TIDMCEY
RNS Number : 7698V
Centamin PLC
12 August 2015
For immediate release 12 August 2015
Centamin plc ("Centamin" or "the Company")
(LSE:CEY, TSX:CEE)
Centamin plc Results for the Second Quarter and Half Year Ended
30 June 2015 and Interim Dividend Announcement
Centamin plc ("Centamin", the "Group" or "the Company") (LSE:
CEY, TSX: CEE) is pleased to announce its results for the second
quarter ended 30 June 2015.
Operational Highlights(1),(2)
-- Gold production of 107,781 ounces was in line with the first quarter and up 33% on Q2 2014.
-- Cash cost of production of US$706 per ounce and all-in
sustaining costs (AISC) of US$853 per ounce.
-- 2015 production guidance of between 430,000 and 440,000 ounces.
-- With higher anticipated production and our continued focus on
cost control, we expect to achieve below the previously guided cash
cost of production of US$700 per ounce and AISC of US$950 per
ounce.
-- Record process plant throughput of 2.67Mt was 7% above the 10Mtpa nameplate capacity.
-- Recovery of 90.3%, up by 2% over the first quarter, reflects
on-going optimisation of the process plant.
-- Underground mining slightly above forecast with 282kt of ore
mined at an average grade of 6.3g/t.
-- Underground drilling at Sukari continues to support further
resource and reserve expansion potential.
-- Encouraging results from exploration programmes in Ethiopia,
Burkina Faso and Côte d'Ivoire.
Financial Highlights(1),(2)
-- EBITDA of US$37.3 million was down 30% on Q1 2015, as lower
operating costs were offset by a fall in realised gold prices and a
reduction in gold sales volumes.
-- Centamin remains debt-free and un-hedged with cash, bullion
on hand, gold sales receivable and available-for-sale financial
assets of US$212.6 million at 30 June 2015.
-- Interim dividend of 0.97 cent per ordinary share versus an
interim payment of 0.87 cent in 2014.
-- Basic earnings per share of 1.65 cents; down 34% on Q1 2015.
Legal Developments in Egypt
-- The Supreme Administrative Court appeal and Diesel Fuel Oil
court case are both still on-going. Centamin is aware of the
potential for the legal process in Egypt to be lengthy and it
anticipates a number of hearings and adjournments before decisions
are reached. Operations continue as normal and any enforcement of
the Administrative Court decision has been suspended pending the
appeal ruling.
Q2 2015 Q1 2015 Q2 2014 Q1 2014
------------------ ----------- -------- -------- -------- --------
Gold produced ounces 107,781 108,233 81,281 74,241
Gold sold ounces 104,168 111,249 79,350 78,957
Cash cost of
production US$/ounce 706 717 783 744
AISC US$/ounce 853 858 NR NR
Average realised
gold price US$/ounce 1,188 1,216 1,291 1,298
------------------ ----------- -------- -------- -------- --------
Revenue US$'000 124,192 135,231 102,624 102,725
EBITDA US$'000 37,308 52,988 32,617 34,265
Profit before
tax US$'000 18,841 28,566 11,330 20,593
EPS US cents 1.65 2.50 0.99 1.87
Cash generated
from operations US$'000 49,729 56,643 20,139 27,833
------------------ ----------- -------- -------- -------- --------
(1) Cash cost of production, AISC, 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 is defined by the World Gold Council,
the details of which can be found at www.gold.org.
(2) Basic EPS, EBITDA, AISC, cash cost 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 4 of the Financial Statements)
NR - Not Reported.
Andrew Pardey, CEO of Centamin, commented: "The first half of
the year at Sukari focused on ramping up the productivity of the
expanded plant and increasing the development of both the
underground and open pit mining operations. At the same time
Centamin is pleased to have generated strong cash flows, allowing
both increased dividend payments to shareholders and continued
investment in exploration, despite the continued pressure on the
gold price. We are now beginning to reap the benefits of our
investment in the higher processing capacity at Sukari, with
expected further improvements in productivity in the quarters
ahead. We remain confident of achieving our current guidance on
gold production and low cash costs, and in generating free cash
whilst we endeavour to generate additional value through our
exploration programmes at Sukari and in Burkina Faso, Côte D'Ivoire
and Ethiopia."
Centamin will host a conference call on Wednesday, 12th August
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: 080 8237 0040
International Toll number: +44 20 3428 1542
Canada Toll free: 1866 404 5783
Participant code: 27847585#
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: 660948#
Via audio link at http://www.centamin.com/centamin/investors
________________________________
CHIEF EXECUTIVE OFFICER'S REPORT
Centamin's EBITDA of US$37.3 million was down 30% on the first
quarter and up 14% on Q2 2014, as the expanded Sukari operation
continued to deliver competitive returns under the weak gold price
environment. Gold production was comparable with the first quarter
and a 2% fall in the average realised gold price, coupled with a
reduction in gold sales volumes, were partially offset by an $11
per ounce decrease in the cash cost of production to US$706 per
ounce, mainly due to a reduction in the fuel price offset by a
slight increase in open pit mining and processing costs.
All-in sustaining costs (AISC) of US$853 per ounce was below
full year guidance, mainly due to the planned scheduling of certain
sustaining capital cost items to later in the year and the
above-mentioned reduction in the fuel price.
The cash generation further strengthened our balance sheet,
which ended the period with US$212.6 million of cash, bullion on
hand, gold sales receivable and available-for-sale financial
assets. This reflects an increase of US$16.8 million during the
quarter, net of a US$22.7 million payment in relation to the final
dividend for 2014.
In line with our policy to maintain a return of capital to our
shareholders, and supported by the robust cash flows from Sukari, I
am pleased to announce today an interim dividend payment for the
current financial year of 0.97 cent per share.
The second quarter delivered stronger than anticipated
production with processing rates 7% above the 10Mtpa nameplate
capacity, as finer material was fed to the milling circuit due to
improved blasting and greater availability of the secondary
crushers. Also of note was an improvement in metallurgical
recoveries to 90.3%, above the forecast level of 88%. The increase
was mainly driven by greater efficiencies in the fine-grinding
circuit, in addition to a re-configuration of the final leaching
stages and improved performance of the new carbon regeneration
kiln. Work continues to ensure recoveries are sustained at these
higher levels.
The open pit delivered total material movement of 13,671kt for
the quarter, a decrease of 15% on Q1 2015, due to lower fleet
utilization and productivity. Mined ore grades of 0.76g/t remained
in line with our forecast.
The underground mine delivered 282kt of ore, a 7% increase on Q1
2015, at an average grade of 6.3g/t in line with the mining plan.
The focus for the operation remains to consistently deliver ore at
an average grade of at least 6g/t.
We continue to expect higher quarterly production rates of
450,000-500,000 ounces per annum in the second half of the year,
driven by further improvements in plant throughput and progressive
increases in open pit grades towards the reserve average of
1.05g/t. As previously announced, as a result of the stronger than
expected production in the second quarter, we have updated our full
year production guidance to between 430,000 and 440,000 ounces.
With this higher expected production, and our continued focus on
cost control, we expect to achieve below our previous full year
guidance for cash cost of production of US$700 per ounce and AISC
of US$950 per ounce.
Some progress has been made to date in optimising productivity
from the various areas of the expanded Sukari operation and there
remains scope for further significant improvements and production
increases over the coming quarters. In particular, we remain
confident that the expanded plant will achieve, in time, throughput
levels materially above nameplate and that the underground
operation will continue to deliver stable grades at the current
mining rates. The additional shareholder value that can be gained
from our continued drive to maximize productivity and reduce unit
costs has the potential to be substantial and requires no material
capital expenditure.
Further support for resource expansion and the long-term
sustainability of high-grade production at Sukari from the
underground mine continues to be provided by results from on-going
exploration drilling, as highlighted in the following pages of this
report. Exploration at our projects in Burkina Faso, Côte D'Ivoire
and Ethiopia also continue to provide encouraging results.
Centamin remains committed to its policy of being 100% exposed
to the gold price through its un-hedged position.
The two litigation actions, Supreme Administrative Court appeal
(SAC Appeal) and Diesel Fuel Oil court case (DFO Case), progressed
in line with our expectations during the half year and are
described in further detail in Note 7 to the financial statements.
In respect of the former, the Company continues to believe that it
has a strong legal position and, in addition, that it will
ultimately benefit from law 32/2014, 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. Law 32/2014 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.
2015 Interim Dividend
The Directors declared an interim dividend of 0.97 cent per
share (US$0.0097) on Centamin plc ordinary shares (totalling
approximately US$11 million). The interim dividend for the
half-year period ending 30 June 2015 will be paid on 9 October 2015
to shareholders on the register on the Record Date of 4 September
2015.
London Stock Exchange (T+2)
EX-DIV DATE: 3 September 2015
RECORD DATE: 4 September 2015
LAST DATE FOR RECEIPT OF CURRENCY ELECTIONS: 18 September
2015
PAY DATE: 9 October 2015
Toronto Stock Exchange (T+3)
EX-DIV DATE: 2 September 2015
RECORD DATE: 4 September 2015
PAY DATE: 9 October 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 currency
election mandate will be applicable for shareholders with a UK bank
account. 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
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 payment
mandates to be received by the Company will be 18 September 2015.
Please note, the registrars retain mandates previously provided by
shareholders and will apply the instructions for this and future
dividends. The currency conversion rate for those electing to
receive sterling will be based on the foreign currency exchange
rates on 18 September 2015. The rate applied will be published on
the Company's website on 21 September 2015.
OPERATIONAL REVIEW
Sukari Gold Mine:
Q2 2015 Q1 2015 Q2 2014 Q1 2014
---------------------------------- ------- ------- ------- -------
OPEN PIT MINING
Ore mined (1) ('000t) 1,751 2,562 1,795 2,325
Ore grade mined (Au
g/t) 0.76 0.78 0.70 0.61
Ore grade milled
(Au g/t) 0.75 0.95 0.81 0.85
Total material mined
('000t) 13,671 15,996 9,861 9,749
Strip ratio (waste/ore) 6.81 5.24 4.5 3.2
---------------------------------- ------- ------- ------- -------
UNDERGROUND MINING
Ore mined from development
('000t) 127 129 127 102
Ore mined from stopes
('000t) 155 135 103 104
Ore grade mined (Au
g/t) 6.30 6.01 5.56 6.95
---------------------------------- ------- ------- ------- -------
Ore processed ('000t) 2,667 2,478 1,957 1,486
Head grade (g/t) 1.32 1.48 1.37 1.69
Gold recovery (%) 90.3 88.3 88.1 88.6
Gold produced - dump
leach (oz) 4,715 4,814 4,968 4,113
Gold produced - total
(2) (oz) 107,781 108,233 81,281 74,241
Cash cost of production(3)
(4) (US$/oz) 706 717 783 744
Open pit mining 224 247 248 245
Underground mining 48 47 60 69
Processing 381 369 413 364
G&A 53 54 62 66
AISC(3) (4) (US$/oz) 853 858 NR NR
---------------------------------- ------- ------- ------- -------
Gold sold (oz) 104,168 111,249 79,350 78,957
Average realised
sales price (US$/oz) 1,188 1,216 1,291 1,298
---------------------------------- ------- ------- ------- -------
(1) Ore mined includes 48kt @ 0.51g/t delivered to the dump
leach pad in Q2 2015 (99kt @ 0.43 g/t in Q2 2014).
(2) Gold produced is gold poured and does not include gold-in-circuit at period end.
(3) Cash cost exclude royalties, exploration and corporate
administration expenditure. Cash cost and AISC are non-GAAP
financial performance measures with no standard meaning under GAAP.
For further information and a detailed reconciliation, please see
"Non-GAAP Financial Measures" section below.
(4) Cash cost of production and AISC reflect an exceptional
provision against prepayments to reflect the removal of fuel
subsidies which occurred in January 2012 (refer to Notes 4 and 5
respectively to the financial statements for further details).
Health and safety - Sukari
The lost time injury (LTI) frequency rate for Q2 2015 was 0.16
per 200,000 man-hours (Q2 2014: 0.29 per 200,000 man-hours), with a
total of 1,238,861 man-hours worked (Q2 2014: 1,375,221).
Developing the health and safety culture onsite has resulted in
improved reporting of incidents compared to previous periods 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 13,671kt in
the quarter, a decrease of 15% on Q1 2015 due to lower fleet
utilization and productivity and a 39% increase on the prior year
period. Mining focused on the Stage 3A and 3B areas and the
northern and eastern walls of the open pit, in line with the mine
plan.
Ore production from the open pit was 1.75Mt at 0.76g/t with an
average head grade fed to the plant of 0.75 g/t, in line with the
mine plan and our forecast. The ROM ore stockpile balance decreased
by 878kt to 1,326kt by the end of the quarter.
Ore mining rates are scheduled to increase during the second
half of the year and we continue to expect grades to progressively
increase towards the reserve average of 1.05g/t as mining
progresses through the upper portions of the next stage of pit
development.
Underground mine
Ore production from the underground mine was 282kt, a 7%
increase on Q1 2015 and a 23% increase on the prior year period.
The ratio of stoping-to-development ore mined increased, with 55%
of stoping ore (155kt) and 45% of development ore (127kt). Ore
tonnages from stopes increased by 15% on the first quarter.
An average head grade of 6.3 g/t was mined in Q2 2015, with
stope production grade of 7.1 g/t and development grade of 5.3
g/t.
Total development during the quarter, including the Amun and
Ptah decline, was 2,091 metres. Development within mineralised
areas of Amun accounted for 1,160 metres and took place between the
830 and 710 levels (230 to 350 metres below the underground
portal), including extension of a portion of the Amun decline
through low-grade ore. Ptah development in mineralised areas took
place over 241 metres on the P810 and P790 levels.
Further work on the exhaust ventilation circuits for both the
Amun and Ptah declines continued, ensuring sufficient ventilation
as the decline extends deeper into the orebody.
A new drive, Hannibal, was developed over 91 metres through the
second highest point of Sukari Hill. The objective of the target
120 metre incline is to provide access for future open pit
development.
A total of 2,495 metres of grade control diamond drilling were
completed, aimed at short-term stope definition, drive direction
optimisation and underground resource development. Positive results
continue and are discussed in the following section. A further
6,610 metres of drilling continued to test the depth extensions
below the current Amun and Ptah zones, and included 666m drilled
from the Hannibal drive to test for mineralisation around the top
of Sukari Hill.
Processing
Quarterly throughput at the Sukari process plant was 2,667Mt, a
36% increase on the prior year reflecting the ramp-up of ore
treatment through the new Stage 4 plant circuit. Processed tonnages
were 8% above the first quarter and 7% above the nameplate capacity
of 10Mtpa as finer material was fed to the milling circuit due to
improved blasting and greater availability of the secondary
crushers. Plant productivity of 1,361 tonnes per hour (tph)
represented an 11% increase on the prior year period and a 6%
increase on Q1 2015.
Plant metallurgical recoveries were 90.3%, a 2.4% increase on Q1
2015 and a 2.6% increase on the prior year period. This significant
improvement was achieved through maintaining an improved grind size
from the Stirred Media Detritors (SMDs) in the fine-grinding
circuit, leading to improved solid leaching rates in the subsequent
CIL circuit. In addition, the new carbon regeneration kiln and a
reconfiguration of the Stage 1 leach tanks contributed to the
improved overall plant recovery. Work continues to optimise the
operational controls and improve circuit stability to ensure
recoveries can be sustained at these higher levels.
The dump leach operation produced 4,715oz, a 2% decrease on the
first quarter and a 5% decrease on the prior year period.
Exploration
Sukari
Drilling from underground remains a focus of the Sukari
exploration programme as new development provides improved access
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.
Selected results received during the second quarter from the
underground drilling programme, which are in addition to those
previously disclosed, include the following:
Amun
Hole Depth Interval Au (g/t)
Number (m)
----------- -------------- --------- ---------
From To
----------- ------ ------ --------- ---------
UGRSD0405 182.9 184.0 1.1 79.0
----------- ------ ------ --------- ---------
Ptah
Hole Depth Interval Au (g/t)
Number (m)
----------- -------------- --------- ---------
From To
----------- ------ ------ --------- ---------
UGRSD0131 95.2 97.0 1.8 18.3
----------- ------ ------ --------- ---------
UGRSD0131 100.7 102.0 1.3 48.5
----------- ------ ------ --------- ---------
UGRSD0164 313.9 319.2 5.3 147.2
----------- ------ ------ --------- ---------
UGRSD0165 197.0 197.9 0.9 59.7
----------- ------ ------ --------- ---------
UGRSD0165 202.7 203.3 0.6 109.0
----------- ------ ------ --------- ---------
UGRSD0551 54.7 63.1 8.4 5.9
----------- ------ ------ --------- ---------
UGRSD0563 277.0 285.0 8.0 5.1
----------- ------ ------ --------- ---------
Whilst exploration remains focused on Sukari Hill, there are
seven other prospects that have been identified within the 160km(2)
Sukari tenement area which are close enough such that ore could be
trucked to the existing processing plant.
A resource and reserve update is nearing completion and should
be released shortly.
Burkina Faso
Centamin's systematic exploration programme over the suite of
tenements collectively known as the Batie West permits includes
reverse circulation (RC), diamond, aircore and auger drilling,
geophysical surveys, geochemical sampling and geological mapping.
Numerous prospects are being tested, including Wadaradoo, Tonior,
Napelapera, Hunter, Amimbiri, Kouglaga North, Danhal, Dounkou,
Tiopolo and Kpere Batie prospects. During the quarter, Centamin has
completed 32,094 metres of drilling, including 2,807 metres of
diamond drilling.
Drill targets identified from the completed Induced Polarisation
(IP) geophysical survey at Wadaradoo are being tested. Geochemical
sampling work has commenced on the Danhal licence area to test the
northern extension of the Batie shear zone.
A signed ministerial decree in relation to the Tiopolo mining
licence application was issued on 5th March 2015. A subsequent
application has been made to postpone development and continue
exploration, as provisioned in the Burkina Faso Mining Code.
The strategy for 2015 is to continue to systematically explore
the entire 160 km strike length of the belt and drill-test the
numerous 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.1,200
km(2) area across the border from Batie West in Burkina Faso. The
objective for 2015 is to geologically assess the licence areas, and
identify and undertake first pass RC drilling on priority targets,
aimed at a path towards resource development in 2016.
Fieldwork continued with mapping, rock chip sampling and auger
drilling geochemistry. Aircore drilling commenced during the period
targeting the identified anomalies. An airborne magnetic and
radiometric survey was completed over the permits and
interpretation of the data is underway.
A further four licences are currently under application and are
expected to be granted in 2015, and are planned to be covered by
regional surface geochemistry aimed at identifying anomalies for
first-pass drilling in 2016.
Ethiopia
Centamin continued exploration on its tenement in Una Deriam in
northern Ethiopia where a total of 1,530 metres were drilled during
Q2 2015.
Drilling continued to test continuity of mineralization and
positive drill results along strike. Results received during the
period received show broad zones of mineralisation including 18m @
0.93g/t and 6m @ 1.83g/t.
Field work continued on the Ondonok Dabus licence, located in
the west of Ethiopia close the regional capital of Asosa, with
mapping, soil geochemistry (BLEG) and rock chip sampling being
completed.
FINANCIAL REVIEW
Centamin has a strong and flexible financial position with no
debt, no hedging and cash, bullion on hand, gold sales receivables
and available-for-sale financial assets of US$212.6 million at 30
June 2015, up from US$195.8 million at 31 March 2015. For further
information, please see the "Non-GAAP Financial Measures"
section.
At 30 June 2015 At 30 June
2014
----------------------------- ----------------- ----------------
Cash at Bank US$175.0 million US$106.4
million
----------------------------- ----------------- ----------------
Gold Sales Receivable US$24.2 million US$18.7 million
----------------------------- ----------------- ----------------
Available for sale financial US$0.3 million US$0.3 million
assets
----------------------------- ----------------- ----------------
Bullion on hand US$13.1 million US$7.9 million
----------------------------- ----------------- ----------------
Total US$212.6 million US$133.3
million
----------------------------- ----------------- ----------------
Centamin's unit cash cost of production was US$706 per ounce, a
decrease of US$11 versus Q1 2015 due to a reduction in the cost of
fuel, offset by a slight increase in open pit mining and processing
costs. On the basis of excluding the exceptional provision for fuel
prepayments this equated to US$624 per ounce, a decrease of US$30
versus Q1 2015.
International fuel prices have been falling steadily and the
average cost per litre has reduced by 23% compared with the first
quarter (and 41% compared with the prior year period). The
contribution of fuel costs to the overall cash cost of production
has reduced by US$31 per ounce compared with the first quarter (and
US$115 per ounce compared with the prior year period).
During the remainder of the year we expect the cash cost of
production to further reduce, as increasing plant throughput and
improving grades drive higher quarterly production rates and
additional cost efficiencies.
A breakdown of capital expenditure for the Group during Q2 2015
is as follows:
US$ million
Open pit development -
Underground mine
development (1) 7.6
Other sustaining -
capital expenditure
------------
TOTAL SUSTAINING
CAPEX - SUKARI 7.6
EXPLORATION CAPITALISED 5.4
(1) Includes underground development drilling
We continue to expect 2015 sustaining capital expenditure to be
approximately US$70 million as advised at our Capital Markets Day
in May 2015, with certain sustaining capital cost items being
scheduled to later in the year.
AISC was below our full year guidance, mainly due to
above-mentioned re-scheduling of sustaining capital costs and the
reduction in the fuel price. Full year production is expected to be
between 430,000 and 440,000 ounces of gold at below our previous
forecast of US$700 per ounce cash cost of production and US$950
AISC.
EBITDA for the period was US$37.3 million, down 30% on the
previous quarter. The key contributing factors were:
(a) a 9% or a US$11.3 million decrease in revenue; partially offset by
(b) a 2% or a US$1.3 million decrease in mine production costs, and
(c) a US$3.0 million decrease in inventory against a US$2.0
million increase in the previous quarter.
CORPORATE UPDATE
As noted in previous annual reports, certain additional
responsibilities were undertaken by the Senior Independent
Non-Executive Director, Ed Haslam while the roles of CEO and
Chairman were combined. With Josef El-Raghy now acting solely as
Chairman, following the appointment of Andrew Pardey as CEO in
February 2015, certain of the responsibilities undertaken by Ed
Haslam have reverted to the Chairman. In light of this, the role
undertaken by Ed and the associated remuneration has been reviewed
and his fees reduced accordingly. Ed Haslam will, however, continue
to undertake certain additional functions, as Josef is an Executive
Chairman. Accordingly, Ed's title has been changed to Deputy
Chairman and Senior Independent Non-Executive Director.
Following the adoption of the new restricted share plan, the
Company has granted 5,145,000 conditional awards to employees of
the Group. The Remuneration Committee also proposed an amendment to
the scheme rules, following feedback from shareholders and the
proxy advisory organisation and the Company subsequently applied an
amendment to the published scheme rules to include a malus claw
back provision. In summary, the additional clause has been included
so that an award holder who ceases to be an eligible employee for
cause (see definition below) in the period after the award has
vested but before the settlement of the deferred shares (i.e.
during the two year holding period) shall immediately forfeit
his/her rights in the award from the date of cessation. Cause is
defined as "ceasing to be an Eligible Employee by reason of
dismissal for gross misconduct, fraud or materially adversely
affecting the Group's reputation".
A summary of the new restricted share plan is set out in note 14
of the Interim Condensed Consolidated Financial Statements.
LEGAL ACTIONS
As detailed in Note 7 of the accompanying interim condensed
consolidated financial statements, the Group's appeal against the
30 October 2012 ruling by the Egyptian Administrative Court remains
on-going. Centamin does not currently see the need to take the
matter to proceedings outside of Egypt as Centamin remains of the
belief that the Egyptian Supreme Administrative Court will rule in
Centamin's favour, based on the legal merit of the case.
The Group continues to benefit from the full support of the
Ministry of Petroleum and EMRA, both in the appeal and at the
operational level.
It should be noted that law 32/2014, was passed in April 2014,
restricting the capacity for third parties to challenge any
contractual agreements between the Egyptian government and an
investor. The Company's legal advisers have confirmed that Centamin
is likely to benefit from this law in the SAC Appeal. The validity
of law 32/2014 is currently being challenged in the Egyptian
Constitutional Court but Centamin believes the challenge is
unlikely to succeed and that the original claim in relation to the
Sukari Concession Agreement, which was brought by a third party and
is subject to an on-going court appeal, should, in due course, be
dismissed under the provisions of law 32/2014.
In light of the on-going dispute with the Egyptian Government
regarding the price at which diesel fuel oil (DFO) is supplied to
the mine at Sukari, it has been necessary since January 2012 to
advance funds to our fuel supplier, Chevron, based on the
international price for diesel. The Company has fully provided
against the prepayment of US$178.2 million as an exceptional item,
of which US$12.4 million was provided for during Q1 2015. Refer to
Note 4 of the accompanying interim condensed consolidated financial
statements for further details on the impact of this exceptional
provision on the Group's results for Q1 2015.
In November 2012 the Group received a further demand from
Chevron for the repayment of fuel subsidies received in the period
from late 2009 through to January 2012, for EGP403 million
(approximately US$52.0 million at current exchange rates). No
provision has been made in respect of the historic subsidies prior
to January 2012 as, based on legal advice that it has received to
date, the Company believes that the prospects of a court finding in
its favour in relation to this matter are strong.
As disclosed previously, the Company has commenced proceedings
in the Administrative Court in Egypt in relation to these matters.
The Company remains of the view that an instant move to
international fuel prices is not a reasonable outcome and will look
to recover any funds advanced thus far at the higher rate should
the court proceedings be successfully concluded. Please refer to
Note 7 to the accompanying interim condensed consolidated financial
statements and the most recently filed Annual Information Form
(AIF) for further information.
With the exception of the relationships with EMRA and the
Egyptian government referred to above, we do not believe there are
any third party relationships which are critical to the Group's
success or which would have a material impact upon the Group's
position if the relationship broke down.
COST RECOVERY AND PROFIT SHARE
Based on the Company's calculation there was no 'Net Profit
Share' due to EMRA as at 30 June 2015, nor is any likely to be due
as at 30 June 2016. It is expected that there will be profit share
due to EMRA for the Sukari Gold Mine ("SGM") financial year ending
30 June 2017, based on budgeted production, operating expense
forecasts and gold price. Centamin elected to make advance payments
against future profit share during 2013 and 2014 to the value of
US$23.75 million, in order to demonstrate goodwill towards the
Egyptian government. An additional US$5.0 million has been paid in
Q2 2015.
OUTLOOK
The main operational focus at Sukari remains on continuing
production growth whilst maintaining a strong control on costs,
with the objective of generating substantial free cash flow even
under the current challenging gold prices. As our interim dividend
highlights, we intend to continue returning 15-30% of this free
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 continue to target a lost time
injury frequency rate of zero.
Guidance for 2015 is between 430,000 and 440,000 ounces at below
our previous forecast of US$700/oz cash cost of production and
US$950/oz AISC. Production is expected to achieve the
450,000-500,000 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 allow the operation to be on a secure footing
to sustain, on an annual basis, the required tonnage at around the
reserve average grade of 1.05g/t.
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 nearing completion and
should be released shortly.
Outside of Sukari, we expect a total exploration expenditure of
approximately US$25 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 green field exploration
sites and therefore require lower exploration spend. 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.
Andrew Pardey
Chief Executive Officer
Set out below are the unaudited consolidated Financial
Statements for the Group, including notes thereto, for the quarter
and half year ended 30 June 2015.
RESPONSIBILITY STATEMENT
We confirm that to the best of our knowledge:
(a) the condensed set of interim consolidated financial
statements for the quarter and half year ended 30 June 2015 has
been prepared in accordance with International Accounting Standard
34 'Interim Financial Reporting' as adopted by the European Union
and as issued by the International Accounting Standards Board
("IASB");
(b) the condensed set of interim consolidated financial
statements, which has been prepared in accordance with the
applicable set of accounting standards, gives a true and fair view
of the assets, liabilities, financial position and profit or loss
of the issuer, or the undertakings included in the consolidation as
a whole as required by DTR 4.2.4";
(c) the interim management report includes a fair review of the
information required by DTR 4.2.7R (indication of important events
during the first six months and description of principal risks and
uncertainties for the remaining six months of the year); and
(d) the interim management report includes a fair review of the
information required by DTR 4.2.8R (disclosure of related parties'
transactions and changes therein).
By order of the Board,
Chief Executive Officer Chief Financial Officer
Andrew Pardey Pierre Louw
12 August 2015 12 August 2015
UNAUDITED INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE QUARTER AND HALF YEAR ENDED
30 JUNE 2015
CONTENTS
INDEPENDENT REVIEW REPORT TO CENTAMIN PLC 15
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 17-18
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL
POSITION 19
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN
EQUITY 20
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
21
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS 22
Independent review report to Centamin Plc
Report on the condensed consolidated interim financial
statements
Our conclusion
We have reviewed the condensed consolidated interim financial
statements, defined below, in the Results for the second quarter
and half year ended 30 June 2015 of Centamin Plc. Based on our
review, nothing has come to our attention that causes us to believe
that the condensed consolidated interim financial statements are
not prepared, in all material respects, in accordance with
International Accounting Standard 34 as adopted by the European
Union and the Disclosure and
Transparency Rules of the United Kingdom's Financial Conduct
Authority. This conclusion is to be read in the context of what we
say in the remainder of this report.
What we have reviewed
The condensed consolidated interim financial statements, which
are prepared by Centamin Plc, comprise:
1. the unaudited interim condensed consolidated statement of
comprehensive income for the six months ended 30 June 2015;
2. the unaudited interim condensed consolidated statement of
financial position as at 30 June 2015;
3. the unaudited interim condensed consolidated statement of
changes in equity for the six months ended 30 June 2015;
4. the unaudited interim condensed consolidated statement of
cash flows for the six months ended 30 June 2015; and
5. the explanatory notes to the unaudited interim condensed
consolidated interim financial statements.
As disclosed in note 1, the financial reporting framework that
has been applied in the preparation of the full annual financial
statements of the group is applicable law, the International
Financial Reporting Standards (IFRSs) as issued by the IASB and the
International Financial Reporting Standards (IFRSs) as adopted by
the European Union.
The condensed consolidated interim financial statements included
in the Results for the second quarter and half year ended 30 June
2015 have been prepared in accordance with International Accounting
Standard 34, 'Interim Financial Reporting', as adopted by the
European Union and the Disclosure and Transparency Rules of the
United Kingdom's Financial Conduct Authority.
What a review of condensed consolidated financial statements
involves
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, 'Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity' issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK and
Ireland) and, consequently, does not enable us to obtain assurance
that we would become aware of all significant matters that might be
identified in an audit. Accordingly, we do not express an audit
opinion.
We have read the other information contained in the Results for
the second quarter and half year ended 30 June 2015 and considered
whether it contains any apparent misstatements or material
inconsistencies with the information in the condensed consolidated
interim financial statements.
Responsibilities for the condensed consolidated interim
financial statements and the review
Our responsibilities and those of the directors
The Results for the second quarter and half year ended 30 June
2015, including the condensed consolidated interim financial
statements, are the responsibility of, and have been approved by,
the directors. The directors are responsible for preparing the
results for the second quarter and half year ended 30 June 2015 in
accordance with the Disclosure and Transparency Rules of the United
Kingdom's Financial Conduct Authority.
Our responsibility is to express to the company a conclusion on
the condensed consolidated interim financial statements in the
results for the second quarter and half year ended 30 June 2015
based on our review. This report, including the conclusion, has
been prepared for and only for the company for the purpose of
complying with the Disclosure and Transparency Rules of the
Financial Conduct Authority and for no other purpose. We do not, in
giving this conclusion, accept or assume responsibility for any
other purpose or to any other person to whom this report is shown
or into whose hands it may come save where expressly agreed by our
prior consent in writing.
Other matters
We have not audited nor reviewed the unaudited interim condensed
consolidated statement of comprehensive income for the three months
ended 30 June 2015 and the unaudited interim condensed consolidated
statement of cash flows for the three months ended 30 June
2015.
(a) The maintenance and integrity of the Centamin plc website is
the responsibility of the directors; the work carried out by the
auditors does not involve consideration of these matters and,
accordingly, the auditors accept no responsibility for any changes
that may have occurred to the condensed consolidated interim
financial statements since they were initially presented on the
website.
(b) Legislation in the Jersey governing the preparation and
dissemination of financial statements may differ from legislation
in other jurisdictions.
PricewaterhouseCoopers LLP
Chartered Accountants
12 August 2015
London
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME FOR THE THREE MONTHS ENDED 30 JUNE 2015
Note 30 June 2015 30 June 2014
-------------------------------------- --------------------------------------
Before Before
exceptional Exceptional exceptional Exceptional
items items Total items items Total
US$'000 (1) US$'000 US$'000 (1) US$'000
US$'000 US$'000
------------ ------------- --------- ------------ ------------- ---------
Revenue 3 124,192 - 124,192 102,624 - 102,624
Cost of sales 4 (87,139) (10,893) (98,032) (69,944) (14,332) (84,276)
------------ ------------- --------- ------------ ------------- ---------
Gross profit 37,053 (10,893) 26,160 32,680 (14,332) 18,348
Other operating
costs 4 (7,299) - (7,299) (6,729) - (6,729)
Impairment of
available-for-sale
financial assets 13 (56) - (56) (408) - (408)
Finance income 4 36 - 36 119 - 119
Profit before
tax 29,734 (10,893) 18,841 25,662 (14,332) 11,330
Tax (8) - (8) - - -
Profit for the
period 29,726 (10,893) 18,833 25,662 (14,332) 11,330
------------ ------------- --------- ------------ ------------- ---------
EMRA Profit share - - - - - -
Profit for the
period after
EMRA Profit share 29,726 (10,893) 18,833 25,662 (14,332) 11,330
------------ ------------- --------- ------------ ------------- ---------
Profit for the
period attributable
to:
- the owners
of the parent 29,726 (10,893) 18,833 25,662 (14,332) 11,330
- Non-controlling - - - - - -
interests
------------ ------------- --------- ------------ ------------- ---------
Other comprehensive
income
Items that may
be reclassified
subsequently
to profit or
loss:
Gains/(losses)
on available
for sale financial
assets (net of
tax) (235) - (235) - - -
Other comprehensive
income for the
period 13 (235) - (235) - - -
------------ ------------- --------- ------------ ------------- ---------
Total comprehensive
income for the
period net of
tax 29,491 (10,893) 18,598 25,662 (14,332) 11,330
------------ ------------- --------- ------------ ------------- ---------
Total comprehensive
income for the
period attributable
to:
- the owners '
of the parent 29,491 (10,893) 18,598 25,662 (14,332) 11,330
- - - - - -
* Non-controlling interests
------------ ------------- --------- ------------ ------------- ---------
Earnings per
share:
Basic (cents
per share) 10 2.600 (0.953) 1.647 2.250 (1.256) 0.994
Diluted (cents
per share) 10 2.565 (0.940) 1.625 2.224 (1.242) 0.982
(1() Refer to Note 4 for further details.
The above Unaudited Interim Condensed Consolidated Statement of
Comprehensive Income should be read in conjunction with the
accompanying notes.
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME FOR THE SIX MONTHS ENDED 30 JUNE 2015
Note 30 June 2015 30 June 2014
-------------------------------------- --------------------------------------
Before Before
exceptional Exceptional exceptional Exceptional
items items Total items items Total
US$'000 (1) US$'000 US$'000 (1) US$'000
US$'000 US$'000
------------ ------------- --------- ------------ ------------- ---------
Revenue 3 259,671 - 259,671 205,349 - 205,349
Cost of sales 4 (173,554) (24,840) (198,394) (131,847) (28,755) (160,602)
------------ ------------- --------- ------------ ------------- ---------
Gross profit 86,117 (24,840) 61,277 73,502 (28,755) 44,747
Other operating
costs 4 (13,970) - (13,970) (12,351) - (12,351)
Impairment of
available-for-sale
financial assets 13 - - - (730) - (730)
Finance income 4 98 - 98 256 - 256
Profit before
tax 72,245 (24,840) 47,405 60,677 (28,755) 31,922
Tax (8) - (8) - - -
Profit for the
period 72,237 (24,840) 47,397 60,677 (28,755) 31,922
------------ ------------- --------- ------------ ------------- ---------
EMRA Profit share - - - - - -
------------ ------------- --------- ------------ ------------- ---------
Profit for the
period attributable
to:
- the owners
of the parent 72,237 (24,840) 47,397 60,677 (28,755) 31,922
- 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) (99) - (99) - - -
Other comprehensive
income for the
period 13 (99) - (99) - - -
------------ ------------- --------- ------------ ------------- ---------
Total comprehensive
income for the
period net of
tax 72,138 (24,840) 47,298 60,677 (28,755) 31,922
------------ ------------- --------- ------------ ------------- ---------
Total comprehensive
income for the
period attributable
to:
- the owners '
of the parent 72,138 (24,840) 47,298 60,677 (28,755) 31,922
- - - - - -
* Non-controlling interests
------------ ------------- --------- ------------ ------------- ---------
Earnings per
share:
Basic (cents
per share) 10 6.321 (2.174) 4.147 5.413 (2.565) 2.848
Diluted (cents
per share) 10 6.242 (2.147) 4.095 5.352 (2.536) 2.816
(1() Refer to Note 4 for further details.
The above Unaudited Interim Condensed Consolidated Statement of
Comprehensive Income should be read in conjunction with the
accompanying notes.
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL
POSITION
AS AT 30 JUNE 2015
Note 30 June 31 December
2015 2014
(Unaudited) (Audited)
US$'000 US$'000
NON-CURRENT ASSETS
Property, plant and
equipment 11 901,487 928,964
Exploration and evaluation
asset 12 138,017 123,999
Prepayments 5 28,750 23,750
Interests in associates - -
Other receivables 748 645
------------ -----------
Total non-current assets 1,069,002 1,077,358
------------ -----------
CURRENT ASSETS
Inventories 130,658 140,628
Available-for-sale
financial assets 13 323 409
Trade and other receivables 25,533 24,973
Prepayments 5 705 1,710
Cash and cash equivalents 16a 174,978 125,659
------------ -----------
Total current assets 332,197 293,379
------------ -----------
Total assets 1,401,199 1,370,737
------------ -----------
NON-CURRENT LIABILITIES
Provisions 3,196 3,015
------------ -----------
Total non-current liabilities 3,196 3,015
------------ -----------
CURRENT LIABILITIES
Trade and other payables 37,363 34,042
Provisions 1,337 307
------------ -----------
Total current liabilities 38,700 34,349
------------ -----------
Total liabilities 41,896 37,364
------------ -----------
Net assets 1,359,303 1,333,373
------------ -----------
EQUITY
Issued capital 8 665,010 661,573
Share option reserve 2,020 4,098
Accumulated profits 692,273 667,702
------------ -----------
Total Equity 1,359,303 1,333,373
------------ -----------
TOTAL EQUITY ATTRIBUTABLE
TO:
* owners of the parent 1,359,303 1,333,373
- -
* non-controlling interest
Total Equity 1,359,303 1,333,373
--------- ---------
The above Unaudited Interim Condensed Consolidated Statement of
Financial Position should be read in conjunction with the
accompanying notes.
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN
EQUITY FOR THE SIX MONTHS ENDED 30 JUNE 2015
Share
Issued options Accumulated
Capital reserve profits Total Equity
US$'000 US$'000 US$'000 US$'000
-------- -------- ----------- --------------
Balance as at 1 January
2015 661,573 4,098 667,702 1,333,373
Profit for the period - - 47,397 47,397
Other comprehensive
income for the period - - (99) (99)
-------- -------- ----------- --------------
Total comprehensive
income for the period - - 47,298 47,298
Dividend paid - - (22,727) (22,727)
Transfer of share based
payments 3,437 (3,437) - -
Recognition of share
based payments - 1,359 - 1,359
Balance as at 30 June
2015 665,010 2,020 692,273 1,359,303
-------- -------- ----------- --------------
Share
Issued options Accumulated Total Equity
Capital reserve profits US$'000
US$'000 US$'000 US$'000
-------- -------- ----------- --------------
Balance as at 1 January
2014 612,463 5,761 594,624 1,212,848
Profit for the period - - 31,922 31,922
Other comprehensive - - - -
income for the period
-------- -------- ----------- --------------
Total comprehensive
income for the period - - 31,922 31,922
Issue of shares 48,218 - - 48,218
Own shares acquired
in the period (1,743) - - (1,743)
Transfer of share based
payments 1,521 (1,521) - -
Recognition of share
based payments - 973 - 973
Balance as at 30 June
2014 660,459 5,213 626,546 1,292,218
-------- -------- ----------- --------------
The above Unaudited Interim Condensed Consolidated Statement of
Changes in Equity should be read in conjunction with the
accompanying notes.
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE THREE AND SIX MONTHS ENDED 30 JUNE 2015
Six Months
Three Months Ended Ended
30 June 30 June
Note 2015 2014 2015 2014
US$'000 US$'000 US$'000 US$'000
Cash flows from operating
activities
Cash generated in operating
activities 16(b) 49,765 20,258 105,290 47,581
Finance income (36) (119) (98) (256)
--------- ---------
Net cash generated by
operating activities 49,729 20,139 105,192 47,325
--------- --------- --------- ---------
Cash flows from investing
activities
Acquisition of property,
plant and equipment (9,343) (14,275) (18,067) (42,763)
Exploration and evaluation
expenditure (6,130) (10,579) (14,721) (13,078)
Proceeds from sale /
(Acquisition) of financial
assets - - - 91
Cash acquired through
Ampella Mining Limited
asset acquisition - - - 9,254
Finance income 36 119 98 256
--------- ---------
Net cash used in investing
activities (15,437) (24,735) (32,690) (46,240)
--------- --------- --------- ---------
Cash flows from financing
activities
Dividend paid (22,727) - (22,727) -
Own shares acquired
during the period - (1,743) - (1,743)
Net cash provided by
financing activities (22,727) (1,743) (22,727) (1,743)
--------- --------- --------- ---------
Net decrease in cash
and cash equivalents 11,565 (6,339) 49,775 (658)
Cash and cash equivalents
at the beginning of
the period 163,351 111,957 125,659 105,979
Effect of foreign exchange
rate changes 62 780 456 1,077
--------- --------- --------- ---------
Cash and cash equivalents
at the end of the period 16 174,978 106,398 174,978 106,398
--------- --------- --------- ---------
The above Unaudited Condensed Consolidated Statement of Cash
Flows should be read in conjunction with the accompanying
notes.
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS FOR THE THREE AND SIX MONTHS ENDED 30 JUNE 2015
NOTE 1: ACCOUNTING POLICIES
Basis of preparation
These unaudited interim condensed consolidated financial
statements have been prepared in accordance with International
Accounting Standard 34 "Interim Financial Reporting" (IAS 34) as
adopted by the European Union and as issued by the International
Accounting Standards Board ("IASB") and the requirements of the
Disclosure and Transparency Rules (DTR) of the Financial Conduct
Authority (FCA) in the United Kingdom as applicable to interim
financial reporting.
The unaudited interim condensed consolidated financial
statements represent a 'condensed set of financial statements' as
referred to in the DTR issued by the FCA. Accordingly, they do not
include all of the information required for a full annual financial
report and are to be read in conjunction with the Group's financial
statements for the year ended 31 December 2014, which were 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 and IFRS as
issued by the IASB. The financial statements for the year ended 31
December 2014 have been filed with the Jersey Financial Services
Commission. The financial information contained in this report does
not constitute statutory accounts under the Companies (Jersey) Law
1991, as amended. The financial information for the year ended 31
December 2014 is based on the statutory accounts for the year ended
31 December 2014. Readers are referred to the auditor's report to
the Group financial statements as at 31 December 2014 (available at
www.centamin.com).
The accounting policies applied in these interim financial
statements are consistent with those used in the annual
consolidated financial statements for the year ended 31 December
2014 except for the adoption of a number of amendments issued by
the IASB and endorsed by the EU which apply for the first time in
2015. The new pronouncements do not have a significant impact on
the accounting policies, methods of computation or presentation
applied by the Group and therefore the prior period consolidated
financial statements have not been restated. The Group has not
early adopted any amendments, standards or interpretations that
have been issued but are not yet effective.
The preparation of these interim condensed consolidated
financial statements requires the use of certain significant
accounting estimates and judgment by management in applying the
Group's accounting policies. There have been no changes to the
areas involving significant judgment and estimates that have been
set out in Note 4 of the Group's annual audited consolidated
financial statements for the year ended 31 December 2014.
Going concern
These financial statements for the period ended 30 June 2015
have been prepared on a going concern basis, which contemplate the
realisation of assets and liquidation of liabilities during the
normal course of operations.
As discussed in Note 7, during the prior year the operation of
the mine was affected by two legal actions. The first of these
followed from a decision taken by Egyptian General Petroleum
Corporation ("EGPC") to charge international, not local
(subsidised) prices for the supply of DFO, and the second arose as
a result of a judgment of the Administrative Court of first
instance in relation to, amongst other matters, the Company's
160km(2) exploitation lease. In relation 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 it may take some time. 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 will be able to continue during this process.
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS FOR THE THREE AND SIX MONTHS ENDED 30 JUNE 2015
(CONTINUED)
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.
The directors have a reasonable expectation that the Group will
have adequate resources to continue in operational existence for
the foreseeable future. Thus they continue to adopt the going
concern basis of accounting in preparing these interim condensed
consolidated financial statements.
NOTE 2: SEGMENT REPORTING
The Group is engaged in the business of exploration for and
mining of 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:
30 June 31 December
2015
(Unaudited) 2014
US$'000 (Audited)
US$'000
Egypt 994,960 1,017,003
Ethiopia 11,151 10,327
Burkina Faso 60,152 48,893
Cote d'Ivoire 1,940 977
Australia 1 2
United Kingdom 8 156
---------------------- ---------
1 ,069,002 1,077,358
---------------------- ---------
NOTE 3: REVENUE
An analysis of the Group's revenue for the period, from
continuing operations, is as follows:
Three Months Six Months
Ended Ended
30 June (Unaudited) 30 June (Unaudited)
2015 2014 2015 2014
US$'000 US$'000 US$'000 US$'000
Gold sales 123,944 102,428 259,175 204,924
Silver sales 248 196 496 425
---------- ---------- ---------- ----------
124,192 102,624 259,671 205,349
---------- ---------- ---------- ----------
NOTE 4: PROFIT BEFORE TAX
Profit for the period has been arrived at after
crediting/(charging) the following gains/(losses) and expenses:
Three months ended Three months ended
30 June 2015 30 June 2014
Before Before
exceptional Exceptional Total exceptional Exceptional Total
items items items items
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Finance income
Interest received 36 - 36 119 - 119
------------ ------------- ------- ------------ ------------- -------
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS FOR THE THREE AND SIX MONTHS ENDED 30 JUNE 2015
(CONTINUED)
NOTE 4: PROFIT BEFORE TAX (CONTINUED)
Three months ended Three months ended
30 June 2015 30 June 2014
Before Before
exceptional Exceptional Total exceptional Exceptional Total
items items items items
Expenses US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Cost of sales
Mine production
costs (67,746) (8,845) (76,591) (49,471) (14,651) (64,122)
Movement in inventory (905) (2,048) (2,953) 905 319 1,224
Depreciation and
Amortisation (18,488) - (18,488) (21,378) - (21,378)
------------ ------------- -------- ------------ ------------- --------
(87,139) (10,893) (98,032) (69,944) (14,332) (84,276)
------------ ------------- -------- ------------ ------------- --------
Three months ended Three months ended
30 June 2015 30 June 2014
Before Before
exceptional Exceptional Total exceptional Exceptional Total
items items items items
Other operating US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
costs
Fixed royalty
- attributable
to the Egyptian
government (3,717) - (3,717) (3,071) - (3,071)
Corporate costs (4,211) - (4,211) (4,010) - (4,010)
Other expenses (29) - (29) (27) - (27)
Foreign exchange
gain, net 763 - 763 541 - 541
Provision for
restoration and
rehabilitation
- unwinding of
discount (90) - (90) (134) - (134)
Depreciation (15) - (15) (28) - (28)
(7,299) - (7,299) (6,729) - (6,729)
------------ ------------- --------- ------------ ------------- ---------
Impairment of
available for
sale financial
assets (56) - (56) (408) - (408)
------------ ------------- --------- ------------ ------------- ---------
Six months ended Six months ended
30 June 2015 30 June 2014
Before Before
exceptional Exceptional Total exceptional Exceptional Total
items items items items
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Finance income
Interest received 98 - 98 256 - 256
------------ ------------- ------- ------------ ------------- -------
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS FOR THE THREE AND SIX MONTHS ENDED 30 JUNE 2014
(CONTINUED)
NOTE 4: PROFIT BEFORE TAX (CONTINUED)
Six months ended Six months ended
30 June 2015 30 June 2014
Before Before
exceptional Exceptional Total exceptional Exceptional Total
items items items items
Expenses US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Cost of sales
Mine production
costs (132,331) (22,135) (154,466) (92,233) (27,533) (119,766)
Movement in inventory 1,734 (2,705) (971) (4,455) (1,222) (5,677)
Depreciation and
Amortisation (42,957) - (42,957) (35,159) - (35,159)
------------ ------------- --------- ------------ ------------- ---------
(173,554) (24,840) (198,394) (131,847) (28,755) (160,602)
------------ ------------- --------- ------------ ------------- ---------
Six months ended Six months ended
30 June 2015 30 June 2014
Before Before
exceptional Exceptional Total exceptional Exceptional Total
items items items items
Other operating US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
costs
Fixed royalty
- Attributable
to the Egyptian
government (7,771) - (7,771) (6,145) - (6,145)
Corporate costs (6,909) - (6,909) (7,670) - (7,670)
Other expenses (60) - (60) (60) - (60)
Foreign exchange
gain, net 981 - 981 1,848 - 1,848
Provision for
restoration and
rehabilitation
- unwinding of
discount (181) - (181) (269) - (269)
Depreciation (30) - (30) (55) - (55)
(13,970) - (13,970) (12,351) - (12,351)
------------ ------------- --------- ------------ ------------- ---------
Impairment of
available for
sale financial
assets - - - (730) - (730)
------------ ------------- --------- ------------ ------------- ---------
Exceptional items
The directors consider that items of income or expense which are
material by virtue of their unusual, irregular or non-recurring
nature should be disclosed separately if the consolidated financial
statements are to fairly present the financial position and
underlying business performance. In order to allow a better
understanding of the financial information presented within the
consolidated financial statements, and specifically the Group's
underlying business performance, the effect of exceptional items
are shown below.
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS FOR THE THREE AND SIX MONTHS ENDED 30 JUNE 2015
(CONTINUED)
NOTE 4: PROFIT BEFORE TAX (CONTINUED)
Exceptional items (continued)
Three Months Six Months
Ended Ended
30 June (Unaudited) 30 June (Unaudited)
2015 2014 2015 2014
US$'000 US$'000 US$'000 US$'000
Included in Cost of sales
Mine production costs (8,845) (14,651) (22,135) (27,533)
Movement in inventory (2,048) 319 (2,705) (1,222)
---------- ---------- ---------- ----------
(10,893) (14,332) (24,840) (28,755)
---------- ---------- ---------- ----------
In January 2012 the Company received a letter from Chevron to
the effect that Chevron would not be able to continue supplying 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 further 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
companies operating in the gold mining sector in Egypt were not
entitled to such subsidies. In addition, the Company received a
demand from Chevron in 2012 for the repayment of fuel subsidies
received in the period from late 2009 through to January 2012, for
EGP403 million (approximately US$52.0 million at current exchange
rates)..
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
re-claiming funds from the government and for this reason has,
fully provided against the prepayment of US$10.9 million and
US$24.8 million made during Q2 2015 and the HY 2015 respectively,
as an exceptional item, as follows:
(a) a US$10.9 million and a US$24.8 million increase in cost of sales,
(b) a US$2.0 million and a US$2.7 million increase in stores inventories, and
(c) a US$2.0 million decrease and a US$2.7 million decrease in
mining stockpiles and ore in circuit.
This has resulted in a net decrease of US$12.4 million and
US$24.8 million in the profit and loss in Q2 2015 and HY 2015
respectively.
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS FOR THE THREE AND SIX MONTHS ENDED 30 JUNE 2015
(CONTINUED)
NOTE 5: PREPAYMENTS
30 June 31 December
2015
(Unaudited) 2014
US$'000 (Audited)
US$'000
Non-current Prepayments
Advance payment to EMRA (1) 28,750 23,750
------ ------
(1) With a view to demonstrating goodwill toward the Egyptian
government, PGM made advance payments to EMRA which will be netted
off against future Profit Share that becomes payable to EMRA.
Six Months Year
Ended Ended
31 December
30 June 2014
2015
(Unaudited) (Audited)
US$'000 US$'000
Current Prepayments
Prepayments 705 1,710
Fuel prepayments - -
--- -----
Prepayments 705 1,710
--- -----
Movement in fuel prepayments (1)
Balance at the beginning of the period - -
Fuel prepayment recognised 24,840 68,737
Less: Provision charged to (2) :
Mine production costs (see Note
4) (22,135) (61,564)
Property, plant and equipment - (6,953)
Inventories (2,705) (220)
Balance at the end of the period - -
-------- --------
(1) The cumulative fuel prepayment recognised and provision
charged as at 30 June 2015 is as follows:
Fuel prepayment recognised (US$'000) 186,606
Provision charged to:
Mine production costs (US$'000) 173,484
Property, plant and equipment (US$'000) 11,852
Inventories (US$'000) 1,270
(2) Refer to Note 4, Exceptional Items, for further details.
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS FOR THE THREE AND SIX MONTHS ENDED 30 JUNE 2015
(CONTINUED)
NOTE 6: COMMITMENTS
The following is a summary of the Company's outstanding
commitments as at 30 June 2015:
Payments due Total < 1 year 1 to 5 >5 years
US$'000 US$'000 years US$'000
US$'000
Operating Lease
Commitments(1) 209 64 145 -
--------- --------- --------- ---------
Total commitments 209 64 145 -
--------- --------- --------- ---------
(1) Operating lease commitments are limited to office premises
in Jersey. As a result of the completion of Stage 4 in the prior
year, the Group had no commitments for capital expenditure as at 30
June 2015.
NOTE 7: 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 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 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 companies
operating in the gold mining sector in Egypt were not entitled to
such subsidies. In November 2012, the Group received a further
demand from Chevron for the repayment of fuel subsidies received
during the period from late 2009 through to January 2012, for
EGP403 million (approximately US$52.0 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 action 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$186.6 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 Q2 2015.
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.
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS FOR THE THREE AND SIX MONTHS ENDED 30 JUNE 2015
(CONTINUED)
NOTE 7: CONTINGENT LIABILITIES AND CONTINGENT ASSETS
(CONTINUED)
Supreme Administrative Court Appeal
On 30 October 2012, the Administrative Court in Egypt handed
down a judgment in relation to a claim brought by, amongst others,
an independent member of a previous parliament, in which he argued
for the nullification of the agreement that confers on the Group
rights to operate in Egypt. This agreement, the Concession
Agreement, was entered into between the Arab Republic of Egypt, the
Egyptian Mineral Resources Authority ("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 at first
instance.
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 was
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 the Group's investment at Sukari and the
government's 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 period-end (31 December 2014:
nil).
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS FOR THE THREE AND SIX MONTHS ENDED 30 JUNE 2015
(CONTINUED)
NOTE 8: ISSUED CAPITAL
Fully Paid Ordinary Six Months Year Ended
Shares Ended
30 June 2015 31 December
2014
(Unaudited) (Audited)
Number US$'000 Number US$'000
Balance at beginning of the period 1,152,107,984 661,573 1,101,397,381 612,463
Issue of shares (1) - - 50,710,603 48,218
Own shares acquired during the
period - - - (1,743)
Transfer from share options reserve - 3,437 - 2,635
Balance at end of the period 1,152,107,984 665,010 1,152,107,984 661,573
------------- ------- -------------- --------
(1) Relates to the ordinary shares that were admitted to trading
as consideration for the acquisition of Ampella Mining Limited.
Fully paid ordinary shares carry one vote per share and carry
the right to dividends.
The authorised share capital is an unlimited number of no par
value shares.
As at the date of this report the Company held 5,993,041
ordinary shares in treasury (2)
(2) Refers to shares held by the trustee pursuant to the
Deferred Bonus Share Plan
NOTE 9: RELATED PARTY TRANSACTIONS
The related party transactions for the three months ended 30
June 2015 are summarised below:
- Salaries, superannuation contributions, bonuses, consulting
and Directors' fees paid to Directors during the three months ended
30 June 2015 amounted to US$416,599 (30 June 2014: US$679,839).
- Mr J El-Raghy is a Director and shareholder of El-Raghy
Kriewaldt Pty Ltd ("ELK"), which provides office premises to the
Company in Australia. All dealings with ELK are in the ordinary
course of business and on normal terms and conditions. Rent paid to
ELK during the three months ended 30 June 2014 amounted to
US$11,539 (30 June 2014: US$12,689).
The related party transactions for the six months ended 30 June
2015 are summarised below:
- Salaries, superannuation contributions, bonuses, consulting
and Directors' fees paid to Directors during the six months ended
30 June 2015 amounted to US$838,685 (30 June 2014:
US$1,510,639).
- Mr J El-Raghy is a Director and shareholder of El-Raghy
Kriewaldt Pty Ltd ("ELK"), which provides office premises to the
Company in Australia. All dealings with ELK are in the ordinary
course of business and on normal terms and conditions. Rent paid to
ELK during the six months ended 30 June 2015 amounted to US$23,193
(30 June 2014: US$26,172).
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS FOR THE THREE AND SIX MONTHS ENDED 30 JUNE 2015
(CONTINUED)
NOTE 10: EARNINGS PER SHARE
Basic earnings per share are calculated using the weighted
average number of shares outstanding. Diluted earnings per share
are calculated using the treasury stock method. In order to
determine diluted earnings per share, the treasury stock method
assumes that any proceeds from the exercise of dilutive stock
options and warrants would be used to repurchase common shares at
the average market price during the period, with the incremental
number of shares being included in the denominator of the diluted
earnings per share calculation. The diluted earnings per share
calculation excludes any potential conversion of options and
warrants that would increase earnings per share.
Three Months Six Months Ended
Ended 30 June
30 June (Unaudited)
(Unaudited)
2015 2014 2015 2014
Cents Cents Cents Cents
Per Share Per Share Per Share Per Share
Basic earnings per
share 1.65 0.99 4.15 2.85
------------- ------------- ------------- -------------
Diluted earnings per
share 1.63 0.98 4.10 2.82
------------- ------------- ------------- -------------
Basic earnings per share
The earnings and weighted average number of ordinary shares used
in the calculation of basic earnings per share are as follows:
Three Months Six Months Ended
Ended 30 June
30 June (Unaudited)
(Unaudited)
2015 2014 2015 2014
US$'000 US$'000 US$'000 US$'000
Earnings used in the
calculation of basic
EPS 18,833 11,330 47,397 31,922
---------- ---------- ---------- ----------
Three Months Six Months Ended
Ended 30 June
30 June (Unaudited)
(Unaudited)
2015 2014 2015 2014
No. No. No. No.
Weighted average number
of ordinary shares
for the purpose of
basic EPS 1,143,422,483 1,140,333,682 1,142,857,680 1,120,934,917
------------- ------------- ------------- -------------
Diluted earnings per share
The earnings and weighted Three Months Six Months Ended
average number of ordinary Ended 30 June
shares used in the 30 June (Unaudited)
calculation of diluted (Unaudited)
earnings per share
are as follows:
2015 2014 2015 2014
US$'000 US$'000 US$'000 US$'000
Earnings used in the
calculation of diluted
EPS 18,833 11,330 47,397 31,922
---------- ---------- ---------- ----------
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS FOR THE THREE AND SIX MONTHS ENDED 30 JUNE 2015
(CONTINUED)
NOTE 10: EARNINGS PER SHARE (CONTINUED)
Three Months Six Months Ended
Ended 30 June
30 June (Unaudited)
(Unaudited)
2015 2014 2015 2014
No. No. No. No.
Weighted average number
of ordinary shares
for the purpose of
diluted EPS 1,158,655,821 1,153,702,973 1,157,360,078 1,133,688,153
------------- ------------- ------------- -------------
Weighted average number
of ordinary shares
for the purpose of
basic EPS 1,143,422,483 1,140,333,682 1,142,857,680 1,120,934,917
Shares deemed to be
issued for no consideration
in respect of employee
options 15,233,338 13,369,291 14,502,398 12,753,236
------------- ------------- ------------- -------------
Weighted average number
of ordinary shares
used in the calculation
of diluted EPS 1,158,655,821 1,153,702,973 1,157,360,078 1,133,688,153
------------- ------------- ------------- -------------
NOTE 11: PROPERTY, PLANT AND EQUIPMENT
Six Months
Ended 30 Land Plant Mine
June 2015 Office and and Mining Development Stripping Capital
(Unaudited) equipment buildings equipment equipment properties Asset WIP Total
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Cost
Balance at
31 December
2014 5,383 1,142 565,811 220,654 228,192 - 121,252 1,142,434
Additions 6 - 2 - - - 15,502 15,510
Transfers 3 - 19,429 16,532 4,665 - (40,629) -
----------- ----------- ----------- ----------- ------------- ---------- --------- ---------
Balance at
30 June 2015 5,392 1,142 585,242 237,186 232,857 - 96,125 1,157,944
----------- ----------- ----------- ----------- ------------- ---------- --------- ---------
Accumulated
depreciation
Balance at
31 December
2014 (4,254) (177) (67,744) (71,798) (69,497) - - (213,470)
Depreciation
and
amortisation (303) (4) (15,199) (14,494) (12,987) - - (42,987)
----------- ----------- ----------- ----------- ------------- ---------- --------- ---------
Balance at
30 June 2015 (4,557) (181) (82,943) (86,292) (82,484) - - (256,457)
----------- ----------- ----------- ----------- ------------- ---------- --------- ---------
Year Ended
31 December
2014 (Audited)
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)
-------- ------ ---------- ---------- ---------- ---- ---------- ----------
Net book
value
As at 31
December
2014 1,129 965 498,067 148,856 158,695 - 121,252 928,964
-------- ------ ---------- ---------- ---------- ---- ---------- ----------
As at 30
June 2015 835 961 502,299 150,894 150,373 - 96,125 901,487
-------- ------ ---------- ---------- ---------- ---- ---------- ----------
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS FOR THE THREE AND SIX MONTHS ENDED 30 JUNE 2015
(CONTINUED)
NOTE 12: EXPLORATION AND EVALUATION ASSETS
Six Months Year
Ended Ended
31 December
30 June 2014
2015
(Unaudited) (Audited)
US$'000 US$'000
Balance at the beginning of the
period 123,999 59,849
Expenditure for the period 14,018 28,841
Acquisition of Ampella Mining Limited - 37,637
Impairment of exploration and evaluation
asset - (2,328)
------------ ------------
Balance at the end of the period 138,017 123,999
------------ ------------
The exploration and evaluation asset relates to the drilling,
geological exploration and sampling of potential ore reserves.
NOTE 13: AVAILABLE-FOR-SALE FINANCIAL ASSETS
The unrealised losses on available-for-sale investments
recognised in other comprehensive income were as follows:
Three Months Six Months
Ended Ended
30 June (Unaudited) 30 June (Unaudited)
2015 2014 2015 2014
US$'000 US$'000 US$'000 US$'000
Loss on fair value of
investment - other comprehensive
income (235) - (99) -
---------- ---------- ---------- ----------
The available for sale financial asset at period-end relates to
a 6.66% (2014 : 11.34%) equity interest in Nyota Minerals Limited
("NYO"), a listed public company, as well as a 0.96% (2014 : 1.6%)
equity interest in KEFI Minerals plc ("KEFI").
As a result of the prolonged decline in the fair value in the
prior year of the investment in Nyota, the prior period devaluation
had been recognised as an impairment loss in the Statement of
Comprehensive Income as follows.
Three Months Six Months
Ended Ended
30 June (Unaudited) 30 June (Unaudited)
2015 2014 2015 2014
US$'000 US$'000 US$'000 US$'000
Impairment loss (56) (408) - (730)
---------- ---------- ---------- ----------
NOTE 14: SHARE BASED PAYMENTS
Restricted Share Plan
The Company's new restricted share plan, as approved by
shareholders at the recent AGM, allows the Company the right to
grant Awards (as defined below) to employees of the Group. Awards
may take the form of either conditional share awards, where shares
are transferred conditionally upon the satisfaction of performance
conditions; or share options, which may take the form of nil cost
options or have a nominal exercise price, the exercise of which is
again subject to satisfaction of applicable performance
conditions.
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS FOR THE THREE AND SIX MONTHS ENDED 30 JUNE 2015
(CONTINUED)
NOTE 14: SHARE BASED PAYMENTS (CONTINUED)
To date the Company has granted 5,145,000 conditional awards to
employees of the Group.
Conditional share awards and options together constitute
"Awards" under the Plan and those in receipt of Awards are "Award
Holders".
A detailed summary of the scheme rules is set out in the 2015
AGM proxy materials which are available at www.centamin.com. In
brief, Awards will vest following the passing of three years from
the date of the Award and vesting will be subject to satisfaction
of Performance Conditions. For the purpose of the Performance
Conditions, the Award will be divided into up to three tranches to
be assessed against separate Performance Conditions measured over a
three year period. Although the precise Performance Conditions may
vary between Awards, the Performance Conditions adopted at the date
of the Plan which apply to the first grant are as follows:
- 20% of the Award shall be assessed by reference to a target total shareholder return (TSR).
- 50% of the Award shall be assessed by reference to absolute
growth in earnings per share (EPS).
- 30% of the Award shall be assessed by reference to compound growth in gold production.
The above measures are assessed by reference to current market
practice and the Remuneration Committee will have regard to market
practice when establishing the precise Performance Conditions for
future Awards.
Where the performance conditions have been met, in the case of
Conditional Awards, 50% of the total shares under the Award will be
issued or transferred to the Award Holders on or as soon as
possible following the specified Vesting Date, with the remaining
50% being issued or transferred on the second anniversary of the
Vesting Date.
Restricted Share Plan awards granted during the period:
RSP 2015
------------------------------ ------------
Grant date 4 June 2015
------------------------------ ------------
Number of instruments 5,145,000
------------------------------ ------------
TSR : Fair value at grant
date GBP (1) 0.5150
------------------------------ ------------
TSR : Fair value at grant
date US$ (1) 0.7894
------------------------------ ------------
EPS : Fair value at grant
date GBP (1) 0.6520
------------------------------ ------------
EPS : Fair value at grant
date US$ (1) 0.9994
------------------------------ ------------
Gold Production : Fair value
at grant date GBP (1) 0.6520
------------------------------ ------------
Gold Production : Fair value
at grant date US$ (1) 0.9994
------------------------------ ------------
Vesting period (years) 3
------------------------------ ------------
Expected volatility 0 - 72.33%
------------------------------ ------------
Expected dividend yield (%) 1.97%
------------------------------ ------------
(1) The vesting of 20% the awards granted under this plan are
dependent on a TSR performance condition. As relative TSR is
defined as a market condition under IFRS 2 "Share-based Payment",
this requires that the valuation model used takes into account the
anticipated performance outcome. We have therefore applied a Monte
Carlo simulation model. The simulation model takes into account the
probability of performance based on the expected volatility of
Centamin and the peer group companies and the expected correlation
of returns between the companies in the comparator group.
The remaining 80% of the awards are subject to EPS and gold
production performance conditions. As these are classified as
non-market conditions under IFRS 2 they do not need to be taken
into account when determining the fair value. These grants have
been valued using a Black-Scholes model.
The fair value calculated was then converted at the closing
GBP:US$ foreign exchange rate on that day.
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS FOR THE THREE AND SIX MONTHS ENDED 30 JUNE 2015
(CONTINUED)
NOTE 15: FINANCIAL INSTRUMENTS' FAIR VALUE DISCLOSURES
The Group has no financial instruments with fair values that are
determined by reference to significant unobservable inputs, i.e.
those that would be classified as level 3 in the fair value
hierarchy, nor have there been any transfers of assets or
liabilities between levels of the fair value hierarchy.
The Group's interest in Nyota Minerals Limited and KEFI Minerals
plc is classified as an available for sale financial asset (see
note 13). The Group carries its interest in Nyota Minerals Limited
and KEFI Minerals plc at fair value, and measures its interest
using Level 1 unadjusted quoted prices.
The director's consider that the carrying amounts of financial
assets and financial liabilities carried at amortised cost
approximate their amortised cost.
NOTE 16: NOTES TO THE STATEMENTS OF CASH FLOWS
(a) Reconciliation of cash and cash equivalents
For the purpose of the statements of cash flows, cash and cash
equivalents includes cash on hand and at bank and deposits.
Three Months Six Months
Ended Ended
30 June 30 June
(Unaudited) (Unaudited)
2015 2014 2015 2014
US$'000 US$'000 US$'000 US$'000
Cash and cash equivalents 174,978 106,398 174,978 106,398
-------- -------- -------- --------
(b) Reconciliation of profit for the period to cash flows from
operating activities
Three Months Six Months
Ended Ended
30 June 30 June
(Unaudited) (Unaudited)
2015 2014 2015 2014
US$'000 US$'000 US$'000 US$'000
Profit for the period 18,833 11,330 47,397 31,922
Add/(less) non-cash items:
Depreciation / amortisation
of property, plant and
equipment 18,503 21,406 42,987 35,215
Inventory write off 2 - 3 -
Increase / (Decrease)
in provisions 178 (533) 1,212 579
Foreign exchange rate
(gain) / loss, net (1,169) (342) (1,451) (743)
Impairment of available-for-sale
financial assets 56 408 - 730
Share based payment expense 643 375 1,358 973
Changes in working capital
during the period :
(Increase) / Decrease
in trade and other receivables (673) 848 (560) 4,906
Decrease / (Increase)
in inventories 9,609 (1,746) 9,970 4,920
(Increase) / Decrease
in prepayments (4,329) 188 (3,995) 597
Decrease / (Increase)
in trade and other payables 8,112 (11,676) 8,369 (31,518)
Cash flows generated
from operating activities 49,765 20,258 106,290 47,581
-------- -------- -------- --------
(c) Non-cash financing and investing activities
There have been no non-cash financing and investing activities
during the current or comparative period quarter other than the
Ampella asset acquisition as disclosed in Note 12.
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS FOR THE THREE AND SIX MONTHS ENDED 30 JUNE 2015
(CONTINUED)
NOTE 17: SUBSEQUENT EVENTS
The Directors declared an interim dividend of 0.97 cent per
share (US$0.0097) on Centamin plc ordinary shares (totalling
approximately US$11 million). The interim dividend for the half
year period ending 30 June 2015 will be paid on 9 October 2015 to
shareholders on the register on the Record Date of 4 September
2015.
Other than the above, there has not arisen in the interval
between the end of the financial period and the date of this report
any item, transaction or event of a material and unusual nature
likely in the opinion of the Directors of the Company to affect
significantly the operations of the company, the results of those
operations, or the state of affairs of the Company in subsequent
financial periods.
The accompanying Form 52 109FS Certification of interim filings
are published, inter alia, for the purposes, of discharging the
Company's obligations arising in connection with the listing of its
shares on the Toronto Stock Exchange.
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 standardized 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:
Quarter Quarter Quarter Quarter
ended ended ended ended
30 June 30 June 30 June 30 June
2015 2015 2014 2014
Before Including Before Including
Exceptional Exceptional Exceptional Exceptional
items items(1) items items(1)
------------------- ------------- ------------- ------------- -------------
US$'000 US$'000 US$'000 US$'000
------------------- ------------- ------------- ------------- -------------
Profit before
tax 29,734 18,841 25,662 11,330
------------------- ------------- ------------- ------------- -------------
Finance income (36) (36) (119) (119)
------------------- ------------- ------------- ------------- -------------
Depreciation
and amortisation 18,503 18,503 21,406 21,406
------------------- ------------- ------------- ------------- -------------
EBITDA 48,201 37,308 46,949 32,617
------------------- ------------- ------------- ------------- -------------
Half year Half year Half year Half year
ended ended ended ended
30 June 30 June 30 June 30 June
2015 2015 2014 2014
Before Including Before Including
Exceptional Exceptional Exceptional Exceptional
items items(1) items items(1)
------------------- ------------- ------------- ------------- -------------
US$'000 US$'000 US$'000 US$'000
------------------- ------------- ------------- ------------- -------------
Profit before
tax 72,245 47,405 60,677 31,922
------------------- ------------- ------------- ------------- -------------
Finance income (98) (98) (256) (256)
------------------- ------------- ------------- ------------- -------------
Depreciation
and amortisation 42,987 42,987 35,215 35,215
------------------- ------------- ------------- ------------- -------------
EBITDA 115,134 90,294 95,636 66,881
------------------- ------------- ------------- ------------- -------------
(1) Profit before tax, Depreciation and amortisation and EBITDA
includes an exceptional provision to reflect the removal of fuel
subsidies (refer to Note 4 of the Financial Statements for further
details).
2) Cash cost and all-in sustaining costs (AISC) per ounce
calculation: Cash cost and AISC per ounce are non-GAAP financial
measures. Cash cost of production per ounce is a measure of the
average cost of producing an ounce of gold, calculated by dividing
the operating costs in a period by the total gold production over
the same period. Operating costs represent total operating costs
less 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 cost is intended to
provide additional information, does not have any standardised
meaning prescribed by GAAP and should not be considered in
isolation or as a substitute for measures of performance prepared
in accordance with GAAP. This measure is not necessarily indicative
of operating profit or cash flow from operations as determined
under GAAP. Other companies may calculate these measures
differently.
During June 2013 the World Gold Council (WGC), an industry body,
published a Guidance Note on the AISC metric, which gold mining
companies can use to supplement their overall non-GAAP disclosure.
AISC is an extension of the existing 'cash cost' metric and
incorporates all costs related to sustaining production and in
particular recognising the sustaining capital expenditure
associated with developing and maintaining gold mines. In addition,
this metric includes the costs associated with developing and
maintaining gold mines. In addition, this metric includes the costs
associated with corporate office structures that support these
operations, the community and rehabilitation costs attendant with
responsible mining and any exploration and evaluation costs
associated with sustaining current operations. AISC per ounce is
arrived at by dividing the dollar value of the sum of these cost
metrics, by the ounces of gold produced.
Reconciliation of cash cost per ounce:
Quarter Quarter Quarter Quarter
ended ended ended ended
30 June 30 June 30 June 30 June
2015 2015 2014 2014
Before Including Before Including
Exceptional Exceptional Exceptional Exceptional
items items(1) items items(1)
----------------- ----------- ------------- ------------- ------------- -------------
Mine production
costs (Note
4) (US$'000) 67,746 76,591 49,471 64,122
----------------- ----------- ------------- ------------- ------------- -------------
Less: Refinery
and transport (US$'000) (484) (484) (500) (500)
----------------- ----------- ------------- ------------- ------------- -------------
Cash cost of
production (US$'000) 67,262 76,107 48,971 63,622
----------------- ----------- ------------- ------------- ------------- -------------
Gold Produced
- Total (oz) 107,781 107,781 81,281 81,281
----------------- ----------- ------------- ------------- ------------- -------------
Cash cost per
ounce (US$/oz) 624 706 602 783
----------------- ----------- ------------- ------------- ------------- -------------
Reconciliation of all-in sustaining costs per ounce:
Quarter Quarter Quarter Quarter
ended ended ended ended
30 June 30 June 30 June 30 June
2015 2015 2014 2014
Before Including Before Including
Exceptional Exceptional Exceptional Exceptional
items items(1) items items
------------------------- ------------- ------------------- ------------- ------------- -------------
Mine production
costs(2) (Note
4) (US$'000) 67,746 76,591
------------------------- ------------- ------------------- ------------- ------------- -------------
Royalties (US$'000) 3,717 3,717
------------------------- ------------- ------------------- -------------
Corporate and
administration
costs (US$'000) 4,211 4,211
------------------------- ------------- ------------------- -------------
Rehabilitation
costs (US$'000) 90 90
------------------------- ------------- ------------------- -------------
Underground development (US$'000) 7,617 7,617
------------------------- ------------- ------------------- -------------
Other sustaining
capital expenditure (US$'000) 9 9
------------------------- ------------- ------------------- -------------
By-product credit (US$'000) (249) (249)
------------------------- ------------- ------------------- -------------
All-in sustaining
costs (US$'000) 83,141 91,986
------------------------- ------------- ------------------- -------------
Gold Produced
- Total (oz) 107,781 107,781
------------------------- ------------- ------------------- -------------
All-in sustaining
costs per ounce (US$/oz) 771 853 NR NR
------------------------- ------------- ------------------- ------------- ------------- -------------
(1) Mine production costs, Cash costs, AISC, AISC per ounce and
Cash cost per ounce, includes an exceptional provision against
prepayments recorded since Q4 2012 to reflect the removal of fuel
subsidies (refer to Note 4 of the Financial Statements for further
details).
(2) Includes Refinery and transport.
(3) NR : Not Reported.
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:
Quarter Quarter
ended ended
30 June 30 June
2015 2014
------------------------------------- ---------- ----------
US$'000 US$'000
------------------------------------- ---------- ----------
Cash and cash equivalents
(Note 16) 174,978 106,398
------------------------------------- ---------- ----------
Bullion on hand (valued
at the period-end spot price) 13,089 7,948
------------------------------------- ---------- ----------
Gold Sales Receivable 24,198 18,668
------------------------------------- ---------- ----------
Available-for-sale financial
assets (Note 13) 323 332
------------------------------------- ---------- ----------
Cash, Bullion, Gold Sales
Receivables and Available-for-sale
Financial Assets 212,588 133,346
------------------------------------- ---------- ----------
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
US 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 filed on SEDAR
at www.sedar.com and on the National Storage Mechanism. 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 in this report which relates to exploration,
geology, sampling and drilling is based on information compiled by
geologist Mr Richard Osman and Christopher Boreham (Underground
Manager) who are full time employees of the Company, and are
members of the Australasian Institute of Mining and Metallurgy each
with more than five years' experience in the fields of activity
being reported on, and are 'Competent Persons' for this purpose and
are "Qualified Persons" as defined in "National Instrument 43-101
of the Canadian Securities Administrators".
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.
-------------------------------------------End of
Announcement------------------------------------------
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR GGUWWRUPAGQG
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