TIDMCEY
RNS Number : 8978E
Centamin PLC
16 March 2022
16 March 2022
Centamin plc
("Centamin" or "the Company")
(LSE:CEY, TSX:CEE)
Full year 2021 results
full year results for the twelve months ended 31 December
2021
MARTIN HORGAN, CEO, commented : "Delivery towards our strategic
objectives was the standout achievement in 2021, placing Centamin
in a much stronger position going forward and laying the
foundations for long-term success. We safely delivered annual
production and cost guidance and made excellent progress on our key
capital projects. The completion of our Sukari Life of Asset review
delivered a significant mineral reserve uplift, identified further
growth and cost savings opportunities, and underpinned a robust 12
year life of mine plan with a clear roadmap to achieving a
consistent +500,000 ounce production profile. We completed a value
assessment and ranking of our organic growth pipeline, resulting in
progressing the Doropo Project to PFS stage and secured 3,000km(2)
of exploration ground in the highly prospective Egyptian Eastern
Desert. Balancing our growth plans with shareholder returns, today
we announced a 5 US cent final dividend for 2021 and expressed our
intention to pay a minimum 5 US cent 2022. I would like to thank
our team at Centamin and more broadly our stakeholders, including
our government partners, whose support and hard work has enabled us
to deliver what has been a transformational year for Centamin."
FINANCIAL HIGHLIGHTS
-- New safety record at Sukari Gold Mine ("Sukari") achieving 5.2 million hours LTI free
-- Revenue of US$733 million, generated from gold sales of
407,252 oz at an average realised gold price of US$1,797/oz
sold
-- Adjusted EBITDA of US$329 million, at a 45% margin
-- Profit before tax of US$154 million, including accelerated amortisation for the period
-- Basic earnings per share ("EPS") of 8.8 US cents per share
-- US$27 million of gross cost-savings in 2021, for a cumulative
US$71 million delivered of the US$150 million cost-saving target by
2024
-- Strong balance sheet with no debt or hedging, and cash and
liquid assets of US$257 million, as at 31 December 2021
-- The Board has proposed a final dividend of 5 US cents per
share, equating to US$58 million to be distributed to shareholders,
subject to shareholder approval at the annual general meeting on 10
May 2022, bringing total distribution to shareholders for full year
2021 to US$105 million.
2022 OUTLOOK UNCHANGED
-- Gold production : 430,000 to 460,000 oz
o Split 45:55 across H1:H2 driven by lower scheduled tonnes from
the underground in H1 as the mine transitions to owner-operator
-- Cash costs : US$900-1,000/oz produced
-- Capital expenditure : US$225.5 million
o Split 65:35 across H1:H2 driven by solar, paste fill and
underground contractor equipment purchase in Q1
-- All-in sustaining costs : US$1,275-1,425/oz sold
-- Exploration expenditure : US$25 million
2022 EVENTS
-- Doropo Project (Côte d'Ivoire) pre-feasibility study
-- Sukari (Egypt) underground expansion study
-- Group capital structure review
-- Sukari 36MW Solar farm commissioning
-- Sukari Mineral Reserve and Resource update Group exploration update
GROUP FINANCIAL SUMMARY
Units FY21 FY20 % H2 21 H1 21
========================== ================= ======== ======== ======= ========= ========
Gold produced Oz 415,370 452,320 (8%) 211,095 204,275
Gold sold Oz 407,252 468,681 (13%) 203,450 203,802
Cash cost US$'000 359,868 325,188 11% 195,094 164,774
Unit cash cost US$/oz produced 866 719 21% 924 807
AISC US$'000 502,366 485,478 3% 260,661 241,705
Unit AISC US$/oz sold 1,234 1,036 19% 1,281 1,186
Avg realised gold
price US$/oz 1,797 1,766 2% 1,797 1,799
========================== ================= ======== ======== ======= ========= ========
Revenue US$'000 733,306 828,737 (12%) 365,902 367,404
Adjusted EBITDA US$'000 328,600 437,555 (25%) 138,173 190,427
Profit before tax US$'000 153,647 314,999 (51%) 36,853 116,794
Profit after tax attrib
to the parent US$'000 101,527 155,979 (35%) 42,043 59,484
Basic EPS US cents 8.81 13.53 (35%) 3.65 5.16
Capital expenditure US$'000 240,872 138,396 74% 162,560 78,312
Operating cash flow US$'000 309,878 453,305 (32%) 168,114 141,764
Adjusted free cash
flow US$'000 (5,998) 141,768 (104%) (22,193) 16,195
========================== ================= ======== ======== ======= ========= ========
WEBCAST PRESENTATION and CONFERENCE CALL
The Company will host a conference call and webcast presentation
today, Wednesday 16 March, at 09.30 GMT, 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.
To join the webcast: https://www.investis-live.com/centamin/620a40fb03c5201200352b6a/twrh
Please allow a few minutes to register.
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: 949534
About Centamin
Centamin is an established gold producer, with premium listings
on both the London Stock Exchange and Toronto Stock Exchange. The
Company's flagship asset is the Sukari Gold Mine ("Sukari"),
Egypt's largest and first modern gold mine, as well as one of the
world's largest producing mines. Since production began in 2009
Sukari has produced circa 5 million ounces of gold, and today has a
projected mine life of 12 years.
Through its large portfolio of exploration assets in Egypt and
West Africa, Centamin is advancing an active pipeline of future
growth prospects, including the Doropo Project in Côte d'Ivoire,
and over 3,000km(2) of highly prospective exploration ground in
Egypt's Arabian Nubian Shield.
Centamin practices responsible mining activities, recognising
its responsibility to not only deliver operational and financial
performance but to create lasting mutual benefit for all
stakeholders through good corporate citizenship.
FOR MORE INFORMATION
Please visit the website www.centamin.com or contact:
Centamin plc Buchanan
Alexandra Barter-Carse, Corporate Communications Bobby Morse/ Ariadna Peretz/
Michael Stoner, Group Corporate Manager James Husband
investor@centaminplc.com + 44 (0) 20 7466 5000
centamin@buchanan.uk.com
NOTES
Guidance
The Company actively monitors the developments of the COVID-19
pandemic, global geopolitical uncertainties and macroeconomics,
such as global inflation, and guidance may be impacted if the
supply chain, workforce or operation are disrupted.
Financials
Full year financial data points included within this report are
audited.
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, Free cash flow and adjusted 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.
Profit after tax attributable to the parent
Centamin profit after the profit share split with the Arab
Republic of Egypt.
Royalties
Royalties are accrued and paid six months in arrears.
Cash and liquid assets
Cash and liquid assets include cash, bullion on hand, gold sales
receivables and financial assets at fair value through profit or
loss.
Movements in inventory
Movement in inventory on ounces produced is the movement in
mining stockpiles and ore in circuit while the movement in
inventory on ounces sold is the net movement in mining stockpiles,
ore in circuit and gold in safe inventory.
Gold produced
Gold produced is gold poured and does not include
gold-in-circuit at period end.
Dividend
All dividends are subject to final Board approval and final
dividends are subject to shareholder approval at the Company's
annual general meeting.
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. Such
statements include "future-oriented financial information" or
"financial outlook" with respect to prospective financial
performance, financial position, EBITDA, cash flows and other
financial metrics that are based on assumptions about future
economic conditions and courses of action. Generally, these
forward-looking statements can be identified by the use of
forward-looking terminology such as "believes", "expects",
"expected", "budgeted", "forecasts" and "anticipates"." and include
production outlook, operating schedules, production profiles,
expansion and expansion plans, efficiency gains, production and
cost guidance, capital expenditure outlook, exploration spend and
other mine plans. 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. Financial outlook and
future-ordinated financial information contained in this news
release is based on assumptions about future events, including
economic conditions and proposed courses of action, based on
management's assessment of the relevant information currently
available. Readers are cautioned that any such financial outlook or
future-ordinated financial information contained or referenced
herein may not be appropriate and should not be used for purposes
other than those for which it is disclosed herein. The Company and
its management believe that the prospective financial information
has been prepared on a reasonable basis, reflecting management's
best estimates and judgments at the date hereof, and represent, to
the best of management's knowledge and opinion, the Company's
expected course of action. However, because this information is
highly subjective, it should not be relied on as necessarily
indicative of future results. 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
It is a pleasure to be writing to you as we reflect on the
achievements of 2021, laying the foundations which underpin our
plans to deliver a multi-asset gold producer whose purpose is to
create opportunities for people through responsible mining.
Since becoming your CEO in April 2020, we have undertaken
thorough reviews of our strategy, processes and procedures,
organisational structure, capital allocation framework and most
notably our portfolio in order to better understand the optimal
route to unlocking its full potential. These reviews have not only
confirmed our belief in the quality of the assets but have also
identified numerous organic growth opportunities across the
portfolio including taking Sukari to a +500koz producer and
advancing Doropo to pre-feasibility study ("PFS") stage to be a
second mine. We have also grown our portfolio in 2021, adding
3,000km(2) of highly-prospective greenfield exploration ground
within the Egyptian Eastern Desert, further expanding our
integrated pipeline of projects, as we look to leverage our
position as Egypt's only significant gold producer. As announced in
December, we commenced a capital structure review of the Group - we
believe it is strategically appropriate to consider introducing a
right level of debt onto the balance sheet, in line with our growth
objectives.
Integral to our growth plans is our commitment to
sustainability. Centamin recognises its societal responsibility as
a modern mining company. In 2021 we continued to reinforce our
sustainability performance framework on matters including gender
diversity and inclusion, tailings management and the impact of
climate change.
Climate-related risk is one of the key issues facing society
today, and our sector must play its part in achieving the targets
required to deliver to keep global warming within acceptable
levels. We continue to assess and implement opportunities for the
Company to manage and reduce our carbon footprint. You'll be aware
of our 36MW Sukari solar farm and the fleet-wide installation of
high-performance truck trays that will have a significant impact on
reducing our carbon footprint, but there are numerous other
projects under review that have the potential to build on this
great start and we look forward to updating you later in 2022 on
these developments. Through the course of the year we will study in
more detail the climate-related risks and opportunities associated
with the updated life of mine plan for Sukari and the impact of
climate on our business model, strategy and financial statement
more broadly. We will develop a climate change strategy that will
set ambitious targets for carbon reduction by 2030 and one that
strives to align with a trajectory of emission reduction to
net-zero by 2050.
HEALTH & SAFETY FIRST
The persistence of the COVID-19 pandemic presented challenges
globally. The safeguarding of our people, communities and
operations remains a priority. Our COVID-19 protocols combined with
the resilience of our business resulted in no material impacts to
gold sales and supply chain. We continue to keep full COVID-19
protocols in place at our operations, including vaccination
programmes and today greater than 90% of our Group workforce,
including contractors, have been vaccinated.
Our people come first and through a proactive approach to safety
management, 2021 saw a further annual improvement in our headline
safety performance by a 45% year-on-year reduction in lost time
injury frequency rate ("LTIFR"). Importantly, we achieved in excess
of five million hours worked at Sukari without a lost time injury
("LTI"), which was a new record for the Company.
2021 PERFORMING WHILST TRANSFORMING
2021 was a year of continued delivery for Centamin including
meeting our production and cost guidance and excellent progress on
our key capital projects. In December 2020, we announced our
three-year reset plans and outlook, which framed 2021 as our peak
reset year, meaning lower production and higher capital
expenditure. Therefore, understandably, our financial results last
year were not as strong as previous years but, importantly, our
business is in a much stronger position as we invest in our
long-term success.
Gold sales of 407,252 ounces, and consequently revenue of US$733
million, were down 13% and 12% respectively, but ahead of our
expectations resulting from higher average gold price of
US$1,797/oz. C apital expenditure of US$241 million was up 74%,
including the outperformance from the critical Sukari open pit
waste-stripping programme, commissioning of the second Sukari
tailings storage facility, construction commencement of the Sukari
solar farm and extensive geological reinterpretation programme.
Cash generated from operations was US$310 million, whilst adjusted
EBITDA was US$329 million with a margin of 45%. We continue to
maintain a strong and flexible balance sheet and finished the year
with US$257 million in cash and liquid assets as of 31 December
2021, after distributing US$81 million to shareholders during the
year.
Geology is the foundation upon which our business is built - a
comprehensive understanding of our orebodies both underpins our
ability to ensure consistent and reliable performance while
simultaneously identifying growth opportunities. During 2021 we
placed significant effort into refocussing our approach to orebody
stewardship by establishing new exploration and mineral resource
management teams. This change in approach has already seen
significant benefits with resource and reserve growth at Sukari, a
roadmap to value realisation in West Africa and the clear
identification of further growth potential across our newly
enlarged portfolio of assets that includes the exploration permits
in Egypt.
Demonstrating our belief in the quality of our people and
portfolio, we have set and communicated bold and ambitious
multi-year operational targets and we have already begun to make
notable progress against them:
-- Safety (2020 to 2023): Targeted 25% reduction year-on-year in
lagging safety indicators LTIFR and TRIFR.
-- Production (2021 to 2024): Targeted 25% growth to 500,000
ounces per annum. Last year was the baseline year with 415,370
ounces produced, in line with annual guidance.
-- Costs (2020 to 2023): Targeted US$150 million in
cost-savings. A total US$72 million of cost-savings realised to
date
-- Reserves (2021 to 2024): Targeted Group Mineral Reserve
growth of three million ounces. In 2021, 1.1 million ounces of
Mineral Reserves were added at Sukari, before depletion,
representing the largest annual increase since production
commenced.
-- Life of mine (2021 to 2024): Targeted increase in Sukari
underground life of mine to ten years. In 2021, a 200% increase in
underground Mineral Reserves extended the life of mine to eight
years.
-- Environmental (2021 to 2023): Define science-based GHG
emission reduction targets by 2030. The 36MW Sukari solar farm is
the key decarbonisation initiative currently under construction
ahead of commissioning in H2 2022. There are several further
initiatives under review including expansion of our existing
commitment to renewables, grid connection, fuel switching to
liquified natural gas and energy efficiency projects.
DELIVERY AGAINST STRATEGY
We have maintained a clear and consistent strategy at Centamin,
and d elivery into our strategic objectives was the standout
achievement in 2021:
Sukari Value Maximisation
Centamin remains the only commercial scale Egyptian gold
producer, having operated the Sukari Gold Mine for more than twelve
years, and, based on current gold reserves, has at least a further
twelve years of production ahead. This high-quality, long-life
asset is the robust foundation of Centamin. Following a period of
underperformance, our strategic priority was to put a world-class
mine around this world-class orebody. The completion of the Life of
Asset Review resulted in a robust life of mine plan that achieves a
consistency of production and importantly, informs our roadmap to a
consistent production level of 500,000 ounces of gold per annum
into the next decade at targeted long-term AISC below
US$1,000/oz.
Growth & Diversification
Outside of Sukari, 2021 saw a strategic review of our West
African exploration portfolio with the aim of defining a roadmap
for the creation and delivery of value for Centamin. The review
highlighted the significant opportunity for further value creation
at the Doropo project in Cote d'Ivoire which demonstrated the
metrics consistent with Centamin's investment hurdles around scale,
annual production targets and forecast capital and operating costs.
Based on this analysis we commenced the PFS, with supporting
drilling and associated environmental and social assessments, which
is planned to be completed in H2 2022. Also in Cote d'Ivoire, the
ABC exploration project demonstrated the potential to build on the
currently identified two million ounce mineral inventory and
establish a project with the scale to support development in due
course. In respect of the Batie West project in Burkina Faso, the
strategic review concluded that while there is a viable project
that could be developed it does not meet our investment hurdle
criteria. A review of corporate options in respect of Batie West
has been on-going since mid-2021, albeit this has been somewhat
frustrated by the recent changes in Burkina Faso's political
environment.
In 2021 we secured approximately 3,000km(2) of new exploration
licences within the Nubian Shield of the Egyptian Eastern Desert.
We have commenced desktop exploration as permitting is finalised
and we hope to have geologists on the ground commencing a fieldwork
programme next quarter. The minimum license spend in the first two
years is US$10 million. We expect to spend approximately US$3
million in 2022 and US$6-7 million in 2023. This will form the
platform for the Company to take the next steps in identifying
further potential gold targets and developing deposits in this
underexplored and highly prospective gold belt.
Commitment to stakeholder returns
In 2021, the Arab Republic of Egypt, our partners at Sukari,
earned US$97 million in profit share payments and royalties.
Meanwhile, recognising 2021 as the peak reset year, the Board
honoured their commitment to sustain the 2020 dividend distribution
in 2021.
As Egypt's largest gold producer, Centamin is a significant
investor and employer in Egypt and more specifically in the Eastern
Desert city of Marsa Alam. At the interims, we announced the
implementation of our Centamin Capability Framework focussed on
workforce development with a particular commitment to the training
and promotion of local talent that ensures Sukari provides a
broad-based benefit to Egypt's nascent mining sector.
STAKEHOLDER ENGAGEMENT
I personally recognise how crucial clear and transparent
stakeholder engagement is to the continued successful operation of
our business. In an everchanging world, we are continually
exploring and trying new ways to expand our reach and communication
with our stakeholders. The pandemic has played a significant part
in how we share and store information internally, accelerating our
digital transformation towards a more centralised platform. Whereas
this is not a replacement for face-to-face interaction, video
communication has become an efficient and effective tool.
Externally, we have hosted three virtual capital markets events,
introduced bi-annual retail investor events and launched our social
media platform providing a great opportunity to further convey our
corporate personality, as defined by our purpose and values.
Despite COVID-19, throughout 2021, we enjoyed being able to
routinely visit our assets and our teams, meet with our government
partners and local communities once again.
OUTLOOK
Although the global outlook remains uncertain with regards to
geopolitical tensions, potential new COVID-19 variants, and the
impact of inflation on the economy, our business has never been so
resilient and well placed to navigate future challenges.
For 2022, we have guided higher production volumes of
430,000-460,000 ounces driven by improving open pit grades and
increased productivity from the underground operation at AISC of
US$1,275-1,425/oz sold reflecting the emerging inflationary
pressures and US$226 million comprehensive asset reset and growth
investment programme.
As we look to build on the successes of 2021, we can look
forward to several key workstreams being completed in 2022. At
Sukari this includes resource and reserve updates, the completion
of an underground expansion study, the delivery of our key capital
projects at the mine and the on-going assessment of further cost
saving initiatives such as the ability to connect to grid power.
Staying in Egypt, we will commence the exploration work across the
Eastern Desert permits and start to demonstrate the significant
potential we see in the region. In West Africa we will deliver the
Pre-feasibility Study for Doropo and complete the next round of
exploration work at ABC in Cote d'Ivoire. Another busy, but
exciting year lies ahead.
THANK YOU
After a remarkable 28 years of dedicated service to Centamin,
Youssef El-Raghy will be retiring from 1 April 2022. From
greenfield exploration to being recognised as a world class mine,
the Company owes him a debt of gratitude for his commitment and
contribution in making possible what is Sukari today - Egypt's
first modern gold mine. Thank you, Youssef, enjoy your
well-deserved retirement.
As part of an internal succession programme, Amr Hassouna has
been appointed as the Egypt Country Manager. Amr has worked at
Centamin for over ten years. His career has progressed through
various operating and financial roles at Sukari and in 2021 he was
the Sukari Gold Mine General Manager, playing an instrumental role
in the delivery of guidance, optimisation studies, cost-savings and
our ESG initiatives.
Finally, thank you to all our stakeholders for your continued
support, we never take that for granted. We have commenced 2022
with confidence and excitement and look forward to delivering and
communicating on our clear roadmap to growing and unlocking further
value from Sukari and our exploration portfolio.
Martin Horgan
Chief Executive Officer
CFO STATEMENT
We are fully focussed on managing the bottom line of the
business in which to maximise the value at Sukari, deliver growth
and diversification combined with sustainable stakeholder returns.
Centamin is a financially robust business, committed to responsible
mining. In 2020 we set out bold capital investment plans required
to sustain and grow our business for the long term and 2021 was
about delivery into those plans.
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's liquidity and
strength of the balance sheet is fundamental to the longevity of
the business and is 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 December 2020 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. In 2021, a key focus was on improving operational
efficiencies to achieve consistent operational performance with
US$106 million spent on sustaining capital expenditure and US$135
million in non-sustaining, or 'growth' capital expenditure. Growth
projects include the ongoing construction of the hybrid solar
plant, reducing the reliance on fossil fuels and improving
operating costs, and the construction of the underground paste-fill
plant.
Capitalisation of open pit waste-stripping
The largest spend category in 2021 was on the deferred stripping
which added US$59 million to our balance sheet, US$51 million was
included in non-sustaining capital expenditure and related
specifically to the work done by the waste-mining contractor, with
the balance of US$8 million allocated to sustaining capital
expenditure. Some deferred stripping has already been amortised in
the year based on ore extracted from these areas.
As more fully described in note 2.9 to the Financial Statements
and as required by the Accounting Standards, from 2021, capitalised
deferred stripping costs are included in "Mine Development
Properties" and amortised using the unit of production method based
on total ounces produced for the 'component' of the orebody, which
is defined as the respective "stage" of the open pit mine plan.
Capitalisation occurs when the strip ratio exceeds the life of mine
strip ratio for that stage. Only the costs related to the excess
stripping are capitalised. In line with the accelerated stripping
programme (2022-2024) we expect to be above the life of mine strip
ratio, resulting in a larger quantum to be capitalised to the
balance sheet.
STRONG BALANCE SHEET
Centamin continues to maintain a robust financial strategy, with
cash and liquid assets(3) of US$257 million as at 31 December 2021.
Unique amongst our peers, Centamin has never had debt, hedging nor
streaming in place, which was strategically appropriate as we
focussed on generating and distributing shareholder returns.
With our renewed longer-term focus and strong emerging growth
opportunities, we announced in December that we have launched a
capital structure review process. As the business transforms, it is
the right time to assess introducing some debt onto our balance
sheet thereby increasing our financial flexibility and liquidity as
we grow the business. The capital structure review is scheduled to
be completed in mid-2022.
FINANCIAL PERFORMANCE
Centamin delivered a resilient performance that was in line with
our expectations and guidance for the year.
Revenues decreased year-on-year by 12% to US$733 million, from
annual gold sales of 407,252 ounces, down 13%, at an average
realised price of US$1,797 per ounce, up 2%. A total of 11,156
ounces of unsold gold bullion was held on site at year end, due to
timing of gold shipments across the year end.
As a Group, underlying EBITDA decreased by 33% to US$293
million, at a 40% margin[1], principally driven by;
-- an 8% reduction in gold production, as scheduled
-- a 38% increase in the combined open pit and underground
material mined, some of which has been capitalised to mining
properties as a waste stripping asset,
-- higher fuel costs to the value of US$23 million,
-- US$10 million additional spend on consumables due to increases in reagent prices,
-- offset slightly by a higher average realised gold sales price,
-- EBITDA has been adjusted by an impairment charge of US$35
million to US$329 million Adjusted EBITDA, during the year an
impairment trigger was identified for the Burkina Faso exploration
and evaluation asset and it was fully impaired, refer to note 1.3.3
in the financial statements for further information.
Profit before tax decreased by 51% to US$154 million, due to the
factors below, with basic earnings per share ("EPS") decreasing by
35% to 8.8 US cents.
-- a 12% decrease in revenue, in line with reduced gold sales as planned
-- a 18% decrease in other income; offset by
-- a 13% decrease in other operating costs, mainly due to a 13% decrease in royalties
-- US$35.2 million impairment of exploration and evaluation
related to our assets in Burkina Faso
-- a 20% decrease in greenfield exploration and evaluation expenditure, and
-- an 8% increase in cost of sales.
As expected, and in line with our three year reset plans
announced in December 2020, Centamin's cash flows and earnings
declined in 2021 due to lower gold production and sales, higher
costs and increased capital expenditure spend. Operational cash
flow decreased by 32% to US$310 million, cash flows from investing
activities was impacted mainly by gross capital expenditure of
US$241 million (predominantly invested in the long-term
sustainability of the business). Adjusted Group free cash flow[2]
declined by 104% to negative US$6 million, after profit share
distribution of US$75 million to our partner, the Arab Republic of
Egypt.
STRINGENT COST MANAGEMENT
Despite significant inflationary pressures experienced towards
the end of 2021 and above budgeted material mined, our focus on
stringent cost management meant that costs were delivered at the
midpoint of our annual guidance.
Average realised gold price on sales improved 2% year-on-year,
our AISC margin declined 23% to US$564 per ounce sold. Cash costs
of production[3] were US$866 per ounce produced, up 21%, reflecting
a 38% increase in open pit mined tonnes and a 6% increase in
underground mined tonnes, processed tonnes remained flat year on
year and an 8% decrease in gold ounces produced. AISC(3) was
US$1,234 per ounce sold, up 19%, mainly due to a 9% increase in
mine production costs, 49% increase in sustaining corporate costs
and a 10% increase in sustaining capital costs. This was compounded
by a 13% decrease in gold ounces sold (which was as scheduled and
in line with guidance).
A critical element of our strategy is maximising margins. Our
cost savings programme was initially launched to extract a minimum
of US$100 million of sustainable costs from the business over 4
years, from 2020 to 2023. This focus on identifying continuous
improvements has been adopted across the Group with excellent
results. Since 2020 we have delivered US$71 million of cost-savings
and combined with the recent outcomes of the Sukari Life of Asset
work identifying more cost initiatives, we had the confidence to
increase the target from US$100 million to US$150 million.
SHAREHOLDER RETURNS
Stakeholder, and specifically shareholder returns, are central
to our company strategy. We have an eight-year track record of
returning cash to shareholders, based on our policy linked to free
cash flow generation. Our dividend policy makes firm commitments on
capital allocation, meaning shareholder interests are always at the
centre of what we do.
2021 Dividend
Consistent with the Company's commitment to returning cash to
shareholders, and recognising 2021 as the peak reset year, the
Board propose a 2021 final dividend, for the year ended 31 December
2021, of 5 US cents per share (c.US$58 million), bringing the
proposed total dividend for 2021 to 9 US cents per share (c.US$105
million):
-- Interim 2021 dividend paid: 4 US cents per share
-- Final 2021 dividend proposed: 5 US cents per share
The final 2021 dividend is subject to shareholder approval at
the 2022 AGM on 10 May 2022 and following approval would be paid on
10 June 2022.
2022 Dividend
In consideration of Centamin's growth plans, and against a
backdrop of global uncertainty and persisting inflationary
pressures, the Board wanted to provide shareholders with some
clarity on the 2022 dividend. Today we have announced our intention
to pay a minimum of 5 US cents for 2022, with upside opportunity
aligned with free cash flow generation after growth capital
investment.
Outlook
We remain focused on the generation of free cash flow as this is
ultimately the metric that matters. We have budgeted for rising
costs in 2022, driven by higher consumer price inflation within our
operating countries, supply chain pressures on fuel, consumables
and shipping costs and tighter labour markets. We have prudently
decided not to budget any offsetting impacts of our ongoing
cost-savings and improving operating efficiencies and productivity
gains until we have a better sense of the longer-term inflationary
environment.
But, as Martin said in his statement, " Sukari can consistently
deliver 500,000 ounces of gold per annum into the next decade at
targeted long-term AISC below US$1,000/oz."
Ross Jerrard
Chief Financial Officer
FINANCIAL REVIEW
Consolidated statement of comprehensive income
Year ended Year ended
31 December 31 December
2021 2020
US$'000 US$'000
-------- ------------ ------------
Revenue 733,306 828,737
-------- ------------ ------------
Revenue from gold and silver sales for the year decreased by 12%
year-on-year to US$733 million (2020: US$829 million), with a 2%
increase in the average realised gold sales price to US$1,797 per
ounce (2020: US$1,766 per ounce) and a 13% decrease in gold sold to
407,252 ounces (2020: 468,681 ounces).
Year ended Year ended
31 December 31 December
2021 2020
US$'000 US$'000
-------------- ------------ ------------
Cost of sales (487,376) (449,441)
-------------- ------------ ------------
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 8% year-on-year to US$487 million, mainly as a result of:
-- 9% increase in total mine production costs from US$339
million to US$368 million (+ve), due to:
o a 12% increase in open pit mining costs (+ve);
o a 2% increase in underground mining costs (+ve);
o a 3% increase in processing costs (+ve); offset by
o a 3% decrease in refinery and transport costs (-ve).
-- 12% increase in depreciation and amortisation charges
year-on-year from US$125 million to US$139 million (+ve) due
to:
o US$226 million in capital expenditure additions to property,
plant and equipment (excl. capital work in progress) which
increased the associated depreciation and amortisation charges;
o slightly offset by lower production in the year.
Year ended Year ended
31 December 31 December
2021 2020
US$'000 US$'000
--------------------------------------- ------------ ------------
Exploration and evaluation expenditure (13,879) (17,391)
--------------------------------------- ------------ ------------
Exploration and evaluation expenditure comprises expenditure
incurred for exploration activities in Côte d'Ivoire and Burkina
Faso. Exploration and evaluation costs decreased by US$4 million or
20% as more exploration and evaluation work specifically drilling
and assaying at the two Côte d'Ivoire sites was done in 2020 as
compared to 2021. The exploration and evaluation asset related to
Burkina Faso has been fully impaired in the year, for further
information refer to note 1.3.3 in the financial statements.
Year ended Year ended
31 December 31 December
2021 2020
US$'000 US$'000
---------------------- ------------ ------------
Other operating costs (49,100) (56,392)
---------------------- ------------ ------------
Other operating costs comprise expenditure incurred for
communications, consultants, directors' fees, stock exchange
listing fees, share registry fees, employee entitlements, general
office administration expenses and the 3% royalty payable to the
Arab Republic of Egypt ("ARE"). Other operating costs decreased by
US$7 million or 13%, mainly as a result of:
-- US$3 million decrease in royalty paid to the ARE government
(in line with the decrease in gold sales revenue) (-ve);
-- In 2020, US$10 million was provided for the possible
settlement of EMRA cost recovery items. Subsequent to the 2020 year
end an agreement was reached with EMRA and this was reallocated to
accruals, as the full amount was provided for in 2020 and no
additional provision was required in the 2021 year (-ve); offset
by
-- US$2 million increase in the provision for obsolete stock (+ve).
Adjusted EBITDA was US$329 million, a decrease of 25%
year-on-year, mostly driven by the 12% decrease in revenue and a
17% increase in cash costs per ounce sold in the year. The adjusted
EBITDA margin decreased by 8 percentage points to 45%. Profit after
tax was US$154 million, down 51% year-on-year, which was impacted
by the impairment of the Burkina Faso exploration and evaluation
asset of US$35 million. Basic earnings per share was 8.8 US cents,
a decrease of 35% year-on-year.
Year ended Year ended
31 December 31 December
2021 2020
US$'000 US$'000
--------------------------------------------------- ------------ ------------
Dividend paid - non-controlling interest in Sukari
Gold Mining Company (SGM) (being EMRA) (75,200) (174,275)
--------------------------------------------------- ------------ ------------
The profit share payments during the year are reconciled against
SGM's audited financial statements. Any variation between payments
made during the year (which are based on the Company's estimates)
and the audited financial statements, may result in a balance due
and payable to EMRA or advances to be offset against future
distributions. SGM's 30 June 2021 financial statements have been
audited and signed off.
Refer to note 1.3.1.2 for details of the treatment and
disclosure of the EMRA profit share.
Year ended Year ended
31 December 31 December
2021 2020
US cents US cents
per share per share
--------------------------------------------- ------------ ------------
Earnings per share attributable to owners of
the parent:
Basic (US cents per share) 8.81 13.53
--------------------------------------------- ------------ --------------
Consolidated statement of financial position
31 December 31 December
2021 2020
US$'000 US$'000
------------------------------------------------ ----------- -----------
Current assets
Inventories - mining stockpiles and consumables 128,721 118,705
Trade and other receivables 32,579 18,424
Prepayments 7,964 8,908
Cash and cash equivalents 207,821 291,281
Total current assets 377,085 437,318
------------------------------------------------ ----------- -----------
Current assets have decreased by US$60 million or 14% mainly as
a result of:
-- US$83 million decrease in net cash (net of foreign exchange
movements) (-ve) driven by reduced profit for the year less payment
of the 2020 final dividend of US$34 million, the payment of the
2021 interim dividend of US$46 million and a US$75 million payment
to EMRA as distributions to the NCI
The Group has a strong and flexible balance sheet with no debt,
no hedging and cash and liquid assets of US$257 million (2020:
US$310 million). Refer to note 3 under Non-GAAP Financial Measures
below for details of this non-GAAP measure.
31 December 31 December
2021 2020
US$'000 US$'000
--------------------------------- ----------- -----------
Non-current assets
Property, plant and equipment 956,217 829,884
Exploration and evaluation asset 25,261 63,701
Inventories - mining stockpiles 64,756 64,870
Other receivables 101 103
--------------------------------- ----------- -----------
Total non-current assets 1,046,335 958,558
--------------------------------- ----------- -----------
Non-current assets have increased by US$88 million or 9% mainly
as a result of:
-- US$104 million net increase in property, plant and equipment
(excluding rehabilitation asset increase). This included waste
stripping costs that have been capitalised, further lifts to the
TSF 2, camp upgrades, the continued construction of the solar plant
and continuous process plant optimisation (total property, plant
and equipment cost of US$266 million) (+ve);
-- US$22 million restoration and rehabilitation asset increase
(notes 1.3.9 and 2.13); offset by
-- US$35 million impairment of the Burkina Faso exploration and
evaluation asset (notes 1.3.2 and 2.10)
31 December 31 December
2021 2020
US$'000 US$'000
-------------------------- ----------- -----------
Current liabilities
Trade and other payables 75,759 64,488
Tax liabilities 253 267
Provisions 4,617 7,480
Total current liabilities 80,629 72,235
-------------------------- ----------- -----------
Current liabilities have increased by US$8 million or 12%
primarily as a result of:
-- Increased spend on capital projects in the current year compared to the previous year.
31 December 31 December
2021 2020
US$'000 US$'000
------------------------------ ----------- -----------
Non-current liabilities
Provisions 42,647 32,752
Other payables 10,386 1,437
------------------------------ ----------- -----------
Total non-current liabilities 53,033 34,189
------------------------------ ----------- -----------
Non-current liabilities have increased by US$19 million or 55%
primarily as a result of:
-- US$22 million increase in the rehabilitation provision
(included in the net provisions balance). The movement was driven
by an increase in the various input unit costs of expected
rehabilitation work and changes in other variables such as the
discount rate as well as the expansion of the area with mining
related activities and infrastructure over the year. One of the big
contributors was the construction of and lifts of TSF2. This
resulted in a larger area that will require rehabilitation, (notes
1.3.9 note 2.13).
-- The US$10 million increase in other payables relates to the
EMRA settlement amount, this was recognised as a provision in the
previous year and reclassified to accruals in the current year
following the signing of the settlement agreement with EMRA.
Consolidated statement of cash flows
31 December 31 December
2021 2020
US$'000 US$'000
--------------------------------------------- ----------- -----------
Cash flows from operating activities
Cash generated from operating activities 309,873 453,315
Income tax received/(paid) 5 (10)
--------------------------------------------- ----------- -----------
Net cash generated from operating activities 309,878 453,305
--------------------------------------------- ----------- -----------
Group cash costs of production were US$866 per ounce produced,
up 21% year-on-year, predominantly due to a 8% decrease in gold
ounces produced and a 9% increase in mine production costs.
A stronger gold price combined with cost and capital allocation
management, offset by increased mining and processing costs in the
year, resulted in a 32% year-on-year decrease in the net cash
generated by operating activities to US$310 million.
31 December 31 December
2021 2020
US$'000 US$'000
--------------------------------------------------- ----------- -----------
Cash flows from investing activities
Disposal of financial assets at fair value through
profit or loss - 7,414
Acquisition of property, plant and equipment (224,929) (127,099)
Brownfield exploration and evaluation expenditure (15,943) (11,717)
Finance income 196 1,554
--------------------------------------------------- ----------- -----------
Net cash used in investing activities (240,676) (129,848)
--------------------------------------------------- ----------- -----------
The current year's capital expenditure was within budget and a
number of significant projects were completed and others were
started in the year. The capital expenditure in the year included
the spend on various capital projects, the largest being on waste
stripping activities capitalised of US$59 million, the solar plant
of US$33 million, further lifts to the new tailings dam of US$9
million, process plant optimization of US$7 million and camp
upgrades US$4 million (refer to notes 2.9 and note 2.10).
31 December 31 December
2021 2020
US$'000 US$'000
------------------------------------------------ ----------- -----------
Cash flows from financing activities
Own shares acquired (1,391) (3,298)
Dividend paid - non-controlling interest in SGM (75,200) (174,275)
Dividend paid - owners of the parent (80,517) (138,725)
------------------------------------------------ ----------- -----------
Net cash used in financing activities (157,108) (316,298)
------------------------------------------------ ----------- -----------
After distribution of profit share payments to the Company's
partner, EMRA(1) , the Group generated negative adjusted free cash
flow of US$6 million, down 104% year-on-year. Profit share payments
of US$75 million and royalties of US$22 million were earned in the
year. Under the terms of the Concession Agreement with EMRA, on 1
July 2020, the profit share mechanism changed to 50:50, from 55:45
in favour of Centamin, and will remain at this level for the
remainder of the tenure.
(1) All profit share payments are made to Egyptian Mineral
Resources Authority ("EMRA"), a department of the Ministry of
Petroleum and Mineral Resources
Capital expenditure
The following table provides a breakdown of the total capital
expenditure of the Group:
Year ended Year ended
31 December 31 December
2021 2020
US$'000 US$'000
-------------------------------------------- ------------ ------------
Underground exploration 13,741 11,599
Underground mine development 34,900 39,197
Other sustaining capital expenditure 57,513 52,433
-------------------------------------------- ------------ ------------
Total sustaining capital expenditure 106,154 103,229
-------------------------------------------- ------------ ------------
Non-sustaining exploration expenditure 2,202 118
Other non-sustaining capital expenditure(1) 132,516 35,049
-------------------------------------------- ------------ ------------
Total gross capital expenditure 240,872 138,396
-------------------------------------------- ------------ ------------
(1) Non-sustaining capital expenditure included the construction
of TSF 2, camp upgrades, the Capital waste stripping contract and
the construction of the solar plant. Non-sustaining costs are
primarily those costs incurred at 'new operations' and costs
related to 'major projects at existing operations' that will
materially benefit the operation.
Exploration expenditure
The following table provides a breakdown of the total
exploration expenditure of the Group:
Year ended Year ended
31 December 31 December
2021 2020
US$'000 US$'000
----------------------------------------- ------------ ------------
Greenfield exploration
Burkina Faso 2,380 2,803
Côte d'Ivoire 11,499 14,588
----------------------------------------- ------------ ------------
Total greenfield exploration expenditure 13,879 17,391
Brownfield exploration
Sukari Tenement 15,943 11,709
Cleopatra(1) - 8
----------------------------------------- ------------ ------------
Total brownfield exploration expenditure 15,943 11,717
----------------------------------------- ------------ ------------
Total exploration expenditure 29,822 29,108
----------------------------------------- ------------ ------------
(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, an impairment trigger was identified for the Burkina
Faso exploration and evaluation asset and as a result, an
impairment charge for the full carrying amount of US$35 million was
recognised in the statement of comprehensive income in the year,
refer to note 1.3.3 for further information.
Subsequent events
As referred to in note 5.2, subsequent to the year end, the
Board proposed a final dividend for 2021 of 5 US cents per share.
Subject to shareholder approval at the annual general meeting on 10
May 2022, the final dividend will be paid on 10 June 2022 to
shareholders on record date of 20 May 2022.
There were no other significant events occurring after the
reporting date requiring disclosure in the financial
statements.
Non -- GAAP financial measures
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 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 a company's approximate total enterprise
value. 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 also 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, like 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.
Reconciliation of profit before tax to EBITDA and adjusted
EBITDA:
31 December 31 December
2021 2020
US$'000 US$'000
------------------------------------------------- ----------- -----------
Profit for the year before tax 153,647 314,999
Finance income (196) (1,554)
Interest expense 486 558
Depreciation and amortisation 139,455 124,512
------------------------------------------------- ----------- -----------
EBITDA 293,392 438,515
Add back/less:(1)
Profit on financial assets at fair value through
profit or loss - (960)
Impairments of non-current assets 35,208 -
------------------------------------------------- ----------- -----------
Adjusted EBITDA 328,600 437,555
------------------------------------------------- ----------- -----------
(1) 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
2021 2020
---------------------------------------- -------- ----------- -----------
Mine production costs (note 2.3) US$'000 368,327 339,012
Less: Refinery and transport US$'000 (2,264) (2,322)
Movement of inventory(1) US$'000 (6,195) (11,502)
---------------------------------------- -------- ----------- -----------
Cash cost of production - gold produced US$'000 359,868 325,188
---------------------------------------- -------- ----------- -----------
Gold produced - total (oz.) oz 415,370 452,320
Cash cost of production per ounce
produced US$/oz 866 719
---------------------------------------- -------- ----------- -----------
(1) The movement in inventory on ounces produced is only the net
movement in mining stockpiles and ore in circuit while the movement
in ounces sold is the net movement in mining stockpiles, ore in
circuit and gold in safe inventory.
A reconciliation has been included below to show the cash cost
of production metric should gold sold ounces be used as a
denominator.
Reconciliation of cash cost of production per ounce sold:
31 December 31 December
2021 2020
------------------------------------ -------- ----------- -----------
Mine production costs (note 2.3) US$'000 368,327 339,012
Royalties US$'000 21,672 24,792
Movement of inventory(1) US$'000 (15,081) 4,181
------------------------------------ -------- ----------- -----------
Cash cost of production - gold sold US$'000 374,918 367,985
------------------------------------ -------- ----------- -----------
Gold sold - total (oz.) oz 407,252 468,681
Cash cost of production per ounce
sold US$/oz 921 785
------------------------------------ -------- ----------- -----------
1) The movement in inventory on ounces produced is only net 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
2021(1) 2020(1)
---------------------------------------- -------- ----------- -----------
Movement in inventory
Movement in inventory - cash (above) US$'000 (15,081) 4,181
Effect of depreciation and amortisation
- non-cash US$'000 35,049 9,523
---------------------------------------- -------- ----------- -------------
Movement in inventory - cash & non-cash
(note 2.3) US$'000 19,968 13,704
---------------------------------------- -------- ----------- -------------
Reconciliation of AISC per ounce sold:
31 December 31 December
2021 2020
------------------------------------- -------- ----------- -----------
Mine production costs (note 2.3) US$'000 368,327 339,012
Movement in inventory US$'000 (15,081) 4,181
Royalties US$'000 21,672 24,792
Sustaining corporate administration
costs US$'000 22,379 15,029
Rehabilitation costs US$'000 276 350
Sustaining underground development
and exploration US$'000 48,641 50,796
Other sustaining capital expenditure US$'000 57,513 52,433
By -- product credit US$'000 (1,361) (1,115)
------------------------------------- -------- ----------- -----------
All -- in sustaining costs(1) US$'000 502,366 485,478
------------------------------------- -------- ----------- -----------
Gold sold - total (oz.) oz 407,252 468,681
AISC per ounce sold US$/oz 1,234 1,036
------------------------------------- -------- ----------- -----------
(1) Includes refinery and transport.
31 December 31 December
2021 2020
US$'000 US$'000
--------------------------------------- ----------- -----------
Corporate costs
Sustaining corporate costs 22,379 15,029
Non-sustaining corporate costs(1) - 2,550
--------------------------------------- ----------- -----------
Corporate costs (sub-total) (note 2.3) 22,379 17,579
--------------------------------------- ----------- -----------
(1) Non-sustaining corporate costs relate to expenses and/or
accruals recognised for work performed by the Group's advisors on
the successful defence of the third-party all-share acquisition
attempt of Centamin plc. This is not a normal cost incurred in the
day-to-day operations of running the Group and as such has been
excluded from our Non-GAAP reporting measures.
3) Cash and cash equivalents, bullion on hand and gold and
silver sales debtor
Cash and cash equivalents, bullion on hand, gold and silver
sales debtor and financial assets at fair value through profit or
loss is a non-GAAP financial measure and is a measure of the
available cash and liquid assets at a point in time. Management
uses this measure internally to better assess performance trends
for the Company as a whole. Management considers that, in addition
to conventional measures prepared in accordance with GAAP, certain
investors use such non-GAAP information to evaluate the Company's
performance and ability to generate cash flow and the measure is
intended to provide additional information. This non-GAAP measure
does not have any standardised meaning prescribed by GAAP and
should not be considered in isolation or as a substitute for
measures of performance prepared in accordance with GAAP. This
measure is not necessarily indicative of cash and cash equivalents
as determined under GAAP and other companies may calculate this
measure differently.
Reconciliation to cash and cash equivalents, bullion on hand,
gold and silver sales debtor:
31 December 31 December
2021 2020
US$'000 US$'000
------------------------------------------------- ----------- -----------
Cash and cash equivalents (note 2.16(a)) 207,821 291,281
Bullion on hand (valued at the year-end spot
price) 20,304 5,747
Gold and silver sales debtor (note 2.7) 29,147 12,492
Cash and cash equivalents, bullion on hand, gold
and silver sales debtor 257,272 309,520
------------------------------------------------- ----------- -----------
The majority of funds have been invested in international
rolling short-term interest money market deposits.
4) Free cash flow and adjusted free cash flow
Free cash flow is a non-GAAP financial measure. Free cash flow
is a measure of the available cash after distributions to the
Non-Controlling Interest ("NCI") in SGM, being EMRA, that the Group
has at its disposal to use for capital reinvestment and to
distribute to shareholders of the parent. Free cash flow is
intended to provide additional information, does not have any
standardised meaning prescribed by GAAP and should not be
considered in isolation or as a substitute for measures of
performance prepared in accordance with GAAP. This measure is not
necessarily indicative of operating profit or cash flow from
operations as determined under GAAP and other companies may
calculate this measure differently.
31 December 31 December
2021 2020
US$'000 US$'000
------------------------------------------------ ----------- -----------
Net cash generated from operating activities 309,878 453,305
Less:
Net cash used in investing activities (240,676) (129,848)
Dividend paid - non-controlling interest in SGM (75,200) (174,275)
------------------------------------------------ ----------- -----------
Free cash flow (5,998) 149,182
Add back:
Net disposals of financial assets at fair value
through profit or loss(1) - (7,414)
Adjusted free cash flow (5,998) 141,768
------------------------------------------------ ----------- -----------
(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
PRINCIPAL RISKS AND UNCERTAINTIES
RISK AND OPPORTUNITY IN A TRANSITIONAL YEAR
Centamin recognises that nothing is without risk. A successful
and sustainable business needs a robust and proactive risk
management framework as its foundation, which outlines the
Company's approach and process for management of risk. 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. The risk management
framework and the system of internal controls are designed to
operate effectively together and report through to the Audit and
Risk Committee on a regular basis.
Centamin takes a number of measures to mitigate risk and
maximise opportunity, including those associated with its
underlying operational and exploration activity, with these being
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.
During 2021 there have been updates to the principal risks
driven by the revised strategy for the business and external
factors such as greater understanding of the potential impact of
climate change. A 'new' principal risk, Decarbonisation, has been
elevated from the climate change emerging risk disclosed in the
2020 Annual Report. The existing principal and emerging risks have
also been refreshed to reflect the broader considerations of the
business moving forward to align with the robust foundation for
growth & yield which has been set as we invest for the
future.
Of particular note through 2021 was the ongoing global impact of
the COVID-19 pandemic, the Infectious Disease Management risk
reflects this as we continued with our proactive approach to
managing the potential impacts and a refresh of the stakeholder
expectations risk to focus on the environmental and social
considerations. In addition, we recognise the importance of climate
change as a growing global risk and in particular due to the nature
of our business the need to address decarbonisation as reflected in
the 'new' principal risk.
Through 2021 we have established reinforced our culture of
continuous improvement which has identified several opportunities
such as the transition of the underground to an owner operator
model and the Solar Project.
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.
PRINCIPAL RISKS
Due in part to the nature of the business as an operating mining
company, the headline principal risks, whilst fundamental to the
ongoing operation, have remained fairly constant since the updates
for the 2020 Annual Report, with the exception of Decarbonisation.
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 past years in host up to date understanding We will
the countries countries to incentivise of the investment not take
in which we foreign direct framework and any unnecessary
operate may investment climate in which risk within
impact on the and the development we operate as our control.
Group. of local mining well as a constructive However,
The future industries. relationship we understand
investment Centamin deploys a with our host that inherently
framework and proactive approach governments we have
business conditions to government and and local partners, limited
in our operating stakeholder such as EMRA. control
locations could liaison and actively The Company over a
change with monitors - on an ongoing undertakes to number
governments basis - legal, fiscal, abide by the of external
adopting different regulatory and political spirit and letter risk factors.
laws, regulations developments in its of the Concession
and policies host countries. Agreement as
that may impact The terms of the Sukari well as local
on the ownership, Concession Agreement, laws/Regulations
development (including the in Egypt and
and operation applicable furthermore
of our mineral tax regime and rights where our exploration
resources projects. of tenure), were issued activities are
Over the last and ratified under taking place
year the Company special Law No. 222 in CDI.
recognises of 1994 and can,
the changing therefore,
landscape for only be amended by
our license the passing of a further
holdings in law.
CDI and BF,
which we are
monitoring
closely. Outside
of our host
countries we
are monitoring
the ongoing
conflict in
the Ukraine.
------------------------- ------------------------- ------------------------- -------------------
Legal and The Groups Centamin deploys a The Company Level:
Regulatory structure includes proactive approach will ensure Balanced
Compliance operational to government and that it complies We will
and exploration stakeholder with all relevant not take
licences in liaison and actively regulation and any unnecessary
Egypt, CDI monitors - on an ongoing legislation risk within
and BF, held basis - legal, fiscal, including its our control.
through companies regulatory and political environmental However,
in Australia, developments in its and operational we understand
Jersey and host countries. commitments that inherently
the United In Egypt we have the set out in the we have
Kingdom. This Sukari Concession relevant limited
means we are Agreement permits/authorisations control
subject to which can only be and local over a
various legal changed laws/regulations. number
and regulatory by means of another of external
requirements law, so we have the risk factors.
across all right to export gold,
jurisdictions, repatriation of funds,
relating to existing tax exemption
issues such and further
as cross jurisdictional considerations.
taxation, related In addition, the Group
party transactions, engages with the
anti-bribery relevant
and corruption. regulatory authorities
Ongoing legal, and seeks appropriate
fiscal and advice to ensure
regulatory compliance
changes may with all relevant
impact project regulation
permitting, and legislation. An
tenure, taxation, example would be the
exchange rates, global tax strategy
environmental in place which ensures
protection, all taxes are paid
labour relations, at an operational level
and the ability and further tax
to repatriate requirements
income and are met through the
capital. These holding structure.
measures may Appropriate monitoring
also impact procedures are in place
the ability and we ensure that
to import key we manage legal and
supplies, export regulatory compliance.
gold production
and repatriate
revenues.
------------------------- ------------------------- ------------------------- -------------------
Litigation Centamin's In order to mitigate To minimise Level:
ability to this risk Centamin exposure to Balanced
operate and has (a) taken litigation and We will
conduct business appropriate reduce the impact not take
in host countries, legal advice from of actions by any unnecessary
may be adversely reputable complying with risk within
affected by legal advisers and all relevant our control.
current and continues actively laws and regulations However,
any future to pursue its legal and to defend we understand
dispute resolution rights with respect and/or bring that inherently
and/or litigation to its existing case; any actions we have
proceedings. and (b) maintains necessary to limited
The Group is regular protect the control
currently party contact with its Company's assets, over a
to a single Egyptian rights and reputation. number
legal action legal advisers who of external
in Egypt. The actively monitor risk factors.
details of developments
this litigation, in both court and local
which relates media for signs of
to the Concession any legislative or
Agreement, similar developments
is given in that relate to its
note 5.1 of ongoing litigation
the financial or which may otherwise
statements. threaten its operations,
The challenge finances or prospects.
to the concession The potential for
agreement could serious
affect its impact can be further
ability to mitigated by: Centamin's
operate the strict adherence to
mine at Sukari local laws and
in the manner agreements;
in which it the Egyptian
is currently government's
operated and continued support on
the former the constitutionality
could adversely of Law no. 32 of 2014,
affect its which restricts the
profitability. ability of third parties
to challenge contractual
agreements between
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 potential Balanced
Management impacted the of our workforce, in risks of the We will
world, presenting line with government global pandemic not take
an unprecedented and public health advice as a threat any unnecessary
medical, economic led to us introducing bringing potential risk within
and social covid-secure working risks to our our control.
challenge and conditions which have people and business. However,
the ongoing assisted in the Following the we understand
effects of mitigation initial assessment that inherently
this were felt of the risk. Ensuring of the potential we have
through 2021 a local and global risks, their limited
and will be proactive approach impacts to our control
beyond. Centamin to our response during people and business over a
has been proactive the pandemic has been we developed number
in how it manages key. a dynamic action of external
and mitigates Whilst the impact and plan at a corporate risk factors.
the impacts potential duration and site level
within its remains uncertain, supported by
control. We the Company regularly resources focusing
have experienced reviews our scenario on our response
no material risk analysis on the day to day.
disruption Group and believes This has continued
to operations, it is well positioned to adapt and
supply chain to continue to manage evolve in response
or gold shipments. through these difficult to the changes
Furthermore, times. As the pandemic both realised
we recognise progressed we continued and projected
the macro-economic to monitor the global to ensure we
uncertainty situation, adapting are in the best
this has created our policies, procedures place to manage
including volatility and controls to minimise and respond
in the markets, the impacts within as required.
increasing our control and we
commodity costs, have maintained this
supply chain through 2021.
disruption
and the impacts
to our people.
The scale and
duration remain
uncertain but
we continue
to monitor
and are prepared
to manage accordingly.
------------------------- ------------------------- ------------------------- -------------------
Gold Price The extent The Group is 100% The Company Level:
of 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 which is We will continue our control.
has no influence. conservatively based to allow for However,
Revenues from on the long term gold financial flexibility we understand
gold sales price as modelled by when budgeting that inherently
are in US dollars external advisors. and forecasting we have
and Centamin This often means we using a measured limited
has exposure can take advantage approach to control
to costs in of any changes in the the potential over a
other currencies gold price which have fluctuations number
including Egyptian been positive over in gold price. of external
pounds, Australian the course of 2021 risk factors.
dollars and with a realised average
sterling. price of US $1797.
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
for our commitment
to stakeholder
returns.
------------------------- ------------------------- ------------------------- -------------------
Strategic Risks
Single Project Sukari currently The project at Sukari At Sukari, the Level:
Dependency constitutes has two distinct ore process plant Informed
Centamin's sources (open pit and has been designed We will
main mineral underground), the with sufficient have an
resource and processing resilience and approach
sole mineral plant has two separate redundancies that could
reserve, near flotation circuits within the operating deliver
term production and two separate power cycle. reasonable
and revenue. stations. The exploration rewards,
Whilst the Whilst one project, projects across economic
resource base the nature of the design the business or otherwise,
in CDI is growing, of the plant provides provide a well-balanced by managing
we are undertaking adequate mitigation project pipeline, risk in
brownfield and reduces the relative with potential an informed
surface exploration likelihood of dependence to add incremental way.
within the compared to a single shareholder
existing concession layer plant design. value by increasing
and have secured The second circuit production across
highly prospective of the process plant the Group as
ground within has been fully highlighted
Egypt's Nubian operational in the Strategy
Shield, we for over seven years, in Action. The
recognise until which shows the recent bid round
further production resilience in Egypt has
growth beyond of the project. In resulted in
Sukari is identified, addition, the plant the Company
the potential is fed by both the being awarded
impact remains open pit and underground additional exploration
high and safeguarding operation, providing areas, which
the project higher and lower-grade we are currently
is paramount ore to the processing discussing further
to the Company. plant. Operational with the government.
The ongoing activity and production
COVID-19 pandemic is expected to continue
has continued at above nameplate
to ensure focus capacity. Other
on this risk mitigating
but through factors, outside the
2021 we have single project at
continued our Sukari,
approach to include the continued
"Co-Existing focus on longer term
with COVID-19". growth and expansion
through exploration
and acquisition targets
both inside and outside
of Egypt.
------------------------- ------------------------- ------------------------- -------------------
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
Should a dispute payment provisions with EMRA, as over a
arise, or under the Concession well as making number
decision-making Agreement, has become sure that the of external
become deadlocked a key priority. terms and conditions risk factors.
and cannot To ensure successful of the Concession
otherwise be operation of the Sukari Agreement and
amicably resolved Gold Mine maintaining applicable laws
by way of commercial a good working are fully complied
negotiations relationship with. Ongoing
or mediation with EMRA, other monitoring and
then time-consuming relevant review of this
and costly ministries and wider is key and is
arbitration government is a key an activity
or other dispute focus. The Group has which we will
resolution regular meetings with continue to
proceedings officials from EMRA give the required
may need to and invests time in focus to.
be initiated. liaising with relevant
ministry and other
governmental
representatives.
------------------------- ------------------------- ------------------------- -------------------
Licence Centamin are Ensure that we are Acting in an Level:
to Operate committed to clear on the standards ethical, responsible Balanced
building and that are expected and transparent We will
operating our locally manner is fundamental not take
mines in a and regionally within to realising any unnecessary
safe and responsible our areas of operation. the significant risk within
manner. To Develop and implement business benefits our control.
do this, we investment plans that gained from However,
seek to build sustain broad building trusted we understand
trust-based stakeholder and constructive that inherently
partnerships support and compliance relationships we have
with host governments with local and regional with all our limited
and local communities standards. stakeholders, control
to protect Maintain an up-to-date and to maintaining over a
our license compliance register our socio-political number
to operate for each asset and license to operate. of external
and ability routinely review our Strengthen our risk factors.
to grow. performance against sustainability
We should only these commitments and governance and
advance our obligations. management framework
business interests at all levels
where this of the organisation,
protects people, including reinforcement
fosters socio-economic of our performance
development standards to
and safeguards support growth,
the environment, supported by
and leaves resources allocated
a positive to ensure the
legacy for long-term physical,
our host communities. chemical and
biological stability
of the site
- or social
benefits to
our host communities.
------------------------- ------------------------- ------------------------- -------------------
Future of Our accomplishments Initiatives which have To deliver on Level:
our Workforce and success been introduced include: the principles Balanced
as a Company the employee development and commitments We will
are made possible pathway, to ensure as stated in not take
by our ability all positions are our People policy. any unnecessary
to attract undertaken Visible leadership risk within
and retain to a proficient level; in the development our control.
human capital supervisory and of our people, However,
and through leadership diversity and we understand
the commitment training to equip inclusion. Sustained that inherently
of our people. employees resourcing of we have
We need to for increased levels the professional limited
support our of technical and development control
people to develop management and training over a
a shared understanding responsibility; and initiatives. number
of the critical succession planning. of external
behaviours Continue to reinforce risk factors.
and skills awareness of our
required for organizational
successful values and the critical
performance behaviours required
and provide for successful
them the opportunity performance.
to progress Through visible
to a top-level leadership,
if they possess strengthen diversity
the ability and inclusion in
to do so. Failure workplace
to do so will culture and practice,
result in elevated and set targets to
rates of turnover increase the
and knowledge representation
loss. of women.
Valuing diversity
and promoting
inclusion is
an ethical
imperative
for a sustainable
business.
------------------------- ------------------------- ------------------------- -------------------
Stakeholder Elevated societal Through our Reinforce the Level:
Environmental expectations Sustainability implementation Controlled
and Social on corporate Performance Framework, of our Sustainability Controlled
Expectations environmental we continue to Performance considers
responsibility, strengthen Framework and potential
including increased our governance and its integration breaches
levels of stakeholder management controls into asset-level in our
scrutiny, disclosure, and assurance processes management systems policies
regulatory to meet stakeholder and practice. and controls
requirements expectations, existing Build the awareness to meeting
and industry and new regulatory and capacity our environmental
standards. and industry standards, of senior management expectations.
Recent high-profile for example the RGMPs, teams to integrate The Board
incidents have GSITM and TCFD. environmental invests
put a spotlight Define environmental and social risks heavily
on the need and social criteria and opportunities in a programme
for increased and triggers to support into investment of continuous
levels of corporate key investment decision-making improvement
accountability decisions. in relevant
on matters At asset-level, focused practices
of environmental on building the capacity and has
and social of our HSES specialist an expectation
governance, teams and the continual to meet
including tailings improvement of our the highest
management, environmental and social standards.
heritage protection, management system.
responsible We are improving our
supply chain, LOM management plans,
diversity and measurement and target
inclusion. setting and third-party
The COVID-19 verification.
pandemic has
also focussed
attention on
the wellbeing
our people,
social inequalities
and the role
which we must
play in the
wider communities.
------------------------- ------------------------- ------------------------- -------------------
Decarbonisation The transition A number of carbon Understanding Level:
New Principal to a net zero abatement initiatives the effects Balanced
Risk carbon economy are underway. of climate-related We will
is expected Construction risk on our not take
to profoundly has commenced on a business is any unnecessary
affect our solar PV project that important as risk within
business model will reduce our GHG we study in our control.
over the medium emissions by 60,000 more detail However,
and/or long-term tCO2-e per annum at and specificity we understand
due to factors Sukari; and the the updated that inherently
including: installation life of mine we have
the pricing of the high production plan for Sukari limited
of carbon emissions; trays to our haul fleet including opportunities control
availability indicates a 15 to 20% for decarbonisation. over a
and costing reduction in fuel We will undertake number
of commodities consumption a trade-off of external
and consumables; per tonne hauled. analysis for risk factors.
changing market Other initiatives under decarbonisation
and investor investigation include options.
sentiment. expansion of our Elaborate a
The most significant existing climate change
opportunity commitment to strategy that
for decarbonisation renewables, will set an
is the ability connection to the ambitious science-based
to reduce and national target for carbon
potentially grid in Egypt and fuel reduction by
remove fossil switching to natural 2030 and an
fuel-generated gas for both power accompanying
electricity generation and roadmap to achieve
from gold mining's hybridization this target.
sources of of our mobile fleet.
power. This
is likely to
require increased
levels of capital
investment
in the short-medium
term and the
uptake of new
technology.
------------------------- ------------------------- ------------------------- -------------------
Operational Risks
Safety, It is an inherent Protecting the safety, Ensuring the Level:
Health and risk in our health and wellbeing safety, health Controlled
Wellbeing industry that of employees, and wellbeing Controlled
incidents due contractors, of our workforce considers
to unsafe acts local communities and is directly potential
or conditions, other stakeholders aligned with breaches
or the failure is a fundamental our first Value, in our
of our equipment responsibility to Protect, policies
or infrastructure for Centamin. We seek and is amoral and controls
could lead continuous improvement imperative. to safety,
to injuries of our safety and health This requires health
or fatalities. management system and a focus on zero and wellbeing.
Remote and practices including harm whilst The Board
rostered work assurance processes, constituting invests
also has potential with particular focus a direct investment heavily
to impact the on the early in the in a programme
mental health identification productivity of continuous
and wellbeing of risks and the of the business improvement
of our workers prevention and the physical in relevant
- an aspect of incidents. integrity of practices
that has been We continue to reinforce our operations. and has
heightened our critical risk and A safe and healthy an expectation
by the ongoing control standards, workforce translates to meet
COVID-19 pandemic. review and test our into an engaged, the highest
Our workforce crisis management plan, motivated and standards.
face potential maintain Covid-19 productive workforce
risks from management that mitigates
hazards such protocols, continue operational
as fire, explosion to enhance employee stoppages, and
and electrocution, medical benefits and reduces potential
as well as our new Tailings Storage incidents or
risks specific Facility ("TSF2") harm.
to the mine starting
site and development operation.
project. These Reinforce the
include potential implementation
slope failures of our Sustainability
or collapse Performance Framework
in the underground, and its integration
heavy or light into asset-level
equipment collisions management
involving systems and practice.
machinery/transport Build the awareness
or personnel and capacity of senior
or environmental management teams to
incidents such operationalise our
as cyanide critical risks standards
contamination. and seek conformance
Continuing to ISO 45001.
focus on the
risks associated
with mining
companies'
tailings facilities
also means
we continue
to monitor
this risk,
completing
regular internal
and external
technical reviews.
------------------------- ------------------------- ------------------------- -------------------
Exploration Exploration Before undertaking Ensuring we Level:
activities any exploration have an effective Opportunistic
by their very activities and efficient We will
nature are a risk-based approach exploration consider
highly speculative is undertaken to filter programme to opportunities
with an inherent projects considering meet our strategic with higher
degree of risk. a number of factors. targets, long-term levels
Centamin strives This approach has been production and of risk
to make new further enhanced in reserves goals. in exchange
discoveries, 2021, and beyond, by Further information for potentially
growth and an overhaul of the will be provided greater
value-creation exploration and through 2022 reward,
opportunities geological in updates on as long
through our leadership team and the exploration as they
exploration a restructured approach. activities. do not
programme. This will be supported conflict
Whilst Egypt by independent advice with our
continues to and an investment in core values.
represent a technology.
significant 2021 also delivered
opportunity a positive PEA for
through brownfield Doropo and we commenced
exploration the PFS which is due
around the in 2022, we secured
concession highly prospective
and highly ground in Egypt and
prospective doubled ABC resources.
ground in Egypt's During 2021 we invested
Nubian Shield, a total of US$14M in
we also recognise exploration activities,
our potential with an initial US$25m
growth projects budgeted for exploration
in Côte expenditure in 2022.
d'Ivoire.
------------------------- ------------------------- ------------------------- -------------------
Geological Geological The overhaul of the To achieve an Level:
Understanding uncertainty geological leadership accurate estimation Informed
is an inherent team through 2021 and based on geology, We will
risk which a restructured approach that informs have an
any mining has led to a number improved mine approach
company faces. of changes to the planning and that could
Understanding stewardship operations to deliver
of the orebody of the orebody and deliver results. reasonable
can be influenced a new Sukari Orebody This will be rewards,
by a number Stewardship Model. supported by economic
of factors Upgrades to the resource the near-term or otherwise,
which can impact management processes roadmap to +500koz by managing
on the ability and the development pa and the robust risk in
to estimate of more robust resource life of mine an informed
the location models have driven schedule as way.
of the ore a review of the existing presented in
and the potential data alongside future December 2021.
grade expected analysis and the ability
by the mining to set Geology targets.
operations. These changes will
As these estimations contribute to an
are used to integrated
inform the approach to the mining
approach to methods which are
our operations applied
and the wider and inform the
business strategy mine-to-mill
we need to planning.
ensure that
we can make
this process
as accurate
as possible.
------------------------- ------------------------- ------------------------- -------------------
Operational By their nature, 2021 has been a To achieve reliable Level:
Performance mineral resources transformational and consistent Informed
and Planning and reserves year for Centamin with production, We will
are estimates a focus on improving whilst optimising have an
based on a mining flexibility the potential approach
range of assumptions, and delivering growth. of the operation. that could
including geological, At the end of 2020 The Company deliver
metallurgical, we completed the Life provides timely reasonable
technical and of Asset Phase 1, issued and accurate rewards,
economic factors. 3 year guidance and information economic
Other variables commenced accelerated to the market or otherwise,
include expected waste-stripping. Through on production by managing
costs, inflation 2021 we commissioned levels and forecasts. risk in
rates, gold TSF 2, completed the The mining sector an informed
price, grade new Sukari Orebody continues to way.
downgrades Stewardship Model and face operating
and production launched the Centamin cost inflation,
outputs. Capability Framework, including labour
Unplanned operational The plan should provide costs, energy
stoppages can clarity as to the costs and the
impact our strategic natural impact
production. direction of the mine of ore-grade
An inability and the desired deterioration
to shift the production over time. In
volumes of levels for the,short, order to deliver
waste required, medium and long-term our disciplined
drops in our to give focus to the growth strategy
operational operational elements and to maintain
capacity in of the mine. Alongside and improve
mining, contractor the overhauled our competitive
management, geological position, the
supply chain leadership team and Group must deliver
disruption restructured approach its financial
or ground stability to geology and orebody improvement
are examples stewardship we have targets and
of potential developed a minimise the
risks. comprehensive number of unplanned
Accurate and mining engineering operational
complete planning model, enhanced our stoppages.
is pivotal geotechnical engineering
to informing programme, increased
production our mining flexibility
estimates, and have identified
grade quality multiple initiatives
and provide to improve operating
greater clarity efficiency and
to corporate/operational productivity.
decision-making. An example being a
We then need dedicated
to deliver contract-mining
against our solution on the East
targets by of the open pit and
analysis of the owner-operator
our data to fleet utilised for
inform the ore and waste mining
right decisions. on the North and West.
Further through
2021 we have
managed the
impact of COVID-19
and continue
to monitor
these. At 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.
Emerging risks are considered as part of the Company's strategic
discussions through all levels of the Group and one of these risks
from the 2020 Annual Report has now been elevated to a principal
risk highlighting the importance of this process.
We have outlined a non-exhaustive list of emerging risks
assessed during the year, these are risks which are inherent to the
nature of our business and where we operate. We monitor these as
part of the risk management framework.
Financial Ensuring that we effectively manage our exposure to
risks such as jurisdictional taxation exposure, currency
fluctuations, interest rate and liquidity is an ongoing
process. The Company has developed the necessary procedures
and programmes, including in response to inflationary
pressures, to minimise the potential impact of these
risks as outlined in the Financial Review and going
concern in Note 1.3.7 of the financial statements.
------------------- -----------------------------------------------------------------
Cyber security The Company recognises the importance of risks associated
with cyber security and data governance but has assessed
they do not represent a principal risk given the current
position of the Company's operations. Increasing investment
in this area is, however, a priority for the Company
to ensure we can maintain our resilience alongside planned
enhancements to our technology started in 2021 through
a Digital Transformation programme.
------------------- -----------------------------------------------------------------
Corporate The Company continue to acknowledge the risks and opportunities
development associated with our ability to realise value by successfully
executing merger, acquisitions and divestments. Management
must be ready to evaluate approaches and opportunities
to ensure value for shareholders is maintained and enhanced.
------------------- -----------------------------------------------------------------
Security - Increased militant activity and political instability
CDI in Northern CDI and BF continues to raise potential
concerns for our personnel safety in-country. We continue
to closely monitor the situation through our own security,
local government, national security and external advisors.
These resources have received investment in 2021 to
ensure we have the required support to mitigate the
risk as we increase operations in CDI.
------------------- -----------------------------------------------------------------
Capital allocation Ensuring balanced capital is allocated effectively and
and project projects are well executed is a risk and opportunity
execution which the Company recognises as highlighted in the Financial
Review. Examples of key capital projects delivered in
2021 include upgrades to the new tailings storage facility,
infrastructure improvements to the camp and progressing
the solar plant and paste fill plant at Sukari, further
detail is shown in the Financial Review under Capital
Projects .
------------------- -----------------------------------------------------------------
Directors' responsibilities
For the year ended 31 December 2021
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 16 March 2022.
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
16 March 2022 16 March 2022
audited full year consolidated financial statements
Consolidated statement of comprehensive income
for the year ended 31 December 2021
31 December 31 December
2021 2020
Note US$'000 US$'000
---------------------------------------------------------------- ---- ----------- -----------
Revenue 2.2 733,306 828,737
Cost of sales 2.3 (487,376) (449,441)
---------------------------------------------------------------- ---- ----------- -----------
Gross profit 245,930 379,296
Exploration and evaluation expenditure 2.1 (13,879) (17,391)
Other operating costs 2.3 (49,100) (56,392)
Other income 2.3 5,708 6,972
Profit on financial assets at fair value through profit or loss 2.6 - 960
Finance income 2.3 196 1,554
Impairment of exploration and evaluation asset 2.10 (35,208) -
---------------------------------------------------------------- ---- ----------- -----------
Profit for the year before tax 153,647 314,999
Tax 2.5 20 (50)
---------------------------------------------------------------- ---- ----------- -----------
Profit for the year after tax 153,667 314,949
Profit for the year after tax attributable to:
- the owners of the parent 101,527 155,979
- non-controlling interest in SGM 2.4 52,140 158,970
---------------------------------------------------------------- ---- ----------- -----------
Total comprehensive income for the year 153,667 314,949
---------------------------------------------------------------- ---- ----------- -----------
Total comprehensive income for the year attributable to:
- the owners of the parent 101,527 155,979
- non-controlling interest in SGM 2.4 52,140 158,970
---------------------------------------------------------------- ---- ----------- -----------
Earnings per share attributable to owners of the parent:
Basic (US cents per share) 6.4 8.811 13.531
Diluted (US cents per share) 6.4 8.738 13.453
---------------------------------------------------------------- ---- ----------- -----------
The above audited consolidated statement of comprehensive income
should be read in conjunction with the accompanying notes.
Consolidated statement of financial position
as at 31 December 2021
31 December 31 December
2021 2020
Note US$'000 US$'000
------------------------------------------------ ------- ----------- -----------
Non-current assets
Property, plant, and equipment 2.9 956,217 829,884
Exploration and evaluation asset 2.10 25,261 63,701
Inventories - mining stockpiles 2.11 64,756 64,870
Other receivables 2.7 101 103
------------------------------------------------ ------- ----------- -----------
Total non-current assets 1,046,335 958,558
------------------------------------------------ ------- ----------- -----------
Current assets
Inventories - mining stockpiles and consumables 2.11 128,721 118,705
Trade and other receivables 2.7 32,579 18,424
Prepayments 2.8 7,964 8,908
Cash and cash equivalents 2.16(a) 207,821 291,281
Total current assets 377,085 437,318
------------------------------------------------ ------- ----------- -----------
Total assets 1,423,420 1,395,876
------------------------------------------------ ------- ----------- -----------
Non-current liabilities
Provisions 2.13 42,647 32,752
Other payables 2.12 10,386 1,437
------------------------------------------------ ------- ----------- -----------
Total non-current liabilities 53,033 34,189
------------------------------------------------ ------- ----------- -----------
Current liabilities
Trade and other payables 2.12 75,759 64,488
Tax liabilities 2.5 253 267
Provisions 2.13 4,617 7,480
Total current liabilities 80,629 72,235
------------------------------------------------ ------- ----------- -----------
Total liabilities 133,662 106,424
------------------------------------------------ ------- ----------- -----------
Net assets 1,289,758 1,289,452
------------------------------------------------ ------- ----------- -----------
Equity
Issued capital 2.14 669,531 668,807
Share option reserve 2.15 4,975 3,343
Accumulated profits 655,508 634,498
------------------------------------------------ ------- ----------- -----------
Total equity attributable to:
- owners of the parent 1,330,014 1,306,648
- non-controlling interest in SGM 2.4 (40,256) (17,196)
------------------------------------------------ ------- ----------- -----------
Total equity 1,289,758 1,289,452
------------------------------------------------ ------- ----------- -----------
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 16 March 2022 and signed on its
behalf by:
Martin Horgan
Chief Executive Officer
Director
16 March 2022
Ross Jerrard
Chief Financial Officer, Director
Director
16 March 2022
Consolidated statement of changes in equity
for the year ended 31 December 2021
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$'000
------------------------ ---- -------- ------------ ----------- ---------- --------------- ----------
Balance as at 1
January 2021 668,807 3,343 634,498 1,306,648 (17,196) 1,289,452
Profit for the
year after tax - - 101,527 101,527 52,140 153,667
------------------------ ---- -------- ------------ ----------- ---------- --------------- ----------
Total comprehensive
income for the
year - - 101,527 101,527 52,140 153,667
Own shares acquired (1,391) - - (1,391) - (1,391)
Net recognition
of share-based
payments - 3,747 - 3,747 - 3,747
Transfer of share-based
payments 2,115 (2,115) - - - -
Dividend paid -
non-controlling
interest in SGM 2.4 - - - - (75,200) (75,200)
Dividend paid -
owners of the parent - - (80,517) (80,517) - (80,517)
------------------------ ---- -------- ------------ ----------- ---------- --------------- ----------
Balance as at 31
December 2021 669,531 4,975 655,508 1,330,014 (40,256) 1,289,758
------------------------ ---- -------- ------------ ----------- ---------- --------------- ----------
Issued Share option Accumulated Non-controlling Total
capital reserve profits Total interests equity
Note US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
---------------------- ---- -------- ------------ ----------- ---------- --------------- ----------
Balance as at 1
January 2020 672,105 4,179 617,244 1,293,528 (1,891) 1,291,637
Profit for the
year after tax - - 155,979 155,979 158,970 314,949
---------------------- ---- -------- ------------ ----------- ---------- --------------- ----------
Total comprehensive
income for the
year - - 155,979 155,979 158,970 314,949
Own shares acquired (3,298) - - (3,298) - (3,298)
Net reversal of
share-based payments - (836) - (836) - (836)
Dividend paid -
non-controlling
interest in SGM 2.4 - - - - (174,275) (174,275)
Dividend paid -
owners of the parent - - (138,725) (138,725) - (138,725)
---------------------- ---- -------- ------------ ----------- ---------- --------------- ----------
Balance as at 31
December 2020 668,807 3,343 634,498 1,306,648 (17,196) 1,289,452
---------------------- ---- -------- ------------ ----------- ---------- --------------- ----------
The above audited consolidated statement of changes in equity
should be read in conjunction with the accompanying notes.
Consolidated statement of cash flows
for the year ended 31 December 2021
31 December 31 December
2021 2020
Note US$'000 US$'000
---------------------------------------------- ------- ----------- -----------
Cash flows from operating activities
Cash generated from operating activities 2.16(b) 309,873 453,315
Income tax received/(paid) 5 (10)
---------------------------------------------- ------- ----------- -----------
Net cash generated from operating activities 309,878 453,305
Cash flows from investing activities
Disposal of financial assets at fair
value through profit or loss - 7,414
Acquisition of property, plant, and equipment (224,929) (127,099)
Brownfield exploration and evaluation
expenditure (15,943) (11,717)
Finance income 2.3 196 1,554
---------------------------------------------- ------- ----------- -----------
Net cash used in investing activities (240,676) (129,848)
Cash flows from financing activities
Own shares acquired (1,391) (3,298)
Dividend paid - non-controlling interest
in SGM 2.4 (75,200) (174,275)
Dividend paid - owners of the parent (80,517) (138,725)
---------------------------------------------- ------- ----------- -----------
Net cash used in financing activities (157,108) (316,298)
---------------------------------------------- ------- ----------- -----------
Net (decrease) / increase in cash and
cash equivalents (87,906) 7,159
Cash and cash equivalents at the beginning
of the year 291,281 278,229
Effect of foreign exchange rate changes 4,446 5,893
---------------------------------------------- ------- ----------- -----------
Cash and cash equivalents at the end
of the year 2.16(a) 207,821 291,281
---------------------------------------------- ------- ----------- -----------
The above audited consolidated statement of cash flows should be
read in conjunction with the accompanying notes.
Notes to the consolidated financial statements
for the year ended 31 December 2021
Basis of preparation
These financial statements are denominated in US dollars
("US$"), which is the presentation 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 2021 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 which are measured at fair value.
The consolidated financial statements for the year ended 31
December 2021 were authorised by the Board of Directors of the
Company for issue on 16 March 2022.
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 judgements and estimates
There were no material updates and/or changes to critical
accounting judgements and estimates that management have made in
the year in applying the Group's accounting policies that have a
significant effect on the amounts recognised and the related
disclosures in the financial statements.
1.2 Changes in policies and estimates
Certain new accounting standards, amendments to accounting
standards and interpretations have been published that are not
mandatory for 31 December 2021 reporting periods and have not been
early adopted by the Group. These standards, amendments or
interpretations are not expected to have a material impact on the
entity in the current or future reporting periods and on
foreseeable future transactions.
For a detailed discussion about the Group's performance and
financial position, please refer to the financial review.
1.3 Critical judgements and estimates in applying the entity's
accounting policies
The following are the critical judgements 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 judgements and
estimates and associated disclosures with the Company's Audit and
Risk Committee.
The critical accounting judgements are as follows:
1 .3.1 Judgement: 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 entities. 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 Judgement: 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 of SGM, through PGM
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;
-- 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:
-- three of which are appointed by the Company, through PGM; and
-- 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 twice a year to:
-- facilitate a forum for sharing information between the owners of SGM;
-- 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;
-- 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.
-- 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:
-- through open discussion at board level;
-- the executive chairman does not have a veto or casting vote;
-- 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
-- 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 Judgement: 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:
-- distributions are always made simultaneously to both shareholders;
-- 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 the end of the SGM reporting period, final profits are
determined, externally audited, and then approved by the board of
SGM:
-- 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 Judgement: Impairment trigger assessment - Burkina Faso
exploration and evaluation assets
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 IFRS 6 an impairment trigger assessment has been
performed.
In making its assessment as to the possibility of whether any
impairment losses had arisen, management considered the following
as part of its assessment of the recoverable amount:
-- internal sources of information; and
-- external sources of information.
The Group's accounting policy for exploration and evaluation
(E&E) expenditure results in brownfield E&E expenditure
being capitalised for those projects where such expenditure is
considered likely to be recoverable through future extraction
activity or sale or where the E&E 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 the
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 E&E 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, an impairment trigger was identified on the
recoverability of the E&E asset related to Burkina Faso valued
at US$35 million, the sequence of events and subsequent impairment
trigger occurred as follows during the financial year:
-- At 30 June 2021, the asset was accounted for as an asset
classified as held for sale on the statement of financial position.
This was due to an announcement made by the company on 27 May 2021
to the market regarding the active sale process for the Burkina
Faso exploration licence. At 30 June 2021, following an impairment
assessment review of the asset held for sale; no impairment was
required based on an active third-party preliminary offer.
-- In December 2021 the company received a letter from the
Burkinabe government, stating that as no development of a mine had
commenced the licence had reached the end of its renewable period.
The company disputes the date from which this is applicable,
believing it to be from March 2022 and has formally written a
letter to the Burkinabe government expressing its views.
-- On 23 January 2022 a military coup occurred in Burkina Faso
and currently no formal government exists. As a result, discussions
with government officials with regards to the licence are not
possible.
1.3.3 Estimate: Impairment assessment of Burkina Faso exploration and evaluation assets
Management have carefully considered all the possible scenarios
and outcomes with respect to this matter and concluded that it is
highly unlikely that the licence will be renewed and management no
longer expects that it will be able to sell the asset within 12
months of the balance sheet date. Accordingly, the asset is no
longer classified as an asset held for sale and it has been
transferred back to E&E assets on the consolidated statement of
financial position. Based on the fact pattern outlined, management
has determined that there is an impairment trigger under IFRS 6,
and subsequently has assessed that the asset has been fully
impaired as at 31 December 2021. The value of the asset has been
written off in full to the statement of comprehensive income.
1.3.4 Judgement: Impairment trigger assessment - Sukari
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;
-- 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.
Consideration of climate change risks
In making the impairment trigger assessment for both the group
operating assets and the remaining exploration and evaluation
assets, the Group also considered elements of climate change risks
that may have an impact on the carrying value of assets, through
its effects on future cash flow projections applied for the
determination of the recoverable amount. We have considered the
relevant legislation currently in place and actions to manage
environmental change which may affect the existing usage of the
Group's assets. The Group has also considered the opportunities
from the sustainable capital investments it is making e.g., the
investment in the solar plant at Sukari aimed at switching part of
the energy requirements of the operations to renewable clean
energy, displacing fossil fuel consumption with lower carbon
alternatives, and improving the way in which the mine operates.
The Group is committed to continuously improve its operations to
operate in an environmentally sustainable way, in line with
industry standards and continue to monitor the future uncertainty
around climate change risks.
Due to economic developments, inherent uncertainties over the
pace of transition to low mission technologies particularly in the
extractive industry in the territories the Group operates,
political and environmental actions that will be taken to meet the
carbon reduction goals, regulatory changes and emissions activity
arising from climate-related matters, the Directors have made
judgements and assumptions using the available internal and
external information to assess the impact of climate change on the
future cash flows and operations of the business. These include
considering the impact of increases in temperatures and rising sea
levels at our operating site, the impact of increased operating
costs because of carbon pricing and the impact on gold prices of
the aforementioned carbon pricing. Based on the considerations made
in the review, there are currently no significant climate change
risk factors that are expected to have a material impact on the net
cash flows of the Group and therefore the recoverable amounts of
the Group's assets.
In preparing the financial statements we have considered the
potential impact of climate-related physical and transition risks,
in the context of the disclosures included in the Strategic Report.
Based on this assessment, climate-related risk is not assessed to
have a material financial impact on the viability of the business
at the current time.
We have assessed the physical risks to our operations under
future emissions scenarios based on General Circulation Models and
scenarios aligned with the latest phase of the Climate Model
Intercomparison Project ("CMIP6"). Our business was assessed to be
resilient to physical risks for the near-term predictions
indicating that adaptation specifically to mitigate the effects of
climate are not required for the operational life of Sukari. We
have not impaired any assets this year as a result of this physical
risk assessment.
We have conducted a preliminary qualitative assessment of
climate-related transition risks on our forecast revenue and
growth. In the short-term, we do not believe these risks present a
material financial impact to the viability of the business, while
noting the potential materiality of the following factors over the
medium and long-term: Pricing of carbon emissions; Availability and
costing of commodities and consumables; Changing market and
investor sentiment. In 2022 we will conduct a more detailed
assessment of the medium and long-term risks and opportunities
through application of climate-related scenarios aligned to the
Intergovernmental Panel on Climate Change ("IPCC"). In 2022 we will
also develop a pathway to decarbonise Sukari for the life of asset,
including associated capital investment.
1.3.5 Judgement: Litigation
The Group exercises judgement in measuring and recognising
provisions and the exposures to contingent liabilities related to
pending litigation, (see note 5.1 to the financial statements).
Judgement 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 a significant legal action in
Egypt, which could adversely affect its profitability and, 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 Concession Agreement under which Sukari
operates, is given in note 5.1 to the financial statements. 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.
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 judgement 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 able to react swiftly if 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:
1.3.6 Estimate: Mineral Reserve and Resource statement impact on
ore reserves
The Group Mineral Reserve and Resource statement for SGM with an
effective date of 30 June 2021 is contained in the supplementary
section of the annual report. The information on the Mineral
Resources and Reserves statement 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 judgement 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, deferred stripping
asset, 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 in the valuation of inventory
because of the unit of production amortisation method.
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(h).
1.3.7 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 consolidated financial
statements, under the historical cost convention, as modified by
financial assets and financial liabilities (including derivative)
instruments which are measured at fair value.
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,
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.
To secure the health and safety of our employees and the
production capabilities of Sukari, the Group established a COVID-19
Executive Committee and support team which meets and provides daily
updates on COVID-19 globally to site, production, supply chain and
HSE activities. 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 COVID-19 will have a
material negative impact on the ability of the Group to operate as
going concern.
Management have performed detailed analyses and forecasts to
assess the economic impact of various downside scenarios 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 2021 the Group had cash and cash equivalents
of US$208 million. As part of assessing the Group's ability to
continue as a going concern, management performed various downside
stress testing scenarios to assess the impact on liquidity
headroom. The scenarios were considered without applying any
mitigating actions over a period of 12 months.
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$1,795/oz. for 2022, US$1,763/oz. for 2023,
US$1,724/oz. for 2024, US$1,650/oz. for 2025 onwards; and
-- production volumes in line with 2022 guidance.
The scenarios and impact on liquidity is as follows:
-- Base case: No change to parameters, expected closing cash balance of US$103 million
-- Average gold price reduction to US$1,575 per ounce, resulted
in a closing cash balance of US$23 million.
-- Processing plant recovery rate reduction by 3%, resulted in a
closing cash balance of US$81 million.
-- Operating expenses increased by 10%, resulted in a closing cash balance of US$76 million.
-- Underground ore tonnage decreased by 10%, resulted in a
closing cash balance of US$90 million.
-- Underground ore grade reduction of 2.0 g/t resulted in a
closing cash balance of US$39 million.
-- Processing plant head grade reduction of 10%, resulted in a
closing cash balance of US$29 million and
-- A combination of the above scenarios
o Average gold price reduction to US$1,650 per ounce.
o Processing plant recovery rate reduction by 1%.
o Operating expenses increased by 5%.
o Underground ore tonnage decreased by 5%.
o Underground ore grade reduction of 0.5 g/t; and
o Processing plant head grade reduction of 5%.
Resulted in a closing cash balance of US$26 million.
The sensitivities applied were informed by internal and external
data sources, including a review of the Group's most recent
production levels with reductions or increases of various levels to
various stages of slowdown, or metal content. Consultations were
also made 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 maintained.
Based on a detailed cash flow forecast prepared by management,
and the various downside scenarios, the Directors have a reasonable
expectation that the Group will have adequate resources to continue
in operational existence for twelve months from 16 March 2022 and
that at this point in time there are no material uncertainties
regarding going concern.
These financial statements for the year ended 31 December 2021
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.
1.3.8 Estimate: Long-term gold price used in the non-current
stockpiles net realisable value (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.
1.3.9 Estimate: Restoration and rehabilitation provision unit
rates
Estimates include the unit costs used in calculating the nominal
provision including 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.
For rehabilitation activities measured in tonnes, the unit costs
range between $0.36/t to US$0.90/t and those measured in cubic
metres and for surface areas measured in metres, the unit cost used
are as follows:
-- Load and Haul waste rock by mass (average haul distance of 2km) $0.36/t
-- Load and Haul waste rock by mass (average haul distance of 6km) $0.90/t
-- Load and Haul waste rock by volume (average haul distance of 2km) $0.77/m(3)
-- Spread waste rock to create cover $1.25/m(3)
-- Load and haul demolition waste for onsite landfill
$2.30/m(3)
-- Demolish concrete foundations (medium reinforced)
$53.00/m(3)
-- Regrade slopes and batters $0.40/m(2)
-- Rip and grade compacted surfaces $0.95/m(2)
-- Demolish buildings (mix of prefabricated, steel and
blockwork) $8.00/m(2)
The range of the unit costs as outlined above is primarily
driven by the level of the work required for each work area
requiring restoration and rehabilitation activity, the extent of
the mine areas and/or infrastructure or equipment requiring such
work as well as the expected mix of the resources to execute the
activities i.e., either internally sourced, contracted third party,
other specialist resource or a combination of the three.
The provision for restoration and rehabilitation has been
discounted by 1.38% (2020: 1.35%) using a US$ applicable rate and
inflation applied at 2.5% (2020: 1.23%).
Sensitivities to changes in costs and discount rates were as
follows:
-- A 10% change in these unit and fixed costs would have a US$3
million increase on the provision and corresponding asset
amounts.
-- a 0.5% decrease in the discount rate would have a US$3
million increase on the provision and corresponding asset
amounts.
Both had a highly insignificant effect on the consolidated
statement of comprehensive income. Please refer to note 2.13 for
the result of the restoration and rehabilitation provision
reassessment for the current year.
The US$21.9 million increase in the provision for the 2021
financial year was primarily due to a US$18 million increase in the
cost base, before discounting, mainly due to the following
significant changes:
-- TSF1 - A US$9 million increase in the cost of loading and
hauling waste rock to create a 2-meter cover over the tailings
surface.
-- TSF2 - the TSF is significantly bigger in 2021 compared to
2020 as construction work continues towards completion in
accordance with engineered plans including a US$5 million increase
in the cost of loading and hauling waste rock to create a 2-meter
cover over the tailings surface.
-- North and west dump leach area - A US$2.6 million increase in
the cost including the cost of supplying and installing an
impermeable liner over the dump leach areas at a cost of US$1.5
million.
-- US$1.6 million increase in the cost of engineering work
related to the planning and design for closure of the mine.
In the financial statements for the year ended 31 December 2020
it stated that 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. The life of asset review was
completed in Q4 of 2021 and announced to the market on 8 December
2021. After completion of the life of asset review, work has
commenced on the full review of the restoration and rehabilitation
plan for Sukari which will determine the company's obligation. It
is estimated that this work will be completed before 31 December
2022 and will involve an external third party to verify the
assumptions and methodology used.
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 Egyptian and 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 and the recently incorporated Egyptian 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
with one of its entities, SGM, 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
2021 2020
US$'000 US$'000
------------------------- ----------- -----------
Egypt 1,044,543 921,427
Burkina Faso 526 35,766
Côte d'Ivoire 596 467
Corporate 670 898
------------------------- ----------- -----------
Total non-current assets 1,046,335 958,558
------------------------- ----------- -----------
Additions to non-current assets mainly relate to Egypt and are
disclosed in note 2.9.
Statement of financial position by operating segment:
Egypt Egypt Burkina Côte
Total Mining Exploration Faso d'Ivoire Corporate
31 December 2021 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
-------------------------------- ---------- ---------- ------------ -------- --------- ---------
Statement of financial position
Total assets 1,423,420 1,228,758 935 1,724 1,650 190,353
Total liabilities (133,662) (129,762) - (368) (829) (2,703)
Net assets/total equity 1,289,758 1,098,996 935 1,356 821 187,650
-------------------------------- ---------- ---------- ------------ -------- --------- ---------
Egypt Egypt Burkina Côte
Total Mining Exploration Faso d'Ivoire Corporate
31 December 2020 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
-------------------------------- --------- ---------- ------------ -------- --------- ---------
Statement of financial position
Total assets 1,395,876 1,077,949 - 37,001 1,087 279,839
Total liabilities (106,424) (101,096) - (635) (390) (4,303)
-------------------------------- --------- ---------- ------------ -------- --------- ---------
Net assets/total equity 1,289,452 976,853 - 36,366 697 275,536
-------------------------------- --------- ---------- ------------ -------- --------- ---------
Statement of comprehensive income by operating segment:
Egypt Burkina Côte
For the year ended 31 December Total Mining Faso d'Ivoire Corporate
2021 US$'000 US$'000 US$'000 US$'000 US$'000
------------------------------- --------- --------- --------- --------- ---------
Statement of comprehensive
income
Revenue 733,306 733,306 - - -
Cost of sales (487,376) (487,376) - - -
------------------------------- --------- --------- --------- --------- ---------
Gross profit 245,930 245,930 - - -
Exploration and evaluation
costs (13,879) - (2,380) (11,499) -
Other operating costs (49,100) (15,756) (21) (247) (33,076)
Other income 5,708 6,922 (105) (238) (871)
Finance income 196 (1) - - 197
Impairment of exploration
and evaluation asset (35,208) - (35,208) - -
------------------------------- --------- --------- --------- --------- ---------
Profit/(loss) for the year
before tax 153,647 237,095 (37,714) (11,984) (33,750)
Tax 20 20 - - -
------------------------------- --------- --------- --------- --------- ---------
Profit/(loss) for the year
after tax 153,667 237,115 (37,714) (11,984) (33,750)
------------------------------- --------- --------- --------- --------- ---------
Profit/(loss) for the year
after tax attributable to:
- the owners of the parent(1) 101,527 184,975 (37,714) (11,984) (33,750)
- non-controlling interest
in SGM(1) 52,140 52,140 - - -
------------------------------- --------- --------- --------- --------- ---------
(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.
Egypt Burkina Côte
For the year ended 31 December Total Mining Faso d'Ivoire Corporate
2020 US$'000 US$'000 US$'000 US$'000 US$'000
------------------------------- ---------- ---------- -------- --------- ---------
Statement of comprehensive
income
Revenue 828,737 828,737 - - -
Cost of sales (449,441) (449,441) - - -
------------------------------- ---------- ---------- -------- --------- ---------
Gross profit 379,296 379,296 - - -
Exploration and evaluation
costs (17,391) - (2,803) (14,588) -
Other operating costs (56,392) (30,760) 307 (197) (25,742)
Other income 6,972 4,820 54 35 2,063
Profit on financial assets
at fair value through profit
or loss 960 - - - 960
Finance income 1,554 77 - - 1,477
------------------------------- ---------- ---------- -------- --------- ---------
Profit/(loss) for the year
before tax 314,999 353,433 (2,442) (14,750) (21,242)
Tax (50) (50) - - -
------------------------------- ---------- ---------- -------- --------- ---------
Profit/(loss) for the year
after tax 314,949 353,383 (2,442) (14,750) (21,242)
------------------------------- ---------- ---------- -------- --------- ---------
Profit/(loss) for the year
after tax attributable to:
- the owners of the parent
(1) 155,979 194,413 (2,442) (14,750) (21,242)
- non-controlling interest
in SGM (1) 158,970 158,970 - - -
------------------------------- ---------- ---------- -------- --------- ---------
(1) Please note that the cost recovery model on which profit
share is based under the Concession Agreement is different to the
accounting results presented above due to various adjustments and
as such the share of profit disclosed above is not reflective of
the 55%:45% split that was in place from 1 July 2018 to 30 June
2020 and 50%:50% split from the 1 July 2020 onwards that occurs in
practice, refer to the statement of cash flows by operating segment
below for further information.
Statement of cash flows by operating segment:
Egypt Egypt Burkina Côte Corporate
For the year ended 31 December Total Mining Exploration Faso d'Ivoire
2021 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
-------------------------------- --------- --------- ------------ -------- --------- ---------
Statement of cash flows
Net cash generated from/(used
in) operating activities
(1) 309,878 372,972 887 200 901 (65,082)
Net cash (used in)/generated
from investing activities (240,676) (241,250) - (1) (308) 883
Net cash used in financing
activities (157,108) (150,400) - - - (6,708)
Own shares acquired (1,391) - - - - (1,391)
Dividend paid - non-controlling
interest in SGM (75,200) (75,200) - - - -
Dividend (paid)/received
- controlling interest in
SGM - (75,200) - - - 75,200
Dividend paid - owners of
the parent (80,517) - - - - (80,517)
-------------------------------- --------- --------- ------------ -------- --------- ---------
Net (decrease)/increase in
cash and cash equivalents (87,906) (18,678) 887 199 593 (70,907)
Cash and cash equivalents
at the beginning of the year 291,281 9,892 - 5 456 280,928
Effect of foreign exchange
rate changes 4,446 15,139 48 (199) (190) (10,352)
-------------------------------- --------- --------- ------------ -------- --------- ---------
Cash and cash equivalents
at the end of the year 207,821 6,353 935 5 859 199,669
-------------------------------- --------- --------- ------------ -------- --------- ---------
(1) Please note that the cash generated by operating activities
for Burkina Faso and Côte d'Ivoire are affected by the movements in
working capital, specifically intercompany loans, with its direct
parent entity Centamin West Africa Holdings Limited which is
included within the corporate segment.
Egypt Egypt Burkina Côte
For the year ended 31 December Total Mining Exploration Faso d'Ivoire Corporate
2020 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
-------------------------------- ---------- ---------- ------------ -------- --------- ---------
Statement of cash flows
Net cash generated from/(used
in) operating activities(1) 453,305 517,341 - 343 (41) (64,338)
Net cash (used in)/generated
from investing activities (129,848) (138,722) - (3) (65) 8,942
Net cash used in financing
activities (3,298) - - - - (3,298)
Dividend paid - non-controlling
interest in SGM (174,275) (174,275) - - - -
Dividend (paid)/received
- controlling interest in
SGM - (196,725) - - - 196,725
Dividend paid - owners of
the parent (138,725) - - - - (138,725)
-------------------------------- ---------- ---------- ------------ -------- --------- ---------
Net increase/(decrease) in
cash and cash equivalents 7,159 7,619 - 340 (106) (694)
Cash and cash equivalents
at the beginning of the year 278,229 5,881 - 16 562 271,770
Effect of foreign exchange
rate changes 5,893 (3,608) - (351) - 9,852
-------------------------------- ---------- ---------- ------------ -------- --------- ---------
Cash and cash equivalents
at the end of the year 291,281 9,892 - 5 456 280,928
-------------------------------- ---------- ---------- ------------ -------- --------- ---------
(1) Please note that the cash generated by operating activities
for Burkina Faso and Côte d'Ivoire are affected by the movements in
working capital, specifically intercompany loans, with its direct
parent entity Centamin West Africa Holdings Limited which is
included within the corporate segment.
Exploration expenditure by operating segment:
The following table provides a breakdown of the total
exploration expenditure of the Group by operating segment:
For the year For the year
ended ended
31 December 31 December
2021 2020
US$'000 US$'000
------------------------------------- ------------ ------------
Côte d'Ivoire 11,499 14,588
Burkina Faso 2,380 2,803
------------------------------------- ------------ ------------
Exploration expenditure - greenfield 13,879 17,391
------------------------------------- ------------ ------------
Egypt (Sukari tenement) 15,943 11,717
------------------------------------- ------------ ------------
Exploration expenditure - brownfield 15,943 11,717
------------------------------------- ------------ ------------
Total exploration expenditure 29,822 29,108
------------------------------------- ------------ ------------
ACCOUNTING POLICY: SEGMENT REPORTING
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision-maker.
The chief operating decision-maker, who is responsible for
allocating resources and assessing performance of the operating
segments, has been identified as the Board of Directors.
2.2 Revenue
An analysis of the Group's revenue for the year, is as
follows:
For the year For the year
ended ended
31 December 31 December
2021 2020
US$'000 US$'000
Gold sales 731,945 827,622
Silver sales 1,361 1,115
------------- ------------ ------------
733,306 828,737
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 collected by 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 judgements 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.
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
2021 2020
US$'000 US$'000
Other income
Net foreign exchange gains 5,158 6,922
Other income 550 50
------------------------------------------------- ------------ ------------
5,708 6,972
------------------------------------------------- ------------ ------------
Finance income
Interest received 196 1,554
------------------------------------------------- ------------ ------------
Expenses
Cost of sales
Mine production costs (368,327) (339,012)
Movement in inventory 19,968 13,704
Depreciation and amortisation (139,017) (124,133)
------------------------------------------------- ------------ ------------
(487,376) (449,441)
------------------------------------------------- ------------ ------------
Other operating costs
Corporate compliance (2,698) (3,049)
Fees payable to the external auditors (856) (924)
Corporate consultants (1,914) (4,033)
Salaries and wages (10,094) (7,262)
Other administration expenses (3,070) (3,147)
Employee equity settled share-based payments (3,747) 836
------------------------------------------------- ------------ ------------
Corporate costs (sub-total) (22,379) (17,579)
Other provisions (731) (10,309)
Net movement on provision for stock obsolescence (3,135) (958)
Other non-corporate operating expenses (511) (2,017)
Royalty - attributable to the ARE government (21,672) (24,792)
Bank charges (186) (179)
Finance charges (486) (558)
Other operating costs (total) (49,100) (56,392)
ACCOUNTING POLICY: FINANCE INCOME, 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
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
2021 have been audited and signed off at the date of this
report.
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 judgements 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
2021 2020
US$'000 US$'000
------------------------------------------------ ------------ ------------
Statement of comprehensive income
------------------------------------------------ ------------ ------------
Profit for the year after tax attributable to
the non-controlling interest in SGM (1) 52,140 158,970
------------------------------------------------ ------------ ------------
Statement of financial position
------------------------------------------------ ------------ ------------
Total equity attributable to non-controlling
interest in SGM (1) (opening) (17,196) (1,891)
------------------------------------------------ ------------ ------------
Profit for the year after tax attributable to
the non-controlling interest in SGM(1) 52,140 158,970
------------------------------------------------ ------------ ------------
Dividend paid - non-controlling interest in SGM (75,200) (174,275)
------------------------------------------------ ------------ ------------
Total equity attributable to non-controlling
interest in SGM (1) (closing) (40,256) (17,196)
------------------------------------------------ ------------ ------------
(1) Profit share commenced during the third quarter of 2016. The
first two years was a 60:40 split of net production surplus to PGM
and EMRA respectively. From 1 July 2018 this changed to a 55:45
split for the next two-year period until 30 June 2020, after which
all net production surpluses have been split 50:50.
Any variation between payments made during the year (which are
based on the Company's estimates) and the SGM audited financial
statements, may result in a balance due and payable to EMRA or
advances to be offset against future distributions. This will be
reflected as an amount attributable to the non-controlling interest
in SGM on the statement of financial position and statement of
changes in equity.
(b) Statement of cash flows impact
For the year For the year
ended ended
31 December 31 December
2021 2020
US$'000 US$'000
------------------------------------------------ ------------ ------------
Statement of cash flows
------------------------------------------------ ------------ ------------
Dividend paid - non-controlling interest in SGM
(1) (75,200) (174,275)
------------------------------------------------ ------------ ------------
(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
consider 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 Australian 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 credit/(expense)
For the year For the year
ended ended
31 December 31 December
2021 2020
US$'000 US$'000
----------------------------------------------- ------------ ------------
Current tax
----------------------------------------------- ------------ ------------
Current tax credit/(expense) in respect of the
current year 20 (50)
----------------------------------------------- ------------ ------------
Deferred tax - -
----------------------------------------------- ------------ ------------
Total tax credit/(expense) 20 (50)
----------------------------------------------- ------------ ------------
The tax credit /(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
2021 2020
US$'000 US$'000
------------------------------------------------------- ------------ ------------
Profit for the year before tax 153,647 314,999
------------------------------------------------------- ------------ ------------
Tax expense calculated at 0%(1) (2020: 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 20 (50)
------------------------------------------------------- ------------ ------------
Tax 20 (50)
------------------------------------------------------- ------------ ------------
(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 (2020: 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:
For the year For the year
ended ended
31 December 31 December
2021 2020
US$'000 US$'000
------------------------ ------------ ------------
Current tax liabilities 253 267
------------------------ ------------ ------------
ACCOUNTING POLICY: TAXATION
Income tax expense comprises current and deferred tax. It is
recognised in profit or loss except to the extent that it relates
to a business combination, or items recognised directly in equity
or in OCI.
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
For the year For the year
ended ended
31 December 31 December
2021 2020
US$'000 US$'000
---------------------------------------------- ------------ ------------
Balance at the beginning of the year - 6,454
Disposals at market value - (7,414)
Unrealised gain on fair value of investment -
profit or loss - 960
---------------------------------------------- ------------ ------------
Balance at the end of the year - -
---------------------------------------------- ------------ ------------
The financial assets at fair value through profit or loss in
2020 related to an equity interest in a listed public company which
the Group disposed of in full in that year ended .
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.
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
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, it 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.
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
For the year For the year
ended ended
31 December 31 December
2021 2020
US$'000 US$'000
------------------------------ ------------ ------------
Non-current
Other receivables - deposits 101 103
------------------------------ ------------ ------------
Current
Gold and silver sales debtors 29,147 12,492
Other receivables 3,432 5,932
------------------------------ ------------ ------------
32,579 18,424
------------------------------ ------------ ------------
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 16 days (2020: 8 days) and
expected credit losses are considered 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 various jurisdictions that the Group operates in.
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
For the year For the year
ended ended
31 December 31 December
2021 2020
US$'000 US$'000
------------ ------------ ------------
Current
Prepayments 7,964 8,908
7,964 8,908
------------ ------------ ------------
Refer to note 5.1 regarding the outcome of the Diesel Fuel Oil
("DFO") dispute.
2.9 Property, plant, and equipment
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
2021 Cost
Balance at 1 January
2021 8,792 5,690 617,465 359,009 662,496 44,554 1,698,006
Additions 11 - 54 231 - 224,633 224,929
Increase in
rehabilitation
asset - - - - 21,875 - 21,875
Transfers from
capital work in
progress 1,127 8,489 7,848 54,042 112,678 (184,184) -
Transfers from
exploration and
evaluation asset - - - - 19,175 - 19,175
Disposals (687) (5) (290) (53,673) - - (54,655)
Disposals: IFRS16
right of use assets - (351) - (142) - - (493)
------------------------ ---------- --------- ---------- ---------- ------------ ---------- ---------
Balance at 31 December
2021 9,243 13,823 625,077 359,467 816,224 85,003 1,908,837
------------------------ ---------- --------- ---------- ---------- ------------ ---------- ---------
Accumulated depreciation
and amortisation
Balance at 1 January
2021 (7,542) (1,641) (242,853) (298,572) (317,514) - (868,122)
Depreciation and
amortisation (688) (1,597) (33,077) (43,518) (60,574) - (139,454)
Disposals 687 212 290 53,769 - - 54,958
------------------------ ---------- --------- ---------- ---------- ------------ ---------- ---------
Balance at 31 December
2021 (7,543) (3,026) (275,640) (288,323) (378,088) - (952,620)
------------------------ ---------- --------- ---------- ---------- ------------ ---------- ---------
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)
------------------------ ---------- --------- ---------- ---------- ------------ ---------- ---------
Net book value
------------------------ ---------- --------- ---------- ---------- ------------ ---------- ---------
As at 31 December
2021 1,700 10,797 349,437 71,144 438,136 85,003 956,217
------------------------ ---------- --------- ---------- ---------- ------------ ---------- ---------
As at 31 December
2020 1,250 4,049 374,612 60,437 344,982 44,554 829,884
------------------------ ---------- --------- ---------- ---------- ------------ ---------- ---------
Included within the depreciation charge is US$0.7 million within
the buildings asset class and US$0.1 million related to plant and
equipment in relation to depreciation of ROU assets (2020: US$0.5
million buildings and US$0.1 million plant and equipment).
An impairment trigger assessment was performed in 2021 on all
Cash Generating Units ("CGUs") including the Sukari Mine, refer to
note 1.3.4 above, however no impairment triggers on property, plant
and equipment were identified in the assessment.
Deferred stripping assets of US$59 million were recognised in
the year ended 31 December 2021, which have been included within
mine development properties, US$10m of amortisation has been
recognised in the year related to these assets.
Assets that have been cost recovered in Egypt under Concession
Agreement ("CA") terms are included on the statement of financial
position under property, plant, and equipment due to the Company
having the 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 and 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 year in which they are
incurred. The cost of PPE includes the estimated restoration costs
associated with the asset.
Depreciation is charged 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 year, with
the effect of any changes recognised on a prospective basis. The
following estimated useful lives are used in the calculation of
straight-line basis depreciation:
Plant and equipment: 2 - 20 years
Office equipment: 3-7 years
Mining equipment: 2-13 years
Buildings 4-20 years
Where the assets relate to an active mine site, the shorter of
the above periods or remaining life of mine are used.
Freehold land is not depreciated, and all other depreciable
assets are depreciated over their useful life or the life of mine
whichever is shorter.
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 reserve has commenced, the accumulated
costs are transferred from exploration and evaluation assets to
mine development properties.
Amortisation is first charged to new mine development ventures
from the date of first commercial production. Amortisation of mine
properties is on a unit of production basis resulting in an
amortisation charge proportional to the depletion of the proven and
probable ore reserves. The unit of production is on an ore tonne
depleted basis for open pit mining property assets and an ounce
depleted basis for underground mining property assets.
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 reserves will be extracted
economically.
IFRIC 20 'Stripping costs in the production phase of a surface
mine'
The Group adopted its accounting policy on stripping costs in
the production phase of a surface mine effective 1 January 2012.
IFRIC20 provides clarity on how to account for and measure the
removal of mine waste materials which provide access to mineral ore
deposits. Within Sukari's Open Pit operations, removal of mine
overburden or waste material is routinely necessary to gain access
to mineral ore deposits and this waste removal activity is known as
'stripping'. There can be two benefits accruing to the entity from
the stripping activity:
-- usable ore that can be used to produce inventory; and
-- improved access to further quantities of material that will be mined in future periods.
The costs of stripping activity to be accounted for in
accordance with the principles of IAS2 'Inventories' to the extent
that the benefit from the stripping activity is realised in the
form of inventory produced. The costs of stripping activity which
provides a benefit in the form of improved access to ore is
recognised as a non-current 'stripping activity asset' where the
following criteria are met:
1. it is probable that the future economic benefit (improved
access to the ore body) associated with the stripping activity will
flow to the entity;
2. the entity can identify the component of the ore body for
which access has been improved; and
3. the costs relating to the stripping activity associated with
that component can be measured reliably.
When the costs of the stripping activity asset and the inventory
produced are not separately identifiable, production stripping
costs are allocated between the inventory produced and the
stripping asset by using an allocation basis that is based on a
relevant production measure. A stripping activity asset is
accounted for as an addition to, or as an enhancement of, an
existing asset and classified as tangible or intangible according
to the nature of the existing asset of which it forms part.
A deferred stripping asset is initially measured at cost and
subsequently carried at cost or its revalued amount less
depreciation or amortisation and impairment losses. A stripping
asset is depreciated or amortised on a systematic basis, over the
expected useful life of the identified component of the ore body
that becomes more accessible as a result of the stripping activity.
The stripping activity asset is depreciated using a unit of
production method based on the total ounces to be produced for the
component over the life of the component of the ore body.
Capitalised deferred stripping costs are included in 'Mine
Development Properties', within Property, plant, and equipment.
These form part of the total investment in the relevant
cash-generating unit, which is reviewed for impairment if events or
a change in circumstances indicate that the carrying value may not
be recoverable. Amortisation of deferred stripping costs is
included in cost of sales.
The stripping costs associated with the current period
operations are expensed during that period and any stripping
activity cost associated with producing future benefit is deferred
on the balance sheet and amortized over the period that the benefit
is received i.e., is classified as capital expenditure, creating a
Deferred Stripping asset.
The SGM components are the separate stages of the open pit mine.
For each component, the stripping ratio is determined, and costs
are capitalised if the stripping ratio in the year for that
component is greater than the overall LOM stripping ratio for that
component.
The change in mine plan has necessitated an increase in
stripping activity during the year (more than has been experienced
in the past) and includes activity from both internal and external
parties. As a result, there has been a significant increase in the
stripping activity. Based on the calculations performed the amount
capitalized to the balance sheet for 2021 is US$59m.
Impairment of assets (other than exploration and evaluation and
financial assets)
At each reporting date, the Group reviews the carrying amounts
of its tangible and intangible assets to determine whether there is
any indication that those assets have suffered an impairment loss.
If any such indication exists, the recoverable amount of the asset
is estimated to determine the extent of the impairment loss (if
any). For the purposes of assessing impairment, assets are grouped
at the lowest levels for which they potentially generate largely
independent cash inflows (cash generating units).
Recoverable amount is the higher of fair value loss costs to
sell and value in use. In assessing value in use, the estimated
future cash flows are discounted to their present value using a
pre-tax discount rate that reflects current market assessment of
the time value of money and the risks specific to the asset for
which the estimates of future flows have not been adjusted.
If the recoverable amount of a cash generating unit ("CGU") is
estimated to be less than its carrying amount, the carrying amount
of the CGU is reduced to its recoverable amount. Where an
impairment loss subsequently reverses, the carrying amount of the
cash generating unit is increased to the revised estimate of its
recoverable amount, but only to the extent that the increased
carrying amount does not exceed the carrying amount that would have
been determined had no impairment loss been recognised for the cash
generating unit in prior years.
A reversal of an impairment loss is recognised immediately in
profit or loss, unless the relevant asset is carried at a revalued
amount, in which case the reversal of an impairment loss is treated
as a revaluation increase.
2.10 Exploration and evaluation asset
For the year For the year
ended ended
31 December 31 December
2021 2020
US$'000 US$'000
------------------------------------------------ ------------ ------------
Balance at the beginning of the year 63,701 68,138
Expenditure for the year 15,943 11,717
Transfer to property, plant, and equipment (19,175) (16,154)
Impairment charge on exploration and evaluation
asset (35,208) -
------------------------------------------------ ------------ ------------
Balance at the end of the year 25,261 63,701
------------------------------------------------ ------------ ------------
The exploration and evaluation asset relates to the drilling,
geological exploration and sampling of potential ore reserves and
can all be attributed to Egypt (US$25.3 million).
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 2021 on the
exploration and evaluation assets, and the asset in Burkina Faso of
US$35.2 million relating to the acquisition of Ampella Mining
Limited was impaired in full in the current year, refer to note
1.3.2 and 1.3.3.
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
-- vat least one of the following conditions is also met:
-- 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
-- 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 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 the 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. Priority
is placed on the higher-grade ore, accordingly, stockpiles which
will not be consumed within the next twelve months based on mining
and processing forecasts have been classified to non-current
assets. The volume of ore extracted from the open pit in the year
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 long-term gold
price would have to reduce to approximately US$1,460 per ounce for
the net realisable value to fall below carrying value.
For the year For the year
ended ended
31 December 31 December
2021 2020
US$'000 US$'000
------------------ ------------ ------------
Non-current
------------------ ------------ ------------
Mining stockpiles 64,756 64,870
------------------ ------------ ------------
Current
--------------------------------------------- ------- --------
Mining stockpiles, ore in circuit, doré
supplies 60,194 40,112
--------------------------------------------- ------- --------
Stores inventory 74,452 81,383
--------------------------------------------- ------- --------
Provision for obsolete stores inventory (5,925) (2,790)
--------------------------------------------- ------- --------
128,721 118,705
--------------------------------------------- ------- --------
The calculation of weighted average costs of mining stockpiles
is applied at a detailed level. The open pit ore on the Mine ROM is
split into seven different grade categories and the underground ore
is treated as a single high-grade category. Each grade category is
costed individually on a weighted average basis applying costs
specifically related to that extracting and moving that grade of
ore to and from the Mine ROM pad. The grade categories range from
high grade underground and open pit ore to low grade open pit ore.
Costs per contained ounce differ between the various cost
categories.
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
classified as follows on the statement of financial position:
-- 1.7Mt at 0.47g/t to current assets as these ore tonnes are
scheduled to be processed within the next twelve months; and
-- 11.8Mt at 0.44g/t to non-current assets as these ore tonnes
are not scheduled to be processed within the next twelve
months.
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 (NRV). 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. Material piled on the
ROM pad is accounted for in their separate grade categories. While
held in physically separate stockpiles, the Group blends the ore
from selected stockpiles 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.
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. NRV 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
For the year For the year
ended ended
31 December 31 December
2021 2020
US$'000 US$'000
--------------------------------- ------------ ------------
Non-current
Other creditors (1) 10,386 1,437
--------------------------------- ------------ ------------
Current
Trade payables 36,050 31,483
Other creditors and accruals (1) 39,709 33,005
--------------------------------- ------------ ------------
75,759 64,488
--------------------------------- ------------ ------------
(1) The increase in the other creditors is mainly due to the
reclassification from provisions to accruals of the US$9.8m
relating to the non-current portion of the remaining EMRA
settlement amount balance totalling US$12m as at 31 December 2021
as the timing and amount of the settlement amount was established
in the year following the signing of the settlement agreement.
US$2m of the balance remains in the current category as it will be
settled within the next 12 months from the reporting date. Also
included within non-current other creditors are lease liabilities
of US$634k.
Trade payables principally comprise the amounts outstanding for
trade purchases and ongoing costs. The average credit period taken
for trade purchases is 29 days (2020: 26 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
the related 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,
bonuses, pensions, 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 the 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
For the year For the year
ended ended
31 December 31 December
2021 2020
US$'000 US$'000
----------------------------------------------------- ------------ ------------
Current
Employee benefits(1) 2,798 1,440
Provision for cost recovery items(2) - 5,089
Other current provisions(3) 1,819 951
----------------------------------------------------- ------------ ------------
4,617 7,480
----------------------------------------------------- ------------ ------------
Non-current
Restoration and rehabilitation(4) 42,647 20,496
Provision for cost recovery items(2) - 12,229
Other non-current provisions - 27
----------------------------------------------------- ------------ ------------
42,647 32,752
----------------------------------------------------- ------------ ------------
Movement in restoration and rehabilitation provision
Balance at beginning of the year 20,496 14,572
Additional provision recognised 21,875 5,574
Interest expense - unwinding of discount 276 350
----------------------------------------------------- ------------ ------------
Balance at end of the year 42,647 20,496
----------------------------------------------------- ------------ ------------
(1) Employee benefits relate to annual, sick, and long service leave entitlements and bonuses.
(2) Provision was 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$17.6 million spread over a
5.5-year period. The recognised amount was discounted to present
value. The current year amount has been reclassified to other
liabilities (accruals) as the timing and amounts payable are now
certain due to a settlement agreement being signed with EMRA, refer
to note 2.12.
(3) Provision for customs, rebates and withholding taxes.
(4) The provision for restoration and rehabilitation has been
discounted by 1.38% (2020: 1.35%) using a US$ applicable rate and
inflation applied at 2.5% (2020: 1.23%). The annual review
undertaken as at 31 December 2021 has resulted in a US$21.9 million
increase in the provision (2020: US$5.6 million). The key
assumption within the estimate with the various ranges and further
detail disclosed in note 1.3.9.
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 based on benchmark
assessments of restoration works required following mine closure
and after considering the projected area disturbed to date.
Discount rates to present value the future obligations are
determined by reference to 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 the income
statement rather than capitalised to the related asset.
2.14 Issued capital
31 December 2021 31 December 2020
------------------------------- ---------------------- ----------------------
Number US$'000 Number US$'000
------------------------------- ------------- ------- ------------- -------
Fully paid ordinary shares
------------------------------- ------------- ------- ------------- -------
Balance at beginning of
the year 1,155,955,384 668,807 1,155,955,384 672,105
------------------------------- ------------- ------- ------------- -------
Own shares acquired during
the year(1) - (1,391) - (3,298)
------------------------------- ------------- ------- ------------- -------
Employee share option scheme
- proceeds from shares issued 495,311 - - -
------------------------------- ------------- ------- ------------- -------
Transfer from share option
reserve - 2,115 - -
------------------------------- ------------- ------- ------------- -------
Balance at end of the year 1,156,450,695 669,531 1,155,955,384 668,807
------------------------------- ------------- ------- ------------- -------
(1) The US$1.4m (2020: US$3.3m) represents the cost of shares in
Centamin plc purchased in the market and held by the Centamin plc
Employee Benefit Trust to satisfy share awards under the Group's
share options plans.
The authorised share capital is an unlimited number of no-par
value shares.
Pursuant to the plan rules, at 31 December 2021, the trustee of
the deferred bonus share plan held 2,205,280 ordinary shares (2020:
2,373,049 ordinary shares).
Fully paid ordinary shares carry one vote per share and carry
the right to dividends. See note 6.3 for more details of the share
awards.
ACCOUNTING POLICY: ISSUED CAPITAL
Ordinary shares are classified as equity. Incremental costs
directly attributable to the issue of new shares or options are
shown in equity as a deduction, net of tax, from the proceeds.
Where the Company or other members of the consolidated Group
purchase the Company's equity share capital, the consideration paid
is deducted from the total shareholders' equity of the Group and/or
of the Company as treasury shares until they are cancelled. Where
such shares are subsequently sold or reissued, any consideration
received is included in shareholders' equity of the Group and/or
the Company.
2.15 Share option reserve
For the year For the year
ended ended
31 December 31 December
2021 2020
US$'000 US$'000
--------------------------------- ------------ ------------
Share option reserve
--------------------------------- ------------ ------------
Balance at beginning of the year 3,343 4,179
--------------------------------- ------------ ------------
Share-based payments expense 4,044 3,190
--------------------------------- ------------ ------------
Transfer to accumulated profits (297) (4,026)
--------------------------------- ------------ ------------
Transfer to issued capital (2,115) -
--------------------------------- ------------ ------------
Balance at the end of the year 4,975 3,343
--------------------------------- ------------ ------------
The share option reserve arises on the grant of share options to
employees under the employee share option plan. Amounts are
transferred out of the reserve and into issued capital when the
options and warrants are exercised/vested. Amounts are transferred
out of the reserve into accumulated profits when the options and
warrants are forfeited.
2.16 Cash flow information
(a) Reconciliation of cash and cash equivalents
For the purpose of the statement of cash flows, cash and cash
equivalents includes cash on hand and at bank and deposits.
For the year For the year
ended ended
31 December 31 December
2021 2020
US$'000 US$'000
-------------------------- ------------- ------------
Cash and cash equivalents 207,821 291,281
-------------------------- ------------- ------------
Most funds have been invested in international rolling
short-term interest money market deposits.
ACCOUNTING POLICY: CASH AND CASH EQUIVALENTS
Cash comprises cash on hand and demand deposits. Cash
equivalents are short term, highly liquid investments that are
readily convertible to known amounts of cash and which are subject
to an insignificant risk of changes in value.
(b) Reconciliation of profit before tax for the year to cash
flows from operating activities
For the year
For the year ended
ended 31 December
31 December 2020
2021 US$'000
US$'000 Restated
--------------------------------------------------- ------------ ------------
Profit for the year before tax 153,647 314,999
--------------------------------------------------- ------------ ------------
Adjusted for:
--------------------------------------------------- ------------ ------------
Profit on financial assets at fair value through
profit or loss - (960)
--------------------------------------------------- ------------ ------------
Impairment of exploration and evaluation assets 35,208 -
--------------------------------------------------- ------------ ------------
Depreciation/amortisation of property, plant,
and equipment 139,454 124,512
--------------------------------------------------- ------------ ------------
Inventory written off 21 29
--------------------------------------------------- ------------ ------------
Prepayments written off - 986
--------------------------------------------------- ------------ ------------
Inventory obsolescence provision 3,135 958
--------------------------------------------------- ------------ ------------
Foreign exchange gains, net (5,158) (6,921)
--------------------------------------------------- ------------ ------------
Share-based payments expense/(credit) 3,747 (836)
--------------------------------------------------- ------------ ------------
Finance income (196) (1,554)
--------------------------------------------------- ------------ ------------
Loss on disposal of property, plant, and equipment 53 623
--------------------------------------------------- ------------ ------------
Changes in working capital during the year:
--------------------------------------------------- ------------ ------------
(Increase)/decrease in trade and other receivables (14,155) 28,637
--------------------------------------------------- ------------ ------------
Increase in inventories (13,036) (22,919)
--------------------------------------------------- ------------ ------------
Decrease/(increase) in prepayments 946 (2,785)
--------------------------------------------------- ------------ ------------
Increase in trade and other payables 8,823 7,076
--------------------------------------------------- ------------ ------------
(Decrease)/increase in provisions (2,616) 11,470
--------------------------------------------------- ------------ ------------
Cash flows generated from operating activities 309,873 453,315
--------------------------------------------------- ------------ ------------
(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 year.
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 Côte d'Ivoire and Egypt.
Categories of financial assets and liabilities
For the year For the year
ended ended
31 December 31 December
2021 2020
US$'000 US$'000
---------------------------- ------------ ------------
Financial assets
---------------------------- ------------ ------------
Cash and cash equivalents 207,821 291,281
---------------------------- ------------ ------------
Trade and other receivables 32,579 17,593
---------------------------- ------------ ------------
240,400 308,874
---------------------------- ------------ ------------
Financial liabilities
---------------------------- ------------ ------------
Non-current
---------------------------- ------------ ------------
Other payables 10,386 1,437
---------------------------- ------------ ------------
Current
---------------------------- ------------ ------------
Trade and other payables 75,759 64,488
---------------------------- ------------ ------------
Tax liabilities 253 267
---------------------------- ------------ ------------
(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
2021 2020 2021 2020 2021 2020
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
-------------------------- ----------- ----------- ----------- ----------- ----------- -----------
Financial assets
-------------------------- ----------- ----------- ----------- ----------- ----------- -----------
Cash and cash equivalents 1,392 4,997 16,063 17,566 2,147 2,057
-------------------------- ----------- ----------- ----------- ----------- ----------- -----------
1,392 4,997 16,063 17,566 2,147 2,057
-------------------------- ----------- ----------- ----------- ----------- ----------- -----------
Financial liabilities
-------------------------- ----------- ----------- ----------- ----------- ----------- -----------
Trade and other payables 1,835 2,682 15,530 19,883 23,727 13,829
-------------------------- ----------- ----------- ----------- ----------- ----------- -----------
1,835 2,682 15,530 19,883 23,727 13,829
-------------------------- ----------- ----------- ----------- ----------- ----------- -----------
Net exposure (443) 2,315 533 (2,317) (21,580) (11,772)
-------------------------- ----------- ----------- ----------- ----------- ----------- -----------
The following table summarises the sensitivity of financial
instruments held at the reporting date to movements in the exchange
rate of the Great British pound, Egyptian pound, and Australian
dollar to the US dollar, with all other variables held constant.
The sensitivities are based on reasonably possible changes over a
financial year, using the observed range of actual historical
rates.
Impact on profit Impact on equity
------------------------ ------------------------ ------------------------
31 December 31 December 31 December 31 December
2021 2020 2021 2020
US$'000 US$'000 US$'000 US$'000
------------------------ ----------- ----------- ----------- -----------
US$/GBP increase by 10% 634 555 - -
------------------------ ----------- ----------- ----------- -----------
US$/GBP decrease by 10% (774) (680) - -
------------------------ ----------- ----------- ----------- -----------
US$/AUD increase by 10% 866 588 - -
------------------------ ----------- ----------- ----------- -----------
US$/AUD decrease by 10% (1,058) (718) - -
------------------------ ----------- ----------- ----------- -----------
US$/EGP increase by 10% (1,476) (655) - -
------------------------ ----------- ----------- ----------- -----------
US$/EGP decrease by 10% 1,804 799 - -
------------------------ ----------- ----------- ----------- -----------
The Group's sensitivity to foreign currency has increased at the
end of the current period mainly due to a decrease in GBP and AUD
foreign currency cash holdings significantly offset by a decrease
in the payable's balances in the same currencies. The EGP trade
payables also significantly increased as compared to the AUD and
GBP trade payables. There is also a significant decrease in US
dollar cash holdings and 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$37,552)
and West African Franc (US$863,807), and net payables in Euro
(US$2,384,886) and in West African Franc (US$1,105,789). A movement
of 10% up or down in these currencies would have a negligible
effect on the assets/liabilities.
The Group has not entered into forward foreign exchange
contracts. Natural hedges are utilised wherever possible to offset
foreign currency liabilities. The Company maintains a policy of not
hedging its currency positions and maintains currency holdings in
line with underlying requirements and commitments.
(d) Commodity price risk
The Group's future revenue forecasts are exposed to commodity
price fluctuations, in particular gold and fuel prices. The Group
has not entered into forward gold hedging contracts.
Gold price
The table below summarises the impact of increases/decreases of
the average realised gold price on the Group's profit after tax for
the year. The analysis assumes that the average realised gold price
per ounce had increased/decreased by 10% with other variables held
constant.
Decrease by 31 December Increase by
10% 2021 10%
US$/oz US$/oz US$/oz
---------------------------- ----------- ----------- -----------
Average realised gold price 1,618 1,797 1,977
---------------------------- ----------- ----------- -----------
Decrease by 31 December Increase by
10% 2021 10%
US$'000 US$'000 US$'000
----------------- ----------- ----------- -----------
Profit after tax 81,349 153,667 223,346
----------------- ----------- ----------- -----------
Fuel price
Any variation in the fuel price has an impact on the mine
production costs. The analysis assumes that the average fuel price
had increased/decreased by a few US cents per litre with all other
variables held constant.
Decrease by 31 December Increase by
10% 2021 10%
US$/litre US$/litre US$/litre
----------- ----------- ----------- -----------
Fuel price 0.47 0.52 0.57
----------- ----------- ----------- -----------
Decrease by 31 December Increase by
10% 2021 10%
US$'000 US$'000 US$'000
---------------------- ----------- ----------- -----------
Mine production costs (9,714) (368,327) 9,714
---------------------- ----------- ----------- -----------
(e) Interest rate risk and liquidity risk
The Group's main interest rate risk arises from cash and
short-term deposits and is not considered to be a material risk due
to the short-term nature of these financial instruments. Cash
deposits are placed on a term period of no more than 30 days at a
time.
The financial instruments exposed to interest rate risk and the
Group's exposure to interest rate risk as at the balance sheet date
were as per the table below.
The Group's liquidity position is managed to ensure that
sufficient funds are available to meet its financial commitments in
a timely and cost-effective manner.
Ultimate responsibility for liquidity risk management rests with
the Board, which has established an appropriate management
framework for the management of the Group's funding requirements.
The Group manages liquidity risk by maintaining adequate cash
reserves and management monitors rolling forecasts of the Group's
liquidity based on expected cash flow. The tables in section (a) to
(c) of this note above reflect a balanced view of cash inflows and
outflows and show the implied risk based on those values. Trade
payables and other financial liabilities originate from the
financing of assets used in the Group's ongoing operations. These
assets are considered in the Group's overall liquidity risk.
Management continually reviews the Group's liquidity position
including cash flow forecasts to determine the forecast liquidity
position and maintain appropriate liquidity levels.
Weighted
average
effective One to
interest Less than twelve One to Two to
rate one month months two years five years Total
% US$'000 US$'000 US$'000 US$'000 US$'000
---------------------- ---------- ---------- -------- ---------- ----------- --------
31 December 2021
---------------------- ---------- ---------- -------- ---------- ----------- --------
Financial assets
---------------------- ---------- ---------- -------- ---------- ----------- --------
Variable interest
rate instruments 0.13% 60,278 125,058 - - 185,336
---------------------- ---------- ---------- -------- ---------- ----------- --------
Non-interest bearing 0% 55,064 - - - 55,064
---------------------- ---------- ---------- -------- ---------- ----------- --------
115,342 125,058 - - 240,400
---------------------- ---------- ---------- -------- ---------- ----------- --------
Financial liabilities
---------------------- ---------- ---------- -------- ---------- ----------- --------
Non-interest bearing 0% 73,535 3,111 2,461 7,291 86,398
---------------------- ---------- ---------- -------- ---------- ----------- --------
73,535 3,111 2,461 7,291 86,398
---------------------- ---------- ---------- -------- ---------- ----------- --------
31 December 2020
---------------------- ---------- ---------- -------- ---------- ----------- --------
Financial assets
---------------------- ---------- ---------- -------- ---------- ----------- --------
Variable interest
rate instruments 0.42% 111,147 150,009 - - 261,156
---------------------- ---------- ---------- -------- ---------- ----------- --------
Non-interest bearing - 47,718 - - - 47,718
---------------------- ---------- ---------- -------- ---------- ----------- --------
158,865 150,009 - - 308,874
---------------------- ---------- ---------- -------- ---------- ----------- --------
Financial liabilities
---------------------- ---------- ---------- -------- ---------- ----------- --------
Non-interest bearing - 66,694 - - - 66,694
---------------------- ---------- ---------- -------- ---------- ----------- --------
66,694 - - - 66,694
---------------------- ---------- ---------- -------- ---------- ----------- --------
(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) Mineral reserve and resource statement impact on ore
reserves
The following disclosure provides information to help users of
the financial statements understand the judgements made about the
future and other sources of estimation uncertainty. The key sources
of estimation uncertainty described in note 1.3.5 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 assumes that the reserve
estimate has increased/decreased by 25% with all other variables
held constant.
Decrease by 31 December Increase by
25% 2021 25%
US$'000 US$'000 US$'000
-------------------------------------------- ----------- ----------- -----------
Amortisation of rehabilitation asset
(within mine development properties) (1,915) (1,436) (1,077)
-------------------------------------------- ----------- ----------- -----------
Amortisation of mine development properties
(remainder) (78,850) (59,138) (44,353)
-------------------------------------------- ----------- ----------- -----------
Mine development properties - net
book value 417,945 438,136 453,280
-------------------------------------------- ----------- ----------- -----------
Property, plant, and equipment - net
book value 937,951 958,142 973,286
-------------------------------------------- ----------- ----------- -----------
The capitalised deferred stripping asset has been excluded from
the above sensitivity analysis as it is not yet being
amortised.
3.2 Capital management
3.2.1 Risk management
The Group's objectives when managing capital are to:
-- safeguard their ability to continue as a going concern, so
that they can continue to provide returns for shareholders and
benefits for other stakeholders; and
-- maintain an optimal capital structure to reduce the cost of capital.
To maintain or adjust the capital structure, the Group may
adjust the amount of dividends paid to owners of the parent, return
capital to owners of the parent or issue new shares.
3.2.2 Dividends to owners of the parent
For the year For the year
ended ended
31 December 31 December
2021 2020
US$'000 US$'000
--------------------------------------------------- ------------ ------------
Ordinary shares
--------------------------------------------------- ------------ ------------
Final dividend for the year ended 31 December
2020 of 3.0 US cents per share (2020: Q1 interim
dividend for the year ended 31 December 2020
of 6.0 US cents per share) 34,461 69,240
--------------------------------------------------- ------------ ------------
Q2 Interim dividend for the year ended 31 December
2021 of 4.0 US cents per share (2020: Q2 Interim
dividend for the year ended 31 December 2020
of 6.0 US cents per share) 46,056 69,485
--------------------------------------------------- ------------ ------------
Total dividends provided for or paid 80,517 138,725
--------------------------------------------------- ------------ ------------
Dividends to owners of the parent:
--------------------------------------------------- ------------ ------------
Paid in cash 80,517 138,725
--------------------------------------------------- ------------ ------------
4. Group structure
4.1 Subsidiaries and controlled entities
The parent entity of the Group is Centamin plc, incorporated in
Jersey, and details of its subsidiaries and controlled entities are
as follows:
Ownership interest
------------------------------- -------------------- ---------------- ------------------------
31 December 31 December
Nature of 2021 2020
Country of
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) 100 100
------------------------------- -------------------- ---------------- ----------- -----------
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
Limited(1) Exploration 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
------------------------------- -------------------- ---------------- ----------- -----------
Ampella Mining Gold SARL Exploration Company Burkina Faso(6) 100 100
------------------------------- -------------------- ---------------- ----------- -----------
Ampella Mining SARL Exploration Company Burkina Faso(6) 100 100
------------------------------- -------------------- ---------------- ----------- -----------
Ampella Resources Burkina
Faso Exploration Company Burkina Faso(6) 100 100
------------------------------- -------------------- ---------------- ----------- -----------
Konkera SA Mining Company Burkina Faso(6) 100 90
------------------------------- -------------------- ---------------- ----------- -----------
Ampella Mining Côte Côte
d'Ivoire Exploration Company d'Ivoire(7) 100 100
------------------------------- -------------------- ---------------- ----------- -----------
Côte
Centamin Côte d'Ivoire Exploration Company d'Ivoire(7) 100 100
------------------------------- -------------------- ---------------- ----------- -----------
Ampella Mining Exploration Côte
CDI Exploration Company d'Ivoire(7) 100 100
------------------------------- -------------------- ---------------- ----------- -----------
Centamin Exploration Côte
CI Exploration Company d'Ivoire(7) 100 100
------------------------------- -------------------- ---------------- ----------- -----------
Centamin Egypt Investments
1 (UK) Limited Holding Company UK(11) 100 -
------------------------------- -------------------- ---------------- ----------- -----------
Centamin Egypt Investments
2 (UK) Limited Holding Company UK(11) 100 -
------------------------------- -------------------- ---------------- ----------- -----------
Centamin Egypt Investments
3 (UK) Limited Holding Company UK(11) 100 -
------------------------------- -------------------- ---------------- ----------- -----------
Centamin Mining Services
LLC Services Company Egypt(12) 100 -
------------------------------- -------------------- ---------------- ----------- -----------
Centamin Central Mining
SAE Exploration Egypt(12) 100 -
------------------------------- -------------------- ---------------- ----------- -----------
Centamin North Mining
SAE Exploration Egypt(12) 100 -
------------------------------- -------------------- ---------------- ----------- -----------
Centamin South Mining
SAE Exploration Egypt(12) 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 (except the new exploration
entities in (11) and (12): 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).
(11) Address of all the holding companies of the new Egypt
exploration companies; Hill House, 1 Little New Street, London,
EC4A 3TR.
(12) Address of the new Egypt exploration companies: c/o
Arabella Plaza, Building 2 First Floor, Office no. 1 to 3, Gamal
Abdelansser Street, New Cairo
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 160km2 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
2021 2020
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 of 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
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 (which has since
been taken over by Total Marketing Egypt) 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 June 2020 the Administrative Court issued a judgement
rejecting PGM's claim on procedural grounds, and at the same time
it rejected EGPC's counterclaim (also on procedural grounds). The
Court did not consider the merits of either PGM's case or the
counterclaim. At the time the Group's legal advisers remained of
the view that the Group had a strong case and advised that the
judgement against PGM was based on an error of law. The Group
therefore submitted an appeal, as did EGPC. In December 2021 a
further hearing was held, at which both appeals were rejected on
procedural grounds, again without consideration of the merits of
the case. Although the Group's Egyptian legal advisers are of the
opinion that the Court made an error of law, this decision is final
and PGM does not have any further right of appeal available to
it.
However, although the Group believed that its grounds for
challenging EGPC's decision were strong and that there was a good
prospect of success, as a practical matter, and to ensure the
continuation of supply whilst the matter was resolved, the Group
continued to advance funds to its fuel supplier based on the
international price for fuel from 2012 until the full withdrawal of
the domestic subsidy for Diesel Fuel Oil in 2020. No provision has
been made in respect of the historical subsidies prior to January
2012.
Even if PGM's claim had been successful, management recognised
the practical difficulties associated with reclaiming funds from
the government and for this reason had fully provided against the
prepayment of US$367 million. The financial statements have always
reflected the position and costs on a gross basis including the
effect of paying the international fuel price, on rejection of the
court case the prepayment has been removed and the disclosure is no
longer shown in the financial statements.
Concession Agreement court case
On 30 October 2012, the Administrative Court in Egypt handed
down a judgement 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 ARE, EMRA 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 judgement states that, although the Concession
Agreement itself remains valid and in force, insufficient evidence
had been submitted to court 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 judgement 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 judgement 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 several leading
Egyptian law firms, who have confirmed that the proper steps were
followed regarding 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 contingent assets at year-end (2020: nil).
5.2 Dividends per share
The dividends paid in 2021 were US$80,516,907 and are reflected
in the consolidated statement of changes in equity for the year
(2020: US$138,724,519).
A final dividend in respect of the year ended 31 December 2021
of 5 US cents per share, totalling approximately US$57.8 million
has been proposed by the Board of Directors and is subject to
shareholder approval at the annual general meeting on 10 May 2022.
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 2021 of 5 US cents per share.
Subject to shareholder approval at the annual general meeting on 10
May 2022, the final dividend will be paid on 03 June 2022 to
shareholders on record date of 20 May 2022.
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 30 June 2021. The changes from the previous statement
published with an effective date of 31 December 2020 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
(h) where these sensitivities to the change have 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
2021 2020
US$ US$
----------------------------- ------------ ------------
Short-term employee benefits 7,370,964 7,627,053
----------------------------- ------------ ------------
Post-employment benefits 7,852 7,292
----------------------------- ------------ ------------
Share-based payments 1,500,304 1,564,277
----------------------------- ------------ ------------
8,879,120 9,198,622
----------------------------- ------------ ------------
(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 2021 are as follows:
Balance Net other Balance
at Granted Granted change - at
For the year ended 1 January as remuneration as remuneration share plan Net other 31 December
31 December 2021 2021 ("DBSP") ("PSP") lapse(1) change(2) 2021(3)
------------------- ---------- ---------------- ---------------- ----------- ---------- ------------
M Horgan 606,405 - 650,000 - 25,000 1,281,405
------------------- ---------- ---------------- ---------------- ----------- ---------- ------------
R Jerrard 1,882,000 - 570,000 (408,000) 33,000 2,077,000
------------------- ---------- ---------------- ---------------- ----------- ---------- ------------
J Rutherford 200,000 - - - 50,000 250,000
------------------- ---------- ---------------- ---------------- ----------- ---------- ------------
S Eyre - - - - 15,000 15,000
------------------- ---------- ---------------- ---------------- ----------- ---------- ------------
M Bankes 190,000 - - - 99,000 289,000
------------------- ---------- ---------------- ---------------- ----------- ---------- ------------
M Cloete 15,000 - - - - 15,000
------------------- ---------- ---------------- ---------------- ----------- ---------- ------------
C Farrow - - - - 30,000 30,000
------------------- ---------- ---------------- ---------------- ----------- ---------- ------------
I Fawzy - - - - 140,000 140,000
------------------- ---------- ---------------- ---------------- ----------- ---------- ------------
H Faul - - - - - -
------------------- ---------- ---------------- ---------------- ----------- ---------- ------------
Y El-Raghy 691,662 - 160,000 (104,000) - 747,662
------------------- ---------- ---------------- ---------------- ----------- ---------- ------------
Gustav Du Toit - 510,000 440,000 - - 950,000
------------------- ---------- ---------------- ---------------- ----------- ---------- ------------
H Bills 200,000 - 300,000 - - 500,000
------------------- ---------- ---------------- ---------------- ----------- ---------- ------------
P Cannon - - 250,000 - - 250,000
------------------- ---------- ---------------- ---------------- ----------- ---------- ------------
J Singleton 746,000 - 250,000 - - 996,000
------------------- ---------- ---------------- ---------------- ----------- ---------- ------------
C Murray 200,000 - 250,000 - 24,000 474,000
------------------- ---------- ---------------- ---------------- ----------- ---------- ------------
A Carse 539,000 - 250,000 (168,000) 25,096 646,096
------------------- ---------- ---------------- ---------------- ----------- ---------- ------------
D Le Masurier 437,300 - 200,000 (120,000) - 517,300
------------------- ---------- ---------------- ---------------- ----------- ---------- ------------
R Nel 330,000 - 200,000 (96,000) (32,027) 401,973
------------------- ---------- ---------------- ---------------- ----------- ---------- ------------
(1) "Net other change - share plan lapse" relates to awards that
have lapsed due to the full performance conditions not being met on
the 2018 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 2021 to the date of this report there have
been no transactions notified by the Company in accordance with the
requirements of Article 19 of the UK Market Abuse Regulation
(Regulation (EU) 596/2014.
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 Balance
at Granted Granted change - at
For the year ended 1 January as remuneration as remuneration share plan Net other 31 December
31 December 2020 2020 ("DBSP") ("PSP") lapse(1) change(2) 2020(3)
------------------- ---------- ---------------- ---------------- ----------- ---------- ------------
M Horgan - - 590,000 - 16,405 606,405
------------------- ---------- ---------------- ---------------- ----------- ---------- ------------
R Jerrard 1,897,000 - 390,000 (420,000) 15,000 1,882,000
------------------- ---------- ---------------- ---------------- ----------- ---------- ------------
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
------------------- ---------- ---------------- ---------------- ----------- ---------- ------------
H Bills - - 200,000 - - 200,000
------------------- ---------- ---------------- ---------------- ----------- ---------- ------------
P Cannon - - - - - -
------------------- ---------- ---------------- ---------------- ----------- ---------- ------------
J Singleton 546,000 - 200,000 - - 746,000
------------------- ---------- ---------------- ---------------- ----------- ---------- ------------
C Murray - - 200,000 - - 200,000
------------------- ---------- ---------------- ---------------- ----------- ---------- ------------
A Carse 379,000 80,000 80,000 - - 539,000
------------------- ---------- ---------------- ---------------- ----------- ---------- ------------
D Le Masurier 527,000 67,500 67,500 (107,000) (117,700) 437,300
------------------- ---------- ---------------- ---------------- ----------- ---------- ------------
R Nel 230,000 50,000 50,000 - - 330,000
------------------- ---------- ---------------- ---------------- ----------- ---------- ------------
(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
2021 are summarised below:
-- salaries, superannuation contributions, bonuses, LTIs,
consulting and directors' fees paid to Directors during the year
ended 31 December 2021 amounted to US$3,694,236 (31 December 2020:
US$3,915,877); and
(f) Transactions with the government of Egypt
Royalty costs attributable to the government of Egypt of
US$21,671,928 (2020: US$24,792,435) were incurred in 2021. Profit
share to EMRA of US$75,200,000 (2020: US$174,275,000) was incurred
in 2021.
(g) Transactions with other related parties
Other related parties include the parent entity, subsidiaries,
and other related parties.
During the financial year, the Company recognised tax payable in
respect of the tax liabilities of its wholly owned
subsidiaries.
Payments to/from the Company are made in accordance with terms
of the tax funding arrangement.
During the financial year the Company provided funds to and
received funding from subsidiaries.
All amounts advanced to related parties are unsecured. No
expense has been recognised in the year for bad or doubtful debts
in respect of amounts owed by related parties.
Transactions and balances between the Company and its
subsidiaries were eliminated in the preparation of the consolidated
financial statements of the Group.
6.2 Contributions to Egypt
(a) Gold sales agreement
On 20 December 2016, SGM entered a contract with the Central
Bank of Egypt ("CBE"). The agreement provides that the parties may
elect, on a monthly basis, for the CBE to supply SGM with its local
Egyptian currency requirements for that month to a maximum value of
EGP80 million (2020: EGP80 million). In return, SGM facilitates the
purchase of refined gold bullion for the CBE from SGM's refiner,
Asahi Refining Canada Ltd. This transaction has been entered into
as SGM requires local currency for its operations in Egypt (it
receives its revenue for gold sales in US dollars). Thirty-four
transactions have been entered into at the date of this report,
eight of which in the current year, pursuant to this agreement, and
the values related thereto are as follows:
For the year For the year
ended ended
31 December 31 December
2021 2020
US$'000 US$'000
--------------- ------------ ------------
Gold purchased 56,147 29,319
--------------- ------------ ------------
Refining costs 31 15
--------------- ------------ ------------
Freight costs 55 30
--------------- ------------ ------------
56,233 29,364
--------------- ------------ ------------
For the year For the year
ended ended
31 December 31 December
2021 2020
Oz Oz
--------------- ------------ ------------
Gold purchased 31,219 16,262
--------------- ------------ ------------
At 31 December 2021 the net payable in EGP owing from the
Central Bank of Egypt is approximately the equivalent of US$24,761
(2020: US$42,987 net receivable from 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. An amount of
EGP10,000,000 was deposited with an Egyptian bank as a nucleus of
the scholarship fund in a fixed deposit account, with contributions
of EGP7,330,000 from PGM and EGP2,670,000 from Sami El-Raghy. The
interest earned on the account 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 2020 and in 2021
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,
495,311 awards vested to eligible participants (27 in total).
June 2019 awards
Due to the performance conditions not being met, all remaining
awards eligible to participants shall lapse.
June 2020 awards
Of the 2,582,500 awards granted on 5 June 2020 under the PSP,
2,137,500 awards remain granted to eligible participants (11 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.
April 2021 awards
Of the 5,945,000 awards granted on 30 April 2021 under the PSP,
5,485,000 awards remain granted to eligible participants (32 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 2022
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 2021
Grant date 30 April 2021
-------------------------------------------------------- --------------
Number of instruments 1,380,000
-------------------------------------------------------- --------------
TSR: fair value at grant date GBP(1)(2) 0.55
-------------------------------------------------------- --------------
TSR: fair value at grant date US$(1)(2) 0.77
-------------------------------------------------------- --------------
Adjusted free cash flow and gold production: fair value
at grant date GBP(1)(2) 0.89
-------------------------------------------------------- --------------
Adjusted free cash flow and gold production: fair value
at grant date US$(1)(2) 1.24
-------------------------------------------------------- --------------
Vesting period (years) 3
-------------------------------------------------------- --------------
Holding period applicable to the award (years)(2) 2
-------------------------------------------------------- --------------
Expected volatility (%) 55.3%
-------------------------------------------------------- --------------
Expected dividend yield (%) 0%
-------------------------------------------------------- --------------
Number of instruments 4,565,000
-------------------------------------------------------- --------------
TSR: fair value at grant date GBP(1) 0.67
-------------------------------------------------------- --------------
TSR: fair value at grant date US$(1) 0.93
-------------------------------------------------------- --------------
Adjusted free cash flow and gold production: fair value
at grant date GBP(1) 1.07
-------------------------------------------------------- --------------
Adjusted free cash flow and gold production: fair value
at grant date US$(1) 1.50
-------------------------------------------------------- --------------
Vesting period (years) 3
-------------------------------------------------------- --------------
Holding period applicable to the award (years) 0
-------------------------------------------------------- --------------
Expected volatility (%) 55.3%
-------------------------------------------------------- --------------
Expected dividend yield (%) 0%
-------------------------------------------------------- --------------
(1) The vesting of 50% of the awards granted under this plan are
dependent on a TSR performance condition. As relative TSR is
defined as a market condition under IFRS 2 'Share-based payments',
this requires that the valuation model used considers the
anticipated performance outcome. We have therefore applied a
Monte-Carlo simulation model. The simulation model considers the
probability of performance based on the expected volatility of
Centamin and the peer group companies and the expected correlation
of returns between the companies in the comparator group. The
remaining 50% of the awards are subject to adjusted free cash flow
and gold production performance conditions. As these are classified
as non-market conditions under IFRS 2 they do not need to be
considered when determining the fair value. These grants have been
valued using a Black--Scholes model. The fair value calculated was
then converted at the closing GBP:US$ 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).
The 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.
DBSP awards granted during the year:
DBSP 2021
Grant date 30 April 2021
------------------------------------------------------ --------------
Number of instruments 1,977,000
------------------------------------------------------ --------------
Share price/fair value at grant date Tranche 1 GBP(1) 1.01
------------------------------------------------------ --------------
Share price/fair value at grant date Tranche 1 US$(1) 1.41
------------------------------------------------------ --------------
Share price/fair value at grant date Tranche 2 GBP(1) 0.98
------------------------------------------------------ --------------
Share price/fair value at grant date Tranche 2 US$(1) 1.36
------------------------------------------------------ --------------
Share price/fair value at grant date Tranche 3 GBP(1) 0.94
------------------------------------------------------ --------------
Share price/fair value at grant date Tranche 3 US$(1) 1.32
------------------------------------------------------ --------------
Vesting period Tranche 1 (years)(2) 1
------------------------------------------------------ --------------
Vesting period Tranche 2 (years)(2) 2
------------------------------------------------------ --------------
Vesting period Tranche 3 (years)(2) 3
------------------------------------------------------ --------------
Expected dividend yield Tranche 1 (%) 5.77%
------------------------------------------------------ --------------
Expected dividend yield Tranche 2 (%) 4.65%
------------------------------------------------------ --------------
Expected dividend yield Tranche 3 (%) 4.26%
------------------------------------------------------ --------------
(1) The fair value of the shares awarded under the DBSP were
calculated by using the closing share price on grant date,
converted at the closing GBP:US$ foreign exchange rate on that day.
No other factors were considered 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 using the
Black-Scholes model. Where share-based payments are subject to
market conditions, fair value was measured using 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 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).
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
2021 2020
US cents per US cents per
share share
--------------------------- ------------- -------------
Basic earnings per share 8.811 13.531
--------------------------- ------------- -------------
Diluted earnings per share 8.738 13.453
--------------------------- ------------- -------------
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
2021 2020
US$'000 US$'000
----------------------------------------------- ------------- -------------
Earnings used in the calculation of basic EPS 101,527 155,979
----------------------------------------------- ------------- -------------
For the year For the year
ended ended
31 December 31 December
2021 2020
Number of Number of
shares shares
----------------------------------------------- ------------- -------------
Weighted average number of ordinary shares for
the purpose of basic EPS 1,152,246,924 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
2021 2020
US$'000 US$'000
------------------------------------------------ ------------- --------------
Earnings used in the calculation of diluted EPS 101,527 155,979
------------------------------------------------ ------------- --------------
For the year For the year
ended ended
31 December 31 December
2021 2020
Number of Number of
shares shares
------------------------------------------------ ------------- --------------
Weighted average number of ordinary shares for
the purpose of basic EPS 1,152,246,924 1,152,715,180
------------------------------------------------ ------------- --------------
Shares deemed to be issued for no consideration
in respect of employee options 9,717,092 6,703,214
------------------------------------------------ ------------- --------------
Weighted average number of ordinary shares used
in the calculation of diluted EPS 1,161,964,016 1,159,418,394
------------------------------------------------ ------------- --------------
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
2021 2020
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) 586 564
-------------------------------------------------- ------------ ------------
Non-recurring audit fee in relation to scope
changes (2) - 151
-------------------------------------------------- ------------ ------------
Fees payable to the Company's auditors and their
associates for other services to the Group
-------------------------------------------------- ------------ ------------
Audit fee of the Company's subsidiaries 132 65
-------------------------------------------------- ------------ ------------
Total audit fees 718 780
-------------------------------------------------- ------------ ------------
Non-audit fees:
-------------------------------------------------- ------------ ------------
Audit related assurance services - interim review 138 134
-------------------------------------------------- ------------ ------------
Total non-audit fees 138 134
-------------------------------------------------- ------------ ------------
(1) 2021 fee includes amounts in relation to the base audit fee
US$566k (2020: US$437k), new applicable regulatory and auditing
standards US$ nil (2020: US$40k), changes in scope and timetable of
the audit US$ nil (2020: US$48k) and corporate reporting review
US$20k (2020: US$18k) and COVID-19 going concern assessments US$
nil (2020: US$21k).
(2) Non-recurring audit fees relate to the prior year audit
addressing going concern assessments US$51k, 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 on 31 December 2021 of US$1.35:GBGBP1 (rate
on 31 December 2020: US$1.37:GBGBP1). Not included within the above
amounts are auditors' expenses (recharged to the company) of US$10k
(2020: US$9k).
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] 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.
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END
FR DDGDXGDBDGDU
(END) Dow Jones Newswires
March 16, 2022 03:01 ET (07:01 GMT)
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