TIDMCEY
RNS Number : 1145I
Centamin PLC
23 March 2015
For immediate release 23 March 2015
Centamin plc ("Centamin" or "the Company")
(LSE:CEY, TSX:CEE)
Centamin plc Results for the Year Ended 31 December 2014
Josef El-Raghy, Chairman of Centamin, commented: "Centamin's
corporate strategy seeks to deliver peer-leading shareholder
returns by taking gold projects from exploration, through
development and into production. In this respect, 2014 was a
pivotal year for the Company. Our flagship Sukari Gold Mine saw the
successful commissioning of the US$331 million Stage 4 process
plant expansion, marking the project's transition out of the
investment phase and into a sustainable period of free cash flow
generation over an expected minimum 20-year mine life. In
recognition of this and due to the Company's strong financial
position, the Board of Directors initiated a dividend program
during 2014 with a maiden interim dividend of 0.87 US cents per
share. The Company is now pleased to propose the final dividend for
2014 of 1.99 US cents per share (approx. US$23 million), for a
total full year dividend of 2.86 US cent per share, representing a
pay-out level of approximately 30% of our free cash flow as defined
by our dividend policy."
Operational Highlights(1),(2)
-- Full year production of 377,261 ounces, a 6% increase on
2013, with Q4 2014 production of 128,115 ounces representing an
increase of 37% over Q3 2014
-- Full year cash cost of production of US$729 per ounce, with
Q4 2014 cash costs of US$655 per ounce
-- Stage 4 plant expansion completed with total project expenditure US$331.2 million
-- Process plant throughput exceeded nameplate 10Mtpa capacity in Q4 2014
-- 2015 guidance of 420,000 ounces gold at US$700 per ounce cash
cost of production and US$950 AISC
-- Underground drilling at Sukari supports further resource and reserve expansion potential
-- Exploration drilling programmes continue in Ethiopia, Burkina Faso and Côte d'Ivoire
Financial Highlights(1),(2)
-- EBITDA US$165.4 million, down 29% on the prior year
-- Basic earnings per share 7.21 cents, down 57% on prior year
-- Centamin remains debt-free and unhedged with cash, bullion on
hand, gold sales receivable and available-for-sale financial assets
of US$162.8 million at 31 December 2014
-- Proposed final dividend of 1.99 US cents per share (approx.
US$23 million); total 2014 dividend of 2.86 US c/sh
Legal Developments in Egypt
-- The Supreme Administrative Court appeal and Diesel Fuel Court
Case are both on-going. Centamin is aware of the potential for the
legal process in Egypt to be lengthy and it anticipates a number of
hearings and adjournments in both cases before decisions are
reached. Operations continue as normal and any enforcement of the
Administrative Court decision has been suspended pending the appeal
ruling.
Q4 2014 Q4 2013 2014 2013
-------------------------------- ----------- -------- -------- -------- --------
Gold produced ounces 128,115 91,546 377,261 356,943
Gold sold ounces 125,416 88,856 375,300 363,576
Cash operating cost of
production US$/ounce 655 711 729 663
Average realised gold
price US$/ounce 1,203 1,249 1,257 1,384
-------------------------------- ----------- -------- -------- -------- --------
Revenue US$'000 151,117 111,200 472,581 503,825
EBITDA US$'000 60,749 45,587 165,384 234,167
Profit before tax US$'000 33,819 30,661 81,562 183,969
EPS US cents 2.96 2.81 7.21 16.87
Cash generated from operations US$'000 32,791 30,497 111,602 245,143
-------------------------------- ----------- -------- -------- -------- --------
(1) Cash cost of Production, EBITDA and cash, bullion on hand,
gold sales receivables and available-for-sale financial assets are
non-GAAP measures and are defined at the end of the Financial
Statements. AISC (All-in-Sustaining Costs) are as defined by the
World Gold Council, the details of which can be found at
www.gold.org.
(2) Basic EPS, EBITDA, Cash Costs of Production includes an
exceptional provision against prepayments, recorded since Q4 2012,
to reflect the removal of fuel subsidies which occurred in January
2012 (see Note 6 of the Financial Statements)
Centamin will host a conference call on Monday, 23 March at
9.00am (London, UK time) to update investors and analysts on its
results. Participants may join the call by dialling one of the
following three numbers, approximately 10 minutes before the start
of the call.
UK Toll Free: 0808 237 0040
International Toll number: +44 203 428 1542
Canada Toll free: 1866 404 5783
Participant code: 29325559#
A recording of the call will be available four hours after the
completion of the call on:
UK Toll Free: 0808 237 0026
International Toll number: +44 20 3426 2807
Playback Code: 655616#
Via audio link at http://www.centamin.com/centamin/investors
________________________________
CHAIRMAN'S STATEMENT
2014 saw Centamin deliver a fifth successive year of production
growth at Sukari with the successful completion and commissioning
of the Stage 4 expansion project. Although our strong track record
of delivery against annual gold production guidance was affected by
lower-than-expected processing rates and underground grades,
resulting in revised guidance, the fourth quarter saw annualised
rates in excess of our long-term 450-500,000 ounce target. Full
year production of 377,261 ounces was a 6% increase on 356,943
ounces in 2013. This strong end to the year was achieved as plant
throughput exceeded the expanded 10Mtpa nameplate capacity and open
pit grades increased in line with the mine plan.
Cost control remains an absolute focus of the Company and it is
pleasing to note that, despite full year production of around 10%
lower than forecast at the start of the year, the cash operating
cost of US$729/oz was only marginally above our original US$700/oz
guidance. In line with the strong production rate, Q4 cash
operating costs of US$655/oz point towards the long-term potential
of the operation to deliver highly competitive cash margins.
The impact of a weaker gold price environment, contributed
towards a 29% year-on-year reduction of EBITDA to US$165.4 million.
Profit after tax of US$81.6 million was down 56% on 2013 and
earnings per share of 7.21 cents compare with 16.87 cents in
2013.
Gold production guidance for 2015 is 420,000 ounces at a cash
operating cost of US$700/oz and all-in-sustaining cost ("AISC") of
US$950/oz. The northern and eastern walls of the open pit are a
focus for 2015 and, as mining progresses through the upper portions
of the next stage of pit development, grades are scheduled to
progressively increase to the reserve average in the second half of
the year, when production is expected to increase to the
450-500,000 ounce per annum rate.
Over the medium-term, continued optimisation and higher
productivity rates, in particular within the processing and
underground mining operations, offer good potential for further
production growth and reductions in AISC for no additional capital
expenditure for expansion. We therefore remain confident that
Sukari will continue to deliver further incremental growth over the
coming years.
Centamin remains committed to its policy of being 100% exposed
to the gold price through its un-hedged position and our balance
sheet remains strong, with US$162.8 million in cash, bullion on
hand, gold sales receivables and available-for-sale financial
assets as at 31 December 2014.
During 2014 Centamin made good progress in securing its
longer-term growth objectives. The completion of the Ampella Mining
acquisition in March gave us a substantial footprint in the highly
prospective regions of Burkina Faso and Cote d'Ivoire. Subsequent
to completion of the acquisition, a systematic exploration
programme was initiated aimed at developing the potential for
further significant growth of the 1.9Moz Indicated and 1.3Moz
Inferred resource.
Whilst disciplined and sustainable growth on our existing
projects remains a key focus, we continue to evaluate opportunities
to grow through the acquisition of projects which offer the
potential for the Company to deliver on its strategic
objectives.
The two litigation actions, Diesel Fuel Oil and Concession
Agreement, progressed in line with our expectations during the year
and are described in further detail in Note 20 to the financial
statements. In respect of the latter, the Company continues to
believe that it has a strong legal position and, in addition, that
it will ultimately benefit from the new law no. 32 of 2014, which
came into force in April 2014 and which restricts the capacity for
third parties to challenge any contractual agreement between the
Egyptian government and an investor. This new law is currently
under review by the Supreme Constitutional Court of Egypt. We are
aware of the potential for the legal process in Egypt to be slow
and for cases to be subject to delays and adjournments but we
remain confident of the merits of the two cases.
The Group continues to benefit from the full support of the
Ministry of Petroleum and EMRA, both in the Concession Agreement
appeal and at the operational level. As part of our long-term
strategy, we look forward to continuing to share the benefits of
this substantial investment as the operation, having transitioned
from its initial period of construction, sets the stage for a new
era of gold mining in Egypt.
Subsequent to the year-end, Andrew Pardey was appointed as Chief
Executive Officer (CEO) and joined the Board as an Executive
Director from 1st February 2015. Andrew has been a driving force
behind Sukari's growth into one of the world's leading gold mines
and of Centamin's development from a junior exploration company
into one of the largest gold producers in North Africa. His
experience and stewardship will be of invaluable benefit to the
business as it continues to develop and realise its next stages of
growth. In my role as Chairman I look forward to continuing to work
with the Company towards delivering substantial shareholder value
through further development of our portfolio of assets.
Trevor Schultz resigned as an executive director and was
appointed as a non-executive director from 1 May 2014, coinciding
with the successful completion of construction of the Stage 4
expansion and hand over to Operations for commissioning. Trevor has
made an invaluable contribution to the establishment of Sukari as a
globally significant gold mining operation, in particular with his
recent role in overseeing the construction of the Stage 4 process
plant. Such a major construction project that was completed with
minimal cost and time overruns is testament to his strong
leadership and experience. I am delighted that the Company and its
shareholders continue to benefit from Trevor's counsel in his role
as a non-executive director.
Subsequent to the year-end, Professor G Robert Bowker (65)
retired as a Non-Executive Director, effective from 26 January
2015. Bob has been involved with the Company since 2008 and during
this time the Centamin team have benefited greatly from his
insightful view of the political landscape in Egypt and the wider
region. Bob has provided valued counsel to those that he has worked
with over the years and has been a part of the evolution of the
company from explorer to Egypt's first modern gold miner. All of us
at Centamin wish him well in the future.
I would like to close by thanking all those at Sukari, in
Alexandria, Ethiopia, Burkina Faso, Côte d'Ivoire, Jersey and Perth
for their efforts in 2014 as Centamin continued on its journey to
becoming an established cash-generative gold producer.
Your company remains well positioned to deliver outstanding
shareholder returns in the coming years as we adhere to our
philosophy of focussing on free cashflow generation, returns to
shareholders and growth through exploration. I look forward to
updating you further over the course of 2015, and would welcome you
to join us at our AGM, which this year will be held in London on 18
May 2015.
By order of the Board for and on behalf of Centamin plc.
Josef El--Raghy
Chairman
FINAL DIVIDEND
The Directors proposed a final dividend of 1.99 US cents per
share (US$0.0199) on Centamin plc ordinary shares (totalling
approximately US$23 million) for a full year total of 2.86 US cents
per share. The final dividend for 2014 will be paid on 29 May 2015,
subject to shareholder approval at the AGM to be held in London on
18 May 2015. The dividend will be paid to shareholders on the
register on the Record Date of 24 April 2015.
The key dates with respect to the dividend are as follows:
London Stock Exchange (T+2)
EX-DIV DATE: 23 April 2015
RECORD DATE: 24 April 2015
LAST DATE FOR RECEIPT OF CURRENCY ELECTIONS: 8 May 2015
PAY DATE: 29 May 2015
Toronto Stock Exchange (T+3)
EX-DIV DATE: 22 April 2015
RECORD DATE: 24 April 2015
PAY DATE: 29 May 2015
The dates set out above are based on the Directors' current
expectations and may be subject to change. If any of the dates
should change, the revised dates will be announced by press release
and will be available at www.centamin.com.
As a Jersey incorporated company, there is no requirement for
Centamin plc to make any withholding or deduction on account of
Jersey tax in respect of the dividend.
Shareholders who wish to elect to receive sterling dividends can
mandate payments directly to their UK bank or building society by
visiting the Investor Centre website at www.investorcentre.co.uk/je
or by completing the dividend mandate form which is available at
www.centamin.com and posting it back to the registrars in
accordance with the instructions set out in the form. The
registrars retain the mandates previously provided by shareholders
and will apply the instructions for this and future dividends.
Our registrars have also arranged a global payment service
allowing payment directly to your designated account, please visit
www.investorcentre.co.uk/je or www.centamin.com for details. The
currency election mandate will be applicable for shareholders with
a UK bank account. The global payment service is a service provided
by the registrars for shareholders registered on the LSE and
transfer charges may apply.
The last date for shareholder currency elections and dividend
mandates to be received by the Company will be 8 May 2015. The
currency conversion rate for those electing to receive Sterling
will be based on the foreign currency exchange rates on 8 May 2015.
The rate applied will be published on the Company's website on 11
May 2015.
CHIEF EXECUTIVE OFFICER'S REPORT
2014 was another year of production growth for Sukari and
overall performance bodes well for the potential of the operation
to generate significant free cash flow over the coming years. The
Stage 4 project to double nameplate capacity at the process plant
to 10 million tonnes per annum (Mtpa) was completed during the
first half of the year for a total capital expenditure of US$331.2
million. The project was completed on budget and with limited
timeline over-runs, representing a solid achievement in itself, but
is all the more notable when set against the various external
challenges that were faced, particularly during the early stages of
the construction period.
Whilst affected by periods of below-expected productivity,
progressive increases in plant throughput continued as
commissioning activities took effect and the nameplate 10Mtpa
capacity was reached, and exceeded, from September onwards.
The fourth quarter was another record for both open pit and
underground mining rates and productivity in both of these areas
remains strong. Following government approval in the fourth quarter
for the increase in Ammonium Nitrate ("AN") usage, the open pit is
now on a secure footing to deliver the scheduled material movements
as required for the expanded operation. The underground mine
continued to deliver strong increases in volumes through 2014,
achieving above-target levels by year-end, although with lower
grades than originally forecast. With the operation now
appropriately scaled for the higher processing rate, the focus for
2015 is on reducing grade volatility and thereafter leveraging the
potential for additional productivity increases.
The efficiency gains delivered with the production ramp-up are
indicated by a material year-on-year decrease in operating costs
per tonne, in both the mining and processing areas. This is a trend
we expect to continue in the coming quarters as the expanded
operation continues to be optimised.
Centamin's track record of safety is an aspect of our
performance of which I am both pleased and eager to improve.
Developing a strong culture of health and safety awareness onsite
has resulted in improved reporting of incidents compared to
previous years and our LTI frequency rate of 0.39 per 200,000
man-hours in 2014 (0.36 in 2013) is a solid achievement, especially
when considering Sukari is the first modern gold mine in Egypt.
Nevertheless, there remains room for improvement and our target is
for zero injuries and having every person go home safely every
day.
Subsequent to the year end, an unfortunate incident occurred in
Burkina Faso on a public road near the Konkera village which
resulted in one of our local employees being fatally wounded and
another sustained injuries. The wellbeing of our employees is a
priority for Centamin and a thorough investigation into this bandit
attack, on two of our vehicles, has been carried out. Further
additional security measures have been proposed following the
incident and these are being implemented. There was no impact on
operational activity as a result of the incident.
The greenhouse gas emissions reporting required by Schedule 7 of
The Large and Medium--Sized Companies and Groups (Accounts and
Reports) Regulations 2008 as amended by The Companies Act 2006
(Strategic Report and Directors' Report) Regulations 2013, is a
requirement only on UK incorporated quoted companies. Centamin has
provided information relating to this legislation in the CSR
Report.
Maintaining good community relations is a core part of our
operational strategy and corporate governance standards. As the
first mining company in Egypt in modern times, we strive to set an
example of a socially responsible industry through adopting a good
neighbour policy. We take every action to ensure Sukari has the
minimum impact on the social environment, as well as to deliver
positive benefits to Egypt and the community as a result of our
investment, and further details of our various initiatives can be
found in the CSR Report.
Our work force is remunerated well above the average for Egypt
and our career development programmes are highly valued. In general
we enjoy a very positive and constructive relationship with our
employees.
Operational Review
Sukari Gold Mine production summary:
Year ended Year ended
31 December 31 December
2014 Q4 2014 2013 Q4 2013
---------------------------------- ------------ ------- ------------ -------
OPEN PIT MINING
Ore mined (1) ('000t) 10,936 4,123 11,664 3,161
Ore grade mined (Au g/t) 0.80 1.00 0.81 0.77
Ore grade milled (Au g/t) 0.97 1.31 1.25 1.27
Total material mined ('000t) 44,820 13,804 41,718 9,642
Strip ratio (waste/ore) 3.1 2.4 2.6 2.1
---------------------------------- ------------ ------- ------------ -------
UNDERGROUND MINING
Ore mined from development
('000t) 464 115 304 87
Ore mined from stopes ('000t) 504 169 283 87
Ore grade mined (Au g/t) 6.10 5.43 9.66 8.25
---------------------------------- ------------ ------- ------------ -------
Ore processed ('000t) 8,428 2,597 5,684 1,400
Head grade (g/t) 1.56 1.71 2.12 2.13
Gold recovery (%) 87.8 87.0 88.6 89.9
Gold produced - dump leach
(oz) 15,564 2,564 12,382 3,804
Gold produced - total (2)
(oz) 377,261 128,115 356,943 91,546
Cash cost of production(3)
(4) (US$/oz) 729 655 663 711
Open pit mining 241 228 271 291
Underground mining 59 48 44 50
Processing 375 334 297 293
G&A 54 45 51 77
---------------------------------- ------------ ------- ------------ -------
Gold sold (oz) 375,300 125,416 363,576 88,856
Average realised sales
price (US$/oz) 1,257 1,203 1,384 1,249
---------------------------------- ------------ ------- ------------ -------
(1) Ore mined includes 221kt @0.46g/t delivered to the dump
leach in Q4 2014 (1,015kt @ 0.45 g/t in Q4 2013). Gold produced is
gold poured and does not include gold-in-circuit at period end.
Cash operating costs exclude royalties, exploration and corporate
administration expenditure.
(2) Gold produced is gold poured and does not include gold-in-circuit at period end.
(3) Cash costs exclude royalties, exploration and corporate
administration expenditure. Cash cost is a non-GAAP financial
performance measure with no standard meaning under GAAP. For
further information and a detailed reconciliation, please see
"Non-GAAP Financial Measures" section below.
(4) Cash costs of production reflect an exceptional provision
against prepayments to reflect the removal of fuel subsidies which
occurred in January 2012 (refer to Notes 3 and 6 respectively to
the financial statements for further details).
Health and safety - Sukari
The LTIFR for 2014 was 0.39 per 200,000 man-hours (2013: 0.36
per 200,000 man-hours), with a total of 5,620,444 man hours worked
during 2014 (2013: 6,702,908). Developing the health and safety
culture onsite has resulted in improved reporting of incidents
compared to previous years and, although there remains further room
for improvement, Centamin views its LTI frequency rate as a solid
achievement considering Sukari is the first modern gold mine in
Egypt.
Open pit
The open pit delivered total material movement of 44,820kt for
the year, an increase of 7% on the prior year and related to an
increase in mining fleet capacity. Whilst mining rates for the year
were below the original forecast, as a result of delays in receipt
of government approval for an increase in daily usage of AN
(received in October 2014), this did not impact production and
rates have increased to the required level to feed the expanded
plant. The additional AN has allowed us to review our cut back
strategies to ensure a continuous supply of Ore from the open pit
to feed the plant
Ore production from the open pit was 10.94Mt at 0.80g/t with an
average head grade fed to the plant of 0.97g/t. The ROM ore
stockpile balance increased by 0.42kt to 2.17kt by the end of the
year. Mining was primarily from the Stage 3A area, which provided
access to higher-grade sulphide portions of the ore-body during the
second half of the year.
Underground mine
Ore production from the underground mine was a record 968kt, a
65% increase on 2013. The ratio of stoping-to-development ore mined
increased, with 52% of stoping ore (504kt) and 48% of development
ore (464kt). Ore tonnages from stopes increased by 78% on the
previous year.
An average head grade of 6.1 g/t was mined in 2014, with stope
production grade of 6.6 g/t and development grade of 5.5 g/t during
the year. Grade from development ore was below original
expectations and was a decline from 2013, impacted by mining
dilution with locally complex geological structures offsetting some
areas of high-grade mineralisation. Drill results support
continuity of the higher grades into areas planned for further
development.
Development in mineralised areas took place between the 875 and
755 levels. A total of 5,701 metres of mineralised development
(4,737 metres in Amun, and 961 metres in Ptah) were completed
during the year, associated with stoping blocks planned for mining
during 2015 to 2017. Total development for the mine was 6,625
metres including Amun and Ptah decline development.
The exhaust ventilation circuit for the Ptah decline was
progressed, ensuring sufficient ventilation as the decline extends
deeper into the orebody. Ore drive development continued on the
Ptah 860 and 875 levels and exploration drill cuddies were also
completed on the 875 and 860 levels.
A total of 10,925 metres of grade control diamond drilling were
completed during 2014, aimed at short-term stope definition, drive
direction optimisation and underground resource development. A
further 36,971 metres of HQ and NQ drilling continued to test the
depth extensions below the current Amun and Ptah zones.
Processing
The annual throughput of the Sukari plant was 8.4Mt in 2014, a
48% increase on 2013 and reflecting the commencement of ore
treatment through the new Stage 4 plant circuit. Whilst slightly
behind the start-of-year schedule, commissioning activities
proceeded well and supported a ramp-up to the expanded 10Mt per
annum nameplate capacity in the third quarter of 2014. The trend
towards higher levels of throughput continued in the fourth
quarter, with plant productivity of 1,330 tonnes per hour (tph)
representing an 87% increase on 2013 annual productivity rates.
Productivity levels have now increased for eight successive
quarters. Our objective is for the process plant in due course to
run at a throughput rate comparable with the performance of the
pre-expansion plant, which operated at 15-20% above nameplate
capacity (5Mtpa) throughout 2013.
Metallurgical recoveries were 87.8%, which is a 0.8% decrease on
2013. Work is continuing to optimise the operational controls and
improve circuit stability to ensure recoveries return to previous
levels above 88% at the increased rate of throughput. The
commissioning of the new carbon regeneration kiln was completed in
mid 2014 and has seen a positive impact.
The dump leach operation produced 15,411oz in 2014, a 26%
increase on 2013.
2014 Capital Expenditure
A breakdown of capital expenditure during 2014 is as
follows:
US$ million
Stage 4 Processing Plant 3.4
Operational fleet expansion 4.5
------------
TOTAL EXPANSION - SUKARI 7.9
Open pit development 20.7
Underground mine development
(1) 31.1
Other sustaining capital
expenditure 8.6
------------
TOTAL SUSTAINING - SUKARI 60.4
EXPLORATION CAPITALISED(2) 64.2
(1) Includes underground exploration drilling
(2) Includes the Ampella Mining Ltd asset acquisition for a
total consideration of US$48.5m (which includes a cash component of
US$9.3m and additional assets of US$1.6m), with the balance
representing exploration expenditure on other licence areas
(excluding Sukari underground drilling).
Capital Expenditure - Stage 4 Expansion
The Stage 4 process plant expansion to double the Sukari process
plant throughput was 100% completed during the first half of 2014
for a total capital expenditure of US$331.2 million. Nameplate
capacity stood at 10Mtpa at the end of June.
A breakdown of the major cost areas of the total project
expenditure, up to 31 December 2014 is as follows:
US$ million
Mining equipment 53.7
Processing plant 168.6
Power plant 38.9
Other 70.0
------------
TOTAL STAGE 4 PROJECT
EXPENDITURE 331.2
Exploration
Sukari
Drilling from underground remains a focus of the Sukari
exploration programme and drilling rates were progressively
increased as new development provided improved access from below
surface to test potential high-grade extensions of the deposit. The
ore body has not yet been closed off to the north, south or at
depth and further underground drilling of the Sukari deposit will
take place during 2015, predominantly from both the Amun and Ptah
declines.
Select results received during the fourth quarter from the
underground drilling programme which have not yet been included in
the resource base, and which are in addition to results
previously-reported during 2014, include the following:
Amun
Hole Number Depth (m) Interval Au (g/t)
(m)
-------------------------- ---------------- --------- ---------
From To
-------------------------- ------- ------- --------- ---------
UGRSD0216 10.9 13 2.1 22.08
-------------------------- ------- ------- --------- ---------
UGRSD0217 138 147.4 9.4 25.7
-------------------------- ------- ------- --------- ---------
including 146.55 147.4 0.85 258
-------------------------- ------- ------- --------- ---------
UGRSD0218 99.6 100.4 0.8 44.48
-------------------------- ------- ------- --------- ---------
106 108 2 11.58
-------------------------- ------- ------- --------- ---------
UGRSD0226 126.3 132 5.7 12.7
-------------------------- ------- ------- --------- ---------
UGRSD0228 136 137.4 1.4 19.39
-------------------------- ------- ------- --------- ---------
UGRSD0230 168.7 174 5.3 29.9
-------------------------- ------- ------- --------- ---------
UGRSD0232 159 165.35 6.35 7.57
-------------------------- ------- ------- --------- ---------
Ptah
Hole Number Depth (m) Interval Au (g/t)
(m)
------------- --------------- --------- ---------
From To
------------- ------- ------ --------- ---------
UGRSD0524 7 11 4 6.6
------------- ------- ------ --------- ---------
74.6 88 13.4 4.2
------------- ------- ------ --------- ---------
UGRSD0525 90.3 93 2.7 14.7
------------- ------- ------ --------- ---------
113 130.9 17.9 5.2
------------- ------- ------ --------- ---------
148 155.6 7.6 10.3
------------- ------- ------ --------- ---------
207 224 17 4.1
------------- ------- ------ --------- ---------
UGRSD0528 21 26.3 5.3 5.8
------------- ------- ------ --------- ---------
UGRSD0531 78 83 5 25.5
------------- ------- ------ --------- ---------
UGRSD0532 216.15 218 1.85 50.5
------------- ------- ------ --------- ---------
UGRSD0537 57.15 62 4.85 7.6
------------- ------- ------ --------- ---------
111.6 122.5 10.9 4.1
------------- ------- ------ --------- ---------
133 135 2 10.7
------------- ------- ------ --------- ---------
330.6 333.1 2.5 27.5
------------- ------- ------ --------- ---------
Surface drilling from January to April 2014 continued in the
northern portions of the Sukari Hill deposit (through the Ra and
Gazelle zones and into the northern Pharaoh Zone).
Seven other prospects besides Sukari Hill have been identified
on the 160km2 Sukari tenement area and exploration is being
conducted under the principle that ore from these prospects would
be trucked to the existing processing plant. Reverse circulation
(24,441 metres) and diamond drilling (703m) programmes were
completed during 2014 on the Quartz Ridge prospect to the east of
the hill. Diamond drilling to the south at the Kurdeman prospect
(1,459m) was also completed.
Burkina Faso
Centamin's tenements in Burkina Faso, collectively known as the
Batie West permits, are Danhal, Donko, Dounkou, Gbingbina, Mabera,
Tiopolo, Niorka, Bottara, Kaldera, Kpere Batie, Timboura and
Kpere.
Subsequent to the Ampella acquisition, Centamin has re-commenced
field activities at Batie West, with a systematic programme
including RC, diamond and auger drilling, geophysical surveys,
geochemical sampling and geological mapping. Drilling has been
completed at the Pampouna (2,685m), Konkera South (230m), Tonsu
(491m) and Tonior (3,303m) prospects for a total of 9,302m,
including 362.8m of diamond drilling.
A geophysical survey at the Wadaradoo prospect has identified
continuous chargeability and resistivity anomalies which are
proving to be useful for defining drill targets. Further work is
being undertaken at the Napelepera East prospect.
Ampella's mining licence application in relation to the Tiopolo
Permit was passed to the Ministers Council during 2014. The signed
ministerial decree was issued in the post-reporting period, on the
5th March 2015 and an application has been made to postpone
development and continue exploration, as provisioned in the Burkina
Faso Mining Code.
Essential components of our health and safety management systems
are being integrated into our exploration programme at Batie West.
This process includes an orientation and induction for employees
and contractors to ensure adherence to our strict policies and
procedures. The Batie West camp site has a well-equipped clinic
which includes a full-time paramedic.
The strategy for 2015 is to continue to systematically explore
the entire 160 km strike length of the belt and drill-test the
prospectivity of the prospects. It is expected this will lead into
further resource development work in late 2015 progressing into
2016.
Côte d'Ivoire
Centamin has three licences in Côte d'Ivoire covering a
c.1200km(2) area across the border from Batie West in Burkina Faso.
A further four licences are currently under application.
Field work commenced with the technical team completing mapping,
rock chip sampling and auger drilling geochemistry. Permits and
authorisations for an airborne magnetic and radiometric survey were
being prepared.
The objective for 2015 is to geologically asses the three
current permits, identify prospects and undertake first pass RC
drilling on priority targets, aimed at a path towards resource
development in 2016.
The four permits that are under application are expected to be
granted in early 2015, and are planned to be covered by regional
surface geochemistry aimed at identifying anomalies for first-pass
aircore drilling in 2016.
Ethiopia
Centamin continued exploration on its tenement in Una Deriem in
northern Ethiopia, and in total, 2,548 meters were drilled in 2014
totalling 13,783m for the region.
Trench intercepts including 20m at 1.08g/t and 22m at 1.48g/t
indicate the presence of significant surface mineralisation.
Drilling continued to test continuity of mineralization and
positive drill results along strike. Results received for four
holes (UDM44-47) indicated patchy mineralisation.
A new permit known as the 'Ondonok Dabus' License, located in
the west of Ethiopia close to the regional capital of Asosa, has
been awarded. Early-stage regional works are underway, including
access tracking and introductions to the local authorities.
In September 2013 Centamin entered into joint venture with
AIM-listed Alecto Minerals plc to pursue existing and new
opportunities identified by Alecto in Ethiopia. The initial joint
venture projects related to two exploration licences Wayu Boda and
Aysid Meketel. The Company gave formal notice to Alecto in February
2015 terminating the joint venture. Centamin's rights in the Wayu
Boda and Aysid Metekel licences have reverted back to Alecto, such
that Alecto will hold 100% of the Licences and will assume
responsibility for the ongoing commitments in respect of the
Licences.
Outlook
The focus for 2015 is to continue production growth at Sukari
whilst maintaining a strong control on costs, with the objective of
generating substantial free cash flow even under challenging gold
price assumptions. We intend to return 15-30% of this cash flow to
our shareholders, in line with our dividend policy, and to allocate
the remainder towards our medium and long-term objective of organic
growth aimed at realising incremental shareholder value and
returns.
Safety remains a priority and we target a loss time injury rate
of zero during 2015.
Guidance for 2015 is for 420,000 ounces at US$700/oz cash
operating cost and US$950/oz all-in-sustaining cost. Production is
expected to achieve the 450-500,000 ounce per annum target rate
from H2 onwards.
In the open pit the focus will continue on the northern and
eastern cutback to expose higher-grade ore from the second half of
the year. This will ensure that the operation is on a secure
footing to sustain, on an annual basis, the required tonnages at
reserve-average grades.
We aim to build on the significant productivity increases from
the underground mine by targeting a reduction in grade
volatility.
As we achieve these targets, and during the next 2-3 year
period, we intend to continue optimising the various areas of the
expanded Sukari operation with the ultimate aim of delivering
further production increases. The productivity levels achieved
during 2013 in the pre-expansion process plant, together with the
various design improvements implemented during the Stage 4 project
build, provide us with confidence that the expanded plant will
achieve, in time, production levels materially above nameplate
capacity. At the underground mine, as stable grade delivery is
achieved at the current mined volumes, we see potential for further
incremental productivity increases.
The additional shareholder value that can be gained from the
continued drive for efficiency has the potential to be significant
and requires no significant capital expenditure.
No capital expenditure for expansion or project development is
planned for 2015.
Exploration at Sukari continues to prioritise extensions of the
high-grade underground resource and reserve and we expect to
continue to deliver positive news in line with the strong results
to date. A resource and reserve update is expected to be issued
during 2015.
Outside of Sukari, we expect a total exploration expenditure of
circa-US$20 million in 2015, with the largest proportion on the
advanced exploration programme in Burkina Faso. Our exploration
tenements in Côte d'Ivoire and Ethiopia are no less prospective,
requiring a lower exploration spend due to their earlier stage. In
line with our overall exploration strategy, the actual expenditure
on these projects is results-driven and the current estimated
expenditures are therefore subject to on-going revisions.
We will continue to evaluate potential opportunities to grow the
business through the acquisition of projects offering the potential
for the Company to deliver on its strategic objectives.
Finally, I would like to thank all my colleagues for their hard
work over the years including the employees on site at Sukari,
those on the exploration sites in Burkina Faso, Ethiopia and Côte
d'Ivoire as well as those in the corporate and administration
offices in Jersey and Australia. I would also like to thank your
Board of directors for their support over the years and am very
much looking forward to 2015 and beyond.
Andrew Pardey
Chief Executive Officer
FINANCIAL REVIEW
The financial statements have been prepared in accordance with
International Financial Reporting Standards ("IFRS") as issued by
the International Accounting Standards Board ("IASB") and adopted
for use by the European Union, the Companies (Jersey) Law 1991, and
IFRS as issued by the IASB, therefore the Group financial
statements comply with Article 4 of the EU IAS Regulation.
Through the Group's emphasis on maximising productivity and
maintaining rigorous cost control, Centamin has continued to return
strong earnings and cash flow generation despite the weaker gold
price environment, with average realised gold prices of US$1,257
per ounce being US$127 per ounce lower than in the prior year. Now
in its sixth year of production, the Sukari Gold Mine remains
highly cash generative, with a competitive cash operating cost of
production of US$729 per ounce and solid EBITDA of US$165.4 million
(see "Non-GAAP Financial Measures" section below).
Centamin remains committed to its policy of being 100% exposed
to the gold price through its un-hedged position, and maintained a
robust cash and cash equivalents balance of US$125.7 million at
year-end 2014.
Centamin announced a maiden interim dividend in August 2014 of
0.87 US cents per ordinary share (US9.9m total distribution) and,
subject to shareholder approval at the AGM on 18 May 2015, a final
dividend of 1.99 US cents per share (totalling approximately
US$23m) is proposed to be paid on 29 May 2015 to shareholders on
the register as of 24 April 2015. The ex-dividend date is 23 April
2015 for LSE listed shareholders and 22 April 2015 for TSX listed
shareholders.
During the first half of the year the Group acquired Ampella
Mining Limited for a total consideration of US$48.5m. This included
a cash component of US$9.3m and assets of US$1.6m. The transaction
has been accounted for as an asset acquisition, using fair value
measurement principles, with exploration rights covering an area of
2,350km2, recorded as an addition to mineral properties in the
period.
Revenue
Revenue from gold and silver sales has decreased by 6% to US$473
million, as a result of a 3% increase in gold sold to 375,300
ounces offset by a 9% decrease in the average gold price to
US$1,257 per ounce.
Cost of Sales
Cost of sales represents the cost of mining, processing,
refinery, transport, site administration and depreciation and
amortisation, as well as preproduction costs incurred prior to
commercial production and movement in production inventory. Cost of
sales is inclusive of exceptional items of US$62.5 million (refer
to Note 6 of the Financial Statements for further information) and
has increased by 29% to US$358.3 million, as a result of:
a) a 16% increase in mine production costs to US$275.9 million,
primarily due to an increase in activity year on year with tonnes
moved increasing by 7% and tonnes treated by 48%;
b) a 66% increase in depreciation and amortisation from US$50.8
million to US$84.2 million, a result of an increase in the
underlying and mine development properties due to the commissioning
of Stage 4 in addition to the change in accounting estimate of the
useful economic life of the Sukari plant and equipment capitalised
within plant and equipment; offset by
c) a US$1.9 million credit for movement in production inventory
a result of an increased addition to the ROM ore stockpile.
Other Operating Costs
Other operating costs reported comprises expenditure incurred
for communications, consultants, directors' fees, stock exchange
listing fees, share registry fees, employee entitlements, general
office administration expenses, the unwinding of the restoration
and rehabilitation provision, foreign exchange movements, the share
of profit/loss in Associates and the 3% production royalty payable
to the Egyptian government. Other operating costs increased by 40%
to US$30.4 million, as a result of:
a) a US$12.5million increase in net foreign exchange movements
from a US$9.5 million gain to a US$2.9 million loss; and
b) a US$1.1 million donation (loss on disposal of assets) of two
Generators to the Marsa Alam Government; offset by
c) a US$1.6 million decrease in the share of loss of Associate,
as a result of having written off the costs associated with the
interest held in Sahar during 2013;
d) a US$0.9 million decrease in royalty paid to the government
of the ARE in line with the decrease in gold sales revenue; and
e) a US$2.3 million decrease in corporate costs.
Other Charges
Impairment charges have been recorded as follows:
a) a US$2.3 million write-off of capitalised exploration in
relation to the JV with Alecto Minerals plc; and
b) a US$0.4 million impairment loss recognised in relation to
the investment in Nyota Minerals Limited.
Finance Income
Finance income reported comprises interest revenue applicable on
the Company's available cash and term deposit amounts. The
movements in finance income are in line with the movements in the
Company's available cash and term deposit amounts.
Net Profit
As a result of the factors outlined above, the Group recorded a
net profit before tax for the year ended 31 December 2014 of
US$81.6 million (2013: US$184.0 million).
Earnings Per Share
Earnings per share of 7.21 cents compare with 16.87 cents in
2013. The decrease was driven by the lower net profit, as outlined
above, as well as an increase of 4.4% in the share count as a
result of the Ampella acquisition.
Comprehensive Income
Other comprehensive income has decreased by US$6.8 million to
US$0.1 million as a result of the revaluation of available-for-sale
financial assets. The prior increase was a result of the cumulative
loss that had been recognised in other comprehensive income being
reclassified from equity to profit.
Financial Position
At 31 December 2014, the Group had cash and cash equivalents of
US$125.7 million compared to US$106.0 million at 31 December 2013.
The majority of funds have been invested in international rolling
short-term higher interest money market deposits.
Current assets have increased by US$24.0 million or 9% to
US$293.4 million, as a result of:
a) Stores inventory has increased by US$3.6 million to US$104.9
million as a result of the commissioning of Stage 4. Mining
stockpiles and ore in circuit inventory has increased by US$1.9
million to US$35.8 million as a result of the increase in gold in
circuit at period end;
b) the completion of the stage 4 expansion resulting in an
increase in the cash inflows and a US$19.0 million increase in the
cash reserves; offset by
c) a US$0.6 million decrease in gold sale receivables.
Non-current assets have increased by US$48.0 million or 5% to
US$1,077.4 million, as a result of:
a) exploration and evaluation assets have increased by US$64.2
million to US$124.0 million as a result of the drilling programs in
Sukari Hill, the Sukari tenement area, Ethiopia, Burkina Faso and
Côte d'Ívoire, this increase is inclusive of a US$2.3 million write
off of expenditure in relation to the joint venture with Alecto
Minerals plc;
b) a US$4.8m increase in prepayments to EMRA in relation to
advance payments against future profit share; and
c) a US$65.0 million increase in property, plant of equipment,
mainly relating to net capitalised work-in-progress costs of
US$68.3 million (comprising US$3.4 million for the Stage 4
processing plant, US$4.5 million for the open pit mining fleet
expansion, $20.7 million for open pit development, US$31.1 million
for underground development and US$8.6 million for other sustaining
capital expenditure) and US$4.3 million in relation to the
acquisition of Ampella Mining Limited, offset by a US$5.2 million
reduction in the rehabilitation asset and disposals of US$2.3
million. Offset further by a depreciation and amortisation charge
of US$84.2 million, and
d) a US$0.6 million decrease in the available-for-sale financial
assets to US$0.4 million as a result of:
1. a US$1.0 million devaluation (including foreign exchange
loss) in the shares held in Nyota together with the sale of 11
million shares for US$0.1 million; offset by
2. a US$0.4 million increase as a result of the receipt of the KEFI shares.
Current liabilities have decreased by US$43.9 million to US$34.4
million as a result of the management of creditor days.
Non-current liabilities reported during the period have
decreased by US$4.6 million as a result of:
a) a change in estimate of the future rehabilitation costs as a
result of a detailed review having being undertaken as at year end
as a result of the commission of stage 4; and
b) the unwinding of the discount on the provision for rehabilitation.
Issued Capital has increased by US$49.1 million due to the issue
of shares in relation to the acquisition of Ampella and vesting of
awards offset by US$1.7m of own shares acquired.
Share option reserves reported have decreased by US$1.6 million
to US$4.1 million as result of the forfeiture and vesting of awards
and the resultant transfer to Accumulated Profits and Issue Capital
respectively, offset by the recognition of the share-based payments
expense.
Accumulated profits increased by US$73.1 million as a result of
the increase in the profit for the year attributable to the
shareholders of the Company of US$81.6 million together with a
US$0.1 million loss on available-for-sale financial assets in
relation to the KEFI shares and a US$1.5 million transfer from the
Share Options Reserve as a result of the forfeiture of awards,
offset by the US$9.9 million interim dividend payment.
Cash Flows
Net cash flows generated by operating activities comprise
receipts from gold and silver sales and interest revenue, offset by
operating and corporate administration costs. Cash flows have
decreased by US$133.5 million to US$111.6 million, primarily
attributable to:
a) a decrease in revenue, due to a lower average realised price offset by higher gold sales; and
b) an increase in cash outflows flows in relation to receivables and payables;
c) a decrease in gross margins as a result of the decrease in
the average realised gold price, offset by;
d) a decrease in cash outflows in relation to inventories and
prepayments, as a result of the commissioning of Stage 4.
Net cash flows used in investing activities comprise exploration
expenditure and capital development expenditures at Sukari
including the acquisition of financial and mineral assets. Cash
outflows have decreased by US$204.1 million to US$78.8 million. The
primary use of the funds during the year was for investment in
capital work-in-progress in relation to the Stage 4 development,
the open pit and underground development, additional mining assets
and exploration expenditures incurred, which was offset by US$9.3
million cash acquired through the assets acquired in Ampella Mining
Limited.
Net cash flows generated by financing activities comprise the
exercising of shares issued under the Company's Loan Funded Share
Plans ("LFSPs") and options under the Employee Share Option Plan
("ESOP") respectively in addition to dividends paid. During the
year:
a) 1.7 million of the Company's own shares valued at US$1.7
million were acquired and awarded as part of the Deferred Bonus
Share Plan; and
b) a US$9.9 million interim dividend was paid during the year.
Effects of exchange rate changes have decreased by US$2.0
million as a result of the strong performance of the US$ to the
Euro and A$.
Pierre Louw
Chief Financial Officer
Set out below are the audited consolidated Financial Statements
for the Group, including notes thereto, for the year ended 31
December 2014. The independent auditors report on these Financial
Statements was unmodified.
Financial statements
Consolidated statement of comprehensive income for the year
ended 31 December 2014
31 December 2014 31 December 2013
-------------------------------------- --------------------------------------
Before Before
exceptional Exceptional exceptional Exceptional
items items(1) Total items items(1) Total
Note US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
------------------------- ----- ------------ ------------ ---------- ------------ ------------ ----------
Revenue 5 472,581 - 472,581 503,825 - 503,825
Cost of sales 6 (295,763) (62,534) (358,297) (226,433) (51,004) (277,437)
------------------------- ----- ------------ ------------ ---------- ------------ ------------ ----------
Gross profit 176,818 (62,534) 114,284 277,392 (51,004) 226,388
Other operating
costs 6 (30,368) - (30,368) (21,727) - (21,727)
Impairment
of available-for--sale
financial
assets 14.1 (436) - (436) (12,911) - (12,911)
Impairment
of associate 14.2 - - - (1,968) - (1,968)
Impairment
of exploration
and evaluation
assets 13 (2,328) - (2,328) (6,503) - (6,503)
Finance income 6 410 - 410 690 - 690
------------------------- ----- ------------ ------------ ---------- ------------ ------------ ----------
Profit before
tax 144,096 (62,534) 81,562 234,973 (51,004) 183,969
Tax 7 - - - (10) - (10)
------------------------- ----- ------------ ------------ ---------- ------------ ------------ ----------
Profit after
tax 144,096 (62,534) 81,562 234,963 (51,004) 183,959
EMRA Profit
share 3 - - - - - -
------------------------- ----- ------------ ------------ ---------- ------------ ------------ ----------
Profit for
the year
after EMRA
profit share 144,096 (62,534) 81,562 234,963 (51,004) 183,959
Profit for
the year
attributable
to:
- the owners
of the parent 144,096 (62,534) 81,562 234,963 (51,004) 183,959
- Non-controlling
interests - - - - - -
------------------------- ----- ------------ ------------ ---------- ------------ ------------ ----------
Other comprehensive
income
Items that
may be reclassified
subsequently
to profit
or loss:
Losses on
available-for-sale
financial
assets (net
of tax) 14.1 (80) - (80) (6,150) - (6,150)
Losses on
available-for-sale
financial
assets transferred
to profit
for the year
(net of tax) 14.1 - - - 12,911 - 12,911
------------------------- ----- ------------ ------------ ---------- ------------ ------------ ----------
Other comprehensive
income for
the year (80) - (80) 6,761 - 6,761
------------------------- ----- ------------ ------------ ---------- ------------ ------------ ----------
Total comprehensive
income attributable
to:
- the owners
of the parent 144,016 (62,534) 81,482 241,724 (51,004) 190,720
- Non-controlling
interests - - - - - -
Earnings
per share:
Basic (cents
per share) 24 12.735 (5.527) 7.208 21.551 (4.68) 16.873
Diluted (cents
per share) 24 12.567 (5.454) 7.113 21.416 (4.65) 16.767
------------------------- ----- ------------ ------------ ---------- ------------ ------------ ----------
(1) Refer to Note 6 for further details.
Financial statements
Consolidated statement of financial position as at 31 December
2014
31 December 31 December
2014 2013
Notes US$'000 US$'000
------------------------------- ------ ------------ ------------
Non-current assets
Property, plant and equipment 12 928,964 950,586
Exploration and evaluation
asset 13 123,999 59,849
Prepayments 11 23,750 18,950
Interests in associates 14.2 - -
Other receivables 9 645 -
------------------------------- ------ ------------ ------------
Total non-current assets 1,077,358 1,029,385
------------------------------- ------ ------------ ------------
Current assets
Inventories 10 140,628 135,269
Available-for--sale financial
assets 14.1 409 989
Trade and other receivables 9 24,973 25,427
Prepayments 11 1,710 1,678
Cash and cash equivalents 25 125,659 105,979
------------------------------- ------ ------------ ------------
Total current assets 293,379 269,342
------------------------------- ------ ------------ ------------
Total assets 1,370,737 1,298,727
------------------------------- ------ ------------ ------------
Non-current liabilities
Provisions 16 3,015 7,638
------------------------------- ------ ------------ ------------
Total non-current liabilities 3,015 7,638
------------------------------- ------ ------------ ------------
Current liabilities
Trade and other payables 15 34,042 78,102
Tax liabilities 7 - -
Provisions 16 307 139
------------------------------- ------ ------------ ------------
Total current liabilities 34,349 78,241
------------------------------- ------ ------------ ------------
Total liabilities 37,364 85,879
------------------------------- ------ ------------ ------------
Net assets 1,333,373 1,212,848
------------------------------- ------ ------------ ------------
Equity
Issued capital 17 661,573 612,463
Share option reserve 18 4,098 5,761
Accumulated profits 667,702 594,624
------------------------------- ------ ------------ ------------
Total equity attributable
to:
- owners of the parent 1,333,373 1,212,848
- Non-controlling interest - -
------------------------------- ------ ------------ ------------
Total Equity 1,333,373 1,212,848
------------------------------- ------ ------------ ------------
The consolidated financial statements were approved by the Board
of Directors, authorised for issue on 23 March 2015 and signed on
its behalf by:
Andrew Pardey Pierre Louw
Chief Executive Officer Chief Financial Officer
Financial statements
Consolidated statement of changes in equity for the year ended
31 December 2014
Share
Issued options Accumulated
capital reserve profits Total
US$'000 US$'000 US$'000 US$'000
---------------------------- -------- -------- ------------ ----------
Balance as at 1 January
2014 612,463 5,761 594,624 1,212,848
Profit for the year - - 81,562 81,562
Other comprehensive
income for the year - - (80) (80)
---------------------------- -------- -------- ------------ ----------
Total comprehensive
income for the year - - 81,482 81,482
Issue of shares 48,218 - - 48,218
Own shares acquired (1,743) - - (1,743)
Transfer of share
based payments 2,635 (4,156) 1,521 -
Recognition of share-based
payments - 2,493 - 2,493
Dividend paid - - (9,925) (9,925)
---------------------------- -------- -------- ------------ ----------
Balance as at 31
December 2014 661,573 4,098 667,702 1,333,373
---------------------------- -------- -------- ------------ ----------
Share
Issued options Accumulated
capital reserve profits Total
US$'000 US$'000 US$'000 US$'000
---------------------------- -------- -------- ------------ ----------
Balance as at 1 January
2013 612,463 3,477 403,904 1,019,844
Profit for the year - - 183,959 183,959
Other comprehensive
income for the year - - 6,761 6,761
---------------------------- -------- -------- ------------ ----------
Total comprehensive
income for the year - - 190,720 190,720
Recognition of share-based
payments - 2,284 - 2,284
---------------------------- -------- -------- ------------ ----------
Balance as at 31
December 2013 612,463 5,761 594,624 1,212,848
---------------------------- -------- -------- ------------ ----------
Financial statements
Consolidated statement of cash flows for the year ended 31
December 2014
31 December 31 December
2014 2013
Notes US$'000 US$'000
------------------------------------------- ------ ------------ ------------
Cash flows from operating activities
Cash generated in operating activities 25(b) 112,012 245,833
Finance income (410) (690)
------------------------------------------- ------ ------------ ------------
Net cash generated by operating
activities 111,602 245,143
------------------------------------------- ------ ------------ ------------
Cash flows from investing activities
Acquisition of property, plant
and equipment (62,305) (266,711)
Exploration and evaluation expenditure (26,201) (14,670)
Acquisition of financial assets 14.1 - (2,456)
Acquisition of interests in associates 14.2 - (500)
Cash acquired through AML asset 9,254
acquisition -
Proceeds from sale of available-for--sale
financial assets 14.1 91 822
Finance income 6 410 690
------------------------------------------- ------ ------------ ------------
Net cash used in investing activities (78,751) (282,825)
------------------------------------------- ------ ------------ ------------
Cash flows from financing activities
Own shares acquired during the
period 17 (1,743) -
Dividend paid (9,925) -
Net cash provided by financing (11,668)
activities -
------------------------------------------- ------ ------------ ------------
Net increase/(decrease) in cash
and cash equivalents 21,183 (37,682)
Cash and cash equivalents at
the beginning of the period 105,979 147,133
Effect of foreign exchange rate
changes (1,503) (3,472)
------------------------------------------- ------ ------------ ------------
Cash and cash equivalents at
the end of the period 25 125,659 105,979
------------------------------------------- ------ ------------ ------------
Financial statements
Notes to the consolidated financial statements for the year
ended 31 December 2014
1. General information
Centamin plc (the "Company") is a listed public company,
incorporated in Jersey and operating through subsidiaries and
jointly controlled entities operating in Egypt, Ethiopia, United
Kingdom and Australia. It is the parent company of the Group,
comprising the Company and its subsidiaries and jointly controlled
entities.
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 Directors' Report and the Performance
Review of the Annual Report.
2. Adoption of new and revised accounting standards
In the current year, no new and revised Standards and
Interpretations have been adopted that have affected the amounts
reported in these financial statements.
Standards not affecting the reported results nor the financial
position
The following standards have been adopted by the group for the
first time for the financial year beginning on or after 1 January
2014:
IFRS 10, 'Consolidated financial statements' builds on existing
principles by identifying the concept of control as the determining
factor in whether an entity should be included within the
consolidated financial statements of the parent company. The
standard provides additional guidance to assist in the
determination of control where this is difficult to assess. See
note 3 for the impact on the financial statements.
IFRS 11, 'Joint arrangements' focuses on the rights and
obligations of the parties to the arrangement rather than its legal
form. There are two types of joint arrangements: joint operations
and joint ventures. Joint operations arise where the investors have
rights to the assets and obligations for the liabilities of an
arrangement. A joint operator accounts for its share of the assets,
liabilities, revenue and expenses. Joint ventures arise where the
investors have rights to the net assets of the arrangement; joint
ventures are accounted for under the equity method. Proportional
consolidation of joint arrangements is no longer permitted. See
note 3 for the impact of adoption on the financial statements.
IFRS 12, 'Disclosures of interests in other entities' includes
the disclosure requirements for all forms of interests in other
entities, including joint arrangements, associates, structured
entities and other off balance sheet vehicles. This amendment did
not have a significant effect on the group financial
statements.
Had the Group adopted IFRS 10, IFRS 11 and IFRS 12 effective 1
January 2013 as required by the IFRS as issued by the IASB, there
would have been no material impact on the financial statements.
Amendment to IAS 32, 'Financial instruments: Presentation' on
offsetting financial assets and financial liabilities. This
amendment clarifies that the right of set-off must not be
contingent on a future event. It must also be legally enforceable
for all counterparties in the normal course of business, as well as
in the event of default, insolvency or bankruptcy. The amendment
also considers settlement mechanisms. The amendment did not have a
significant effect on the group financial statements.
Amendment to IAS 36, 'Impairment of assets, on the recoverable
amount disclosures for non-financial assets. This amendment removed
certain disclosures of the recoverable amount of CGUs which had
been included in IAS 36 by the issue of IFRS 13. This amendment did
not have a significant effect on the group financial
statements.
Amendment to IAS 39, 'Financial instruments: Recognition and
measurement' on the novation of derivatives and the continuation of
hedge accounting. This amendment considers legislative changes to
'over-the-counter' derivatives and the establishment of central
counterparties. Under IAS 39 novation of derivatives to central
counterparties would result in discontinuance of hedge
accounting.
The amendment provides relief from discontinuing hedge
accounting when novation of a hedging instrument meets specified
criteria. This amendment did not have a significant effect on the
group financial statements.
IFRIC 21, 'Levies', sets out the accounting for an obligation to
pay a levy if that liability is within the scope of IAS 37
'Provisions'. The interpretation addresses what the obligating
event is that gives rise to pay a levy and when a liability should
be recognised. The Group is subject to Royalty payments to the
Egyptian Mineral Resource Authority ("EMRA") which meets the
definition of a levy, however, the impact on the Group of adopting
this interpretation is not material.
Other standards, amendments and interpretations which are
effective for the financial year beginning on 1 January 2014 are
not material to the group.
Beyond the information above, it is not practicable to provide a
reasonable estimate of the effect of these standards until a
detailed review has been completed.
New standards, amendments and interpretations not yet
adopted
A number of new standards and amendments to standards and
interpretations are for annual periods beginning after 1 January
2014, and have not been effective applied in preparing these
consolidated financial statement. None of these is expected to have
a significant effect on the consolidated financial statements of
the Group, except the following set out below:
IFRS 9, 'Financial instruments', addresses the classification,
measurement and recognition of financial assets and financial
liabilities. The complete version of IFRS 9 was issued in July
2014. It replaces the guidance in IAS 39 that relates to the
classification and measurement of financial instruments. IFRS 9
retains but simplifies the mixed measurement model and establishes
three primary measurement categories for financial assets:
amortised cost, fair value through OCI and fair value through
P&L. The basis of classification depends on the entity's
business model and the contractual cash flow characteristics of the
financial asset. Investments in equity instruments are required to
be measured at fair value through profit or loss with the
irrevocable option at inception to present changes in fair value in
OCI not recycling. There is now a new expected credit losses model
that replaces the incurred loss impairment model used in IAS
39.
For financial liabilities there were no changes to
classification and measurement except for the recognition of
changes in own credit risk in other comprehensive income, for
liabilities designated at fair value through profit or loss. IFRS 9
relaxes the requirements for hedge effectiveness by replacing the
bright line hedge effectiveness tests. It requires an economic
relationship between the hedged item and hedging instrument and for
the 'hedged ratio' to be the same as the one management actually
use for risk management purposes. Contemporaneous documentation is
still required but is different to that currently prepared under
IAS 39. The standard is effective for accounting periods beginning
on or after 1 January 2018. Early adoption is permitted. The group
is yet to assess IFRS 9's full impact.
IFRS 15, 'Revenue from contracts with customers' deals with
revenue recognition and establishes principles for reporting useful
information to users of financial statements about the nature,
amount, timing and uncertainty of revenue and cash flows arising
from an entity's contracts with customers. Revenue is recognised
when a customer obtains control of a good or service and thus has
the ability to direct the use and obtain the benefits from the good
or service. The standard replaces IAS 18 'Revenue' and IAS 11
'Construction contracts' and related interpretations. The standard
is effective for annual periods beginning on or after 1 January
2017 and earlier application is permitted. The group is assessing
the impact of IFRS 15.
There are no other IFRSs or IFRIC interpretations that are not
yet effective that would be expected to have a material impact on
the Group.
3. Summary of significant accounting policies
Basis of preparation
These financial statements are denominated in United States
dollars, which is the functional currency of Centamin plc. All
companies in the Group use the United States dollar as their
functional currency except for Sheba Exploration Holdings Limited,
Sheba Exploration Limited, Centamin Group Services, Centamin
Holdings Limited and Ampella Mining Limited, Centamin Egypt Limited
that use the Great British pound and Australian dollars
respectively. All financial information presented in United States
dollars has been rounded to the nearest thousand dollars, unless
otherwise stated.
The financial statements have been prepared in accordance with
International Financial Reporting Standards ("IFRS") as issued by
the International Accounting Standards Board ("IASB") and adopted
for use by the European Union, the Companies (Jersey) Law 1991, and
IFRS as issued by the IASB, therefore the Group financial
statements comply with Article 4 of the EU IAS Regulation.
The consolidated financial statements have been prepared on a
going concern basis and under the historical cost convention, as
modified by available for sale financial assets, and financial
assets and financial liabilities (including derivative) instruments
at fair value through profit and loss.
There are no changes in these accounting policies for the year
ended 31 December 2014 except as disclosed below 'Changes in
accounting policy'.
Changes in accounting policy
On 1 January 2014, the Group adopted IFRS 10, 'Consolidated
Financial Statements', IFRS 11, \'Joint Arrangements', IFRS 12
'Disclosure of Interests in Other Entities', a revised version of
IAS 27, 'Separate Financial Statements' and a revised version of
IAS 28, 'Investments in Associates and Joint Ventures' which have
been amended for conforming changes based on the issuance of IFRS
10 and IFRS 11. The Group adopted the amendments to the transition
guidance for IFRS 10 and IFRS 11 as well as IFRIC 21, 'Levies'.
IFRS 10 replaces IAS 27 'Consolidated and Separate Financial
Statements' and SIC-12 'Consolidation - Special Purpose Entities',
and establishes a single control model that applies to all
entities, including those that were previously considered special
purpose entities under SIC-12. An investor controls an investee
when it has power over the relevant activities, exposure to
variable returns from the investee, and the ability to affect those
returns through its power over the investee. The assessment of
control is based on all facts and circumstances and the conclusion
is reassessed if there is an indication that there are changes in
facts and circumstances.
On adopting IFRS 10, the Group has assessed its interest in its
principal asset, Sukari Gold Mine ("SGM") which is jointly owned by
the Group's wholly owned subsidiary Pharaoh Gold Mines NL ("PGM")
and EMRA on a 50% equal basis. The Group has considered the
relevant activities of SGM and who has the power over these
activities and is exposed to variable returns from its involvement
with SGM and has the ability to affect those returns through its
power over the relevant activities of SGM. Accordingly, the Group
has consolidated this interest.
A Non-Controlling Interest ("NCI") is recorded in relation to
the equity in the subsidiaries that is not attributable to the
Parent.
There has been no impact upon the comparatives as SGM has
previously been 100% proportionally consolidated within the Group
reflecting the substance and economic reality of the Concession
Agreement.
IFRS 12 'Disclosure of Interests in Other Entities (including
amendments to the transition guidance for IFRS 10 - 12 issued in
June 2012)', which requires annual disclosures of the nature,
associated risks, and financial effects of interests in
subsidiaries, joint arrangements, associates and unconsolidated
structured entities became effective for annual periods beginning
on or after 1 January 2013.
Changes in accounting estimate
On 1 January 2014, the Group changed its accounting estimate in
relation to the useful economic life of Sukari plant and equipment
capitalised within plant and equipment. Plant and equipment was
previously depreciated on a straight-line basis over a 45 year
economic life, however, as a result of the commissioning of Stage
4, the current life of mine is 20 years and as such the useful
economic life of the Sukari plant and equipment has been reduced to
20 years from 1 January 2014.
The impact of this change is shown below:
Depreciation expense for the year ended 31 December 2014 (old
basis) 5,843
Depreciation expense for the Year ended 31 December 2014 (new basis) 11,143
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 from the date on which the Company
obtains control and until such time as the Company ceases to
control such entity. The group controls an entity when the group is
exposed to, or has rights to, variable returns from its involvement
with the entity and has the ability to affect those returns through
its power over the entity.
In preparing the consolidated financial statements, all
intercompany balances and transactions, and unrealised profits
arising within the consolidated entity are eliminated in full.
Sukari Gold Mines ("SGM") is jointly owned by PGM and EMRA on a
50% equal basis. For accounting purposes, SGM is wholly
consolidated within the Centamin group of companies reflecting the
substance and economic reality of the Concession Agreement (see
Note 21) and will therefore recognise a non-controlling interest
("NCI") for EMRA's participation. Furthermore based on the
requirements of the Concession Agreement, payments to NCI meet the
definition of a liability and will be recorded in the Income
Statement and Statement of Financial Position (below profit after
tax), as the EMRA Profit Share, on the date that a net production
surplus becomes available. Payment made to EMRA pursuant to the
provisions of the Concession Agreement is based on the net
production surplus available as at 30 June, being SGM's financial
year end. Pursuant to the Concession Agreement, PGM solely funds
SGM's activities. PGM is also entitled to recover the following
costs and expenses payable from sales revenue (excluding the
royalty payable to the Arab Republic of Egypt ("ARE") (a) all
current operating expenses incurred and paid after the initial
commercial production; (b) exploration costs, including those
accumulated to the commencement of commercial production (at the
rate of 33.3% of total accumulated cost per annum); and (c)
exploitation capital costs, including those accumulated prior to
the commencement of commercial production (at the rate of 33.3% of
total accumulated cost per annum).
EMRA is entitled to a share of 50% (except for, in accordance
with the terms of the Concession Agreement, in the first four years
where it shall be 40% for the first two years and 45% for the
following two years) of SGM's net production surplus ("EMRA Profit
Share") (defined as revenue less payment of the fixed royalty to
Arab Republic of Egypt ("ARE") and recoverable costs). Based on the
Company's calculation there was no Net Profit Share due to EMRA as
at 31 December 2014, nor is any likely to be due as at 30 June
2015. Accordingly, no EMRA entitlement has been recognised to date.
Any payment made to EMRA pursuant to these provisions of the
Concession Agreement will be recognised as a variable charge in the
income statement (below profit after tax) of Centamin, which will
lead to a reduction in the earnings per share.
Going concern
These financial statements for the year ended 31 December 2014
have been prepared on a going concern basis, which contemplate the
realisation of assets and liquidation of liabilities during the
normal course of operations.
The group meets its day to day working capital requirements
through existing cash resources, as discussed in Note 20, during
2012 the operation of the mine was affected by two legal actions.
The first of these followed from a decision taken by EGPC to charge
international, not local (subsidised) prices for the supply of
Diesel Fuel Oil to Sukari, and the second arose as a result of a
judgment of the Administrative Court in relation to, amongst other
matters, the Company's 160km(2) exploitation lease. With regard to
the first decision, the Company remains confident that in the event
that it is required to continue to pay international prices, the
mine at Sukari will remain commercially viable. Similarly, the
Company remains confident that the appeal it has lodged in relation
to the decision of the Administrative Court will ultimately be
successful, although final resolution of the matter may take some
time.
With respect to the legal action, on 20 March 2013 the Supreme
Administrative Court upheld the Company's application to suspend
the decision until the merits of the Company's appeal are
considered and ruled on, thus providing assurance that normal
operations would be able to continue during this process. Sukari
has operated as usual throughout the period.
In the unlikely event that the Group is unsuccessful in either
or both of its legal actions, and that the operating activities are
restricted to a reduced area, it is the Director's belief that the
Group will be able to continue as going concern.
After making enquiries, the Directors have a reasonable
expectation that the Group will have adequate resources to continue
in operational existence for the foreseeable future. The Group
therefore continues to adopt the going concern basis in preparing
these financial statements.
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.
The following significant policies have been adopted in the
preparation and presentation of these financial statements:
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.
Financial instruments
Financial assets and financial liabilities are recognised in the
Group's balance sheet when the Group becomes a party to the
contractual provisions of the instrument.
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.
Equity instruments
An equity instrument is any contract that evidences a residual
interest in the assets of an entity after deducting all of its
liabilities. Equity instruments issued by the Group are recognised
at the proceeds received, net of direct issue costs.
Financial liabilities
Financial liabilities are classified as either financial
liabilities at fair value through profit or loss ("FVTPL") or
other
financial liabilities.
Financial liabilities at FVTPL
Financial liabilities are classified as at FVTPL when the
financial liability is either held for trading or it is designated
as at FVTPL. A financial liability is classified as held for
trading if:
-- it has been incurred principally for the purpose of repurchasing it in the near term; or
-- on initial recognition it is part of a portfolio of
identified financial instruments that the Group manages together
and has a recent actual pattern of short-term profit taking; or
-- it is a derivative that is not designated and effective as a hedging instrument.
A financial liability other than a financial liability held for
trading may be designated as at FVTPL upon initial recognition
if:
-- such designation eliminates or significantly reduces a
measurement or recognition inconsistency that would otherwise
arise; or
-- the financial liability forms part of a group of financial
assets or financial liabilities or both, which is managed and its
performance is evaluated on a fair value basis, in accordance with
the Group's documented risk management or investment strategy, and
information about the grouping is provided internally on that
basis; or
-- it forms part of a contract containing one or more embedded
derivatives, and IAS 39 Financial Instruments: Recognition and
Measurement permits the entire combined contract (asset or
liability) to be designated as at FVTPL.
Financial liabilities at FVTPL are stated at fair value, with
any gains or losses arising on re-measurement recognised in profit
or loss. The net gain or loss recognised in profit or loss
incorporates any interest paid on the financial liability and is
included in the "other gains and losses" line item in the income
statement.
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. The effective interest method is a method of
calculating the amortised cost of a financial liability and of
allocating interest expense over the relevant period. The effective
interest rate is the rate that exactly discounts estimated future
cash payments through the expected life of the financial liability,
or, where appropriate, a shorter period.
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
Financial assets are recognised and derecognised on trade date
where the purchase or sale of a financial asset is under a contract
whose terms require delivery of the financial asset within the
timeframe established by the market concerned, and are initially
measured at fair value, net of transaction costs except for those
financial assets classified as at fair value through the profit or
loss which are initially measured at fair value.
Subsequent to initial recognition, investments in subsidiaries
are measured at cost in the Company financial statements. Other
financial assets are "loans and receivables". 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.
Available-for-sale financial assets ("AFS")
Listed shares and listed redeemable notes held by the Group that
are traded in an active market are classified as being AFS and are
stated at fair value. The Group also has investments in unlisted
shares that are not traded in an active market but that are
classified as AFS financial assets and stated at fair value
(because the directors consider that fair value can be reliably
measured). Fair value is determined in the manner described in Note
26. Gains and losses arising from changes in fair value are
recognised in other comprehensive income and accumulated profits
with the exception of impairment losses, interest calculated using
the effective interest method and foreign exchange gains and losses
on monetary assets, which are recognised directly in profit or
loss. Where the investment is disposed of or is determined to be
impaired, the cumulative gain or loss previously recognised in the
investments revaluation reserve is reclassified to profit or
loss.
Dividends on AFS equity instruments are recognised in profit or
loss when the Group's right to receive the dividends
is established.
The fair value of AFS monetary assets denominated in a foreign
currency is determined in that foreign currency and
translated at the spot rate at the balance sheet date. The
foreign exchange gains and losses that are recognised in profit or
loss are determined based on the amortised cost of the monetary
asset. Other foreign exchange gains and losses are recognised in
other comprehensive income.
Loans and receivables
Trade receivables, loans and other receivables that have fixed
or determinable payments that are not quoted in an active market
are classified as "loans and receivables". Loans and receivables
are measured at amortised cost using the effective interest rate
method less impairment. Interest is recognised by applying the
effective interest rate except for short-term receivables when the
recognition of interest would be immaterial.
Impairment of financial assets
Financial assets, other than those at fair value through profit
or loss, are assessed for indicators of impairment at each
reporting date. Financial assets are impaired where there is
objective evidence that as a result of one or more events that
occurred after the initial recognition of the financial asset the
estimated future cash flows of the investment have been impacted.
For financial assets carried at amortised cost, the amount of the
impairment is the difference between the asset's carrying amount
and the present value of estimated future cash flows, discounted at
the original effective interest rate.
The carrying amount of the financial asset is reduced by the
impairment loss directly for all financial assets with the
exception of trade receivables where the carrying amount is reduced
through the use of an allowance account. When a trade receivable is
uncollectible, it is written off against the allowance account.
Subsequent recoveries of amounts
previously written off are credited against the allowance
account. Changes in the carrying amount of the allowance account
are recognised in profit or loss.
With the exception of available-for-sale 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 available-for-sale equity instruments, any
subsequent increase in fair value after an impairment loss is
recognised in other comprehensive income.
Derecognition of financial assets
The Group derecognises a financial asset only when the
contractual rights to the cash flows from the asset expire, or when
it transfers the financial asset and substantially all the risks
and rewards of ownership of the asset to another entity. If the
Group neither transfers nor retains substantially all the risks and
rewards of ownership and continues to control the transferred
asset, the Group recognises its retained interest in the asset and
an associated liability for amounts it may have to pay. If the
Group retains substantially all the risks and rewards of ownership
of a transferred financial asset, the Group continues to recognise
the financial asset and also recognises a collateralised borrowing
for the proceeds received.
Employee benefits
A liability is recognised for benefits accruing to employees in
respect of wages and salaries, annual leave, long service leave and
sick leave when it is probable that settlement will be required and
they are capable of being measured reliably.
Liabilities recognised in respect of employee benefits expected
to be settled within twelve months, are measured at their nominal
values using the remuneration rate expected to apply at the time of
settlement. Liabilities recognised in respect of employee benefits
which are not expected to be settled within twelve months are
measured as the present value of the estimated future cash flows to
be made by the consolidated entity in respect of services provided
by employees up to reporting date.
Superannuation
The Company contributes to, but does not participate in,
compulsory superannuation funds (defined contribution schemes) on
behalf of the employees and directors in respect of salaries and
directors' fees paid. Contributions are charged against income as
they are made.
Exploration, evaluation and development expenditure
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:
(a) the rights to tenure of the area of interest are current; and
(b) at least one of the following conditions is also met:
(i) 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
(ii) exploration and evaluation activities in the area of
interest have not at the reporting date reached a stage which
permits a reasonable assessment of the existence or otherwise of
economically recoverable reserves, and active and significant
operations in, or in relation to, the area of interest are
continuing.
Exploration and evaluation assets are initially measured at cost
and include acquisition of rights to explore, studies, exploration
drilling, trenching and sampling and associated activities. General
and administrative costs are only included in the measurement of
exploration and evaluation costs where they are related directly to
operational activities in a particular area of interest.
Exploration and evaluation assets are assessed for impairment
when facts and circumstances (as defined in IFRS 6 Exploration for
and Evaluation of Mineral Resources) suggest that the carrying
amount of exploration and evaluation assets may exceed its
recoverable amount. The recoverable amount of the exploration and
evaluation assets (or the cash-generating unit(s) to which it has
been allocated, being no larger than the relevant area of interest)
is estimated to determine the extent of the impairment loss (if
any). Where an impairment loss subsequently reverses, the carrying
amount of the asset is increased to the revised estimate of its
recoverable amount, but only to the extent that the increased
carrying amount does not exceed the carrying amount that would have
been determined had no impairment loss been recognised for the
asset in previous years.
Where a decision is made to proceed with development in respect
of a particular area of interest, the relevant exploration and
evaluation asset is tested for impairment, reclassified to mine
development properties, and then amortised over the life of the
reserves associated with the area of interest once mining
operations have commenced.
Mine development expenditure is recognised at cost less
accumulated amortisation and any impairment losses.
When commercial production in an area of interest has commenced,
the associated costs are amortised over the estimated economic life
of the mine on a units of production basis.
Changes in factors such as estimates of proved and probable
reserves that affect unit of production calculations are dealt with
on a prospective basis.
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 United States
dollars, which is the functional currency of the Group and the
presentation currency for the consolidated financial statements.
All companies in the Group use the United States dollar as their
functional currency except for Sheba Exploration Holdings Limited,
Sheba Exploration Limited, Centamin Group Services, Centamin
Holdings Limited and Ampella Mining Limited, Centamin Egypt Limited
that use the Great British pound and Australian dollars
respectively.
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, 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.
Inventories
Inventories are valued at the lower of cost and net realisable
value. Costs including an appropriate portion of fixed and variable
overhead expenses are assigned to inventory on hand by the method
appropriate to each particular class of inventory, with the
majority being valued on a weighted average cost basis. Net
realisable value represents the estimated selling price less all
estimated costs of completion and costs necessary to make the
sale.
Ore stockpiles, gold in circuit and bullion are valued applying
absorption costing.
Interests in joint ventures
The group applies IFRS 11 to joint arrangements. Under IFRS 11
investments in joint arrangements are classified as either joint
operations or joint ventures depending on the contractual rights
and obligations each investor. Joint ventures are accounted for
using the equity method. In relation to its interests in joint
operations, the group recognises its share of assets and
liabilities; revenue from the sale of its share of the output; and
its share of expenses.
SGM is wholly consolidated within the Centamin group of
companies, reflecting the substance and economic reality of the
Concession Agreement (see Note 21).
Leased assets
Leased assets are classified as finance leases when the terms of
the lease transfer substantially all the risks and rewards
incidental to ownership of the leased asset to the lessee. All
other leases are classified as operating leases.
Operating lease payments are recognised as an expense on a
straight-line basis over the lease term, except where other
systematic basis is more representative of the time pattern in
which economic benefits from the leased asset are consumed.
Contingent rentals arising under operating leases are recognised as
an expense in the period in which they are incurred.
Property, plant and equipment ("PPE")
Plant and equipment is stated at cost less accumulated
depreciation and impairment. Plant and equipment will include
capitalised development expenditure. Cost includes expenditure that
is directly attributable to the acquisition of the item as well as
the estimated cost of abandonment. In the event that settlement of
all or part of the purchase consideration is deferred, cost is
determined by discounting the amounts payable in the future to
their present value as at the date of acquisition. Subsequent costs
are included in the asset's carrying amount or recognised as a
separate asset, as appropriate, only when it is probable that
future economic benefits associated with the item will flow to the
group and the cost of the item can be measured reliably. The
carrying amount of the replaced part is derecognised. All other
repairs and maintenance are charged to the income statement during
the financial period in which they are incurred. The cost of
property, plant and equipment includes the estimated restoration
costs associated with the asset.
Depreciation is provided on plant and equipment. 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.
The estimated useful lives, residual values and depreciation
method are reviewed at the end of each annual financial
period, with the effect of any changes recognised on a
prospective basis.
Freehold land is not depreciated.
The following estimated useful lives are used in the calculation
of depreciation:
Plant and equipment 2 - 20 years
Office equipment 3 - 7 years
Mining equipment 2 - 13 years
Buildings 4 - 20 years
The gain or loss arising on the disposal or scrappage of an
asset is determined as the difference between the sales proceeds
and the carrying amount of the asset and is recognised in
income.
Mine development properties
Where mining of a mineral resource has commenced, the
accumulated costs are transferred from exploration and
evaluation assets to mine development properties.
Amortisation is first charged to new mine development ventures
from the date of first commercial production. Amortisation of mine
properties is on a unit of production basis resulting in an
amortisation charge proportional to the depletion of the proved and
probable ore reserves. The unit of production can be on a tonnes or
an ounce depleted basis.
Capitalised underground development costs incurred to enable
access to specific ore blocks or areas of the underground mine, and
which only provide an economic benefit over the period of mining
that ore block or area, are depreciated on a units of production
basis, whereby the denominator is estimated ounces of gold in
proven and probable reserves within that ore block or area where it
is considered probable that those resources will be extracted
economically.
Stripping activity assets
The Group defers stripping costs incurred (removal of mine waste
materials which provide improved access to further
quantities of material that will be mined in future periods).
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:
(a) it is probable that the future economic benefit (improved
access to the ore body) associated with the stripping activity will
flow to the entity;
(b) the entity can identify the component of the ore body for which access has been improved; and
(c) 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 activity 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
stripping activity asset is initially measured at cost and
subsequently carried at cost or its revalued amount less
depreciation or amortisation and impairment losses. A stripping
activity 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 units
of production method based on the total ounces to be produced over
the life of the component of the ore body.
Deferred stripping costs are included in "stripping assets",
within tangible assets. 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 operating costs.
Impairment of assets (other than exploration and evaluation and
financial assets)
At each reporting date, the Group reviews the carrying amounts
of its tangible and intangible assets to determine whether there is
any indication that those assets have suffered an impairment loss.
If any such indication exists, the recoverable amount of the asset
is estimated in order to determine the extent of the impairment
loss (if any). For the purposes of assessing impairment, assets are
grouped at the lowest levels for which there are largely
independent cash inflows (cash-generating units).
Recoverable amount is the higher of fair value loss costs to
sell and value in use. In assessing value in use, the estimated
future cash flows are discounted to their present value using a
pre-tax discount rate that reflects current market assessment of
the time value of money and the risks specific to the asset for
which the estimates of future flows have not been adjusted.
If the recoverable amount of a cash-generating unit is estimated
to be less than its carrying amount, the carrying amount of the
cash-generating unit is reduced to its recoverable amount. Where an
impairment loss subsequently reverses, the carrying amount of the
cash-generating unit is increased to the revised estimate of its
recoverable amount, but only to the extent that the increased
carrying amount does not exceed the carrying amount that would have
been determined had no impairment loss been recognised for the
cash-generating unit in prior years.
A reversal of an impairment loss is recognised immediately in
profit or loss, unless the relevant asset is carried at a revalued
amount, in which case the reversal of an impairment loss is treated
as a revaluation increase.
Revenue
Revenue is measured at the fair value of the consideration
received or receivable for goods and services in the normal course
of business, net of discounts, VAT and other sales-related
taxes.
Sale of goods
Revenue from the sale of mineral production is recognised when
the Group has passed the significant risks and rewards of ownership
of the mineral production to the buyer, it is probable that
economic benefits associated with the transaction will flow to the
Group, the sales price can be measured reliably, and the Group has
no significant continuing involvement and the costs incurred or to
be incurred in respect of the transaction can be measured reliably.
This is when insurance risk has passed to the buyer and the goods
have been collected at the agreed location.
Where the terms of the executed sales agreement allow for an
adjustment to the sales price based on a survey of the
mineral production by the buyer (for instance an assay for gold
content), recognition of the revenue from the sale of mineral
production is based on the most recently determined estimate of
product specifications.
Pre-production revenues
Income derived by the entity prior to the date of commercial
production is offset against the expenditure capitalised and
carried in the Consolidated Statement of Financial Position. All
revenues recognised after commencement of commercial production are
recognised in accordance with the revenue policy stated above. The
commencement date of commercial production is determined when
stable and sustained production capacity has been achieved.
Production 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 the
Sukari Project. 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.
Other income
Interest income
Interest 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. Interest income is accrued on a
time basis, by reference to the principal outstanding and at the
effective interest rate applicable, which is the rate that exactly
discounts estimated future cash receipts through the expected life
of the financial asset to that asset's net carrying amount.
Business combinations
Acquisitions of businesses as defined by IFRS 3 are accounted
for using the acquisition method. The consideration for each
acquisition is measured at the aggregate of the fair values (at the
date of exchange) of assets given, liabilities incurred or assumed,
and equity instruments issued by the Group in exchange for control
of the acquiree. Acquisition-related costs are recognised in profit
or loss as incurred.
Where applicable, the consideration for the acquisition includes
any asset or liability resulting from a contingent
consideration arrangement, measured at its acquisition-date fair
value. Subsequent changes in such fair values are adjusted against
the cost of acquisition where they qualify as measurement period
adjustments (see below). All other subsequent changes in the fair
value of contingent consideration classified as an asset or
liability are accounted for in accordance with IFRS 3 either in
profit or loss or as a change to other comprehensive income.
Changes in the fair value of contingent consideration classified as
equity are not re-measured, and its subsequent settlement is
accounted for within equity.
Where a business combination is achieved in stages, the Group's
previously-held interests in the acquired entity are
remeasured to fair value at the acquisition date (i.e. the date
the Group attains control) and the resulting gain or loss,
if any, is recognised in profit or loss. Amounts arising from
interests in the acquiree prior to the acquisition date that have
previously been recognised in other comprehensive income are
reclassified to profit or loss, where such treatment would be
appropriate if that interest were disposed of.
The acquiree's identifiable assets, liabilities and contingent
liabilities that meet the conditions for recognition under IFRS 3
(2008) are recognised at their fair value at the acquisition date,
except that:
-- deferred tax assets or liabilities and liabilities or assets
related to employee benefit arrangements are recognised and
measured in accordance with IAS 12 Income Taxes and IAS 19 Employee
Benefits respectively;
-- liabilities or equity instruments related to the replacement
by the Group of an acquiree's share-based payment awards are
measured in accordance with IFRS 2 Share-based Payment; and
-- assets (or disposal groups) that are classified as held for
sale in accordance with IFRS 5 Non-current Assets Held for
Sale.
Assets Held for Sale and Discontinued Operations are measured in
accordance with that Standard. If the initial accounting for a
business combination is incomplete by the end of the reporting
period in which the combination occurs, the Group reports
provisional amounts for the items for which the accounting is
incomplete. Those provisional amounts are adjusted during the
measurement period (see below), or additional assets or liabilities
are recognised, to reflect new information obtained about facts and
circumstances that existed as of the acquisition date that, if
known, would have affected the amounts recognised as of that
date.
The measurement period is the period from the date of
acquisition to the date the Group obtains complete information
about facts and circumstances that existed as of the acquisition
date, and is subject to a maximum of one year.
Investments in associates
An associate is an entity over which the Group has significant
influence and that is neither a subsidiary nor an interest in a
joint venture. Significant influence is the power to participate in
the financial and operating policy decisions of the investee but is
not control or joint control over those policies.
The results, assets and liabilities of associates are
incorporated in these financial statements using the equity method
of accounting, except when the investment is classified as held for
sale, in which case it is accounted for in accordance with IFRS 5
Non-current Assets Held for Sale and Discontinued Operations.
Under the equity method, investments in associates are carried
in the consolidated balance sheet at cost as adjusted
for post-acquisition changes in the Group's share of the net
assets of the associate, less any impairment in the value
of individual investments. Losses of an associate in excess of
the Group's interest in that associate (which includes any
long-term interests that, in substance, form part of the Group's
net investment in the associate) are recognised only to the extent
that the Group has incurred legal or constructive obligations or
made payments on behalf of the associate.
Any excess of the cost of acquisition over the Group's share of
the net fair value of the identifiable assets, liabilities
and contingent liabilities of the associate recognised at the
date of acquisition is recognised as goodwill. The goodwill
is included within the carrying amount of the investment and is
assessed for impairment as part of that investment.
Any excess of the Group's share of the net fair value of the
identifiable assets, liabilities and contingent liabilities
over
the cost of acquisition, after reassessment, is recognised
immediately in profit or loss.
Where a Group entity transacts with an associate of the Group,
profits and losses are eliminated to the extent of the
Group's interest in the relevant associate.
The group determines at each reporting date whether there is any
objective evidence that the investment in the associate is
impaired. If this is the case, the group calculates the amount of
impairment as the difference between the recoverable amount of the
associate and its carrying value and recognises the amount adjacent
to share of profit/(loss) of associates in the income
statement.
Dilution gains and losses arising in investments in associates
are recognised in the income statement.
Share-based payments
Equity-settled share-based payments with employees and others
providing similar services are measured at the fair value of the
equity instrument at grant date. Fair value is measured by the use
of the Black Scholes model. Where share-based payments are subject
to market conditions, fair value was measured by the use of a
Monte-Carlo simulation. 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.
Equity-settled share-based transactions with other parties are
measured at the fair value of the goods or services received,
except where the fair value cannot be estimated reliably, in which
case they are measured at the fair value of the equity instruments
granted, measured at the date the entity obtains the goods or the
counterparty renders the service. The fair value of the employee
services received in exchange for the grant of the options is
recognised as an expense. The total amount to be expensed is
determined by reference to the fair value of the options
granted:
- including any market performance conditions (for example, an
entity's share price);
- excluding the impact of any service and non-market performance
vesting conditions (for example, profitability and remaining an
employee of the entity over a specified time period); and
- including the impact of any non-vesting conditions (for
example, the requirement for employees to save or holding shares
for a specific period of time).
When the options are exercised, the company issues new shares.
The proceeds received net of any directly attributable transaction
costs are credited to share capital (nominal value) and share
premium.
The expected life used in the model has been adjusted, based on
management's best estimate, for the effects of non-transferability,
exercise restrictions, and behavioural considerations. Further
details on how the fair value of equity-settled share-based
transactions has been determined can be found in Note 27. 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.
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
purchases 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.
Taxation
Income tax expense represents the sum of the tax currently
payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the
period. Taxable profit differs from profit as reported in the
consolidated statement of comprehensive income because of items
of income or expense that are taxable or deductible in other
periods and items that are never taxable or deductible. The Group's
liability for current tax is calculated using tax rates that have
been enacted or substantively enacted by the end of the reporting
period.
Deferred tax
Deferred tax is recognised on temporary differences between the
carrying amounts of assets and liabilities in the financial
statements and the corresponding tax bases used in the computation
of taxable profit. Deferred tax liabilities are generally
recognised for all taxable temporary differences. Deferred tax
assets are generally recognised for all deductible temporary
differences to the extent that it is probable that taxable profits
will be available against which those deductible temporary
differences can be utilised. Such deferred tax assets and
liabilities are not recognised if the temporary difference arises
from goodwill or from the initial recognition (other than in a
business combination) of other assets and liabilities in a
transaction that affects neither the taxable profit nor the
accounting profit.
Deferred tax liabilities are recognised for taxable temporary
differences associated with investments in subsidiaries and
associates, and interests in joint ventures, except where the Group
is able to control the reversal of the temporary difference and it
is probable that the temporary difference will not reverse in the
foreseeable future. Deferred tax assets arising from deductible
temporary differences associated with such investments and
interests are only recognised to the extent that it is probable
that there will be sufficient taxable profits against which to
utilise the benefits of the temporary differences and they are
expected to reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at the
end of each reporting period and reduced to the extent that it is
no longer probable that sufficient taxable profits will be
available to allow all or part of the asset to be recovered.
Deferred tax assets and liabilities are measured at the tax
rates that are expected to apply in the period in which the
liability is settled or the asset realised, based on tax rates
(and tax laws) that have been enacted or substantively enacted by
the end of the reporting period. The measurement of deferred tax
liabilities and assets reflects the tax consequences that would
follow from the manner in which the Group expects, at the end of
the reporting period, to recover or settle the carrying amount of
its assets and liabilities.
Deferred tax assets and liabilities are offset when there is a
legally enforceable right to set off current tax assets against
current tax liabilities and when they relate to income taxes levied
by the same taxation authority and the Group intends to settle its
current tax assets and liabilities on a net basis.
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. 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 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 rather than being
capitalised into the cost of the related asset.
4. Critical accounting judgments
Critical judgments in applying the entity's accounting
policies
The following are the critical judgments 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 judgments and
associated disclosures with the Company's Audit and Risk
Committee.
Impairment of assets (other than exploration and evaluation and
financial assets)
IFRS requires management to test for impairment if events or
changes in circumstances indicate that the carrying amount of a
finite lived asset may not be recoverable. Management have
concluded that there is no indication that an impairment exists,
nor have any indicators arisen after the reporting period and are
therefore not required to perform a full impairment review under
IAS 36.
In making its assessment as to the possibility of whether
impairments losses having arisen, Management considered the
following indications:
-- Internal sources of information;
-- External sources of information;
-- Litigation;
-- The key assumptions applied in the 31 December 2013 impairment review;
-- Forecast gold prices;
-- Discount rate;
-- Production volumes;
-- Reserves and resources report; and
-- Costs and recovery rates.
Litigation
The Group exercises judgment in measuring and recognising
provisions and the exposures to contingent liabilities related to
pending litigation, as well as other contingent liabilities (see
Note 20 to the financial statements). Judgment is necessary in
assessing the likelihood that a pending claim will succeed, or a
liability will arise, and to quantify the possible range of the
financial settlement.
The Group is currently a party to two legal actions both of
which could affect its ability to operate the mine at Sukari in the
manner in which it is currently operated and adversely affect its
profitability. The details of this litigation, which relate to the
loss of the Egyptian national subsidy for diesel fuel oil and the
ability of the Group to operate outside the area of 3km(2)
determined by the Administrative Court of first instance to be the
area of the Sukari exploitation lease, are given in Note 20 to the
financial statements and in the most recently filed Annual
Information Form ("AIF") which is available on SEDAR at
www.sedar.com. Although it is possible to quantify the effects of
the loss the national fuel subsidy, it is not currently possible to
quantify with sufficient precision the effect of restricting
operations to an area of 3km(2) .
Every action is being taken to contest these decisions,
including the making of formal legal appeals and, although their
resolution may take some time, management remain confident that a
satisfactory outcome will ultimately be achieved. In the meantime,
however, the Group is continuing to pay international prices for
diesel fuel oil. With respect to the Administrative Court ruling,
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 would be able to continue during
this process.
In the unlikely event that the Group is unsuccessful in either
or both of its legal actions, and that the operating activities are
restricted to a reduced area, it is management's belief that the
Group will be able to continue as going concern.
Recovery of capitalised exploration evaluation and development
expenditure
The Group's accounting policy for exploration and evaluation
expenditure results in exploration and evaluation expenditure being
capitalised for those projects where such expenditure is considered
likely to be recoverable through future extraction activity or sale
or where the exploration activities have not reached a stage which
permits a reasonable assessment of the existence of reserves.
This policy requires management to make certain estimates and
assumptions as to future events and circumstances, in particular
whether the Group will proceed with development based on existence
of reserves or whether an economically viable extraction operation
can be established. Such estimates and assumptions may change from
period to period as new information becomes available. If,
subsequent to the exploration and evaluation expenditure being
capitalised, a judgment is made that recovery of the expenditure is
unlikely or the project is to be abandoned, the relevant
capitalised amount will be written off to the income statement.
As described in Note 13 to the financial statements, in February
2015, the Company gave formal notice to Alecto Minerals plc
("Alecto") terminating the joint venture agreement entered into
between the Company and Centamin in September 2013 with regards to
the development of Alecto's licences in Ethiopia.
Centamin's rights in the Wayu Boda and Aysid Metekel licences
have reverted back to Alecto, such that Alecto will hold 100% of
the licences and will assume responsibility for the ongoing
commitments in respect of the licences on termination of the Joint
Venture and have thus written off all expenditure incurred to date
including the acquisition costs in relation to those licences,
amounting to U$2,327,778.
Going concern
Under guidelines set out by the UK Financial Reporting Council
("FRC") the directors of UK listed companies are required to
consider whether the going concern basis is the appropriate basis
of preparation of financial statements.
Based on a detailed cash flow forecast prepared by management,
in which any reasonably possible change in the key assumptions on
which cash flow forecast is based, the directors have a reasonable
expectation that the Group will have adequate resources to continue
in operational existence for the foreseeable future. Key
assumptions under-pinning this forecast include:
-- litigation as discussed in Note 20 to the financial statements;
-- forecast gold price;
-- production volumes; and
-- costs and recovery rates.
These financial statements for the year ended 31 December 2014
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
the financial statements.
Accounting treatment of Sukari Gold Mines ("SGM")
SGM is consolidated within the Centamin Group of companies,
reflecting the substance and economic reality of the Concession
Agreement (see Note 21 to the financial statements).
Key sources of estimation uncertainty
The following are the key assumptions concerning the future, and
other key sources of estimation uncertainty at the
reporting date, that have a significant risk of causing a
material adjustment to the carrying amounts of assets and
liabilities within the next financial year:
Provision for restoration and rehabilitation costs
The Group is required to decommission, rehabilitate and restore
mines and processing sites at the end of their producing lives to a
condition acceptable to the relevant authorities. The provision has
been calculated taking into account the estimated future
obligations including 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.
Ore reserve estimates
Estimates of recoverable quantities of reserves include
assumptions on commodity prices, exchange rates, discount rates and
production costs for future cash flows. It also involves assessment
and judgment of complex geological models. The economic, geological
and technical factors used to estimate ore reserves may change from
period to period. Changes in ore reserves affect the carrying
values of mine properties, property, plant and equipment, provision
for rehabilitation assets and deferred taxes. Ore reserves are
integral to the amount of depreciation and amortisation charged to
the Statement of Comprehensive Income and the calculation of
inventory.
Production forecasts from the underground mine at Sukari are
partly based on estimates regarding future resource and reserve
growth. It is the opinion of management and directors that these
estimates are both realistic and conservative, based on current
information. However, as the mine relies on continued deeper
development and exploration drilling for further reserve
definition, the life of this part of the mine remains limited and
there is a risk that some or all of this growth will not
materialise with a consequent negative impact on current production
forecasts which affect the unit of production used in depreciation
calculations.
Depreciation of capitalised underground mine development
costs
Depreciation of capitalised underground mine development costs
at the Sukari mine is based on reserve estimates.
Management and directors believe that these estimates are both
realistic and conservative, based on current information. However,
as the mine relies on continued deeper development and exploration
drilling for further reserve definition, the estimated reserves may
change with a consequent negative impact on the carrying value of
capitalised underground mine development.
5. Revenue
An analysis of the Group's revenue for the year, from continuing
operations, is as follows:
31 December 31 December
2014 2013
US$'000 US$'000
-------------- ------------ ------------
Gold sales 471,776 503,128
Silver sales 805 697
-------------- ------------ ------------
472,581 503,825
-------------- ------------ ------------
All gold and silver sales during the year were made to a single
customer in North America.
6. Profit before tax
Profit for the year has been arrived at after
crediting/(charging) the following gains/(losses) and expenses:
31 December 2014 31 December 2013
-------------------------------------- ---------------------------------------
Before Before
exceptional Exceptional Exceptional Exceptional
items items Total Items items Total
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
------------------- ------------ ------------ ---------- ------------ ------------ -----------
Cost of sales
Mine production
costs (214,370) (61,564) (275,934) (184,608) (53,130) (237,738)
Movement in
inventory 2,839 (970) 1,869 8,973 2,126 11,099
Depreciation
and amortisation (84,232) - (84,232) (50,798) - (50,798)
------------------- ------------ ------------ ---------- ------------ ------------ -----------
(295,763) (62,534) (358,297) (226,433) (51,004) (277,437)
------------------- ------------ ------------ ---------- ------------ ------------ -----------
31 December 31 December
2014 2013
US$'000 US$'000
---------------------------------------------- ------------ ------------
Finance income
Interest received 410 690
Other operating costs
Corporate compliance (1,339) (3,188)
Corporate consultants (381) (793)
Employee entitlements (116) (118)
Salary and wages (6,135) (5,854)
Travel and accommodation (899) (1,205)
Other administration expenses (243) (278)
Employee equity settled share-based payments (2,493) (2,284)
Fixed royalty - attributable to the Egyptian
government (14,144) (15,074)
Foreign exchange (loss)/gain, net (2,900) 9,621
Provision for restoration and rehabilitation
- unwinding of discount (538) (563)
Share of loss in associate (1) - (1,664)
Loss on disposal of property, plant and
equipment (1,093) (121)
Lease payments (87) (206)
---------------------------------------------- ------------ ------------
(30,368) (21,727)
---------------------------------------------- ------------ ------------
(1) In the prior year, the share of loss in associate included a
US$1,414,000 Impairment of Exploration and Evaluation assets. Refer
to Note 14 for further details.
31 December 31 December
2014 2013
US$'000 US$'000
---------------------------------- ------------ ------------
Impairment of assets
Impairment of available-for-sale
financial assets (1) (436) (12,911)
Impairment of exploration and
evaluation assets (2) (2,328) (6,503)
---------------------------------- ------------ ------------
(2,764) (19,414)
---------------------------------- ------------ ------------
(1) Refer to Note 14 for further details.
(2) Refer to Note 13 for further details.
31 December 31 December
2014 2013
US$'000 US$'000
---------------------------------- ------------ ------------
Employee benefit expense (1),(2)
Short-term employee benefits 48,481 50,285
Long-term employee benefits 2 2
Post-employee benefits 9 10
Share-based payments 2,493 2,284
---------------------------------- ------------ ------------
50,985 52,581
---------------------------------- ------------ ------------
(1) Included in employee benefit expense is an amount of
US$3,067,856 (2013: US$7,713,163) capitalised to property, plant
and equipment and US$1,288,211 (2013: US$2,616,573) capitalised to
exploration and evaluation assets during the year.
(2) The average number of people (including executive directors)
employed was 1,395 (2013: 1,281)
Exceptional items
The directors consider that items of income or expense which are
material by virtue of their unusual, irregular or non-recurring
nature should be disclosed separately if the consolidated financial
statements are to fairly present the financial position and
underlying business performance. In order to allow a better
understanding of the financial information presented within the
consolidated financial statements, and specifically the Group's
underlying business performance, the effect of exceptional items
are shown below.
31 December 31 December
2014 2013
US$'000 US$'000
--------------------------- ------------ ------------
Included in cost of sales
Mine production costs (61,564) (53,130)
Movement in inventory (970) 2,126
(62,534) (51,004)
--------------------------- ------------ ------------
In January 2012 the Company received a letter from Chevron to
the effect that Chevron would not be able to continue supplying
Diesel Fuel Oil ("DFO") to the mine at Sukari at local subsidised
prices. It is understood that the reason that this letter was
issued was that Chevron had received a letter instructing it to do
so from the Egyptian General Petroleum Corporation ("EGPC"). It is
understood that EGPC itself took the decision to issue this
instruction because it had received legal advice from the Legal
Advice Department of the Council of State (an internal government
advisory department) that the companies operating in the gold
mining sector in Egypt were not entitled to such subsidies. In
addition, the Company during the year received a demand from
Chevron for the repayment of fuel subsidies received in the period
from late 2009 through to January 2012, amounting to some US$60
million (EGP403 million).
The Group has taken detailed legal advice on this matter (and,
in particular, on the opinion given by Legal Advice
Department of the Council of State) and in consequence in June
2012 lodged an appeal against EGPC's decision in the Administrative
Courts. Again, the Group believes that its grounds for appeal are
strong and that there is every prospect of success. However, as a
practical matter, and in order to ensure the continuation of
supply, the Group has since January 2012 advanced funds to its fuel
supplier, Chevron, based on the international price for diesel.
As at the date of the financial statements, no final decision
had been taken by the courts regarding this matter.
Furthermore, the Group remains of the view that an instant move
to international fuel prices is not a reasonable outcome and will
look to recover funds advanced thus far should the court proceeding
be concluded in its favour. However, management recognises the
practical difficulties associated with reclaiming funds from the
government and for this reason has, fully provided against the
prepayment of US$165.7 million, as an exceptional item, of which
US$68.7 million was provided for during 2014 as follows:
(a) a US$62.5 million increase in cost of sales (2013: US$51.0 million increase);
(b) a US$0.2 million increase in stores inventories (2013 US$1.7 million increase);
(c) a US$1.0 million decrease in mining stockpiles and ore in
circuit (2013: US$ 2.1 million increase); and
(d) a US$7.0 million increase in property, plant and equipment
(capital WIP) (2013: US$0.8 million increase).
This has resulted in a net charge of US$62.5 million in the
profit and loss.
7. Tax
Tax recognised in profit is summarised as follows:
Tax expense
31 December 31 December
2014 2013
US$'000 US$'000
----------------------------------------------- ------------- ------------
Current tax
Current tax expense in respect of the current
year - 10
- 10
------------------------------------------------------------- ------------
Deferred tax - -
Total tax expense - 10
----------------------------------------------- ------------- ------------
In Australia, Centamin Egypt Limited and Pharaoh Gold Mines NL
have elected to form a tax-consolidated group and
therefore are treated as a single entity for Australian income
tax purposes. Pharaoh Gold Mines NL has elected into the "Branch
Profits Exemption" whereby foreign branch income will generally not
be subject to Australian income tax.
In Egypt, Centamin has entered into a concession agreement that
provides that the income generated by Sukari Gold
Mining Company's activities is granted a long-term tax exemption
from all taxes imposed in Egypt.
The tax expense for the year can be reconciled to the profit per
the consolidated statement of comprehensive income as follows:
31 December 31 December
2014 2013
US$'000 US$'000
------------------------------------------------ ------------ ------------
Profit before income tax 81,562 183,969
Add: share of loss in associate - 1,664
------------------------------------------------ ------------ ------------
81,562 185,633
Tax expense calculated at 0% (2013: -
0%) (1) of profit before tax -
Tax effect of amounts which are not
deductible/taxable in calculating taxable
income:
Effect of tax different tax rates of
subsidiaries operating in other jurisdictions - 10
Tax expense for the year - 10
------------------------------------------------ ------------ ------------
(1) The tax rate used in the above reconciliation is the
corporate tax rate of 0% payable by Jersey corporate entities under
the Jersey tax law (2013: 0%). There has been no change in the
underlying corporate tax rates when compared to the previous
financial period.
31 December 31 December
2014 2013
US$'000 US$'000
Current tax liabilities - -
Current tax payable - -
------------------------ ------------ ------------
Tax consolidation
Relevance of tax consolidation to the consolidated entity
Companies within the Group's wholly-owned Australian resident
entities formed a tax-consolidated group with effect from 1 July
2003. The head entity within the tax-consolidated Group is Centamin
Egypt Limited. The members of the tax-consolidated Group are
identified at Note 21.
Nature of tax funding arrangements and tax sharing
agreements
Entities within the tax-consolidated Group have entered into a
tax funding arrangement and a tax-sharing agreement with the head
entity. Under the terms of the tax-funding agreement, Centamin
Egypt Limited and each of the entities in the tax-consolidated
Group has agreed to pay a tax-equivalent payment to or from the
head entity, based on the current tax liability or current tax
asset of the entity. Such amounts are reflected in amounts
receivable from or payable to other entities in the
tax-consolidated group.
The tax-sharing agreement entered into between members of the
tax-consolidated Group provides for the determination of the
allocation of income tax liabilities between the entities should
the head entity default on its tax payment obligations. No amounts
have been recognised in the financial statements in respect of this
agreement as payment of any amounts under the tax-sharing agreement
is considered remote.
8. Segment reporting
The Group is engaged in the business of exploration and mining
of precious metals only, which represents a single operating
segment. The Board is the Group's chief operating decision maker
within the meaning of IFRS 8.
Non-current assets other than financial instruments by
country:
31 December 31 December
2014 2013
US$'000 US$'000
---------------- ------------ ------------
Egypt 999,745 1,007,161
Ethiopia 3,835 3,067
Burkina Faso 48,893 -
Cote d'Ivoire 977 -
Australia 2 1
United Kingdom 156 206
---------------- ------------ ------------
1,053,608 1,010,435
---------------- ------------ ------------
9. Trade and other receivables
31 December 31 December
2014 2013
US$'000 US$'000
----------------------------- ------------- ------------
Non-current
Deposits 24 -
Value added taxation refund 621 -
----------------------------- ------------- ------------
645 -
31 December 31 December
2014 2013
US$'000 US$'000
----------------------------- ------------- ------------
Current
Gold sales debtors 24,057 24,657
Other receivables 916 770
----------------------------- ------------- ------------
24,973 25,427
----------------------------- ------------- ------------
Trade and other receivables are classified as loans and
receivables and are therefore measured at amortised cost.
The average age of the receivables is 21 days (2013: 18 days).
No interest is charged on the receivables. There are no trade
receivables past due and impaired at the reporting date, and thus
no allowance for doubtful debts has been recognised. Of the trade
receivables balance, the gold sales debtor is all receivable from
Johnson Matthey of Canada. The amount due has been received
subsequent to year end and was considered to be fully
recoverable.
The directors consider that the carrying amount of trade and
other receivables is approximately equal to their fair value.
10. Inventories
31 December 31 December
2014 2013
US$'000 US$'000
--------------------- ------------ ------------
Mining stockpiles
and ore in circuit 35,768 33,899
Stores 104,860 101,370
--------------------- ------------ ------------
140,628 135,269
--------------------- ------------ ------------
Inventory write-offs of US$16,174 (2013: US$372,045) were
recognised during the year.
11. Prepayments
31 December 31 December
2014 2013
US$'000 US$'000
---------------------------------- ------------ ------------
Current
Prepayments 1,710 1,678
Fuel prepayments - -
---------------------------------- ------------ ------------
1,710 1,678
---------------------------------- ------------ ------------
Movement in fuel prepayments (1)
Balance at the beginning of the -
year -
Fuel prepayment recognised 68,737 55,578
Less: provision charged to: (2)
Mine production costs (see Note
6) (61,564) (53,130)
Property, plant and equipment
(see Note 6) (6,953) (742)
Inventories (see Note 6) (220) (1,706)
---------------------------------- ------------ ------------
Balance at the end of the year - -
---------------------------------- ------------ ------------
(1) Refer to Note 6, Exceptional Items, for further details.
(2) The cumulative fuel prepayment recognised and provision
charged as at 31 December 2014 is as follows:
Fuel prepayment recognised (US$'000) 165,732
Provision charged to:
Mine production costs (US$'000) (151,348)
Property, plant and equipment (US$'000) (11,852)
Inventories (US$'000) (2,532)
31 December 31 December
2014 2013
US$'000 US$'000
------------- ------------ ------------
Non-current
EMRA (3) 23,750 18,950
------------- ------------ ------------
23,750 18,950
------------- ------------ ------------
(3) With a view to demonstrating goodwill toward the Egyptian
government, PGM made advance payments to EMRA which will be netted
off against future Profit Share that becomes payable to EMRA.
12. Property, plant and equipment
Mine
Plant
Office and Mining development Stripping Capital
equipment Buildings equipment equipment properties asset WIP Total
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
------------------ --------- --------- --------- --------- ----------- --------- --------- ----------
Cost
Balance at
31 December
2013 4,625 171 284,902 178,374 182,974 - 426,461 1,077,507
Additions 17 - 8 - 6,979 - 61,252 68,256
Decrease in
rehabilitation
asset - - - - (5,161) - - (5,161)
Acquisition
of subsidiary 1,080 1,131 814 1,224 - - 3 4,252
Disposals (571) (160) (724) (391) - - (574) (2,420)
Transfers 232 - 280,811 41,447 43,400 - (365,890) -
------------------ --------- --------- --------- --------- ----------- --------- --------- ----------
Balance at
31 December
2014 5,383 1,142 565,811 220,654 228,192 - 121,252 1,142,434
------------------ --------- --------- --------- --------- ----------- --------- --------- ----------
Accumulated
depreciation
Balance at
31 December
2013 (3,051) (23) (42,747) (46,326) (34,774) - - (126,921)
Acquisition
of subsidiary (765) (146) (649) (1,224) - - - (2,784)
Depreciation
and amortisation (730) (8) (24,456) (24,373) (34,723) - - (84,290)
Disposals 292 - 108 125 - - - 525
------------------ --------- --------- --------- --------- ----------- --------- --------- ----------
Balance at
31 December
2014 (4,254) (177) (67,744) (71,798) (69,497) - - (213,470)
------------------ --------- --------- --------- --------- ----------- --------- --------- ----------
Cost
Balance at
31 December
2012 3,595 171 278,366 105,276 176,407 - 259,856 823,671
Additions 54 - 55 - 1,742 - 252,173 254,024
Disposals (188) - - - - - - (188)
Transfers 1,164 - 6,481 73,098 4,825 - (85,568) -
------------------ --------- --------- --------- --------- ----------- --------- --------- ----------
Balance at
31 December
2013 4,625 171 284,902 178,374 182,974 - 426,461 1,077,507
------------------ --------- --------- --------- --------- ----------- --------- --------- ----------
Accumulated
depreciation
Balance at
31 December
2012 (2,516) (16) (28,252) (29,707) (15,609) - - (76,100)
Depreciation
and amortisation (602) (7) (14,495) (16,619) (19,165) - - (50,888)
Disposals 67 - - - - - - 67
------------------ --------- --------- --------- --------- ----------- --------- --------- ----------
Balance at
31 December
2013 (3,051) (23) (42,747) (46,326) (34,774) - - (126,921)
------------------ --------- --------- --------- --------- ----------- --------- --------- ----------
Net book value
As at 31 December
2013 1,574 148 242,155 132,048 148,200 - 426,461 950,586
------------------ --------- --------- --------- --------- ----------- --------- --------- ----------
As at 31 December
2014 1,129 965 498,067 148,856 158,695 - 121,252 928,964
------------------ --------- --------- --------- --------- ----------- --------- --------- ----------
During the prior year, as a result of the decline in the gold
price, the Group carried out a review of the recoverable amount of
the property, plant and equipment. The review did not lead to a
recognition of an impairment loss. The discount rate used in
measuring value in use was 12% per annum and the assumed average
gold price was US$1,342 per ounce. No impairment review was
performed in 2014 as no indicators of impairment were
identified.
13. Exploration and evaluation asset
31 December 31 December
2014 2013
US$'000 US$'000
---------------------------------- ------------ ------------
Balance at the beginning of
the period 59,849 45,669
Expenditure for the period 28,841 20,683
Acquisition of Ampella Mining 37,637
Limited -
Impairment of exploration and
evaluation asset (2,328) (6,503)
---------------------------------- ------------ ------------
Balance at the end of the period 123,999 59,849
---------------------------------- ------------ ------------
The exploration and evaluation asset relates to the drilling,
geological exploration and sampling of potential ore reserves.
During the first half of the year the Group acquired a 100%
interest in Ampella Mining Limited for a total consideration
(through the issue of shares in Centamin plc) of US$48.5m including
a cash component of US$9.3m and additional assets of US$1.6m. The
transaction has been accounted for as an asset acquisition, using
fair value measurement principles, with exploration rights covering
an area of 2,350km(2) , recorded as an addition to mineral
properties in the period. The tenements collectively known as the
Batie West permits are Danhal, Donko, Dounkou, Gbingbina, Mabera,
Tiopolo, Niorka, Bottara, Kaldera, Kpere Batie, Timboura and
Kpere.
In February 2015 the Company gave formal notice to Alecto
Minerals plc (the AIM quoted mineral exploration company)
terminating the joint venture agreement entered into between the
Company and Centamin in September 2013 with regards to the
development of Alecto's licences in Ethiopia.
Centamin's rights in the Wayu Boda and Aysid Metekel licences
have reverted back to Alecto, such that Alecto will hold 100% of
the licences and will assume responsibility for the ongoing
commitments in respect of the licences on termination of the Joint
Venture and have thus written off all expenditure incurred to date
including the acquisition costs in relation to those licences.
14. Available-for-sale financial assets and interests in
associates
14.1 Available-for-sale financial assets
31 December 31 December
2014 2013
US$'000 US$'000
---------------------------------------- ------------ ------------
Balance at the beginning of the period 989 5,613
Acquisitions 379 2,456
Disposals (91) (822)
Loss on foreign exchange movement (352) (108)
Loss on fair value of investment -
other comprehensive income (80) (6,150)
Impairment loss (436) -
---------------------------------------- ------------ ------------
Balance at the end of the period 409 989
---------------------------------------- ------------ ------------
The available-for-sale financial asset at period end relates to
a 11.34% (2013: 12.62%) equity interest in Nyota Minerals Limited
("Nyota"), a listed public company. During the year, management
made the decision to sell its interest in Nyota and the financial
asset has now been classed as a current asset.
In 2013, as a result of the prolonged decline in the fair value
of the investment in Nyota, an impairment loss has been recognised
and the cumulative investments revaluation reserve balance within
the accumulated profit reserve has been transferred to the
Statement of Comprehensive Income as follows:
31 December 31 December
2014 2013
US$'000 US$'000
------------------------------------------------ ------------- ------------
Impairment loss - being the transfer
of unrealised loss - from other comprehensive
income - 12,911
------------------------------------------------ ------------- ------------
14.2 Interests in associates
31 December 31 December
2014 2013
US$'000 US$'000
---------------------------------------- ------------- ------------
Balance at the beginning of the period - 3,132
Acquisitions - 500
Share of loss in associate (see Note
6) - (1,664)
Impairment in interest in associate - (1,968)
---------------------------------------- ------------- ------------
Balance at the end of the period - -
---------------------------------------- ------------- ------------
In the prior year the interest in associate related to the
Group's 39.64% equity interest in Sahar Minerals Limited ("Sahar"),
of which 33% was acquired in July 2011, 3% acquired in December
2012, and a further 4% acquired in September 2013. The associate
holds exploration rights and continues to explore, however,
management took the decision to write off the costs associated with
the interest held in Sahar due to Sahar's intention to put all
assets into care and maintenance as a result of funding
requirements.
15. Trade and other payables
31 December 31 December
2014 2013
US$'000 US$'000
------------------------------ ------------ -------------
Trade payables 17,067 59,996
Other creditors and accruals 16,975 18,106
------------------------------ ------------ -------------
34,042 78,102
------------------------------ ------------ -------------
Trade payables principally comprise the amounts outstanding for
trade purchases and ongoing costs. The average credit period taken
for trade purchases is 16 days (2013: 69 days). Trade payables are
interest free for periods ranging from 30 to 180 days. Thereafter
interest is charged at commercial rates. The Group has financial
risk management policies in place to ensure that all payables are
paid within the credit timeframe.
The directors consider that the carrying amount of trade
payables approximate their fair value.
16. Provisions
31 December 31 December
2014 2013
US$'000 US$'000
-------------------------------------------- ------------ ------------
Current
Employee benefits (1) 307 139
307 139
-------------------------------------------- ------------ ------------
Non-current
Restoration and rehabilitation
(2) 3,015 7,638
-------------------------------------------- ------------ ------------
3,015 7,638
-------------------------------------------- ------------ ------------
Movement in restoration and rehabilitation
provision
Balance at beginning of the year 7,638 5,544
(Provision derecognised) / additional
provision recognised (5,161) 1,531
Interest expense - unwinding
of discount 538 563
-------------------------------------------- ------------ ------------
Balance at end of the year 3,015 7,638
-------------------------------------------- ------------ ------------
(1) Employee benefits relate to annual, sick and long service
leave entitlements. The current provision for employee benefits as
at 31 December 2014 includes US$150,493 (31 December 2013:
US$139,111) of annual leave entitlements.
(2) The provision for restoration and rehabilitation represents
the present value of the directors' best estimate of the future
outflow of economic benefits that will be required to remove the
facilities and restore the affected areas at the Group's sites
discounted by 12% (2013: 7%). This estimate has been made on the
basis of benchmark assessments of restoration works required
following mine closure and after taking into account the projected
area to be disturbed over the life of the mine, being 20 years. A
detailed review was undertaken as at 31 December 2014 as a result
of the commissioning of Stage 4 which has resulted in the
US$4,623,470 decrease in the provision.
17. Issued capital
31 December 2014 31 December 2013
------------------------ ------------------------
Number US$'000 Number US$'000
--------------------------------------- -------------- -------- -------------- --------
Fully paid ordinary shares
Balance at beginning of the period 1,101,397,381 612,463 1,101,397,381 612,463
Issue of shares 50,710,603 48,218 - -
Own shares acquired during the period - (1,743) - -
Transfer to share option reserve - 2,635 - -
--------------------------------------- -------------- -------- -------------- --------
Balance at end of the period 1,152,107,984 661,573 1,101,397,381 612,463
--------------------------------------- -------------- -------- -------------- --------
The Authorised Share Capital is an unlimited number of no par
value shares.
At 31 December 2014 the Company held 9,821,383 ordinary shares
in treasury(1) (2013: 11,013,888 ordinary shares).
Fully paid ordinary shares carry one vote per share and carry
the right to dividends. See Note 27 for more details of the share
options.
(1) Refers to shares held by the Trustee pursuant to the
Deferred Bonus Share Plan.
18. Reserves
31 December 31 December
2014 2013
US$'000 US$'000
---------------------- ------------ ------------
Share option reserve 4,098 5,761
---------------------- ------------ ------------
4,098 5,761
---------------------- ------------ ------------
31 December 31 December
2014 2013
US$'000 US$'000
------------------------- ------------ ------------
Share option reserve
Balance at beginning
of the period 5,761 3,477
Share-based payments
expense 2,493 2,284
Transfer to accumulated (1,521)
profits -
Transfer to issued (2,635)
capital -
------------------------- ------------ ------------
Balance at the end
of the period 4,098 5,761
------------------------- ------------ ------------
The share option reserve arises on the grant of share options to
employees under the employee share option plan. Amounts are
transferred out of the reserve and into issued capital when the
options and warrants are exercised/vested. Amounts are transferred
out of the reserve into accumulated profits when the options and
warrants are forfeited.
19. Commitments for expenditure
(a) Capital expenditure commitments
31 December 31 December
2014 2013
US$'000 US$'000
------------------------------------- ------------- ------------
Plant and equipment(1)
Not longer than one year - 3,474
Longer than one year and not longer -
than five years -
Longer than five years - -
------------------------------------- ------------- ------------
- 3,474
--------------------------------------------------- ------------
(1) As a result of the completion of Stage 4, the Group had no
commitments for capital expenditure as at 31 December 2014.
(b) Operating lease commitments
The future aggregate minimum lease payments under
non-cancellable operating leases are as follows:
31 December 31 December
2014 2013
US$'000 US$'000
------------------------------ ------------ ------------
Office premises
Not longer than one year 63 73
Longer than one year and not
longer than five years 195 244
Longer than five years - -
------------------------------ ------------ ------------
258 317
------------------------------ ------------ ------------
Operating lease commitments are limited to office premises in
Jersey.
20. Contingent liabilities and contingent assets
Contingent liabilities
Fuel supply
In January 2012, the Group received a letter from Chevron to the
effect that Chevron would only be able to supply Diesel Fuel Oil
("DFO") to the mine at Sukari at international prices rather than
at local subsidised prices, which had the effect of adding
approximately US$150 per ounce to the cost of production. It is
understood that the reason that this letter was issued was that
Chevron had received a letter instructing it to do so from the
Egyptian General Petroleum Corporation ("EGPC"). It is further
understood that EGPC itself issued this instruction because it had
received legal advice from the Legal Advice Department of the
Council of State (an internal government advisory department) that
the companies operating in the gold mining sector in Egypt were not
entitled to such subsidies. In November, the Group received a
further demand from Chevron for the repayment of fuel subsidies
received during the period from late 2009 through to January 2012,
amounting to EGGBP403 million (approximately US$60.5 million at
current exchange rates).
The Group has taken detailed legal advice on this matter (and,
in particular, on the opinion given by the Legal Advice
Department of the Council of State) and in June 2012 lodged an
appeal against EGPC's decision in the Administrative Courts. Again,
the Group believes that its grounds for appeal are strong and that
there is a good prospect of success. However, as a practical
matter, and in order to ensure the continuation of supply whilst
the matter is resolved, the Group has since January 2012 advanced
funds to its fuel supplier, Chevron, based on the international
price for fuel.
As at the date of this document, no decision had been taken by
the courts regarding this matter. The Group remains of the view
that an instant move to international fuel prices is not a
reasonable outcome and will look to recover funds advanced thus far
should the court proceeding be successfully concluded. However,
management recognises the practical difficulties associated with
reclaiming funds from the government and for this reason has fully
provided against the prepayment of US$97.0 million, as an
exceptional item. Refer to Note 6 of the accompanying financial
statements for further details on the impact of this exceptional
provision on the Group's results for 2014.
No provision has been made in respect of the historic subsidies
prior to January 2012 as, based on legal advice, the Company
believes that the prospects of a court finding in its favour in
relation to this matter remain very strong.
Concession Agreement court case
On 30 October 2012, the Administrative Court in Egypt handed
down a judgment in relation to a claim brought by, amongst others,
an independent member of the previous parliament, in which he
argued for the nullification of the agreement that confers on the
Group rights to operate in Egypt. This agreement, the Concession
Agreement, was entered into between the Arab Republic of Egypt, the
Egyptian Mineral Resources Authority ("EMRA") and Centamin's
wholly--owned subsidiary Pharaoh Gold Mines ("PGM"), and was
approved by the People's Assembly as Law 222 of 1994.
In summary that judgment states that, although the Concession
Agreement itself remains valid and in force, insufficient evidence
had been submitted to Court in order to demonstrate that the
160km(2) "exploitation lease" between PGM and EMRA had received
approval from the relevant Minister as required by the terms of the
Concession Agreement. Accordingly, the Court found that the
exploitation lease in respect of the area of 160km(2) was not valid
although it stated that there was in existence such a lease in
respect of an area of 3km(2) . Centamin, however, is in possession
of the executed original lease documentation which clearly shows
that the 160km(2) exploitation lease was approved by the Minister
of Petroleum and Mineral Resources. It appears that an executed
original document was not supplied to the Court.
Upon notification of the judgment the Group took various steps
to protect its ability to continue to operate the mine at Sukari.
These included lodging a formal appeal before the Supreme
Administrative Court on 26 November 2012. In addition, in
conjunction with the formal appeal the Group applied to the Supreme
Administrative Court to suspend the initial decision until such
time as the court was able to consider and rule on the merits of
the appeal. On 20 March 2013 the Court upheld this application thus
suspending the initial decision and providing assurance that normal
operations would be able to continue whilst the appeal process is
under way.
EMRA lodged its own appeal in relation to this matter on 27
November 2012, the day after the Company's appeal was lodged,
supporting the Group's view in this matter. Furthermore, in late
December 2012, the Minister of Petroleum lodged a supporting appeal
and shortly thereafter publicly indicated that, in his view, the
terms of the Concession Agreement were fair and that the
"exploitation" lease was valid. The Minister of Petroleum also
expressed support for the investment and expertise that Centamin
brings to the country. The Company believes this demonstrates the
government's commitment to our investment at Sukari and the desire
to stimulate further investment in the Egyptian mining
industry.
The Company does not yet know when the appeal will conclude,
although it is aware of the potential for the process in Egypt to
be lengthy. The Company has taken extensive legal advice on the
merits of its appeal from a number of leading Egyptian law firms
who have confirmed that the proper steps were followed with regard
to the grant of the 160km(2) lease. It therefore remains of the
view that the appeal is based on strong legal grounds and will
ultimately be successful. In the event that the appellate court
fails to be persuaded of the merits of the case put forward by the
Group, the operations at Sukari may be adversely effected to the
extent that the Group's operation exceeds the exploitation lease
area of 3km(2) referred to in the original court decision.
The Company remains confident that normal operations at Sukari
will be maintained whilst the appeal case is heard.
Contingent assets
There were no contingent assets at year end (31 December 2013:
nil).
21. Subsidiaries
The parent entity of the Group is Centamin plc, incorporated in
Jersey, and the details of its subsidiaries are as follows:
Ownership interest
--------------------------
31 December 31 December
Country
of 2014 2013
incorporation % %
---------------------------------- ---------------- ------------ ------------
Centamin Egypt Limited Australia 100 100
Viking Resources Limited Australia 100 100
North African Resources
NL Australia 100 100
Pharaoh Gold Mines NL Australia 100 100
Egyptian Pharaoh Investments
(1) Egypt 50 50
Sukari Gold Mining Co Egypt 50 50
Centamin UK Limited (voluntarily
struck off) United Kingdom 100 100
Sheba Exploration Holdings
Limited (2) United Kingdom 100 100
Centamin Group Services
Limited Jersey 100 100
Centamin Holdings Limited Jersey 100 100
Sheba Exploration Limited Ethiopia 100 100
Centamin Limited Bermuda 100 100
Centamin West Africa Holdings
Limited United Kingdom 100 100
Ampella Mining Limited Australia 100 -
Ampella Share Plan Ltd Australia 100 -
Ampella Mining Gold Pty 100
Ltd Australia -
West African Gold Reserve 100
Pty Ltd Australia -
Ampella Mining Gold SARL Burkina 100
Faso -
Ampella Mining SARL Burkina 100
Faso -
Ampella Mining Cote d'Ivoire Cote d'Ivoire 100 -
---------------------------------- ---------------- ------------ ------------
(1) Dormant company.
(2) Previously Sheba Exploration (UK) Plc.
Through its wholly owned subsidiary, PGM, the Company entered
into the Concession Agreement with EMRA and the Arab Republic of
Egypt 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 Concession Agreement
came into effect under Egyptian law on 13 June 1995.
In 2005 PGM, together with EMRA, were granted an Exploitation
Lease over 160 square kilometres surrounding the Sukari Project
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 Concession Agreement.
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 Concession Agreement require that PGM
solely funds SGM. PGM is however entitled to recover from sales
revenue recoverable costs, as defined in the Concession Agreement.
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 2014, PGM has not
recovered its cost and accordingly, no EMRA entitlement has been
recognised to date, It is anticipated that the first payment to
EMRA will become payable during 2017. Any payment made to EMRA
pursuant to these provisions of the Concession Agreement will be
recognised as a variable charge in the income statement.
The Concession Agreement grants certain tax exemptions,
including the following:
-- from 1 April 2010, being the date of commercial production,
the Sukari Project is entitled to a 15 year exemption from any
taxes imposed by the Egyptian government on the revenues generated
from the Sukari Project. 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 has 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 the Sukari Project. 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 additional 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 the Sukari Project;
-- PGM at all times is free to transfer in US dollars 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 sub-contractors are entitled to import
machinery. Equipment and consumable items under the "Temporary
Release System" which provided exemption from Egyptian customs
duty; and
-- legal title of all operating assets of PGM will pass to EMRA
when cost recovery is completed. The right of use of all fixed and
movable assets remains with PGM and SGM.
22. Auditor's remuneration
The analysis of the auditor's remuneration is as follows:
31 December 31 December
2014 2013
US$'000 US$'000
------------------------------------------- ------------ ------------
Fees payable to the Company's auditor
and their associates for the audit
of the Company's annual accounts 300 301
Additional fees relating to the
prior year - 67
Fees payable to the Company's auditor
and their associates for other services
to the Group
- the audit of the Company's subsidiaries 100 50
------------------------------------------- ------------ ------------
Total audit fees 400 418
------------------------------------------- ------------ ------------
Non-audit fees:
Audit related assurance services
- interim review 100 140
Other assurance services 125 49
Tax compliance services - 56
Tax advisory services - 60
Total non-audit fees 225 305
------------------------------------------- ------------ ------------
The Audit Committee and the external auditor have safeguards in
place to avoid the possibility that the auditor's objectivity and
independence could be compromised. These safeguards include the
implementation of a policy on the use of the external auditor for
non-audit related services.
Where it is deemed that the work to be undertaken is of a nature
that is generally considered reasonable to be completed by the
auditor of the Company for sound commercial and practical reasons,
the conduct of such work will be permissible provided that it has
been pre-approved. All these services are also subject to a
predefined fee limit. Any work performed in excess of this limit
must be approved by the Audit Committee.
The amounts paid in 2014 were paid to our current external
auditors and the amounts paid in 2013 were paid to our previous
external auditors.
23. Joint arrangements
The consolidated entity has an interest in the following joint
arrangement:
Percentage interest
--------------------------
31 December 31 December
2014 2013
Name of joint operation % %
------------------------------ ------------ ------------
Egyptian Pharaoh Investments
(1) - Exploration 50 50
------------------------------ ------------ ------------
(1) Dormant company.
The Group has a US$1 (Cash) interest in the above joint
operation. The amount is included in the consolidated financial
statements of the Group. Capital commitments arising from the
Group's interests in joint operation are disclosed in Note 19.
24. Earnings per share
31 December 31 December
2014 2013
Cents per share Cents per
share
-------------------- ---------------- ------------
Basic earnings per
share 7.208 16.873
Diluted earnings
per share 7.113 16.767
-------------------- ---------------- ------------
Basic earnings per share
The earnings and weighted average number of ordinary shares used
in the calculation of basic earnings per share arenas follows:
31 December 31 December
2014 2013
US$'000 US$'000
-------------------------------------- -------------- --------------
Earnings used in the calculation of
basic EPS 81,562 183,959
-------------------------------------- -------------- --------------
31 December 31 December
2014 2013
Number Number
-------------------------------------- -------------- --------------
Weighted average number of ordinary
shares for the purpose of basic EPS 1,131,521,652 1,090,242,853
-------------------------------------- -------------- --------------
Diluted earnings per share
The earnings and weighted average number of ordinary shares used
in the calculation of diluted earnings per share are as
follows:
31 December 31 December
2014 2013
US$'000 US$'000
---------------------------------- ------------ ------------
Earnings used in the calculation
of diluted EPS 81,562 183,959
---------------------------------- ------------ ------------
31 December 31 December
2014 2013
Number Number
------------------------------------------------- -------------- --------------
Weighted average number of ordinary
shares for the purpose of basic EPS 1,131,521,652 1,090,242,853
Shares deemed to be issued for no consideration
in respect of employee options 15,098,842 6,902,032
------------------------------------------------- -------------- --------------
Weighted average number of ordinary
shares used in the calculation of diluted
EPS 1,146,620,494 1,097,144,885
------------------------------------------------- -------------- --------------
No potential ordinary shares were excluded from the calculation
of weighted average number of ordinary shares for the purpose of
diluted earnings per share.
25. Notes to the statements of cash flows
(a) Reconciliation of cash and cash equivalents
For the purpose of the statement of cash flows, cash and cash
equivalents includes cash on hand and at bank and deposits.
31 December 31 December
2014 2013
US$'000 US$'000
--------------------------- ------------ -------------
Cash and cash equivalents 125,659 105,979
--------------------------- ------------ -------------
(b) Reconciliation of profit for the year to cash flows from
operating activities
31 December 31 December
2014 2013
US$'000 US$'000
-------------------------------------------- ------------ ------------
Profit for the year 81,562 183,959
Add/(less) non-cash items:
Depreciation/amortisation of property,
plant and equipment 84,290 50,888
Stock write-off 11 372
Decrease in provisions (5,234) (2,729)
Foreign exchange rate gain/(loss),
net 4,455 (7,788)
Impairment of available-for-sale financial
assets 436 12,911
Share of loss in associate - 1,664
Loss on disposal of property, plant 1,093
and equipment -
Impairment of associate - 1,968
Impairment of exploration and evaluation
assets 2,328 6,503
Share-based payments expense 2,493 2,284
Changes in working capital during the
period:
Decrease in trade and other receivables 454 15,309
Increase in inventories (5,359) (40,633)
Increase in prepayments (4,832) (20,162)
(Decrease)/Increase in trade and other
payables (49,685) 41,287
-------------------------------------------- ------------ ------------
Cash flows generated from operating
activities 112,012 245,833
-------------------------------------------- ------------ ------------
(c) Non-cash financing and investing activities
During the year there have been no non-cash financing and
investing activities other than the Ampella asset acquisition as
disclosed in Note 13.
26. Financial instruments
(a) Group risk management
The Group manages its capital to ensure that entities within the
Group will be able to continue as a going concern while maximising
the return to stakeholders through the optimisation of the cash and
equity balance. The Group's overall strategy remains unchanged from
the previous financial period.
The Group has no debt and thus is not geared at year end or in
the prior year. The capital structure consists of cash and cash
equivalents and equity attributable to equity holders of the
parent, comprising issued capital and reserves as disclosed in
Notes 17 and 18. The Group operates in Australia, Jersey, Egypt,
Burkina Faso, Cote d'Ivoire and Ethiopia. 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 the Sukari Gold Project in Egypt,
and the exploration projects in Ethiopia, Burkina Faso and Cote
d'Ivoire.
Categories of financial assets and liabilities:
31 December 31 December
2014 2013
US$'000 US$'000
----------------------------- ------------ ------------
Financial assets
Available-for-sale
assets 409 989
Cash and cash equivalents 125,659 105,979
Trade and other receivables 25,618 25,427
----------------------------- ------------ ------------
151,686 132,395
----------------------------- ------------ ------------
Financial liabilities
Trade and other payables 34,042 78,102
----------------------------- ------------ ------------
34,042 78,102
----------------------------- ------------ ------------
(b) Financial risk management and objectives
The Group's overall risk management program 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 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. Revenue is received in United States dollars. The risk is
measured by regularly monitoring, forecasting and performing
sensitivity analyses on the Group's financial position.
Financial instruments denominated in Great British pound,
Australian dollar and Egyptian pound are as follows:
Great British
pound Australian dollar Egyptian pound
-------------------------- -------------------------- --------------------------
31 December 31 December 31 December 31 December 31 December 31 December
2014 2013 2014 2013 2014 2013
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
-------------------- ------------ ------------ ------------ ------------ ------------ ------------
Financial
assets
Cash and
cash equivalents 127 535 7,405 17,430 1,246 898
Available-for-sale
assets 390 580 19 409 - -
-------------------- ------------ ------------ ------------ ------------ ------------ ------------
517 1,115 7,424 17,839 1,246 898
-------------------- ------------ ------------ ------------ ------------ ------------ ------------
Financial
liabilities
Trade and
other payables 1,492 549 18 4,923 3,339 35,980
-------------------- ------------ ------------ ------------ ------------ ------------ ------------
1,492 549 18 4,923 3,339 35,980
Net exposure (975) 566 7,406 12,916 (2,093) (35,082)
-------------------- ------------ ------------ ------------ ------------ ------------ ------------
The following table summarises the sensitivity of financial
instruments held at the reporting date to movements in the exchange
rate of the Great British and Egyptian pounds and Australian dollar
to the United States dollar, with all other variables held
constant. The sensitivities are based on reasonably possible
changes over a financial period, using the observed range of actual
historical rates.
Impact on profit Impact on equity
-------------------------- --------------------------
31 December 31 December 31 December 31 December
2014 2013 2014 2013
US$'000 US$'000 US$'000 US$'000
-------------------- ------------ ------------ ------------ ------------
US$/GBGBP increase
by 10% 4 1 (35) (53)
US$/GBGBP decrease
by 10% (4) (1) 35 53
-------------------- ------------ ------------ ------------ ------------
US$/A$ increase
by 10% (583) (1,144) (2) (29)
US$/A$ decrease
by 10% 583 1,144 2 29
-------------------- ------------ ------------ ------------ ------------
US$/EGBP increase
by 10% 102 3,003 - -
US$/EGBP decrease
by 10% (102) (3,003) - -
-------------------- ------------ ------------ ------------ ------------
The Group's sensitivity to foreign currency has decreased at the
end of the current period mainly due to the decrease in foreign
currency cash holdings in Australian dollars and a corresponding
increase in US dollar cash holdings.
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 prices. The Group has not
entered into forward gold hedging contracts.
(e) Interest rate risk
The Group's main interest rate risk arises from cash and
short-term deposits and is not considered to be a material risk due
to the short-term nature of these financial instruments. Cash
deposits are placed on term period of no more than 30 days at a
time.
The financial instruments exposed to interest rate risk and the
Group's exposure to interest rate risk as at balance date were as
follows:
Weighted
average One to One to More than
effective Less than twelve Twelve
interest
rate one month months months Total
% US$'000 US$'000 US$'000 US$'000
----------------------- ---------- ---------- -------- ---------- ---------
31 December
2014
Financial assets
Variable interest
rate instruments 0.23 26,863 98,770 - 125,633
Non-interest
bearing - 25,325 - 23,750 49,075
----------------------- ---------- ---------- -------- ---------- ---------
52,188 98,770 23,750 174,708
----------------------- ---------- ---------- -------- ---------- ---------
Financial liabilities
Variable interest
rate instruments - - - -
Non-interest
bearing 34,042 - - 34,042
----------------------- ---------- ---------- -------- ---------- ---------
34,042 - - 34,042
----------------------- ---------- ---------- -------- ---------- ---------
31 December
2013
Financial assets
Variable interest
rate instruments 0.49 6,228 99,086 - 105,314
Non-interest
bearing - 27,081 - 18,950 46,031
----------------------- ---------- ---------- -------- ---------- ---------
33,309 99,086 18,950 151,345
----------------------- ---------- ---------- -------- ---------- ---------
Financial liabilities
Variable interest
rate instruments - - - - -
Non-interest
bearing - 78,102 - - 78,102
----------------------- ---------- ---------- -------- ---------- ---------
78,102 - - 78,102
----------------------- ---------- ---------- -------- ---------- ---------
(f) Liquidity risk
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 or liquidity risk management rests with
the Board of Directors, who has established an appropriate
management framework for the management of the Group's funding
requirements. The Group manages liquidity risk by maintaining
adequate cash reserves and management monitors rolling forecasts of
the Group's liquidity on the basis of expected cash flow. The
tables above reflect a balanced view of cash inflows and outflows
and shows 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 liquidity position including cash
flow forecasts to determine the forecast liquidity position and
maintain appropriate liquidity levels.
One to One to More than
less than twelve twelve
1 month months months Total
US$'000 US$'000 US$'000 US$'000
----------------------- ---------- -------- ---------- --------
31 December 2014
Financial assets
Variable interest
rate instruments 26,863 98,770 - 125,633
Non-interest bearing 25,325 - 23,750 49,075
----------------------- ---------- -------- ---------- --------
52,188 98,770 23,750 174,708
----------------------- ---------- -------- ---------- --------
Financial liabilities
Variable interest
rate instruments - - - -
Non-interest bearing 34,042 - - 34,042
----------------------- ---------- -------- ---------- --------
34,042 - - 34,042
----------------------- ---------- -------- ---------- --------
31 December 2013
Financial assets
Variable interest
rate instruments 6,228 99,086 - 105,314
Non-interest bearing 27,081 - 18,950 46,031
----------------------- ---------- -------- ---------- --------
33,309 99,086 18,950 151,345
----------------------- ---------- -------- ---------- --------
Financial liabilities
Variable interest
rate instruments - - - -
Non-interest bearing 78,102 - - 78,102
----------------------- ---------- -------- ---------- --------
78,102 - - 78,102
----------------------- ---------- -------- ---------- --------
(g) 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, but the Group has good credit checks on customers and none
of the trade receivables from the customer has been past due nor
have they been impaired. Also, the cash balances held in Australian
dollars are held with a financial institution 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.
(h) 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.
(i) Fair value measurements recognised in the statement of
financial position
The following table provides an analysis of financial
instruments that are measured subsequent to initial recognition at
fair value, grouped into Levels 1 to 3 based on the degree to which
the fair value is observable:
-- Level 1 fair value measurements are those derived from quoted
prices (unadjusted) in active markets for identical assets or
liabilities;
-- Level 2 fair value measurements are those derived from inputs
other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly (i.e. as
prices) or indirectly (i.e. derived from prices); and
-- Level 3 fair value measurements are those derived from
valuation techniques that include inputs for the asset or liability
that are not based on observable market data (unobservable
inputs).
2014
------------------------------
Level Level Level
1 2 3 Total
------------------------------ ------ ------ ------ ------
Available-for-sale financial
assets 409 - - 409
------------------------------ ------ ------ ------ ------
2013
------------------------------
Level Level Level
1 2 3 Total
------------------------------ ------ ------ ------ ------
Available-for-sale financial
assets 989 - - 989
------------------------------ ------ ------ ------ ------
There were no financial assets or liabilities subsequently
measured at fair value on Level 3 fair value measurement bases.
27. Share-based payments
Executive Directors Loan Funded Share Plan ("EDLFSP") and
Employee Loan Funded Share Plan ("ELFSP")
Shares were issued to executive directors under the Executive
Directors Loan Funded Share Plan EDLFSP 2011 and employees under
the ELFSP as part of their remuneration package. Under the terms of
the EDLFSP and ELFSP, the Company has provided a limited recourse
and interest free loan to certain employees of the Company for the
purpose of acquiring the New Shares (the "Loan"). The purchase of
the shares has been funded by the Loan and the shares will not vest
until certain performance conditions are met. In the event the
performance conditions are not met, or the shares are forfeited by
the participant, the Company can either re-acquire the shares or
direct the trustee to sell them on, offsetting the proceeds against
the outstanding loan amount and waiving the remainder of the loan.
Subject to performance conditions and time based hurdles being met,
the loan will be repayable by the relevant employee in full on the
earlier of the termination date of the loan (three years from the
date of issue) or the date on which the shares are disposed of. No
options have been offered under the EDLFSP and ELFSP in 2012, 2013
or 2014.
Further details of the EDLFSP and ELFSP can be found in the
Notice of General Meeting for the shareholder meeting held on
Tuesday, 15 February 2011, and full copies of the plan are
available upon request.
Further details of the performance conditions can be found in
the remuneration report.
2011 Employee Option Scheme
Options were issued under the 2011 Employee Option Scheme
("EOS") made in accordance with thresholds set in plans approved by
shareholders at the Extraordinary General Meeting of Shareholders
on 14 December 2011. All employees of the Group other than
directors are able to participate in the 2011 EOS. The Committee
shall select from time to time from such group the actual
participants in the 2011 EOS. There are no current plans for
options to be granted under the 2011 EOS.
The 2011 EOS provides for employees (other than directors) to
receive up to an annual aggregate of options over ordinary shares,
with an exercise price calculated by either the volume weighted
average closing price of ordinary shares sold on an exchange for
the five trading days most recently preceding the day as at which
the market value is calculated or if market value is required to be
determined in another manner or another amount for the purposes of
tax legislation in another jurisdiction, then the value is so
determined at the date of issue. The ability to exercise the
options is conditional on the Group achieving its performance
hurdles. For the initial grants to be made under the 2011 EOS it is
the current intention that the performance criteria will be the TSR
performance criteria as detailed in the 2011 Executive LFSP.
Further details of the performance conditions can be found in the
remuneration report. There are no outstanding awards under this
plan and there is no current intention to use the plan.
Under the 2011 EOS the exercise price of the options is
denominated in Great British pounds. All options expire on the
earlier of their expiry date or termination of the individual's
employment.
Deferred Bonus Share Plan
During the year the Company implemented a Deferred Bonus Share
Plan ("DBSP") which is a long-term share incentive arrangement for
senior management (but not executive directors) and other employees
(participants).
Under the DBSP, the Board shall, at its absolute discretion,
require such eligible participants to defer up to one hundred per
cent (100%) of their bonus opportunity and such eligible
participants shall not be paid their deferred bonus in cash but
shall instead be granted a Deferred Bonus Award over such number of
shares provided that the eligible participant remains in employment
on the date of grant (effectively the vesting date). The award of
the deferred shares will not have any performance criteria
attached. They will however be subject to a service period.
On 4 June 2013, the Group offered to both the beneficiaries of
the shares awarded under the ELFSP and to the majority of the
beneficiaries of the options granted under the EOS the choice to
replace their awards and options with awards under the DBSP. The
Group has accounted for this change as modifications to the
share-based payment plans and will be recognising the incremental
fair value granted, measured in accordance with IFRS 2, by this
replacement over the vesting period of the new DBSP awards.
Under this offer, each participant has been granted a number of
awards under the DBSP equivalent to the number of shares or options
held under the ELFSP and EOS respectively. Such DBSP awards shall
be subject to the terms and conditions of the DBSP and shall
ordinarily vest in three equal tranches on the anniversary of the
grant date, conditional upon the continued employment with the
Group. All offers made to participants were accepted.
The total share-based payment charge relating to Centamin plc
shares for the year is split as follows:
31 December 31 December
2014 2013
US$'000 US$'000
---------- ------------ ------------
2011 EOS 68 74
LFSP (15) 596
DBSP 2,440 1,614
---------- ------------ ------------
2,493 2,284
---------- ------------ ------------
No LFSP awards or EOS options were granted during the year.
The fair value of share-based payments awarded under the LFSP
and granted under the 2011 EOS were measured by the use of the
Black Scholes model where share-based payments have non-market
based performance conditions. Where share-based payments are
subject to market conditions, fair value was measured by the use of
a Monte-Carlo simulation. The Monte-Carlo simulation has been used
to model the Company's share prices against the performance of the
chosen comparator group and the FTSE 250 at the relevant vesting
dates.
The assumptions used in these are set out below:
LFSP 2012 EOS 2012(1) EOS 2012(1) LFSP 2011 LFSP 2011 LFSP 2011
--------------------------- ----------- ----------- ----------- ----------- ------------ ------------
Date of grant 5 April 5 April 15 August 21 March 21 June 30 September
Series number 31-34 35-40 41-46 21-25 26-29 30
Number of instruments 5,100,000 750,000 800,000 8,742,500 825,000 400,000
Share price at date
of grant (GBGBP) 0.6380 0.6380 0.6950 1.2590 1.1710 1.1710
Exercise price (GBGBP) 0.6754 0.6754 0.6823 1.2590 1.1710 1.1710
Vesting conditions(2) 1-3 1-3 1-3 1-3 1-3 1-3
Expected volatility
(3) 51.67% 51.67% 51.48% 50.08% 47.05% 47.05%
Risk-free interest
rate(4) 0.41%-0.52% 0.41%-0.52% 0.18%-0.25% 0.78%-1.65% 0.56%-1.13% 1.13%
Expected departures 0% 0% 0% 0% 0% 0%
Expected outcomes
of meeting performance
targets at grant date 100% 100% 100% 100% 100% 100%
FV at grant date (weighted
average) (GBGBP) 0.2022 0.1300 0.1939 0.4364 0.3134 0.3842
--------------------------- ----------- ----------- ----------- ----------- ------------ ------------
(1) There were no options granted under the 2011 EOS during
2011.
(2) Variable vesting dependent on one to three years of
continuous employment and, for certain series, market based
performance conditions being achieved.
(3) The expected volatility of Centamin and each company in the
chosen comparator group and the FTSE 250 Index Companies ("FTSE
250") has been calculated using approximately two years of
historical price data.
(4) The expected rate of return used in the valuations for
Centamin and other UK comparator companies was set to equal the UK
government bond rate with a yield-to-maturity that is equivalent to
the tenor of the options. When modelling the share price of
Canadian comparator companies, the Canadian government bond rate
was used.
Deferred share awards granted during the current and prior
year:
DBSP 2014(1) DBSP 2013
-------------------------------------- ------------- ------------
Grant date 4 June 2014 4 June 2013
Number of instruments 4,360,836 9,075,000
Share price at grant date (GBGBP) 0.6285 0.3857
Share price at grant date (US$) 1.0526 0.5886
Vesting period (years) (2) 1-3 1-3
Expected dividend yield (%) n/a n/a
Fair value (GBGBP) (3) 0.6285 0.3857
Fair value (US$) (2) 1.0526 0.5886
Incremental fair value at grant date
(weighted average) (GBGBP) (4) 0.6285 0.3277
Incremental fair value at grant date
(weighted average) (US$) (4) 1.0526 0.5000
-------------------------------------- ------------- ------------
(1) Awards granted on 4 June 2014.
(2) Variable vesting dependent on one to three years of
continuous employment.
(3) The fair value of shares in the DBSP was calculated by using
the closing share price on grant date, converted at the closing
GBGBP:US$ foreign exchange rate on that day, no other factors were
taken into account in determining the fair value.
(4) The incremental fair value of the shares awarded on 4 June
2013 under the DBSP were calculated by using the closing share
price on grant date, converted at the closing GBGBP:US$ foreign
exchange rate on that day less the fair value of the share-based
payments awarded under the ELFSP and EOS immediately prior to the
grant under the DBSP. No other factors were taken into account in
determining the fair value of the shares awarded under the DBSP.
The fair value of the share-based payments awarded under the LFSP
and granted under the 2011 EOS was measured by the use of the Black
Scholes model where share-based payments have non-market based
performance conditions. Where share-based payments are subject to
market conditions, fair value was measured by the use of a
Monte-Carlo simulation. The Monte-Carlo simulation has been used to
model the Company's share prices against the performance of the
chosen comparator group and the FTSE 250 at the relevant vesting
dates.
The incremental fair value of the shares awarded on 4 June 2014
under the DBSP were calculated by using the closing share price on
grant date, converted at the closing GBGBP:US$ foreign exchange
rate on that day. No other factors were taken into account in
determining the fair value of the shares awarded under the
DBSP.
The following table reconciles the outstanding share options
granted under the Employee Share Option Plan at the beginning and
end of the reporting period:
31 December 2014 31 December 2013
---------------------- ----------------------
US$ US$
Weighted Weighted
average average
Number exercise Number exercise
of options price of options price
-------------------------- ----------- --------- ----------- ---------
Balance at beginning
of the period - - - -
Granted during the period - - - -
Expired/lapsed during
the period - - - -
Exercised during the
period - - - -
-------------------------- ----------- --------- ----------- ---------
Balance at the end of
the period - - - -
-------------------------- ----------- --------- ----------- ---------
Exercisable at the end
of the period - - - -
-------------------------- ----------- --------- ----------- ---------
The following table reconciles the outstanding share options
granted under 2011 Employee Option Scheme, at the beginning and end
of the reporting period:
31 December 2014 31 December 2013
US$ US$
Weighted Weighted
average average
Number exercise Number exercise
of options price of options price
------------------------------ ------------ ---------- ----------- ---------
Balance at beginning of
the period - - 1,400,000 1.0716
Granted during the period - - - -
Expired/lapsed during
the period - - (600,000) 1.1136
Replaced with DBSP awards - - (300,000) 1.1250
Cancelled and to be replaced
with DBSP awards - - (500,000) 1.1250
Exercised during the period - - - -
------------------------------ ------------ ---------- ----------- ---------
Balance at the end of
the period - - - -
------------------------------ ------------ ---------- ----------- ---------
Exercisable at the end
of the period - - - -
------------------------------ ------------ ---------- ----------- ---------
The following reconciles the outstanding share options granted
under the EDLFSP and ELFSP at the beginning and end of the
reporting period:
31 December 2014 31 December 2013
----------------------- -----------------------
US$ US$
Weighted Weighted
average average
Number exercise Number exercise
of options price of options price
--------------------------- ------------ --------- ------------ ---------
Balance at beginning
of the period 1,222,222 2.0758 10,137,222 1.5808
Granted during the period - - - -
Expired/lapsed/forfeited
during the period (1,222,222) 2.0758 (167,500) 1.5014
Replaced with DBSP awards - - (8,747,500) 1.5228
Exercised during the
period - - - -
--------------------------- ------------ --------- ------------ ---------
Balance at the end of
the period - - 1,222,222 2.0758
--------------------------- ------------ --------- ------------ ---------
Exercisable at the end
of the period - - - -
--------------------------- ------------ --------- ------------ ---------
The following reconciles the outstanding share awards granted
under the DBSP at the beginning and end of the reporting
period:
31 December 31 December
2014 2013
Number of Number of
awards awards
----------------------- ------------ ------------
Balance at beginning
of the period 9,287,500 1,000,000
Granted during the
period 4,360,836 9,075,000
Expired/lapsed during
the period (754,171) (787,500)
Exercised during (3,225,834)
the period -
----------------------- ------------ ------------
Balance at the end
of the period 9,668,331 9,287,500
----------------------- ------------ ------------
Exercisable at the
end of the period - 333,333
----------------------- ------------ ------------
28. Key management personnel compensation
Key management personal 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 and the Company is set
out below:
31 December 31 December
2014 2013
US$ US$
-------------------------- ------------ ------------
Short-term employee
benefits 7,567,732 8,079,116
Long-term employee
benefits 1,642 1,635
Post-employment benefits 59,285 31,153
Share-based payments 2,106,223 1,826,452
-------------------------- ------------ ------------
Total 9,734,882 9,938,356
-------------------------- ------------ ------------
29. 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 21.
Equity interests in associates and jointly controlled
arrangements
Details of interests in joint ventures are disclosed in Note
23.
(b) Key management personnel compensation
Details of key management personnel compensation are disclosed
above.
(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 period are as follows:
Balance at Granted as Received Balance at Balance
1 January remuneration on exercise Net other 31 December held
31 December 2014 2014(2) (DBSP) of options change(1) 2014 nominally
----------------- ---------- ------------ ----------- ----------- ----------- ---------
J El--Raghy 71,445,086 - - - 71,445,086 -
T Schultz 1,030,000 - - (1,000,000) 30,000 -
G Haslam 102,056 - - - 102,056 -
M Arnesen 15,000 - - - 15,000 -
M Bankes 120,000 - - 30,000 150,000 -
K Tomlinson - - - 24,400 24,400 -
P Louw 1,737,500 400,000 - - 2,137,500 -
A Pardey 1,785,000 400,000 - - 2,185,000 -
R Osman 600,000 200,000 - - 800,000 -
H Brown 475,000 75,000 - - 550,000 -
D Le Masurier - 300,000 - - 300,000 -
L Gregory - 300,000 - - 300,000 -
Y El-Raghy 510,000 170,000 - (42,586) 637,414 -
T Smith - 300,000 - - 300,000 -
L Sobey 300,000 100,000 - (10,000) 390,000 -
A Davidson - 450,000 - - 450,000 -
----------------- ---------- ------------ ----------- ----------- ----------- ---------
Balance Granted Balance
at as Received at Balance
1 January remuneration on exercise Net other 31 December held
31 December
2013 2013(2) (DBSP) of options change(1) 2013 nominally
-------------- ---------- ------------ ----------- ----------- ----------- ---------
J El--Raghy 70,945,086 - - 500,000 71,445,086 -
T Schultz 1,030,000 - - - 1,030,000 -
G Haslam 102,056 - - - 102,056 -
M Arnesen 15,000 - - - 15,000 -
M Bankes 90,000 - - 30,000 120,000 -
K Tomlinson - - - - - -
P Louw 1,737,500 1,200,000 - (1,200,000) 1,737,500 -
A Pardey 1,785,000 510,000 - (510,000) 1,785,000 -
R Osman - 600,000 - - 600,000 -
H Brown 475,000 - - - 475,000 -
D Le Masurier - - - - -
L Gregory - - - - -
Y El--Raghy 510,000 - - - 510,000 -
T Smith - - - - - -
L Sobey - 300,000 - - 300,000 -
A Davidson - - - - - -
-------------- ---------- ------------ ----------- ----------- ----------- ---------
(1) "Net other change" relates to the on market acquisition or
disposal of fully paid ordinary share, including the forfeiture of
shares awarded under the LFSP and DBSP and the replacement of
awards under the ELFSP with shares awarded under the DBSP.
(2) includes shares held under LFSP/DBSP.
d) Key management personnel share option holdings
The details of the movement in key management personnel options
to acquire ordinary shares in Centamin plc are as follows:
Balance
Balance -
vested
vested and
Balance Balance during exercisable
at at the at
Granted
1 January as Other 31 December financial 31 December
31 December
2014 2014 remuneration Exercised changes 2014 period 2014
------------- --------- ------------ --------- ------- ----------- --------- -----------
J El-Raghy - - - - - - -
T Schultz - - - - - - -
G Haslam - - - - - - -
M Arnesen - - - - - - -
M Bankes - - - - - - -
K Tomlinson - - - - - - -
P Louw - - - - - - -
A Pardey - - - - - - -
R Osman - - - - - - -
H Brown - - - - - - -
D Le Masurier - - - - - - -
L Gregory - - - - - - -
Y El-Raghy - - - - - - -
T Smith - - - - - - -
L Sobey - - - - - - -
A Davidson - - - - - - -
------------- --------- ------------ --------- ------- ----------- --------- -----------
Balance
Balance -
vested
vested and
Balance Balance during exercisable
at at the at
Granted
1 January as Other 31 December financial 31 December
31 December
2013 2013 remuneration Exercised changes 2013 period 2013
-------------- --------- ------------ --------- ---------- ----------- --------- -----------
J El-Raghy - - - - - - -
T Schultz - - - - - - -
G Haslam - - - - - - -
M Arnesen - - - - - - -
M Bankes - - - - - - -
K Tomlinson - - - - - - -
P Louw - - - - - - -
A Pardey - - - - - - -
R Osman - - - - - - -
H Brown - - - - - - -
D Le Masurier - - - - - - -
L Gregory - - - - - - -
Y El-Raghy - - - - - - -
T Smith - - - - - - -
L Sobey - - - - - - -
A Davidson 500,000 - - (500,000) - - -
-------------- --------- ------------ --------- ---------- ----------- --------- -----------
Apart from the details disclosed in this note, no key management
personnel has entered into a material contract with the Company or
the economic entity since the end of the previous financial year
and there were no material contracts involving key management
personnel interests at year end.
e) Other transactions with key management personnel
The related party transactions for the year ended 31 December
2014 are summarised below:
Josef El-Raghy is a director and shareholder of El-Raghy
Kriewaldt Pty Ltd ("El-Raghy Kriewaldt"). El-Raghy Kriewaldt
provides office premises to the Company. All dealings with El-Raghy
Kriewaldt are in the ordinary course of business and on normal
terms and conditions. Rent and office outgoings paid to El-Raghy
Kriewaldt during the period were A$57,898 or US$51,920 (31 December
2013: A$48,278 or US$45,600).
f) Transactions with the government of Egypt
Royalty costs attributable to the government of Egypt of
US$14,143,710 (2013: US$15,074,098) were incurred in 2014.
With a view to demonstrating goodwill toward the Egyptian
government, PGM has made advance payments to EMRA of
US$4,800,000(2013:US$18,950,000) which will be netted off against
any future profit share that becomes payable to EMRA.
g) During the year two Generators were donated to the Marsa Alam
Government. These Generators had a carrying value of
US$1,093,129
h) Transactions with other related parties
Other related parties include the parent entity, subsidiaries,
and other related parties.
During the financial period, 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 period 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 period 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 consolidated
financial statements of the Group.
30. Dividends per share
The dividends paid in 2014 were US$9,923,308 (0.87 US cents per
share) (2013: nil).
A dividend in respect of the year ended 31 December 2014 of 1.99
US cents per share, amounting to a total dividend of US$22,926,695
has been approved by the Board of Directors and is subject to
shareholder approval at the annual general meeting on 18 May 2015.
These financial statements do not reflect this dividend
payable.
31. Subsequent events
As referred to in Note 13, In February 2015 the Company gave
formal notice to Alecto Minerals plc (the AIM quoted mineral
exploration company) terminating the joint venture agreement
entered into between the Company and Centamin in September 2013
with regards to the development of Alecto's licences in
Ethiopia.
As referred to in Note 20, subsequent to the year end the Group
is involved in ongoing litigation in respect of both the price at
which diesel fuel oil is supplied to the mine at Sukari and the
validity of the 160km(2) exploitation lease.
As referred to in Note 30, subsequent to the year end the Board
of Directors announced the approval of a final dividend for 2014 of
1.99 US cents per share, totaling US$22,911,770. Subject to
shareholder approval at the annual general meeting on 18 May 2015,
the final dividend will be paid on 29 May 2015 to shareholders on
the register as of 24 April 2015.
There were no other significant events occurring after the
reporting date requiring disclosure in the financial
statements.
NON-GAAP FINANCIAL MEASURES
Three non--GAAP financial measures are used in this report:
(1) EBITDA
"EBITDA" is a non--GAAP financial measure, which excludes the
following from profit before tax:
-- finance costs;
-- finance income; and
-- depreciation and amortisation.
Management believes that EBITDA is a valuable indicator of the
Group's ability to generate liquidity by producing operating cash
flow to fund working capital needs and fund capital expenditures.
EBITDA is also frequently used by investors and analysts for
valuation purposes whereby EBITDA is multiplied by a factor or
"EBITDA multiple" that is based on an observed or inferred
relationship between EBITDA and market values to determine the
approximate total enterprise value of a company. EBITDA is intended
to provide additional information to investors and analysts and
does not have any standardised definition under IFRS and should not
be considered in isolation or as a substitute for measures of
performance prepared in accordance with IFRS. EBITDA excludes the
impact of cash costs and income of financing activities and taxes,
and therefore is not necessarily indicative of operating profit or
cash flow from operations as determined under IFRS. Other companies
may calculate EBITDA differently. The following table provides a
reconciliation of EBITDA to profit for the year attributable to the
Company.
Reconciliation of profit before tax to EBITDA:
Year ended Year ended Year ended Year ended
31 December 31 December 31 December 31 December
2014 2014 2013 2013
before including before including
exceptional exceptional exceptional exceptional
items items(1) items items(1)
US$'000 US$'000 US$'000 US$'000
------------------- ------------ ------------ ------------ ------------
Profit before tax 144,096 81,562 234,973 183,969
Finance income (410) (410) (690) (690)
Depreciation and
amortisation 84,232 84,232 50,888 50,888
------------------- ------------ ------------ ------------ ------------
EBITDA 227,918 165,384 285,171 234,167
------------------- ------------ ------------ ------------ ------------
(1) Profit before tax, depreciation and amortisation and EBITDA
includes an exceptional provision to reflect the removal of fuel
subsidies (refer to Note 6 to the financial statements for further
details).
(2) Cash cost per ounce calculation:
"cash costs per ounce" is a non--GAAP financial measure. Cash
cost per ounce is a measure of the average cost of producing an
ounce of gold, calculated by dividing the operating costs in a
period by the total gold production over the same period. Operating
costs represent total operating costs less administrative expenses,
royalties, depreciation and amortisation. Management uses this
measure internally to better assess performance trends for the
Company as a whole. The Company believes that, in addition to
conventional measures prepared in accordance with GAAP, certain
investors use such non--GAAP information to evaluate the Company's
performance and ability to generate cash flow. The Company believes
that these measures provide an alternative reflection of the
Group's performance for the current period and are an alternative
indication of its expected performance in future periods. Cash
costs 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.
Reconciliation of cash cost per ounce:
Year ended Year ended Year ended Year ended
31 December 31 December 31 December 31 December
2014 2014 2013 2013
before including before including
exceptional exceptional exceptional exceptional
items(1) items(1) items items(1)
-------------------------------- ---------- ------------ ------------ ------------ ------------
Mine production costs (Note 6) US$'000 214,370 275,934 184,608 237,738
Less: refinery and transport US$'000 (1,063) (1,063) (921) (921)
Cash costs US$'000 212,307 274,871 183,687 236,817
-------------------------------- ---------- ------------ ------------ ------------ ------------
Gold produced - total (oz) 377,261 377,261 356,943 356,943
-------------------------------- ---------- ------------ ------------ ------------ ------------
Cash cost per ounce (US$/oz) 565 729 515 663
-------------------------------- ---------- ------------ ------------ ------------ ------------
(1) Mine production costs, cash costs and cash cost per ounce
includes an exceptional provision against prepayments recorded in
Q4 2012 and 2013 to reflect the removal of fuel subsidies (refer to
Note 6 to the financial statements for further details).
(3) Cash and cash equivalents, bullion on hand, gold sales
receivables and available--for--sale financial assets:
This is a non--GAAP financial measure any other companies may
calculate these measures differently.
Reconciliation to cash and cash equivalents, bullion on hand,
gold sales receivables and available--for--sale financial
assets:
Year ended Year ended
31 December 31 December
2014 2013
US$'000 US$'000
------------------------------------------------------------------------------------------ ------------ ------------
Cash and cash equivalents (Note 25) 125,659 105,979
Bullion on hand (valued at the year end spot price) 12,685 10,853
Gold sales receivable (Note 9) 24,057 24,657
Available-for--sale financial assets (Note 14.1) 409 989
------------------------------------------------------------------------------------------ ------------ ------------
Cash and cash equivalents, bullion on hand, gold sales receivables and
available-for--sale
financial assets 162,810 142,478
------------------------------------------------------------------------------------------ ------------ ------------
GLOSSARY
AIF Annual Information Form
AN ammonium nitrate
ARE Arab Republic of Egypt
Assay qualitative analysis of ore to determine its components
Au chemical symbol for the element gold
Board the Board of Directors of the Group
CA Concession Agreement
DBSP Deferred Bonus Share Plan
Directors the directors of the Board of Centamin plc
dump leach a process used for the recovery of metal ore from typically weathered
low--grade ore. Blasted
material is laid on a slightly sloping, impervious pad and uniformly leached
by the percolation
of the leach liquor trickling through the beds by gravity to ponds. The
metals are recovered
by conventional methods from the solution
EDLFSP Executive Director Loan Funded Share Plan
ELFSP Employee Loan Funded Share Plan
EMRA Egyptian Mineral Resource Authority
EOS Employee Option Scheme
ESOP Employee Share Option Plan
EGPC the Egyptian General Petroleum Corporation
EMRA Egyptian Resource Mineral Authority
EU IFRS International Financial Reporting Standards as adopted by the European Union
FA fatality
feasibility study extensive technical and financial study to assess the commercial viability
of a project
flotation mineral processing technique used to separate mineral particles in a slurry,
by causing them
to selectively adhere to a froth and float to the surface
FRC Financial Reporting Council
grade relative quantity or the percentage of ore mineral or metal content in an
ore body
g/t gram per metric tonne
indicated resource as defined in the JORC Code, is that part of a mineral resource which has
been sampled by
drill holes, underground openings or other sampling procedures at locations
that are too widely
spaced to ensure continuity but close enough to give a reasonable indication
of continuity
and where geoscientific data is known with a reasonable degree of
reliability. An indicated
mineral resource will be based on more data and therefore will be more
reliable than an inferred
resource estimate
inferred resource as defined in the JORC Code, is that part of a mineral resource for which
the tonnage and
grade and mineral content can be estimated with a low level of confidence.
It is inferred
from the geological evidence and has assumed but not verified geological
and/or grade continuity.
It is based on information gathered through the appropriate techniques from
locations such
as outcrops, trenches, pits, workings and drill holes which may be limited
or of uncertain
quality and reliability
IFRS International Financial Reporting Standards
IOD Institute of Directors
JORC Joint Ore Reserves Committee of the Australasian Institute of Mining and
Metallurgy, Australian
Institute of Geoscientists and the Minerals Council of Australia
LFSP Loan Funded Share Plan
LTI lost time due to injury
LTIFR lost time injury frequency rate
material tailings material that remains after all metals/minerals considered economic have
been removed from
the ore
MD&A Management's Discussion and Analysis of the Financial Condition and Results
of Operations
Mill equipment used to grind crushed rocks to the desired size for mineral
extraction
Mineralization process of formation and concentration of elements and their chemical
compounds within a mass
or body of rock
Moz million ounces
Mt million tonnes
MTIF Medical treatment injury frequency
Mtpa million tonnes per annum
net production surplus or profit share revenue less payment of the 3% royalty to Arab Republic of Egypt ("ARE") and
recoverable costs
open pit large scale hard rock surface mine
ore mineral deposit that can be extracted and marketed profitably
ore body mining term to define a solid mass of mineralised rock that can be mined
profitably under
current or immediately foreseeable economic conditions
ore reserve the economically mineable part of a Measured or Indicated mineral resource.
It includes diluting
materials and allowances for losses which may occur when the material is
mined. Appropriate
assessments, which may include feasibility studies, have been carried out,
and include consideration
of and modification by realistically assumed mining, metallurgical,
economic, marketing, legal,
environmental, social and governmental factors. These assessments
demonstrate at the time
of reporting that extraction could be reasonably justified. Ore reserves are
sub--divided
in order of increasing confidence into Probable and Proven
ounce or oz troy ounce (= 31.1035 grams)
PGM Pharaoh Gold Mines NL
Probable measured and/or indicated mineral resources which are not yet proven, but
where technical
economic studies show that extraction is justifiable at the time of the
determination and
under specific economic conditions
Production total attributable gold production, as stated throughout this document, is
comprised of 100%
of production from the Group's subsidiaries
Proven measured mineral resources, where technical economic studies show that
extraction is justifiable
at the time of the determination and under specific economic conditions
Recovery proportion of valuable material obtained in the processing of an ore, stated
as a percentage
Resource concentration or occurrence of material of intrinsic economic interest in or
on the Earth's
crust in such a form that there are reasonable prospects for eventual
economic extraction.
The location, quantity, grade geological characteristics and continuity of a
mineral resource
are known, estimated or interpreted from specific geological evidence and
knowledge. Mineral
resources are subdivided into Inferred, Indicated and Measured categories
ROM run of mine
SGM Sukari Gold Mining Co.
Stockpile an accumulation of ore or mineral formed to create a reserve for loading or
when demand slackens
or when the process plant is unequal to handling mine output
strip ratio the unit amount of spoil or waste that must be removed to gain access to a
similar unit of
ore or mineral
--------------------------------------- -----------------------------------------------------------------------------
CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS
This document contains "forward-looking information" which may
include, but is not limited to, statements with respect to the
future financial or operating performance of Centamin plc
('Centamin' or 'the Company'), its subsidiaries (together 'the
Group'), affiliated companies, its projects, the future price of
gold, the estimation of mineral reserves and mineral resources, the
realization of mineral reserve and resource estimates, the timing
and amount of estimated future production, revenues, margins, costs
of production, estimates of initial capital, sustaining capital,
operating and exploration expenditures, costs and timing of the
development of new deposits, costs and timing of future
exploration, requirements for additional capital, foreign exchange
risks, governmental regulation of mining operations and exploration
operations, timing and receipt of approvals, consents and permits
under applicable mineral legislation, environmental risks, title
disputes or claims, limitations of insurance coverage and
regulatory matters. Often, but not always, forward-looking
statements can be identified by the use of words such as "plans",
"expects", "is expected", "budget", "scheduled", "estimates",
"forecasts", "intends", "targets", "aims", "anticipates" or
"believes" or variations (including negative variations) of such
words and phrases, or may be identified by statements to the effect
that certain actions, events or results "may", "could", "would",
"should", "might" or "will" be taken, occur or be achieved.
Forward-looking statements involve known and unknown risks,
uncertainties and a variety of material factors, many of which are
beyond the Company's control which may cause the actual results,
performance or achievements of Centamin, its subsidiaries and
affiliated companies to be materially different from any future
results, performance or achievements expressed or implied by the
forward-looking statements. Readers are cautioned that
forward-looking statements may not be appropriate for other
purposes than outlined in this document. Such factors include,
among others, future price of gold; general business, economic,
competitive, political and social uncertainties; the actual results
of current exploration and development activities; conclusions of
economic evaluations and studies; fluctuations in the value of the
U.S. dollar relative to the local currencies in the jurisdictions
of the Company's key projects; changes in project parameters as
plans continue to be refined; possible variations of ore grade or
projected recovery rates; accidents, labour disputes or slow-downs
and other risks of the mining industry; climatic conditions;
political instability, insurrection or war, civil unrest or armed
assault; labour force availability and turnover; delays in
obtaining financing or governmental approvals or in the completion
of exploration and development activities; as well as those factors
referred to in the section entitled "Risks and Uncertainties"
section of the Management discussion & analysis. The reader is
also cautioned that the foregoing list of factors is not exhausted
of the factors that may affect the Company's forward-looking
statements.
Although the Company has attempted to identify important factors
that could cause actual actions, events or results to differ
materially from those described in forward-looking statements,
there may be other factors that cause actions, events or results to
differ from those anticipated, estimated or intended.
Forward-looking statements contained herein are made as of the date
of this document and, except as required by applicable law, the
Company disclaims any obligation to update any forward-looking
statements, whether as a result of new information, future events
or results or otherwise. 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 statements. Accordingly, readers should not
place undue reliance on forward-looking statements.
QUALIFIED PERSON AND QUALITY CONTROL
Information of a scientific or technical nature in this document
was prepared under the supervision of Andrew Pardey, BSc. Geology,
Chief Operating Officer of Centamin plc and a qualified person
under the Canadian National Instrument 43-101.
Refer to the technical report entitled "Mineral Resource and
Reserve Estimate for the Sukari Gold Project, Egypt" dated 30
January 2014 and filed on SEDAR at www.sedar.com, for further
discussion of the extent to which the estimate of mineral
resources/reserves may be materially affected by any known
environmental, permitting, legal, title, taxation, socio-political,
or other relevant issues.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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