TIDMCEY
RNS Number : 1386T
Centamin PLC
16 March 2023
16 March 2023
Centamin plc
("Centamin" or "the Company")
(LSE:CEY, TSX:CEE)
Full year 2022 results
audited results for the twelve months ended 31 December 2022
MARTIN HORGAN, CEO, commented : "Centamin made great progress in
2022, a year in which we celebrated the Sukari Gold Mine producing
its 5 millionth ounce underpinning the quality of the orebody which
has 6 million ounces in Mineral Reserves remaining and identified
further upside potential. We spent the past year successfully
progressing our reinvestment plan and remain on track to
consistently return Sukari to production levels towards 500,000
ounces per annum from 2024.
"In 2022, the Company delivered guidance for both production and
costs, despite global inflationary headwinds, and invested US$224
million in capital projects at Sukari such as our flagship 36MW
Solar farm which is reducing both emissions and costs. We look
forward to updating our stakeholders on our decarbonisation roadmap
to 2030, later this quarter.
"In terms of growth, Sukari achieved its second successive year
of reserve growth and across the wider portfolio, we commenced
exploration work across our EDX portfolio in Egypt and progressed
our Doporo PFS which is expected to be completed in the first half
of 2023. The Company secured its inaugural sustainability linked
debt facility with a group of leading international resource banks,
adding financial flexibility to an already robust balance sheet and
enable us to deliver our identified growth opportunities."
FINANCIAL HIGHLIGHTS
-- Revenue of US$788 million generated from sales of 438,638 oz
at an average realised gold price of US$1,794/oz
-- Adjusted EBITDA of US$319 million, at a 40% margin
-- Profit before tax of US$171 million
-- Basic earnings per share ("EPS") of 6.29 US cents per share
-- US$43 million of gross cost-savings in 2022, for a cumulative
US$116 million delivered of the US$150 million cost-saving target
by 2023
-- Capital structure review completed, establishing a capital
allocation framework that balances growth and stakeholder
returns
-- Strong balance sheet with cash and liquid assets of US$157
million, as at 31 December 2022, excluding the US$150 million
sustainability-linked revolving credit facility which was announced
on 22 December 2022, and
-- The Board has proposed a final dividend of 2.5 US cents per
share, equating to US$29 million to be distributed to shareholders,
subject to shareholder approval at the annual general meeting on 23
May 2023, bringing total distribution to shareholders for full year
2022 to US$58 million.
OPERATIONAL HIGHLIGHTS
-- Sukari gold production of 440,974 oz, a 6% increase on 2021 and in line with guidance
-- Second consecutive year of meaningful growth of both resources and reserves
-- Successfully navigated the transition from contractor to
owner-operated at Sukari underground
-- Commissioned 36MW(DC) solar plant, the largest global hybrid
solar farm to power a gold mine
-- Completed Egypt's first airborne geophysical survey across
the full Sukari concession area, and
-- Progressed Doropo PFS to imminent completion.
SUSTAINABILITY PERFORMANCE
-- Record safety performance of eight million hours worked
without a Lost Time Injury at Sukari; previous record of 5 million
for LTI free hours worked, driving an 83% improvement in LTIFR from
2021 and a 13% improvement in TRIFR
-- Increased our Egyptian female representation to 34 employees
(from zero) at Sukari; the introduction of female professionals at
our sites has been supported and accompanied by diverse and
inclusive workforce training
-- Expanded workforce training programme with a 62% increase in
training hours following roll-out of professional development
framework for employees; ongoing focus to promote national
employment in leadership position through the Group, and
-- Commitment to 30% reduction in scope 1 and 2 emissions by
2030 remains on track; largest global hybrid solar farm to power a
gold mine was commissioned at Sukari in 2022, reducing annual
consumption of diesel fuel for power generation by 22%.
Decarbonisation roadmap to be launched in Q1 2023.
2023 OUTLOOK
Guidance unchanged
-- Gold production guidance range of 450,000 to 480,000 oz per
annum weighted towards H2 (45:55)
-- Cash cost guidance range of US$840-990/oz produced and AISC
guidance range of US$1,250-1,400/oz sold, similar to the 2022
levels despite global inflationary pressures including higher fuel
prices
-- Capex guidance is US$225 million, weighted towards H1
(55:45), as the Company continues to identify growth and
optimisation projects at Sukari, including development of a gravity
circuit; expansion of the dump leach capacity; and commencement of
the underground expansion. This also reflects inflationary
pressures on the contracted waste-stripping programme specifically
from higher fuel prices
-- Exploration spend is budgeted at US$30 million, including
US$23 million for the pre-development study work on the Doropo
Project.
2023 KEY MILESTONES
-- June 2023: Doropo Project (Côte d'Ivoire) complete pre-feasibility study
-- H2 2023: Sukari Gold Mine (Egypt) update Life of Mine Plan
(NI 43-101), including underground expansion, and
-- Announcements on the ongoing exploration programmes.
GROUP FINANCIAL SUMMARY
Units FY22 FY21* % H2 22 H1 22
=============================== ================= ========= ======== ====== ======== =========
Gold produced Oz 440,974 415,370 6% 237,076 203,898
Gold sold Oz 438,638 407,252 8% 235,051 203,587
Cash cost US$'000 402,546 359,868 12% 212,690 189,856
Unit cash cost US$/oz produced 913 866 5% 897 931
AISC US$'000 613,868 502,366 22% 319,756 294,112
Unit AISC US$/oz sold 1,399 1,234 13% 1,360 1,445
Avg realised gold
price US$/oz 1,794 1,797 0% 1,730 1,872
------------------------------- ----------------- --------- -------- ------ -------- ---------
Revenue US$'000 788,424 733,306 8% 406,638 381,786
Adjusted EBITDA US$'000 319,015 328,787 (3%) 165,899 153,116
Profit before tax US$'000 171,001 153,647 11% 86,254 84,747
Profit after tax attrib
to the parent US$'000 72,490 101,527 (29%) 10,129 62,361
Basic EPS US cents 6.29 8.81 (29%) 0.88 5.41
Capital expenditure US$'000 283,543 240,872 18% 144,856 138,687
Adjusted capital expenditure US$'000 224,270 233,034 (4%) 113,571 110,699
Operating cash flow* US$'000 291,936 309,074 (6%) 164,079 127,857
Adjusted free cash
flow* US$'000 (18,139) (6,802) 167% 7,630 (25,769)
=============================== ================= ========= ======== ====== ======== =========
*In the 2021 Consolidated Statement of Comprehensive Income,
Finance costs were included and disclosed in the line 'Other
operating costs', in these financial statements they are now
separately disclosed in their own line and as such 'Other operating
costs' for 2021 have changed.
WEBCAST PRESENTATION and CONFERENCE CALL
The Company will host a conference call and webcast presentation
today, Thursday 16 March, at 08.30 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/63eb959d33aa1a120095c6ee/gqruu
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: 640480
PRINT-FRILY VERSION of the results: www.centamin.com/investors/results-reports/
About Centamin
Centamin is an established gold producer, with premium listings
on the London Stock Exchange and Toronto Stock Exchange. Following
a period of 'reset' including a significant refresh of the Board
and management team, the Company is now entering a growth phase,
balanced with stakeholder returns. 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 over 5 million
ounces of gold, and today has 6.0Moz in gold Mineral Reserves.
Through its large portfolio of exploration assets in Egypt and Côte
d'Ivoire, Centamin is advancing an active pipeline of future growth
prospects, including the Doropo project in Côte d'Ivoire, and has
over 3,000km(2) of highly prospective exploration ground in Egypt's
Nubian Shield.
Centamin practices responsible mining activities, recognising
its responsibility to deliver operational and financial performance
and create lasting mutual benefit for all stakeholders through good
corporate citizenship, including but not limited to in 2022,
achieving new safety records (8m hrs LTI-free), commissioning of
the largest hybrid solar farm for a gold mine (Sukari 36MW(DC)
solar plant), sustaining a +95% Egyptian workforce and a +60%
Egyptian supply chain at Sukari.
FOR MORE INFORMATION please visit the website www.centamin.com
or contact:
Centamin plc FTI Consulting
Alexandra Barter-Carse, Head of Corporate Ben Brewerton / Sara Powell
Communications / Nick Hennis
investor@centaminplc.c om +442037271000
centamin@fticonsulting.com
NOTES
Guidance
The Company actively monitors the 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 and gold
sales receivables.
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 direct or indirect 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, the risks and uncertainties
associated with the direct and indirect impacts 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 report on the tremendous progress Centamin
made over 2022 - a year in which we celebrated a memorable
milestone with the Sukari Gold Mine producing it's 5 millionth
ounce. This achievement is rare for most gold mines and testament
to the scale and quality of the Sukari orebody. What is more
remarkable is that Sukari has a further 6 million ounces in Mineral
Reserves, equating to a 14-year life of mine, with further upside
potential as we have demonstrated by adding nearly two million
ounces of gross Mineral Reserves over the last two years. We remain
confident in delivering more geological growth, both at Sukari and
across the wider portfolio.
As custodians of this world class asset, Centamin recognises the
business and societal importance in building a responsible culture
that values and supports people, creating opportunity through jobs,
infrastructure, education, alongside developing our assets and
delivering strong shareholder returns. We practise responsible
mining activities and take pride in setting the example for our
growing industry within Egypt and as we continue to develop our
exploration projects in Côte d'Ivoire. In addition to paying in
excess of US$800 million to Egypt in profit share and royalties
since production began, over 95% of our workforce are employed
locally to the country of operation - 78% of which are in
leadership positions at Sukari - and 68% of total procurement is
spent domestically to the country of operation. We are living and
breathing our stated company purpose 'to create opportunity through
responsible mining'.
PERFORMANCE
2022 was another busy year with progress made against our stated
plans. We completed the second year of our three-year Sukari reset
plan to return the asset to production levels towards 500,000
ounces per annum from 2024.
Against a challenging macroeconomic backdrop, the Centamin team
successfully navigated the transition from contractor to
owner-operated within the Sukari underground and delivered
production, costs and capital projects in line with 2022 guidance.
Sukari produced 440,974 ounces of gold and with US$224 million
invested in adjusted sustaining and non-sustaining growth capital
projects as we continued the reinvestment programme to optimise the
asset for the longer term. At the same time we implemented further
initiatives that will deliver more gold at better costs while
reducing our carbon emissions over the remaining substantial mine
life, most notably with the commissioning of the Sukari 36MW(DC)
solar plant.
Financially, based on an annual realised gold price of
US$1,794/oz, we generated gross revenues of US$788 million. We were
not immune to the global inflationary cost pressures experienced in
2022 but our prudent approach to forecasting and ongoing
cost-savings programme enabled us to maintain our 2022 cost
guidance throughout the year and deliver within the stated range.
All-in sustaining costs were US$1,399/oz sold and cash costs were
US$913/oz produced and we continue to seek opportunities to further
improve our cost profile going forward. EBITDA for the year was
US$319 million, up 9%, and with a continued strong EBITDA margin of
40%.
STRATEGIC PROGRESS
Sukari Value Maximisation
Geologically, we continue to unlock the mineral resource
potential within the Sukari orebody and the wider 160km(2) Sukari
Concession area. Our improved geological understanding resulted in
the second consecutive year of meaningful growth of both resources
and reserves at unchanged cut-off grades. The open pit Mineral
Reserve gain replaced annual depletion for the first time since
2015, while the underground Mineral Reserves of 1.2 million ounces
represents a threefold increase since 2020, net of mining
depletion, further supporting our underground expansion plans for
benefit from 2024.
The Mineral Resource Management team, responsible for the
orebody stewardship, has developed a rolling five-year exploration
plan focussed on unlocking the potential of the orebody, targeting
resource to reserve conversion and further extensional growth.
Beyond the orebody, the Exploration team has been focussed on
delineating potential satellite deposits to provide additional ore
feed to the Sukari mill over the life of mine. A highlight of the
2022 exploration programme was completing Egypt's first airborne
geophysical survey across the full Concession area. Introducing
this tried and tested first principles exploration tool has given
us a geological dataset which we can utilise across our wider
Eastern Desert Exploration ("EDX") blocks across the Egyptian
Nubian shield.
Operationally, total material moved outperformed with the open
pit accelerated waste stripping programme and the underground
transition to owner-mining both delivering increased operating
flexibility and further safety, cost and productivity gains.
The open pit mining operation delivered another record year of
material moved of 136 million tonnes, through a combination of our
own mining fleet and contracted waste-stripping programme. The
benefits of this investment were evident through 2022 as open pit
mining flexibility increased from one operating area in 2020 to
four operating areas as we exited 2022. In parallel to the increase
in tonnes mined in the open pit, owner fleet optimisations have
delivered a 18% productivity gain in total mined tonnes per hour
since 2020. This has included the full implementation of the high
productivity truck trays, improvement in haul cycle planning and
road condition maintenance.
The underground mine went through a significant period of change
during the year. Following an international tender process in 2021
planned to coincide with the expiry of the underground mining
contract in late 2021, the decision was taken to switch to an owner
mining model based on the extended underground mine life and
expected cost savings and productivity gains. During Q1 2022 the
underground team implemented the handover plan as the contractor
exited the business and the Sukari team assumed full responsibility
for operations from Q2 2022. Performance improved over 2022 as
operations bedded down and new equipment was delivered to site with
productivity gains and cost savings realised over the period
compared to the contracting costs. With this transition now
complete, the operations have begun 2023 in excellent shape as we
seek to maximise underground production.
Introducing paste-fill within the underground in 2023 will
enable us to maximise ore extraction in a safer manner while
providing further cost and productivity gains over and above the
current method of cemented waste rock fill. Construction of the
paste-fill plant progressed as expected in 2022 and we expect to
start commissioning in Q2 2023.
With the underground reserve life growing from three to
approximately ten years since 2021 and an active pipeline of
further growth targets identified, we carried out an independent
underground option study to assess the potential to increase the
mining rates. The study concluded that underground ore mining could
sustainably be increased from the current life of mine average of
1Mt per annum to a 1.5Mt per annum with low project execution risk
and low capital intensity. Work in 2023 will focus on fully
engineering and planning this expansion option for implementation
in 2024.
Growth & Diversification
Eastern Desert Exploration ("EDX")
Prior to the commencement of fieldwork our team completed remote
desktop assessment of the three exploration blocks spanning
3,000km(2) , which enabled a quick and focussed start to the
fieldwork programme. Our strategy remains twofold: 1) identify
potential deposits within trucking distance of the Sukari mill and
2) explore for significant discoveries which could support
standalone operations. Utilising a predominantly Egyptian staffed
team, exploration commenced in May 2022 on the Nugrus block, which
is adjacent to the Sukari Concession area, before moving to the Um
Rus and Najd blocks to the north. Geochemical reconnaissance work
using BLEG sampling was carried across the license areas, followed
by more detailed soil sampling, mapping of known artisanal workings
and combined with the remote sensing work, has generated several
targets for drill testing during the balance of 2023.
In parallel with the exploration work, Centamin has been part of
an industry group working with the Egyptian government to finalise
the exploitation terms. Good progress has been made and we
anticipate finalisation of the exploitation terms in H1 2023.
Doropo
We believe our Doropo Project in Côte d'Ivoire has the potential
to be a mine which can significantly increase overall group
production, while making a material contribution to the wider
Ivorian economy and its people.
Having completed the 124,000 metre drilling campaign, we
upgraded the resource and constrained it within economic open pit
shells for the first time. The resultant 2.5Moz of Indicated
Resources is at an average grade of 1.52g/t, representing an 22%
increase in grade estimated for the 2021 PEA. Encouragingly we
continue to identify additional mineralisation targets within the
Mineral Resource area and regionally, across the broader license
holding that have the potential to further grow the gold endowment
and further increase the life of the project.
Metallurgical test work carried out in 2022 identified an
opportunity to simplify the processing flowsheet by removing the
flotation and regrind circuit, which could have a positive impact
on the economics of the project and will be included in the
PFS.
The environmental, social impact assessment work continued
through 2022, assessing the environmental and social baselines
which will enable the project design and layout to be developed in
a way which is sympathetic to the local conditions while enabling
the project to be assessed in line with international good
practice.
The PFS is near completion and we are excited to share those
results and commence the Definitive Feasibility Study to enable the
project to meet its permitting timeline.
Stakeholder Returns
For Centamin, 2022 was a landmark year for progress against our
ESG priorities.
Safety
We finished 2022 having achieved a new safety record of eight
million hours worked without a Lost Time Injury at Sukari, breaking
the previous record of 5 million for LTI free hours worked and at
the time of writing this we are currently at 9.1 million LTI-free.
This has driven an 83% improvement in LTIFR from 2021, and we
recorded a 13% improvement in TRIFR. This excellent achievement
reflects management's on-going focus on safety in the workplace and
I believe that safety performance is a good proxy for operational
ability - a safe mine is a well-run mine and while we are proud of
this achievement, we will not allow complacency to distract us from
striving to further improve on this result into 2023 and
beyond.
Diversity & Inclusion
We believe diversity and promoting inclusion is an ethical
imperative for a sustainable business. At Centamin we promote a
culture of belonging throughout the business, where everyone is
respected, valued and empowered to excel within the workplace, and
importantly, by creating an inclusive culture that reflects the
diversity of the countries in which we operate. In 2021, Centamin
welcomed changes to the Egyptian legal and regulatory framework
that removed restrictions to the employment of women in the mining
sector. Through broad and concerted leadership, we are proud to
have increased our Egyptian female representation to 34 employees
(from zero) at Sukari and on our Egyptian Eastern Desert
Exploration blocks ("EDX"), as we seek to improve our gender
balance in Egypt and across the Group. I would also like to give
specific mention to our trailblasing colleague, Sara Mohamed
Elsayed, who was the first Egyptian female employee at a mine site.
Sara joined Sukari in 2021 as Environmental Superintendent and was
named one of the 100 Global Inspirational Women in Mining for
2022.
The Introduction of female professionals at our sites has been
supported and accompanied by workforce training on the benefits of
a diverse and inclusive workplace, employee engagement to identify
and resolve barriers to the advancement of women, including
something as basic as female PPE to maximise the comfort and safety
of all employees. These efforts represent a significant milestone
in the history of Sukari and the Egyptian mining sector more
broadly.
Workplace development
We have sought to create an environment in which our people can
develop and thrive and in 2022 there was a 62% increase in
workforce training hours. At Sukari we have put in place a
professional development framework that aims to establish a shared
understanding of the required skills to achieve proficiency in each
and every role; the critical behaviours for successful performance
at Centamin; and ultimately the objective to develop and promote
our local workforce through the organisation. Increased levels of
training was provided to support the progression of our employees
to a proficient level, including certified leadership training to
our management and supervisory team. This is an ongoing focus as we
seek to promote national employment in leadership positions
throughout the Group.
Decarbonisation
In 2022, we commissioned the largest global hybrid solar farm to
power a gold mine. The 36MW(DC) solar plant reduces our annual
consumption of diesel fuel for power generation by 22% (up to
70,000 litres of diesel displacement per day), significantly
reducing costs and Scope 1 GHG emissions by approximately 60,000
tCO2-e per annum. Solar, combined with the productivity gains from
implementation of the high productivity truck trays are two
tangible achievements in 2022.
Our vision for a low carbon future is a mine with sources of
onsite and imported renewable energy, reductions in absolute energy
consumption through efficient operational strategy and new
technologies, staged electrification of our mobile fleet and
partnerships with our suppliers to select low carbon options and
increase recycling in our supply chain. In 2022, we studied
opportunities to reduce the operational emission of Sukari over the
life of mine, including sourcing clean and lower carbon power
through connection to the national grid and further expansion of
our onsite renewable energy production. We have set an interim
climate target of 30%, to reduce our Scope 1 and 2 GHG emissions by
2030, compared to a 2021 base-year. This would put us on a
Paris-aligned trajectory to limit global warming to 'well below'
2degC by 2050.
Shareholder dividends
Our commitment to stakeholder returns includes our dividend
commitment to our shareholders. Our sustainable dividend policy of
returning a minimum of 30% of free cash flow in cash dividends to
shareholders has amassed an impressive nine-year track record,
distributing a total of US$834 million, including today's proposed
final dividend, since 2014.
Given the potential scale of the organic opportunities available
to Centamin, Sukari cashflows and our robust balance sheet, we have
been seeking to provide our investors with exposure to our growth
projects while maintaining our approach to dividend payments.
2023 OUTLOOK
In 2021, we commenced the reset with which to lay the foundation
for long-term success. 2022 was about execution and delivery into
not just our stated guidance but on all our projects and promises.
2023 is about extending our track record of delivery and building
on that platform for growth.
In 2023, we are forecasting increased production of 450,000 to
480,000 ounces and targeting lower all-in sustaining costs with a
guided range of US$1,250-US$1,400 per ounce sold. This year capex
will be US$225 million, including the last full year of contracted
waste-stripping programme and additional non-sustaining projects
such as the gold gravity circuit, expansion of the north dump
leach, completion of the paste-fill plant and ongoing development
of the tailings storage facility.
We will continue to deliver into our geological exploration
programme at the Sukari orebody and across the concession area
while we complete the updated life of mine plan incorporating the
underground expansion potential and mining areas of bonanza
grades.
The most significant decarbonisation and cost savings
opportunity identified for 2023 is the ability to connect to the
Egyptian national electricity grid which has recently been extended
to within 30km of the Sukari mine site. If successful, this would
enable the operations to run on a combination of the current solar
generated power and grid, and therefore displacing the current site
thermal power generation using diesel.
THANK YOU
Thank you to the Board, shareholders, and wider stakeholders for
their support, engagement and feedback. I would like to thank
everyone at Centamin, our colleagues and contractors, for their
hard work, dedication, passion and enthusiasm. What we have
achieved in a few short years is significant and provides a
platform from which we can begin our journey to developing a
multi-asset, multi-jurisdictional gold producer.
Martin Horgan
Chief Executive Officer
FINANCIAL REVIEW
Ross Jerrard commented : "Our strong balance sheet, underpinned
by a resilient business with increased capacity for growth, gives
us the flexibility and strength to deliver stakeholder
returns."
Centamin is a robust business, committed to responsible mining.
In 2020 we set out bold capital reinvestment plans required to
sustain our business and drive higher production and improve
margins for the long term, and for the last two years we have
delivered on those plans.
Despite persisting global supply-side issues and global
inflation, our focus is on what we can control. We do this with
rigorous planning and subsequent disciplined compliance to plan, a
thriving culture of continuous improvement, and active risk and
opportunity assessment to ensure we don't stop at the minimum but
are always looking to improve.
FINANCIAL PERFORMANCE
In 2022, Centamin delivered a resilient financial performance
that was in line with our expectations and guidance for the year.
Notwithstanding, the Group's results are significantly affected by
movements in the gold price, input costs, particularly in
consumables and fuel, and to a lesser degree foreign exchange
rates.
Revenues increased year-on-year by 8% to US$788 million, from
annual gold sales of 438,638 ounces, up 8%, at an average realised
price of US$1,794 per ounce, with no significant movement
year-on-year. A total of 13,485 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, Adjusted EBITDA was US$319 million, at a 40% EBITDA
margin, principally driven by;
-- a 6% increase in gold production, as scheduled, at similar
average realised gold prices as compared to last year; offset
by
-- a 24% 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, oil and lubricants costs to the value of US$72
million due to increases in the fuel cost per litre coupled with
increased production
-- US$53 million additional spend on consumables due to
increases in reagent prices and increased production in the
year
Profit before tax increased by 11% to US$171 million, due to the
factors below, with basic earnings per share decreasing by 29% to
6.29 US cents.
-- an 8% increase in revenue, in line with increased gold sales as planned
-- a 16% increase in other income; offset by
-- a 1% increase in other operating costs, mainly due to a 10% increase in royalties
-- a 114% increase in greenfield exploration and evaluation expenditure, and
-- a 12% increase in cost of sales
As expected, and in line with our three year reinvestment plans,
Centamin's cash flows and earnings were positively impacted in 2022
by higher gold production and sales, offset by higher costs and
increased capital expenditure. Operational cash flow decreased by
6% to US$292 million. Cash flows from investing activities were
impacted mainly by gross capital expenditure of US$276 million,
predominantly invested in sustaining the long-term production from
Sukari. Adjusted Group free cash flow declined to negative US$18
million, after profit share distribution of US$35 million to our
Egyptian partner, EMRA, and US$27 million advancing our organic
growth pipeline at our exploration projects Doropo, EDX and
ABC.
STRINGENT COST MANAGEMENT
Our judicious approach to forecasting and stringent cost
management meant we were able to counter some of the global
inflationary cost pressures last year and delivered guidance as
stated at the beginning of 2022. Good progress was made and we are
confident we will make our US$150 million target of cost savings by
the end of 2023. As at 31 December 2022 we had extracted US$116
million of sustainable cost savings and remain motivated to find
further opportunities.
Cash costs of production were US$913 per ounce produced, up 5%,
reflecting a 24% increase in total open pit mined tonnes, and a 2%
increase in tonnes processed, total underground mined tonnes
remained flat year on year and a 6% increase in gold ounces
produced. AISC was US$1,399 per ounce sold, up 13%, mainly due to a
11% increase in mine production costs, 9% increase in sustaining
corporate costs and a 55% increase in sustaining capital costs.
This was partially offset by an 8% increase in gold ounces sold
(which was as scheduled and in line with guidance).
Capitalisation of open pit waste-stripping
The largest investment in 2022 was on the accelerated
waste-stripping (deferred waste-stripping) which added US$141
million to our balance sheet, US$89 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$52
million allocated to sustaining capital expenditure, which was
waste material mined by the Centamin fleet above the life of mine
strip ratio. Some deferred waste-stripping has already been
amortised in the year based on ore extracted from the areas
mined.
As more fully described in note 2.9 to the financial statements
and required by the Group's financial reporting 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 closed 2022 financial year with cash and liquid assets
of US$157 million. As announced on 22 December 2022, we secured the
first piece of corporate debt and on 13 March 2023, all conditions
precedent were met regarding the US$150 million sustainably linked
revolving credit facility ("RCF"), significantly increasing the
Company's financial flexibility to fund growth projects across the
portfolio. Initially, the focus will be Sukari. Under the terms of
our Concession Agreement growth capital invested is recovered over
three years, making these investments ideally suited for the
structure of the RCF.
APPROACH TO CAPITAL ALLOCATION
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 and continually assesses inorganic
growth opportunities. Our organic projects are self-funded but
before capital is allocated they are routinely ranked based on
results against our development criteria and prospective
returns.
In 2022, a key focus was on improving operational efficiencies
to achieve consistent operational performance with US$165 million
spent on sustaining capital expenditure and US$119 million on
non-sustaining, or 'growth' capital expenditure. Growth projects
include the construction of the hybrid solar plant, reducing the
reliance on fossil fuels and improving operating costs, and ongoing
construction of the underground paste-fill plant.
Impressive progress was made on project delivery as we achieved
several further important milestones, including initiating business
improvements such as completion of the preparatory work on
centralising our accounting and internal control systems across the
Group in 2022, which will enable faster and more efficient access
to our numbers, ahead of planned implementation in 2023.
2022 dividend
Stakeholder, and specifically shareholder returns, are central
to our Company strategy. Centamin were one of the first gold
producers to pay dividends under a structured policy. We have built
a nine-year track record of returning cash to shareholders, based
on our policy linked to free cash flow generation before growth
investment. Our dividend policy makes firm commitments on capital
allocation, meaning shareholder interests are always at the centre
of what we do.
Consistent with the Company's commitment to returning cash to
shareholders, and recognising 2022 as the peak reset year, the
Board proposes a 2022 final dividend, for the year ended 31
December 2022 of 2.5 US cents per share (c.US$29 million), bringing
the proposed total dividend for 2022 to 5 US cents per share
(c.US$58 million):
-- Interim 2022 dividend paid: 2.5 US cents per share
-- Final 2022 dividend proposed: 2.5 US cents per share
The final 2022 dividend is subject to shareholder approval at
the 2023 AGM on 23 May 2023 and following approval would be paid on
23 June 2023.
OUTLOOK
We are fully focused on managing the bottom line of the business
so that we can maximise the value at Sukari and deliver growth and
diversification combined with sustainable stakeholder returns. We
have budgeted for similar costs in 2023 as 2022, accounting for
rising input costs, driven by higher consumer price inflation
within our operating countries, supply chain pressures on fuel,
consumables and shipping costs and tighter labour markets. We have
prudently decided not to budget any offsetting impacts of our
ongoing cost-savings and improving operating efficiencies and
productivity gains until we have a better sense of the longer-term
inflationary environment.
The previous two years have been largely focused on business
transformation and building our geological understanding. Today, we
are excited by the additional value that is organically within our
grasp and we are pursuing to capture of this upside to achieve our
goals across growth and returns.
Ross Jerrard
Chief Financial Officer
primary statements highlights
Year ended Year ended
31 December 2022 31 December 2021
US$'000 US$'000
-------- ----------------- -----------------
Revenue 788,424 733,306
-------- ----------------- -----------------
Revenue from gold and silver sales for the year increased by 8%
year-on-year to US$788 million (2021: US$733 million) with the
year-on-year average realised gold price remaining flat at US$1,794
per ounce sold (2021: US$1,797 per ounce sold) complimented by an
8% increase in gold ounces sold to 438,638 ounces (2021: 407,252
ounces).
Year ended Year ended
31 December 2022 31 December 2021
US$'000 US$'000
-------------- ----------------- -----------------
Cost of sales (544,075) (487,376)
-------------- ----------------- -----------------
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 12% year-on-year to US$544 million, mainly as a result
of:
-- 11% increase (US$40 million) in total mine production costs
from US$368 million to US$409 million (+ve), primarily due to the
following drivers:
o a 30% increase in processing costs (US$47 million) (+ve). The
increase was driven by price increases on fuel. Diesel fuel is
mainly consumed at Sukari for the process plants power generation;
offset by
o a 3% decrease in open pit mining costs (US$4 million) (-ve);
and
o a 6% decrease in administration costs (US$3 million) (-ve)
o There was no significant change in the underground mining
costs.
-- 5% increase in depreciation and amortisation charges
year-on-year from US$139 million to US$146 million (+ve). This
increase was mainly due to:
o a US$284 million in net additions to property, plant and
equipment (excl. capital work in progress) which increased the
associated depreciation and amortisation charges; in addition to
higher gold production in the year
Year ended Year ended
31 December 2022 31 December 2021
US$'000 US$'000
------------------------------------------------ ----------------- -----------------
Dividend paid - non-controlling interest in SGM (35,492) (75,200)
------------------------------------------------ ----------------- -----------------
The profit share payments during the year are reconciled against
SGM's audited financial statements. Any variation between payments
made during the year (which are based on the Company's estimates)
and the audited financial statements, may result in a balance due
and payable to EMRA or advances to be offset against future
distributions. SGM's 30 June 2022 financial statements have been
audited and signed off.
Refer to note 1.3.1.2 in the notes for details of the treatment
and disclosure of the EMRA profit share.
CAPITAL EXPITURE
The following table provides a breakdown of the total capital
expenditure of the Group:
Year ended Year ended
31 December 2022 31 December 2021
US$'000 US$'000
------------------------------------------------------ ----------------- -----------------
Underground exploration 8,636 13,741
Underground mine development 32,107 34,900
Other sustaining capital expenditure 124,162 57,513
------------------------------------------------------ ----------------- -----------------
Total sustaining capital expenditure 164,905 106,154
------------------------------------------------------ ----------------- -----------------
Non-sustaining exploration expenditure 3,539 2,202
Other non-sustaining capital expenditure (1) 115,099 132,516
------------------------------------------------------ ----------------- -----------------
Total gross capital expenditure 283,543 240,872
Less:
Sustaining element of waste stripping capitalised (2) (51,527) (7,838)
Capitalised Right of Use Assets (7,746) -
------------------------------------------------------ ----------------- -----------------
Adjusted capital expenditure (after reclassification) 224,270 233,034
------------------------------------------------------ ----------------- -----------------
(1) Non-sustaining capital expenditure included further spend on
the solar plant, underground paste-fill plant and the Capital Waste
Stripping. Non-sustaining costs are primarily those costs incurred
at 'new operations' and costs related to 'major projects at
existing operations' that will materially benefit the
operation.
(2) Reclassified from operating expenditure.
EXPLORATION EXPITURE
The following table provides a breakdown of the total
exploration expenditure of the Group:
Year ended Year ended
31 December 2022 31 December 2021
US$'000 US$'000
----------------------------------------- ----------------- -----------------
Greenfield exploration
Burkina Faso 2,928 2,380
Côte d'Ivoire 25,120 11,499
Egypt - Eastern Desert Exploration 1,675 -
----------------------------------------- ----------------- -----------------
Total greenfield exploration expenditure 29,723 13,879
----------------------------------------- ----------------- -----------------
Brownfield exploration
Sukari Tenement 12,175 15,943
----------------------------------------- ----------------- -----------------
Total brownfield exploration expenditure 12,175 15,943
----------------------------------------- ----------------- -----------------
Total exploration expenditure 41,898 29,822
----------------------------------------- ----------------- -----------------
Exploration and evaluation expenditure comprises expenditure
incurred for exploration activities primarily in Côte d'Ivoire and
in the new Egypt greenfield permit areas. Greenfield exploration
and evaluation costs (excluding Burkina Faso) increased by US$15
million or 133% as more exploration and evaluation work
specifically drilling and assaying at the two Côte d'Ivoire sites
was done in 2022 as compared to 2021 as well as the commencement of
exploration work in the new Egypt permit areas. The brownfield
capitalised exploration costs on the Sukari concession area
decreased by US$4 million or 24% year on year.
The spend in Burkina Faso is mainly on key services and other
regulatory obligations required as the process to formally exit the
project is currently underway.
SUBSEQUENT EVENTS
As referred to in note 5.2, subsequent to the year end, the
Board proposed a final dividend for 2022 of 2.5 US cents per share.
Subject to shareholder approval at the annual general meeting on 23
May 2023, the final dividend will be paid on 23 June 2023 to
shareholders on record date of 2 June 2023.
Also refer to note 5.1 in the financial statements for more
information on the Law 32 judgement that was handed down in January
2023.
The Company's compliance requirements and obligations in respect
of the US$150 million Revolving Credit Facility had not yet
commenced as at 31 December 2022 as there were certain conditions
precedent that were still to be satisfied to make the agreement
effective. The conditions precedent were met on 13 March 2023
subsequent to year end and before the annual financial statements
were signed and the facility is available for draw down from this
date the conditions precedent were met.
Other than as noted above, 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 2022 31 December 2021
US$'000 US$'000
---------------------------------- ---------------- ----------------
Profit for the year before tax 171,001 153,647
Finance income (1,214) (196)
Finance costs (1) 2,459 673
Depreciation and amortisation 146,769 139,455
---------------------------------- ---------------- ----------------
EBITDA 319,015 293,579
Add back/less: (2)
Impairments of non-current assets - 35,208
---------------------------------- ---------------- ----------------
Adjusted EBITDA 319,015 328,787
---------------------------------- ---------------- ----------------
(1) In the 2021 Consolidated Statement of Comprehensive Income,
Finance costs were included and disclosed in 'Other operating
costs', in the current year they are now separately disclosed in
their own line hence the change on the Finance Costs number in
2021.
(2) Adjustments made to normalise earnings for example profit on
financial assets at fair value through profit or loss, impairments
of property, plant and equipment, non-current mining stockpiles and
exploration and evaluation assets.
2) Cash cost of production per ounce produced and sold and
all-in sustaining costs ("AISC") per ounce sold calculation
Cash cost of production and AISC are non-GAAP financial
measures. Cash cost of production per ounce is a measure of the
average cost of producing an ounce of gold, calculated by dividing
the operating costs in a period by the total gold production over
the same period. Operating costs represent total operating costs
less sustaining administrative expenses, royalties, depreciation
and amortisation. Management uses this measure internally to better
assess performance trends for the Company as a whole. Management
considers that, in addition to conventional measures prepared in
accordance with GAAP, certain investors use such non-GAAP
information to evaluate the Company's performance and ability to
generate cash flow. Management considers that these measures
provide an alternative reflection of the Group's performance for
the current year and are an alternative indication of its expected
performance in future periods. Cash cost of production is intended
to provide additional information, does not have any standardised
meaning prescribed by GAAP and should not be considered in
isolation or as a substitute for measures of performance prepared
in accordance with GAAP. This measure is not necessarily indicative
of operating profit or cash flow from operations as determined
under GAAP. Other companies may calculate these measures
differently.
During June 2013 the World Gold Council ("WGC"), an industry
body, published a Guidance Note on the 'all in sustaining costs'
metric, which gold mining companies can use to supplement their
overall non-GAAP disclosure. AISC is an extension of the existing
'cash cost' metric and incorporates all costs related to sustaining
production and in particular recognising the sustaining capital
expenditure associated with developing and maintaining gold mines.
In addition, this metric includes the cost associated with
developing and maintaining gold mines. This metric also includes
the cost associated with corporate office structures that support
these operations, the community and rehabilitation costs attendant
with responsible mining and any exploration and evaluation costs
associated with sustaining current operations. AISC US$/oz is
arrived at by dividing the dollar value of the sum of these cost
metrics, by the ounces of gold sold (as compared to using ounces
produced which is used in the cash cost of production
calculation).
On 14 November 2018 the World Gold Council published an updated
Guidance Note on 'all-in sustaining costs' and 'all-in costs'
metrics. Per their press release it was expected that companies
have chosen to use the updated guidance from 1 January 2019 or on
commencement of their financial year if later. The Group has
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 2022 31 December 2021
------------------------------------------- -------- ---------------- ----------------
Mine production costs (note 2.3) US$'000 408,543 368,327
Less: Refinery and transport US$'000 (2,324) (2,264)
Movement of inventory (1) US$'000 (3,673) (6,195)
Cash cost of production - gold produced US$'000 402,546 359,868
------------------------------------------- -------- ---------------- ----------------
Gold produced - total (oz.) oz 440,974 415,370
------------------------------------------- -------- ---------------- ----------------
Cash cost of production per ounce produced US$/oz 913 866
------------------------------------------- -------- ---------------- ----------------
1) The movement in inventory on ounces produced is only the net
movement in mining stockpiles and ore in circuit while the movement
in ounces sold is the net movement in mining stockpiles, ore in
circuit and gold in safe inventory.
A reconciliation has been included below to show the cash cost
of production metric should gold sold ounces be used as a
denominator.
Reconciliation of cash cost of production per ounce sold:
31 December 2022 31 December 2021
--------------------------------------------------- -------- -------------------- -------------------
Mine production costs (note 2.3) US$'000 408,543 368,327
Royalties US$'000 23,842 21,672
Movement of inventory (1) US$'000 (6,789) (15,081)
Cash cost of production - gold sold US$'000 425,596 374,918
--------------------------------------------------- -------- -------------------- -------------------
Gold sold - total (oz.) oz 438,638 407,252
--------------------------------------------------- -------- -------------------- -------------------
Cash cost of production per ounce sold US$/oz 970 921
--------------------------------------------------- -------- -------------------- -------------------
31 December 2022 (1) 31 December 2021(1)
--------------------------------------------------- -------- -------------------- -------------------
Movement in inventory
Movement in inventory - cash (above) US$'000 (6,789) (15,081)
Effect of depreciation and amortisation - non-cash US$'000 17,448 35,049
--------------------------------------------------- -------- -------------------- -------------------
Movement in inventory - cash & non-cash (note 2.3) US$'000 10,659 19,968
--------------------------------------------------- -------- -------------------- -------------------
(1) The movement in inventory on ounces produced is only net the
movement in mining stockpiles and ore in circuit while the movement
in ounces sold is the net movement in mining stockpiles, ore in
circuit and gold in safe inventory.
Reconciliation of AISC per ounce sold:
31 December 2022 31 December 2021
--------------------------------------------------- -------- ---------------- ----------------
Mine production costs (note 2.3) US$'000 408,543 368,327
Movement in inventory US$'000 (6,789) (15,081)
Royalties US$'000 23,842 21,672
Sustaining corporate administration costs US$'000 24,282 22,379
Rehabilitation costs US$'000 588 276
Sustaining underground development and exploration US$'000 40,743 48,641
Other sustaining capital expenditure US$'000 124,162 57,513
By -- product credit US$'000 (1,503) (1,361)
--------------------------------------------------- -------- ---------------- ----------------
All -- in sustaining costs(1) US$'000 613,868 502,366
--------------------------------------------------- -------- ---------------- ----------------
Gold sold - total (oz.) oz 438,638 407,252
--------------------------------------------------- -------- ---------------- ----------------
AISC per ounce sold US$/oz 1,399 1,234
--------------------------------------------------- -------- ---------------- ----------------
(1) Includes refinery and transport.
3) Cash and cash equivalents, bullion on hand and gold and
silver sales debtor
Cash and cash equivalents, bullion on hand, gold and silver
sales debtor is a non-GAAP financial measure of the available cash
and liquid assets at a point in time. Management uses this measure
internally to better assess performance trends for the Company as a
whole. Management considers that, in addition to conventional
measures prepared in accordance with GAAP, certain investors use
such non-GAAP information to evaluate the Company's performance and
ability to generate cash flow and the measure is intended to
provide additional information.
This non-GAAP measure does not have any standardised meaning
prescribed by GAAP and should not be considered in isolation or as
a substitute for measures of performance prepared in accordance
with GAAP. This measure is not necessarily indicative of cash and
cash equivalents as determined under GAAP and other companies may
calculate it differently.
Reconciliation to cash and cash equivalents , bullion on hand,
gold and silver sales debtor:
31 December 2022 31 December 2021
US$'000 US$'000
------------------------------------------------------------------------- ---------------- ----------------
Cash and cash equivalents (note 2.16(a)) 102,373 207,821
Bullion on hand (valued at the year-end spot price) 24,440 20,304
Gold and silver sales debtor (note 2.7) 29,832 29,147
------------------------------------------------------------------------- ---------------- ----------------
Cash and cash equivalents, bullion on hand, gold and silver sales debtor 156,645 257,272
------------------------------------------------------------------------- ---------------- ----------------
The majority of funds have been invested in international
rolling short-term interest money market deposits.
4) Free cash flow and adjusted free cash flow
Free cash flow is a non-GAAP financial measure. Free cash flow
is a measure of the available cash after distributions to the
Non-Controlling Interest ("NCI") in SGM, being EMRA, that the Group
has at its disposal to use for capital reinvestment and to
distribute to shareholders of the parent. Free cash flow is
intended to provide additional information, does not have any
standardised meaning prescribed by GAAP and should not be
considered in isolation or as a substitute for measures of
performance prepared in accordance with GAAP. This measure is not
necessarily indicative of operating profit or cash flow from
operations as determined under GAAP and other companies may
calculate this measure differently.
31 December 2022 31 December 2021
US$'000 US$'000
--------------------------------------------------------------------- ---------------- ----------------
Net cash generated from operating activities 291,936 309,878
Less:
Net cash used in investing activities (274,583) (240,676)
Dividend paid - non-controlling interest in SGM (35,492) (75,200)
--------------------------------------------------------------------- ---------------- ----------------
Free cash flow (18,139) (5,998)
Add back:
Transactions completed through specific available cash resources (1) - -
--------------------------------------------------------------------- ---------------- ----------------
Adjusted free cash flow (18,139) (5,998)
--------------------------------------------------------------------- ---------------- ----------------
(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 OPPORTUNITIES AS WE POSITION FOR GROWTH
Centamin recognises that nothing is without risk. We believe a
successful and sustainable business model requires a robust and
proactive risk management framework as its foundation. This is
supported by a strong culture of risk awareness, encouraging
openness and integrity, alongside a clearly defined appetite for
risk. This enables the Company to consider risks and opportunities
for more effective decision-making, delivery on our objectives and
improve our performance as a responsible mining company.
The Board has overall responsibility, supported by the Audit and
Risk Committee, for establishing a framework that allows for the
review of existing and emerging risks in the context of both
opportunities and potential threats that informs the principal
risks and uncertainties. These inform the assessment of the future
prospects and long-term viability of the Group, further details of
the approach are shown in the Viability Statement in the 2022
Annual Report. Risks and opportunities are also considered when
challenging the strategic objectives of the Company that underpin
Our Strategy as shown in the 2022 Annual Report.
Further information on our Risk Oversight and Accountability are
shown on our website under Risk & Opportunity Management in our
About Section here which also contains further information on our
Risk Appetite.
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. Further
detail of the work of the Audit and Risk Committee is set out in
the Audit and Risk Committee Report of the Governance Report in the
2022 Annual Report.
The principal risks identified by the Board evidence the extent
of potential consequences inherent in operating a large-scale
mining operation and we have included our view on the appetite to
these risks at a point in time at the end of 2022, however it
should be noted that these risks are discussed regularly, and our
appetite could change based on several factors. The Board regularly
assesses the measures to mitigate these risks.
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
For the current reporting period we have identified 16 principal
risks and 3 emerging risks. Further detail on the Principal Risks
which could affect Centamin are shown below with a description of
the nature of the risk, risk trend and velocity, link to the
strategic pillars, mitigation measures, ongoing strategy to manage
the risk and the Group risk appetite.
Principal Nature of Risk Mitigation Measures Ongoing Strategy
Risk
GEOPOLITICAL Future political, Government policies To maintain
security and social have developed over a detailed and
Risk Appetite: changes in the countries the past years in host up to date understanding
Balanced in which we operate countries to incentivise of the investment
may impact on the foreign direct investment framework and
Group. and the development operating conditions
The future investment of local mining industries. as well as a
framework, stability Centamin deploys a proactive constructive
and business conditions approach to government relationship
in our operating and stakeholder liaison with all concerned
locations could change and actively monitors stakeholders
with governments - on an ongoing basis including host
adopting different - legal, fiscal, regulatory governments
laws, regulations and political developments and local partners,
and policies that in its host countries. such as EMRA.
may impact on the The terms of the Sukari The Company
ownership, development Concession Agreement, seeks to abide
and operation of (including the applicable by the Concession
our Mineral Resources tax regime and rights Agreement as
projects. For example, of tenure), were issued well as local
over the last year and ratified under special laws/regulations
the Company has adapted Law No. 222 of 1994 in Egypt including
to the changing regional and can, therefore, around the areas
security in our development only be amended by the of exploration
projects in Côte passing of a further and furthermore
d'Ivoire. We are law. We continue to where our exploration
monitoring these closely monitor the activities are
closely. Outside situation through our taking place
of our host countries own security, local in Côte
we are monitoring and national government d'Ivoire.
the ongoing conflict contacts, national security
in Ukraine including and external advisors.
the potential wider
impact of this on
the Company. This
is discussed further
in the Chair's Foreward
and in the Market
Review in the 2022
Annual Report.
------------------------------ ------------------------------ -------------------------------
LEGAL AND The Group's structure Centamin deploys a proactive The Company
REGULATORY includes mining exploitation approach to government seeks to ensure
COMPLIANCE and exploration licences and stakeholder liaison that it complies
Risk Appetite: in Egypt and Côte and actively monitors with all relevant
Balanced d'Ivoire held through - on an ongoing basis regulation and
companies in Australia, - legal, fiscal, regulatory legislation
Jersey and the United and political developments including its
Kingdom. As a result, in its host countries. environmental
the Group is subject In Egypt we have the and operational
to various legal Sukari Concession Agreement commitments
and regulatory requirements which can only be changed set out in the
across all jurisdictions, by means of another relevant
including cross law, so we have the permits/authorisations
jurisdictional right to export gold, and local laws/
taxation, related repatriation of funds, regulations.
party transactions, existing tax exemption
antibribery and corruption. and further considerations.
Ongoing legal, fiscal In addition, the Group
and regulatory changes engages with the relevant
may impact project regulatory authorities.
permitting, tenure, In addition, on an ongoing
taxation, exchange basis, the Group seeks
rates, environmental appropriate advice to
protection, labour ensure compliance with
relations, and the all relevant regulation
ability to repatriate and legislation. An
income and capital. example would be the
These measures may global tax strategy
also impact the ability in place which ensures
to import key supplies, all taxes are paid at
export gold production an operational level
and repatriate revenues. and further tax requirements
are met through the
holding structure.
Appropriate
monitoring procedures
are in place, and we
ensure that we manage
legal and regulatory
compliance.
------------------------------ ------------------------------ -------------------------------
LITIGATION Centamin's ability In order to mitigate To minimise
Risk Appetite: to operate and conduct this risk Centamin has exposure to
Balanced its business may (a) retained reputable litigation and
be adversely affected legal advisers and continues reduce the impact
by current and any to actively pursue its of actions by
future dispute resolution legal rights with respect complying with
and/or litigation to its existing case; all relevant
proceedings. Centamin and (b) maintains regular laws and regulations
is party to a single contact with its Egyptian and to defend
legal action in Egypt. legal advisers who actively and/or bring
The details of this monitor developments any actions
litigation, which in both court and local necessary to
relates to the Sukari media for signs of any protect the
Concession Agreement, legislative or similar Company's assets,
are given in note developments that relate rights and reputation.
5.1 of the financial to its ongoing litigation,
statements in the or which may otherwise
2022 ARA. This challenge threaten its operations,
to the Sukari Concession finances or prospects.
Agreement could affect The potential for serious
the Company's ability impact can be further
to operate the mine. mitigated by:
Centamin's adherence
to local laws and agreements;
the Egyptian government's
continued support on
the constitutionality
of Law No. 32 of 2014,
which restricts the
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.
On the 14th of January
2023 there was a ruling
by the Egyptian Supreme
Constitutional Court
which held that Law
No. 32 of 2014 was
constitutional.
The judgment gives Centamin
the right to request
the Supreme Administrative
Court to rule that the
2011 challenge to the
Concession Agreement
is now legally inadmissible.
Further detail is given
in note 5.1 and on our
website in the regulatory
news section within
the update issued on
the 16 January.
------------------------------ ------------------------------ -------------------------------
GLOBAL MACROECONOMIC The COVID-19 pandemic We monitor price movements We will continue
DEVELOPMENTS meant economies across and market dynamics to allow for
Risk Appetite: the world were negatively using primarily third-party financial flexibility
Balanced impacted by lockdowns analysis and forecasts when budgeting
and disruptions to to support our financial and forecasting
supply chains, which projections and cash using a measured
have been further management strategies. approach to
impacted by the crisis Prices will continue the potential
in the Ukraine and to influence budget fluctuations
wider macroeconomic considerations in areas in gold price,
developments globally. such as exploration inflationary
Through 2021 and and the timing of certain pressures and
in to 2022, we saw capital expenditures. the increasing
increases in operating We focus on cost efficiencies costs across
costs and greater and capital discipline our capital
inflationary pressures, to deliver competitive expenditure
together with a shortage all-in sustaining cost. and operational
of critical consumables Deliver on our cost needs.
and equipment. We savings initiatives
expect this to continue to counter inflation
during 2023 as the and improve margins
new world normal with the recent examples
is established. This being the high productivity
situation could create truck trays alongside
an adverse impact additional benefits
on our operations, from the delivery of
costs, sales and the solar plant which
profits. reduces our fuel consumption
Further information and lowers the cost
is shown in the Operational of buying fuel. Further
Review on and Market options being considered
Review in the 2022 include Grid Connection,
Annual Report. a Renewable Extension
and Electrifying our
Mining Fleet outlined
in Our 2030 Carbon Abatement
Roadmap in the 2022
Annual Report.
------------------------------ ------------------------------ -------------------------------
GOLD PRICE The extent of the The Group is 100% exposed The Company
Risk Appetite: Company's financial to the gold price; however, does not currently
Balanced performance is due the cash costs of the hedge against
in part to the price Sukari Gold Mine remain the price of
of gold, over which within our budget which gold.
the Company has no is conservatively based We will continue
influence. Revenues on the long-term gold to allow for
from gold sales are price as modelled by financial flexibility
in US dollars and external advisors. This when budgeting
Centamin has exposure often means we can take and forecasting
to costs in other advantage of any changes using a measured
currencies including in the gold price which approach to
Egyptian pounds, have been positive over the potential
Australian dollars the course of 2022 with fluctuations
and sterling. a realised average price in gold price.
Centamin manages of US$1794. This includes
its exposure to gold ensuring that
price by keeping we can manage
operating costs as within the boundaries
low as possible and and margins
continues to consider that the price
other options where of gold and
these would be viewed the impacts
as beneficial for to our cost
our commitment to base allow.
stakeholder returns.
------------------------------ ------------------------------ -------------------------------
CAPITAL Centamin targets We monitor price movements We will continue
ALLOCATION a capital structure and market dynamics to allow for
AND LIQUIDITY to provide sufficient using primarily third-party financial flexibility
Risk Appetite: liquidity and financial analysis and forecasts when budgeting
Balanced flexibility to meet in order to support and forecasting
the Company's current our financial projections using a measured
and future financial and cash management approach to
commitments, while strategies. Prices will the potential
balancing that with continue to influence fluctuations
sustainable stakeholder budget considerations in gold price,
returns. in areas such as exploration inflationary
The capital requirements and the timing of certain pressures and
to develop Sukari, capital expenditures. the increasing
delivery of key projects, We focus on cost efficiencies costs across
future gold prices and capital discipline our capital
and operating costs to deliver competitive expenditure
are all factors which all-in sustaining cost. and operational
need to be considered Deliver on our cost needs. This
alongside the external savings initiatives includes ensuring
pressures, as highlighted to counter inflation that we can
in the Global Macroeconomic and improve margins manage within
Developments risk. with the recent examples the boundaries
being the high productivity and margins
truck trays alongside that the impacts
additional benefits to our cost
from the delivery of base allow.
the solar plant which Distribution
reduces our fuel consumption of free cash
and lowers the cost flow to stakeholders
of buying fuel. Further will continue
options being considered to be managed
include Grid Connection, in a balanced
a Renewable Extension and sustainable
and Electrifying our manner that
Mining Fleet outlined allows for both
in Our 2030 Carbon Abatement growth and returns.
Roadmap. Further to
this we have established
increased levels of
stores and inventory
which will be maintained
in the short to medium
term to reduce uncertainty.
We have a robust investment
approval process involving
the management and the
Board as required. Additional
optionality will be
generated through the
RCF which is now in
place.
------------------------------ ------------------------------ -------------------------------
DIVERSIFICATION Sukari currently The project at Sukari Outside the
Risk Appetite: constitutes Centamin's has two distinct ore single project
Informed main Mineral Resource sources (open pit and at Sukari, there
and sole Mineral underground), the processing is continued
Reserve, near term plant has two separate focus on longer
production and revenue. flotation circuits, term growth
We recognise until two separate power stations and expansion
further production and the commissioning through our
growth beyond the of the solar plant in exploration
core Sukari asset Q4 2022. and potential
is identified there Whilst one project, acquisition
is the challenge the nature of the design targets both
of diversification. of the plant provides inside and outside
adequate mitigation of Egypt.
and reduces the relative The exploration
likelihood of dependence projects across
compared to a single the business
layer plant design. provide a well-balanced
The second circuit of project pipeline,
the process plant has with potential
been fully operational to add incremental
for over eight years, shareholder
which shows resilience. value by increasing
In addition, the plant production.
is fed by both the open Further information
pit and underground will be provided
operation, providing through 2023
higher and lower-grade in updates on
ore. the exploration
Operational activity activities and
and production is expected the release
to continue at above of the pre-feasibility
nameplate capacity. study for Doropo
Further to this we have in H1.
increased our operational
flexibility at Sukari
including an updated
underground mining capacity.
Alongside the PFS on
Doropo the wider resource
base in Côte d'Ivoire
is growing at ABC, we
are undertaking brownfield
exploration around the
Sukari Concession and
exploring highly prospective
ground in Egypt's Eastern
Desert.
Further information
is given in the Exploration
Review in the 2022 Annual
Report.
------------------------------ ------------------------------ -------------------------------
CONCESSION SGM is 50:50 jointly It is of key importance A key objective
GOVERNANCE owned by PGM (the for Centamin to maintain of the Company
AND MANAGEMENT Company's wholly a healthy and transparent is to maintain
Risk Appetite: owned subsidiary) working relationship its licence
Balanced and EMRA, with equal with its 50% partner, to operate in
board representation EMRA, through a strict its host countries.
from both parties. adherence to the Sukari In Egypt, this
The board of SGM Concession Agreement. is achieved
operates by way of With the onset of profit through active
simple majority. sharing in 2019, the and ongoing
Further to this with proper application of co-operation,
the award of the the cost recovery, net regular meetings
EDX concession areas profit share payment and correspondence
we need to adhere provisions and SGM protocols with EMRA, as
with the agreed terms. under the Concession well as making
Should a dispute Agreement, has become sure that the
arise, or decision-making a priority. These are terms and conditions
become deadlocked key considerations as of the Concession
which cannot otherwise we work towards the Agreement and
be amicably resolved renewal of the terms applicable laws
then time-consuming of the existing Concession are fully complied
and costly arbitration agreement. with including
or other dispute It is a key focus to under the terms
resolution proceedings maintain good working of the EDX concessions.
may need to be initiated. relations with EMRA, Ongoing monitoring
other relevant ministries and review of
and wider government this is key
to ensure successful and is an activity
operation of the Sukari which we will
Gold Mine. The Group continue to
has regular meetings give the required
with officials from focus to.
EMRA and invests time
in liaising with the
relevant ministry and
other governmental
representatives.
This investment is shown
by the wider commitment
to Egypt through the
Sukari concession exploration
and EDX concession
investment.
------------------------------ ------------------------------ -------------------------------
LICENCE Centamin is committed Ensure that we are clear Acting in an
TO OPERATE to building and operating on the standards that ethical, responsible
Risk Appetite: our mines in a safe are expected locally and transparent
Balanced and responsible manner. and regionally within manner is fundamental
To do this, we seek our areas of operation. to realising
to build trust-based Develop and implement the significant
partnerships with investment plans that business benefits
host governments sustain broad stakeholder gained from
and local communities support and compliance building trusted
to protect our licence with local and regional and constructive
to operate and ability standards. relationships
to grow. We should Maintain an up-to-date with all our
only advance our compliance register stakeholders,
business interests for each asset and routinely and to maintaining
where this protects review our performance our socio-political
people, fosters against these commitments licence to operate.
socio-economic and obligations. Strengthen our
development and safeguards sustainability
the environment, governance and
and leaves a positive management framework
legacy at all levels
for our host communities. of the organisation,
including reinforcement
of our performance
standards to
support growth,
supported by
resources allocated
to ensure the
long-term physical,
chemical and
biological stability
of the site
- or social
benefits to
our host communities.
Further information
is shown in
Understanding
Our Stakeholders
in the 2022
Annual Report.
------------------------------ ------------------------------ -------------------------------
PEOPLE Our accomplishments Initiatives which have To deliver on
( Attract, as a Company rely been introduced include: the principles
develop on our ability to the Employee Development and commitments
and retain attract, develop Pathway, to ensure all as stated in
skilled and retain talented positions are undertaken our Code of
people) people as they are to a proficient level; Conduct. Visible
Risk Appetite: the foundation of supervisory and leadership leadership in
Balanced our business. training to equip employees the development
It is imperative for increased levels of our people,
that we support our of technical and management diversity and
people to develop responsibility; and inclusion. Sustained
a shared understanding succession planning. resourcing of
of the critical behaviours Continue to reinforce the professional
and skills required awareness of our development,
for successful performance organisational training initiatives
and provide them values and the critical and investment
with the opportunity behaviours required in our people.
to progress to more for successful performance
senior positions supported by established
within the Company. policies and processes.
Otherwise, we face Through visible leadership,
the risk of elevated strengthen diversity
rates of turnover and inclusion in workplace
and knowledge loss. culture and practice,
Valuing diversity and set targets to increase
and promoting inclusion the representation.
is an ethical imperative Further information
for a sustainable is shown in Understanding
business. Our Stakeholders in
the 2022 Annual Report.
------------------------------ ------------------------------ -------------------------------
STAKEHOLDER Elevated expectations Through our Sustainability Our Environmental
ENVIRONMENTAL on environmental, Performance Framework and Social Policies
AND SOCIAL social and governance we continue to strengthen are supported
EXPECTATIONS ("ESG") corporate our governance and management at an operational
Risk Appetite: responsibility, includes controls and assurance level by HSES
Balanced increased levels processes to meet stakeholder Management Systems
of stakeholder scrutiny, expectations, existing and tailored
disclosure, regulatory and new regulatory and Environmental
requirements and industry standards, Management Plan
industry standards. for example the RGMPs, that considers
Recent high-profile GISTM and TCFD. the regulatory
incidents have put We define environmental context of the
a spotlight on the and social criteria country and
need for increased and triggers to support unique environmental
levels of corporate key investment decisions. risks specific
accountability on At asset-level, we have to each site.
matters of environmental focused on building We employ a
and social governance, the capacity of our robust tailings
including tailings HSES specialist teams governance approach
management, heritage and the continual improvement based on good
protection, biodiversity, of our environmental, industry practice,
water management, sustainability and social risk management
responsible supply management system. We and assurance.
chains, diversity are updating our LOM We are targeting
and inclusion. management plans and conformance
Whilst the COVID-19 preparing for ISO 14001 with the GISTM
pandemic initially accreditation. Further by August 2023.
focused attention, information is shown We recognise
we have continued in Understanding Our that our operations
to develop and invest Stakeholders in the can be a significant
in the wellbeing 2022 Annual Report. driver for positive
of our people, addressing socio-economic
social inequalities development.
and the role which Fundamental
we must play in the to this success
wider communities. is the establishment
of trusting
partnerships
with our stakeholders,
good governance,
ethical conduct
and transparency.
------------------------------ ------------------------------ -------------------------------
Decarbonisation We recognise transition In the short-term, we We have set
Risk Appetite: to a net zero carbon are focused on the an interim climate
Balanced economy is expected identification target of 30%,
to profoundly affect and delivery of projects to reduce our
our business model that will effectively Scope 1 and
over the medium and reduce our operational 2 GHG emissions
long-term due to Scope 1 and 2 GHG emissions. by 2030, compared
factors including: In 2022, we executed to a 2021 base-year.
capital investment various carbon abatement This would put
and access to new projects, most notably us on a Paris-aligned
technology, the pricing our 36MWDC (30MWAC) trajectory to
of carbon emissions; solar plant and battery limit global
availability and storage system. Other warming to 'well
costing of commodities energy efficiency initiatives below' 2degC
and consumables; executed included roll-out by 2050.
changing market and of the high production We have identified
investor sentiment. trays leading to an other carbon
The most significant 8% reduction in fuel abatement opportunities
opportunity for consumption per tonne that are the
decarbonisation of material moved, subject of ongoing
is the ability to optimisation investigation,
reduce and potentially of the fine grind process including the
remove fossil fuel-generated within the comminution electrification
electricity from circuit and replacement of our mobile
gold mining's sources of older underground fleet and energy
of power. trucks and loaders to efficiency.
The Transition Risk more efficient units. Under our climate
and Opportunity analysis We also studied opportunities transition strategy,
on in the 2022 Annual to reduce the operational we also recognise
Report gives further emission of Sukari over the need to
detail. the Life of Mine, including collaborate
sourcing clean and lower with our supply
carbon power through chain to reduce
connection to the national Scope 3 GHG
grid and further expansion emissions.
of our onsite renewable We will continue
energy production. Further to assess our
information is given climate-related
in our 2030 Decarbonisation risks and opportunities
Roadmap in the 2022 against the
Annual Report. updated Life
of Mine Plan
for Sukari.
Further information
on our Climate
Change Governance,
Strategy, Risks,
Metrics and
Targets are
given in our
disclosures
against the
Task Force on
Climate-related
Financial Disclosures
in the 2022
Annual Report
and our 2030
Decarbonisation
Roadmap.
------------------------------ ------------------------------ -------------------------------
SAFETY, It is an inherent Protecting the safety, Ensuring the
HEALTH AND risk in our industry health and wellbeing safety, health
WELLBEING that incidents due of employees, contractors, and wellbeing
Risk Appetite: to unsafe acts or local communities and of our workforce
Controlled conditions, or the other stakeholders is is directly
failure of our equipment a fundamental responsibility aligned with
or infrastructure for Centamin. We seek our first Value,
could lead to injuries continuous improvement to Protect,
or fatalities. Remote of our safety and health and is a moral
and rostered work management system and imperative.
also has potential practices including This requires
to impact the mental assurance processes, a focus on zero-harm
health and wellbeing with particular focus whilst constituting
of our workers. on the early identification a direct investment
Our workforce faces of risks and the prevention in the
potential risks from of incidents. TSF2 is productivity
hazards such as fire, now in operation and of the business
explosion and electrocution, continues to be operated and the physical
as well as risks to the highest standards integrity of
specific to the mine as outlined on our our operations.
site and development commitments A safe and healthy
project. These include and standards to the workforce translates
potential slope failures Tailings Storage Facility. into an engaged,
or collapse in the We continue to review motivated and
underground, mobile and test our crisis productive workforce
plant collisions management plan alongside that mitigates
and incidents involving reinforcing our critical operational
hazardous materials. risk and control standards. stoppages, and
Continuing focus which includes building reduces potential
on the risks associated the awareness and capacity incidents or
with mining companies' of senior management harm.
tailings facilities teams to operationalise
also means we continue our critical risks standards
to monitor this risk, and seek conformance
completing regular to ISO 45001.
internal and external In 2022 we enhanced
technical reviews. our health and wellbeing
programmes with increased
awareness and training
on mental health, as
part of the delivery
of our Health & Wellbeing
Plan, with new insights
on the relationship
between employer and
employee arising from
the COVID-19 pandemic.
------------------------------ ------------------------------ -------------------------------
EXPLORATION Exploration activities Before undertaking any Ensuring we
AND PROJECT by their very nature exploration activities, have an effective
DEVELOPMENT are highly speculative a risk-based approach and efficient
Risk Appetite: with an inherent is undertaken to filter exploration
Opportunistic degree of risk. Centamin projects, considering programme to
strives to make new a number of factors. meet our strategic
discoveries, growth There is now a restructured targets, long-term
and value-creation approach established production and
opportunities through with the refreshed reserves goals.
our exploration programme. exploration Further information
Whilst Egypt continues team who undertake systematic will be provided
to represent a significant work programmes which through 2023
opportunity through reduce the risk and in updates on
brownfield exploration gradually increase the the exploration
around the Sukari certainty of exploration activities and
Concession and highly discoveries that allows the release
prospective ground a focused spending strategy. of the pre-feasibility
in Egypt's Eastern This will be supported study for Doropo.
Desert, we also recognise by independent advice
our potential growth and an investment in
projects in Côte technology.
d'Ivoire. Further 2022 delivered a positive
information is given update on the pre-feasibility
in the Exploration study for Doropo with
Review in the 2022 completion planned for
Annual Report. H1 2023, we secured
2,989km2 of highly
prospective
and underexplored ground
in Egypt which we started
fieldwork on.
Further information
is given in the Exploration
Review.
------------------------------ ------------------------------ -------------------------------
MAXIMISING Geological uncertainty The Mineral Resource To achieve an
OUR GEOLOGICAL is an inherent risk Management team is focused accurate estimation
POTENTIAL which all mining on developing the geological based on geology,
Risk Appetite: companies face. and structural framework that informs
Informed Understanding of in which mineralisation improved mine
the geology and associated is hosted. This has planning and
grade distribution brought about a clear operations to
can be influenced understanding of the deliver results.
by a number of factors structural and lithological This will be
which can impact controls on mineralisation supported by
the size, orientation and the development the near-term
and shape of the of a predictive model roadmap to 475
ore and the potential which is being used - 500koz pa
grade expected by to expand the Mineral and the robust
the mining operations. Resource and Reserve life of mine
As these estimations base of the Company. schedule which
are used to inform Orebody stewardship was further
our operations and was also introduced updated in 2022.
the wider business in which geology and
strategy we need the geologist is at
to ensure that we the forefront of all
can make this process mining and extraction
as accurate as possible. process decision-making.
This has allowed improved
long and short-term
planning, timing of
grade control, material
movement, blending and
processing requirements
to maximise return on
investment.
Further information
on the improvements
which have been made
are shown in the Exploration
Review with one of the
key areas being the
growth of our Mineral
Reserves at Sukari,
as highlighted in the
Sukari Reserve and Resource
update released in Q4
2022.
------------------------------ ------------------------------ -------------------------------
OPERATIONAL By their nature, 2021 was a transformational To achieve reliable
PERFORMANCE mineral resources year for Centamin with and consistent
AND PLANNING and reserves are a focus on improving production,
estimates based on mining flexibility and whilst optimising
Risk Appetite: a range of assumptions, delivering growth which the potential
Informed including geological, was continued through of the operation
metallurgical, technical 2022 as we delivered as highlighted
and economic factors. greater open pit mining in the Operational
Other variables include flexibility and consistency Review. The
expected costs, inflation alongside other improvements. Company provides
rates, gold price, We updated the market timely and accurate
grade on the twelve-year LOM information
downgrades and production Plan, issued ten-year to the market
outputs. guidance, continued on production
Unplanned operational with accelerated levels and forecasts.
stoppages can impact waste-stripping The mining sector
our production. An and took ownership of continues to
inability to shift the underground mining face operating
the volumes of waste operation. Through 2022 cost inflation,
required, drops in we commissioned the including labour
our operational capacity solar plant, installed costs, energy
in mining, contractor all the high production costs and the
management, supply truck trays, lifted natural impact
chain disruption and boosted TSF2 and of ore-grade
or ground stability refreshed the Sukari deterioration
are examples of potential Orebody Stewardship over time. In
risks. Model. The LOM Plan order to deliver
Accurate and complete should provide clarity our disciplined
planning is pivotal as to the strategic growth strategy
to informing production direction of the mine and to maintain
estimates, grade and the desired production and improve
quality and provide levels for the short, our competitive
greater clarity to medium and long-term position, the
corporate/operational to give focus to the Group must deliver
decision-making. operational elements its financial
We then need to deliver of the mine. Alongside improvement
against our targets the overhauled geological targets, cost
by analysis of our leadership team and savings initiatives
data to inform the restructured approach and minimise
right decisions. to geology and orebody the number of
stewardship we have unplanned operational
developed a comprehensive stoppages.
mining engineering model,
enhanced our geotechnical
engineering programme,
increased our mining
flexibility and have
identified multiple
initiatives to improve
operating efficiency
and productivity. An
example being taking
ownership of the underground
mining operation in
house with targeted
investment in the resources
required to reflect
the growth potential.
------------------------------ ------------------------------ -------------------------------
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 a number of these
risks from the 2022 Annual Report have been elevated to a principal
risk , highlighting the importance of this process.
We have included 'Infectious Disease' as we recognise that there
continues to be the potential of a pandemic event or an even more
localised outbreak which could have significant impacts on our
business, so we will continue to ensure that we apply the lessons
learned from COVID-19. We also recognise 'Climate Change' as an
emerging risk, whilst not currently a principal risk, as this will
potentially have external and longer-term impacts which need to be
considered.
The Audit and 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. 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.
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
as part of an ongoing digital transformation programme.
Infectious Disease Potential of a regional/global outbreak of a new disease bringing medical, economic and social
challenges. We recognise the potential impacts of a global pandemic similar to COVID-19 as
a threat bringing potential risks to our people and business. Learning from COVID-19 and other
infectious disease management we developed a dynamic action plan to safeguard the health of
our people and minimise any business impact. This will continue to adapt and evolve as required
to ensure we are in the best place to manage and respond as required.
Climate Change Encompassing both physical and transitional elements, as this applies to our growth and
diversification
prospects in Côte d'Ivoire and Egypt. Above and beyond the scope of our existing operation,
as presented in our Climate Change disclosures in the 2022 Annual Report, climate change has
the potential to profoundly affect how we screen, evaluate and allocate capital towards growth
prospects.
Further details on transitional risk and mitigations are given under the principal risk of
'Decarbonisation'.
DIRECTORS' RESPONSIBILITIES
For the year ended 31 December 2022
STATEMENT OF DIRECTORS' RESPONSIBILITIES IN RESPECT OF THE
FINANCIAL STATEMENTS
The Directors are responsible for preparing the financial
statements in accordance with applicable Jersey law and
International Financial Reporting Standards.
The Directors must not approve the 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 responsible for:
-- selecting suitable accounting policies and then applying them consistently;
-- stating whether applicable accounting standards have been
followed, subject to any material departures disclosed and
explained in the financial statements;
-- making judgements and accounting estimates that are reasonable and prudent; and
-- preparing the financial statements on the going concern basis
unless it is inappropriate to presume that the Group will continue
in business.
The Directors confirm that they have complied with the above
requirements in preparing the financial statements.
The D irectors are responsible for ensuring that the financial
statements comply with the Companies (Jersey) Law, 1991 and
safeguarding the assets of the Group and hence for taking
reasonable steps for the prevention and detection of fraud and
other irregularities. So far as the D irectors are aware, there is
no relevant audit information of which the Group's auditors are
unaware, and each director has taken all the steps that he or she
ought to have taken as a director in order to make himself or
herself aware of any relevant audit information and to establish
that the Group's auditors are aware of that information.
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 and emerging 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 Directors are also 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.
On behalf of the Board:
Martin Horgan Ross Jerrard
Chief Executive Officer Chief Financial Officer
Director Director
16 March 2023 16 March 2023
AUDITED FINANCIAL STATEMENTS
Consolidated statement of comprehensive income
for the year ended 31 December 2022
31 December 2022 31 December 2021
Note US$'000 US$'000*
--------------------------------------------------------- ---- ---------------- ----------------
Revenue 2.2 788,424 733,306
Cost of sales 2.3 (544,075) (487,376)
--------------------------------------------------------- ---- ---------------- ----------------
Gross profit 244,349 245,930
Exploration and evaluation expenditure 2.1 (29,723) (13,879)
Other operating costs 2.3 (49,003) (48,427)
Other income 2.3 6,623 5,708
Finance income 2.3 1,214 196
Finance costs 2.3 (2,459) (673)
Impairment of exploration and evaluation asset 2.10 - (35,208)
--------------------------------------------------------- ---- ---------------- ----------------
Profit for the year before tax 171,001 153,647
Tax 2.5 (226) 20
--------------------------------------------------------- ---- ---------------- ----------------
Profit for the year after tax 170,775 153,667
--------------------------------------------------------- ---- ---------------- ----------------
Profit for the year after tax attributable to:
- the owners of the parent 72,490 101,527
- non-controlling interest in SGM 2.4 98,285 52,140
--------------------------------------------------------- ---- ---------------- ----------------
Total comprehensive income for the year 170,775 153,667
--------------------------------------------------------- ---- ---------------- ----------------
Total comprehensive income for the year attributable to:
- the owners of the parent 72,490 101,527
- non-controlling interest in SGM 2.4 98,285 52,140
--------------------------------------------------------- ---- ---------------- ----------------
Earnings per share attributable to owners of the parent:
Basic (US cents per share) 6.4 6.287 8.811
Diluted (US cents per share) 6.4 6.203 8.738
--------------------------------------------------------- ---- ---------------- ----------------
*In the 2021 Consolidated Statement of Comprehensive Income,
Finance costs were included and disclosed in the line 'Other
operating costs', in these financial statements they are now
separately disclosed in their own line and as such 'Other operating
costs' for 2021 have changed.
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 2022
31 December 2022 31 December 2021
Note US$'000 US$'000
---------------------------------- ------- ---------------- ----------------
Non-current assets
Property, plant and equipment 2.9 1,086,649 956,217
Exploration and evaluation asset 2.10 24,809 25,261
Inventories 2.11 94,773 64,756
Other receivables 2.7 1,372 101
---------------------------------- ------- ---------------- ----------------
Total non-current assets 1,207,603 1,046,335
---------------------------------- ------- ---------------- ----------------
Current assets
Inventories 2.11 134,065 128,721
Trade and other receivables 2.7 35,628 32,579
Prepayments 2.8 13,864 7,964
Cash and cash equivalents 2.16(a) 102,373 207,821
---------------------------------- ------- ---------------- ----------------
Total current assets 285,930 377,085
---------------------------------- ------- ---------------- ----------------
Total assets 1,493,533 1,423,420
---------------------------------- ------- ---------------- ----------------
Non-current liabilities
Other payables 2.12 11,801 10,386
Provisions 2.13 37,425 42,647
---------------------------------- ------- ---------------- ----------------
Total non-current liabilities 49,226 53,033
---------------------------------- ------- ---------------- ----------------
Current liabilities
Trade and other payables 2.12 99,395 75,759
Tax liabilities 2.5 249 253
Provisions 2.13 3,256 4,617
---------------------------------- ------- ---------------- ----------------
Total current liabilities 102,900 80,629
---------------------------------- ------- ---------------- ----------------
Total liabilities 152,126 133,662
---------------------------------- ------- ---------------- ----------------
Net assets 1,341,407 1,289,758
---------------------------------- ------- ---------------- ----------------
Equity
Issued capital 2.14 670,994 669,531
Share option reserve 2.15 6,082 4,975
Accumulated profits 641,794 655,508
---------------------------------- ------- ---------------- ----------------
Total equity attributable to:
- owners of the parent 1,318,870 1,330,014
- non-controlling interest in SGM 2.4 22,537 (40,256)
---------------------------------- ------- ---------------- ----------------
Total equity 1,341,407 1,289,758
---------------------------------- ------- ---------------- ----------------
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 2023 and signed on its
behalf by:
Martin Horgan Ross Jerrard
Chief Executive Officer Chief Financial Officer
Director Director
16 March 2023 16 March 2023
Consolidated statement of changes in equity
for the year ended 31 December 2022
Share
Issued option Accumulated Non-controlling Total
capital reserve profits Total interests equity
Note US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
---------------------------------------- ---- -------- -------- ----------- --------- --------------- ---------
Balance as at 1 January 2022 669,531 4,975 655,508 1,330,014 (40,256) 1,289,758
Profit for the year after tax - - 72,490 72,490 98,285 170,775
---------------------------------------- ---- -------- -------- ----------- --------- --------------- ---------
Total comprehensive income for the year - - 72,490 72,490 98,285 170,775
Net recognition of share-based payments 2.15 - 2,570 - 2,570 - 2,570
Transfer of share-based payments 2.15 1,463 (1,463) - - - -
Dividend paid - non-controlling interest
in SGM 2.4 - - - - (35,492) (35,492)
Dividend paid - owners of the parent - - (86,204) (86,204) - (86,204)
---------------------------------------- ---- -------- -------- ----------- --------- --------------- ---------
Balance as at 31 December 2022 670,994 6,082 641,794 1,318,870 22,537 1,341,407
---------------------------------------- ---- -------- -------- ----------- --------- --------------- ---------
Share
Issued option Accumulated Non-controlling Total
capital reserve profits Total interests equity
Note US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
-------------------------------------- ---- -------- -------- ----------- ---------- --------------- ----------
Balance as at 1 January 2021 668,807 3,343 634,498 1,306,648 (17,196) 1,289,452
Profit for the year after tax - - 101,527 101,527 52,140 153,667
-------------------------------------- ---- -------- -------- ----------- ---------- --------------- ----------
Total comprehensive income for the
year - - 101,527 101,527 52,140 153,667
Own shares acquired 2.14 (1,391) - - (1,391) - (1,391)
Net recognition of share-based
payments 2.15 - 3,747 - 3,747 - 3,747
Transfer of share-based payments 2.15 2,115 (2,115) - - - -
Dividend paid - non-controlling
interest in SGM 2.4 - - - - (75,200) (75,200)
Dividend paid - owners of the parent - - (80,517) (80,517) - (80,517)
-------------------------------------- ---- -------- -------- ----------- ---------- --------------- ----------
Balance as at 31 December 2021 669,531 4,975 655,508 1,330,014 (40,256) 1,289,758
-------------------------------------- ---- -------- -------- ----------- ---------- --------------- ----------
The above audited consolidated statement of changes in equity
should be read in conjunction with the accompanying notes.
Consolidated statement of cash flows
for the year ended 31 December 2022
31 December 2022 31 December 2021
Note US$'000 US$'000
------------------------------------------------------- ------- ---------------- ----------------
Cash flows from operating activities
Cash generated from operating activities 2.16(b) 292,166 309,873
Income tax (paid)/received (230) 5
------------------------------------------------------- ------- ---------------- ----------------
Net cash generated from operating activities 291,936 309,878
Cash flows from investing activities
Acquisition of property, plant, and equipment (263,622) (224,929)
Brownfield exploration and evaluation expenditure (12,175) (15,943)
Finance income 2.3 1,214 196
------------------------------------------------------- ------- ---------------- ----------------
Net cash used in investing activities (274,583) (240,676)
Cash flows from financing activities
Cash element of share-based payments (523) -
Own shares acquired - (1,391)
Dividend paid - non-controlling interest in SGM 2.4 (35,492) (75,200)
Dividend paid - owners of the parent 3.2.2 (86,204) (80,517)
------------------------------------------------------- ------- ---------------- ----------------
Net cash used in financing activities (122,219) (157,108)
------------------------------------------------------- ------- ---------------- ----------------
Net decrease in cash and cash equivalents (104,866) (87,906)
Cash and cash equivalents at the beginning of the year 207,821 291,281
Effect of foreign exchange rate changes (582) 4,446
------------------------------------------------------- ------- ---------------- ----------------
Cash and cash equivalents at the end of the year 2.16(a) 102,373 207,821
------------------------------------------------------- ------- ---------------- ----------------
The above audited consolidated statement of cash flows should be
read in conjunction with the accompanying notes.
Notes to the consolidated financial statements
for the year ended 31 December 2022
BASIS OF PREPARATION
These financial statements are denominated in US dollars
("US$"), 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
the International Financial Reporting Standards ("IFRS") as adopted
by the European Union ("EU") and interpretations issued from time
to time by the IFRS Interpretations Committee ("IFRS IC") and which
are mandatory for reporting as at 31 December 2022 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 or effective.
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 2022 were authorised by the Board of Directors of the
Company for issue on 16 March 2023.
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.
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.
Management has 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 2022 the Group had cash and cash equivalents
of US$102 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 at least twelve months from 16
March 2023, examples of such mitigating actions which were not
applied would be drawdowns of the US$150 million Revolving Credit
Facility which was available as of 13 March 2023.
Key assumptions underpinning this forecast include:
-- Available cash balances;
-- Favourable litigation outcomes, for current litigation refer
to note 5.1 to the financial statements;
-- A fuel price of US$0.90/litre;
-- A processing plant recovery rate of 88.2%
-- Gold price of at least US$1,600/oz.; and
-- Production volumes in line with 2023 guidance
-- The scenarios and impact on liquidity is as follows:
-- Base case: No change to parameters, expected closing cash balance of US$52 million;
-- Average gold price reduction to US$1,475 per ounce: resulted
in a closing cash balance of US$6 million;
-- Fuel price increase to US$1.25/litre: resulted in a closing cash balance of US$9 million;
-- Processing capacity reduction by 20%: resulted in a closing
cash balance of US$10 million; and
-- Processing plant recovery rate reduction to 85.0%: resulted
in a closing cash balance of US$37 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. 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 without applying mitigating measures.
The above sensitivity analysis was also used to assess each
scenarios' outcome as a short-term impairment trigger necessitating
a need for a full impairment assessment review for the Sukari
operating assets as at the reporting date. All the various outcomes
assessed did not reflect an adverse position that would be
indicative of a potential impairment rigger for the Sukari
operating assets.
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 2023 and
that currently there are no material uncertainties regarding going
concern.
These financial statements for the year ended 31 December 2022
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.
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 primarily due to the short remaining life of
mine for Sukari.
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 AMMENTS
1.1 CHANGES IN CRITICAL JUDGEMENTS AND ESTIMATES
There were no material updates and/or changes to critical
accounting judgements and estimates that management has 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 2022 reporting periods and have not been
early adopted by the Group.
New or amended accounting standards
The amendments to accounting standards that are effective for
annual periods beginning on 1 January 2022 did not have a
significant impact on the Group's results year and are also not
expected to have a significant impact in future reporting periods
and on foreseeable future transactions.
Further details of new or revised accounting standards,
interpretations or amendments which are effective for the periods
beginning on or after 1 January 2022 and their impact on the Group
are listed below:
Accounting standard Requirement Impact on financial
statements
=========================== ============================================================ ===========================
Amendment to IAS 16 The amendment to IAS 16 'Property, Plant and Equipment' No material change to the
'Property, Plant and ("PP&E") prohibits an entity from Group's financial position
Equipment': proceeds deducting from the cost of an item of PP&E any proceeds or performance.
before intended use. received from selling items produced
while the entity is preparing the asset for its intended
use. It also clarifies that an entity
is 'testing whether the asset is functioning properly' when
it assesses the technical and
physical performance of the asset. The financial
performance of the asset is not relevant
to this assessment.
=========================== ============================================================ ===========================
Amendments to IAS 37 The amendment of ISA 37 clarifies that the direct costs of No material change to the
'Provisions, Contingent fulfilling a contract include both Group's financial position
Liabilities and Contingent the incremental costs of fulfilling the contract and or performance.
Assets': Onerous Contracts allocation of other costs directly related
- Cost of Fulfilling a to fulfilling contracts. Before recognising a separate
Contract. provision for an onerous contract,
the entity recognises any impairment loss that has occurred
on assets used in fulfilling the
contract.
Annual improvements to The following improvements we finalised in May 2020: No material change to the
IFRS Standards 2018 - * IFRS 9 'Financial Instruments' - clarifies which fees Group's financial position
2020. should be included in the 10% test for derecognition or performance.
of financial liabilities.
* IFRS 16 'Leases' - amendment of illustrative example
13 to remove the illustration of payments from the
lessor relating to leasehold improvements, to remove
any confusion about the treatment of lease
incentives.
=========================== ============================================================ ===========================
Amendments to IFRS 3 Minor amendments were made to IFRS 3 'Business No material change to the
'Business Combinations' - Combinations' to update the references to the Group's financial position
Reference to the Conceptual Framework for Financial Reporting and add an or performance.
Conceptual Framework. exception for the recognition of liabilities
and contingent liabilities within the scope of IAS 37
'Provisions, Contingent Liabilities
and Contingent Assets'and Interpretation 21 'Levies'. The
amendments also confirm that contingent
assets should not be recognised at the acquisition date.
=========================== ============================================================ ===========================
For a detailed discussion about the Group's performance and
financial position, please refer to the financial review.
1.3 CRITICAL JUDGEMENTS AND ESTI M ATES IN APPLYING THE ENTITY'S
ACCOUNTING POLICIES
The following are the critical judgements and estimates that
management has 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
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
o PGM controls the appointment of the General Manager ("GM") at
the Sukari Gold Mine;
o By controlling the appointment of the GM and directing their
activities, the GM will make all day-to-day decisions to allow the
mine to operate in a manner that aligns with the Company's
objectives which involve:
o 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;
o managing capital expenditure, procurement, cost control and
treasury;
o conducting exploration, development, production, and marketing
operations;
o co-ordinating SGM operations and activities, including its
dealings with all contractors and subcontractors;
o bearing ultimate responsibility for all costs and expenses
required in carrying out any and all operations under the CA;
o funding the operations of SGM and recovering costs and
expenses throughout the LOM (i.e., exploration, development, and
production phases);
o funding additional exploration and expansion programmes within
the mine during the production phase;
o taking custody of SGM's stock and management of its funds;
o selling and shipping of all gold and associated metals
produced; and
o entering into and managing gold sales or hedging contracts and
forward sale agreements
b) The duties of EMRA
-- EMRA must, under the terms of the CA, provide the required
approvals to allow the mine to operate.
c) The duties, role, and function of the board of SGM:
-- The board of SGM has six board members:
o three of which are appointed by the Company, through PGM;
and
o three of which are appointed by EMRA:
-- the executive chairman, as one of the three EMRA appointed
board members, is a representative of EMRA and is appointed by the
Egyptian Ministry of Finance.
-- The board of SGM convenes twice a year to:
o facilitate a forum for sharing information between the owners
of SGM;
o provide a mechanism to scrutinise the timing and amounts of
expenses; rather than as a decision-making body over SGM's most
significant relevant activities;
o consider, review, and approve all the following in relation to
SGM:
-- the budget;
-- the annual financial statements;
-- the cost recovery position; and
-- other compliance matters.
o The board of SGM is not allowed to unreasonably withhold
approval of any of the above.
-- If there is a disputed matter or deadlock position at an SGM
board level, it is resolved as follows:
o through open discussion at board level;
o the executive chairman does not have a veto or casting
vote;
o where matters cannot be agreed upon, an ad-hoc committee is
appointed with each party having equal representation. This
committee will then recommend an appropriate course of action to
the board with the best interest of all shareholders in mind;
and
o should the board still not agree on a course of action, there
is a provision for arbitration and ultimately matters can be
presented to the International Court of Arbitration at The
Hague.
-- the board of SGM cannot appoint or remove the GM, this right
belongs solely to the Company, through PGM, under the terms of the
CA;
EMRA and/or the Egyptian government have no downside risk in
their share of SGM. If SGM were to become loss making or insolvent,
these costs are absorbed in its entirety by the Company, through
PGM, in accordance with the CA.
The Company, through PGM, is therefore exposed to the variable
returns of SGM, has the ability to affect the amount of those
returns, has power over SGM through its ability to direct its
relevant activities and therefore meets all the criteria of control
to consolidate SGM's results within the Group to reflect the
substance and economic reality of the CA.
As the Company, through PGM, is determined to be the controlling
party, it should consolidate SGM, and should apply consolidation
procedures, combining balance sheet and profit and loss items line
by line as well as applying the rest of the consolidation
procedures set out in IFRS 10 App B para B86. The Group therefore
prepares consolidated financial statements on this basis.
1.3.1.2 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:
o distributions are always made simultaneously to both
shareholders;
o the split of the distribution is in accordance with the
ratchet mechanism (i.e. the standard profit share ratios of 60/40
(first two years from 1 July 2016), 55/45 (second two years from 1
July 2018) and 50/50 (from 1 July 2020) to PGM and EMRA
respectively through time) as governed by the CA; but:
-- distributions are not mandatory, entirely discretionary and
there are only distributions if there are excess funds;
-- distributions are paid in advance on a weekly or fortnightly
basis by mutual agreement between shareholders;
-- at the end of the SGM reporting period, final profits are
determined, externally audited, and then approved by the SGM
board:
o final profit distributions become payable within 60 days of
the financial year end, SGM is unable to avoid payment at this
point and the amount payable is recorded as equity attributable to
the NCI until paid;
-- the CA is merely a shareholder agreement specifying how and
when profits from SGM will be distributed to shareholders and is
typical of a minority shareholder protection mechanism
The Group should attribute the profit or loss for the year after
tax and each component of other comprehensive income for the year
to the owners of the parent and to the NCI in SGM. The entity shall
also attribute total comprehensive income for the year to the
owners of the parent and to NCI even if this results in the NCI
having a deficit balance (IFRS 10 App B para B94). The CA only
contemplates the distribution of profit to shareholders.
The NCI would only have a deficit balance where advance
distributions paid during the year have exceeded final
distributions payable after year-end financial statements have been
prepared and audited. This deficit would be entirely funded by the
Company, through PGM, and would first be redeemed from future
excess cash before regular distributions to both parties resume.
SGM has no claw back provision for advance profits paid to the NCI.
We note that annual dividend payments, after approval of audited
financial statements, is a standard feature of transactions with an
NCI and that such payments are not normally treated as non --
discretionary payments triggering a liability in the consolidated
statement of financial position of the parent.
Any losses generated by SGM will be entirely funded by the
Company, through PGM, but attributed to both shareholders. These
losses will first be recovered before further profit share
distributions commence.
In the Group statement of financial position, all the
accumulated profits of SGM are attributable to the Company as EMRA
have already received their share through the advance profit
distribution payments made, therefore NCI is usually disclosed in
the financial statements as nil unless there is an outstanding
distribution payable to or deficit from EMRA due to timing
differences of the cash sweep. Please refer to note 2.4 for further
information.
1.3.2 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 IAS 36 Impairment of Assets, an impairment trigger
assessment has been performed.
Group operating assets
As part of the impairment trigger assessment, management has
also considered movements in the key assumptions which have
historically been used in impairment assessments and is satisfied
that there have not been any changes that would constitute an
impairment trigger.
These include changes to:
-- forecast gold prices, considering current and historical
prices, price trends and related factors;
-- discount rates;
-- operating performance which includes production and sales volumes;
-- exploration potential and reserves and resources report;
-- operating costs, taking into consideration the impact of the
solar plant on those costs and emissions targets;
-- recovery rates; and significant changes to the mine plan with
an impact on the mine's cost of mineral extraction
On review, no impairment triggers were identified.
Consideration of climate change risks
In preparing the financial statements, the Directors have
considered the potential impact of climate-related physical and
transitional risks for the Group operating assets, in the context
of the TCFD disclosures. The Directors recognise that
climate-related risks have potential to impact the carrying value
of assets through its effects on future cash flow projections and
impairments on the useful life of assets. The financial statement
also considers the opportunities arising from our transition to a
low carbon future and achievement of our target for reducing GHG
emissions.
In particular, the Directors have qualitatively assessed the
financial and strategic viability of the business to the likely
impact of climate-related risk in respect of the following
areas:
-- Going concern and viability of the Group over the short-term,
arising from market and investor uncertainty
-- Cash flow forecasts considering increased price forecasts for commodities and consumables
-- Effects on property, plant and equipment, arising from carbon
pricing and the adoption/deployment of low carbon technology
-- Capital expenditure over the short and medium term, arising
from the adoption/deployment of low carbon technology
The Directors have made judgements and assumptions using
available internal and external information to assess the impact of
climate-related risks on the future cash flows and operations of
the business. The Directors are aware of the uncertainty around how
climate-related transition risks will affect global and national
economies over the medium and longer term, and more specifically:
gold price, carbon pricing, other regulatory mechanisms and the
availability of low carbon technology of relevance to our
operations. In 2023, we will undertake a more detailed analysis of
climate-related scenarios aligned to the Intergovernmental Panel on
Climate Change ("IPCC") and review the impact of these transition
risks on business strategy and financial performance over the life
of our assets. Centamin will monitor and routinely test
climate-related risk against judgements and estimates made in
preparation of the Group's financial statements.
Based on the considerations of climate-related transition risk
in the short-term, no factors are expected to have a material
impact on the carrying values of assets or liability of the Group
in the next financial year. Capital expenditure to support our
target for GHG emissions reduction is assessed to be financially
material in the short term, however the technology is commercially
available and the expenditure is value accretive. At Sukari, our
planned extension to solar plant and grid connection are forecast
to provide a positive return on investment within the life of
asset.
We have assessed the physical risks to our operations under
future emissions scenarios. 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 change is not required for the operational life of Sukari.
The useful life of the Sukari asset is not expected to be reduced
by climate-related physical risks.
1.3.3 JUDGEMENT: LITIGATION
The Group exercises judgement in measuring and recognising
provisions and the exposure 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 party to a significant legal action in Egypt, which
could potentially adversely affect its profitability and 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, and the
latest developments, are provided in note 5.1 to the financial
statements.
With respect to the Administrative Court ruling in the
Concession Agreement case (discussed in note 5.1 below), on 20
March 2013 the Supreme Administrative Court upheld the Company's
application to suspend this decision until the merits of the
Company's appeal are considered and ruled on, thus providing
assurance that normal operations will be able to continue during
this process. In 2016, the Company's appeal was indefinitely stayed
by the Supreme Administrative Court, pending judgment in a separate
case currently before the Supreme Constitutional Court, the outcome
of which affects the Concession Agreement case. The Supreme
Constitutional Court has now given a favourable judgment in that
case, as a result of which an application has been made to resume
proceedings in the original appeal (which is a purely procedural
matter). The Group's Egyptian lawyers will then make an application
to the Supreme Administrative Court to have the original case
dismissed and the judgment cancelled. Further details are provided
in note 5.1 below.
In the unlikely event that the Group is unsuccessful in this
action and the operating activities are restricted to a reduced
area, it is management's belief that the Group would be able to
continue as a going concern. The Group is in regular contact with
its Egyptian lawyers, who are monitoring developments 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:
1.3.4 ESTIMATE: MINERAL RESERVE AND RESOURCE STATEMENT IMPACT ON
ORE RESERVES
Ore reserves and mineral resource estimates are estimates of the
amount of ore that can be economically and legally extracted from
the Group's mining properties. The Group Mineral Reserve and
Resource statement for SGM with an effective date of 30 June 2022
is contained in the supplementary section of the 2022 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.
Ore reserves are integral to the recognised amounts of
depreciation and amortisation and the valuation of inventory
because of the unit of production ("UOP") amortisation method.
Therefore, ore reserves and mineral resource estimates and changes
to these may impact the Group's reported financial position and
results in the following way:
-- The carrying value of mine development properties, which
incorporates the rehabilitation obligation assets may be affected
due to changes in estimated future cash flows. The recoverable
amount of mine development properties is directly linked to the
quantities of the economically recoverable reserves of the mine and
therefore with other factors held constant, a significant decrease
in the reserves might result in an impairment loss on the asset and
have a negative impact on the carrying values;
-- Capitalised stripping costs recognised in the statement of
financial position, as either part of mine development properties
or inventory or charged to profit or loss, may change due to
changes in stripping ratios;
-- Depreciation and amortisation charges in the statement of
profit or loss and other comprehensive income may change where such
charges are determined using the UOP, or where the useful life of
the related assets change. The Group's mine development properties
asset category, incorporating the deferred stripping asset and
rehabilitation obligation assets is amortised using the UOP method;
and
-- Provisions for rehabilitation and environmental provisions
may change where reserve estimate changes affect expectations about
when such activities will occur and the associated cost of these
activities.
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).
1.3.5 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.
1.3.6 ESTIMATE: RESTORATION AND REHABILITATION PROVISION UNIT
RATES
The Sukari's 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 commenced on the full review of the
restoration and rehabilitation plan for Sukari to determine the
Company's obligation as at 31 December 2022. This work, which
involved an external third party to verify the assumptions and
methodology used in the restoration and rehabilitation plan, has
been completed. On the financial side, the restoration and
rehabilitation plan and provision assessment resulted in a decrease
of the provision by US$5.8 million (2021: US$ 21.9 million
increase) to US$37 million as at 31 December 2022, see note
2.13.
The US$5.8 million decrease in the provision was mainly due to
an increase in the discount rate to 3.63% in 2022 from 1.38% in
2021 and decrease in the inflation rate to 2.37% in 2022 from 2.50%
in 2021. The cost base before discounting however increased by a
net amount of US$4.7 million. The key drivers for the cost base
increase were mainly due to the following significant changes:
-- TSF1 - A US$1 million increase (2021 $9 million increase) in
the cost of loading and hauling waste rock to create a two-metre
cover over the tailings surface;
-- TSF2 - the TSF usable area is significantly bigger in 2022
compared to 2021 as construction work of certain stages was
completed. There is US$3 million decrease (2021: $5 million
increase) in the cost of loading and hauling and spreading the
waste rock to create a two-metre cover over the tailings surface.
The 2022 cost base is determined using the actual surface area of
the tailings dam as at year end compared to the surface area of the
entire TSF in 2021;
-- North and west dump leach area - A US$0.4 million (2021: $2.6
million) increase in the cost including the cost of supplying and
installing an impermeable liner over the dump leach areas; and
-- US$1.5 million (2021: $1.6 million) increase in the
engineering cost of mine closure planning and design related
work.
Estimates in the process include the unit costs used in
calculating the provision e.g., ripping and grading, hauling and
application, regrading slopes, construction of bunds and demolition
of buildings and certain fixed costs, including labour and
dismantling of equipment.
For rehabilitation activities measured in tonnes, the unit costs
range between $0.31/t to US$0.77/t and those measured in cubic
metres and for surface areas measured in metres, the unit cost used
are as follows:
$0.31/t
* Load and haul waste rock by mass (average haul
distance of 2km)
$0.77/t
* Load and haul waste rock by mass (average haul
distance of 6km)
* Load and haul waste rock by volume (average haul
distance of 2km) $0.66/m3
* Spread waste rock to create cover $1.25/m3
* Load and haul demolition waste for on-site landfill $1.97/m3
* Demolish concrete foundations (medium reinforced) $53.00/m3
* Regrade slopes and batters $0.40/m2
* Rip and grade compacted surfaces $0.95/m2
* Demolish buildings (mix of prefabricated, steel and
blockwork) $8.00/m2
The range of the estimated 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.
Sukari has a life of mine which runs through to 2033 and while
generally the majority of restoration and rehabilitation work will
be undertaken when the economically viable resources of the mine
are depleted at the end of the life of mine, the actual estimated
timing of cash outflows for the restoration and rehabilitation work
may be different and, in some cases, significantly different due to
various factors, including the discovery of more resources that
increase the quantities of economically recoverable resources and
therefore, extend the life of mine. The ore reserves available for
economic extraction, the extent of the area they are located and
the timeframe within which they are reasonably expected to be
depleted and consequently for rehabilitation activities to commence
therefore, have a significant impact in the estimation process of
the restoration and rehabilitation provision amount.
Most of the unit rates have not changed from prior year while
others have marginally changed. As the rehabilitation and
restoration work will be done in-country, management has considered
the year-on-year inflation in Egypt and particularly the
devaluation of the Egyptian currency, EGP against the USD, in the
year (of over 45%) and concluded that maintaining the unit rates
within the same range as the prior year would be reasonable in the
estimation process for the current year provision.
Management has performed sensitivity analyses of reasonably
possible changes in the significant assumptions which are primarily
the unit costs of the rehabilitation activities above as well as
the discount and inflation rates.
The sensitivity results below are based on illustrative
percentage changes, however the estimates may vary by greater
amounts. The provision for restoration and rehabilitation may also
change where reserve estimate changes affect expectations about
when such activities will occur and therefore the associated cost
of these activities.
The reported provision and corresponding asset amount would
change as shown below should there be a change in the estimated
unit cost rates, discount rates and inflation rate assumptions on
the basis that all the other factors that can potentially change
remain constant. Also analysed was a change in the estimated unit
cost due to the rehabilitation process being executed
illustratively five years later due to changes in the reserve
estimates altering the expected dates of performing the
rehabilitation:
-- A 10% increase in these estimated unit and fixed costs
elements would result in a US$3.1 million increase on the provision
and corresponding asset amounts, while a 10% decrease would result
in a US$3.1 million decrease.
-- A 10% increase in these unit and fixed costs with a five year
longer time horizon to perform the rehabilitation activities would
result in a US$0.7 million increase on the provision and
corresponding asset amounts, while a 10% decrease would result in a
US$5.1 million decrease.
-- A 10% increase in the discount rate would result in a US$1.4
million decrease on the provision and corresponding asset amounts,
while a 10% decrease would result in a US$1.4 million increase.
-- A 10% increase in the inflation rate would result in a US$0.9
million increase on the provision and corresponding asset amounts,
while a 10% decrease would result in a US$0.9 million decrease.
The above scenarios resulted in increases of the restoration and
rehabilitation provision ranging from US$0.7 million to US$3.1
million and decreases ranging from US$0.9 million to US$5.1
million. All the scenarios would have an insignificant effect on
the consolidated statement of comprehensive income, through
immaterial movements in the interest cost on the liability and
reduced rehabilitation asset amortisation charge. Refer to note
2.13 for additional information on the restoration and
rehabilitation provision movements.
The sensitivities analysed above reflect both reasonably
possible changes in the provisions in response to changes in the
underlying assumptions as well as an illustrative analysis from a
change in rehabilitation activities' timeframe.
1.4 OTHER SIGNIFICANT ACCOUNTING POLICIES
1.4.1 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.
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 revenue from the sale of gold while the West
African and the new 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, including financial instruments by
country:
Total Egypt Burkina Faso Côte d'Ivoire Corporate
31 December 2022 US$'000 US$'000 US$'000 US$'000 US$'000
-------------------------------------------- --------- --------- ------------ ------------------ ---------
Non-current assets (excl. financial assets) 1,206,231 1,204,956 - 826 449
Non-current assets (financial instruments) 1,372 1,270 20 82 -
-------------------------------------------- --------- --------- ------------ ------------------ ---------
Total non-current assets 1,207,603 1,206,226 20 908 449
-------------------------------------------- --------- --------- ------------ ------------------ ---------
Total Egypt Burkina Faso Côte d'Ivoire Corporate
31 December 2021 US$'000 US$'000 US$'000 US$'000 US$'000
-------------------------------------------- --------- --------- ------------ ------------------ ---------
Non-current assets (excl. financial assets) 1,046,234 1,044,543 505 516 670
Non-current assets (financial instruments) 101 - 21 80 -
-------------------------------------------- --------- --------- ------------ ------------------ ---------
Total non-current assets 1,046,335 1,044,543 526 596 670
-------------------------------------------- --------- --------- ------------ ------------------ ---------
Additions to non-current assets mainly relate to Egypt and are
disclosed in note 2.9.
Statement of financial position by operating segment:
Egypt Burkina Côte
Mining Egypt Exploration Faso d'Ivoire Corporate
31 December 2022 + US$'000 US$'000 US$'000 US$'000 US$'000
------------------------------------ ---------- --------------- ----------------- -------- --------- ---------
Total assets 1,493,533 1,413,266 4,057 40 4,074 72,096
Total liabilities (152,126) (142,556) (533) (470) (3,421) (5,146)
------------------------------------ ---------- --------------- ----------------- -------- --------- ---------
Net assets (liability)/total equity 1,341,407 1,270,710 3,524 (430) 653 66,950
------------------------------------ ---------- --------------- ----------------- -------- --------- ---------
Burkina Côte
Total Egypt Mining Egypt Exploration Faso d'Ivoire Corporate
31 December 2021 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
------------------------------------ ---------- --------------- ----------------- -------- --------- ---------
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
------------------------------------ ---------- --------------- ----------------- -------- --------- ---------
Statement of comprehensive income by operating segment:
Egypt Burkina Côte
Total Mining Egypt Exploration Faso d'Ivoire Corporate
For the year ended 31 December 2022(1) US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
--------------------------------------------- --------- --------- ----------------- -------- --------- ---------
Revenue 788,424 788,424 - - - -
Cost of sales (544,075) (544,075) - - - -
--------------------------------------------- --------- --------- ----------------- -------- --------- ---------
Gross profit 244,349 244,349 - - - -
Exploration and evaluation costs (29,723) - (1,675) (2,928) (25,120) -
Other operating costs(1) (49,003) (27,299) (116) (506) (326) (20,756)
Other income 6,623 8,039 196 (168) (666) (778)
Finance income 1,214 99 - - - 1,115
Finance costs(1) (2,459) (1,098) (19) (2) (58) (1,282)
Impairment of intra-group loans - - - 140,623 - (140,623)
Profit/(loss) for the year before tax 171,001 224,090 (1,614) 137,019 (26,170) (162,324)
Tax (226) (226) - - - -
--------------------------------------------- --------- --------- ----------------- -------- --------- ---------
Profit/(loss) for the year after tax 170,775 223,864 (1,614) 137,019 (26,170) (162,324)
--------------------------------------------- --------- --------- ----------------- -------- --------- ---------
Profit/(loss) for the year after tax
attributable to:
- the owners of the parent (2) 72,490 125,579 (1,614) 137,019 (26,170) (162,324)
- non-controlling interest in SGM (2) 98,285 98,285 - - - -
--------------------------------------------- --------- --------- ----------------- -------- --------- ---------
(1) In the 2021 Consolidated Statement of Comprehensive Income,
Finance costs were included and disclosed in the line 'Other
operating costs', in these financial statements they are now
separately disclosed in their own line and as such 'Other operating
costs' for 2021 have changed.
(2) Please note that the cost recovery model on which profit
share is based under the Concession Agreement is different to the
accounting results presented above due to various adjustments and
as such the share of profit disclosed above is not reflective of
the 55%:45% split that was in place from 1 July 2018 to 30 June
2020 and 50%:50% split from 1 July 2020 onwards that occurs in
practice, refer to the statement of cash flows by operating segment
below for further information.
STATEMENT OF COMPREHENSIVE INCOME BY OPERATING SEGMENT:
Egypt Egypt Exploration Burkina Côte
Total Mining US$'000 Faso d'Ivoire Corporate
For the year ended 31 December 2021 US$'000 US$'000 US$'000 US$'000 US$'000
-------------------------------------------- --------- --------- ----------------- --------- --------- ---------
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(1) (48,427) (15,158) - (19) (227) (33,024)
Other income 5,708 6,922 - (105) (238) (871)
Finance income 196 (1) - - - 197
Finance costs(1) (673) (598) - (2) (20) (52)
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 (2) 101,527 184,975 - (37,714) (11,984) (33,750)
- non-controlling interest in SGM (2) 52,140 52,140 - - - -
-------------------------------------------- --------- --------- ----------------- --------- --------- ---------
(1) In the 2021 Consolidated Statement of Comprehensive Income,
Finance costs were included and disclosed in the line 'Other
operating costs', in these financial statements they are now
separately disclosed in their own line and as such 'Other operating
costs' for 2021 have changed.
(2) 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
For the year ended 31 December Total Mining Exploration Faso d'Ivoire Corporate
2022 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) 291,936 320,954 1,912 (2,644) 1,673 (29,959)
Net cash (used in)/generated
from investing activities (274,583) (274,120) (976) - (595) 1,108
Net cash used in financing
activities (122,219) (35,492) - - - (86,727)
Cash element of share-based
payments (523) - - - - (523)
Dividend paid - non-controlling
interest in SGM (35,492) (35,492) - - - -
Dividend paid - owners of
the parent (86,204) - - - - (86,204)
-------------------------------- --------- --------- ------------ -------- --------- ---------
Net (decrease)/increase
in cash and cash equivalents (104,866) 11,342 936 (2,644) 1,078 (115,578)
Cash and cash equivalents
at the beginning of the year 207,821 13,609 935 5 859 192,413
Effect of foreign exchange
rate changes (582) 2,422 100 2,640 (515) (5,229)
-------------------------------- --------- --------- ------------ -------- --------- ---------
Cash and cash equivalents
at the end of the year 102,373 27,373 1,971 1 1,422 71,606
-------------------------------- --------- --------- ------------ -------- --------- ---------
(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
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
(2) 291,281 11,899 - 5 456 278,921
Effect of foreign exchange
rate changes (2) 4,446 20,388 48 (199) (190) (15,601)
-------------------------------- --------- --------- ------------ -------- --------- ---------
Cash and cash equivalents
at the end of the year (2) 207,821 13,609 935 5 859 192,413
-------------------------------- --------- --------- ------------ -------- --------- ---------
(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.
(2) The numbers have been restated to reflect a reclassification
of US$2m on the opening cash and cash equivalents balance and US$5m
on the foreign exchange rate change between Corporate and Egypt
Mining segments.
ACCOUNTING POLICY: SEGMENT REPORTING
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision-maker.
The chief operating decision-maker, who is responsible for
allocating resources and assessing performance of the operating
segments, has been identified as the Board of Directors.
2.2 Revenue
An analysis of the Group's revenue for the year, is as
follows:
For the For the
year ended year ended
31 December 31 December
2022 2021
US$'000 US$'000
------------- ------------ ------------
Gold sales 786,921 731,945
Silver sales 1,503 1,361
------------- ------------ ------------
788,424 733,306
------------- ------------ ------------
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 (the performance obligation) , 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 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
2022 2021
US$'000 US$'000*
------------------------------------------------- ------------ ------------
Other income
Net foreign exchange gains 6,559 5,158
Other income 64 550
------------------------------------------------- ------------ ------------
6,623 5,708
------------------------------------------------- ------------ ------------
Finance income 1,214 196
Finance costs (2,459) (672)
------------------------------------------------- ------------ ------------
Expenses
Cost of sales
Mine production costs (408,543) (368,327)
Movement in inventory 10,659 19,968
Depreciation and amortisation (146,191) (139,017)
------------------------------------------------- ------------ ------------
(544,075) (487,376)
------------------------------------------------- ------------ ------------
Other operating costs
Corporate compliance (2,869) (2,698)
Fees payable to the external auditors (895) (856)
Corporate consultants (2,697) (1,914)
Salaries and wages (11,979) (10,094)
Other administration expenses (3,272) (3,070)
Employee equity settled share-based payments (2,570) (3,747)
------------------------------------------------- ------------ ------------
Corporate costs (sub-total) (24,282) (22,379)
Other provisions 1,180 (731)
Net movement on provision for stock obsolescence (579) (3,135)
Other non-corporate operating expenses (1,480) (511)
Royalty - attributable to the ARE government (23,842) (21,672)
Other operating costs (total) (49,003) (48,428)
------------------------------------------------- ------------ ------------
* In the 2021 Consolidated Statement of Comprehensive Income,
Finance costs were included and disclosed in the line 'Other
operating costs', in these financial statements they are now
separately disclosed in their own line and as such 'Other operating
costs' for 2021 have changed.
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.
Finance income is generated mainly from treasury activities
(e.g., income on surplus funds invested for the short term) and
therefore is separately disclosed outside of the Group's operating
profit in the consolidated statement of comprehensive income and
disclosed as a separate line under investing activities in the
consolidated statement of cash flows.
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.
ACCOUNTING POLICY: FINANCE COSTS
FINANCE COSTS
Finance costs for the Group will normally include:
-- Costs that are borrowing costs for the purposes of IAS 23 Borrowing Costs:
o interest expense calculated using the effective interest rate
method as described in IFRS 9 Financial Instruments;
o interest in respect of lease liabilities; and
o exchange differences arising from foreign currency borrowings
to the extent that they are regarded as an adjustment to interest
costs.
-- the unwinding of the effect of discounting provisions.
Borrowing costs directly attributable to the acquisition,
construction or production of an asset that necessarily takes a
substantial period of time to get ready for its intended use or
sale (a qualifying asset) are capitalised as part of the cost of
the respective asset. Borrowing costs consist of interest and other
costs that the Group incurs in connection with the borrowing of
funds.
Where funds are borrowed specifically to finance a project, the
amount capitalised represents the actual borrowing costs incurred.
Where surplus funds are available for a short term from funds
borrowed specifically to finance a project, the income generated
from the temporary investment of such amounts is also capitalised
and deducted from the total capitalised borrowing cost. Where the
funds used to finance a project form part of general borrowings,
the amount capitalised is calculated using a weighted average of
rates applicable to relevant general borrowings of the Group during
the period.
All other borrowing and finance costs which are generally
incurred in the Group's ordinary activities are recognised in the
statement of profit or loss and other comprehensive income in the
period in which they are incurred, and the Group would also include
foreign exchange differences on directly attributable borrowings as
borrowing costs capable of capitalisation to the extent that they
represented an adjustment to interest costs. These f inance costs
are separately disclosed in the consolidated statement of
comprehensive income as required by IAS 1 Presentation of Financial
Statements and disclosed under operating activities in the
consolidated statement of cash flows.
Even though exploration and evaluation assets can be qualifying
assets, they generally do not meet the 'probable economic benefits'
test therefore any related borrowing costs incurred during this
phase are generally recognised in the statement of profit or loss
and other comprehensive income in the period they are incurred.
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. SGM financial statements for the year ended 30 June
2022 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 ended For the year ended
31 December 2022 31 December 2021
US$'000 US$'000
------------------------------------------------------------------------------ ------------------ ------------------
Statement of comprehensive income
Profit for the year after tax attributable to the non-controlling interest in
SGM (1) 98,285 52,140
Statement of financial position
Total equity attributable to non-controlling interest in SGM (1) (opening) (40,256) (17,196)
Profit for the year after tax attributable to the non-controlling interest in
SGM (1) 98,285 52,140
Dividend paid - non-controlling interest in SGM (35,492) (75,200)
------------------------------------------------------------------------------ ------------------ ------------------
Total equity attributable to non-controlling interest in SGM (1) (closing) 22,537 (40,256)
------------------------------------------------------------------------------ ------------------ ------------------
(1) Profit share commenced during the third quarter of 2016. The
first two years was a 60:40 split of net production surplus to PGM
and EMRA respectively. From 1 July 2018 this changed to a 55:45
split for the next two-year period until 30 June 2020, after which
all net production surpluses have been split 50:50.
Any variation between payments made during the year (which are
based on the Company's estimates) and the SGM audited financial
statements, may result in a balance due and payable to EMRA or
advances to be offset against future distributions. This will be
reflected as an amount attributable to the non-controlling interest
in SGM on the statement of financial position and statement of
changes in equity.
(B) STATEMENT OF CASH FLOWS IMPACT
For the year For the year
ended ended
31 December 31 December
2022 2021
US$'000 US$'000
-------------------------------------------- ------------ ------------
Statement of cash flows
-------------------------------------------- ------------ ------------
Dividend paid - non-controlling interest in
SGM (1) (35,492) (75,200)
-------------------------------------------- ------------ ------------
(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 provides 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 (EXPENSE)/CREDIT
For the year ended For the year ended
31 December 2022 31 December 2021
US$'000 US$'000
------------------------------------------------------------ ------------------ ------------------
Current tax
Current tax (expense)/credit in respect of the current year (226) 20
Deferred tax - -
------------------------------------------------------------ ------------------ ------------------
Total tax (expense)/credit (226) 20
------------------------------------------------------------ ------------------ ------------------
The tax (expense)/credit 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
2022 2021
US$'000 US$'000
---------------------------------------------- ------------ ------------
Profit for the year before tax 171,001 153,647
Tax expense calculated at 0%(1) (2021: 0%)(1)
of profit for the year before tax - -
Tax effect of:
Other (226) 20
---------------------------------------------- ------------ ------------
Tax (226) 20
---------------------------------------------- ------------ ------------
(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 (2021: 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
2022 2021
US$'000 US$'000
------------------------ ------------ ------------
Current tax liabilities 249 253
------------------------ ------------ ------------
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 INSTRUMENTS
INTEREST BEARING LOANS AND BORROWINGS
US$150 million Revolving Credit Facility ("RCF")
On 22 December 2022, the Company entered into an agreement for a
US$150 million RCF with four banks: Bank of Montreal (London
Branch), HSBC Bank plc, ING Bank N.V. (Amsterdam Branch) and
Nedbank Limited (London Branch).
As at 31 December 2022, there were no drawdowns on the facility
and therefore no interest expense was recognised in the period. A
facility establishment and commitment fee of US$1.2 million was
recognised in the profit or loss statement.
The terms and conditions of the facility imposes certain
financial covenants on the Company in respect of each Relevant
Period that has an outstanding borrowing as outlined below i.e.,
the Company shall ensure that:
a) Interest Cover: Interest Cover in respect of any Relevant
Period shall not be less than the ratio of 4:1;
b) Leverage: Leverage in respect of any Relevant Period shall not exceed the ratio of 3:1;
c) Liquidity: Liquidity shall at all times exceed USD50,000,000; and
d) Reserve Tail: at each Scheduled Reserves Assessment Date, the
Reserve Tail Ratio is not less than thirty per cent. .
As at 31 December 2022, the Company's compliance requirements
and obligations in respect of financial covenants and financial
conditions were not yet effective as conditions precedent were not
yet satisfied and completed to make the agreement effective and
available for drawdown.
The Relevant Period is defined as each period of twelve months
ending on or about the last day of the Financial Year and each
period of twelve months ending on or about the last day of each
Financial Quarter.
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.
FINANCIAL ASSETS AT AMORTISED COST
Trade receivables, loans and other receivables that have fixed
or determinable payments that are not quoted in an active market
are classified as financial assets at amortised cost. This category
of financial assets is 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. In accordance with of IFRS 9 "Financial
Instruments", a loss allowance shall be recognised for expected
credit losses on a financial asset that is measured in accordance
with paragraphs 4.1.2 or 4.1.2A, a lease receivable, a contract
asset or a loan commitment and a financial guarantee contract to
which the impairment requirements apply in accordance with
paragraphs 2.1(g), 4.2.1(c) or 4.2.1(d).
The objective of the impairment requirements is to recognise
lifetime expected credit losses for which there have been
significant increases in credit risk since initial recognition,
whether assessed on an individual or collective basis, considering
all reasonable and supportable information, including that which is
forward-looking.
At each reporting date, the Group assesses whether financial
assets carried at amortised cost are credit impaired. A financial
asset is credit-impaired when one or more events that have a
detrimental impact on the estimated future cash flows of the
financial asset have occurred.
The carrying amount of the financial asset is reduced by the
impairment loss directly for all financial assets through the use
of an allowance account, with a simplified approach for trade
receivables. 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 ended For the year ended
31 December 2022 31 December 2021
US$'000 US$'000
----------------------------- ------------------ ------------------
Non-current
Other receivables - deposits 1,372 101
----------------------------- ------------------ ------------------
Current
Gold and silver sales debtor 29,832 29,147
Other receivables 5,796 3,432
----------------------------- ------------------ ------------------
35,628 32,579
----------------------------- ------------------ ------------------
Trade and other receivables are classified as financial assets
subsequently measured at amortised cost.
All gold and silver sales during the year were made to a single
customer in North America, Asahi Refining Canada Ltd, and are
neither past due nor impaired.
The average age of the receivables is 16 days (2021: 16 days)
and expected credit losses are considered immaterial. No interest
is charged on the receivables. Of the trade receivables balance,
the gold and silver sales debtor is all receivable from Asahi
Refining Canada Ltd. The amount due has been received in full after
year end. Other receivables represent GST and VAT owing from
various jurisdictions that the Group operates in.
The Directors consider that the carrying amount of trade and
other receivables is approximately equal to their fair value,
therefore no expected credit loss is recognised within this note,
see note 3.1.1 for the risk assessment related to trade
receivables.
2.8 PREPAYMENTS
For the year For the year
ended ended
31 December 31 December
2022 2021
US$'000 US$'000
---------------- ------------ ------------
Current
Prepayments (1) 13,864 7,964
---------------- ------------ ------------
13,864 7,964
---------------- ------------ ------------
(1) The prepayments balance above mainly consists of warehouse inventories paid for in advance.
2.9 PROPERTY, PLANT, AND EQUIPMENT
Capital
Plant Mine work
Office and Mining development in
equipment Buildings equipment equipment properties progress Total
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
------------------------------ ---------- --------- ---------- ---------- ------------ --------- -----------
Year ended 31 December
2022 Cost
Balance at 1 January 2022 9,243 13,823 625,077 359,467 816,224 85,003 1,908,837
Additions 127 1,041 526 281 - 261,647 263,622
Additions: IFRS 16 right
of use assets - 2,342 1,399 4,005 - - 7,746
Decrease in rehabilitation
asset - - - - (5,839) - (5,839)
Transfers from capital
work in progress 508 6,587 10,808 63,201 186,742 (267,846) -
Transfers from exploration
and evaluation asset - - - - 12,627 - 12,627
Disposals (1,727) (1,019) (2,434) (43,294) - - (48,474)
Disposals: IFRS 16 right
of use assets - (1,073) - (139) - - (1,212)
------------------------------ ---------- --------- ---------- ---------- ------------ --------- -----------
Balance at 31 December
2022 8,151 21,701 635,376 383,521 1,009,754 78,804 2,137,307
------------------------------ ---------- --------- ---------- ---------- ------------ --------- -----------
Accumulated depreciation
and amortisation
Balance at 1 January 2022 (7,543) (3,026) (275,640) (288,323) (378,088) - (952,620)
Depreciation and amortisation (818) (2,221) (34,467) (43,455) (65,808) - (146,769)
Disposals 1,727 1,674 2,073 43,257 - - 48,731
------------------------------ ---------- --------- ---------- ---------- ------------ --------- -----------
Balance at 31 December
2022 (6,634) (3,573) (308,034) (288,521) (443,896) - (1,050,658)
------------------------------ ---------- --------- ---------- ---------- ------------ --------- -----------
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: IFRS 16 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)
------------------------------ ---------- --------- ---------- ---------- ------------ --------- -----------
Net book value
------------------------------ ---------- --------- ---------- ---------- ------------ --------- -----------
As at 31 December 2022 1,517 18,128 327,342 95,000 565,858 78,804 1,086,649
------------------------------ ---------- --------- ---------- ---------- ------------ --------- -----------
As at 31 December 2021 1,700 10,797 349,437 71,144 438,136 85,003 956,217
------------------------------ ---------- --------- ---------- ---------- ------------ --------- -----------
Included within the depreciation charge in relation to
depreciation of ROU assets is US$1 million within the buildings
asset class (2021: US$0.7 million), US$0.3 million within plant and
equipment (2021: US$0.1 million) and US$0.9 million related to
mining equipment (2021: US$ Nil ).
The net book value of the assets in the note above includes the
following amounts relating to ROU assets on leases; US$2.4 million
(2021: US$1.0 million) within buildings, US$1.1 million (2021:
US$0.1 million) within plant and equipment and US$3.2 million
(2021: US$0.1 million) within mining equipment.
An impairment trigger assessment was performed in 2022 on all
Cash Generating Units ("CGUs") including the Sukari Mine, refer to
note 1.3.2 above, however no impairment triggers on property, plant
and equipment were identified in the assessment.
Deferred stripping assets of US$141 million (2021: US$59
million) were recognised in the year ended 31 December 2022 and
have been included within mine development properties. An
amortisation charge of US$26 million (2021: US$10 million) has been
recognised in the year relating to the deferred stripping
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.
None of the Group's property, plant and equipment items is
pledged as security and the Group had US$19 million capital
expenditure commitments as at 31 December 2022 (2021: US$17
million).
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'
IFRIC 20 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 IAS 2 '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:
-- it is probable that the future economic benefit (improved
access to the ore body) associated with the stripping activity will
flow to the entity;
-- the entity can identify the component of the ore body for
which access has been improved; and
-- 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 amortised over the period that the benefit
is received i.e., is classified as capital expenditure, creating a
Deferred Stripping asset.
The pit 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
capitalised to the balance sheet for 2022 is US$141 million (2021:
$59m).
IMPAIRMENT OF ASSETS (OTHER THAN EXPLORATION AND EVALUATION AND
FINANCIAL ASSETS)
At each reporting date, the Group reviews the carrying amounts
of its tangible and intangible assets to determine whether there is
any indication that those assets have suffered an impairment loss.
If any such indication exists, the recoverable amount of the asset
is estimated to determine the extent of the impairment loss (if
any). For the purposes of assessing impairment, assets are grouped
at the lowest levels for which they potentially generate largely
independent cash inflows (cash generating units).
Recoverable amount is the higher of fair value loss costs to
sell and value in use. In assessing value in use, the estimated
future cash flows are discounted to their present value using a
pre-tax discount rate that reflects current market assessment of
the time value of money and the risks specific to the asset for
which the estimates of future flows have not been adjusted.
If the recoverable amount of a cash generating unit ("CGU") is
estimated to be less than its carrying amount, the carrying amount
of the CGU is reduced to its recoverable amount. Where an
impairment loss subsequently reverses, the carrying amount of the
cash generating unit is increased to the revised estimate of its
recoverable amount, but only to the extent that the increased
carrying amount does not exceed the carrying amount that would have
been determined had no impairment loss been recognised for the cash
generating unit in prior years.
A reversal of an impairment loss is recognised immediately in
profit or loss, unless the relevant asset is carried at a revalued
amount, in which case the reversal of an impairment loss is treated
as a revaluation increase.
2.10 EXPLORATION AND EVALUATION ("E&E") ASSET
For the year For the year
ended ended
31 December 31 December
2022 2021
US$'000 US$'000
------------------------------------------------ ------------ ------------
Balance at the beginning of the year 25,261 63,701
Expenditure for the year 12,175 15,943
Transfer to property, plant, and equipment (12,627) (19,175)
Impairment charge on exploration and evaluation
asset - (35,208)
------------------------------------------------ ------------ ------------
Balance at the end of the year 24,809 25,261
------------------------------------------------ ------------ ------------
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$24.8 million (2021: 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. No impairment triggers were noted in
the current year following a similar impairment trigger and review
assessment on the Group's E&E assets.
ACCOUNTING POLICY: EXPLORATION, EVALUATION AND DEVELOPMENT
EXPITURE
Exploration and evaluation expenditures in relation to each
separate area of interest are differentiated between greenfield and
brownfield exploration activities in the year in which they are
incurred.
The greenfield and brownfield terms are generally used in the
minerals sector and have been adopted to differentiate high risk
remote exploration activity from near-mine exploration
activity:
(a) greenfield exploration refers to territory, where mineral
deposits are not already developed and has the goal of establishing
a new mine requiring new infrastructure, regardless of it being in
an established mining field or in a remote location. Greenfield
exploration projects can be subdivided into grassroots and advanced
projects embracing prospecting, geoscientific surveys, drilling,
sample collection and testing, but excludes work of brownfields
nature, pit and shaft sinking and bulk sampling; and
(b) brownfield exploration, also known as near-mine exploration,
refers to areas where mineral deposits were previously developed.
In brownfield exploration, geologists look for deposits near or
adjacent to an already operating mine with the objective of
extending its operating life and taking advantage of the
established infrastructure.
Greenfield exploration costs will be expensed as incurred and
will not be capitalised to the balance sheet until a decision is
made to pursue a commercially viable project. Brownfield
exploration costs will continue to be capitalised to the statement
of financial position. Brownfield exploration and evaluation
expenditures in relation to each separate area of interest are
recognised as an exploration and evaluation asset in the year in
which they are incurred where the following conditions are
satisfied:
-- The rights to tenure of the area of interest are current; and
-- At least one of the following conditions is also met:
o the exploration and evaluation expenditures are expected to be
recouped through successful development and exploration of the area
of interest, or alternatively, by its sale; or
o exploration and evaluation activities in the area of interest
have not at the reporting date reached a stage which permits a
reasonable assessment of the existence or otherwise of economically
recoverable reserves, and active and significant operations in, or
in relation to, the area of interest are continuing
Exploration and evaluation assets are initially measured at cost
and include acquisition of rights to explore, studies, exploration
drilling, trenching, and sampling and associated activities.
General and administrative costs are only included in the
measurement of exploration and evaluation costs where they are
related directly to operational activities in a particular area of
interest.
Exploration and evaluation assets are assessed for impairment
when facts and circumstances (as defined in IFRS 6 'Exploration for
and evaluation of mineral resources') suggest that the carrying
amount of exploration and evaluation assets may exceed its
recoverable amount. The recoverable amount of the exploration and
evaluation assets (or the cash generating unit(s) to which it has
been allocated, being no larger than the relevant area of interest)
is estimated to determine the extent of the impairment loss (if
any). Where an impairment loss subsequently reverses, the carrying
amount of the asset is increased to the revised estimate of its
recoverable amount, but only to the extent that the increased
carrying amount does not exceed the carrying amount that would have
been determined had no impairment loss been recognised for the
asset in previous years. The E&E asset's recoverable amount
which is the higher of the amount to be recovered through use of
the asset and the amount to be recovered through sale of the asset
is determined based on the provisions of IAS 36, Impairment of
Assets.
In accordance with IFRS 6, the full balance of the Groups'
E&E assets which do not currently generate cash inflows is
allocated to a producing mine's cash-generating unit (CGU) for the
purpose of assessing and testing the assets for impairment as this
is considered the most appropriate level of reporting reflecting
the way the Groups' operations are managed. Management considers an
operation actively mining precious metals as a distinct CGU and
only E&E expenditure on such active mining operations is
capitalised. Any E&E expenditure on operations exploring for
precious metals is expensed.
The application of the Group's accounting policy for E&E
expenditure requires judgement to determine whether future economic
benefits are likely from either future exploitation or sale, or
whether activities have not reached a stage that permits a
reasonable assessment of the existence of reserves.
In addition to applying judgement to determine whether future
economic benefits are likely to arise from the Group's E&E
assets or whether activities have not reached a stage that permits
a reasonable assessment of the existence of reserves, the Group has
to apply a number of estimates and assumptions. The determination
of the Group's ore reserves and mineral resource estimates is
itself an estimation process that involves varying degrees of
uncertainty depending on how the resources are classified (i.e.,
measured, indicated or inferred), refer to note 1.3.4. The
estimates directly impact when the Group reclassifies E&E
expenditure to mine development properties. The reclassification
process requires management to make certain estimates and
assumptions about future events and circumstances, particularly,
when a decision is made to proceed with development in respect of a
particular exploration area to start economic extraction operation
of the ore. Any such estimates and assumptions may change as new
information becomes available. If, after expenditure is
capitalised, information becomes available suggesting that the
recovery of expenditure is unlikely, the relevant capitalised
amount is written off to the statement of profit or loss and other
comprehensive income in the period when the new information becomes
available.
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$1,415 per ounce for
the net realisable value to fall below carrying value.
For the year ended For the year ended
31 December 2022 31 December 2021
US$'000 US$'000
------------------ ------------------ ------------------
Non-current
------------------ ------------------ ------------------
Mining stockpiles 94,773 64,756
------------------ ------------------ ------------------
For the year ended For the year ended
31 December 2022 31 December 2021
US$'000 US$'000
------------------------------------------------------ ------------------ ------------------
Current
Mining stockpiles, ore in circuit, doré supplies 40,836 60,194
Stores inventory 99,733 74,452
Provision for obsolete stores inventory (6,504) (5,925)
------------------------------------------------------ ------------------ ------------------
134,065 128,721
------------------------------------------------------ ------------------ ------------------
The calculation of weighted average costs of mining stockpiles
is applied at a detailed level of ore grade categories. 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
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:
-- Current assets (ore tonnes scheduled to be processed within the next twelve months): None
-- Non-current assets (ore tonnes not scheduled to be processed
within the next twelve months): 13.7Mt at 0.45g/t
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 constantly 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 ended For the year ended
31 December 2022 31 December 2021
US$'000 US$'000
------------------------------------ ------------------ ------------------
Non-current
Other creditors (1) 11,801 10,386
------------------------------------ ------------------ ------------------
Current
Trade payables 43,493 36,050
Other creditors and accruals (1)(2) 55,902 39,709
------------------------------------ ------------------ ------------------
99,395 75,759
------------------------------------ ------------------ ------------------
(1) Included within non-current other creditors and current
other creditors and accruals is $7.3m (2021: $9.8m) and $4.9m
(2021: $2.4m) respectively in relation to the remaining instalments
of a $17.6m settlement agreement signed with EMRA in 2021. By its
nature, elements of the cost recovery mechanism within the
Concession Agreement are subject to interpretation and ongoing
audits by EMRA. It is possible that future settlement agreements
may be agreed with EMRA in relation to historic items. The
Directors have assessed that it is not probable that any additional
settlements with EMRA will be required as at 31 December 2022, and
therefore no additional provisions have been recognised within
these financial statements.
Also included within current and non-current other creditors are
lease liabilities of US$1.9m and US$4.5m respectively.
(2) Included within the current other creditors is a US$12m
increase in SGM's stock item accruals as at 31 December 2022 as
compared to the prior year mainly driven by increased material
procurement following the underground transition from Barminco to
owner operated model in Q1 2022.
Trade payables principally comprise the amounts outstanding for
trade purchases and ongoing costs. The average credit period taken
for trade purchases is 29 days (2021: 29 days). Trade payables are
interest free for periods ranging from 30 to 180 days. Thereafter
interest is charged at commercial rates.
The Group has financial risk management policies in place to
ensure that all payables are paid within the credit timeframe.
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
2022 2021
US$'000 US$'000
------------------------------------------- ------------ ------------
Current
Employee benefits (1) 2,276 2,798
Other current provisions (2) 980 1,819
------------------------------------------- ------------ ------------
3,256 4,617
------------------------------------------- ------------ ------------
Non-current
Restoration and rehabilitation (3) 37,396 42,647
Other non-current provisions 29 -
------------------------------------------- ------------ ------------
37,425 42,647
------------------------------------------- ------------ ------------
Movement in restoration and rehabilitation
provision
Balance at beginning of the year 42,647 20,496
(Decrease)/Increase in provision (5,839) 21,875
Interest expense - unwinding of discount 588 276
------------------------------------------- ------------ ------------
Balance at end of the year 37,396 42,647
------------------------------------------- ------------ ------------
1) Employee benefits relate to annual, sick, and long service leave entitlements and bonuses.
2) Provision for customs, rebates and withholding taxes.
3) The provision for restoration and rehabilitation has been
discounted by 3.63% (2021: 1.38%) using a US$ applicable rate and
inflation applied at 2.37% (2021: 2.5%). The annual review
undertaken as at 31 December 2022 has resulted in a US$5.8 million
decrease in the provision (2021: US$21.9 million increase). The key
assumptions within the estimate, the various ranges and further
details are disclosed in note 1.3.6.
The Group is working towards conformance with the Global
Industry Standard for Tailings Management (GISTM). Whilst not a
member of ICMM, the Group has committed to a plan for conformance
by August 2023, with respect to its two active TSFs ("TSF1" and
"TSF2") at Sukari by August 2023. In 2022, we continued to review
our conformance, and completed a gap analysis of our tailings
governance and management framework, with reference to the ICMM
Conformance Protocols for the GISTM.
In 2023, we will develop a road-map that further reinforces our
tailings governance and management framework to conform with the
GISTM. While this work is ongoing, it is not currently possible to
reliably estimate the value of incremental costs required to
achieve conformance with the new standard and hence no provision
has been recorded.
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 2022 31 December 2021
---------------------------------------- ---------------------- ----------------------
Number US$'000 Number US$'000
---------------------------------------- ------------- ------- ------------- -------
Fully paid ordinary shares
Balance at beginning of the year 1,156,450,695 669,531 1,155,955,384 668,807
Own shares acquired during the year
(1) - - - (1,391)
Employee share option scheme - proceeds
from shares issued - - 495,311 -
Transfer from share option reserve - 1,463 - 2,115
---------------------------------------- ------------- ------- ------------- -------
Balance at end of the year 1,156,450,695 670,994 1,156,450,695 669,531
---------------------------------------- ------------- ------- ------------- -------
(1) The US$ Nil (2021: US$1.4m) represents the cost of shares in
Centamin plc purchased in the market and held by the Centamin plc
Employee Benefit Trust to satisfy share awards under the Group's
share options plans.
The authorised share capital is an unlimited number of no-par
value shares.
Pursuant to the plan rules, at 31 December 2022, the trustee of
the deferred bonus share plan held 1,187,779 ordinary shares (2021:
2,205,280 ordinary shares).
Fully paid ordinary shares carry one vote per share and carry
the right to dividends. See note 6.3 for more details of the share
awards.
ACCOUNTING POLICY: ISSUED CAPITAL
Ordinary shares are classified as equity. Incremental costs
directly attributable to the issue of new shares or options are
shown in equity as a deduction, net of tax, from the proceeds.
Where the Company or other members of the consolidated Group
purchase the Company's equity share capital, the consideration paid
is deducted from the total shareholders' equity of the Group and/or
of the Company as treasury shares until they are cancelled. Where
such shares are subsequently sold or reissued, any consideration
received is included in shareholders' equity of the Group and/or
the Company.
2.15 SHARE OPTION RESERVE
For the year ended For the year ended
31 December 2022 31 December 2021
US$'000 US$'000
--------------------------------- ------------------ ------------------
Share option reserve
Balance at beginning of the year 4,975 3,343
Share-based payments expense 2,570 4,044
Transfer to accumulated profits - (297)
Transfer to issued capital (1,463) (2,115)
--------------------------------- ------------------ ------------------
Balance at the end of the year 6,082 4,975
--------------------------------- ------------------ ------------------
The share option reserve arises on the grant of share options to
employees under the employee share option plan. Amounts are
transferred out of the reserve and into issued capital when the
options and warrants are exercised/vested. Amounts are transferred
out of the reserve into accumulated profits when the options and
warrants are forfeited.
2.16 CASH FLOW INFORMATION
(A) RECONCILIATION OF CASH AND CASH EQUIVALENTS
For the purpose of the statement of cash flows, cash and cash
equivalents includes cash on hand and at bank and deposits.
For the year For the year
ended ended
31 December 31 December
2022 2021
US$'000 US$'000
-------------------------- ------------- ------------
Cash and cash equivalents 102,373 207,821
-------------------------- ------------- ------------
Most funds have been invested in international rolling
short-term interest money market deposits.
The Company secured an RCF on 22 December 2022 (see note 2.6)
and the facility is secured by certain financial covenants on the
Company which are applicable from the date the conditions precedent
are met. The covenant specific to the Company's cash assets states
that:
-- Liquidity shall at all times exceed USD50 million
The carrying amounts of financial assets pledged as security for
the facility, being the cash is included in 2.16 above.
ACCOUNTING POLICY: CASH AND CASH EQUIVALENTS
Cash comprises cash on hand and demand deposits. Cash
equivalents are short-term, highly liquid investments that are
readily convertible to known amounts of cash and which are subject
to an insignificant risk of changes in value.
(B) RECONCILIATION OF PROFIT BEFORE TAX FOR THE YEAR TO CASH
FLOWS FROM OPERATING ACTIVITIES
For the year ended For the year ended
31 December 2022 31 December 2021
US$'000 US$'000
------------------------------------------------------------ ------------------ ------------------
Profit for the year before tax 171,001 153,647
Adjusted for:
Impairment of exploration and evaluation assets - 35,208
Depreciation/amortisation of property, plant, and equipment 146,769 139,454
Inventory written off 2 21
Inventory obsolescence provision 579 3,135
Foreign exchange gains, net (6,559) (5,158)
Share-based payments expense 2,570 3,747
Finance income (1,214) (196)
Loss on disposal of property, plant, and equipment 899 53
Changes in working capital during the year:
Increase in trade and other receivables (3,049) (14,155)
Increase in inventories (35,940) (13,036)
(Increase)/decrease in prepayments (7,172) 946
Increase in trade and other payables 25,053 8,823
Decrease in provisions (773) (2,616)
------------------------------------------------------------ ------------------ ------------------
Cash flows generated from operating activities 292,166 309,873
------------------------------------------------------------ ------------------ ------------------
(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. However, on 22 December 2022, the Company entered
into an agreement for a US$150 million Revolving Credit Facility
(RCF) with four banks. The facility will introduce debt and gearing
to the Company when drawn down. As at 31 December 2022, the
facility was not yet available for draw down as there were
conditions precedent not yet satisfied.
The capital structure currently consists of cash and cash
equivalents and equity attributable to equity holders of the
parent, comprising issued capital and reserves as disclosed in
notes 2.14 and 2.15. The Group operates in Australia, Jersey,
Egypt, Burkina Faso, and Côte d'Ivoire. None of the Group's
entities are subject to externally imposed capital
requirements.
The Group utilises inflows of funds toward the ongoing
exploration and development of SGM in Egypt and the exploration
projects in Côte d'Ivoire and Egypt.
CATEGORIES OF FINANCIAL ASSETS AND LIABILITIES
For the year For the year
ended ended
31 December 31 December
2022 2021
US$'000 US$'000
----------------------------- ------------ ------------
Financial assets
Non-current
Other receivables - deposits 1,372 101
Current
Cash and cash equivalents 102,373 207,821
Trade and other receivables 35,628 32,579
----------------------------- ------------ ------------
139,373 240,501
----------------------------- ------------ ------------
Financial liabilities
Non-current
Other payables 11,801 10,386
Current
Trade and other payables 99,395 75,759
----------------------------- ------------ ------------
111,196 86,145
----------------------------- ------------ ------------
(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
2022 2021 2022 2021 2022 2021
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
-------------------------- ----------- ----------- ----------- ----------- ----------- -----------
Financial assets
Cash and cash equivalents 622 1,392 343 16,063 837 2,147
-------------------------- ----------- ----------- ----------- ----------- ----------- -----------
622 1,392 343 16,063 837 2,147
-------------------------- ----------- ----------- ----------- ----------- ----------- -----------
Financial liabilities
Trade and other payables 2,084 1,835 11,751 15,530 37,218 23,727
-------------------------- ----------- ----------- ----------- ----------- ----------- -----------
2,084 1,835 11,751 15,530 37,218 23,727
-------------------------- ----------- ----------- ----------- ----------- ----------- -----------
Net exposure (1,462) (443) (11,408) 533 (36,381) (21,580)
-------------------------- ----------- ----------- ----------- ----------- ----------- -----------
The following table summarises the sensitivity of financial
instruments held at the reporting date to movements in the exchange
rate of the Great British pound, Egyptian pound, and Australian
dollar to the US dollar, with all other variables held constant.
The sensitivities are based on reasonably possible changes over a
financial year, using the observed range of actual historical
rates.
Impact on profit Impact on equity
------------------------ ------------------------ ------------------------
31 December 31 December 31 December 31 December
2022 2021 2022 2021
US$'000 US$'000 US$'000 US$'000
------------------------ ----------- ----------- ----------- -----------
US$/GBP increase by 10% 482 634 - -
US$/GBP decrease by 10% (590) (774) - -
US$/AUD increase by 10% 98 866 - -
US$/AUD decrease by 10% (119) (1,058) - -
US$/EGP increase by 10% (2,816) (1,476) - -
US$/EGP decrease by 10% 3,443 1,804 - -
------------------------ ----------- ----------- ----------- -----------
The amounts shown above are the main currencies to which the
Group is exposed. The Group also has small deposits in Euro
US$335,586 (2021: US$37,552) and West African Franc US$1,422,704
(2021: US$863,807), and net payables in Euro US$5,277,783 (2021:
US$2,384,886) and in West African Franc US$3,064,019 (2021:
US$1,105,789). A movement of 10% up or down in these currencies
would have a negligible effect on the assets/liabilities.
The Group has not entered into forward foreign exchange
contracts. Natural hedges are utilised wherever possible to offset
foreign currency liabilities. The Company maintains a policy of not
hedging its currency positions and maintains currency holdings in
line with underlying requirements and commitments.
(d) Commodity price risk
The Group's future revenue forecasts are exposed to commodity
price fluctuations, in particular gold that it produces and sells
into the global markets and fuel prices. The market prices of gold
is the key driver of the Group's capacity to generate cash flow.
The Group has not entered into any forward gold or fuel hedging
contracts.
Gold price
The table below summarises the impact of increases/decreases of
the average realised gold price on the Group's profit after tax for
the year. The analysis assumes that the average realised gold price
per ounce had increased/decreased by 10% with other variables held
constant.
Impact on average realised
gold price
-------------------------------------------- ----------------------------
31 December 31 December
2022 2021
US$/Oz US$/Oz
-------------------------------------------- ------------- -------------
Average realised gold price 1,794 1,797
Average realised gold price with impact of
increase by 10% US$/oz 1,973 1,977
Average realised gold price with impact of
decrease by 10% US$/oz 1,615 1,618
-------------------------------------------- ------------- -------------
Impact on after tax
profit
-------------------------------------------- ----------------------------
31 December 31 December
2022 2021
US$'000 US$'000
-------------------------------------------- ------------- -------------
After tax profit 170,775 153,667
After tax profit with impact of increase by
10% US$/oz 24 7,106 223,346
After tax profit with impact of decrease by
10% US$/oz 9 4,444 81,349
-------------------------------------------- ------------- -------------
Fuel price
Any variation in the fuel price has an impact on the mine
production costs. The analysis assumes that the average fuel price
had increased/decreased by a few US cents per litre with all other
variables held constant.
Impact on fuel price
----------------------------------------------- ---------------------------
31 December 31 December
2022 2021
US$/litre US$/litre
----------------------------------------------- ------------- ------------
F uel price 0.88 0.52
F uel price with impact of increase by 10%
US$/ litre 0.9 9 0.57
F uel price with impact of decrease by 10%
US$/ litre 0. 81 0.47
----------------------------------------------- ------------- ------------
Impact on mine production
costs
----------------------------------------------- ---------------------------
31 December 31 December
2022 2021
US$'000 US$'000
----------------------------------------------- ------------- ------------
M ine production costs (408,543) (368,327)
M ine production costs with impact of increase
by 10% US$/litre 16, 943 9,714
M ine production costs with impact of decrease
by 10% US$/litre (16, 943) (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 table analyses the Group's
financial liabilities into relevant maturity groupings based on
their expected settlement profiles for all non-derivative financial
liabilities. The amounts disclosed in the table are the
undiscounted expected cash flows. A separate line for lease
liabilities has been presented in the maturity analysis of the
Group's financial liabilities in 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 One to
effective Less than twelve One to Two to
interest rate one month months two years five years Total
% US$'000 US$'000 US$'000 US$'000 US$'000
---------------------- ---------------- ---------- -------- ---------- ----------- --------
31 December 2022
Financial assets
Variable interest
rate instruments 1.04% 21,394 54,998 - - 76,392
Non-interest bearing - 61,610 - - - 61,610
---------------------- ---------------- ---------- -------- ---------- ----------- --------
83,004 54,998 - - 138,002
---------------------- ---------------- ---------- -------- ---------- ----------- --------
Financial liabilities
Non-interest bearing 0% 97,716 2,500 2,500 5,000 107,716
Lease liabilities 234 1,929 1,750 3,136 7,049
---------------------- ---------------- ---------- -------- ---------- ----------- --------
97,950 4,429 4,250 8,136 114,765
---------------------- ---------------- ---------- -------- ---------- ----------- --------
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% 73,541 2,851 1,829 6,828 85,022
Lease liabilities 21 260 632 463 1,376
---------------------- ---------------- ---------- -------- ---------- ----------- --------
73,535 3,111 2,461 86,398
---------------------- ---------------- ---------- -------- ---------- ----------- --------
(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 1.3.4 above and the
range of possible outcomes are described more fully below.
Depreciation of capitalised underground mine development
costs
Depreciation of capitalised underground mine development costs
at SGM is based on reserve estimates. Management and Directors
believe that these estimates are both realistic and conservative,
based on current information. The sensitivity analysis assumes that
the reserve estimate has increased/decreased by 25% with all other
variables held constant.
Decrease 31 December Increase
by 25% 2022 by 25%
US$'000 US$'000 US$'000
-------------------------------------------- --------- ----------- ---------
Amortisation of rehabilitation asset
(within mine development properties) (3,978) (2,984) (2,238)
Amortisation of mine development properties
(remainder) (83,766) (62,824) (47,118)
Mine development properties - net book
value 549,761 571,697 588,149
Property, plant, and equipment - net
book value* 1,070,553 1,092,489 1,108,941
-------------------------------------------- --------- ----------- ---------
*Reflects the impact on the overall property, plant and
equipment net book value at the reporting date from the movements
in mine development amortisation above.
Decrease 31 December Increase
by 25% 2021 by 25%
US$'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
-------------------------------------------- -------- ----------- --------
*Reflects the impact on the overall property, plant and
equipment net book value at the reporting date from the movements
in mine development amortisation above.
The sensitivity analysis presented above includes the impact on
the amortisation amounts of the capitalised deferred stripping
asset. The deferred stripping asset and the rehabilitation asset
are included within the Mine Development Properties category in the
Group's property, plant and equipment.
(i) Loan covenants
On 22 December 2022, the Company entered into an agreement for a
US$150 million Revolving Credit Facility (RCF) with four banks:
Bank of Montreal (London Branch), HSBC Bank plc, ING Bank N.V.
(Amsterdam Branch) and Nedbank Limited (London Branch) (see note
2.6).
As at 31 December 2022, there were no drawdowns on the facility.
The terms of the facility impose certain financial covenants on the
Company in respect of each Relevant Period with outstanding
borrowing, refer to note 2.6 for further information on the
covenant requirements.
However, as at 31 December 2022, the Company's compliance
requirements and obligations in respect of the financial covenants
and financial conditions had not yet started as there were certain
conditions precedent that were still to be satisfied to make the
agreement effective. The conditions precedent were met on 13 March
2023 and the facility is available for draw down from this
date.
3.2 CAPITAL MANAGEMENT
3.2.1 RISK MANAGEMENT
The Group's objectives when managing capital are to:
-- safeguard their ability to continue as a going concern, so
that they can continue to provide returns for shareholders and
benefits for other stakeholders; and
-- maintain an optimal capital structure to reduce the cost of capital.
To maintain or adjust the capital structure, the Group may
adjust the amount of dividends paid to owners of the parent, return
capital to owners of the parent or issue new shares.
3.2.2 DIVIDS TO OWNERS OF THE PARENT
For the year ended For the year ended
31 December 2022 31 December 2021
US$'000 US$'000
------------------------------------------------------------------------------ ------------------ ------------------
Ordinary shares
Final dividend for the year ended 31 December 2021 of 5.0 US cents per share
(2021: Q1 interim
dividend for the year ended 31 December 2021 of 3.0 US cents per share) 57, 740 34,461
Q2 Interim dividend for the year ended 31 December 2022 of 2.5 US cents per
share (2021: Q2
Interim dividend for the year ended 31 December 2021 of 4.0 US cents per
share) 28, 464 46,056
------------------------------------------------------------------------------ ------------------ ------------------
Total dividends provided for or paid 86, 204 80,517
------------------------------------------------------------------------------ ------------------ ------------------
Dividends to owners of the parent:
Paid in cash 86, 204 80,517
------------------------------------------------------------------------------ ------------------ ------------------
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
----------------------------------
Nature of 31 December 2022 31 December 2021
activity Country of 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
(liquidated)
(holder of an Ethiopia branch) Holding company UK(4) - 100
Sheba Exploration Holdings
Limited (liquidated) (1) Exploration company UK(4) - 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 (liquidated) Holding company Bermuda(8) - 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) 100 100
Ampella Mining Côte d'Ivoire Exploration company Côte d'Ivoire(7) 100 100
Centamin Côte d'Ivoire Exploration company Côte d'Ivoire(7) 100 100
Ampella Mining Exploration CDI Exploration company Côte d'Ivoire(7) 100 100
Centamin Exploration CI Exploration company Côte d'Ivoire(7) 100 100
Centamin Egypt Investments 1 (UK)
Limited Holding company UK(11) 100 100
Centamin Egypt Investments 2 (UK)
Limited Holding company UK(11) 100 100
Centamin Egypt Investments 3 (UK)
Limited Holding company UK(11) 100 100
Centamin Mining Services Egypt
LLC Services company Egypt(12) 100 100
Centamin Central Mining SAE Exploration Egypt(12) 100 100
Centamin North Mining SAE Exploration Egypt(12) 100 100
Centamin South Mining SAE Exploration Egypt(12) 100 100
--------------------------------- -------------------- ------------------------- ---------------- ----------------
(1) Previously Sheba Exploration (UK) plc.
(2) Address of all Australian entities: Suite 8, 7 The Esplanade, Mount Pleasant, WA 6153.
(3) Address of Centamin Group Services UK Limited, Second Floor,
9-10 Savile Row, London, W1S 3PF.
(4) Address of all other UK entities: Hill House, 1 Little New Street, London, EC4A 3TR.
(5) Address of all Egypt entities (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 UK 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 160 km(2) surrounding the Sukari Gold Mine site. The
exploitation lease was signed by PGM, EMRA and the Egyptian
Minister of Petroleum and gives tenure for a period of 30 years,
commencing 24 May 2005 and extendable by PGM for an additional 30
years upon PGM providing reasonable commercial justification.
In 2006 SGM was incorporated under the laws of Egypt. SGM was
formed to conduct exploration, development, exploitation, and
marketing operations in accordance with the CA. Responsibility for
the day-to-day management of the project rests with the General
Manager, who is appointed by PGM.
The fiscal terms of the CA require that PGM solely funds SGM.
PGM is however entitled to recover from sales revenue recoverable
costs, as defined in the CA. EMRA is entitled to a share of SGM's
net production surplus or profit share (defined as revenue less
payment of the fixed royalty to ARE and recoverable costs). As at
31 December 2015, PGM had not recovered its cost and, accordingly,
no EMRA entitlement had been recognised at that date. During 2016,
payments to EMRA commenced as advance profit share distributions.
Any payment made to EMRA pursuant to these provisions of the CA are
recognised as dividend paid to the non-controlling interest in
SGM.
4.2 JOINT ARRANGEMENTS
The consolidated entity has interests in the following joint
arrangements:
Percentage interest
--------------------------------- --------------------------
31 December 31 December
2022 2021
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
Concession Agreement court case
On 30 October 2012, the Administrative Court in Egypt handed
down a judgment in relation to a claim brought by, amongst others,
an independent member of a previous parliament, in which he argued
for the nullification of the agreement that confers on the Group
rights to operate in Egypt. This agreement, the Concession
Agreement, was entered into between the ARE, EMRA and Centamin
plc's wholly owned subsidiary, Pharaoh Gold Mines NL, and was
approved by the People's Assembly as Law 222 of 1994.
In summary, that judgment states that, although the Concession
Agreement itself remains valid and in force, insufficient evidence
had been submitted to court 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 plc, however, is in possession of the executed
original lease documentation which clearly shows that the 160km(2)
exploitation lease was approved by the Minister of Petroleum and
Mineral Resources. It appears that an executed original document
was not supplied to the court in the first instance.
Upon notification of the judgment the Group took immediate steps
to protect its ability to continue to operate the mine at Sukari.
These included lodging a formal appeal before the Supreme
Administrative Court on 26 November 2012. In addition, in
conjunction with the formal appeal, the Group applied to the
Supreme Administrative Court to suspend the initial decision until
such time as the court was able to consider and rule on the merits
of the appeal. On 20 March 2013, the Court upheld this application
thus suspending the initial decision and providing assurance that
normal operations would be able to continue whilst the appeal
process was underway.
EMRA lodged its own appeal in relation to this matter on 27
November 2012, the day after the Company's appeal was lodged,
supporting the Group's view in this matter. Furthermore, in late
December 2012, the Minister of Petroleum lodged a supporting appeal
and shortly thereafter publicly indicated that, in his view, the
terms of the Concession Agreement were fair, and that the
exploitation lease was valid. The Minister of Petroleum also
expressed support for the investment and expertise that Centamin
plc brings to the country.
The Group believes this demonstrates the government's commitment
to their investment at Sukari and the government's desire to
stimulate further investment in the Egyptian mining industry.
In 2016 the Supreme Administrative Court stayed the Concession
Agreement appeal until the Supreme Constitutional Court has ruled
on the validity of Law no. 32 of 2014. Law no. 32 of 2014 restricts
the right of third parties to challenge contractual agreements
between the Egyptian government and an investor and has partial
retrospective effect, applying to any cases then before the courts
but in which no final judgment had been given. Law 32 should,
therefore, render the third-party challenge to the Concession
Agreement inadmissible (as no final judgment has yet been given in
that case), although the validity of Law 32 was challenged and has
been under review by the Supreme Constitutional Court. The court
finally issued judgment in the case on 14 January 2023, dismissing
the various challenges and upholding the constitutionality of Law
32. The Group's Egyptian lawyers have now filed an application to
the Supreme Administrative Court to resume proceedings in the
original appeal (this is a purely procedural step) and they will
then make a further application to the Supreme Administrative
Court, on behalf of PGM, asking the court to confirm that the
original complainant had no capacity to bring the claim in the
first place, as he was not a party to the Concession Agreement.
They will ask the court to reject the case in its entirety and
treat it as never having been filed. If that occurs, the earlier
judgment at first instance would be cancelled and the appeal
proceedings would be terminated.
The Group's Egyptian lawyers have confirmed that continuing
operations at Sukari will be unaffected by the judgment in the Law
32 case, as they are protected by the suspension of enforcement of
the first instance judgment, which was granted pending the hearing
of the appeal, and which will remain effective until final judgment
is handed down by the Supreme Administrative Court or the original
case is dismissed and the first instance judgment cancelled.
Refer to note 2.12 for additional information on the EMRA
position with respect to provisions.
CONTINGENT ASSETS
There were no contingent assets at year end (2021: nil).
5.2 DIVIDS PER SHARE
The dividends paid in 2022 were US$86 million and are reflected
in the consolidated statement of changes in equity for the year
(2021: US$81 million).
A final dividend in respect of the year ended 31 December 2022
of 2.5 US cents per share, totalling approximately US$29 million
has been proposed by the Board of Directors and is subject to
shareholder approval at the annual general meeting on 23 May 2023.
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 2022 of 2.5 US cents per share.
Subject to shareholder approval at the annual general meeting on 23
May 2023, the final dividend will be paid on 23 June 2023 to
shareholders on record date of 02 June 2023.
Also refer to note 5.1 above for more information on the Law 32
judgement that was handed down in January 2023.
The Company's compliance requirements and obligations in respect
of the US$150 million Revolving Credit Facility (RCF) had not yet
commenced as at 31 December 2022 as there were certain conditions
precedent that were still to be satisfied to make the agreement
effective. The conditions precedent were met on 13 March 2023
subsequent to year end and before the annual financial statements
were signed and the facility is available for draw down from this
date the conditions precedent were met.
Other than as noted above, there were no other significant
events occurring after the reporting date requiring disclosure in
the financial statements.
6. OTHER INFORMATION
6.1 RELATED PARTY TRANSACTIONS
(A) EQUITY INTERESTS IN RELATED PARTIES
Equity interests in subsidiaries
Details of the percentage of ordinary shares held in
subsidiaries are disclosed in note 4.1.
Equity interest in associates and jointly controlled
arrangements
Details of interests in joint ventures are disclosed in note
4.2.
(B) KEY MANAGEMENT PERSONNEL COMPENSATION
Key management personnel are persons having authority and
responsibility for planning, directing, and controlling the
activities of the Group, directly or indirectly, including any
Director (executive or otherwise) of the Group.
The aggregate compensation made to key management personnel of
the consolidated entity is set out below:
For the year For the year
ended ended
31 December 31 December
2022 2021
US$ US$
----------------------------- ------------ ------------
Short-term employee benefits 10,261,960 7,370,964
Post-employment benefits 1,320 7,852
Share-based payments 1, 949,569 1,500,304
----------------------------- ------------ ------------
12,212,849 8,879,120
----------------------------- ------------ ------------
(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 2022 are as follows:
Balance Net other Balance
at Granted Granted change - Net other at
For the year ended 1 January as remuneration as remuneration share plan change 31 December
31 December 2022 2022 ("DBSP") ("PSP") lapse (1) (2) 2022 (3)
------------------- ---------- ---------------- ---------------- ----------- --------- ------------
M Horgan 1,281,405 - 979,000 - 65,788 2,326,193
R Jerrard 2,077,000 - 821,000 (617,000) 67,000 2,348,000
J Rutherford 250,000 - - - - 250,000
S Eyre 15,000 - - - - 15,000
M Bankes 289,000 - - - 30,000 319,000
M Cloete 15,000 - - - - 15,000
C Farrow 30,000 - - - - 30,000
I Fawzy 140,000 - - - - 140,000
H Faul - - - - - -
Gustav Du Toit 950,000 - 492,000 - - 1,442,000
A Hassouna 236,931 - 492,000 (31,000) - 697,931
C Barker 300,000 - 471,000 - - 771,000
M Stoner - - 314,000 - - 314,000
H Bills 500,000 - 480,000 - - 980,000
P Cannon 250,000 - 377,000 - - 627,000
C Murray 474,000 - 461,000 - (24,000) 911,000
A Carse 648,688 - 377,000 (169,000) - 856,688
D Le Masurier 517,300 - 287,000 (127,000) - 677,300
R Nel 401,973 - 332,000 (110,000) (16,667) 607,306
------------------- ---------- ---------------- ---------------- ----------- --------- ------------
(1) ' Net other change - share plan lapse' relates to awards
that have lapsed due to the full performance conditions not being
met on the 2019 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 2022 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 2021 are as follows:
For the year Granted as Granted as Net other Balance at
ended Balance at remuneration remuneration change - share Net other 31 December
31 December 2021 1 January 2021 ("DBSP") ("PSP") plan lapse(1) change 2021(2)
---------------- --------------- --------------- --------------- --------------- --------------- ---------------
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 541,592 - 250,000 (168,000) 25,096 648,688
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 oth er change' relates to the on-market acquisition or
disposal of fully paid ordinary shares.
(2) 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
2022 are summarised below:
-- salaries, superannuation contributions, bonuses, LTIs,
consulting and Directors' fees paid to Directors during the year
ended 31 December 2022 amounted to US$3,918,404 (31 December 2021:
US$3,694,236).
(F) TRANSACTIONS WITH THE GOVERNMENT OF EGYPT
Royalty costs attributable to the government of Egypt of
US$23,842,287 (2021: US$21,671,928) were incurred in 2022. Profit
share to EMRA of US$ 35,492,459 (2021: US$75,200,000) was incurred
in 2022.
(G) TRANSACTIONS WITH OTHER RELATED PARTIES
Other related parties include the parent entity, subsidiaries,
and other related parties.
During the financial year, the Company recognised tax payable in
respect of the tax liabilities of its wholly owned
subsidiaries.
Payments to/from the Company are made in accordance with terms
of the tax funding arrangement.
During the financial year the Company provided funds to and
received funding from subsidiaries.
All amounts advanced to related parties are unsecured. No
expense has been recognised in the year for bad or doubtful debts
in respect of amounts owed by related parties.
Transactions and balances between the Company and its
subsidiaries were eliminated in the preparation of the consolidated
financial statements of the Group.
6.2 CONTRIBUTIONS TO EGYPT
(A) GOLD SALES AGREEMENT
On 20 December 2016, SGM entered a contract with the Central
Bank of Egypt ("CBE"). The agreement provides that the parties may
elect, on a monthly basis, for the CBE to supply SGM with its local
Egyptian currency requirements for that month to a maximum value of
EGP 80 million (2021: EGP 80 million). In return, SGM facilitates
the purchase of refined gold bullion for the CBE from SGM's
refiner, Asahi Refining Canada Ltd. This transaction has been
entered into as SGM requires local currency for its operations in
Egypt (it receives its revenue for gold sales in US dollars).
Forty-five transactions have been entered into at the date of this
report, eleven of which in the current year, pursuant to this
agreement, and the values related thereto are as follows:
For the year ended For the year ended
31 December 2022 31 December 2021
US$'000 US$'000
--------------- ------------------ ------------------
Gold purchased 50, 497 56,147
Refining costs 28 31
Freight costs 56 55
--------------- ------------------ ------------------
50, 581 56,233
--------------- ------------------ ------------------
For the year ended For the year ended
31 December 2022 31 December 2021
Oz Oz
--------------- ------------------ ------------------
Gold purchased 27, 907 31,219
--------------- ------------------ ------------------
At 31 December 2022 the amount receivable from CBE is
approximately US$23,681 (2021: US$24,761 net payable).
(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 2021 and in 2022
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 granted in May 2022 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 lapsed in 2021.
June 2020 awards
Of the 2,582,500 awards granted on 5 June 2020 under the PSP,
1,370,625 awards remain granted to eligible participants (9 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,
5,375,000 awards remain granted to eligible participants (28 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.
May 2022 awards
Of the 9,042,000 contingent share awards granted on 20 May 2022
under the Incentive Share Plan ("ISP"), 9,042,000 awards remain
granted to eligible participants (34 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:
ISP 2022
Grant date 20 May 2022
-------------------------------------------------------------------------------- -------------
Number of instruments 1,524,223
TSR: fair value at grant date GBP(1)(2) 0.34
TSR: fair value at grant date US$(1)(2) 0.43
Adjusted free cash flow and gold production: fair value at grant date GBP(1)(2) 0.73
Adjusted free cash flow and gold production: fair value at grant date US$(1)(2) 0.92
Vesting period (years) 3
Holding period applicable to the award (years)(2) 2
Expected volatility (%) 51.0%
Expected dividend yield (%) 0%
Number of instruments 7,517,777
TSR: fair value at grant date GBP(1) 0.39
TSR: fair value at grant date US$(1) 0.50
Adjusted free cash flow and gold production: fair value at grant date GBP(1) 0.83
Adjusted free cash flow and gold production: fair value at grant date US$(1) 1.06
Vesting period (years) 3
Holding period applicable to the award (years) 0
Expected volatility (%) 51.0%
Expected dividend yield (%) 0%
-------------------------------------------------------------------------------- -------------
(1) The vesting of 50% of the awards granted under this plan are
dependent on a TSR performance condition. As relative TSR is
defined as a market condition under IFRS 2 'Share-based payments',
this requires that the valuation model used considers the
anticipated performance outcome. We have therefore applied a
Monte-Carlo simulation model. The simulation model considers the
probability of performance based on the expected volatility of
Centamin and the peer group companies and the expected correlation
of returns between the companies in the comparator group. The
remaining 50% of the awards are subject to adjusted free cash flow
and gold production performance conditions. As these are classified
as non-market conditions under IFRS 2 they do not need to be
considered when determining the fair value. These grants have been
valued using a Black -- Scholes model. The fair value calculated
was then converted at the closing GBP:US$ 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.
RESTRICTED SHARE AWARDS ("RSA")
Under the Company's Incentive Share Plan ("ISP"), the Company
has restricted share awards, which are a long-term share incentive
arrangement for senior management (but not Executive Directors) and
other employees (participants).
The RSA awards shall be subject to the terms and conditions of
the ISP and shall ordinarily vest in three equal tranches on the
anniversary of the grant date, conditional upon the continued
employment with the Group.
RSA awards granted during the year:
RSA 2022
Grant date 20 May 2022
------------------------------------------- -------------
Number of instruments 2,010,000
F air value at grant date Tranche 1 GBP(1) 0.80
F air value at grant date Tranche 1 US$(1) 1.01
F air value at grant date Tranche 2 GBP(1) 0.75
F air value at grant date Tranche 2 US$(1) 0.95
F air value at grant date Tranche 3 GBP(1) 0.71
F air value at grant date Tranche 3 US$(1) 0.90
Vesting period Tranche 1 (years )(2) 1
Vesting period Tranche 2 (years)(2) 2
Vesting period Tranche 3 (years)(2) 3
Expected dividend yield Tranche 1 (%) 4.4 %
Expected dividend yield Tranche 2 (%) 5.1 %
Expected dividend yield Tranche 3 (%) 5.2 %
------------------------------------------- -------------
(1) The fair value of the shares awarded under the RSA were
calculated by using the closing share price on grant date,
converted at the closing GBP:US$ foreign exchange rate on that day.
No other factors were considered in determining the fair value of
the shares awarded under the RSA.
(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 ended For the year ended
31 December 2022 31 December 2021
US cents per share US cents per share
--------------------------- ------------------- -------------------
Basic earnings per share 6.287 8.811
Diluted earnings per share 6.203 8.738
--------------------------- ------------------- -------------------
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 ended For the year ended
31 December 2022 31 December 2021
US$'000 US$'000
------------------------------------------------------------------------ -------------------- ------------------
Earnings used in the calculation of basic EPS 72,490 101,527
------------------------------------------------------------------------ -------------------- ------------------
For the year ended For the year ended
31 December 2022 31 December 2021
Number of shares Number of Shares
------------------------------------------------------------------------ -------------------- ------------------
Weighted average number of ordinary shares for the purpose of basic EPS 1,152,960,534 1,152,246,924
------------------------------------------------------------------------ -------------------- ------------------
DILUTED EARNINGS PER SHARE AT TRIBUTED 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 ended For the year ended
31 December 2022 31 December 2021
US$'000 US$'000
------------------------------------------------ ------------------ ------------------
Earnings used in the calculation of diluted EPS 72,490 101,527
------------------------------------------------ ------------------ ------------------
For the year ended For the year ended
31 December 2022 31 December 2021
Number of shares Number of shares
------------------------------------------------------------------------------ ------------------ ------------------
Weighted average number of ordinary shares for the purpose of basic EPS 1,152,960,534 1,152,246,924
Shares deemed to be issued for no consideration in respect of employee options 15,597,563 9,717,092
Weighted average number of ordinary shares used in the calculation of diluted
EPS 1 ,168,558,097 1,161,964,016
------------------------------------------------------------------------------ ------------------ ------------------
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 ended For the year ended
31 December 2022 31 December 2021
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) 630 586
------------------------------------------------------------------------------ ------------------ ------------------
Fees payable to the Company's auditors and their associates for other services
to the Group
Audit fee of the Company's subsidiaries 126 132
------------------------------------------------------------------------------ ------------------ ------------------
Total audit fees 756 718
------------------------------------------------------------------------------ ------------------ ------------------
Non-audit fees:
Audit related assurance services - interim review 139 138
------------------------------------------------------------------------------ ------------------ ------------------
Total non-audit fees 139 138
------------------------------------------------------------------------------ ------------------ ------------------
(1) 2022 fee includes amounts in relation to the base audit fee
US$562k (2021: US$566k) and prior year overruns of US$26k, new
applicable regulatory and auditing standards US$37k (2021: US$ nil)
and corporate reporting review US$ nil (2021: US$20k).
All audit fees are billed in GBP and were translated at an
average foreign exchange rate for the year ended 31 December 2022
of US$1.23:GBGBP1 (rate on 31 December 2021: US$1.35:GBGBP1). Not
included within the above amounts are auditors' expenses (recharged
to the Company) of US$19k (2021: US$10k).
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, Jersey 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 2022 Annual Report.
- END -
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END
FR BELLFXXLXBBQ
(END) Dow Jones Newswires
March 16, 2023 03:01 ET (07:01 GMT)
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