TIDMCEY
RNS Number : 7294G
Centamin PLC
10 August 2016
For immediate release 10 August 2016
Centamin plc ("Centamin" or "the Company")
(LSE:CEY, TSX:CEE)
Centamin plc Results for the Second Quarter and Half Year Ended
30 June 2016 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 2016.
Q2 2016 Operational Highlights(1),(2)
-- Gold production of 140,306 ounces was a 12% increase on Q1 2016 and 30% higher than Q2 2015.
-- Cash cost of production of US$461 per ounce and all-in
sustaining costs (AISC) of US$669 per ounce.
-- 2016 annual production guidance of between 520,000 and
540,000 (previously 470,000) ounces at a cash cost of production of
between US$530 and US$550 (previously US$680) per ounce and AISC of
between US$720 and US$750 (previously US$900) per ounce.
-- Record process plant throughput of 2.93 million tonnes (Mt);
a 2% increase on the previous quarter.
-- Recovery of 89.5%, up by 1% over the first quarter, reflects
on-going optimisation of the process plant.
-- The underground mine delivered 256kt of ore, (a 9% decrease
on Q1 2016), at a grade of 9.3g/t (up 19% on Q1 2016).
-- Continued positive results from underground exploration
drilling at Sukari, with an updated resource and reserve estimate
scheduled during the second half of the year.
-- Development of a new exploration decline commenced in August
2016 within the north-eastern Cleopatra zone of Sukari Hill, aimed
at testing the potential for further reserve growth and additional
underground production of up to 1Mt per annum. Initial project
expenditure is expected to be US$11.5 million.
-- Exploration continues to support the potential for
near-surface and high-grade economic mineralisation in Burkina
Faso. Encouraging results from the exploration programme in Côte
d'Ivoire.
Financial Highlights(1),(2)
-- EBITDA of US$101.6 million was up 51% on Q1 2016, driven by
an increase in realised gold prices and gold sales volumes together
with improved operational efficiencies and lower overall costs.
-- Centamin remains debt-free and un-hedged with cash, bullion
on hand, gold sales receivable and available-for-sale financial
assets of US$332.2 million at 30 June 2016, up US$56.5 million over
the quarter.
-- Interim dividend of 2 US cents per ordinary share versus an
interim payment of 0.97 US cents in 2015.
-- Basic earnings per share of 6.297 US cents; up 78% on Q1 2016.
Legal Developments in Egypt
-- The Supreme Administrative Court (SAC) appeal and Diesel Fuel
Oil court case are both still on-going. During the quarter, the SAC
stayed the Concession Agreement appeal until the Supreme
Constitutional Court rules on the validity of Law 32 of 2014. There
remains potential for the legal process in Egypt to be lengthy and
further discussion of both cases is provided later in this
report.
Q2 2016 Q1 2016 Q2 2015 Q1 2015
------------------------- ----------- -------- -------- -------- --------
Gold produced ounces 140,306 125,268 107,781 108,233
Gold sold ounces 141,802 123,668 104,168 111,249
Cash cost of production US$/ounce 461 603 706 717
AISC US$/ounce 669 758 853 858
Average realised gold
price US$/ounce 1,268 1,196 1,188 1,216
------------------------- ----------- -------- -------- -------- --------
Revenue US$'000 180,128 148,107 124,192 135,231
EBITDA US$'000 101,605 67,484 37,308 52,988
Profit before tax US$'000 73,379 40,850 18,841 28,566
EPS US cents 6.297 3.546 1.647 2.501
Cash generated from
operations US$'000 96,144 60,482 49,729 56,463
------------------------- ----------- -------- -------- -------- --------
(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)
Andrew Pardey, CEO of Centamin, commented: "The Sukari operation
has continued to build on the strong start to the year, with total
first half production of 265,574 ounces of gold. The continued
optimisation of the processing operation saw plant throughput
increase further during the second quarter, remaining above our
base case forecast rate of 11Mt per annum. The open pit delivered
an increase in ore material movement and the underground mine
continued to deliver both tonnes and grade in excess of our base
case forecast. Our 2016 guidance has been updated to reflect the
strong first half, with expected full year production of between
520,000 and 540,000 ounces at a cash cost of production of US$530
to US$550 per ounce and AISC of US$720 to US$750 per ounce. The key
focus for the operation during the coming quarters remains on
realising the potential for sustained productivity and cost
improvements."
Centamin will host a conference call on Wednesday, 10th 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: 52212062#
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: 675675#
Via audio link at
http://www.centamin.com/media/press-releases/2016
________________________________
CHIEF EXECUTIVE OFFICER'S REPORT
Second quarter gold production of 140,306 ounces represents a
12% increase on the previous quarter as the Sukari process plant
saw increased throughput rates, higher grades and improved
metallurgical recoveries. EBITDA of US$101.6 million was up 51% on
the previous quarter, driven by a 15% increase in gold sales and a
6% rise in the average realised gold price, combined with a strong
US$142 per ounce (24%) reduction in the cash cost of production to
US$461 per ounce.
The quarterly reduction in the unit cash cost of production was
primarily a function of both the higher gold output and also a 5%
decrease in mine production costs to US$67.8 million. Following on
from progress in the first quarter, operating expenditure was
reduced despite the continued increase in processing rates and a
slight increase in fuel price over the preceding quarter,
reflecting improved cost efficiencies. Despite the quarterly
increase, fuel prices remained below originally forecast
levels.
Sukari's solid cash flow margins were also highlighted by a
US$89 per ounce (12%) quarterly reduction in AISC to US$669 per
ounce. The reduction in cash cost of production was offset by an
increase in sustaining costs.
Centamin's balance sheet continued to strengthen, ending the
period with US$332.2 million of cash, bullion on hand, gold sales
receivable and available-for-sale financial assets. This is an
increase of US$56.5 million for the quarter following expenditure
on exploration of US$12.0 million in West Africa. Centamin remains
committed to its policy of being 100% exposed to the gold price
through its un-hedged position.
In line with our dividend policy and our commitment to maintain
a return of capital to our shareholders, the company is pleased to
announce an interim dividend payment to 30 June 2016 of 2 US cents
per share (30 June 2015 dividend of 0.97 US cents per share).
The lost time injury (LTI) frequency rate at Sukari for Q2 was
0.62 per 200,000 man-hours. Whilst this represented an increase on
the first quarter's achievement, and our long-term target, of zero
LTIs, we continue to view this as a solid achievement considering
Sukari is the first modern gold mine in Egypt. Safety remains a
priority and we continue to develop the health and safety culture
across our operations.
Processing rates were 2% higher than the prior quarter and 7%
above our base case 11Mtpa annualised forecast rate as optimisation
continued. We continue to see potential for sustained production
rates in excess of this base case, although note an expected
increase in plant stoppages related to planned maintenance during
the third quarter, which may result in a quarterly decrease in
throughput. Recoveries of 89.5% were 1% higher than the previous
quarter and 1.5% above our forecast for the full year. Work
continues on developing the potential to improve and sustain
recoveries at the 90% level at increasing throughput rates.
The open pit delivered total material movement of 15,080kt, a 1%
decrease on the previous quarter, with 3,425kt of ore, a 42%
increase on the previous quarter. Grades increased in line with the
mine plan, with an average head grade to the plant of 0.99g/t, up
19% from Q1 2016.
The underground mine delivered 256kt of ore (a 9% decrease on Q1
2016) at a grade of 9.3g/t (up 19% on Q1 2016). The focus for the
operation remains to deliver a minimum of 1Mt per annum of ore at
an average grade which is consistently at, or above, the current
underground reserve average grade of 6g/t.
To reflect the strong operating performance and fuel price
reductions during the first half of the year, we update our full
year guidance to between 520,000 and 540,000 ounces at a cash cost
of production of US$530 to US$550 per ounce and AISC of US$720 to
US$750 per ounce. With gold output now established at target levels
for the expanded Sukari operation, we remain focussed on realising
further increases in productivity and cost efficiencies. We
continue to note that optimisation of the mining and processing
operations is ongoing and offers the potential in the coming
quarters to deliver higher gold output and lower costs than our
base case outlook.
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. A resource and reserve update is planned during the second
half of the year.
The continued success of the underground mining and exploration
programmes provides support for our decision to commence a new
exploration decline within the north-eastern Cleopatra zone of
Sukari Hill. This development started in August 2016, with an
expected expenditure of US$11.5 million over an approximate 9-month
period. Drive development and underground exploration drilling will
target multiple zones of high-grade mineralisation, as interpreted
from existing data. The initial project is aimed at developing
infrastructure with the capacity to support mining rates of up to 1
million tonnes per annum from this area. Ultimate production rates
will depend on future results from the programme, and would be in
addition to the current underground ore production from the Amun
and Ptah declines.
Our exploration in Burkina Faso continues to build evidence of a
number of potentially economic mineralised structures. We continue
to test the potential for lateral and depth extensions at these
more advanced targets, with priority on the Wadaradoo and
Napalapera prospect areas. In Côte d'Ivoire, first-pass drilling
over targets defined by geochemical and geophysical surveys has
indicated the potential over a number of prospects for laterally
significant mineralisation.
Developments in the two litigation actions, Diesel Fuel Oil and
Concession Agreement, are described in further detail in Note 7 to
the financial statements. In respect of the Concession Agreement
case, the Supreme Administrative Court has stayed the Concession
Agreement appeal until the Supreme Constitutional Court has ruled
on the validity of Law 32 of 2014. The Company continues to believe
that it has a strong legal position and, in addition, that it will
ultimately benefit from Law 32 which restricts the capacity for
third parties to challenge any contractual agreement between the
Egyptian government and an investor. This law, whilst in force and
ratified by the new parliament, is currently under review by the
Supreme Constitutional Court. In the event that the Supreme
Constitutional Court rules that Law 32 is invalid, the Group
remains confident that its appeal will be successful on the
merits.
No final decision has been taken by the courts regarding the
Diesel Fuel Oil case and the Company is aware of the potential for
delays in the Egyptian legal system.
2016 Interim Dividend
The Directors declared an interim dividend of 2 US cents per
share on Centamin plc ordinary shares (totalling approximately
US$23 million). The interim dividend for the half-year period
ending 30 June 2016 will be paid on 7 October 2016 to shareholders
on the register on the Record Date of 9 September 2016.
London Stock Exchange (T+2)
EX-DIV DATE: 8 September 2016
RECORD DATE: 9 September 2016
LAST DATE FOR RECEIPT OF CURRENCY ELECTIONS: 16 September
2016
PAY DATE: 7 October 2016
Toronto Stock Exchange (T+3)
EX-DIV DATE: 7 September 2016
RECORD DATE: 9 September 2016
PAY DATE: 7 October 2016
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 16 September 2016.
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 16 September 2016. The rate applied will be published on
the Company's website on 19 September 2016.
OPERATIONAL REVIEW
Sukari Gold Mine:
Q2 2016 Q1 2016 Q2 2015 Q1 2015
---------------------------------- ------- ------- ------- -------
OPEN PIT MINING
Ore mined (1) ('000t) 3,425 2,405 1,751 2,562
Ore grade mined (Au g/t) 0.90 0.87 0.76 0.78
Ore grade milled (Au g/t) 0.99 0.83 0.75 0.95
Total material mined ('000t) 15,080 15,157 13,671 15,996
Strip ratio (waste/ore) 3.40 5.30 6.81 5.24
---------------------------------- ------- ------- ------- -------
UNDERGROUND MINING
Ore mined from development
('000t) 113 145 127 129
Ore mined from stopes ('000t) 143 136 155 135
Ore grade mined (Au g/t) 9.26 7.77 6.30 6.01
---------------------------------- ------- ------- ------- -------
Ore processed ('000t) 2,928 2,876 2,667 2,478
Head grade (g/t) 1.66 1.49 1.32 1.48
Gold recovery (%) 89.5 88.5 90.3 88.3
Gold produced - dump leach
(oz) 2,431 2,993 4,715 4,814
Gold produced - total (2)
(oz) 140,306 125,268 107,781 108,233
Cash cost of production(3)
(4) (US$/oz) 461 603 706 717
Open pit mining 155 213 224 247
Underground mining 39 44 48 47
Processing 237 307 381 369
G&A 30 39 53 54
AISC(3) (4) (US$/oz) 669 758 853 858
---------------------------------- ------- ------- ------- -------
Gold sold (oz) 141,802 123,668 104,168 111,249
Average realised sales
price (US$/oz) 1,268 1,196 1,188 1,216
---------------------------------- ------- ------- ------- -------
(1) Ore mined includes 284t @0.35g/t delivered to the dump leach
pad in Q2 2016 (48kt @ 0.51g/in Q2 2015).
(2) Gold produced is gold poured and does not include
gold-in-circuit at period end.
(3) Cash cost of production exclude royalties, exploration and
corporate administration expenditure. Cash cost of production 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 2016 was 0.62
per 200,000 man-hours (Q2 2015: 0.16 per 200,000 man-hours), with a
total of 1,281,666 man-hours worked (Q2 2015: 1,238,861).
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 15,080kt in
the quarter, a decrease of 1% on Q1 2016 due to lower fleet
utilization and a 10% increase on the prior year period. Mining
continued to focus on the Stage 3A and 3B areas of the open pit, in
line with the mine plan.
Ore production from the open pit was 3,425kt at 0.90g/t with an
average head grade to the plant of 0.99 g/t, in line with the mine
plan and our forecast. The ROM ore stockpile increased by 521kt to
1,012kt by the end of the quarter.
During the second half of the year, ore mining rates are
scheduled to be higher than originally forecast as mining
progresses through the lower benches of the current stage (3A) and
upper portions of the next stage (3B) of pit development. We
continue to expect grades to progressively increase towards the
reserve average of 1.05g/t.
Underground mine
Ore production from the underground mine was 256kt, a 9%
decrease on Q1 2016 and a 9% decrease on the prior year period. The
ratio of stoping-to-development ore mined increased, with 56% of
ore from stoping (143kt) and 44% of ore from development (113kt).
Ore tonnages from stopes decreased by 1% on the first quarter.
The average mined grade in Q2 2016was 9.3 g/t and comprised ore
from stoping at 8.5 g/t and ore from development at 10.2 g/t.
Total development during the quarter, including the Amun, Ptah
and Horus declines, was 2,105 metres. Development within
mineralised areas of Amun accounted for 1,052 metres and took place
between the 710 and 665 levels (350 to 395 metres below the
underground portal). Ptah development in mineralised porphyry
totalled 579 metres on the P790 and P705 levels.
Work on the exhaust ventilation circuits for both the Amun and
Ptah declines progressed, ensuring sufficient ventilation as the
decline continues to extend deeper into the orebody.
A total of 2,964 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 support extensions of development drives and stoping
blocks. A further 6,223 metres of drilling continued to test for
extensions of the orebody at depth, below the current Amun and Ptah
zones.
Processing
Quarterly throughput at the Sukari process plant was 2,928kt, a
2% increase on Q1 2016 and a 10% increase on the prior year period.
Plant productivity of 1,432 tonnes per hour (tph) represented a 1%
increase on Q1 2016 and a 5% increase on the prior year period.
Processing levels above the base case forecast of 11Mtpa continued
through Q2 2016 resulting in a quarterly record for both throughput
and gold produced. This achievement was a result of a continuous
focus on improving operational control, in addition to a reduction
in unplanned downtime in the crushing and milling circuits.
Plant metallurgical recovery was 89.5%, a 1% increase on Q1 2016
and a 0.8% decrease on the prior year period. Recovery remained
high throughout the quarter through increasing flotation mass pull
and operating all the Stirred Media Detritors (SMDs) in the
fine-grinding circuit at higher utilisation rates, in order to
achieve the target grind size at the increased throughputs rates.
Over the coming quarters, the commissioning of a copper sulphate
mixing facility is expected to improve the quality of the return
water from the tailings storage facility. This in turn is expected
to further stabilize the flotation circuits, leading to increased
recoveries.
The dump leach operation produced 2,431oz, 19% lower than Q1
2016, which is within the quarter plan.
Exploration
Centamin's "explore to develop" strategy is focussed on
defining, through the exploration process, the optimal path to
development for projects which can provide material returns on
shareholder's capital. The Company aims to undertake systematic
exploration programmes over large-area licence packages within
geologically prospective regions; and will only operate within
stable jurisdictions offering a fiscally-attractive framework for
mining investment. Development decisions are made on the basis that
Centamin will take a self-performing, self-funding and staged
approach to project construction and operation. Through this
value-driven and long-term growth objective, and with its strong
cash flows and healthy balance sheet, the Company believes that it
is well positioned to become a multi-asset gold producer
maintaining a lowest-quartile cost profile and peer-leading
shareholder returns.
Sukari
Drilling from underground remains a focus of the Sukari
exploration programme as new development provides improved access
to test for high-grade extensions of the deposit. The ore body
remains open at depth and further underground drilling of the
Sukari deposit will continue during 2016. During the second
quarter, both rigs were drilling from sites on the Ptah 875 level,
with drill cuddies currently being developed on the Ptah 735
level.
Selected results received during the second quarter from the
underground drilling programme, which are in addition to those
previously disclosed, include the following:
Hole ID From Width Grade
(m) (m) (Au g/t)
-------------- ------- ------ ----------
UGRSD0584 19 1 30.33
-------------- ------- ------ ----------
30 1.2 22.88
-------------- ------- ------ ----------
274 1 19.65
-------------- ------- ------ ----------
UGRSD0585 65 1 15.41
-------------- ------- ------ ----------
75 1 11.34
-------------- ------- ------ ----------
197.6 1.2 74.45
-------------- ------- ------ ----------
UGRSD0586 225.7 1 24.97
-------------- ------- ------ ----------
UGRSD0588 414.35 3.65 34.98
-------------- ------- ------ ----------
UGRSD0589_W1 414 3 39.96
-------------- ------- ------ ----------
UGRSD0705 80 0.4 669.96
-------------- ------- ------ ----------
83.3 0.8 22.31
-------------- ------- ------ ----------
UGRSD0707 260 1 83.04
-------------- ------- ------ ----------
291 1 61.56
-------------- ------- ------ ----------
293.6 1 20.47
-------------- ------- ------ ----------
305.2 2.05 30.25
-------------- ------- ------ ----------
313 1 16.27
-------------- ------- ------ ----------
UGRSD0708_W1 255.1 0.9 33.75
-------------- ------- ------ ----------
281.8 0.35 31.14
-------------- ------- ------ ----------
283.5 0.6 35.12
-------------- ------- ------ ----------
287.9 0.45 17.31
-------------- ------- ------ ----------
289 2 160.81
-------------- ------- ------ ----------
UGRSD0714_W1 338 3 147.55
-------------- ------- ------ ----------
Cleopatra Exploration Decline
The existing underground operations at Sukari have demonstrated
that the western contact zone between the main porphyry and the
surrounding metasedimentary rock units is highly prospective for
high-grade gold mineralisation. This contact has limited drilling
in the north western portion of Sukari Hill, where the porphyry is
approximately three hundred metres wide and access for surface
drill rigs is limited.
High grades have been observed along the north-eastern flank of
Sukari Hill, where an interpreted en-echelon set of three
mineralised zones are named Cleopatra, Julius and Antoine.
Cleopatra outcrops as two distinct quartz veins on the north
eastern flank of Sukari Hill, whereas Julius and Antoine do not
outcrop. The zones are interpreted as commencing on the eastern
porphyry contact, dipping broadly to the west.
This project is designed to commence development along strike
within the upper Cleopatra zone. In addition to providing
geological information, exploration drilling will be carried out
from this central drive. This drilling will target both the western
porphyry contact, from the wadi level down 400m, and the lower
Cleopatra, Julius and Antoine areas.
The initial project will be developed in two phases. Phase 1 has
a projected cost of US$5 million, with 1,370 metres of development
and 96,422 tonnes of mined material to be completed over a 5-month
period.
Phase 2 has a projected cost of US$6.5 million, with 1,057
metres of development and 54,409 tonnes of mined material to be
completed over a 5-month period. Phase 2 is planned to commence
four months after the start of Phase 1.
Surface preparation for site infrastructure and the decline
portal are underway with decline development commencing in August
2016.
The initial project is aimed at developing infrastructure with
the capacity to support mining rates of up to 1 million tonnes per
annum from this area. Ultimate production rates will depend on
future results from the development and exploration drilling, and
will be in addition to the current underground ore production from
the Amun and Ptah declines.
Other prospects
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.
Resource and Reserve
An updated resource and reserve estimate is expected to be
completed during the second half of 2016.
Burkina Faso
The exploration strategy in Burkina Faso is to continue to
systematically explore and drill-test numerous targets along the
160km length of greenstone belt contained within the
circa-2,200km(2) licence holding. Results from these programmes
will lead to resource development during the second half of
2016.
During the second quarter Reverse Circulation (RC) and diamond
(DD) drilling has been carried out at a number of prospects, with a
primary focus on the Wadaradoo and Napalapera areas. The drilling
fleet comprised of 5 multipurpose RC/DD rigs which completed
59,329m RC and 2,533m DD during the quarter, as well as 1 aircore
(AC) rig which drilled a total of 18,403m.
Exploration at Wadaradoo has focused on Wadaradoo North,
Wadaradoo Main and Wadaradoo Far East with four multipurpose rigs
based in the area.
At Wadaradoo North, a flat-lying reverse thrust containing
silica and albite bleaching quartz-pyrite veining was drilled to a
vertical depth of 230m. High-grade mineralisation is currently
defined over a strike length of approximately 450m, having been
closed off to the south at the intersection of a large northeast
structure. Key results during the quarter include 5m @ 15g/t from
156m, 9m @ 4.4g/t from 143m and 2m @ 42g/t (including visible gold)
from 201m. To the south, a second structure was intersected beneath
the main structure with 7m @ 6.5g/t from 198m. An initial study is
underway to assess the requirement for additional drilling.
At Wadaradoo Far East, follow-up regional exploration and RC
drilling is being conducted on targets defined by IP, mapping, AC
drilling and artisanal workings.
Wadaradoo significant RC and DD drill intersections,
downhole
Hole ID From Width Grade
(m) (m) (Au g/t)
---------- ----- ------ ----------
WDRC0798 225 7 3.54
---------- ----- ------ ----------
WDRC0798 225 7 3.54
---------- ----- ------ ----------
WDRC0966 188 7 5.44
---------- ----- ------ ----------
WDRC0967 173 8 3.29
---------- ----- ------ ----------
WDRC0970 156 5 15.06
---------- ----- ------ ----------
WDRC0971 143 9 4.40
---------- ----- ------ ----------
WDRC1300 238 8 3.90
---------- ----- ------ ----------
WDRD0349 198 7 6.54
---------- ----- ------ ----------
WDRD1230 201 2 42.05
---------- ----- ------ ----------
WDRD1231 212 6 5.95
---------- ----- ------ ----------
An extension of the Napalapera exploration permit to the border
with Côte d'Ivoire was granted in March, and a drill program was
completed on a 50x50m spacing throughout the permit. Three
shallow-plunging high-grade shoots have been identified on
dilational folds within the mineralised structure. Best results
during the quarter included 4m @ 17.4g/t from 50m; 6m @ 8.4g/t from
150m and 17m @ 3.56g/t from 170m. Initial studies will determine if
further drilling is required.
Napelepera significant RC and DD drill intersections,
downhole
Hole ID From Width Grade
(m) (m) (Au g/t)
--------- ----- ------ ----------
NPRC468 38 10 1.8
--------- ----- ------ ----------
NPRC487 50 4 17.46
--------- ----- ------ ----------
NPRD471 150 6 8.40
--------- ----- ------ ----------
NPRD472 170 17 3.56
--------- ----- ------ ----------
NPRD480 234 10 1.87
--------- ----- ------ ----------
NPRD511 261 19 1.99
--------- ----- ------ ----------
Côte d'Ivoire
Centamin now has five permits in Côte d'Ivoire covering
circa-1,665km(2) across the border from Batie West in Burkina Faso.
Ten permits remain under application, some of which are expected to
be granted during 2016.
A total of 17,355m of RC was drilled during the quarter over
several prospects identified from IP surveys, auger drilling, soil
sampling, trenching and structural mapping of artisanal workings.
Several new prospects returned significant high-grade tenors.
The Han prospect is a 10 to 20m-wide structure with a shallow
dip of approximately 25 degrees, and has currently been tested over
a 2km strike length to 100m vertical depth. Mineralisation remains
open at depth and along strike. A sulphide-rich shear zone in the
granite is overprinted by silica-sericite-albite-hematite
alteration, with high-grade intersections including 10m @ 5.3 g/t
and 7m @ 3.9 g/t.
The Nokpa prospect, identified from IP anomalies, lies within a
complex structural zone where a doleritic dyke intersects other
known mineralised trends (Souwa and Chegue). A halo of intense
hematite alteration has been developed around mineralised channels,
with significant results including 10m @ 10.1 g/t, 11m @ 5 g/t and
16m @ 3.3 g/t.
On the Solo prospect, high-grade gold mineralisation is hosted
by a sub-vertical quartz vein. Drilling results include 8m @ 5.8
g/t and 4m @ 5 g/t.
The Enioda prospect (continuity of Napelepera from Burkina Faso)
has continued to deliver coherent intersections over a 2.2km strike
length.
Some of the previously tested high-grade zones of Souwa have
been extended to an 80m vertical depth with similar high grade
tenors, including 17m @ 4.7 g/t. The Souwa structure is very
similar in geometry and mineralisation to the Han structure,
located approximately 7.5km away. Further drilling is planned to
test for high-grade mineralisation up to 200m vertical depth.
At the Doropo project, testing continues of several gold-bearing
structures within the granite in the close vicinity of
previously-defined prospects. Several of these structures are
shallow dipping, large and continuous shear zones, with others
being smaller-scale quartz veins/shear zones featuring significant
plunging shoots.
Global interpretation and target generation commenced towards
the end of the quarter, integrating all geological, geophysical,
geochemical and drilling data.
Côte d'Ivoire significant RC drill intersections, downhole
Prospect HoleID From Width Grade
(m) (m) (Au g/t)
---------- ---------- ----- ------ ----------
Enioda DPRC0212 52 3.0 1.4
---------- ---------- ----- ------ ----------
DPRC0215 59 8.0 1.0
--------------------- ----- ------ ----------
DPRC0218 54 5.0 2.3
--------------------- ----- ------ ----------
Han DPRC0198 16 10.0 5.3
---------- ---------- ----- ------ ----------
DPRC0225 110 7.0 2.1
--------------------- ----- ------ ----------
DPRC0226 129 7.0 3.9
--------------------- ----- ------ ----------
DPRC0227 78 18.0 1.5
--------------------- ----- ------ ----------
DPRC0228 108 9.0 2.5
--------------------- ----- ------ ----------
DPRC0235 70 10.0 5.4
--------------------- ----- ------ ----------
DPRC0237 118 4.0 4.6
--------------------- ----- ------ ----------
DPRC0243 15 6.0 2.5
--------------------- ----- ------ ----------
Nokpa DPRC0191 41 10.0 3.3
---------- ---------- ----- ------ ----------
DPRC0192 36 10.0 10.1
--------------------- ----- ------ ----------
DPRC0192 68 14.0 4.3
--------------------- ----- ------ ----------
DPRC0193 82 11.0 5.0
--------------------- ----- ------ ----------
DPRC0194 122 16.0 3.3
--------------------- ----- ------ ----------
DPRC0259 150 8.0 2.9
--------------------- ----- ------ ----------
Solo DPRC0206 53 8.0 5.8
---------- ---------- ----- ------ ----------
DPRC0209 112 4.0 5.0
--------------------- ----- ------ ----------
Souwa DPRC0173 96 17.0 4.7
---------- ---------- ----- ------ ----------
DPRC0175 99 3.0 14.5
--------------------- ----- ------ ----------
DPRC0176 114 5.0 4.2
--------------------- ----- ------ ----------
DPRC0185 48 6.0 4.0
--------------------- ----- ------ ----------
FINANCIAL REVIEW
In its seventh year of production, the Sukari Gold Mine remains
highly cash generative and this is reflected in the group's
financial results for the quarter ended 30 June 2016:
-- Q2 2016 revenues of US$180.1 million were up 45% compared
with Q2 2015 due to a 7% rise in average realised gold prices and a
36% increase in gold sales.
-- Cash cost of production decreased to US$461 per ounce
produced from US$706 in Q2 2015. The main contributing factors were
the higher gold production, improved operational cost efficiencies
and a lower fuel price compared with Q2 2015.
-- AISC of US$669 per ounce sold was lower than the comparable
prior year period of $853 per ounce, mainly due to the factors
described above and the rescheduling of certain sustaining capital
cost items. During Q2 there was a lower quarterly expenditure on
sustaining capital than is expected for the remainder of the
year.
-- EBITDA increased by 172% to US$101.6 million compared to Q2
2015, due to 25% higher gross operating margins as a result of the
increased revenue and the lower cash cost of production.
-- Profit before tax of US$73.4 million was 289% higher than Q2
2015, mainly due to the 25% higher gross operating margins.
-- Earnings per share of 6.297 US cents, was 282% higher than Q2
2015, mainly due to the higher gross operating margins.
-- Operational cash flow of US$96.1 million was 93% higher than
Q2 2015, due to the factors affecting EBITDA, offset by an increase
in working capital outflows.
Revenue
Revenue from gold and silver sales for the quarter increased by
45% to US$180.1 million (US$124.2 million in Q2 2015), with a 7%
increase in the average realised gold sales price to US$1,268 per
ounce (US$1,188 per ounce in Q2 2015) and a 36% increase in gold
sold to 141,802 ounces (104,168 ounces in Q2 2015).
Cost of sales
Cost of sales represents the cost of mining, processing,
refining, transport, site administration, depreciation,
amortisation and movement in production inventories. Cost of sales
is inclusive of exceptional items of US$4.7 million in relation to
fuel charges (refer to Notes 4 and 5 to the financial statements
for further information) and down 1% compared with the prior year
period to US$96.9 million, as a result of:
(a) a 11% decrease in total mine production costs to from
US$76.6 million to US$67.8 million, despite a 10% increase in mined
tonnes combined with a 10% increase in processed tonnes as a result
of improved operational efficiencies and lower overall costs;
offset by
(b) a 54% increase in depreciation and amortisation charges from
US$18.5 million to US$28.4 million as higher production physicals,
and reclassification of exploration & evaluation expenditure to
property, plant and equipment, increased the associated
amortisation charges; and
(c) a 78% decrease in movement in production inventories costs
from US$2.9 million to US$0.6 million.
Other operating costs
Other operating costs comprises expenditure incurred for
communications, consultants, directors' fees, stock exchange
listing fees, share registry fees, employee entitlements, general
office administration expenses, the unwinding of the restoration
and rehabilitation provision, foreign exchange movements, the share
of profit/loss in associates and the 3% production royalty payable
to the Egyptian government. Other operating costs increased by 41%
on the prior year period to US$10.3 million, as a result of:
(a) a US$0.3 million decrease in net foreign exchange movements
from a US$0.8 million gain to a US$0.5 million gain;
(b) a US$1.7 million increase in royalty paid to the government
of the Arab Republic of Egypt in line with the increase in gold
sales revenue; and
(c) a US$1.0 million increase in corporate costs.
Finance income
Finance income reported comprises interest revenue applicable on
the Company's available cash and term deposit amounts. The
movements in finance income are in line with the movements in the
Company's available cash and term deposit amounts.
Profit before tax
As a result of the factors outlined above, the group recorded a
profit before tax for the quarter ended 30 June 2016 of US$73.4
million (Q2 2015 US$18.8 million).
Earnings per share
Earnings per share of 6.297 US cents compares with 1.647 US
cents per share for Q2 2015. The increase was driven by the factors
outlined above.
Comprehensive income
Other comprehensive income was US$0.05 million and relates to
the revaluation of available-for-sale financial assets.
Financial position
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$332.2 million at 30
June 2016, up from US$230.7 million at 31 December 2015.
At 30 June As at 31 Dec At 30 June
2016 2015 2015
US$'000 US$'000 US$'000
Cash at Bank 281,678 199,616 174,978
Bullion on hand 15,809 10,492 13,089
Gold sales receivable 34,524 20,472 24,198
Available for sale financial
assets 194 163 323
----------- ------------- -----------
332,205 230,743 212,588
----------- ------------- -----------
The majority of funds have been invested in international
rolling short-term interest money market deposits.
Current assets have increased from Q4 2015 to Q2 2016 by
US$109.3 million or 30% to US$472.0 million, as a result of:
(a) an increase in net cash inflows of US$82.0 million net of foreign exchange movements; and
(b) a US$9.1 million decrease in collective stores inventory value to US$97.4 million;
(c) a US$4.0 million decrease in overall mining stockpiles, gold
in circuit levels and finished goods inventory values to US$24.3
million;
(d) a US$14.0 million increase in gold sale receivables;
(e) a US$26.3 million increase in prepayments due to the
reclassification of the advance payments made to EMRA of $28.8
million from non-current assets to current assets offset by a
reduction in other prepayments of US$2.5 million.
Non-current assets have decreased from Q4 2015 to Q2 2016 by
US$31.2 million to US$1,021.1 million, as a result of:
(a) US$26.5 million expenditure for property, plant and
equipment (comprising of plant and mining equipment and
rehabilitation asset);
(b) US$55.2 million charges for depreciation and amortisation;
(c) US$26.2 million increase in exploration and evaluation
assets, as a result of the drilling programmes in Sukari Hill, the
Sukari tenement area, Burkina Faso and Côte d'Ivoire;
(d) a US$28.8 million decrease in prepayments due to the
reclassification of the advance payments made to EMRA of $28.8
million from non-current assets to current assets.
Current liabilities have decreased from Q4 2015 to Q2 2016 by
US$13.9 million to US$40.7 million due to a:
(a) US$11.4 million decrease in payables and accrual balances;
(b) US$6.8 million decrease in the income tax liabilities
balance through the settlement of the income tax obligation
appearing in the financial accounts as at the end of December 2015;
and a
(c) US$4.4 million increase in current provisions.
Non-current liabilities have increased from Q4 2015 to Q2 2016
by US$0.3 million to US$7.4 million as a result of an increase in
the rehabilitation provision.
The value of issued capital has increased from Q4 2015 to Q2
2016 by US$1.9 million due to the vesting of awards under the
employee share plans.
Share option reserves reported have decreased from Q4 2015 to Q2
2016 by US$0.8 million to US$1.6 million as result of the
forfeiture and vesting of awards and the resultant transfer to
accumulated profits and issued capital respectively, offset by the
recognition of the share-based payments expenses for the
period.
Accumulated profits increased from Q4 2015 to Q2 2016 by US$90.6
million as a result of a:
(a) US$113.5 million profit for the period attributable to the
shareholders of the Company; and a
(b) US$0.1 million gain on available-for-sale financial assets
in relation to the Company's shareholding in KEFI Minerals plc;
offset by a
(c) US$22.9 million final dividend payment in respect of the
year ended 31 December 2015 paid to shareholders in the first half
of the year.
Cashflow
Net cash flows generated by operating activities comprise
receipts from gold and silver sales and interest income, offset by
operating and corporate administration costs. Cash flows have
increased from Q2 2015 to Q2 2016 by US$46.4 million to US$96.1
million, primarily attributable to:
(a) an increase in revenue, due to an increase in gold sold
ounces combined with a higher average realised price; offset by
(b) a net increase in the cash outflows in relation to the
working capital balances of receivables, inventories, prepayments
and payables.
Net cash flows used in investing activities comprise exploration
expenditure and capital development expenditures including the
acquisition of financial and mineral assets. Cash outflows have
increased by US$12.3 million from Q2 2015 to Q2 2016 to US$27.8
million. The primary use of the funds in the second quarter was for
investment in underground development at the Sukari site in Egypt
and exploration expenditures incurred in West Africa.
Net cashflows generated by financing activities comprise the
dividend payments made to shareholders.
Effects of exchange rate changes have decreased by US$1.8
million as a result of marginal strengthening of some of the
functional currencies used within the operation in the quarter.
Capital Expenditure
Q2 2016 Capital Expenditure
A breakdown of capital expenditure for the Group during Q2 2016
is as follows:
US$ million
Open pit development -
Underground mine development(1) 9.1
Other sustaining capital
expenditure 6.8
Total Sustaining Capex 15.9
Exploration 12.0
(1) Includes underground exploration drilling
CORPORATE UPDATE
On 16 May 2016, Kevin Tomlinson resigned as non-executive
director of the Company. Following the resignation, the Board and
Nomination Committee will be meeting to discuss the composition of
the Board and its committees.
On 4 June 2016, the Company granted 4,999,000 conditional awards
to 31 employees of the Group under the shareholder approved
restricted share plan. Of the awards granted on 4 June 2015,
3,845,000 conditional awards remain granted to 18 eligible
employees.
A summary of the restricted share plan is set out in note 14 of
the Interim Condensed Consolidated Financial Statements.
PRINCIPAL RISKS AFFECTING THE CENTAMIN GROUP
The operations of the Company are speculative due to the high
risk nature of its business which includes the acquisition,
financing, exploration, development and operation of mining
properties. These risk factors could materially affect the
Company's future operations and could cause actual events to differ
materially from those described in forward-looking statements
relating to the Company.
There have been no changes in the Company's risks and
uncertainties during the six month period ended 30 June 2016 from
those described in the Group's annual management discussion,
analysis and business review for the year ended 31 December 2015,
and the Company does not anticipate any changes in the Company's
risks and uncertainties during the next six months to 31 December
2016. The key principal risks relate to the following:
-- Single project dependency
-- Sukari Project joint venture risk and relationship with EMRA
-- Gold price and currency exposure
-- Jurisdictional taxation exposure
-- Political risk - Sukari
-- Political risk - West Africa
-- Reserve and resource estimations
-- Failure to achieve production estimates
-- Litigation risks
Centamin takes a number of measures to mitigate risks associated
with its underlying operational and exploration activity which are
monitored and evaluated regularly. Due to the nature of these
inherent risks, it is not possible to give absolute assurance that
mitigating actions will be wholly effective. The Company is exposed
to changes in the economic environment through its operations in
Egypt, as well as its operations in West Africa (Burkina Faso and
Côte d'Ivoire). Relationships with governments and the maintenance
of exploration permits and licence areas remain key risks and key
focus for all exploration, development and operational
projects.
One of the Company's main objectives is to achieve a target of
zero injuries and for every employee to be safe every day. The
control environment and operating practices in place at the mining
and exploration operations helps reduce the likelihood of harm to
employees. Centamin is committed to attracting, energising,
developing and training its workforce to ensure they are highly
skilled and motivated.
Centamin recognises the value of being a socially responsible
employer and the importance of engaging with the wider community in
the areas in which it operates. By investing in the community and
engaging in projects that directly and positively impact local
people, Centamin can foster a cooperative working environment.
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. During the quarter, the Supreme Administrative Court
stayed the Concession Agreement appeal until the Supreme
Constitutional Court rules on the validity of Law 32 of 2014. If
the Supreme Constitutional Court upholds Law 32, the Group is
advised that it will benefit from its provisions. In the event that
the Supreme Constitutional Court rules that Law 32 is invalid, the
Group remains confident that its appeal will be successful on the
merits. 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 merits 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.
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 fuel supplier based on the international price for
diesel. The Company has fully provided against the prepayment of
US$216.6 million as an exceptional item, of which US$8.4 million
has been made during the HY 2016. 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 Q2 2016.
In November 2012 the Group received a further demand from its
fuel supplier for the repayment of fuel subsidies received in the
period from late 2009 through to January 2012, for EGP403 million
(approximately US$45 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 'Profit Share'
due to EMRA 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 from 2013 and the value of the
payments to date amounts to US$28.75 million. The advance payments
were made in order to demonstrate goodwill towards the Egyptian
government. These payments will be netted off against any future
Profit Share that becomes payable to EMRA.
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 2016.
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 2016 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 Ross Jerrard
10 August 2016 10 August 2016
UNAUDITED INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE QUARTER AND HALF YEARED
30 JUNE 2016
CONTENTS
INDEPENT REVIEW REPORT TO CENTAMIN PLC 20
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 22
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL
POSITION 24
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN
EQUITY 25
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
26
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS 27
Independent review report to Centamin plc
Report on the unaudited interim condensed consolidated financial
statements
Our conclusion
We have reviewed Centamin plc's unaudited interim condensed
consolidated financial statements (the "interim financial
statements") in the results for the second quarter and half year
ended 30 June 2016 of Centamin plc. Based on our review, nothing
has come to our attention that causes us to believe that the
interim financial statements are not prepared, in all material
respects, in accordance with International Accounting Standard 34,
'Interim Financial Reporting', as adopted by the European Union and
the Disclosure Rules and Transparency Rules of the United Kingdom's
Financial Conduct Authority.
What we have reviewed
The interim financial statements comprise:
-- the unaudited interim condensed consolidated statement of
comprehensive income for the six months ended 30 June 2016;
-- the unaudited interim condensed consolidated statement of
financial position as at 30 June 2016;
-- the unaudited interim condensed consolidated statement of
changes in equity for the six months ended 30 June 2016;
-- the unaudited interim condensed consolidated statement of
cash flows for the six months ended 30 June 2016; and
-- the explanatory notes to the interim financial statements.
The interim financial statements included in the results for the
second quarter and half year ended 30 June 2016 have been prepared
in accordance with International Accounting Standard 34, 'Interim
Financial Reporting', as adopted by the European Union and the
Disclosure Rules and Transparency Rules of the United Kingdom's
Financial Conduct Authority.
As disclosed in note 1 to the interim financial statements, the
financial reporting framework that has been applied in the
preparation of the full annual financial statements of the Group is
applicable law and International Financial Reporting Standards
(IFRSs) as adopted by the European Union.
Responsibilities for the 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
2016, including the interim financial statements, is the
responsibility of, and has been approved by, the directors. The
directors are responsible for preparing the results for the second
quarter and half year ended 30 June 2016 in accordance with the
Disclosure Rules and Transparency Rules of the United Kingdom's
Financial Conduct Authority.
Our responsibility is to express a conclusion on the interim
financial statements in the results for the second quarter and half
year ended 30 June 2016 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 Rules and Transparency
Rules of the United Kingdom's 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.
What a review of interim 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 2016 and considered
whether it contains any apparent misstatements or material
inconsistencies with the information in the interim financial
statements.
Other Matter
We have not audited nor reviewed the unaudited interim condensed
consolidated statement of comprehensive income for the three months
ended 30 June 2016 and the unaudited interim condensed consolidated
statement of cash flows for the three months ended 30 June
2016.
PricewaterhouseCoopers LLP
Chartered Accountants
London
10 August 2016
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 interim financial statements since
they were initially presented on the website.
b) Legislation in the United Kingdom governing the preparation
and dissemination of financial statements may differ from
legislation in other jurisdictions.
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENT OF
COMPREHENSIVE INCOME FOR THE THREE MONTHSED 30 JUNE 2016
Note 30 June 2016 30 June 2015
-------------------------------------- --------------------------------------
Before Before
exceptional Exceptional exceptional Exceptional
items items Total items items (1) Total
US$'000 (1) US$'000 US$'000 US$'000 US$'000
US$'000
------------ ------------- --------- ------------ ------------- ---------
Revenue 3 180,128 - 180,128 124,192 - 124,192
Cost of sales 4 (92,193) (4,662) (96,855) (87,139) (10,893) (98,032)
------------ ------------- --------- ------------ ------------- ---------
Gross profit 87,935 (4,662) 83,273 37,053 (10,893) 26,160
Other operating costs 4 (10,308) - (10,308) (7,299) - (7,299)
Impairment of available-for-sale
financial assets 13 220 - 220 (56) - (56)
Finance income 4 194 - 194 36 - 36
Profit before tax 78,041 (4,662) 73,379 29,734 (10,893) 18,841
Tax (771) - (771) (8) - (8)
------------ ------------- --------- ------------ ------------- ---------
Profit for the period
after tax 77,270 (4,662) 72,608 29,726 (10,893) 18,833
------------ ------------- --------- ------------ ------------- ---------
EMRA profit share - - - - - -
Profit for the period
after EMRA profit
share 77,270 (4,662) 72,608 29,726 (10,893) 18,833
------------ ------------- --------- ------------ ------------- ---------
Profit for the period
attributable to:
* the owners of the parent 77,270 (4,662) 72,608 29,726 (10,893) 18,833
Other comprehensive
income
Items that may be
reclassified subsequently
to profit or loss:
Profits/losses on
available for sale
financial assets
(net of tax) 53 - 53 (235) - (235)
------------ ------------- --------- ------------ ------------- ---------
Other comprehensive
income for the period 13 53 - 53 (235) - (235)
------------ ------------- --------- ------------ ------------- ---------
Total comprehensive
income for the period
attributable to:
- the owners of the
parent 77,323 (4,662) 72,661 29,491 (10,893) 18,598
------------ ------------- --------- ------------ ------------- ---------
- - -
Earnings per share:
Basic (cents per
share) 10 6.701 (0.404) 6.297 2.600 (0.953) 1.647
Diluted (cents per
share) 10 6.668 (0.402) 6.266 2.565 (0.940) 1.625
(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 MONTHSED 30 JUNE 2016
Note 30 June 2016 30 June 2015
-------------------------------------- --------------------------------------
Before Before
exceptional Exceptional exceptional Exceptional
items items Total items items (1) Total
US$'000 (1) US$'000 US$'000 US$'000 US$'000
US$'000
------------ ------------- --------- ------------ ------------- ---------
Revenue 3 328,236 - 328,236 259,671 - 259,671
Cost of sales 4 (187,452) (11,103) (198,555) (173,554) (24,840) (198,394)
------------ ------------- --------- ------------ ------------- ---------
Gross profit 140,784 (11,103) 129,681 86,117 (24,840) 61,277
Other operating costs 4 (15,909) - (15,909) (14,241) - (14,241)
Impairment of available-for-sale
financial assets 13 153 - 153 271 - 271
Finance income 4 320 - 320 98 - 98
Profit before tax 125,348 (11,103) 114,245 72,245 (24,840) 47,405
Tax (786) - (786) (8) - (8)
Profit for the period
after tax 124,562 (11,103) 113,459 72,237 (24,840) 47,397
EMRA profit share - - - - - -
Profit for the period
after EMRA
profit share 124,562 (11,103) 113,459 72,237 (24,840) 47,397
------------ ------------- --------- ------------ ------------- ---------
Profit for the period
attributable to:
* the owners of the parent 124,562 (11,103) 113,459 72,237 (24,840) 47,397
------------ ------------- --------- ------------ ------------- ---------
Other comprehensive
income
Items that may be
reclassified subsequently
to profit or loss:
Losses on available
for sale financial
assets (net of tax) 74 - 74 (99) - (99)
------------ ------------- --------- ------------ ------------- ---------
Other comprehensive
income for the period 13 74 - 74 (99) - (99)
------------ ------------- --------- ------------ ------------- ---------
Total comprehensive
income for the period
attributable to:
- the owners of the
parent 124,636 (11,103) 113,533 72,138 (24,840) 47,298
------------ ------------- --------- ------------ ------------- ---------
- - -
Earnings per share:
Basic (cents per
share) 10 10.807 (0.963) 9.844 6.321 (2.174) 4.147
Diluted (cents per
share) 10 10.758 (0.959) 9.799 6.242 (2.147) 4.095
(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 2016
Note 30 June 31 December
2015
2016 (Audited)
(Unaudited) US$'000
US$'000
NON-CURRENT ASSETS
Property, plant and equipment 11 890,354 871,467
Exploration and evaluation asset 12 130,663 152,077
Prepayments 5 - 28,750
Other receivables 84 60
------------ -----------
Total non-current assets 1,021,101 1,052,354
------------ -----------
CURRENT ASSETS
Inventories 121,673 134,775
Available-for-sale financial assets 194 163
Trade and other receivables 37,786 23,784
Prepayments 5 30,651 4,330
Cash and cash equivalents 16a 281,678 199,616
------------ -----------
Total current assets 471,982 359,499
------------ -----------
Total assets 1,493,083 1,411,853
------------ -----------
NON-CURRENT LIABILITIES
Provisions 7,430 7,139
------------ -----------
Total non-current liabilities 7,430 7,139
------------ -----------
CURRENT LIABILITIES
Trade and other payables 35,703 47,138
Tax liabilities - 6,837
Provisions 4,961 576
------------ -----------
Total current liabilities 40,664 54,551
------------ -----------
Total liabilities 48,094 61,690
------------ -----------
Net assets 1,444,989 1,353,332
------------ -----------
EQUITY
Issued capital 8 667,489 665,590
Share option reserve 1,640 2,469
Accumulated profits 775,860 685,273
------------ -----------
Total Equity 1,444,989 1,353,332
------------ -----------
The above Unaudited Interim Condensed Consolidated Statement of
Financial Position should be read in conjunction with the
accompanying notes.
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN
EQUITY FOR THE SIX MONTHSED 30 JUNE 2016
Share option Accumulated
Issued Capital reserve profits Total Equity
US$'000 US$'000 US$'000 US$'000
---------------- ---------------- ------------- ----------------
Balance as at 1 January 2016 665,590 2,469 685,273 1,353,332
Profit for the period - - 113,459 113,459
Other comprehensive income for
the period - - 74 74
---------------- ---------------- ------------- ----------------
Total comprehensive income for
the period - - 113,533 113,533
Dividend paid - - (22,946) (22,946)
Transfer of share based payments 1,899 (1,899) - -
Recognition of share based payments - 1,070 - 1,070
Balance as at 30 June 2016 667,489 1,640 775,860 1,444,989
---------------- ---------------- ------------- ----------------
Share
option Accumulated Total Equity
Issued Capital reserve profits US$'000
US$'000 US$'000 US$'000
-------------- -------- ------------- ----------------
Balance as at 1 January 2015 661,573 4,098 667,702 1,333,373
Profit for the period - - 47,397 47,397
Other comprehensive income for
the period - - (99) (99)
-------------- -------- ------------- ----------------
Total comprehensive income for
the period - - 47,298 47,298
Dividend paid - - (22,727) (22,727)
Transfer of share based payments 3,437 (3,437) - -
Recognition of share based payments - 1,359 - 1,359
Balance as at 30 June 2015 665,010 2,020 692,273 1,359,303
-------------- -------- ------------- ----------------
The above Unaudited Interim Condensed Consolidated Statement of
Changes in Equity should be read in conjunction with the
accompanying notes.
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE THREE AND SIX MONTHSED 30 JUNE 2016
Three Months Ended Six Months Ended
30 June 30 June
Note 2016 2015 2016 2015
US$'000 US$'000 US$'000 US$'000
Cash flows from operating
activities
Cash generated in operating
activities 16(b) 96,338 49,765 156,821 105,290
Finance income (194) (36) (320) (98)
--------- ---------
Net cash generated by operating
activities 96,144 49,729 156,501 105,192
--------- --------- --------- ---------
Cash flows from investing
activities
Acquisition of property, plant
and equipment (14,839) (9,343) (26,530) (18,067)
Exploration and evaluation
expenditure (13,132) (6,130) (26,231) (14,721)
Finance income 194 36 320 98
--------- ---------
Net cash used in investing
activities (27,777) (15,437) (52,441) (32,690)
--------- --------- --------- ---------
Cash flows from financing
activities
Dividend paid (22,946) (22,727) (22,946) (22,727)
Net cash provided by financing
activities (22,946) (22,727) (22,946) (22,727)
--------- --------- --------- ---------
Net increase in cash and cash
equivalents 45,421 11,565 81,114 49,775
Cash and cash equivalents
at the beginning of the period 234,460 163,351 199,616 125,659
Effect of foreign exchange
rate changes 1,797 62 948 (456)
--------- --------- --------- ---------
Cash and cash equivalents
at the end of the period 16 281,678 174,978 281,678 174,978
--------- --------- --------- ---------
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 MONTHSED 30 JUNE 2016
(CONTINUED)
NOTE 1: ACCOUNTING POLICIES
Basis of preparation
These unaudited interim condensed consolidated financial
statements have been prepared in accordance with IAS 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. These unaudited interim
condensed consolidated financial statements are not affected by
seasonality.
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 2015, 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 2015 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 2015 is based on the statutory accounts for the year ended
31 December 2015. Readers are referred to the auditor's report to
the Group financial statements as at 31 December 2015 (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
2015 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
2016. 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 2015.
Going concern
These financial statements for the period ended 30 June 2016
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 2012 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 were considered and ruled on, thus
providing assurance that normal operations will be able to continue
during this process.
In the unlikely event that the Group is unsuccessful in either
or both of its legal actions, and that the operating activities are
restricted to a reduced area, it is the director's belief that the
Group will be able to continue as going concern.
NOTE 1: ACCOUNTING POLICIES (CONTINUED)
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
2016
(Unaudited) 2015
US$'000 (Audited)
US$'000
Egypt 915,297 970,376
Ethiopia 309 336
Burkina Faso 94,850 76,209
Côte d'Ivoire 10,552 5,316
Australia 4 2
Jersey 89 115
--------- ---------
1,021,101 1,052,354
--------- ---------
NOTE 3: REVENUE
An analysis of the Group's revenue for the period, from
continuing operations, is as follows:
Three Months Ended Six Months Ended
30 June (Unaudited) 30 June (Unaudited)
2016 2015 2016 2015
US$'000 US$'000 US$'000 US$'000
Gold sales 179,865 123,944 327,717 259,175
Silver sales 263 248 519 496
---------- ---------- ---------- ----------
180,128 124,192 328,236 259,671
---------- ---------- ---------- ----------
NOTE 4: PROFIT BEFORE TAX
Profit for the period has been arrived at after
crediting/(charging) the following gains/(losses) and expenses:
Three months ended Three months ended
30 June 2016 30 June 2015
Before Before
exceptional Exceptional Total exceptional Exceptional Total
items items items items
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Finance income
------------ ------------- -------- ------------ ------------- --------
Interest received 194 - 194 36 - 36
------------ ------------- -------- ------------ ------------- --------
Expenses
Cost of sales
Mine production costs (64,598) (3,225) (67,823) (67,746) (8,845) (76,591)
Movement in inventory 798 (1,437) (639) (905) (2,048) (2,953)
Depreciation and Amortisation (28,393) - (28,393) (18,488) - (18,488)
------------ ------------- -------- ------------ ------------- --------
(92,193) (4,662) (96,855) (87,139) (10,893) (98,032)
------------ ------------- -------- ------------ ------------- --------
NOTE 4: PROFIT BEFORE TAX (CONTINUED)
Three months ended 30 Three months ended
June 2016 30 June 2015
Before Before
exceptional Exceptional Total exceptional Exceptional Total
items items items items
Other operating costs US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Fixed royalty - attributable
to the Egyptian government (5,392) - (5,392) (3,717) - (3,717)
Corporate costs (5,160) - (5,160) (4,211) - (4,211)
Other expenses (53) - (53) (29) - (29)
Foreign exchange gain,
net 469 - 469 763 - 763
Provision for restoration
and rehabilitation
- unwinding of discount (145) - (145) (90) - (90)
Depreciation (27) - (27) (15) - (15)
------------ ------------- --------- ------------ ------------- ---------
(10,308) - (10,308) (7,299) - (7,299)
------------ ------------- --------- ------------ ------------- ---------
Impairment of available
for sale financial
assets 220 - 220 (56) - (56)
------------ ------------- --------- ------------ ------------- ---------
Six months ended 30 Six months ended 30
June 2016 June 2015
Before Before
exceptional Exceptional Total exceptional Exceptional Total
items items items items
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Finance income
------------ ------------- --------- ------------ ------------- ---------
Interest received 320 - 320 98 - 98
------------ ------------- --------- ------------ ------------- ---------
Expenses
Cost of sales
Mine production costs (130,306) (9,158) (139,464) (132,330) (22,135) (154,465)
Movement in inventory (2,033) (1,945) (3,978) 1,734 (2,705) (971)
Depreciation and Amortisation (55,113) - (55,113) (42,958) - (42,958)
------------ ------------- --------- ------------ ------------- ---------
(187,452) (11,103) (198,555) (173,554) (24,840) (198,394)
------------ ------------- --------- ------------ ------------- ---------
Other operating costs
Fixed royalty - Attributable
to the Egyptian government (9,823) - (9,823) (7,771) - (7,771)
Corporate costs (6,960) - (6,960) (7,177) - (7,177)
Other expenses (99) - (99) (63) - (63)
Foreign exchange gain,
net 1,317 - 1,317 981 - 981
Provision for restoration
and rehabilitation
- unwinding of discount (291) - (291) (181) - (181)
Depreciation (53) - (53) (30) - (30)
------------ ------------- --------- ------------ ------------- ---------
(15,909) - (15,909) (14,241) - (14,241)
------------ ------------- --------- ------------ ------------- ---------
Impairment of available
for sale financial
assets 153 - 153 271 - 271
------------ ------------- --------- ------------ ------------- ---------
NOTE 4: PROFIT BEFORE TAX (CONTINUED)
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.
Three Months Ended Six Months Ended
30 June (Unaudited) 30 June (Unaudited)
2016 2015 2016 2015
US$'000 US$'000 US$'000 US$'000
Included in Cost of sales
Mine production costs (3,225) (8,845) (9,158) (22,135)
Movement in inventory (1,437) (2,048) (1,945) (2,705)
---------- ---------- ---------- ----------
(4,662) (10,893) (11,103) (24,840)
---------- ---------- ---------- ----------
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$45.0 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, 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$216.6 million to 30
June 2016, as an exceptional item, of which US$3.7 million and
US$8.4 million was provided for during Q2 2016 and the HY 2016
respectively, as follows:
(a) a US$3.2 million and US$9.2 million increase in mine
production costs included in cost of sales; and
(b) a US$0.8 million and US$1.8 million increase in property,
plant and equipment costs; offset by
(c) a US$0.5 million and US$0.7 million decrease in the valuation of stores inventories;
The above allocation of the exceptional items has resulted in a
net reduction of US$0.1 million and US$1.9 million to the down
payment advance for fuel procurement account for Q2 2016 and the HY
2016 respectively recorded in Prepayments further details of which
appear in Note 5.
NOTE 5: PREPAYMENTS
30 June 31 December
2016
(Unaudited) 2015
US$'000 (Audited)
US$'000
Non-current Prepayments
Advance payment to EMRA (1) -28,750
------
Current Prepayments
Advance payment to EMRA (1) 28,750 -
Fuel advance down payments 1,240 3,169
Other prepayments 661 1,161
------ ------
30,651 4,330
------ ------
(1) With a view to demonstrating goodwill toward the Egyptian
government, PGM made advance payments to EMRA which will be netted
off against future Profit Share that becomes payable to EMRA.
The cumulative fuel prepayment recognised and provision charged
as at 30 June 2016 is as follows:
Movement in fuel prepayments
Balance at the beginning of the period 3,169 -
Fuel prepayment recognised 216,602 208,204
Fuel advance down payment - 3,169
Less: Provision charged to (2) :
Mine production costs (see Note 4) (204,314) (195,155)
Property, plant and equipment (13,687) (11,852)
Inventories (530) (1,197)
Balance at the end of the period 1,240 3,169
----------- -----------
(2) Refer to Note 4, Exceptional Items, for further details.
NOTE 6: COMMITMENTS
The following is a summary of the Company's outstanding
commitments as at 30 June 2016:
Payments due Total < 1 year 1 to 5 >5 years
US$'000 US$'000 years US$'000
US$'000
Operating Lease Commitments(1) 103 46 57 -
--------- --------- --------- ---------
Total commitments 103 46 57 -
--------- --------- --------- ---------
(1) Operating lease commitments are limited to office premises
in Jersey.
NOTE 7: CONTINGENT LIABILITIES AND CONTINGENT ASSETS
Contingent Liabilities
Fuel Supply
As set out in note 4 above, in January 2012, the Group received
a letter from Chevron to the effect that Chevron would only be able
to supply DFO (Diesel Fuel Oil) to the mine at Sukari at
international prices rather than 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
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$45.0 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, 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$216.6 million, as an
exceptional item. Refer to Note 5 of these financial statements for
further details on the impact of this exceptional provision on the
Group's results for Q2 2016.
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.
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 in the first
instance.
NOTE 7: CONTINGENT LIABILITIES AND CONTINGENT ASSETS
(CONTINUED)
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 Supreme Administrative Court has stayed the Concession
Agreement appeal until the Supreme Constitutional Court has ruled
on the validity of Law 32 of 2014. The Company continues to believe
that it has a strong legal position and, in addition, that it will
ultimately benefit from Law 32 which restricts the capacity for
third parties to challenge any contractual agreement between the
Egyptian government and an investor. This law, whilst in force and
ratified by the new parliament, is currently under review by the
Supreme Constitutional Court. If the Supreme Constitutional Court
rules that Law 32 is invalid, the Group remains confident that its
appeal will be successful on the merits.
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 (30 June 2016:
nil, 31 December 2015: nil).
NOTE 8: ISSUED CAPITAL
Fully Paid Ordinary Shares Six Months Ended Year Ended
30 June 2016 31 December 2015
(Unaudited) (Audited)
Number US$'000 Number US$'000
Balance at beginning of the period 1,152,107,984 665,590 1,152,107,984 661,573
Issue of shares (1) - - - 38
Transfer from share options reserve - 1,899 - 3,979
Balance at end of the period 1,152,107,984 667,489 1,152,107,984 665,590
------------- ------- -------------- --------
(1) Fully paid ordinary shares carry one vote per share and
carry the right to dividends.
NOTE 9: RELATED PARTY TRANSACTIONS
The related party transactions for the three months ended 30
June 2016 are summarised below:
- Salaries, superannuation contributions, bonuses, LTI's,
consulting and directors' fees paid to Directors during the three
months ended 30 June 2016 amounted to US$599,896 (30 June 2015:
US$416,599).
- 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 2016 amounted to
US$12,842 (30 June 2015: US$11,539).
The related party transactions for the six months ended 30 June
2016 are summarised below:
- Salaries, superannuation contributions, bonuses, consulting
and directors' fees paid to Directors during the six months ended
30 June 2016 amounted to US$1,207,943 (30 June 2015:
US$838,685).
- 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 2016 amounted to US$25,492
(30 June 2015: US$23,193).
NOTE 10: EARNINGS PER SHARE
Basic earnings per share are calculated using the weighted
average number of shares outstanding. Diluted earnings per share
are calculated using the treasury stock method. In order to
determine diluted earnings per share, the treasury stock method
assumes that any proceeds from the exercise of dilutive stock
options and warrants would be used to repurchase common shares at
the average market price during the period, with the incremental
number of shares being included in the denominator of the diluted
earnings per share calculation. The diluted earnings per share
calculation exclude any potential conversion of options and
warrants that would increase earnings per share.
Three Months Ended Six Months Ended
30 June 30 June
(Unaudited) (Unaudited)
2016 2015 2016 2015
Cents Per Cents Per Cents Per Cents
Share Share Share Per Share
Basic earnings per share 6.297 1.647 9.844 4.147
------------ ------------ ------------ -------------
Diluted earnings per share 6.266 1.625 9.799 4.095
------------ ------------ ------------ -------------
NOTE 10: EARNINGS PER SHARE (CONTINUED)
Basic earnings per share
The earnings and weighted average number of ordinary shares used
in the calculation of basic earnings per share are as follows:
Three Months Ended Six Months Ended
30 June 30 June
(Unaudited) (Unaudited)
2016 2015 2016 2015
US$'000 US$'000 US$'000 US$'000
Earnings used in the calculation
of basic EPS 72,608 18,833 113,459 47,397
----------- ----------- ---------- ----------
Three Months Ended Six Months Ended
30 June 30 June
(Unaudited) (Unaudited)
2016 2015 2016 2015
No. No. No. No.
Weighted average number of ordinary
shares for the purpose of basic
EPS 1,153,125,676 1,143,422,483 1,152,616,830 1,142,857,680
------------- ------------- ------------- -------------
Diluted earnings per share
The earnings and weighted average Three Months Ended Six Months Ended
number of ordinary shares used 30 June 30 June
in the calculation of diluted (Unaudited) (Unaudited)
earnings per share are as follows:
2016 2015 2016 2015
US$'000 US$'000 US$'000 US$'000
Earnings used in the calculation
of diluted EPS 72,608 18,833 113,459 47,397
----------- ----------- ---------- ----------
Three Months Ended Six Months Ended
30 June 30 June
(Unaudited) (Unaudited)
2016 2015 2016 2015
No. No. No. No.
Weighted average number of ordinary
shares for the purpose of diluted
EPS 1,158,817,070 1,158,655,821 1,157,905,024 1,157,360,078
------------- ------------- ------------- -------------
Weighted average number of ordinary
shares for the purpose of basic
EPS 1,153,125,676 1,143,422,483 1,152,616,830 1,142,857,680
Shares deemed to be issued for
no consideration in respect of
employee options 5,691,394 15,233,338 5,288,194 14,502,398
------------- ------------- ------------- -------------
Weighted average number of ordinary
shares used in the calculation
of diluted EPS 1,158,817,070 1,158,655,821 1,157,905,024 1,157,360,078
------------- ------------- ------------- -------------
NOTE 11: PROPERTY, PLANT AND EQUIPMENT
Six Months Ended
30 June 2016 Office Land Plant Mining Mine Development Capital
(Unaudited) equipment and buildings and equipment equipment properties WIP Total
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Cost
Balance at 31
December 2015 5,535 1,194 582,854 241,316 316,304 32,469 1,179,672
Additions 64 26 1,438 2,026 2,074 20,898 26,526
Transfers - - - - 47,523 - 47,523
Disposal - - - (234) - - (234)
----------- --------------- --------------- ----------- ----------------- -------- ---------
Balance at 30
June 2016 5,599 1,220 584,292 243,108 365,901 53,367 1,253,487
----------- --------------- --------------- ----------- ----------------- -------- ---------
Accumulated
depreciation
Balance at 31
December 2015 (4,867) (293) (98,504) (100,826) (103,715) - (308,205)
Depreciation and
amortisation (246) (30) (14,820) (14,455) (25,611) - (55,162)
Disposal - - - 234 - - 234
----------- --------------- --------------- ----------- ----------------- -------- ---------
Balance at 30
June 2016 (5,113) (323) (113,324) (115,047) (129,326) - (363,133)
----------- --------------- --------------- ----------- ----------------- -------- ---------
Year Ended 31
December 2015 Mine
(Audited) Office Land Plant Mining Development Capital
Cost equipment and buildings and equipment equipment properties WIP Total
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Balance at 31
December 2014 5,401 1,186 565,836 221,178 232,921 116,772 1,143,294
Additions 103 8 147 3,779 - 28,781 32,818
Increase in
rehabilitation
asset - - - - 3,762 - 3,762
Disposals - - - (202) - - (202)
Transfers 31 - 16,871 16,561 79,621 (113,084) -
----------- --------------- --------------- ----------- ---------------- ---------- ---------
Balance at 31
December 2015 5,535 1,194 582,854 241,316 316,304 32,469 1,179,672
----------- --------------- --------------- ----------- ---------------- ---------- ---------
Accumulated
depreciation
Balance at 31
December 2014 (4,280) (234) (67,980) (72,339) (69,497) - (214,330)
Depreciation and
amortisation (587) (59) (30,524) (28,663) (34,218) - (94,051)
Disposals - - - 176 - - 176
----------- --------------- --------------- ----------- ---------------- ---------- ---------
Balance at 31
December 2015 (4,867) (293) (98,504) (100,826) (103,715) - (308,205)
----------- --------------- --------------- ----------- ---------------- ---------- ---------
Net book value
As at 31
December
2015 668 901 484,350 140,490 212,589 32,469 871,467
----------- --------------- --------------- ----------- ---------------- ---------- ---------
As at 30 June
2016 486 897 470,968 128,061 236,576 53,365 890,354
----------- --------------- --------------- ----------- ---------------- ---------- ---------
NOTE 12: EXPLORATION AND EVALUATION ASSETS
Six Months Year Ended
Ended 31 December
30 June 2016 2015
(Unaudited) (Audited)
US$'000 US$'000
Balance at the beginning of the period 152,077 123,999
Expenditure for the period 26,231 34,372
Transfer to Property Plant & Equipment (47,523) -
Impairment of exploration and evaluation
asset (122) (6,294)
------------- ------------
Balance at the end of the period 130,663 152,077
------------- ------------
The exploration and evaluation asset relates to the drilling,
geological exploration and sampling of potential ore reserves and
can be attributed to Egypt (US$25,260,970) Burkina Faso
(US$95,170,584) and Côte d'Ivoire (US$10,231,023).
NOTE 13: AVAILABLE-FOR-SALE FINANCIAL ASSETS
The unrealised losses on available-for-sale investments
recognised in other comprehensive income were as follows:
Three Months Ended Six Months Ended
30 June (Unaudited) 30 June (Unaudited)
2016 2015 2016 2015
US$'000 US$'000 US$'000 US$'000
Profit / (Loss) on fair value
of investment - other comprehensive
income 53 (235) 74 (99)
---------- ---------- ---------- ----------
The available for sale financial asset at period-end relates to
a 5.33% (2015: 6.66%) equity interest in Nyota Minerals Limited
("NYO"), a listed public company, as well as a 0.53% (2015: 0.96%)
equity interest in KEFI Minerals plc ("KEFI").
NOTE 14: SHARE BASED PAYMENTS
Restricted Share Plan
The Company's shareholder approved restricted share plan (RSP)
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.
To date the Company has granted the following conditional awards
to employees of the Group.
June 2015 Awards
Of the 5,145,000 awards granted on 4 June 2015 under the RSP,
3,845,000 awards remain granted to eligible participants (18 in
total) and apply the following performance criteria:
- 20% of the Award shall be assessed by reference to a target total shareholder return.
- 50% of the Award shall be assessed by reference to absolute growth in earnings per share.
- 30% of the Award shall be assessed by reference to compound growth in gold production.
June 2016 Awards
Of the 4,999,000 awards granted on 4 June 2016 under the RSP,
4,704,000 awards remain granted to eligible participants (31 in
total) applying the following performance criteria:
- 20% of the award shall be assessed by reference to a target total shareholder return.
- 30% of the award shall be assessed by reference to mineral reserve replacement and growth.
- 20% of the award shall be assessed by reference to compound growth in EBIDTA.
- 30% of the award shall be assessed by reference to compound growth in gold production.
Conditional share awards and options together constitute
"Awards" under the Plan and those in receipt of Awards are "Award
Holders".
A detailed summary of the scheme rules is set out in the 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. 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 2016
--------------------------------------- ------------
Grant date 4 June 2016
--------------------------------------- ------------
Number of instruments 4,999,000
--------------------------------------- ------------
TSR : Fair value at grant date GBP
(1) 0.6300
--------------------------------------- ------------
TSR : Fair value at grant date US$
(1) 0.9107
--------------------------------------- ------------
Reserve : Fair value at grant date
GBP (1) 1.0100
--------------------------------------- ------------
Reserve : Fair value at grant date
US$ (1) 1.4600
--------------------------------------- ------------
EBITDA : Fair value at grant date GBP
(1) 1.0100
--------------------------------------- ------------
EBITDA : Fair value at grant date US$
(1) 1.4600
--------------------------------------- ------------
Gold Production : Fair value at grant
date GBP (1) 1.0100
--------------------------------------- ------------
Gold Production : Fair value at grant
date US$ (1) 1.4600
--------------------------------------- ------------
Vesting period (years) 3.0
--------------------------------------- ------------
Expected volatility 42.14%
--------------------------------------- ------------
Expected dividend yield (%) 1.84%
--------------------------------------- ------------
(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 Reserve, EBITDA
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.
Deferred Bonus Share Plan
Deferred Bonus Share Plan awards granted during the period:
DBSP 2016
---------------------------------------- ------------
Grant date 4 June 2016
---------------------------------------- ------------
Number of instruments 1,200,000
---------------------------------------- ------------
Share price / Fair value at grant date
GBP (2) 1.0600
---------------------------------------- ------------
Share price / Fair value at grant date
US$ (2) 1.5323
---------------------------------------- ------------
Vesting period (years) (3) 1-3
---------------------------------------- ------------
Expected dividend yield (%) n/a
---------------------------------------- ------------
(2) The fair value of the shares awarded under the DBSP were
calculated by using the closing share price on grant date,
converted at the closing GBP:US$ foreign exchange rate on that day.
No other factors were taken into account in determining the fair
value of the shares awarded under the DBSP.
(3) Variable vesting dependent on one to three years of
continuous employment.
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 directors consider that the carrying amounts of financial
assets and financial liabilities carried at amortised cost
approximate their fair value.
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.
As at 30 June As at 30 June
(Unaudited) (Unaudited)
2016 2015 2016 2015
US$'000 US$'000 US$'000 US$'000
Cash and cash equivalents 281,678 174,978 281,678 174,978
-------- -------- -------- --------
(b) Reconciliation of profit for the period to cash flows from
operating activities
Three Months Ended Six Months Ended
30 June 30 June
(Unaudited) (Unaudited)
2016 2015 2016 2015
US$'000 US$'000 US$'000 US$'000
Profit for the period 72,608 18,833 113,459 47,397
Add/(less) non-cash items:
Depreciation / amortisation of
property, plant and equipment 28,420 18,503 55,166 42,987
Inventory write off - 2 - 3
Exploration - write off 37 - 122 -
Increase / (Decrease) in provisions (2,580) 178 (2,161) 1,212
Foreign exchange rate (gain)
/ loss, net (138) (1,169) (947) (1,451)
Impairment of available-for-sale
financial assets (220) 56 (153) -
Share based payment expense 1,408 643 1,069 1,358
Changes in working capital during
the period :
(Increase) / Decrease in trade
and other receivables (10,379) (673) (14,001) (560)
Decrease / (Increase) in inventories 4,093 9,609 13,102 9,970
(Increase) / Decrease in prepayments 3,335 (4,329) 2,429 (3,995)
Decrease / (Increase) in trade
and other payables (247) 8,112 (11,263) 8,369
Cash flows generated from operating
activities 96,338 49,765 156,821 105,290
--------- --------- -------- --------
(c) Non-cash financing and investing activities
There have been no non-cash financing and investing activities
during the current or comparative period quarter.
NOTE 17: SUBSEQUENT EVENTS
The Directors declared an interim dividend of 2 US cents per
share on Centamin plc ordinary shares (totalling approximately
US$23 million). The interim dividend for the half year period
ending 30 June 2016 will be paid on 7 October 2016 to shareholders
on the register on the Record Date of 9 September 2016.
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
is 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 standardised definition under IFRS and should not
be considered in isolation or as a substitute for measures of
performance prepared in accordance with IFRS. EBITDA excludes the
impact of cash cost of production and income of financing
activities and taxes, and therefore is not necessarily indicative
of operating profit or cash flow from operations as determined
under IFRS. Other companies may calculate EBITDA differently. The
following table provides a reconciliation of EBITDA to profit for
the year attributable to the Company.
Reconciliation of profit before tax to EBITDA:
Quarter ended Quarter ended Quarter ended Quarter ended
30 June 30 June 30 June 2015 30 June
2016 2016 Before Exceptional 2015
Before Exceptional Including items Including
items Exceptional Exceptional
items(1) items(1)
US$'000 US$'000 US$'000 US$'000
Profit before
tax 78,041 73,379 29,734 18,841
Finance income (194) (194) (36) (36)
Depreciation
and amortisation 28,420 28,420 18,503 18,503
EBITDA 106,267 101,605 48,201 37,308
----------------------- ----------------------- -------------------- --------------
Half year Half year Half year Half year
ended ended ended ended
30 June 30 June 30 June 2015 30 June
2016 2016 Before Exceptional 2015
Before Exceptional Including items Including
items Exceptional Exceptional
items(1) items(1)
US$'000 US$'000 US$'000 US$'000
Profit before
tax 125,348 114,245 72,245 47,405
Finance income (320) (320) (98) (98)
Depreciation
and amortisation 55,166 55,166 42,987 42,987
EBITDA 180,194 169,091 115,134 90,294
----------------------- ----------------------- -------------------- -------------
(1) Profit before tax, Depreciation and amortisation and EBITDA
includes an exceptional provision to reflect the removal of fuel
subsidies (refer to Note 4).
2) Cash cost of production and all-in sustaining costs per ounce
calculation: Cash cost of production and AISC are non-GAAP
financial measures. Cash cost of production per ounce is a measure
of the average cost of producing an ounce of gold, calculated by
dividing the operating costs in a period by the total gold
production over the same period. Operating costs represent total
operating costs less 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
of production is intended to provide additional information, does
not have any standardised meaning prescribed by GAAP and should not
be considered in isolation or as a substitute for measures of
performance prepared in accordance with GAAP. This measure is not
necessarily indicative of operating profit or cash flow from
operations as determined under GAAP. Other companies may calculate
these measures differently.
During June 2013 the World Gold Council (WGC), an industry body,
published a Guidance Note on 'all in sustaining costs' metric,
which gold mining companies can use to supplement their overall
non-GAAP disclosure. AISC is an extension of the existing 'cash
cost' metric and incorporates all costs related to sustaining
production and in particular recognising the sustaining capital
expenditure associated with developing and maintaining gold mines.
In addition, this metric includes the cost associated with
developing and maintaining gold mines. In addition, this metric
includes the cost associated with corporate office structures that
support these operations, the community and rehabilitation costs
attendant with responsible mining and any exploration and
evaluation costs associated with sustaining current operations.
AISC US$/oz is arrived at by dividing the dollar value of the sum
of these cost metrics, by the ounces of gold sold.
Reconciliation of cash cost of production per ounce:
Quarter ended Quarter ended Quarter ended Quarter ended
30 June 2016 30 June 2016 30 June 2015 30 June 2015
Before Exceptional Including Before Exceptional Including
items Exceptional items Exceptional
items(1) items(1)
US$'000 US$'000 US$'000 US$'000
Mine production costs
(Note 4) 64,598 67,823 67,746 76,591
Less: Refinery and
transport (403) (403) (484) (484)
Movement in inventory (3,337) (2,702) - -
-------------------- -------------- -------------------- --------------
Cash cost of production 60,858 64,718 67,262 76,107
-------------------- -------------- -------------------- --------------
Gold Produced - Total 140,306 140,306 107,781 107,781
Cash cost of production US$434/oz US$461/oz US$624/oz US$706/oz
per ounce
Half year Half year Half year Half year
ended ended ended ended
30 June 2016 30 June 2016 30 June 2015 30 June 2015
Before Exceptional Including Before Exceptional Including
items Exceptional items Exceptional
items(1) items(1)
US$'000 US$'000 US$'000 US$'000
Mine production costs
(Note 4) 130,306 139,464 132,330 154,465
Less: Refinery and
transport (787) (787) (808) (808)
Movement in inventory (677) 1,611 - -
-------------------- -------------- -------------------- --------------
Cash cost of production 128,842 140,288 131,522 153,657
-------------------- -------------- -------------------- --------------
Gold Produced - Total 265,574 265,574 216,014 216,014
Cash cost of production US$485/oz US$528/oz US$609/oz US$711/oz
per ounce
Reconciliation of AISC per ounce:
Quarter Quarter ended Quarter Quarter ended
ended 30 June 2016 ended 30 June 2015
30 June Including 30 June Including
2016 Exceptional 2015 Exceptional
Before items(1) Before items
Exceptional Exceptional
items items
US$'000 US$'000 US$'000 US$'000
Mine production costs(2)
(Note 4) 64,598 67,823 67,746 76,591
Movement in inventory (798) 639 - -
Royalties 5,392 5,392 3,717 3,717
Corporate administration
costs 5,160 5,160 4,211 4,211
Rehabilitation costs 145 145 90 90
Underground development 9,126 9,126 7,617 7,617
Other sustaining
capital exp. 6,793 6,793 9 9
By-product credit (263) (263) (249) (249)
------------- -------------- --------------------- --------------
AISC 90,153 94,815 83,141 91,986
------------- -------------- --------------------- --------------
Gold Sold - Total 141,802 141,802 107,781 107,781
AISC per ounce US$636/oz US$669/oz US$771/oz US$853/oz
(1) Mine production costs, cash cost of production, AISC, cash
cost of production per ounce, and AISC per ounce includes an
exceptional provision against prepayments recorded since Q4 2012 to
reflect the removal of fuel subsidies (refer to Note 4 of the
Financial Statements for further details).
(2) Includes refinery and transport.
Half year Half year Half year Half year
ended ended ended ended
30 June 30 June 2016 30 June 30 June 2015
2016 Including 2015 Including
Before Exceptional Before Exceptional
Exceptional items(1) Exceptional items
items items
US$'000 US$'000 US$'000 US$'000
Mine production costs(2)
(Note 4) 130,306 139,464 132,330 154,465
Movement in inventory 2,033 3,978 (2,639) (2,639)
Royalties 9,823 9,823 7,771 7,771
Corporate administration
costs 6,960 6,960 7,177 7,177
Rehabilitation costs 291 291 181 181
Underground development 18,295 18,295 15,645 15,645
Other sustaining
capital exp. 10,235 10,235 6,012 6,012
By-product credit (518) (518) (496) (496)
------------- -------------- ------------- --------------
AISC 177,425 188,528 165,981 188,116
------------- -------------- ------------- --------------
Gold Sold - Total 265,470 265,470 216,014 216,014
AISC per ounce US$668/oz US$710/oz US$768/oz US$871/oz
(1) Mine production costs, cash cost of production, AISC, cash
cost of production per ounce, and AISC per ounce includes an
exceptional provision against prepayments recorded since Q4 2012 to
reflect the removal of fuel subsidies (refer to Note 4 of the
Financial Statements for further details).
(2) Includes refinery and transport.
3) Cash and cash equivalents, bullion on hand, gold sales
receivables and available-for-sale financial assets: This is a
non-GAAP financial measure any other companies may calculate these
measures differently.
Reconciliation to cash and cash equivalents, bullion on hand,
gold sales receivables and available-for-sale financial assets:
Quarter ended Quarter ended
30 June 2016 30 June 2015
US$'000 US$'000
Cash and cash equivalents (Note
16(a)) 281,678 174,978
Bullion on hand (valued at the
year-end spot price) 15,809 13,089
Gold sales receivable 34,524 24,198
Available-for-sale financial assets
(Note 13) 194 323
Cash, bullion, gold sales receivables
and available-for-sale financial
assets 332,205 212,588
-------------- --------------
CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS
This document contains "forward-looking information" which may
include, but is not limited to, statements with respect to the
future financial or operating performance of Centamin plc
('Centamin' or 'the Company'), its subsidiaries (together 'the
Group'), affiliated companies, its projects, the future price of
gold, the estimation of mineral reserves and mineral resources, the
realization of mineral reserve and resource estimates, the timing
and amount of estimated future production, revenues, margins, costs
of production, estimates of initial capital, sustaining capital,
operating and exploration expenditures, costs and timing of the
development of new deposits, costs and timing of future
exploration, requirements for additional capital, foreign exchange
risks, governmental regulation of mining operations and exploration
operations, timing and receipt of approvals, consents and permits
under applicable mineral legislation, environmental risks, title
disputes or claims, limitations of insurance coverage and
regulatory matters. Often, but not always, forward-looking
statements can be identified by the use of words such as "plans",
"expects", "is expected", "budget", "scheduled", "estimates",
"forecasts", "intends", "targets", "aims", "anticipates" or
"believes" or variations (including negative variations) of such
words and phrases, or may be identified by statements to the effect
that certain actions, events or results "may", "could", "would",
"should", "might" or "will" be taken, occur or be achieved.
Forward-looking statements involve known and unknown risks,
uncertainties and a variety of material factors, many of which are
beyond the Company's control which may cause the actual results,
performance or achievements of Centamin, its subsidiaries and
affiliated companies to be materially different from any future
results, performance or achievements expressed or implied by the
forward-looking statements. Readers are cautioned that
forward-looking statements may not be appropriate for other
purposes than outlined in this document. Such factors include,
among others, future price of gold; general business, economic,
competitive, political and social uncertainties; the actual results
of current exploration and development activities; conclusions of
economic evaluations and studies; fluctuations in the value of the
U.S. dollar relative to the local currencies in the jurisdictions
of the Company's key projects; changes in project parameters as
plans continue to be refined; possible variations of ore grade or
projected recovery rates; accidents, labour disputes or slow-downs
and other risks of the mining industry; climatic conditions;
political instability, insurrection or war, civil unrest or armed
assault; labour force availability and turnover; delays in
obtaining financing or governmental approvals or in the completion
of exploration and development activities; as well as those factors
referred to in the section entitled "Principal risks affecting the
Centamin Group" section of the Management Discussion & Analysis
filed on SEDAR. 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 Andrew Pardey and Christopher Boreham (Underground
Manager) who, as members of the Australasian Institute of Mining
and Metallurgy each have 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 latest technical report entitled "Mineral Resource
and Reserve Estimate for the Sukari Gold Project, Egypt" effective
30 June 2015 and dated 23 October 2015 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 QKLFBQVFEBBV
(END) Dow Jones Newswires
August 10, 2016 02:00 ET (06:00 GMT)
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