 days (2019: 23 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.
Other creditors and accruals relate to various accruals that
have been recognised due to amounts known to be outstanding for
which invoices have not yet been received.
The Directors consider that the carrying amount of trade
payables approximate their fair value.
Accounting policy: Trade and other payables
These amounts represent liabilities for goods and services
provided to the Group prior to the end of the financial year which
are unpaid. The amounts are unsecured and are usually paid within
30 days of recognition. Trade and other payables are presented as
current liabilities unless payment is not due within twelve months
after the reporting period. They are recognised initially at their
fair value and subsequently measured at amortised cost using the
effective interest method.
Employee benefits
A liability is recognised for benefits accruing to employees in
respect of wages and salaries, annual leave, long service leave and
sick leave when it is probable that settlement will be required,
and they are capable of being measured reliably.
Liabilities recognised in respect of employee benefits expected
to be settled within twelve months, are measured at their nominal
values using the remuneration rate expected to apply at the time of
settlement. Liabilities recognised in respect of employee benefits
which are not expected to be settled within twelve months are
measured at the present value of the estimated future cash flows to
be made by the consolidated entity in respect of services provided
by employees up to reporting date.
Superannuation
The Company contributes to, but does not participate in,
compulsory superannuation funds (defined contribution schemes) on
behalf of the employees and directors in respect of salaries and
directors' fees paid. Contributions are charged against income as
they are made.
2.13 Provisions
31 December 31 December
2020 2019
US$'000 US$'000
----------------------------------------------------- ----------- -----------
Current
Employee benefits(1) 1,440 701
Provision for cost recovery items(2) 5,089 7,060
Other current provisions(3) 951 828
----------------------------------------------------- ----------- -----------
7,480 8,589
----------------------------------------------------- ----------- -----------
Non-current
Restoration and rehabilitation(4) 20,496 14,572
Provision for cost recovery items(2) 12,229 -
Other non-current provisions 27 3
----------------------------------------------------- ----------- -----------
32,752 14,575
----------------------------------------------------- ----------- -----------
Movement in restoration and rehabilitation provision
Balance at beginning of the year 14,572 13,591
Additional provision recognised 5,574 570
Interest expense - unwinding of discount 350 411
----------------------------------------------------- ----------- -----------
Balance at end of the year 20,496 14,572
----------------------------------------------------- ----------- -----------
(1) Employee benefits relate to annual, sick and long service
leave entitlements and bonuses.
(2) Provision held for in-country settlement of cost recovery
items relating to EMRA. The amount is based on the written offer
proposed to EMRA in March 2021 to settle all outstanding matters
which includes payment of US$17.6 million spread over a 5.5 years
period. This has been discounted to present value. The prior year
provision was based on a probability weighted outcome of the
matters under discussion which are being finalised as part of the
proposed settlement.
(3) Provision for customs, rebates and withholding taxes.
(4) The provision for restoration and rehabilitation has all
been discounted by 1.35% (2019: 2.40%) using a US$ applicable rate
and inflation applied at 1.23% (2019: 1.77%). The annual review
undertaken as at 31 December 2020 has resulted in a US$5.6 million
increase in the provision (2019: US$0.57 million).
Key management estimates are the unit costs used in calculating
the nominal provision amount, for various activities, namely
ripping and grading, hauling and application, regrading slopes,
construction of bunds and demolition of buildings, as well as
certain fixed costs, including labour and dismantling of equipment.
Unit costs are considered to be the key assumption within the
estimate which range between $0.33/m(2) to $6.62/m(2) . A 10%
change in these unit and fixed costs would have a US$1.8 million
impact on the provision and corresponding asset amounts, with a
minimal effect on the consolidated statement of comprehensive
income. 10% is chosen as an appropriate sensitivity as this is in
line with the year on year increase in nominal cost base, when
excluding one-off changes in relation to increases in
rehabilitation site areas.
In 2021, in line with the life of asset review, Centamin will
commence a full review of the restoration and rehabilitation plan
for Sukari which could result in a change in the provision
recognised to date.
ACCOUNTING POLICY: RESTORATION AND REHABILITATION
A provision for restoration and rehabilitation is recognised
when there is a present legal or constructive obligation as a
result of exploration, development and production activities
undertaken, it is probable that an outflow of economic benefits
will be required to settle the obligation, and the amount of the
provision can be measured reliably. The estimated future
obligations include the costs of dismantling and removal of
facilities, restoration and monitoring of the affected areas. The
provision for future restoration costs is the best estimate of the
present value of the expenditure required to settle the restoration
obligation at the reporting date in accordance with the
requirements of the Concession Agreement. Future restoration costs
are reviewed annually and any changes in the estimate are reflected
in the present value of the restoration provision at each reporting
date.
The 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 decommission
infrastructure, restore affected areas by ripping and grading of
compacted surfaces to blend with the surroundings, closure of
project components to ensure stability and safety at the Group's
sites at the end of the life of mine. This restoration and
rehabilitation estimate has been made on the basis of benchmark
assessments of restoration works required following mine closure
and after taking into account the projected area to be disturbed to
date.
Discount rates to present value the future obligations are
determined by reference to market risk free rates for periods which
approximate the period of the associated obligation.
The initial estimate of the restoration and rehabilitation
provision relating to exploration, development and mining
production activities is capitalised into the cost of the related
asset and amortised on the same basis as the related asset, unless
the present obligation arises from the production of the inventory
in the period, in which case the amount is included in the cost of
production for the period. Changes in the estimate of the provision
of restoration and rehabilitation are treated in the same manner,
except that the unwinding of the effect of discounting on the
provision is recognised as a finance cost within other operating
costs rather than being capitalised into the cost of the related
asset.
2.14 Issued capital
31 December 2020 31 December 2019
-------------------------------
Number US$'000 Number US$'000
------------------------------- ------------- ------- ------------- -------
Fully paid ordinary shares
Balance at beginning of
the year 1,155,955,384 672,105 1,154,722,984 670,589
Own shares acquired during
the year - (3,298) - -
Employee share option scheme
- proceeds from shares issued - - 1,232,400 1,312
Transfer from share option
reserve - - - 204
------------------------------- ------------- ------- ------------- -------
Balance at end of the year 1,155,955,384 668,807 1,155,955,384 672,105
------------------------------- ------------- ------- ------------- -------
The authorised share capital is an unlimited number of no par
value shares.
At 31 December 2020, the trustee of the deferred bonus share
plan held 2,373,049 ordinary shares (2019: 473,049 ordinary shares)
pursuant to the plan rules.
Fully paid ordinary shares carry one vote per share and carry
the right to dividends. See note 6.3 for more details of the share
options.
ACCOUNTING POLICY: ISSUED CAPITAL
Ordinary shares are classified as equity. Incremental costs
directly attributable to the issue of new shares or options are
shown in equity as a deduction, net of tax, from the proceeds.
Where the Company or other members of the consolidated Group
purchase the Company's equity share capital, the consideration paid
is deducted from the total shareholders' equity of the Group and/or
of the Company as treasury shares until they are cancelled. Where
such shares are subsequently sold or reissued, any consideration
received is included in shareholders' equity of the Group and/or
the Company.
2.15 Share option reserve
31 December 31 December
2020 2019
US$'000 US$'000
--------------------------------- ----------- -----------
Share option reserve
Balance at beginning of the year 4,179 5,688
Share-based payments expense 3,190 2,646
Transfer to accumulated profits (4,026) (2,639)
Transfer to issued capital - (1,516)
--------------------------------- ----------- -----------
Balance at the end of the year 3,343 4,179
--------------------------------- ----------- -----------
The share option reserve arises on the grant of share options to
employees under the employee share option plan. Amounts are
transferred out of the reserve and into issued capital when the
options and warrants are exercised/vested. Amounts are transferred
out of the reserve into accumulated profits when the options and
warrants are forfeited.
2.16 Cash flow information
(a) Reconciliation of cash and cash equivalents
For the purpose of the statement of cash flows, cash and cash
equivalents includes cash on hand and at bank and deposits.
31 December 31 December
2020 2019
US$'000 US$'000
-------------------------- ----------- -----------
Cash and cash equivalents 291,281 278,229
-------------------------- ----------- -----------
ACCOUNTING POLICY: CASH AND CASH EQUIVALENTS
Cash comprises cash on hand and demand deposits. Cash
equivalents are short term, highly liquid investments that are
readily convertible to known amounts of cash and which are subject
to an insignificant risk of changes in value.
(b) Reconciliation of profit for the year to cash flows from
operating activities
For the year For the year
ended ended
31 December 31 December
2020 2019
US$'000 US$'000
--------------------------------------------------- ------------ ------------
Profit for the year before tax 314,999 173,029
Adjusted for:
Profit on financial assets at fair value through
profit or loss (960) (3,889)
Depreciation/amortisation of property, plant
and equipment 124,512 116,187
Inventory written off 29 594
Prepayments written off 986 -
Inventory obsolescence provision 958 (1,500)
Foreign exchange gains, net (6,921) (5,806)
Share-based payments (credit)/expense (836) 7
Finance income (1,554) (5,817)
Loss/(gain) on disposal of property, plant and
equipment 623 (137)
Changes in working capital during the year:
Decrease/(increase) in trade and other receivables 28,637 (13,619)
(Increase) in inventories (22,919) (30,141)
(Increase)/decrease in prepayments (2,785) 559
Increase in trade and other payables 7,076 18,167
Increase in provisions 11,470 1,414
--------------------------------------------------- ------------ ------------
Cash flows generated from operating activities 453,315 249,048
--------------------------------------------------- ------------ ------------
(c) Non-cash financing and investing activities
During the year there have been no non-cash financing and
investing activities.
3. Group financial risk and capital management
3.1 Group financial risk management
3.1.1 Financial instruments
(a) Group risk management
The Group manages its capital to ensure that entities within the
Group will be able to continue as a going concern while maximising
the return to stakeholders through the optimisation of the cash and
equity balance. The Group's overall strategy remains unchanged from
the previous financial period.
The Group has no debt and thus not geared at the year end or in
the prior year. The capital structure consists of cash and cash
equivalents and equity attributable to equity holders of the
parent, comprising issued capital and reserves as disclosed in
notes 2.14 and 2.15. The Group operates in Australia, Jersey,
Egypt, Burkina Faso and Côte d'Ivoire. None of the Group's entities
are subject to externally imposed capital requirements.
The Group utilises inflows of funds toward the ongoing
exploration and development of SGM in Egypt, and the exploration
projects in Burkina Faso and Côte d'Ivoire.
Categories of financial assets and liabilities
31 December 31 December
2020 2019
US$'000 US$'000
-------------------------------------------------------- ----------- -----------
Financial assets
Cash and cash equivalents 291,281 278,229
Trade and other receivables (excluding VAT receivables) 17,593 46,320
Financial assets at fair value through profit
or loss - 6,454
-------------------------------------------------------- ----------- -----------
308,874 331,003
-------------------------------------------------------- ----------- -----------
Financial liabilities
Trade and other payables 64,488 57,411
-------------------------------------------------------- ----------- -----------
(b) Financial risk management and objectives
The Group's overall risk management programme focuses on the
unpredictability of financial markets and seeks to minimise
potential risk adverse effects and ensure that net cash flows are
sufficient to support the delivery of the Group's financial targets
whilst protecting future financial security. The Group continually
monitors and tests its forecast financial position against these
objectives.
The Group's activities expose it to a variety of financial
risks: market, commodity, credit, liquidity, foreign exchange, and
interest rate. These risks are managed under Board approved
directives through the Audit and Risk Committee. The Group's
principal financial instruments comprise interest bearing cash and
cash equivalents. Other financial instruments include trade
receivables and trade payables, which arise directly from
operations.
It is, and has been throughout the period under review, Group
policy that no speculative trading in financial instruments be
undertaken.
(c) Market risk
The Group operates internationally and is exposed to foreign
exchange risk arising from various currency exposures, primarily
with respect to the Australian dollar, Great British pound and
Egyptian pound. Foreign exchange risk arises from future commercial
transactions and recognised assets and liabilities that are
denominated in a currency that is not the entity's functional
currency. The risk is measured by regularly monitoring, forecasting
and performing sensitivity analyses on the Group's financial
position.
Financial instruments denominated in Great British pounds,
Australian dollars and Egyptian pounds are as follows:
Great British pound Australian dollar Egyptian pound
--------------------------
31 December 31 December 31 December 31 December 31 December 31 December
2020 2019 2020 2019 2020 2019
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
-------------------------- ----------- ----------- ----------- ----------- ----------- -----------
Financial assets
Cash and cash equivalents 4,997 1,999 17,566 1,339 2,057 2,141
Financial assets at fair
value through profit
or loss - - - 6,454 - -
-------------------------- ----------- ----------- ----------- ----------- ----------- -----------
4,997 1,999 17,566 7,793 2,057 2,141
-------------------------- ----------- ----------- ----------- ----------- ----------- -----------
Financial liabilities
Trade and other payables 2,682 224 19,883 10,192 13,829 (858)
-------------------------- ----------- ----------- ----------- ----------- ----------- -----------
2,682 224 19,883 10,192 13,829 (858)
-------------------------- ----------- ----------- ----------- ----------- ----------- -----------
Net exposure 2,315 1,775 (2,317) (2,399) (11,772) 2,999
-------------------------- ----------- ----------- ----------- ----------- ----------- -----------
The following table summarises the sensitivity of financial
instruments held at the reporting date to movements in the exchange
rate of the Great British pound, Egyptian pound and Australian
dollar to the US dollar, with all other variables held constant.
The sensitivities are based on reasonably possible changes over a
financial period, using the observed range of actual historical
rates.
Impact on profit Impact on equity
------------------------
31 December 31 December 31 December 31 December
2020 2019 2020 2019
US$'000 US$'000 US$'000 US$'000
------------------------ ----------- ----------- ----------- -----------
US$/GBP increase by 10% 555 161 - -
US$/GBP decrease by 10% (680) (197) - -
US$/AUD increase by 10% 588 (805) - (587)
US$/AUD decrease by 10% (718) 984 - 717
US$/EGP increase by 10% (655) 273 - -
US$/EGP decrease by 10% 799 (333) - -
------------------------ ----------- ----------- ----------- -----------
The Group's sensitivity to foreign currency has increased at the
end of the current period mainly due to an increase in GBP and EGP
foreign currency cash holdings offset by a decrease in AUD foreign
currency cash holdings as well as an increase in AUD financial
assets at fair value through profit or loss holdings an increase in
AUD and GBP trade payables offset by a decrease in EGP trade
payables. There is also a decrease in US dollar cash holdings and
offset by an increase in US dollar trade payables.
The amounts shown above are the main currencies which the Group
is exposed to. Centamin also has small deposits in euro
(US$211,212) and West African franc (US$460,730), and net payables
of US$4,110,508 in euro and US$951,748 in West African franc. A
movement of 10% up or down in these currencies would have a
negligible effect on the assets/liabilities.
The Group has not entered into forward foreign exchange
contracts. Natural hedges are utilised wherever possible to offset
foreign currency liabilities. The Company maintains a policy of not
hedging its currency positions and maintains currency holdings in
line with underlying requirements and commitments.
(d) Commodity price risk
The Group's future revenue forecasts are exposed to commodity
price fluctuations, in particular gold and fuel prices. The Group
has not entered into forward gold hedging contracts.
Gold price
The table below summarises the impact of increases/decreases of
the average realised gold price on the Group's profit after tax for
the year. The analysis assumes that the average realised gold price
per ounce had increased/decreased by 10% with all other variables
held constant.
Decrease by 31 December Increase by
10% 2020 10%
US$/oz US$/oz US$/oz
---------------------------- ----------- ----------- -----------
Average realised gold price 1,589 1,766 1,942
---------------------------- ----------- ----------- -----------
Decrease by 31 December Increase by
10% 2020 10%
US$'000 US$'000 US$'000
---------------------------- ----------- ----------- -----------
Profit after tax 233,588 314,949 394,147
---------------------------- ----------- ----------- -----------
Fuel price
Any variation in the fuel price has an impact on the mine
production costs. The analysis assumes that the average fuel price
had increased/decreased by a few US cents per litre with all other
variables held constant.
Decrease by 31 December Increase by
10% 2020 10%
US$/litre US$/litre US$/litre
---------------------- ----------- ----------- -----------
Fuel price 0.41 0.45 0.50
---------------------- ----------- ----------- -----------
Decrease by 31 December Increase by
10% 2020 10%
US$'000 US$'000 US$'000
---------------------- ----------- ----------- -----------
Mine production costs (7,416) (339,012) 7,416
---------------------- ----------- ----------- -----------
(e) Interest rate risk and liquidity risk
The Group's main interest rate risk arises from cash and
short-term deposits and is not considered to be a material risk due
to the short-term nature of these financial instruments. Cash
deposits are placed on term period of no more than 30 days at a
time.
The financial instruments exposed to interest rate risk and the
Group's exposure to interest rate risk as at the balance sheet date
were as per the table below.
The Group's liquidity position is managed to ensure that
sufficient funds are available to meet its financial commitments in
a timely and cost-effective manner.
Ultimate responsibility for liquidity risk management rests with
the Board, which has established an appropriate management
framework for the management of the Group's funding requirements.
The Group manages liquidity risk by maintaining adequate cash
reserves and management monitors rolling forecasts of the Group's
liquidity on the basis of expected cash flow. The tables in section
(a) to (c) of this note above reflect a balanced view of cash
inflows and outflows and show the implied risk based on those
values. Trade payables and other financial liabilities originate
from the financing of assets used in the Group's ongoing
operations. These assets are considered in the Group's overall
liquidity risk. Management continually reviews the Group's
liquidity position including cash flow forecasts to determine the
forecast liquidity position and maintain appropriate liquidity
levels.
Weighted average
effective Less than One to twelve
interest rate one month months Total
% US$'000 US$'000 US$'000
----------------------------------- ---------------- ---------- ------------- --------
31 December 2020
Financial assets
Variable interest rate instruments 0.42% 111,147 150,009 261,156
Non-interest bearing - 47,717 - 47,717
----------------------------------- ---------------- ---------- ------------- --------
158,864 150,009 308,873
----------------------------------- ---------------- ---------- ------------- --------
Financial liabilities
Non-interest bearing - 66,694 - 66,694
----------------------------------- ---------------- ---------- ------------- --------
66,694 - 66,694
----------------------------------- ---------------- ---------- ------------- --------
31 December 2019
Financial assets
Variable interest rate instruments 1.32 162,360 110,790 273,149
Non-interest bearing - 57,853 - 57,853
----------------------------------- ---------------- ---------- ------------- --------
220,213 110,790 331,003
----------------------------------- ---------------- ---------- ------------- --------
Financial liabilities
Non-interest bearing - 57,567 - 57,567
----------------------------------- ---------------- ---------- ------------- --------
57,567 - 57,567
----------------------------------- ---------------- ---------- ------------- --------
(f) Credit risk
Credit risk refers to the risk that a counterparty will default
on its contractual obligations resulting in financial loss to the
Group. The Group has adopted a policy of only dealing with
creditworthy counterparties and obtaining sufficient collateral or
other security where appropriate, as a means of mitigating the risk
of financial loss from defaults. The Group measures credit risk on
a fair value basis. The Group's credit risk is concentrated on one
entity, the refiner Asahi Refining Canada Ltd, but the Group has a
good credit check on its customer and none of the trade receivables
from the customer has been past due. Also, the cash balances held
in all currencies are held with financial institutions with a high
credit rating.
The gross carrying amount of financial assets recorded in the
financial statements represents the Group's maximum exposure to
credit risk without taking account of the value of collateral or
other security obtained.
(g) Fair value
The carrying amount of financial assets and financial
liabilities recorded in the financial statements represents their
respective fair values, principally as a consequence of the
short-term maturity thereof.
(h) Fair value measurements recognised in the statement of
financial position
The following table provides an analysis of financial
instruments that are measured subsequent to initial recognition at
fair value, Grouped into Levels 1 to 3 based on the degree to which
the fair value is observable:
-- Level 1 fair value measurements are those derived from quoted
prices (unadjusted) in active markets for identical assets or
liabilities;
-- Level 2 fair value measurements are those derived from inputs
other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly (i.e. as
prices) or indirectly (i.e. derived from prices); and
-- Level 3 fair value measurements are those derived from
valuation techniques that include inputs for the asset or liability
that are not based on observable market data (unobservable
inputs).
2020
------------------------
Level 1 Level 2 Level 3 Total
US$'000 US$'000 US$'000 US$'000
------------------------ -------- -------- -------- --------
Financial assets at fair - - - -
value through profit or
loss
------------------------ -------- -------- -------- --------
2019
-------------------------
Level 1 Level 2 Level 3 Total
US$'000 US$'000 US$'000 US$'000
------------------------- -------- -------- -------- --------
Financial assets at fair
value through profit or
loss 6,454 - - 6,454
------------------------- -------- -------- -------- --------
There were no financial assets or liabilities subsequently
measured at fair value on Level 3 fair value measurement bases.
(i) Mineral reserve and resource statement impact on ore
reserves
The following disclosure provides information to help users of
the financial statements understand the judgments made about the
future and other sources of estimation uncertainty. The key sources
of estimation uncertainty described in note 1.3.4 above and the
range of possible outcomes are described more fully below.
Depreciation of capitalised underground mine development
costs
Depreciation of capitalised underground mine development costs
at SGM is based on reserve estimates. Management and Directors
believe that these estimates are both realistic and conservative,
based on current information. The analysis is based on the
assumption that the reserve estimate has increased/decreased by 25%
with all other variables held constant.
Decrease by 31 December Increase by
25% 2020 25%
US$'000 US$'000 US$'000
-------------------------------------------- ----------- ----------- -----------
Amortisation of rehabilitation asset
(within mine development properties) (1,161) (871) (653)
Amortisation of mine development properties
(remainder) (58,711) (44,033) (33,025)
Mine development properties - net
book value 330,014 344,982 356,208
Property, plant and equipment - net
book value 814,916 829,884 841,110
-------------------------------------------- ----------- ----------- -----------
3.2 Capital management
3.2.1 Risk management
The Group's objectives when managing capital are to:
-- safeguard their ability to continue as a going concern, so
that they can continue to provide returns for shareholders and
benefits for other stakeholders; and
-- maintain an optimal capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Group
may adjust the amount of dividends paid to owners of the parent,
return capital to owners of the parent or issue new shares.
3.2.2 Dividends to owners of the parent
31 December 31 December
2020 2019
US$'000 US$'000
--------------------------------------------------- ----------- -----------
Ordinary shares
Q1 interim dividend for the year ended 31 December
2020 of 3.0 US cents per share
(2019: Final dividend for the year ended 31
December 2018 of 3.0 US cents per share) 69,240 34,672
Q2 Interim dividend for the year ended 31 December
2020 of 6.0 US cents per share
(2019: Interim dividend for the year ended 31
December 2019 of 4.0 US cents per share) 69,485 46,357
--------------------------------------------------- ----------- -----------
Total dividends provided for or paid 138,725 81,029
--------------------------------------------------- ----------- -----------
Dividends to owners of the parent:
Paid in cash 138,725 81,029
--------------------------------------------------- ----------- -----------
4. Group structure
4.1 Subsidiaries and controlled entities
The parent entity of the Group is Centamin plc, incorporated in
Jersey, and the details of its subsidiaries and controlled entities
are as follows:
Ownership interest
---------------------------------- ---------------
Nature of Country 31 December 31 December
of 2020 2019
activity incorporation % %
---------------------------------- ----------------- --------------- ------------------ -----------
Centamin Egypt Limited Holding company Australia(2) 100 100
Pharaoh Gold Mines NL (holder
of an Egyptian branch) Holding company Australia(2) 100 100
Sukari Gold Mining Company(10) Mining Company Egypt(5) 50 50
Centamin Group Services UK
Limited Services Company UK(3) 100 -
Centamin West Africa Holdings
Limited Holding company UK(4) 100 100
Sheba Exploration Limited
(holder of an Ethiopia branch) Holding company UK(4) 100 100
Sheba Exploration Holdings Exploration
Limited(1) Company UK(4) 100 100
Centamin Group Services Limited Services Company Jersey(9) 100 100
Centamin Holdings Limited Holding company Jersey(9) 100 100
MHA Limited Holding company Jersey(9) 100 100
Centamin Limited Holding company Bermuda(8) 100 100
Ampella Mining Limited Holding company Australia(2) 100 100
Exploration Burkina
Ampella Mining Gold SARL Company Faso(6) 100 100
Exploration Burkina
Ampella Mining SARL Company Faso(6) 100 100
Ampella Resources Burkina Exploration Burkina
Faso Company Faso(6) 100 100
Burkina
Konkera SA Mining Company Faso(6) 90 90
Exploration Côte
Ampella Mining Côte d'Ivoire Company d'Ivoire(7) 100 100
Exploration Côte
Centamin Côte d'Ivoire Company d'Ivoire(7) 100 100
Ampella Mining Exploration Exploration Côte
CDI Company d'Ivoire(7) 100 100
Exploration Côte
Centamin Exploration CI Company d'Ivoire(7) 100 100
---------------------------------- ----------------- --------------- ------------------ -----------
(1) Previously Sheba Exploration (UK) plc.
(2) Address of all Australian entities: Suite 8, 7 The
Esplanade, Mount Pleasant, WA 6153.
(3) Address of Centamin Group Services UK Limited, Second Floor,
9-10 Savile Row, London, W1S 3PF
(4) Address of all other UK entities: Hill House, 1 Little New
Street, London, EC4A 3TR.
(5) Address of all Egypt entities: 361 El-Horreya Road, Sedi
Gaber, Alexandria, Egypt.
(6) Address of all Burkina Faso entities: Ampella Resources
Burkina Faso: 11 BP 1974 Ouaga 11. Ampella Mining SARL: 01 BP 1621
Ouaga 01. Ampella Mining Gold SARL: 11 BP 1974 CMS 11 Ouaga 11.
Konkera SA: 11 BP 1974 Ouaga CM11.
(7) Address of all Côte d'Ivoire entities: 20 BP 945 Abidjan
20.
(8) Address of Bermuda entity: Appleby Corporate Services
(Bermuda) Ltd, Canon's Court, 22 Victoria Street, Hamilton HM EX,
Bermuda.
(9) Address of all Jersey entities: 2 Mulcaster Street, St
Helier, Jersey JE2 3NJ.
(10) Sukari Gold Mining Company is fully consolidated within the
Group under IFRS 10 'Consolidated financial statements' as if it
were a subsidiary due to it being a controlled entity, reflecting
the substance and economic reality of the Concession Agreement
("CA") (see note 1.3.1, note 4.1 and note 4.2).
Through its wholly owned subsidiary, PGM, the Company entered
into the Concession Agreement ("CA") with EMRA and the ARE granting
PGM and EMRA the right to explore, develop, mine and sell gold and
associated minerals in specific concession areas located in the
Eastern Desert of Egypt. The CA came into effect under Egyptian law
on 13 June 1995.
In 2005 PGM, together with EMRA, were granted an exploitation
lease over 160km(2) surrounding the Sukari Gold Mine site. The
exploitation lease was signed by PGM, EMRA and the Egyptian
Minister of Petroleum and gives tenure for a period of 30 years,
commencing 24 May 2005 and extendable by PGM for an additional 30
years upon PGM providing reasonable commercial justification.
In 2006 SGM was incorporated under the laws of Egypt. SGM was
formed to conduct exploration, development, exploitation and
marketing operations in accordance with the CA. Responsibility for
the day-to-day management of the project rests with the general
manager, who is appointed by PGM.
The fiscal terms of the CA require that PGM solely funds SGM.
PGM is however entitled to recover from sales revenue recoverable
costs, as defined in the CA. EMRA is entitled to a share of SGM's
net production surplus or profit share (defined as revenue less
payment of the fixed royalty to ARE and recoverable costs). As at
31 December 2015, PGM had not recovered its cost and, accordingly,
no EMRA entitlement had been recognised at that date. During 2016,
payments to EMRA commenced as advance profit share distributions.
Any payment made to EMRA pursuant to these provisions of the CA are
recognised as dividend paid to the non-controlling interest in
SGM.
4.2 Joint arrangements
The consolidated entity has interests in the following joint
arrangements:
Percentage interest
--------------------------------
31 December 31 December
2020 2019
Name of joint operation % %
-------------------------------- ----------- -----------
Sukari Gold Mining Company(1) 50 50
Egyptian Pharaoh Investments(2) 50 50
-------------------------------- ----------- -----------
(1) Sukari Gold Mining Company is fully consolidated within the
Group under IFRS 10 'Consolidated financial statements' as if it
were a subsidiary due to it being a controlled entity, reflecting
the substance and economic reality of the Concession Agreement
("CA") (see note 1.3.1, note 4.1 and note 4.2).
(2) Dormant company.
The Group has a US$1 (cash) interest in the Egyptian Pharaoh
Investments joint operation. The amount is included in the
consolidated financial statements of the Group. There are no
capital commitments arising from the Group's interests in this
joint operation.
Accounting policy: Interests in joint arrangements
The Group applies IFRS 11 'Joint arrangements'. Under IFRS 11,
investments in joint arrangements are classified as either joint
operations or joint ventures depending on the contractual rights
and obligations each investor. Joint ventures are accounted for
using the equity method. In relation to its interests in joint
operations, the Group recognises its share of assets and
liabilities; revenue from the sale of its share of the output; and
its share of expenses.
SGM is wholly consolidated within the Centamin Group of
companies, reflecting the substance and economic reality of the CA
(see note 1.3.1, note 4.1 and note 4.2).
5. Unrecognised items
5.1 Contingent liabilities and contingent assets
Contingent liabilities
Fuel supply
As set out in note 2.8, in January 2012 the Group was notified
by Chevron, its supplier of Diesel Fuel Oil, that, on the
instructions of the Egyptian General Petroleum Corporation
("EGPC"), Chevron would only be able to supply Diesel Fuel Oil to
the mine at Sukari at international prices rather than at local
subsidised prices which had been charged prior to that date. It is
understood that EGPC had been advised by 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. On 19 June 2012, legal
proceedings were issued by PGM in the Administrative Court against
EGPC and the Minister of Petroleum, alleging that the withdrawal of
the subsidy was unlawful. 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,
amounting to EGP403 million (approximately US$25.9 million at
current exchange rates). EGPC filed a counterclaim against PGM for
this amount.
In September 2016, the State Commissioner issued a report on the
case, which was unfavourable to PGM, although this report is not
binding on the court. In June 2020 the Administrative Court issued
a judgment rejecting PGM's claim on procedural grounds, and at the
same time it also rejected EGPC's counterclaim. The Court did not
consider the merits of either PGM's case or the counterclaim. The
Group's legal advisers remain of the view that the Group has a
strong case and have advised that the judgment against PGM is based
on an error of law. The Group has therefore submitted an appeal, as
has EGPC. In September 2020 both appeals were referred to the State
Commissioner for preparation of a legal report, which is expected
later this year. If either appeal is successful, the case will be
returned to the Administrative Court for consideration of the
relevant claim or claim on its merits.
The Group believes that its grounds for challenging EGPC's
decision 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
continued to advance funds to its fuel supplier based on the
international price for fuel from 2012 until the withdrawal of the
domestic subsidy for Diesel Fuel Oil in 2020. Should this court
action be successfully concluded the Group will look to recover the
excess funds advanced. However, management recognises the practical
difficulties associated with reclaiming funds from the government
and for this reason has fully provided against the prepayment of
US$367 million. Refer to note 2.8 of these financial statements for
further details on the impact of this provision on the Group's
results for 31 December 2020.
No provision has been made in respect of the historical
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 NL, and was approved by the People's
Assembly as Law 222 of 1994.
In summary, that judgment states that, although the Concession
Agreement itself remains valid and in force, insufficient evidence
had been submitted to court in order to demonstrate that the
160km(2) exploitation lease between PGM and EMRA had received
approval from the relevant minister as required by the terms of the
Concession Agreement. Accordingly, the Court found that the
exploitation lease in respect of the area of 160km(2) was not valid
although it stated that there was in existence such a lease in
respect of an area of 3km(2). Centamin, however, is in possession
of the executed original lease documentation which clearly shows
that the 160km(2) exploitation lease was approved by the Minister
of Petroleum and Mineral Resources. It appears that an executed
original document was not supplied to the court in the first
instance.
Upon notification of the judgment the Group took immediate 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 underway.
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 Group believes this demonstrates the government's commitment
to their investment at Sukari and the government's desire to
stimulate further investment in the Egyptian mining industry.
In 2016 the Supreme Administrative Court stayed the Concession
Agreement appeal until the Supreme Constitutional Court has ruled
on the validity of Law no. 32 of 2014. Law no. 32 of 2014 restricts
the right of third parties to challenge contractual agreements
between the Egyptian government and an investor and has partial
retrospective effect, applying to any cases then before the courts
but in which no final judgment had been given. The validity of this
law, which was ratified by the Egyptian parliament in 2016, is
currently under review by the Supreme Constitutional Court ("SCC").
In 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 took the view that Law no. 32
was unconstitutional. The State Commissioner's report and
complementary report are advisory and non-binding on the SCC. If
Law 32 is upheld, it is expected that a decision to uphold the
Company's appeal would be taken in a relatively short time frame.
If Law 32 is held to be invalid, it is possible that the Egyptian
Government could introduce further legislative changes either to
amend or replace Law 32, in which case the stay on proceedings
would remain in place until the position is clear. If the
Government decides against legislative action, then the stay on
proceedings would be lifted and PGM's appeal would proceed to be
considered on its merits.
The Group continues to believe that it has a strong legal
position and that in the event that the SCC rules that Law no. 32
is invalid, it remains confident that its appeal would be
successful.
Consequently, at this stage, it is not possible to say when the
appeal will conclude, although there is the potential for court
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.
Other contingent assets
There were no other contingent assets at year-end (31 December
2019: nil).
5.2 Dividends per share
The dividends paid in 2020 were US$138,724,519 and are reflected
in the consolidated statement of changes in equity for the year
(2019: US$81,029,238).
A final dividend in respect of the year ended 31 December 2020
of 3 US cents per share, totalling approximately US$34.7 million
has been proposed by the Board of Directors and is subject to
shareholder approval at the annual general meeting on 11 May 2021.
These financial statements do not reflect the dividend payable.
As announced on 9 January 2017, the update to the Company's
dividend policy sets a minimum payout level relative to cash flow
while considering the financial condition of, and outlook for, the
Company. When determining the amount to be paid, the Board will
take into consideration the underlying profitability of the Company
and significant known or expected funding commitments.
Specifically, the Board will aim to approve an annual dividend of
at least 30% of the Company's net cash flow after sustaining
capital costs and following the payment of profit share due to the
government of Egypt.
5.3 Subsequent events
As referred to in note 5.2, subsequent to the year end, the
Board proposed a final dividend for 2020 of 3 US cents per share.
Subject to shareholder approval at the annual general meeting on 11
May 2021, the final dividend will be paid on 15 June 2021 to
shareholders on record date of 21 May 2021.
As referred to in note 1.3.4, the Group mineral reserve and
resource statement for SGM has been published with an effective
date of 31 December 2020. The changes from the previous statement
published with an effective date of 30 June 2019 will have a
prospective effect on the amortisation of the rehabilitation asset
and mine development properties. Please refer to the mineral
reserve and resource statement impact on ore reserves note 3.1.1(i)
where these sensitivities to the change has been disclosed.
There were no other significant events occurring after the
reporting date requiring disclosure in the financial
statements.
6. Other information
6.1 Related party transactions
(a) Equity interests in related parties
Equity interests in subsidiaries
Details of the percentage of ordinary shares held in
subsidiaries are disclosed in note 4.1.
Equity interest in associates and jointly controlled
arrangements
Details of interests in joint ventures are disclosed in note
4.2.
(b) Key management personnel compensation
Key management personnel are persons having authority and
responsibility for planning, directing and controlling the
activities of the Group, directly or indirectly, including any
director (executive or otherwise) of the Group.
The aggregate compensation made to key management personnel of
the consolidated entity is set out below:
For the year For the year
ended ended
31 December 31 December
2020 2019
US$ US$
----------------------------- ------------ ------------
Short-term employee benefits 7,627,053 5,906,929
Post-employment benefits 7,292 7,311
Share-based payments 1,564,277 1,919,602
----------------------------- ------------ ------------
9,198,622 7,833,841
----------------------------- ------------ ------------
(c) Key management personnel equity holdings
The details of the movement in key management personnel equity
holdings of fully paid ordinary shares in Centamin plc during the
financial year ended 31 December 2020 are as follows:
Balance Net other
at Granted Granted change Balance at
1 January as remuneration as remuneration - share Net other 31 December
31 December 2020 2020 ("DBSP") ("PSP") plan lapse(1) change(2) 2020
----------------- ---------- ---------------- ---------------- -------------- ---------- ------------
M Horgan - - 590,000 - 16,405 606,405(3)
R Jerrard 1,897,000 - 390,000 (420,000) 15,000 1,882,000(3)
J Rutherford - - - - 200,000 200,000
S Eyre - - - - - -
M Bankes 190,000 - - - - 190,000
M Cloete 15,000 - - - - 15,000
C Farrow - - - - - -
I Fawzy - - - - - -
H Faul - - - - - -
Y El-Raghy 793,662 60,000 110,000 (72,000) (200,000) 691,662(3)
H Bills - - 200,000 - - 200,000(3)
P Cannon - - - - - -
J Singleton 546,000 - 200,000 - - 746,000(3)
C Murray - - 200,000 - - 200,000(3)
A Carse 385,336 80,000 80,000 - - 545,336(3)
D Le Masurier 527,000 67,500 67,500 (107,000) (117,700) 437,300(3)
R Nel 230,000 50,000 50,000 - - 330,000(3)
----------------- ---------- ---------------- ---------------- -------------- ---------- ------------
(1) "Net other change - share plan lapse" relates to awards that
have lapsed due to the full performance conditions not being met on
the 2017 grant.
(2) "Net other change" relates to the on-market acquisition or
disposal of fully paid ordinary shares.
(3) Balance includes unvested grants under the Company's
performance share plan.
Since 31 December 2020 to the date of this report there have
been no transactions notified to the Company under DTR 3.1.2.R.
The details of the movement in key management personnel equity
holdings of fully paid ordinary shares in Centamin plc during the
financial year ended 31 December 2019 are as follows:
Balance Net other
at Granted Granted change Balance at
1 January as remuneration as remuneration - share Net other 31 December
31 December 2019 2019 ("DBSP") ("PSP") plan lapse(1) change(2) 2019
----------------- ---------- ---------------- ---------------- -------------- ---------- ------------
R Jerrard 1,805,000 - 617,000 (525,000) - 1,897,000(3)
S Eyre - - - - - -
M Bankes 190,000 - - - - 190,000
M Cloete - - - - 15,000 15,000
C Farrow - - - - - -
I Fawzy - - - - - -
Y El-Raghy 763,662 - 114,000 (84,000) - 793,662(3)
J Singleton - - 546,000 - - 546,000(3)
A Carse 216,336 - 169,000 - - 385,336(3)
D Le Masurier 576,000 - 127,000 (96,000) (80,000) 527,000(3)
R Nel 120,000 - 110,000 - - 230,000(3)
----------------- ---------- ---------------- ---------------- -------------- ---------- ------------
(1) "Net other change" relates to the on-market acquisition or
disposal of fully paid ordinary shares.
(2) Includes shareholdings attributable to the El-Raghy
family.
(3) Balance includes unvested grants under the Company's
performance share plan.
(d) Key management personnel share option holdings
There were no options held, granted or exercised during the year
by Directors or senior management in respect of ordinary shares in
Centamin plc.
(e) Other transactions with key management personnel
The related party transactions for the year ended 31 December
2020 are summarised below:
-- salaries, superannuation contributions, bonuses, LTIs,
consulting and directors' fees paid to Directors during the year
ended 31 December 2020 amounted to US$3,915,877 (31 December 2019:
US$3,507,050); and
(f) Transactions with the government of Egypt
Royalty costs attributable to the government of Egypt of
US$24,792,435 (2019: US$19,700,850) were incurred in 2020. Profit
share to EMRA of US$174,275,000 (2019: US$87,075,000) was incurred
in 2020.
(g) Transactions with other related parties
Other related parties include the parent entity, subsidiaries,
and other related parties.
During the financial year, the Company recognised tax payable in
respect of the tax liabilities of its wholly owned
subsidiaries.
Payments to/from the Company are made in accordance with terms
of the tax funding arrangement.
During the financial year the Company provided funds to and
received funding from subsidiaries.
All amounts advanced to related parties are unsecured. No
expense has been recognised in the year for bad or doubtful debts
in respect of amounts owed by related parties.
Transactions and balances between the Company and its
subsidiaries were eliminated in the preparation of the consolidated
financial statements of the Group.
6.2 Contributions to Egypt
(a) Gold sales agreement
On 20 December 2016, SGM entered into a contract with the
Central Bank of Egypt ("CBE"). The agreement provides that the
parties may elect, on a monthly basis, for the CBE to supply SGM
with its local Egyptian currency requirements for that month to a
maximum value of EGP80 million (2019: EGP50 million). In return,
SGM facilitates the purchase of refined gold bullion for the CBE
from SGM's refiner, Asahi Refining Canada Ltd. This transaction has
been entered into as SGM requires local currency for its operations
in Egypt (it receives its revenue for gold sales in US dollars).
Thirty-four transactions have been entered into at the date of this
report, twelve of which in the current year, pursuant to this
agreement, and the values related thereto are as follows:
For the year For the year
ended ended
31 December 31 December
2020 2019
US$'000 US$'000
--------------- ------------ ------------
Gold purchased 29,319 35,641
Refining costs 15 19
Freight costs 30 53
--------------- ------------ ------------
29,364 35,713
--------------- ------------ ------------
For the year For the year
ended ended
31 December 31 December
2020 2019
Oz Oz
--------------- ------------ ------------
Gold purchased 16,262 25,721
--------------- ------------ ------------
At 31 December 2020 the net receivable in EGP owing from the
Central Bank of Egypt is approximately the equivalent of US$42,987
(2019: US$30,893 net payable owing to CBE).
(b) University grant
During 2018, the Group together with Sami El-Raghy and the
University of Alexandria Faculty of Science initiated a sponsored
scholarship agreement, the Michael Kriewaldt Scholarships, to
outstanding geology major students to enrol at the postgraduate
research programme of the geology department of the University for
their MSc and/or PhD in mining and mineral resources.
EGP10,000,000, EGP7,330,000 by PGM and EGP2,670,000 by Sami
El-Raghy, was deposited in a fixed deposit account of which the
interest earned will be put towards the cost of the scholarships
and will be administered by the University on the conditions set
out in the agreement. This amount has been accounted for under
donations expense in profit and loss in 2019 and in 2020 the
interest earned has also been accounted for under donations
expense.
6.3 Share-based payments
Performance share plan
The Company's shareholder approved Performance Share Plan
("PSP") allows the Company the right to grant awards (as defined
below) to employees of the Group. Awards may take the form of
either conditional share awards, where shares are transferred
conditionally upon the satisfaction of performance conditions; or
share options, which may take the form of nil cost options or have
a nominal exercise price, the exercise of which is again subject to
satisfaction of applicable performance conditions.
The awards due to be granted in June 2021 will vest following
the passing of three years. Vesting will be subject to the
satisfaction of the performance conditions (and for Executive
Directors a full two-year post-vesting holding period). Awards will
vest based upon a blend of three-year relative TSR, cash flow and
production targets, full details of which are set out in the
Directors' Remuneration Report. These measures are assessed by
reference to current market practice and the Remuneration Committee
will have regard to current market practice when establishing the
precise performance conditions for awards.
To date, the Company has granted the following conditional
awards to employees of the Group:
June 2018 awards
Of the 4,908,000 awards granted on 27 June 2018 under the PSP,
585,400 awards remain granted to eligible participants (31 in
total) applying the following performance criteria:
-- 40% of the award shall be assessed by reference to a target total shareholder return;
-- 20% of the award shall be assessed by reference to compound growth in Adjusted EBITDA; and
-- 40% of the award shall be assessed by reference to compound growth in gold production.
June 2019 awards
Of the 4,845,000 awards granted on 14 June 2019 under the PSP,
2,711,000 awards remain granted to eligible participants (14 in
total) applying the following performance criteria:
-- 50% of the award shall be assessed by reference to a target total shareholder return;
-- 25% of the award shall be assessed by reference to compound
growth in adjusted free cash flow; and
-- 25% of the award shall be assessed by reference to compound growth in gold production.
Conditional share awards and options together constitute
"awards" under the plan and those in receipt of awards are "award
holders".
June 2020 awards
Of the 2,582,500 awards granted on 5 June 2020 under the PSP,
2,382,500 awards remain granted to eligible participants (13 in
total) applying the following performance criteria:
-- 50% of the award shall be assessed by reference to a target total shareholder return;
-- 25% of the award shall be assessed by reference to compound
growth in adjusted free cash flow; and
-- 25% of the award shall be assessed by reference to compound growth in gold production.
Conditional share awards and options together constitute
"awards" under the plan and those in receipt of awards are "award
holders".
A detailed summary of the scheme rules is set out in the 2020
AGM proxy materials which are available at www.centamin.com. In
brief, awards will vest following the passing of three years from
the date of the award and vesting will be subject to satisfaction
of performance conditions. The above measures are assessed by
reference to current market practice and the Remuneration Committee
will have regard to market practice when establishing the precise
performance conditions for future awards.
Where the performance conditions have been met, in the case of
conditional awards awarded to certain participants, 50% of the
total shares under the award will be issued or transferred to the
award holders on or as soon as possible following the specified
vesting date, with the remaining 50% being issued or transferred on
the second anniversary of the vesting date.
Performance share plan awards granted during the year:
PSP 2020
Grant date 5 June 2020
Number of instruments 1,090,000
------------
TSR: fair value at grant date GBP(1)(2) 0.87
------------
TSR: fair value at grant date US$(1)(2) 1.07
------------
Adjusted free cash flow and gold production: fair value
at grant date GBP(1)(2) 1.28
------------
Adjusted free cash flow and gold production: fair value
at grant date US$(1)(2) 1.58
------------
Vesting period (years) 3
------------
Holding period applicable to 50% of the award (years)(2) 2
------------
Expected volatility (%) 49%
------------
Expected dividend yield (%) 0%
------------
Number of instruments 1,492,500
------------
TSR: fair value at grant date GBP(1) 0.99
------------
TSR: fair value at grant date US$(1) 1.22
------------
Adjusted free cash flow and gold production: fair value
at grant date GBP(1) 1.47
------------
Adjusted free cash flow and gold production: fair value
at grant date US$(1) 1.81
------------
Vesting period (years) 3
------------
Holding period applicable to 50% of the award (years) 0
------------
Expected volatility (%) 49%
------------
Expected dividend yield (%) 0%
------------
(1) The vesting of 50% of the awards granted under this plan are
dependent on a TSR performance condition. As relative TSR is
defined as a market condition under IFRS 2 'Share-based payments',
this requires that the valuation model used takes into account the
anticipated performance outcome. We have therefore applied a
Monte-Carlo simulation model. The simulation model takes into
account the probability of performance based on the expected
volatility of Centamin and the peer group companies and the
expected correlation of returns between the companies in the
comparator group. The remaining 50% of the awards are subject to
adjusted free cash flow and gold production performance conditions.
As these are classified as non-market conditions under IFRS 2 they
do not need to be taken into account when determining the fair
value. These grants have been valued using a Black -- Scholes
model. The fair value calculated was then converted at the closing
GBP:US$ foreign exchange rate on that day.
(2) A discount for lack of marketability has been applied to
account for the decrease in value of the award by reason of the
two-year holding period restriction .
Deferred bonus share plan ("DBSP")
In 2012, the Company implemented the DBSP, which is a long-term
share incentive arrangement for senior management (but not
Executive Directors) and other employees (participants).
On 4 June 2013, the Group offered to both the beneficiaries of
the shares awarded under the Employee Loan Funded Share Plan
("ELFSP") and to the majority of the beneficiaries of the options
granted under the Employee Option Scheme ("EOS") the choice to
replace their awards and options with awards under the DBSP. The
Group has accounted for this change as modifications to the
share-based payment plans and will be recognising the incremental
fair value granted, measured in accordance with IFRS 2, by this
replacement over the vesting period of the new DBSP awards.
Under this offer, each participant has been granted a number of
awards under the DBSP equivalent to the number of shares or options
held under the ELFSP and EOS respectively. Such DBSP awards shall
be subject to the terms and conditions of the DBSP and shall
ordinarily vest in three equal tranches on the anniversary of the
grant date, conditional upon the continued employment with the
Group. All offers made to participants were accepted. The award of
the deferred shares will not have any performance criteria
attached. They will, however, be subject to a service period.
DBSP awards granted during the year:
DBSP 2020
Grant date 5 June 2020
Number of instruments 3,679,500
------------
Share price/fair value at grant date Tranche 1 GBP(1) 1.39
------------
Share price/fair value at grant date Tranche 1 US$(1) 1.72
------------
Share price/fair value at grant date Tranche 2 GBP(1) 1.27
------------
Share price/fair value at grant date Tranche 2 US$(1) 1.57
------------
Share price/fair value at grant date Tranche 3 GBP(1) 1.17
------------
Share price/fair value at grant date Tranche 3 US$(1) 1.44
------------
Vesting period Tranche 1 (years) (2) 1
------------
Vesting period Tranche 2 (years) (2) 2
------------
Vesting period Tranche 3 (years) (2) 3
------------
Expected dividend yield Tranche 1 (%) 5.90%
------------
Expected dividend yield Tranche 2 (%) 4.88%
------------
Expected dividend yield Tranche 3 (%) 7.60%
------------
(1) The fair value of the shares awarded under the DBSP were
calculated by using the closing share price on grant date,
converted at the closing GBP:US$ foreign exchange rate on that day.
No other factors were taken into account in determining the fair
value of the shares awarded under the DBSP.
(2) Variable vesting dependent on one to three years of
continuous employment.
ACCOUNTING POLICY: SHARE-BASED PAYMENTS
Equity settled share-based payments with employees and others
providing similar services are measured at the fair value of the
equity instrument at grant date. Fair value is measured by the use
of the Black-Scholes model. Where share-based payments are subject
to market conditions, fair value was measured by the use of a
Monte-Carlo simulation. A discount for lack of marketability has
been applied to account for the decrease in value of the award by
reason of the two-year holding period restriction. The fair value
determined at the grant date of the equity settled share-based
payments is expensed over the vesting period, based on the
consolidated entity's estimate of shares that will eventually
vest.
Share-based payments
Equity settled share-based transactions with other parties are
measured at the fair value of the goods or services received,
except where the fair value cannot be estimated reliably, in which
case they are measured at the fair value of the equity instruments
granted, measured at the date the entity obtains the goods or the
counterparty renders the service. The fair value of the employee
services received in exchange for the grant of the options is
recognised as an expense. The total amount to be expensed is
determined by reference to the fair value of the options
granted:
-- including any market performance conditions (for example, an entity's share price);
-- excluding the impact of any service and non-market
performance vesting conditions (for example, profitability and
remaining an employee of the entity over a specified time period);
and
-- including the impact of any non-vesting conditions (for
example, the requirement for employees to save or holding shares
for a specific period of time).
When the options are exercised, the Company issues new shares.
The proceeds received net of any directly attributable transaction
costs are credited to share capital (nominal value) and share
premium. The expected life used in the model has been adjusted,
based on management's best estimate, for the effects of
non-transferability, exercise restrictions, and behavioural
considerations. Further details on how the fair value of equity
settled share-based transactions has been determined can be found
above. At each reporting date, the Group revises its estimate of
the number of equity instruments expected to vest. The impact of
the revision of the original estimates, if any, is recognised in
profit or loss over the remaining vesting period, with
corresponding adjustment to the equity settled employee benefits
reserve.
6.4 Earnings per share ("EPS") attributable to owners of the
parent
For the year For the year
ended ended
31 December 31 December
2020 2019
US cents per US cents per
share share
--------------------------- ------------- -------------
Basic earnings per share 13.531 7.588
Diluted earnings per share 13.453 7.535
--------------------------- ------------- -------------
Basic earnings per share attributable to owners of the
parent
The earnings and weighted average number of ordinary shares used
in the calculation of basic earnings per share are as follows:
For the year For the year
ended ended
31 December 31 December
2020 20189
US$'000 US$'000
---------------------------------------------- ------------ ------------
Earnings used in the calculation of basic EPS 155,979 87,463
---------------------------------------------- ------------ ------------
For the year For the year
ended ended
31 December 31 December
2020 2019
Number Number
----------------------------------------------- ------------- -------------
Weighted average number of ordinary shares for
the purpose of basic EPS 1,152,715,180 1,152,715,180
----------------------------------------------- ------------- -------------
Diluted earnings per share attributed to owners of the
parent
The earnings and weighted average number of ordinary shares used
in the calculation of diluted earnings per share are as
follows:
For the year For the year
ended ended
31 December 31 December
2020 2019
US$'000 US$'000
------------------------------------------------ ------------ ------------
Earnings used in the calculation of diluted EPS 155,979 87,463
------------------------------------------------ ------------ ------------
For the year For the year
ended ended
31 December 31 December
2020 2019
Number Number
------------------------------------------------ -------------- -------------
Weighted average number of ordinary shares for
the purpose of basic EPS 1,152,715,180 1,152,715,180
Shares deemed to be issued for no consideration
in respect of employee options 6,703,214 8,011,425
Weighted average number of ordinary shares used
in the calculation of diluted EPS 1,159,418,394 1,160,726,605
------------------------------------------------ -------------- -------------
No potential ordinary shares were excluded from the calculation
of weighted average number of ordinary shares for the purpose of
diluted earnings per share.
6.5 Auditors' remuneration
The analysis of the auditors' remuneration is as follows:
For the year For the year
ended ended
31 December 31 December
2020 2019
US$'000 US$'000
-------------------------------------------------- ------------ ------------
Fees payable to the Company's auditors and their
associates for the audit of the Company's annual
financial statements
- Audit fee for the current year audit(1) 564 436
- Non-recurring audit fee in relation to scope
changes(2) 151 86
Fees payable to the Company's auditors and their
associates for other services to the Group
- Audit fee of the Company's subsidiaries 65 58
Total audit fees 789 604
-------------------------------------------------- ------------ ------------
Non-audit fees:
- Audit related assurance services - interim
review 134 112
- Risk management and advisory services - 154
Total non-audit fees 134 266
-------------------------------------------------- ------------ ------------
(1) 2020 fee includes amounts in relation to the base audit fee
US$437k (2019: US$420k), new applicable regulatory and auditing
standards US$40k , changes in scope and timetable of the audit
US$48k, corporate reporting review US$18k (2019: US$16k) and going
concern assessments US$21k (2019: US$27k).
(2) Non-recurring audit fees relate to the prior year audit
addressing going concern assessments US$27k, impairment assessments
US$51k and changes in scope and timetable of the audit as a result
of Covid-19 US$73k.
All audit fees are billed in GBP and were translated at a
foreign exchange rate of US$1.37:GBGBP1 (2019: US$1.32:GBGBP1). Not
included within the above amounts are auditors' expenses (recharged
to the company) of US$9k (2019: US$24k).
The Audit and Risk Committee and the external auditors have
safeguards in place to avoid the possibility that the auditors'
objectivity and independence could be compromised. These safeguards
include the implementation of a policy on the use of the external
auditors for non-audit related services.
Where it is deemed that the work to be undertaken is of a nature
that is generally considered reasonable to be completed by the
auditors of the Company for sound commercial and practical reasons,
the conduct of such work will be permissible provided that it has
been pre-approved. All these services are also subject to a
predefined fee limit. Any work performed in excess of this limit
must be approved by the Audit and Risk Committee.
6.6 General information
Centamin plc (the "Company") is a listed public company,
incorporated and domiciled in Jersey and operating through
subsidiaries and jointly controlled entities operating in Egypt,
Burkina Faso, Côte d'Ivoire, United Kingdom and Australia. It is
the Parent Company of the Group, comprising the Company and its
subsidiaries and joint arrangements.
Registered office and principal place of business:
Centamin plc
2 Mulcaster Street
St Helier, Jersey JE2 3NJ
The nature of the Group's operations and its principal
activities are set out in the Governance Report and the Strategic
Report of the Annual Report.
-END-
[1] EBITDA margin is EBITDA as a percentage of gross revenue.
[2] Adjustments made to free cash flow, for example acquisitions
or disposals of financial assets at fair value through profit or
loss, which are completed through or add to specific allocated
available cash reserves.
[3] Basic EPS, Adjusted EBITDA, cash costs of production and
AISC reflect a provision against prepayments following the removal
of fuel subsidies in January 2012 (refer to note 2.8 of the
financial statements for further details).
[4] Cash costs of production, AISC, Adjusted EBITDA, Cash,
bullion on hand, gold and silver sales debtor, financial assets at
fair value through profit or loss (also known as Cash and liquid
assets) and Adjusted free cash flow are Non-GAAP Financial Measures
as defined at the end of the Financial Review section.
[5] All profit share payments are made to Egyptian Mineral
Resources Authority ("EMRA"), a department of the Ministry of
Petroleum.
This information is provided by RNS, the news service of the
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END
FR KFLFLFXLXBBB
(END) Dow Jones Newswires
March 22, 2021 03:00 ET (07:00 GMT)
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