TIDMCEY
RNS Number : 4028D
Centamin PLC
31 January 2018
For immediate 31 January 2018
release
Centamin plc ("Centamin" or "the Company")
(LSE:CEY, TSX:CEE)
Centamin plc results for the year ended 31 December 2017 and
full year dividend declaration
Josef El-Raghy, Chairman of Centamin, commented: "Testament to
the quality of our team and the quality of our assets, the past
year has seen the Company firmly consolidate its position as one of
the world's leading low cost gold producers. The Sukari Gold Mine
produced 544,658 ounces of gold in 2017, at a cash cost of
production of US$554/oz and all-in sustaining cost of US$790/oz at
an average realised gold price of US$1,261/oz, generating US$676
million in revenue, US$326 million in EBITDA and US$224 million in
pre-tax profits. Commercially in operation for eight years, Sukari
has maintained cash costs in the lowest quartile in the industry,
averaging US$614/oz since commercial production commenced in
2010.
The central tenet of our corporate strategy is delivering
returns to stakeholders. Following a strong operational and
financial performance throughout the year, the board of directors
is delighted to propose a final dividend for 2017 of 10 US cents
per share, for approval at the forthcoming Annual General Meeting
on 26 March 2018. This represents a proposed full year dividend of
12.5 US cents per share, totalling a full year pay-out of US$144
million, which is equivalent to approximately 100% of our free cash
flow in 2017."
Financial Highlights(1),(2)
Fourth Quarter, ending 31 December 2017.
-- Cash costs of production of US$453 per ounce, a 6%
improvement quarter on quarter ("QoQ") on Q3 2017 and a 15%
improvement year on year ("YoY) on Q4 2016, driven predominantly by
an increase in ounces produced. The benefits of an increase in
produced ounces (driven by increases in processed tonnes and grade)
was slightly offset by an increase in fuel and reagent costs;
-- All-in sustaining costs ("AISC(1) ") of US$744 per ounce
sold, were 2% higher QoQ and 3% higher YoY, mainly due to increased
production costs and higher sustaining capital costs as a result of
the planned fleet rebuilds.
Full Year, ending 31 December 2017
-- Strong cash flow generation with US$142 million of free cash
flow(1) generated in 2017, down 41% on the prior year (2016: US$242
million) almost entirely due to the impact of increased profit
share payments;
-- 2017 revenues of US$676 million were down 2% on the prior
year (2016: US$687 million) with a 0.4% increase in realised gold
prices offset by a decrease in gold sales;
-- Cash costs increased to US$554 per ounce produced (2016:
US$513), driven predominantly by an increase in mined and processed
tonnes and an increase in fuel and reagent costs;
-- AISC(1) of US$790 per ounce sold matched our forecast but was
an increase on the prior year (2016: US$694), mainly due to
increased production costs and higher sustaining capital costs
resulting from planned fleet rebuilds;
-- EBITDA(1) decreased by 13% to US$326 million, as a result of
increased production and operating costs and the slight decrease in
revenues;
-- Profit before tax decreased by 16% to US$224.1 million, due to the factors outlined above;
-- Earnings per share after profit share of 9.51 US cents were
down 49% on the prior year due to lower revenue, higher costs and,
most significantly, the impact of the first full year of profit
share (2016: 18.71 US cents);
-- Operational cash flow of US$359 million was 2% lower than
2016, due to the lower gold production base with higher gold prices
offset by a higher cost base;
-- Total capital expenditure for 2017 of US$107.5 million was a
2% increase on the prior year (2016: US$105.6 million). The US$19
million increase in sustaining capital (including the scheduled
fleet rebuild programme) was largely offset by a US$17 million
reduction in the non-sustaining capitalised exploration costs
across the group;
-- Cash and liquid assets (3) of US$418 million at 31 December 2017; and
-- Centamin remains debt-free and unhedged.
Proposed Final Dividend
o Subject to shareholder approval at the Company's annual
general meeting on Monday 26 March 2018:
o Proposed final dividend of 10 US cents per share
(US$115.2m);
o Total dividend of 12.5 US cents per share, including the
interim dividend of 2.5 US cents per share (paid out 29 September
2017);
o Proposed total dividend pay-out of approximately US$144
million, equivalent to approximately 100% of free cash flow in
2017; and
o Record date on 23 March 2018; Pay date on 6 April 2018.
Operational Highlights (1),(2)
-- Full year gold production was 544,658 ounces, above guidance
of 540,000 ounces and 1% decrease year on year ("YoY");
-- Record processing throughput of 12.0Mt, a 4% improvement YoY
and above our base case forecast rate of 11.8 Mtpa.
-- Record open pit total material movement (waste plus ore) of 70.9Mt, a 14% improvement YoY.
-- Record open pit ore production of 16.09Mt, a 47% improvement
YoY, at an average mined grade of 0.66g/t. This included 3,965kt at
0.29g/t delivered to the dump leach pads. The average head grade to
the plant from the open pit was 0.89g/t, a 6% decrease YoY; and
-- Total underground ore mined of 1.14Mt, a 12% improvement YoY,
at a grade of 8.28g/t, an 8% decrease YoY, marking the third
consecutive year of sustained annualised rate above our base case
forecast of 1Mt per annum.
o Underground ore from stoping was 684kt, a 21% increase YoY, at
a grade of 8.88g/t;
o Underground ore from development was 461kt, a 1% increase YoY
at a grade of 7.39g/t.
Exploration Highlights
-- Exploration at Sukari drives high grade underground reserve
expansion in excess of annual depleted mined ounces;
-- Exploration success in Côte d'Ivoire has expanded last year's
maiden resource at Doropo Project to 1.35Moz gold Indicated and
0.9Moz gold Inferred, with the main structure remaining open;
-- Exciting new discovery at the ABC Project in Côte d'Ivoire
where exploration delineated an outcropping 12km strike-length gold
bearing structure; and
In Burkina Faso, drilling targeted resource and reserve
expansion near Konkera.
2018 Outlook
-- Forecast gold production for 2018 is 580,000 ounces, a 6.5%
increase on 2017 actual production, with the mine plan forecasting
a relatively balanced quarterly production profile over the
year;
-- Forecast cash cost of production for 2018 of US$555 per ounce
and all-in-sustaining cost of US$770 per ounce;
-- 2018 capital expenditure of US$135 million including US$37.5
million for non-sustaining exploration;
-- Processing plant throughput of 12.3Mtpa, with the
installation of the fourth secondary crusher increasing
capacity;
-- 70.5Mt total open pit material scheduled to be mined; 17.7Mt
total open pit ore scheduled to be mined at an overall grade of
0.70g/t including dump-leach and stock-pile material, with open pit
feed grade in line with open pit reserve grade;
-- Open pit mining activities will be focused on Stage 4A of the
north wall, the predominant source of ore over the next five
years;
-- 1.3Mt total underground ore scheduled to be mined at a grade
of 7.2 g/t; comprising a 65:35 split between stoping and
development ore, respectively;
-- Ongoing decline development and exploration at Cleopatra, to
access the high grade western contact, a key near term growth
catalyst; Ongoing underground decline development at Amun and Ptah,
to access the Horus, Bast and Osiris zones, which are key drivers
of medium term growth;
-- Four exploration rigs allocated to focus on underground
reserve replacement and resource expansion drilling as the orebody
remains open in multiple directions;
-- Further resource development in West Africa, with resource
expansion and definition continuing at the Doropo Project in
north-east Côte d'Ivoire and resource definition drilling in
Burkina Faso; and
-- Follow up exploration work continues after encouraging first
pass drill results from the ABC project in western Côte d'Ivoire
delineated an outcropping 12km strike gold bearing structure.
Legal Developments in Egypt
-- The Supreme Administrative Court appeal and Diesel Fuel Court
Case are both on-going. With the potential for the legal process in
Egypt to be lengthy there may be a number of hearings and
adjournments before decisions are reached. There were no
developments during the year in the two litigation actions.
Q4 2017 Q4 2016 2017 2016
------------------------- ----------- -------- -------- -------- --------
Gold produced ounces 154,298 136,787 544,658 551,036
Gold sold ounces 153,490 130,959 539,726 546,630
Cash cost of production US$/ounce 453 536 554 513
AISC US$/ounce 744 720 790 694
Average realised
gold price US$/ounce 1,278 1,207 1,261 1,256
------------------------- ----------- -------- -------- -------- --------
Revenue US$'000 190,413 158,307 675,510 687,387
EBITDA US$'000 103,301 81,762 325,927 372,885
Profit before tax US$'000 81,351 58,870 224,094 266,829
Basic EPS US cents 3.81 3.17 9.51 18.71
Capital expenditure
including exploration US$'000 33.4 25.7 107.5 105.6
Cash generated
from operations US$'000 113,454 69,869 358,811 366,295
------------------------- ----------- -------- -------- -------- --------
(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 Review.
(2) Basic EPS, EBITDA, cash cost of production and AISC reflect
a provision against prepayments to reflect the removal of fuel
subsidies which occurred in January 2012 (refer to note 12 of the
financial statements for further details).
(3) Cash and cash equivalents, bullion on hand, gold sales
receivables and available--for--sale financial assets
Results Presentation and Conference Call
Centamin will host a Results Presentation for investors and
analysts, today, Wednesday, 31 January 2018, at 09.00 GMT, at
Buchanan Communications offices, 107 Cheapside, London EC2V
6DN.
Participants unable to attend can dial-in remotely with the
following details. The presentation and associated videos will be
made available on the company website from 09.00 GMT
http://www.centamin.com/investors/presentations/2018
UK Toll: 02034281542
UK Toll Free: 08082370040
Participant Code: 63780277#
Webcast link:
http://vm.buchanan.uk.com/2018/centamin310118/registration.htm
A replay of the conference call/webcast will be made available
on the company website www.centamin.com from 12.00 GMT (07.00
EST).
For further information, please visit www.centamin.com or
contact:
Centamin plc Buchanan
Andrew Pardey, Chief Executive Bobby Morse
Officer Chris Judd
Alexandra Carse, Investor Patrick Hanrahan
Relations + 44 (0) 20 7466 5000
+44 (0) 7700 713 738 centamin@buchanan.uk.com
alexandra.carse@centamin.je
Chairman's statement
Dear Shareholders,
On behalf of the board, it gives me pleasure to present the 2017
results.
Strength throughout the cycle
Testament to the quality of our team and the quality of our
assets, the past year has seen the Company firmly consolidate its
position globally as one of the leading low cost gold producers.
The Sukari Gold Mine produced 544,658 ounces of gold in 2017, at
cash costs of US$554/oz and all-in sustaining costs of US$790/oz at
an average realised gold price of US$1,261/oz, generating US$676
million in revenue, US$326 million in EBITDA, US$224 million in
pre-tax profits. Commercially in operation for eight years, Sukari
has maintained year on year cash costs in the lowest quartile in
the industry, averaging US$614/oz since commercial production
commenced in 2010.
Our aim is to deliver strong performance under any market
conditions. In what has been a more challenging market, Centamin's
stringent cost reduction strategies and working capital
efficiencies have enabled the Company to generate strong all-in
sustaining margins of US$471/oz, down from US$562/oz in 2016,
generating significant cash flow of US$359 million, only marginally
lower than the US$366 million achieved in 2016. A 24% increase in
fuel costs combined with a scheduled 30% increase in sustaining
capital expenditure in 2017 (largely due to equipment rebuilds),
were offset by reductions in non-sustaining exploration expenditure
and cost reduction strategies delivering all-in sustaining costs of
US$790/oz, exactly in line with guidance for 2017. The increase in
production costs and the slight decrease in produced ounces led to
an 8% increase in unit cash costs of production to US$554/oz for
2017, well below our US$580/oz guidance for 2017 and extremely
competitive within the global gold industry.
Consistent strategy
Over the past twenty years the Company has been committed to
building a modern gold mining industry in Egypt, a country which
straddles the economic diversity of Africa and the Middle East, a
strategically vital economy in a region that has been associated
with several significant challenges, and a country located on one
of the last remaining underdeveloped gold belts, the Arabian Nubian
Shield. There have been various public views expressed about Egypt
in the international arena that simply do not correlate with the
experience that Centamin has had, as one of the largest foreign
investors in this dynamic country. Having worked closely with
Centamin since its founding, particularly with my father and
family, through to today's highly experienced Board, Centamin has
put Egypt firmly on the map of gold exporting countries.
Significantly, Sukari has produced every single commercial ounce of
gold that Egypt has exported over the past eight years, which by
the end of 2017 stood at over 2.9 million ounces.
The modern infrastructure and operations established at Sukari,
supported by a minimum of 20- year mine life with untapped
underground resource upside, provide the solid foundation from
which Centamin will continue to generate meaningful cash flow. Our
robust balance sheet, which remains debt free, allows us to
continue investing in future growth - whether that is organically
across our portfolio of assets and/or through seizing value
accretive opportunities which are in line with our strategic
objectives.
Delivering substantial stakeholder returns
Free cash flow generation is the fundamental driver of the
business, allowing the Company to prioritise stakeholder returns.
The success of Sukari, which today employs over 1,350 Egyptian
nationals directly and many more indirectly throughout its supply
chain, is further underpinned by direct cash returns to date to the
Egyptian State of US$272 million through royalties and profit share
(excluding taxes on salaries, fuel and other sources of fiscal
revenue). In total, the Company, with the support of its
shareholders, has directly invested, and fully recovered, more than
US$1.1 billion into the Egyptian economy. This simply could not
have happened without the patient support from our Egyptian
stakeholders, who have benefited from seeing Sukari grow from an
exploration licence into one of the largest gold producing mines in
the world.
In July, we declared an interim dividend of 2.5 US cents per
share, a 25% increase on the 2016 interim payment. Following
another year of strong operational and financial performance,
including paying out US$112m in profit share, the board of
directors are delighted to propose a final dividend for 2017 of 10
US cents per share, for approval at the forthcoming Annual General
Meeting on 26 March 2018. This represents a proposed total dividend
of 12.5 US cents per share, full year pay-out of US$144 million,
which is equivalent to approximately 100% of our free cash flow in
2017. This level of payment is consistent with the Company's policy
of returning cash in excess of US$250-300m that is not required for
growth projects.
Board and management changes
Our commitment to robust corporate governance and the
disciplined execution of our fiduciary duties forms a core pillar
to Centamin and, in order to grasp the opportunities that lie in
front of Centamin, the Company has striven to improve on every
aspect of its business beyond simply producing profitable gold
ounces and lowering cash costs. In this regard, we are delighted to
welcome Alison Baker as an independent Non-Executive Director to
the board. Alison will play an important part in the ongoing
development of our corporate governance initiatives. We also warmly
welcome Ross Jerrard to the board as Chief Financial Officer. Ross
joined Centamin's senior management team in 2016 as Chief Financial
Officer, and has been instrumental in transforming our reporting
systems throughout the group. Lastly, I am delighted to welcome
Mark Morcombe to the senior management team, as Chief Operating
Officer. Mark is a very accomplished, well respected mining
engineer, who brings a vast amount of relevant African open pit and
underground experience.
Under the strong stewardship of your CEO, Andrew Pardey, who
helped build Sukari in his various roles, including as General
Manager and then COO, I believe that the Company is in a position
of considerable strength to see sustainable and consistent growth
over the coming years. The Board has embarked on the process, with
an executive search firm, of finding an independent Non-Executive
Chairman to succeed me. As announced recently, it is my intention
to resign from my position no later than the end of December 2018,
and continue my support of Centamin as a committed shareholder. I
want to thank the Board for their support during my tenure and I
wish them well for what remains an exciting future for the
Company.
On that note, I thank all shareholders for their support over
the years, which has seen Centamin grow from a small Australian
listed exploration company into one of the largest gold producers
listed on the London and Toronto Stock Exchanges. We welcome you to
attend our AGM, which will be held in Jersey on 26 March 2018. I
would also like to thank all of our incredible staff whose
contributions have made the Company what it is today.
By order of the board for and on behalf of Centamin plc.
Josef El-Raghy
Chairman
31 January, 2018
Dividend information
Final Dividend
The Directors proposed a final dividend of 10 US cents per share
on Centamin plc ordinary shares (totalling approximately US$115
million) for a full year total of 12.5 US cents per share for a
totally pay-out of US$144 million. The final dividend for 2017 will
be paid to shareholders on 6 April 2018, subject to shareholder
approval at the AGM to be held in Jersey on 26 March 2018. The
dividend will be paid to shareholders on the register on the Record
Date of 23 March 2018.
The key dates with respect to the dividend are as follows:
London Stock Exchange and Toronto Stock Exchange (T+2)
EX-DIV DATE: 22 March 2018
RECORD DATE: 23 March 2018
LAST DATE FOR RECEIPT OF CURRENCY ELECTIONS: 26 March 2018
PAY DATE: 6 April 2018
The dates set out above are based on the Directors' current
expectations and may be subject to change. If any of the dates
should change, the revised dates will be announced by press release
and will be available at www.centamin.com
As a Jersey incorporated company, there is no requirement for
Centamin plc to make any withholding or deduction on account of
Jersey tax in respect of the dividend.
Shareholders who wish to elect to receive sterling dividends can
mandate payments directly to their UK bank or building society by
visiting the Investor Centre website at www.investorcentre.co.uk/je
or by completing the dividend mandate form which is available at
www.centamin.com and posting it back to the registrars in
accordance with the instructions set out in the form. The
registrars retain the mandates previously provided by shareholders
and will apply the instructions for this and future dividends.
Our registrars have also arranged a global payment service
allowing payment directly to your designated account, please visit
www.investorcentre.co.uk/je or www.centamin.com for details. The
currency election mandate will be applicable for shareholders with
a UK bank account. The global payment service is a service provided
by the registrars for shareholders registered on the LSE and
transfer charges may apply.
The last date for shareholder currency elections and dividend
mandates to be received by the Company will be 26 March 2018. The
currency conversion rate for those electing to receive Sterling
will be based on the foreign currency exchange rates on 27 March
2018. The rate applied will be published on the Company's website
on 28 March 2018.
Chief Executive Officer Statement
During 2017, Centamin successfully delivered against our
strategic objectives to generate significant cash flow, maintain
substantial stakeholder returns, deliver exploration led growth and
ensure ongoing commitment to workplace safety.
In its eighth year of commercial production, Sukari enjoyed
another strong year, producing 544,658oz, exceeding our guidance of
540,000oz. Integral to this success are our people. Safety is a
critical area of Centamin's performance and our aim is to ensure
that every person returns safe at the end of each shift. Continued
onsite health and safety development has resulted in a circa 4%
reduction in lost time injury frequency rate to 0.26. We continue
to take the appropriate measures in striving to achieve a zero-harm
workplace.
Driving productivity
This year marked another great year of operational milestones,
as a result of our uncompromised commitment to continuous
improvements to productivity and efficiency.
The open pit delivered a record 70.9Mt of material mined, a 14%
increase on 2016, and the processing plant achieved record
throughput of 12.0Mt, up 4% on 2016. Both mining and plant
throughput volumes represent the eighth successive year of growth.
Throughout 2017, ongoing improvements to the operation, utilisation
and availability of our fixed assets have been a key driver in
achieving these milestones. For example, renewed operator training
has improved productivity of the loading fleet. Furthermore,
pro-active, preventative maintenance and systems implementation to
improve efficiency across procurement warehousing and plant and
equipment maintenance throughout 2016 and 2017 has resulted in
improved mining productivity throughout the year.
The increase in tonnes through the plant slightly impaired
metallurgical recoveries, which were 88.1%, marginally below
budget. Further optimisation on improving recoveries is underway.
Projects undertaken include the installation of VisioFroth; the
commissioning of a second acid wash column; an expansion of the
elution circuit by installing a third elution column with
supporting infrastructure and an extra electro winning cell; an
automated control monitoring system that aims to increase the
floatation mass pull; reducing the CIL tailings losses with
improved carbon management and carbon monitoring techniques.
Creating value through the drill-bit
Centamin has an excellent exploration track record and 2017 was
no different. Our updated Mineral Reserve and Resource statement of
total reserves of 8.0Moz and Measured and Indicated Resources of
11.7Moz, as at 30 June 2017, reiterated the long-term
sustainability of the Sukari open pit and the further expansion
opportunities for the high grade underground operations.
Sukari underground drilling resulted in a 51% increase in
underground reserves to 0.8Moz and a 74% increase in reserve tonnes
to 4.7Mt. Underground exploration at Amun / Ptah was very
successful during 2017, identifying potential high-grade zones at
Horus and demonstrating the prospectivity of the Osiris and Bast
sectors within the Amun zone and the gap between Anum and Ptah
respectively.
Medium term organic growth at Sukari is likely to be driven by
increased underground production levels, displacing lower-grade
open pit ore. In particular, the Cleopatra exploration decline was
advanced during the year to establish drill platforms within Sukari
to test the contact zone at the northern end of the porphyry for
similar mineralisation to that currently being mined at Amun /
Ptah. Initial drill results confirmed the presence of prospective
structures within the porphyry which may be used to target future
development of the decline and the Company has today reported
encouraging results from the contact zone between the porphyry and
the surrounding meta-sedimentary rock. Drilling continues and will,
over the course of 2018, guide future development plans for
Cleopatra. Even though Cleopatra is an exploration project, the
decline has been built to the same specification as Amun / Ptah
with potential capacity of around 1Mtpa of additional underground
ore, dependent on the results of the ongoing exploration
programme.
West African developments
The resource at our Doropo project in Côte d'Ivoire has been
increased from the maiden resource announced in January 2017 to
1.3Moz (contained gold) indicated and 0.95Moz inferred. This
resource is located with an area of 25km(2) and within a
comfortable haul from a potential central processing facility.
The Doropo resource is located within a granite domain that had
previously been dismissed as not being prospective for significant
gold mineralisation. The team in Cote d'Ivoire has successfully
proved its ability to define a resource area that is still open and
with further geochemical anomalies in the area that still need to
be drill tested for further prospective gold mineralisation. Test
work has continued to confirm that the gold from this area can be
extracted using conventional CIL or heap leaching methods. Whilst
undertaking this work in Doropo, the team has also been very active
on the ABC project area on the west side of Cote d'Ivoire. Although
at an early stage in the exploration pipeline, initial results from
first pass drilling has confirmed a mineralised corridor of over 12
km in strike length.
Doropo and the ABC project have the potential to develop further
as drilling continues and form part of the strong base for
Centamin's exploration and development pipeline including Burkina
Faso and the near mine targets at Sukari.
Strengthening established partnerships
Last year marked 22 years in partnership under our Concession
Agreement with the Arab Republic of Egypt. Last year was also the
first full year profit share payout to the government under our
profit share arrangement. The smooth transition from US$1.1bn
project cost recovery in late 2016 to this year's first full year
US$112m profit share payout (totalling circa US$159 million paid to
date), is testament to the strength of our established relationship
with the Egyptian government and our excellent team and framework
in place in Alexandria and Cairo, led by Youssef El-Raghy, the
General Manager of Egyptian Operations.
As with any partnership, nurturing that relationship is
paramount to its success. Centamin maintains regular Executive and
Senior Management contact with respective government and industry
partners, establishing open lines of communication throughout our
Finance, Operations and in-country Corporate Affairs departments.
We would like to thank our supportive stakeholders, and we look
forward to the long-term relationship of substantial profit share
resulting from the operation and growth of our world class
asset.
The year ahead
We look forward to delivering solid growth in 2018 with gold
production guidance of 580,000 ounces, a 6% increase over 2017
production, at a lower all-in sustaining cost of US$770/oz. Cash
costs are expected to be US$555/oz, in line with 2017 actuals,
driven by increased production offsetting expected higher fuel and
reagent input costs.
With the installation of the fourth secondary crusher, we are
targeting record processing plant throughput of 12.3Mt. The mine
plan forecasts a relatively balanced quarter on quarter production
profile throughout the year. The underground is scheduled to mine
an increased 1.3Mt ore at a grade of 7.2 g/t; comprising a 65:35
split between stoping and development ore, respectively. The
improvement in total tonnes from underground will be driven by
increased stoping activities made possible by our focus on ensuring
development is well advanced. Open pit mining activities will be
focused on Stage 4A of the north wall. This is the predominant
source of ore from the open pit over the next five years. The open
pit is scheduled to move 70.5Mt of material and mine 17.7Mt ore at
an overall grade of 0.70g/t including dump-leach and stock-pile
material, with open pit feed grade in line with open pit reserve
grade.
Underground exploration and development remains the key catalyst
in near term organic production growth. Sukari exploration spend of
over US$20 million is anticipated for 2018, with four rigs
allocated to focus on underground reserve replacement and resource
expansion drilling as the orebody remains open in multiple
directions. The focus of our development will include the
exploration decline at Cleopatra to access the high grade western
contact of the porphyry as well as expanding decline development at
Amun and Ptah, to access the Horus, Bast and Osiris zones, which we
should drive our medium term growth strategy.
Finally, I would like to thank my colleagues for their hard work
and contribution towards delivering another solid performance.
Operating within a cyclical sector, in a fast changing world,
Centamin has established an impressive track record of adapting,
mitigating risks where appropriate, and delivery strong results.
This resilience in our business model is testament to the strength
of core values your Company is built upon and the experience and
expertise of the people within it.
I would also like to thank our board of directors for their
continued support and guidance, in particular our Chairman, Josef
El-Raghy, who has announced his intention to retire at the end of
2018. As CEO and Chairman over the past 15 years, Josef has built a
remarkable gold company. Centamin is in a very strong financial and
operational position and we respect that this year is the right
time for Josef to hand over the reins to a successor as we enter
the next stage of growth in 2018 and beyond.
Andrew Pardey
Chief Executive Officer
31 January 2018
Operational review
Health and safety - Sukari
The Lost Time Injury Frequency Rate ("LTIFR") for 2017 was 0.26
per 200,000 man hours (2016: 0.27 per 200,000 man hours), with a
total of 5,464,321 man hours worked during 2017 (2016: 5,187,635).
Continued development of the onsite health and safety culture has
resulted in improved reporting of incidents.
Centamin remains committed to further improving health and
safety during 2018 towards our zero--harm target. Further details
of the safety initiatives, employee welfare and relevant government
relations are set out in the CSR report which will be published in
the 2017 annual report and accounts on 20 February 2018.
Open pit
The open pit delivered total material movement of 70.9Mt, a 14%
increase on the prior year (62.2Mt in 2016). This increase was
related to improved mining productivity and equipment utilisation.
The strip ratio was 3.4, a reduction from 4.68 in 2016, as ore
mining focused on the Stage 3B areas.
Ore production from the open pit was 16.1Mt at 0.66g/t, with an
average head grade to the plant of 0.89g/t. The ROM ore stockpile
balance increased by 1,607kt to 2,178kt by the end of the year. Ore
mining was primarily from the Stage 3B area, which provided access
to higher--grade sulphide portions of the ore body during 2017.
In 2018, total material mined is forecast at 70.5Mt, with total
ore mined of 17.7 Mt at a grade of 0.7 g/t. Total waste planned is
52.8Mt. The strip ratio is planned at 3.0. Mining activities will
be focused in the mining area of Stage 4A with 70Mt of material
planned with the remaining 0.5 Mt mined from Stage 3B during Q1
2018. Stage 4A will be the primary source of ore for the year
providing 17.3 Mt at 0.68 g/t the ore mined for the year. Stage 3B
will provide the balance of approximately 0.44Mt at 1.3 g/t. Stage
4A will continue to be predominant source of open pit ore until
June 2021.
Underground mine
The underground mine produced 1.14Mt of ore, a 13% increase on
the prior year (1.02Mt in 2016). Ore from stoping accounted for 60%
(0.68Mt) of the total, with the balance of ore (0.46Mt) from
development. The average mined head grade was 8.3g/t, above our
7.3g/t forecast. The average grade from stoping was 8.9g/t (9.1g/t
in 2016) and the average grade from development was 7.4g/t (9.0g/t
in 2016), a 2% and 18% decrease, respectively on the prior
year.
During the second, third and fourth quarters production was
increased to be closely aligned with a 1.3Mtpa run rate. Tonnage
and lower--grade stockwork stopes on the western contact and in the
central zone were produced predominantly together with stoping of a
high grade lode in the Ptah. Stoping was shared between the eastern
side of the deposit, where higher--grade mineralisation typically
occurs in laminated quartz veins, with sulphide stockworks trailing
out westward into the porphyry mass and the North / South dipping
high grade quartz vein sitting amid haematite altered porphyry and
meta-sediments at the Ptah.
Underground development advanced 6,981 metres, including
progression of the Horus and Ptah declines. This development
comprised 4,257 metres in Amun and 2,724 metres in Ptah.
The exhaust circuit for the Ptah and Horus declines was
progressed, ensuring sufficient ventilation as both declines
extends deeper into the ore body.
A total of 10,672 metres of grade control drilling were
completed, aimed at short term mine planning and resource
development. A further 33,800 metres of underground diamond
drilling continued to test for reserve extensions below the current
Amun and Ptah zones with extensive drilling also being undertaken
at the Cleopatra zone of Sukari Hill. Further details and
underground drilling results are discussed in the exploration
section of this report.
Processing
The Sukari plant processed a record 12.03Mt of ore in 2017, a
4.1% increase on the prior year (11.56Mt in 2016) and 2.4% above
our 11.75Mt forecast. Productivity continued to increase throughout
the year, with a record 3.1Mt processed during the fourth quarter,
reflecting the ongoing improvement on availability and productivity
of the circuit.
Metallurgical recovery averaged 88.1%, a 1.5% decrease on the
prior year (89.4% in 2016). Work is continuing to optimise the
operational controls and stability for flotation, the ultra-fine
grinding and pyrite leach circuits to ensure recoveries are
improved with a target rate of 89.5% at the increased rate of
throughput.
The dump leach operation produced 8,597oz during the year.
The 2018 production guidance is based on a forecast production
rate of 12.3Mt, with an annual average gold recovery of 89.6%.
Grades are expected to remain steady throughout the year, averaging
1.60g/t.
Year Year
ended ended
31-Dec 31-Dec
Sukari Gold Mine 2017 Q4 Q3 Q2 Q1 2016 Q4
production summary 2017 2017 2017 2017 2016
------------------------- -------- -------- -------- -------- -------- -------- --------
Open pit mining
Ore mined(1)
('000t) 16,090 5,726 4,825 3,060 2,478 10,949 2,183
Ore grade mined
(g/t Au) 0.66 0.62 0.76 0.76 0.47 0.93 0.85
Ore grade milled
(g/t Au) 0.89 0.92 1.11 0.81 0.72 0.95 0.85
Total material
mined ('000t) 70,870 17,647 18,602 17,493 17,129 62,238 15,810
Strip ratio (waste/ore) 3.40 2.08 2.86 4.72 5.91 4.68 6.24
------------------------- -------- -------- -------- -------- -------- -------- --------
Underground mining
Ore mined from
development ('000t) 461 130 113 119 99 454 103
Ore mined from
stoping ('000t) 684 168 189 174 153 565 125
Ore grade mined
(g/t Au) 8.28 8.80 7.98 8.79 7.44 9.04 10.43
------------------------- -------- -------- -------- -------- -------- -------- --------
Ore processed
('000t) 12,032 3,072 2,996 3,056 2,908 11,559 2,948
Head grade (g/t) 1.57 1.70 1.82 1.44 1.29 1.65 1.62
Gold recovery
(%) 88.1 88.5 88.3 86.7 88.8 89.4 89.9
Gold produced
- dump leach
oz) 8,597 3,119 1,692 1,738 2,048 9,872 2,550
Gold produced
- total(2) (oz) 544,658 154,298 156,533 124,641 109,187 551,036 136,787
------------------------- -------- -------- -------- -------- -------- -------- --------
Cash cost of
production(3)
(US$/oz) 554 453 483 609 734 513 536
Open pit mining 210 160 180 234 286 179 198
Underground mining 40 34 33 41 55 43 46
Processing 269 224 244 296 347 253 254
G&A 35 35 26 38 46 38 38
AISC(3) (US$/oz) 790 744 732 829 887 694 720
------------------------- -------- -------- -------- -------- -------- -------- --------
Gold sold (oz) 539,726 153,490 150,273 120,912 115,052 546,630 130,959
Average realised
sales price (US$/oz) 1,261 1,278 1,283 1,249 1,220 1,256 1,207
------------------------- -------- -------- -------- -------- -------- -------- --------
(1) Ore mined includes 2,064kt @ 0.32g/t delivered to the dump
leach in Q4 2017 (117kt @ 0.21g/t in Q4 2016).
(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 costs of production
reflect a provision against prepayments to reflect the removal of
fuel subsidies which occurred in January 2012 (refer to note 12 of
the financial statements for further details).
(4) Cash cost of production and all-in sustaining costs are
non-GAAP financial performance measures with no standard meaning
under GAAP. Please see the financial review for details of non-GAAP
measures.
Mineral reserve and resource statements
During the year, Centamin updated its mineral resource and
mineral reserve estimates for the Sukari Gold Mine, as at 30 June
2017.
The total measured and indicated mineral resource estimate of
11.7Moz Au is reported as an open pit resource at a 0.3g/t cut--off
grade. This total is inclusive of the 1.6Moz underground mineral
resource. The open pit and surface stockpile mineral reserve
estimate is 7.2Moz and the underground mineral reserve estimate is
5.4 million tonnes ("Mt") containing 0.8Moz gold.
The total combined open pit and underground mineral reserve
estimate of 8.0Moz represents an increase in underground reserves
offsetting total depleted ounces from the production of 1.0Moz
between 30 June 2015 and 30 June 2017.
Resource and reserve definition drilling continues to target
higher grade areas of the Sukari deposit, in parallel with
expanding underground infrastructure. Positive results from the
ongoing drilling programmes are discussed in the following
section.
Total Mineral Resource for the Sukari Gold Mine
As at 30 June
2017
-------------------------- ---------------- ------------------------- -------------------------
Measured Indicated Total measured Inferred
& indicated
-------- ---------------- ---------------- ------------------------- -------------------------
Cut-off Tonnes Grade Tonnes Grade Tonnes Grade Gold Tonnes Grade Gold
(g/t) (Mt) (g/t) (Mt) (g/t) (Mt) (g/t) (Moz) (Mt) (g/t) (Moz)
-------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
0.3 240 1.02 145 0.84 385 0.95 11.75 25 0.80 0.64
-------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
0.4 199 1.15 114 0.97 313 1.09 10.95 19 0.90 0.58
-------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
0.5 167 1.29 92 1.10 259 1.22 10.17 15 1.1 0.52
-------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
0.7 121 1.55 62 1.34 183 1.48 8.72 10 1.3 0.43
-------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
1.0 80 1.92 36 1.70 116 1.85 6.90 6 1.7 0.31
-------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
As at 30
June 2015
----------------- ------- ------- ------- ------- ------- ------- ------- ------- -------
0.3 198 1.05 188 1.02 386 1.03 12.9 33 1.0 1.1
-------- ------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Notes to table:
-- The effective date of the reserve and resource statement is
30 June 2017 or 30 June 2015 as relevant.
-- Totals may not equal the sum of the components due to rounding adjustments.
-- The mineral resource estimate is based on the open pit mined
surface as at 30 June 2017 and adjusted for underground mine
workings as at 30 June 2017.
-- All available assays as at 30 June 2017.
-- Resource data set comprises 311,419 two metre down hole
composites and surface rock chip samples.
-- Mineral resources are reported inclusive of those resources
converted to Proven and Probable Mineral Reserves.
-- The resources are estimates of recoverable tonnes and grades
using Multiple Indicator Kriging with block support correction.
-- Measured resources lie in areas where drilling is available
at a nominal 25 x 25 metre spacing, Indicated resources occur in
areas drilled at approximately 25 x 50 metre spacing and Inferred
resources exist in areas of broader spaced drilling.
-- The resource model extends from 9700mN to 12200mN and to a
maximum depth of 0mRL (a maximum depth of approximately 1,000
metres below wadi level).
Underground mineral resource for the Sukari Gold Mine (included
within the total resource above)
As at 30 June 2017 As at 30 June 2015
----------- ------------------------- -------------------------
Tonnes Grade Gold Tonnes Grade Gold
('000 (g/t) ('000 ('000 (g/t) ('000
t) oz) t) oz)
----------- ------- ------- ------- ------- ------- -------
Measured 1,947 8.9 554 1,850 6.5 390
----------- ------- ------- ------- ------- ------- -------
Indicated 5,492 6.0 1,065 2,820 7.0 630
----------- ------- ------- ------- ------- ------- -------
Total
M&I 7,439 6.8 1,619 4,670 6.8 1,020
----------- ------- ------- ------- ------- ------- -------
Inferred 6,711 4.5 976 6,970 5.6 1,240
----------- ------- ------- ------- ------- ------- -------
Notes to table:
-- The effective date of the reserve and resource statement is
30 June 2017 or 30 June 2015 as relevant.
-- Totals may not equal the sum of the components due to rounding adjustments.
-- The mineral resource is reported above 2g/t within interpreted mineralised domains.
-- The mineral resource estimate is depleted by underground mine workings as at 30 June 2017.
-- All available information has been used including mapping
from underground mining and assays as at 30 June 2017.
-- Available resource data resulted in 41,277 one metre down
hole composites used for grade estimation.
-- The mineral resources were estimated utilising a single
Indicator weighted Kriging method (IK) to estimate gold for each of
the mineralisation domains.
-- Measured mineral resources are defined by a drill spacing of
at least 20m x 20m and confined to the interpreted mineralisation
defined by underground mine development. Indicated Mineral
Resources are defined as areas outside the measured mineral
resource and defined by approximately 20m x 20m drill spacing.
Inferred Mineral Resources include all remaining estimated
mineralisation defined by a drill spacing of approximately 50m x
50m.
-- Mineral resources are reported inclusive of those resources
converted to Proven and Probable Mineral Reserves.
-- The underground resource is located within the boundaries of
the total resource, and is included within that total.
-- For previous resource notes, please refer to Centamin press
release dated 10 September 2015.
Total Combined (Open Pit and Underground) Mineral Reserve for
the Sukari Gold Mine.
Proven Probable Mineral Reserve
----------- ---------------- ---------------- -------------------------
Tonnes Grade Tonnes Grade Tonnes Grade Gold
(Mt) (g/t) (Mt) (g/t) (Mt) (g/t) (Moz)
----------- ------- ------- ------- ------- ------- ------- -------
As at 30
Jun 2017
(1-4) 170 1.02 74 1.01 244 1.00 8.0
----------- ------- ------- ------- ------- ------- ------- -------
As at 30
Jun 2015
(5) 152 1.03 101 1.15 253 1.09 8.8
----------- ------- ------- ------- ------- ------- ------- -------
Notes to table:
-- The effective date of the reserve and resource statement is
30 June 2017 or 30 June 2015 as relevant.
-- Totals may not equal the sum of the components due to rounding adjustments
(1) Total includes:
-- Open pit mineral reserve = 229Mt @ 1.0g/t for 7.0Moz
-- Underground mineral reserve = 5.4Mt @ 4.60g/t for 0.8Moz
-- Stockpiles = 10Mt @ 0.50g/t for 0.2Moz
(2) Based on open pit mined surface as at 30 June 2017,
underground mine workings as at 30 June 2017, and a gold price of
US$1,300 per ounce
(3) Ultimate open pit design has a waste to ore ratio of
5.3:1.
(4) See additional notes in tables below for the underground and
open pit mineral reserves
(5) As at 30 June 2015 at US$1,300 per ounce, please refer to
Centamin press release dated 10 September 2015.
Open pit mineral reserve by classification
The component of the combined reserve, as outlined above, that
relates to the open pit operation is summarised below.
As at 30 June 2017
As at 30 June 2015
------------ ------------------------ ------------------------
Tonnes Grade Gold Tonnes Grade Gold
(Mt) (g/t (Moz) (Mt) (g/t (Moz)
Au) Au)
------------ ------- ------ ------- ------- ------ -------
Proven 159 1.02 5.2 130 1.11 4.6
------------ ------- ------ ------- ------- ------ -------
Probable 70 0.80 1.8 99 1.07 3.4
------------ ------- ------ ------- ------- ------ -------
Stockpile
-- proven 10 0.52 0.2 21 0.42 0.3
------------ ------- ------ ------- ------- ------ -------
TOTAL 239 0.93 7.2 250 1.03 8.3
------------ ------- ------ ------- ------- ------ -------
Notes to Table:
-- The effective date of the reserve and resource statement is
30 June 2017 or 30 June 2015 as relevant.
-- Totals may not equal the sum of the components due to rounding adjustments.
-- Based on mined surface as at 30 June 2017 and a gold price of US$1,300 per ounce.
-- Cut-off grades (gold): CIL oxide 0.35g/t, CIL transitional
0.35g/t, CIL sulphide 0.35g/t, dump leach oxide 0.2g/t.
-- Designed underground reserves detailed below do not form part of the open pit reserve.
-- For previous reserve notes, please refer to Centamin press release dated 10 September 2015.
Underground mineral reserve by classification
The component of the combined reserve, as outlined above, that
relates to the underground operation is summarised below.
As at 30 June 2017
As at 30 June 2015
------------- ------------------------ ---------------------- -------
Tonnes Grade Gold Tonnes Grade Gold
(Mt) (g/t ('000 (Mt) (g/t ('000
Au) oz) Au) oz)
------------- ------- ------ ------- ----------- --------- -------
Proven 0.7 8.5 200 1.0 6.1 200
------------- ------- ------ ------- ----------- --------- -------
Probable 4.0 4.4 569 1.7 5.9 320
------------- ------- ------ ------- ----------- --------- -------
Sub-total 4.7 5.1 769 2.7 6.0 520
------------- ------- ------ ------- ----------- --------- -------
Development
(probable) 0.6 0.9 18 0
------------- ------- ------ ------- ----------- --------- -------
TOTAL 5.4 4.5 787 2.7 6.0 520
------------- ------- ------ ------- ----------- --------- -------
Notes to table:
-- The effective date of the reserve and resource statement is
30 June 2017 or 30 June 2015 as relevant.
-- Totals may not equal the sum of the components due to rounding adjustments.
-- Based on underground mine workings as at 30 June 2017.
-- Long hole stopes for reserves estimation are designed using a
3.0g/t elevated cut-off and mining dilution applied at 15% @ 0.4g/t
as all stopes are located in mineralised porphyry and 10% mining
loss is then assumed to allow for stope bridges and material left
in stopes after mining. For shallow dipping long hole stopes a 50%
mining loss has been assumed
-- Room and pillar stopes for reserves estimation are designed
using a 3.0g/t elevated cut-off and mining dilution applied at 10%
@ 0.8g/t as all stopes are located in mineralised porphyry and 40%
mining loss is then assumed to allow for non-recovered pillars and
material left in stopes after mining
-- Mineral resources are reported inclusive of those resources
converted to proven and probable mineral reserves.
Exploration
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 to the north, south and at depth and further
underground drilling of the Sukari deposit will take place during
2018, from across the existing and planned areas of
development.
Selected underground drilling results received during the year
(including from the fourth quarter), include the following:
Amun
Interval Au
Hole number (m) (g/t)
------------- --------- -------
UGRSD0804 2.55 151.6
1.0 337.2
UGRSD0805 3.4 21.3
UGRSD0806 3.2 79.5
UGRSD0808 1.1 41.1
1.0 55.3
2.2 49.2
5.8 59.9
UGRSD0810 4.0 31.9
UGD3524 4.0 70.1
UGD3510 4.1 71.8
------------- --------- -------
Bast
Interval Au
Hole number (m) (g/t)
------------- --------- ------
UGRSD0827 0.4 180.4
UGRSD0830 11.0 8.8
UGRSD0831 1.0 45.8
UGRSD0832 9.0 6.1
UGRSD0832 0.4 141
------------- --------- ------
Ptah
Interval Au
Hole number (m) (g/t)
-------------- --------- ------
UGRSD0123 1.8 86.8
UGRSD0135 1.9 419
3.3 71.5
2.0 163.2
2.0 163.7
UGRSD0139 5.0 11.8
UGRSD0577 11.0 8
UGRSD0593_W1 2.0 20.2
UGRSD0829 4.0 82.1
UGRSD0902 2.6 24.3
UGRSD0139 1.0 11.8
UGRSD0832 0.4 141.0
2.6 5.8
UGRSD0833 0.6 85.5
UGRSD0834 2.8 19.3
UGRSD0906 2.9 5.4
5.0 8.4
23.0 4.5
15.0 5.3
UGRSD0908A 2.1 5.3
UGRSD0909 1.0 21.1
-------------- --------- ------
Cleopatra
Interval Au
Hole number (m) (g/t)
------------- --------- ------
CRSD004 2.65 8.5
CRSD007 3.35 13
CRSD011 0.8 569.5
1.0 40.1
CRSD029 2.0 11.8
CRSD031 3.0 14.1
2.05 9.5
CUD061 3.55 8.2
CUD062 16.6 4.4
CUD086 3.35 6.9
CRSD073 5.0 3.7
CRSD074 2.0 5.2
3.0 3.6
CRSD077 1.6 7.7
CRSD078 3.0 4.7
------------- --------- ------
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, where the porphyry is
approximately 500 metres wide and access for surface drill rigs is
limited.
High grades have been observed along the north--eastern flank of
Sukari, where an interpreted en--echelon set of three mineralised
zones are located, namely Cleopatra, Julius and Antoine zones.
Cleopatra outcrops as two distinct quartz veins on the
north--eastern flank of Sukari, whereas Julius and Antoine do not
outcrop. The zones are interpreted as commencing on the eastern
porphyry contact, dipping broadly to the west.
Exploration development drives are exploring along the strike of
the upper Cleopatra zone, and four drill sites have now been
established in the centre of the porphyry for exploration drilling
of the north. The drives will provide a large quantity of
geological data in addition to that gained from the drilling.
This project is designed to commence development along strike
within the upper Cleopatra zone and set up four drill sites in the
centre of the porphyry. The drives will provide a large quantity of
geological data in addition to that gained from the drilling.
The initial project development was structured in two phases.
Phase 1 was started in Q3 2016 and was completed in Q1 2017 with
1,370 metres of development and 96,422 tonnes of mined material.
This development produced 21,078 tonnes of low--grade mineralised
material. The first drill cuddy was established and exploration
drilling commenced during December 2016. The drilling targeted
westerly--dipping dilation of stockwork porphyry which is located
on the eastern contact.
Phase 2 is currently under way and has completed 1,008.9m of
decline development and 100,671 tonnes of material mined. Drilling
focused on exploring along the western and northern contacts in the
north--western portion of the main porphyry.
A total of 22,149 m of exploration drilling has been completed
for the Cleopatra decline by two LM90 drill rigs drilling from 3 of
the established drill sites. In addition 2,311.9m of shorter
exploration drill holes have been completed utilising the Mobile
Carrier Drill Rig (MCR) to assist with defining the geometry of the
higher grade shoots.
The Cleopatra decline has been engineered to support mining
rates of up to 1Mtpa from this area. Ultimate production rates will
depend on future results from the development, exploration drilling
and further development. It will be in addition to the current
underground ore production from the Amun and Ptah declines.
Other prospects
Whilst exploration remains focused on Sukari, 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. No exploration drilling
was completed on these prospects this year, however a thorough
in-house prospectivity review has commenced with the objective of
outlining new exploration plans for 2018.
Côte d'Ivoire
Centamin has ten permits covering circa 3,231km(2) and a further
nine permits covering 3,187km(2) under application, the Côte
d`Ivoire exploration team has been organised into three crews, one
focused on development of the Doropo Project within the resource
area, one focused on regional exploration around the Doropo Project
and the third group is focused on regional exploration that
commenced during the year on the west side of the country,
resulting in the highly prospective discovery of the ABC
Project.
Doropo Project
The Doropo resources span an area of 25km(2) . In 2017, the
exploration programme commenced by drilling the identified new
targets from 2016 exploration programme. This successfully resulted
in the discovery of Chegue South, Chegue Main and Enioda prospects.
Continued systematic drill-testing and in-fill drilling of the
prospects has extended the existing resource and identified new
potential drill targets on Chegue. The Doropo resource has expanded
rapidly and now stands at 1.35Moz at 1.3g/t in the indicated
category and 0.90Moz at 1.2g/t in inferred, a significant increase
in contained ounces from the maiden resource announced early in
2017.
A total of 62,716 RC meters, 4,880 diamond drill meters,
including 1,069 diamond meters for metallurgical testing, were
completed.
The new resource at Doropo is summarised in the tables
below.
Mineral resource for Côte d'Ivoire
0.5g/t cut off
----------------------------------------------------
Indicated Inferred
------------------------- -------------------------
Mt Au (g/t) Au (koz) Mt Au (g/t) Au (koz)
------- ----- -------- -------- ----- -------- --------
Souwa 15.36 1.4 0.65 7.20 1.3 0.29
Nokpa 5.06 1.4 0.22 4.92 1.3 0.2
Chegue
North 1.21 0.9 0.04 1.1 0.9 0.03
Chegue
Main 1.13 1.2 0.04 1.19 0.9 0.03
Chegue
South 4.6 1.4 0.2 3.55 1.1 0.12
Kekeda 2.04 1.2 0.07 2.01 1.2 0.07
Han 3.16 1.3 0.13 1.53 1.2 0.06
Enioda - - - 3.24 0.9 0.1
------- ----- -------- -------- ----- -------- --------
Total 32.55 1.3 1.35 24.91 1.2 0.90
------- ----- -------- -------- ----- -------- --------
-- The table shows a summary of the resource estimate using a
cut-off of 0.5g/t Au at December 2017.
-- Totals may not equal the sum of the components due to rounding adjustments.
0.8g/t cut off
----------------------------------------------------
Indicated Inferred
-------------------------
Mt Au (g/t) Au (koz) Mt Au (g/t) Au (koz)
------- ----- -------- -------- ----- -------- --------
Souwa 8.77 1.9 0.52 3.60 2 0.22
Nokpa 3.12 1.9 0.18 2.93 1.8 0.16
Chegue
North 0.54 1.3 0.02 0.48 1.3 0.02
Chegue
Main 0.66 1.5 0.03 0.45 1.3 0.02
Chegue
South 2.56 2 0.16 1.5 1.7 0.08
Kekeda 1.07 1.7 0.06 1.01 1.7 0.05
Han 1.86 1.8 0.1 0.8 1.8 0.04
Enioda - - - 1.32 1.4 0.06
------- ----- -------- -------- ----- -------- --------
Total 18.58 1.9 1.07 12.21 1.7 0.65
------- ----- -------- -------- ----- -------- --------
-- The table shows a summary of the resource estimate using a
cut-off of 0.5g/t Au at December 2017.
-- Totals may not equal the sum of the components due to rounding adjustments.
Nokpa significant mineralised RC and DD drill intersections
Hole ID From (m) Interval Au (g/t)
(m)
--------- -------- -------- --------
DPDD1422 212.5 9.5 2.0
DPDD1423 256 10.8 2.5
DPRC0691 57 3 18.5
DPRC1300 125 8 4.7
DPRD1070 126.8 3.4 6.3
DPRD1070 159 13 2.3
DPRD1377 146 16 3.0
DPRD1379 112 27 1.2
DPRD1380 231 3 8.3
DPRD1380 246 8 13.2
DPRD1388 185.2 7.9 4.9
DPRD1389 103 2.5 24.5
DPRD1389 167 34.3 3.5
DPRD1390 160 20 2.2
DPRD1390 184 6.3 5.7
DPRD1391 185.39 10.61 2.2
DPRD1392 166.2 8.8 2.1
DPRD1409 298 15 3.2
DPRD1411 251.8 21.2 3.0
DPRD1412 268.5 10.35 2.1
The Souwa deposit is by far the biggest one in the Resource area
(from all the drilling completed thus far). Driling delineated a
2.1km strike mineralisation which remains open in all directions
There are two main ore shoots defined along the structure,
extending between 120m and 200m in vertical depths.
Souwa significant mineralised RC and DD drill intersections
Hole ID From (m) Interval Au (g/t)
(m)
--------- -------- -------- --------
DPDD1381 116 26 2.0
DPDD1382 80 19 5.7
DPDD1384 187 6 2.8
DPDD1385 84 12 6.0
DPDD1386 91 24 4.3
DPRC0816 108 13 1.4
DPRC0818 48 11 3.2
DPRC0819 79 10 1.7
DPRC0824 49 9 2.1
DPRC0827 44 6 3.0
DPRC0842 83 10 2.6
DPRC0844 49 3 7.3
DPRC0845 79 3 9.6
DPRC0854 119 7 8.0
DPRC0856 2 17 1.1
DPRC0889 138 12 1.7
DPRC1177 165 6 2.7
DPRC1275 42 3 15.3
DPRC1284 11 17 3.0
DPRC1285 12 12 2.5
DPRC1286 25 5 4.0
DPRC1289 19 14 1.6
DPRC1294 29 8 4.4
DPRC1295 50 6 3.0
DPRC1336 20 6 4.1
DPRC1396 181 4 29.6
DPRC1398 177 11 7.2
DPRC1413 126 16 4.5
DPRC1414 153 19 1.1
DPRD1075 89 10.2 2.1
DPRD1102 128 3 5.9
DPRD1102 137 8.85 2.1
DPRD1151 138 12 2.2
The Chegue structure consists of three structures, North, Main
and South. North and Main are independent, shallow, coherent ore
shoots. These ore shoots are open at depth but the main structure
is still open and the surface mapping shows potential for other ore
shoots to be intersected that are required to be tested with
drilling in 2018.
Despite the limited surface signature, the Chegue South deposit
was a new discovery in 2017. The structure has been tested along a
strike length of 700m and a vertical depth of 00m and remains open
on the southern side.
Chegue significant mineralised RC drill intersections
Hole ID From (m) Interval Au (g/t)
(m)
--------- -------- -------- --------
DPRC0677 144 11 1.9
DPRC0736 78 13 5.2
DPRC0740 141 2 32.7
DPRC0741 44 8 2.9
DPRC0742 79 10 1.9
DPRC0743 115 12 1.9
DPRC0744 139 12 5.6
DPRC0750 69 7 6.5
DPRC0754 125 13 1.3
DPRC0757 100 2 12.8
DPRC0758 101 12 3.0
DPRC0760 126 14 1.2
DPRC0764 107 2 9.7
DPRC0770 79 10 2.1
DPRC0773 78 12 2.9
DPRC0774 120 8 2.9
DPRC0776 12 12 1.6
DPRC0786 42 12 1.3
DPRC0789 71 4 6.8
DPRC0800 135 10 2.8
DPRC0801 143 19 3.2
DPRC0801 169 11 23.4
DPRC0860 151 5 3.2
DPRC0864 162 2 7.9
DPRC0871 64 3 23.0
DPRC0875 122 22 0.9
DPRC0877 220 7 2.3
DPRC0879 170 7 2.5
DPRC0879 183 7 9.3
DPRC1217 69 5 3.5
DPRC1218 90 4 6.6
DPRC1317 82 13 2.9
DPRC1335 48 7 34.5
Several other prospects have returned significant mineralised
intercepts during the year; they will be the base of further
exploration work in 2018.
Other prospects with significant mineralised RC and DD drill
intersections
Prospect Hole ID From (m) Interval Au (g/t)
(m)
------------ --------- -------- -------- --------
Tchouahinin DPRC0665 13 8 10.5
Tchouahinin DPRC0723 118 4 12.7
Tchouahinin DPRC1187 37 2 10.2
Han DPRD0470 87 19 1.1
Kekeda DPRC0632 36 12 2.4
ABC Project
"ABC" stands for "Archaean-Birimian Contact". Centamin has two
permits, Kona and FarakoNafana, covering circa 751km(2) along the
underexplored contact zone between the Archaean and Birimian
cratons. The licence holding includes 80km strike on the Archaean
margins, in addition to several shear zones and faults interpreted
to be potentially significant targets.
Kona permit
Greenfield exploration work commenced in 2017. Reconnaissance
mapping of the permit area and geochemical sampling identified
Lolosso, an outcropping 12km gold mineralised structure.
The Lolosso structure cuts the Kona permit on a North-South
orientation. It corresponds to a split from the major Sassandra
fault which bounds the Archaean Craton. Even if technically located
in the Archaean domain, a narrow corridor of Birrimian
volcano-sediments is pinched in between granites, and forms the
host of the mineralisation along Lolosso.
More detailed fieldwork was carried out, including a GAIP survey
over the entire 25km mineralised corridor. During 2017 there were
5,884m of RC drilled along fourteen drill sections. Most of the
drill holes returned low-grade gold mineralisation, showing a
mineralised corridor varying from 100m to over 200m width. Higher
grade zones, often of over 15m width, have been intersected and
will be followed up by further drilling in 2018. One of the most
significant drill sections, intercepts includingKNRC006, KNRC008
and KNRC009, the vertical depth has been tested to 130m and remains
open. Preliminary metallurgical test work, including bottle roll
and fire assay on the tail, has shown no apparent metallurgical
issues.
The ABC Project has potential to host a significant gold
deposit. The Lolosso mineralised system discovered thus far is
extensive and requires additional exploration work throughout 2018
to better understand the geological potential. At the FarakoNafana
permit, mapping and soil geochemical work has commenced.
There are currently four additional permits under application,
covering circa 1,538km(2) .
Lolosso significant mineralised RC drill intersections
Hole ID From (m) Interval Au (g/t)
(m)
--------- -------- -------- --------
KNRC0001 0 18 1.1
KNRC0002 11 17 1.2
KNRC0002 54 20 1.3
KNRC0003 31 22 1
KNRC0004 51 33 1.2
KNRC0006 1 24 1.6
KNRC0008 16 39 2.3
KNRC0008 68 14 1.7
KNRC0009 54 19 1.1
KNRC0009 78 21 1.5
KNRC0009 119 18 1.9
KNRC0010 0 35 1.8
KNRC0011 26 10 2.2
KNRC0011 69 26 1.5
KNRC0012 61 16 1.4
KNRC0012 131 27 1.5
KNRC0013 6 31 1.5
KNRC0014 70 25 1.4
KNRC0015 46 35 1.2
KNRC0024 54 10 1.6
KNRC0025 101 9 4
KNRC0026 168 12 1.4
KNRC0027 0 11 2.4
KNRC0028 58 20 1.2
KNRC0029 87 27 1.1
KNRC0035 14 16 1.1
KNRC0043 83 11 2.2
DPRC0750 69 7 6.5
Summary details in relation to the HSES aspects of exploring in
Côte d'Ivoire are set out in the CSR report.
The costs capitalised on exploration licences that have
subsequently expired or relinquished have been written off during
the year. Refer to note 14 in the financial report.
Burkina Faso
Centamin holds a 1,258km(2) licence package. The 2017
exploration strategy was to target potential reserve growth within
a 25km radius of the processing plant at Konkera North. Two
extensive GAIP surveys were completed covering Konkera and
Gangal-Tonior SE. Systematic auger drilling identified a number of
gold anomalies/intersected significant gold bearing structures
within the target blocks.
Soil geochemistry, auger drilling and air core drilling is under
way throughout 2018, with the aim to deliver a resource update.
Work completed included 12,926m of AC, 1583.1km GAIP lines
measured, 39,995m of auger and 225m of trenching during the
year.
The costs capitalised on exploration licences that have
subsequently expired or relinquished have been written off during
the year. Refer to note 14 in the financial report.
Table 1 below summarises the 2017 exploration activities of
Batie West.
2017 exploration activities, Batie West Project, Burkina
Faso
Burkina Faso
2017 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Total
------------------------ ------ ------ ---- ------ ------ ------ ------ ------ ------ ------ ------ ------ -------
Orientation
geochimie
Samples sol 0 0 0 0 0 0 0 0 0 0 0 0 0
--------- ------------- ------ ------ ---- ------ ------ ------ ------ ------ ------ ------ ------ ------ -------
Regional Soils
(Termite,
stream samples) 420 2 13 6 0 25 18 3 0 0 0 0 487
----------------------- ------ ------ ---- ------ ------ ------ ------ ------ ------ ------ ------ ------ -------
Infill Soils 0 0 0 0 0 0 0 0 0 0 51 577 628
----------------------- ------ ------ ---- ------ ------ ------ ------ ------ ------ ------ ------ ------ -------
Auger 2,753 866 0 533 891 751 866 664 841 879 411 0 9,455
----------------------- ------ ------ ---- ------ ------ ------ ------ ------ ------ ------ ------ ------ -------
Rocks 78 143 34 23 12 33 0 10 10 0 0 2 345
----------------------- ------ ------ ---- ------ ------ ------ ------ ------ ------ ------ ------ ------ -------
Trenching 151 0 0 0 0 0 0 0 0 0 0 0 151
----------------------- ------ ------ ---- ------ ------ ------ ------ ------ ------ ------ ------ ------ -------
Aircore drilling 198 0 0 0 0 0 0 0 0 1,137 4,452 1,049 6,836
----------------------- ------ ------ ---- ------ ------ ------ ------ ------ ------ ------ ------ ------ -------
Total 3,600 1,011 47 562 903 809 884 677 851 2,016 4,914 1,628 17,902
----------------------- ------ ------ ---- ------ ------ ------ ------ ------ ------ ------ ------ ------ -------
Metrage Auger 6,439 2,235 0 3,023 4,548 4,127 4,422 3,796 4,058 5,324 2,023 0 39,995
--------- ------------- ------ ------ ---- ------ ------ ------ ------ ------ ------ ------ ------ ------ -------
Aircore drilling 764 0 0 0 0 0 0 0 0 2,253 7,859 2,050 12,926
----------------------- ------ ------ ---- ------ ------ ------ ------ ------ ------ ------ ------ ------ -------
RC Drilling 0
----------------------- ------ ------ ---- ------ ------ ------ ------ ------ ------ ------ ------ ------ -------
Diamond Drilling 0
----------------------- ------ ------ ---- ------ ------ ------ ------ ------ ------ ------ ------ ------ -------
Trenching 225 0 0 0 0 0 0 0 0 0 0 0 225
----------------------- ------ ------ ---- ------ ------ ------ ------ ------ ------ ------ ------ ------ -------
Total 7,428 2,235 0 3,023 4,548 4,127 4,422 3,796 4,058 7,577 9,882 2,050 53,146
----------------------- ------ ------ ---- ------ ------ ------ ------ ------ ------ ------ ------ ------ -------
Line km
surveyed
IP/DD IP 187 374 0 0 125 234 285 0 138 146 94 0 1,583
--------- ------------- ------ ------ ---- ------ ------ ------ ------ ------ ------ ------ ------ ------ -------
Line km surveyed
DDIP 0
----------------------- ------ ------ ---- ------ ------ ------ ------ ------ ------ ------ ------ ------ -------
Line Clearing 85 374 138 264 84 228 353 159 21 1,706
----------------------- ------ ------ ---- ------ ------ ------ ------ ------ ------ ------ ------ ------ -------
Drill Collars
Cementing 517 79 123 151 9 107 0 0 0 0 986
----------------------- ------ ------ ---- ------ ------ ------ ------ ------ ------ ------ ------ ------ -------
Financial review
The consolidated financial statements have been prepared in
accordance with International Financial Reporting Standards
("IFRS") as issued by the International Accounting Standards Board
("IASB") and adopted for use by the European Union and in
accordance with the Companies (Jersey) Law 1991.
Now in its eighth year of production, the Sukari Gold Mine
remains highly cash generative and this is reflected in the group's
financial results for the year ended 31 December 2017:
-- Strong cash flow generation with US$142 million of free cash
flow(1) generated in 2017, down 41% on the prior year (2016: US$242
million) almost entirely due to the impact of increased profit
share payments;
-- 2017 revenues of US$676 million were down 2% on the prior
year (2016: US$687 million) with a 0.4% increase in realised gold
prices offset by a decrease in gold sales;
-- Cash costs of production(1) increased to US$554 per ounce
produced on the prior year (2016: US$513), driven predominantly by
an increase in mined and processed tonnes and an increase in fuel
and reagent costs;
-- AISC(1) of US$790 per ounce sold matched our forecast but was
an increase on the prior year (2016: US$694), mainly due to
increased production costs and higher sustaining capital costs
resulting from planned fleet rebuilds;
-- EBITDA(1) decreased by 13% to US$326 million, as a result of
increased production and operating costs and the slight decrease in
revenues;
-- Profit before tax decreased by 16% to US$224.1 million, due to the factors outlined above;
-- Earnings per share after profit share of 9.51 US cents were
down 49% on the prior year due to lower revenue, higher costs and,
most significantly, the impact of the first full year of profit
share (2016: 18.71 US cents);
-- Operational cash flow of US$359 million was 2% lower than
2016, due to the lower gold production base with higher gold prices
offset by a higher cost base; and
-- The Egyptian state has benefitted directly from profit share
payments to EMRA of US$111.6 million during the year ended 31
December 2017, in addition to US$20.4 million in royalty payments
for the same period.
(1) Please refer to the Non GAAP measures
With the strong performance of our flagship asset and solid cash
flows carrying through into the second half, a final dividend for
2017 of 10.0 US cents per share has been proposed for approval at
the AGM on 26 March 2018. Together with the interim dividend of 2.5
US cents paid during the year, this represents a paid and proposed
full year dividend of 12.5 US cents per share (2016: 15.5 US cents
per share). Payment of the proposed final dividend would result in
a full year pay--out of approximately US$144 million, which is
equivalent to 100% of our free cash flow for 2017, in line with the
Company's policy of returning to shareholders capital not required
for future investment.
Centamin remains committed to its policy of being 100% exposed
to the gold price through its unhedged position, and maintained a
healthy cash, bullion on hand, gold sales receivables and
available--for--sale financial assets balance during the year. Cash
and cash equivalents stood at US$360million as at 31 December
2017.
Revenue
Revenue from gold and silver sales has decreased by 2% to
US$675.5 million (2016: US$687.4 million), with a 0.4% increase in
the average realised gold price to US$1,261 per ounce (2016:
US$1,256 per ounce) and a 1% decrease in gold sold to 539,726
ounces (2016: 546,630 ounces). The movement is also net of a
US$6.2m reallocation from revenue against capitalised exploration
costs related to Cleopatra.
Cost of sales
Cost of sales represents the cost of mining, processing,
refinery, transport, site administration and depreciation and
amortisation, and movement in production inventory. Cost of sales
is inclusive of US$41.9 million categorised as fuel pre-payments
(refer to note 12 to the financial statements for further
information) and has increased by 6% to US$414 million, mainly as a
result of a:
-- 7% increase in total mine production costs from US$288.3
million to US$307.6 million, due to a 14% increase in mined tonnes
combined with a 4% increase in processed tonnes and an increase in
unit costs mainly due to increased fuel and reagent costs; and
-- 2% decrease in depreciation and amortisation charges from
US$106.9 million to US$104.3 million as a reclassification of
exploration and evaluation expenditure to mine development and a
change in estimate of the reserve base which decreased the
associated amortisation charges.
Other operating costs
Other operating costs comprise 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 and the 3%
production royalty payable to the Egyptian government. Other
operating costs increased by US$4.8 million or 15% on the prior
year to US$36.9 million, mainly as a result of a:
-- US$3.6 million decrease in net foreign exchange gains (+ve);
-- US$0.2 million decrease in royalty paid to the government of
the ARE in line with the decrease in gold sales revenue (-ve);
-- US$1.3 million increase in corporate and other costs (+ve); and
-- US$0.1 million increase in stock obsolescence provision (+ve).
Finance income
Finance income 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 year ended 31 December 2017 of US$224.1
million (2016: US$266.8 million).
Tax
The group operates in several countries and, accordingly, it is
subject to, the various tax regimes in the countries in which it
operates. The tax charge of US$2.1 million for the year was
associated with an internal group restructuring.
EMRA profit share
During the year ended 31 December 2017, US$111.6 million was
paid as profit share payments to the Egyptian Mineral Resources
Authority ("EMRA").
Profit share payments made to EMRA, pursuant to the provisions
of the Concession Agreement, are recognised as a variable charge in
the income statement (below profit after tax) of Centamin,
resulting in a reduction in earnings per share. The profit share
payments during the year will be reconciled against SGM's audited
June 2017 and 2018 financial statements. Any variation between
payments made during the year (which are based on the Company's
estimates) and the audited financial statements, may result in a
balance due and payable to EMRA or advances to be offset against
future distributions. SGM's June 2017 financial statements are
currently being audited.
Earnings per share
Earnings per share (after profit share) of 9.51 US cents in 2017
decreased when compared with the prior year (2016: 18.71 US cents).
The decrease was driven by the factors outlined above.
Comprehensive income
Other comprehensive income movement was the result of 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$417.9 million at 31
December 2017, down from US$428.0 million at 31 December 2016
following dividend payments of US$184.4 million during the
period.
Year ended Year ended
31 December 31 December
2017 2016
US$'000 US$'000
------------------------------------------------------------------- ----------- -----------
Cash and cash equivalents (note 27) 359,680 399,873
Bullion on hand (valued at the year-end spot price) 27,123 4,998
Gold sales receivable (note 10) 31,007 23,009
Available--for--sale financial assets (note 15) 125 130
------------------------------------------------------------------- ----------- -----------
Cash and cash equivalents, bullion on hand, gold sales receivables
and available--for--sale financial assets 417,935 428,010
------------------------------------------------------------------- ----------- -----------
The majority of funds have been invested in international
rolling short-term interest money market deposits.
Current assets have decreased by US$51.7 million or 9% to
US$509.3 million, as a result of a:
-- US$23.4 million decrease (-ve) in inventory driven by a
US$18.2 million decrease (-ve) in collective stores inventory value
to US$78.6 million (due to significant cost reduction and
minimisation initiatives), a US$2.5 million decrease (-ve) in
overall mining stockpiles and gold in circuit levels to US$31.7
million and a US$2.6 million increase (+ve) in the provision for
obsolete stores inventory to US$5.1 million;
-- US$9.6 million increase in trade and other receivables
(including gold sale receivables) (+ve);
-- US$2.3 million increase in prepayments (+ve); and
-- US$40.2 million decrease in net cash (net of foreign exchange
movements) (-ve) driven by a US$155.4 million final dividend
payment to registered shareholders for 2016, a US$29.0 million
interim dividend payment to registered shareholders for 2017 and a
US$111.6 million payment to EMRA as profit share during the
year.
Non--current assets have decreased by US$3.2 million or 0.3% to
US$1,020 million, as a result of a:
-- US$86.7 million increase in the cost of property, plant and equipment (+ve);
-- US$104.6 million charge for depreciation and amortisation (-ve);
-- US$14.9 million increase in exploration and evaluation assets
(net of a US$3.6 million impairment), as a result of the drilling
programmes in Sukari Hill, Burkina Faso and Côte d'Ivoire (-ve);
and
-- US$0.3 million decrease in prepayments and other receivables (-ve).
Current liabilities have increased by US$14.4 million or 28% to
US$66.4 million, as a result of a:
-- US$8.8 million increase in trade payables offset by a US$0.2
million decrease in accruals (+ve);
-- US$0.5 million increase in tax liabilities accrued during the year (+ve); and
-- US$5.3 million increase in current provisions primarily
driven by withholding tax, customs and rebate provisions held at
year end (+ve).
Non--current liabilities have increased by US$3.3 million to
US$10.9 million as a result of an increase in the rehabilitation
provision.
The value of share capital has increased by US$1.3 million to
US$668.7 million which can be attributed to the value of awards
granted under the employee share plans for the period. There has
been no change in the number issued shares over the same
period.
Share option reserves reported have increased by US$1.3 million
to US$4.3 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
payment expenses for the year.
Accumulated profits decreased by US$75.1 million to US$778.9
million as a result of a:
-- US$222.0 million profit for the year after tax (+ve); offset by
-- US$112.6 million profit share charge to EMRA in the year (-ve); and
-- US$184.4 million in dividend payments to external
shareholders; comprising a US$155.4 million final dividend payment
for 2016 and a US$29.0 million interim dividend payment for 2017
(-ve).
Cash flow
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 from operating
activities decreased by US$7.5 million to US$358.8 million,
primarily attributable to a
slight decrease in revenue, due to a higher average realised
price offset by a 1% decrease in gold sold ounces, as well as an
increase in costs
as explained above.
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 decreased by
US$1.0 million to US$104.7 million. The primary use of the funds in
the year
was for purchases of property, plant and equipment, investment
in underground development at the Sukari site in Egypt and
exploration
expenditures incurred in West Africa.
Net cash flows used in financing activities increased by
US$231.4 million to US$296 million which comprises a US$111.6
million payment to
EMRA as profit share and dividends paid of US$184.4 million
during the year.
Effects of exchange rate changes have decreased by US$2.6
million as a result of movements of the currencies used across the
operations in
the year.
Capital expenditure
The following table provides a breakdown of the total capital
expenditure of the group:
31 December 31 December
2017 2016
US$ million US$ million
------------------------------------------ ----------- -----------
Underground exploration 6.0 7.5
Underground mine development 32.7 32.4
Other sustaining capital expenditure 43.9 23.7
------------------------------------------ ----------- -----------
Total sustaining capital expenditure 82.6 63.6
------------------------------------------ ----------- -----------
Non-sustaining exploration capitalised(1) 24.9 42.0
------------------------------------------ ----------- -----------
(1) Includes expenditure in West Africa (US$6.4 million Burkina
Faso and US13.9 million Cote d'Ivoire) and US$4.6 million of the
Sukari expenditure relating to Cleopatra in non-sustaining capital
expenditure.
Cumulative exploration expenditure capitalised for Cleopatra at
Sukari is US$7.6 million (project to date) offset by pre-production
net revenues of US$4.8 million (refer to notes 5 and 6 to the
financial statements for further details) resulting in US$2.8
million remaining on the statement of financial position at 31
December 2017.
Exploration expenditure
The following table provides a breakdown of the total
exploration expenditure of the group:
31 December 31 December
2017 2016
US$ million US$ million
------------------------------ ----------- -----------
Burkina Faso 6.4 26.3
Cote d'Ivoire 13.9 12.7
Sukari Tenement 6.0 7.5
Cleopatra 4.6 3.0
------------------------------ ----------- -----------
Total exploration expenditure 30.9 49.5
------------------------------ ----------- -----------
Exploration and evaluation assets - impairment
considerations
As discussed in note 14 to the financial statements, in
consideration of the requirements of IFRS 6, management is not
aware of any information that would otherwise suggest that an
impairment trigger has occurred which would require a full
impairment test to be carried out at 31 December 2017.
Exchange rates
Foreign exchange gains have decreased from US$5m to US$1.5m,
resulting in a US$3.5 million decrease on the prior year.
Ross Jerrard
Chief financial officer
31 January 2018
Non GAAP Measures
Non--GAAP financial measures
Four non--GAAP financial measures are used in this report:
1) EBITDA
EBITDA is a non--GAAP financial measure, which excludes the
following from profit before tax:
-- Finance costs;
-- Finance income; and
-- Depreciation and amortisation.
Management believes that EBITDA is a valuable indicator of the
group's ability to generate liquidity by producing operating cash
flow to fund working capital needs and fund capital expenditures.
EBITDA is also frequently used by investors and analysts for
valuation purposes whereby EBITDA is multiplied by a factor or
"EBITDA multiple" that is based on an observed or inferred
relationship between EBITDA and market values to determine the
approximate total enterprise value of a company. EBITDA is intended
to provide additional information to investors and analysts and
does not have any standardised definition under IFRS and should not
be considered in isolation or as a substitute for measures of
performance prepared in accordance with IFRS. EBITDA excludes the
impact of cash cost of production and income of financing
activities and taxes, and therefore is not necessarily indicative
of operating profit or cash flow from operations as determined
under IFRS. Other companies may calculate EBITDA differently. The
following table provides a reconciliation of EBITDA to profit for
the year attributable to the Company.
Reconciliation of profit before tax to EBITDA
Year ended Year ended
31 December 31 December
2017(1) 2016(1)
US$'000 US$'000
------------------------------ ----------- -----------
Profit before tax 224,094 266,829
Finance income (2,729) (917)
Depreciation and amortisation 104,562 106,973
------------------------------ ----------- -----------
EBITDA 325,927 372,885
------------------------------ ----------- -----------
(1) Profit before tax, depreciation and amortisation and EBITDA
includes a charge to reflect the removal of fuel subsidies (refer
to note 12 to the financial statements for further details).
2) Cash cost of production per ounce produced and sold and
all-in sustaining costs per ounce sold calculation
Cash cost of production and AISC are non-GAAP financial
measures. Cash cost of production per ounce is a measure of the
average cost of producing an ounce of gold, calculated by dividing
the operating costs in a period by the total gold production over
the same period. Operating costs represent total operating costs
less 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 (as compared to
using ounces produced which is used in the cash cost of production
calculation).
Reconciliation of cash cost of production per ounce
produced:
Year ended Year ended
31 December 31 December
2017(1) 2016(1)
------------------------------------------------------------------- ------------ ----------- -----------
Mine production costs (note 6) US$'000 307,563 288,317
Add: Pre-production costs of gold sales related to Cleopatra US$'000 1,329 -
Less: Refinery and transport US$'000 (1,554) (1,564)
Movement of inventory(2) US$'000 (5,632) (3,876)
------------------------------------------------------------------- ------------ ----------- -----------
Cash cost of production - gold produced US$'000 301,706 282,877
Gold produced - Total (oz.) oz 544,658 551,036
Cash cost of production per ounce produced US$/oz 554 513
------------------------------------------------------------------- ------------ ----------- -----------
A reconciliation has been included below to show the cash cost of production
metric should gold sold ounces be used as a denominator.
Reconciliation of cash cost of production per ounce sold:
Year Year ended
ended
31 December 31 December
2017(1) 2016(1)
------------------------------------------------------------------- ------------ ----------- -----------
Mine production costs (note 6) US$'000 307,563 288,317
Add: Pre-production costs of gold sales related to Cleopatra US$'000 1,329 -
Movement in inventory(2) US$'000 2,490 (5,910)
------------------------------------------------------------------- ------------ ----------- -----------
Cash cost of production - gold sold US$'000 311,382 282,407
------------------------------------------------------------------- ------------ ----------- -----------
Gold sold - Total (oz.) oz 539,726 546,630
Cash cost of production per ounce sold US$/oz 577 517
------------------------------------------------------------------- ------------ ----------- -----------
(1) Cash cost of production includes a charge to reflect the
removal of fuel subsidies (refer to note 12 to the financial
statements for further details).
(2) The movement in inventory on ounces produced is only the
movement on mining stockpiles and ore in circuit while the movement
on ounces sold is the net movement on mining stockpiles, ore in
circuit and gold in safe inventory.
Reconciliation of AISC per ounce sold:
Year ended Year ended
31 December 31 December
2017(1) 2016(1)
------------------------------------------------------------- -------- ----------- -----------
Mine production costs (note 6) US$'000 307,563 288,317
Add: Pre-production costs of gold sales related to Cleopatra US$'000 1,329 -
Movement in inventory US$'000 2,490 (5,910)
Royalties US$'000 20,404 20,575
Corporate administration costs US$'000 12,679 13,521
Rehabilitation costs US$'000 629 581
Sustaining underground development and exploration US$'000 38,649 39,864
Other sustaining capital expenditure US$'000 43,890 23,762
By--product credit US$'000 (1,167) (1,080)
All--in sustaining costs(2) US$'000 426,466 379,630
Gold sold - total oz 539,726 546,630
AISC per ounce sold US$/oz 790 694
------------------------------------------------------------- -------- ----------- -----------
(1) Mine production costs, cash cost of production, cash cost of
production per ounce, AISC and AISC per ounce sold includes
prepayments recorded since Q4 2012 to reflect the removal of fuel
subsidies (refer to note 12 to 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
Cash and cash equivalents, bullion on hand, gold sales
receivables and available--for--sale financial assets is a non-GAAP
financial measures. Cash and cash equivalents, bullion on hand,
gold sales receivables and available--for--sale financial assets is
a measure of the available cash and liquid assets at a point in
time. Management uses this measure internally to better assess
performance trends for the Company as a whole. 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 and cash equivalents, bullion
on hand, gold sales receivables and available--for--sale financial
assets 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 cash and cash equivalents as determined
under GAAP. This is a non--GAAP financial measure and other
companies may calculate these measures differently.
Reconciliation to cash and cash equivalents, bullion on hand,
gold sales receivables and available--for--sale financial
assets:
Year ended Year ended
31 December 31 December
2017 2016
US$'000 US$'000
------------------------------------------------------------------- ----------- -----------
Cash and cash equivalents (note 27) 359,680 399,873
Bullion on hand (valued at the year-end spot price) 27,123 4,998
Gold sales receivable (note 10) 31,007 23,009
Available--for--sale financial assets (note 15) 125 130
------------------------------------------------------------------- ----------- -----------
Cash and cash equivalents, bullion on hand, gold sales receivables
and available--for--sale financial assets 417,935 428,010
------------------------------------------------------------------- ----------- -----------
4) Free cash flow
Free cash flow is a non-GAAP financial measure. Free cash flow
is a measure of the available cash after EMRA profit share payments
that the group has at its disposal to use for capital reinvestment
and to distribute to shareholders as dividends in accordance with
the Company's dividend policy. 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. Free cash
flow is intended to provide additional information, does not have
any standardised meaning prescribed by GAAP and should not be
considered in isolation or as a substitute for measures of
performance prepared in accordance with GAAP. This measure is not
necessarily indicative of operating profit or cash flow from
operations as determined under GAAP. This is a non-GAAP financial
measure and other companies may calculate these measures
differently.
Year ended Year ended
31 December 31 December
2017 2016
US$'000 US$'000
--------------------------------------------- ----------- -----------
Net cash generated from operating activities 358,811 366,295
Less:
Net cash used in investing activities (104,743) (105,774)
EMRA profit share payments (111,629) (18,503)
--------------------------------------------- ----------- -----------
Free cash flow 142,439 242,018
--------------------------------------------- ----------- -----------
Principal risks affecting the group
Corporate governance update
As announced on 11 January 2018, the board welcomes Alison
Baker, an independent non-executive director, who will join the
board on 5 February 2018. Alison will join the nomination committee
and HSES committee on appointment. Ross Jerrard, the Company's
Chief Financial Officer, will also be joining the board on 5
February 2018. These new members bring a wealth of experience
within their fields and in the case of Ross, from within the
Company. Andrew Pardey will shortly complete his third year as CEO
and will be supported in 2018 by the newly appointed member of the
senior management team, Mark Morcombe, as chief operating
officer.
As announced in January of this year, Josef El-Raghy will be
retiring at the end of 2018. Due process has started with the
appointment of a recruitment agency, and the nomination committee
will identify a successor to fill the role of Independent chairman
to the board. This process will aim to identify a new chairman by
June 2018.
Principal risks affecting the 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.
Set out below are the Company's principal risks and
uncertainties for the year ended 31 December 2017. The descriptions
below describe the current status of the principal risks affecting
Centamin and its operational and exploration activities.
Loss of revenue due to single project dependency
The Sukari Gold Mine currently constitutes Centamin's main
mineral resource and sole mineral reserve and near term production
and revenue. The resources in Burkina Faso and Cote d'Ivoire are
not currently of a sufficient size to convert into a reserve. Until
further production growth beyond Sukari is identified the potential
impact remains high and safeguarding the project is paramount to
the Company.
Sukari Gold Mine joint venture risk and relationship with
EMRA
Whilst Centamin retains control over the project, the holding
company, Sukari Gold Mines ("SGM"), is jointly owned by the
Company's wholly owned subsidiary Pharaoh Gold Mines NL ("PGM") and
EMRA with equal board representation from both parties. The board
of SGM operates by way of simple majority. Should a dispute arise
which can't otherwise be amicably resolved, arbitration or other
proceedings may need to be employed. The successful management of
the Sukari Gold Mine is in part dependent on maintaining a good
working relationship with EMRA. The group has regular meetings with
officials from EMRA and invests time in liaising with relevant
ministry and other governmental representatives.
Gold price
The extent of the Company's financial performance is due in part
to the price of gold, which the Company has no influence over.
Revenues from gold sales are in US dollars and Centamin has
exposure to costs in other currencies including Egyptian pounds,
Australian dollars and Sterling. Centamin manages its exposure to
gold price by keeping operating costs as low as possible.
Jurisdictional taxation exposure
The group's corporate structure includes operational activity in
Egypt and West Africa held through holding companies in Australia
and the United Kingdom. Exposure to changing cross jurisdictional
tax legislation could have an adverse effect of the Company's
ability to repatriate revenues.
Political risk - Sukari
The Company's operational activities are primarily in Egypt, a
country that has been subject to civil and military disturbance.
Future political and economic conditions in Egypt could change with
future governments adopting different policies that may impact the
development and ownership of mineral resources. Policy changes and
licensing may also impact the use of explosives, tenure of mineral
concessions, taxation, royalties, exchange rates, environmental
protection, labour relations, repatriation of income and capital.
Changes may also impact the ability to import key supplies and
export gold. The potential for serious impact should be balanced
against the Egyptian government's support of Centamin's investment
and contribution to both revenue and development of the mining
industry. New laws have been introduced to protect and therefore
encourage foreign investment, which is a positive step for the
country. Law no. 32 has been confirmed by Parliament, although it
remains subject to a challenge in the Supreme Court.
Political risk - West Africa
The Company operates in Burkina Faso and Côte d'Ivoire. There
are no assurances that future political and economic conditions in
these countries will not result in the governments adopting
different policies in respect to foreign development and ownership
of exploration and exploitation licences.
Exploration development
Time and costs of exploration activity are recognised as
exploration and evaluation assets ("E&E assets") on the balance
sheet. E&E assets continue to be carried on the balance sheet
where there is ongoing planned activity and the right of tenure is
current. There can be no guarantee that an exploration project
progresses to an economic resource and therefore there remains a
risk that E&E assets are partially or fully impaired during a
financial period where either a decision is made to discontinue a
project or no further activity is scheduled.
Reserve and resource estimate
Mineral resource and reserve figures are prepared by Centamin
personnel and reviewed by externally appointed independent
geologists. By their nature, mineral resources and reserves are
estimates based on a range of assumptions, including geological,
metallurgical technical and economic factors. Other variables
include expected costs, inflation rates, gold price and production
outputs. There can be no guarantee that the anticipated tonnages or
grades expected by Centamin will be achieved both from the
underground operation or open pit.
Failure to achieve production estimates
Centamin prepares annual estimates for future gold production
from the Sukari Gold Mine. There can be no assurance that Centamin
will achieve its production estimates and such failure could have a
material and adverse effect on Centamin's future cash flows,
profitability, results of operations and financial condition. It
should be specifically noted that the potential quantity and grade
from the Sukari underground mine is conceptual in nature, that
there has been insufficient exploration to define a mineral
resource and that it is uncertain if further exploration will
result in the target being delineated as a mineral resource.
Litigation
Centamin's finances, and its ability to operate in Egypt, may be
severely adversely affected by current and any future litigation
proceedings and it is possible that further litigation could be
initiated against Centamin at any time. Centamin is currently
involved in litigation that relates both to (a) the validity of its
exploitation lease at Sukari and (b) the price at which it can
purchase Diesel Fuel Oil.
The risk relating to currency exposure is no longer considered
to be a principal risk to the business and has been removed from
the principal risk register. All other principal risks are the same
as previously disclosed in the 2016 annual report and accounts.
The group operates predominantly in Egypt with EGP representing
approximately 15% of total cost base. The group receives all
revenue from gold sales in US dollars. In November 2016 the
Egyptian government floated the Egyptian pound in an attempt to
stabilise its economy. This led to a significant devaluation of the
currency and subsequently and increase in local inflation. Whilst
this still carries a potential risk for the group, as it can lead
to increases in the prices of fuel, raw materials as well as
pressure to increase staff wages, we have observed a relatively
stable profile against the US$ and whilst this will be closely
monitored, this risk has been removed from Centamin's principal
risk register.
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.
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.
Directors responsibilities
Directors' responsibilities in respect of the annual report and
financial statements
The directors are responsible for preparing the Annual Report
and the financial statements in accordance with applicable law and
regulations.
Company law requires the directors to prepare financial
statements for each financial year. Under that law the directors
have prepared the group financial statements in accordance with
International Financial Reporting Standards (IFRSs) as adopted by
the European Union. Under company law the directors must not
approve the group financial statements unless they are satisfied
that they give a true and fair view of the state of affairs of the
group and of the profit or loss of the group for that period. In
preparing the financial statements, the directors are required
to:
-- select suitable accounting policies and then apply them consistently;
-- state whether applicable IFRSs as adopted by the European
Union have been followed, subject to any material departures
disclosed and explained in the financial statements;
-- make judgements and accounting estimates that are reasonable and prudent; and
-- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the group will continue
in business.
The directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the group's
transactions and disclose with reasonable accuracy at any time the
financial position of the group and enable them to ensure that the
financial statements and the Directors' Remuneration Report comply
with The Companies (Jersey) Law, 1991 and, as regards the group
financial statements, Article 4 of the IAS Regulation.
The directors are also responsible for safeguarding the assets
of the group and hence for taking reasonable steps for the
prevention and detection of fraud and other irregularities.
The directors are responsible for the maintenance and integrity
of the company's website. Legislation in the United Kingdom and
Jersey governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
The directors consider that the annual report and financial
statements, taken as a whole, is fair, balanced and understandable
and provides the information necessary for shareholders to assess
the group's performance, business model and strategy. The 2017
annual report will be published and available for shareholders on
20 February 2018.
The directors have undertaken a robust assessment of the
principal risks impacting the Company. The assessment identified
strategic and operational risks at a corporate level and principal
risks impacting our operations in Egypt and West Africa.
The board receives written assurances from the CEO and CFO that
to the best of their knowledge and belief, the group's financial
position presents a true and fair view and that the financial
statements are founded on a sound system of risk management,
internal compliance and control. Further, they confirm that the
group's risk management and internal compliance is operating
efficiently and effectively. The board recognises that internal
control assurances from the CEO and CFO can only be reasonable
rather than absolute, and therefore they are not and cannot be
designed to detect all weaknesses in control procedures.
The financial statements have been audited by the independent
audit and accounting firm, PricewaterhouseCoopers LLP, who were
given unrestricted access to all financial records and related
information, including minutes of all shareholder, board and
committee meetings.
The financial statements were approved by the board of directors
on 31 January 2018 and signed on their behalf by Andrew Pardey
(CEO) and Ross Jerrard (CFO).
Each of the directors, whose names and functions are listed in
the Directors' Report confirm that, to the best of their
knowledge.
-- the group financial statements, which have been prepared in
accordance with IFRSs as adopted by the European Union, give a true
and fair view of the assets, liabilities, financial position and
profit of the group; and
-- the Strategic Report includes a fair review of the
development and performance of the business and the position of the
group, together with a description of the principal risks and
uncertainties that it faces.
In the case of each director in office at the date the
Directors' Report is approved:
-- so far as the director is aware, there is no relevant audit
information of which the group's auditors are unaware; and
-- they have taken all the steps that they ought to have taken
as a director in order to make themselves aware of any relevant
audit information and to establish that the group's auditors are
aware of that information.
On behalf of the board:
Andrew Pardey Ross Jerrard
Chief executive officer Chief financial officer
31 January 2018 31 January 2018
Set out below are the audited consolidated Financial Statements
for the group, including notes thereto, for the year ended 31
December 2017. The independent auditors report on these Financial
Statements was unmodified.
The financial statements have been prepared in accordance with
International Financial Reporting Standards ("IFRS") as issued by
the International Accounting Standards Board ("IASB") and adopted
for use by the European Union and in accordance with the Companies
(Jersey) Law 1991.
Consolidated statement of comprehensive income
for the year ended 31 December 2017
31 December 31 December
2017 2016
Notes US$'000 US$'000
-------------------------------------------------------------------- ----- ----------- -----------
Revenue 5 675,510 687,387
Cost of sales 6 (414,341) (389,276)
-------------------------------------------------------------------- ----- ----------- -----------
Gross profit 261,169 298,111
Other income 680 -
Other operating costs 6 (36,927) (32,077)
Impairment of exploration and evaluation assets 14 (3,557) (122)
Finance income 6 2,729 917
-------------------------------------------------------------------- ----- ----------- -----------
Profit for the year before tax 224,094 266,829
Tax 8 (2,063) (821)
-------------------------------------------------------------------- ----- ----------- -----------
Profit for the year after tax 222,031 266,008
EMRA profit share 7 (112,629) (51,253)
-------------------------------------------------------------------- ----- ----------- -----------
Profit for the year after EMRA profit share 109,402 214,755
Profit for the year attributable to:
- the owners of the parent 109,402 214,755
-------------------------------------------------------------------- ----- ----------- -----------
Other comprehensive income
Items that may be reclassified subsequently to profit or loss:
Profit/(loss) on available--for--sale financial assets (net of tax) 15 (91) 45
-------------------------------------------------------------------- ----- ----------- -----------
Other comprehensive income for the year (91) 45
-------------------------------------------------------------------- ----- ----------- -----------
Total comprehensive income attributable to:
- the owners of the parent 109,311 214,800
-------------------------------------------------------------------- ----- ----------- -----------
Earnings per share before profit share:
Basic (cents per share) 26 19.303 23.170
Diluted (cents per share) 26 19.154 23.054
Earnings per share after profit share:
Basic (cents per share) 26 9.511 18.705
Diluted (cents per share) 26 9.438 18.612
-------------------------------------------------------------------- ----- ----------- -----------
The above audited consolidated statement of comprehensive income
should be read in conjunction with the accompanying notes.
Consolidated statement of financial position
as at 31 December 2017
31 December 31 December
2017 2016
Notes US$'000 US$'000
-------------------------------------- ----- ----------- -----------
Non--current assets
Property, plant and equipment 13 851,099 868,926
Exploration and evaluation asset 14 168,832 153,918
Prepayments 12 - 295
Other receivables 10 96 81
-------------------------------------- ----- ----------- -----------
Total non--current assets 1,020,027 1,023,220
-------------------------------------- ----- ----------- -----------
Current assets
Inventories 11 105,210 128,582
Available--for--sale financial assets 15 125 130
Trade and other receivables 10 34,467 24,870
Prepayments 12 9,793 7,508
Cash and cash equivalents 27 359,680 399,873
-------------------------------------- ----- ----------- -----------
Total current assets 509,275 560,963
-------------------------------------- ----- ----------- -----------
Total assets 1,529,302 1,584,183
-------------------------------------- ----- ----------- -----------
Non--current liabilities
Provisions 17 10,961 7,697
-------------------------------------- ----- ----------- -----------
Total non--current liabilities 10,961 7,697
-------------------------------------- ----- ----------- -----------
Current liabilities
Trade and other payables 16 56,585 47,991
Tax liabilities 8 469 -
Provisions 17 9,311 3,976
-------------------------------------- ----- ----------- -----------
Total current liabilities 66,365 51,967
-------------------------------------- ----- ----------- -----------
Total liabilities 77,326 59,664
-------------------------------------- ----- ----------- -----------
Net assets 1,451,976 1,524,519
-------------------------------------- ----- ----------- -----------
Equity
Issued capital 18 668,732 667,472
Share option reserve 19 4,323 3,048
Accumulated profits 778,921 853,999
-------------------------------------- ----- ----------- -----------
Total equity attributable to:
- owners of the parent 1,451,976 1,524,519
-------------------------------------- ----- ----------- -----------
Total equity 1,451,976 1,524,519
-------------------------------------- ----- ----------- -----------
The above audited consolidated statement of financial position
should be read in conjunction with the accompanying notes.
The consolidated financial statements on were approved by the
board of directors on 31 January 2018 and signed on its behalf
by:
Andrew Pardey Ross Jerrard
Chief executive officer Chief financial officer
31 January 2018 31 January 2018
Consolidated statement of changes in equity
for the year ended 31 December 2017
Share
Issued option Accumulated Total
capital reserve profits equity
US$'000 US$'000 US$'000 US$'000
---------------------------------------- ------- ------- ----------- ---------
Balance as at 1 January 2017 667,472 3,048 853,999 1,524,519
Profit for the year after tax - - 222,031 222,031
EMRA profit share - - (112,629) (112,629)
Other comprehensive income for the year - - (91) (91)
---------------------------------------- ------- ------- ----------- ---------
Total comprehensive income for the year - - 109,311 109,311
Issue of shares - - - -
Transfer of share based payments 1,260 (1,260) - -
Recognition of share based payments - 2,535 - 2,535
Dividend paid - shareholders - - (184,389) (184,389)
---------------------------------------- ------- ------- ----------- ---------
Balance as at 31 December 2017 668,732 4,323 778,921 1,451,976
---------------------------------------- ------- ------- ----------- ---------
Share
Issued option Accumulated Total
capital reserve profits 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 year after tax - - 266,008 266,008
EMRA profit share - - (51,253) (51,253)
Other comprehensive income for the year - - 45 45
---------------------------------------- ------- ------- ----------- ---------
Total comprehensive income for the year - - 214,800 214,800
Issue of shares (17) - - (17)
Transfer of share based payments 1,899 (1,899) - -
Recognition of share
based payments - 2,478 - 2,478
Dividend paid - shareholders - - (46,073) (46,073)
---------------------------------------- ------- ------- ----------- ---------
Balance as at 31 December 2016 667,472 3,048 853,999 1,524,519
---------------------------------------- ------- ------- ----------- ---------
The above audited consolidated statement of changes in equity
should be read in conjunction with the accompanying notes.
Consolidated statement of cash flows
for the year ended 31 December 2017
31 December 31 December
2017 2016
Notes US$'000 US$'000
--------------------------------------------------------- ----- ----------- -----------
Cash flows from operating activities
Cash generated in operating activities 27(b) 363,110 374,811
Income tax refund received 108 -
Income tax paid (1,678) (7,599)
Finance income (2,729) (917)
--------------------------------------------------------- ----- ----------- -----------
Net cash generated by operating activities 358,811 366,295
--------------------------------------------------------- ----- ----------- -----------
Cash flows from investing activities
Acquisition of property, plant and equipment (76,576) (57,204)
Exploration and evaluation expenditure (30,896) (49,487)
Finance income 6 2,729 917
--------------------------------------------------------- ----- ----------- -----------
Net cash used in investing activities (104,743) (105,774)
--------------------------------------------------------- ----- ----------- -----------
Cash flows from financing activities
Dividend paid (184,389) (46,073)
EMRA profit share paid 7 (111,629) (18,503)
--------------------------------------------------------- ----- ----------- -----------
Net cash used in financing activities (296,018) (64,576)
--------------------------------------------------------- ----- ----------- -----------
Net (decrease)/increase in cash and cash equivalents (41,950) 195,945
Cash and cash equivalents at the beginning of the period 399,873 199,616
Effect of foreign exchange rate changes 1,757 4,312
--------------------------------------------------------- ----- ----------- -----------
Cash and cash equivalents at the end of the period 27 359,680 399,873
--------------------------------------------------------- ----- ----------- -----------
The above audited consolidated statement of cash flows should be
read in conjunction with the accompanying notes.
Notes to the consolidated financial statements
for the year ended 31 December 2017
1. General information
Centamin plc (the "Company") is a listed public company,
incorporated and domiciled in Jersey and operating through
subsidiaries and jointly controlled entities operating in Egypt,
Burkina Faso, Côte d'Ivoire, United Kingdom and Australia. It is
the parent company of the group, comprising the Company and its
subsidiaries and joint arrangements.
Registered office and principal place of business:
Centamin plc
2 Mulcaster Street
St Helier, Jersey JE2 3NJ
The nature of the group's operations and its principal
activities are set out in the directors' report and the strategic
report of the annual report.
2. Adoption of new and revised accounting standards
Standards not affecting the reported results nor the financial
position
In the current year, the new and revised standards and
interpretations that have been adopted have not had a significant
impact on the amounts reported in these financial statements.
New standards, amendments and interpretations not yet
adopted
Standards and interpretations issued but not yet effective up to
the date of issuance of the financial statements are listed below.
This listing of standards and interpretations issued are those that
the group reasonably expects to have an impact on disclosures,
financial position or performance when applied at a future
date.
IFRS 15 'Revenue from contracts with customers'. The new
standard replaces IAS 18 'Revenue' and IAS 11 'Construction
contracts' and provides a five--step framework for application to
customer contracts: identification of customer contract;
identification of the contract performance obligations;
determination of the contract price; allocation of the contract
price to the contract performance obligations; and revenue
recognition as performance obligations are satisfied. A new
requirement where revenue is variable stipulates that revenue may
only be recognised to the extent that it is highly probable that
significant reversal of revenue will not occur. The group has
assessed the impact of IFRS 15 and determined that its application
will result in no changes in its revenue recognition. As the
majority of gold sales are not subject to pricing adjustments, a
significant impact is not anticipated. The new standard will be
effective for annual periods beginning on or after 1 January
2018.
IFRS 9 'Financial instruments'. IFRS 9 addresses the financial
reporting of financial assets and financial liabilities. This
standard replaces IAS 39 'Financial instruments: recognition and
measurement'. IFRS 9 requires financial assets to be classified
into three measurement categories: those measured at fair value
through profit and loss, those measured at fair value through other
comprehensive income and those measured at amortised cost. The
determination is made at initial recognition. The classification
depends on the entity's business model for managing its financial
instruments and the contractual cash flow characteristics of the
instrument. For financial liabilities, the standard retains most of
the IAS 39 requirements. The impairment model, hedging rules and
derecognition rules have also been amended under IFRS 9. The group
believe there is no material impact of IFRS9 on current results,
had it been effective in the year ended 31 December 2017 as it does
not enter into formal hedge accounting arrangements, has no long
term trade or other receivables and does not hold financial
liabilities at fair value. The group has considered the impact of
IFRS9 on the accounting for assets currently held as
available-for--sale and determined it not be material. The new
standard will be effective for annual periods beginning on or after
1 January 2018.
IFRS 16 'Leases'. The new standard will replace IAS 17 'Leases'
and eliminates the classification of leases as either operating or
finance leases by the lessee. Classification of leases by the
lessor under IFRS 16 continues as either an operating or a finance
lease, as was the treatment under IAS 17 'Leases'. The treatment of
leases by the lessee will require capitalisation of most leases
resulting in accounting treatment similar to finance leases under
IAS 17 'Leases'. Exemptions for leases of very low value or short
term leases will be applicable. The new standard will result in an
increase in lease assets and liabilities for the lessee. Under the
new standard the treatment of all lease expense is aligned in the
statement of earnings with depreciation, and an interest expense
component recognised for each lease, in line with finance lease
accounting under IAS 17 'Leases'. The group's leases will come on
balance sheet on adoption of IFRS16 and the impact is still being
assessed. IFRS 16 will be applied for annual periods beginning on
or after 1 January 2019 with the cumulative effect of initially
applying the standard recognised at the date of initial
application.
3. Summary of significant accounting policies
Basis of preparation
These financial statements are denominated in US dollars
("US$"), which is the presentational currency of Centamin plc. All
companies in the group use the US$ as their functional currency
except for the UK subsidiaries which are denominated in Great
British pounds ("GBP") and the Australian subsidiaries which are
denominated in Australian dollars ("AUD"). All financial
information presented in US dollars has been rounded to the nearest
thousand dollars, unless otherwise stated.
The financial statements have been prepared in accordance with
International Financial Reporting Standards ("IFRS") as issued by
the International Accounting Standards Board ("IASB") and adopted
for use by the European Union and interpretations issued from time
to time by the IFRS Interpretations Committee ("IFRS IC") both as
adopted by the European Union ("EU") and which are mandatory for EU
reporting as at 31 December 2017, the Companies (Jersey) Law 1991,
and IFRS as issued by the IASB and interpretations issued from time
to time by the IFRS IC which are mandatory as at 31 December 2017.
The group has not early adopted any other amendments, standards or
interpretations that have been issued but are not yet
mandatory.
The consolidated financial statements have been prepared on a
going concern basis and under the historical cost convention, as
modified by available--for--sale financial assets, and financial
assets and financial liabilities (including derivative) instruments
at fair value through profit and loss.
Comparative figures
Certain comparative figures have been reclassified to conform to
the financial statement presentation adopted for the current year.
These are categorisation changes for comparison purposes only and
have no effect on results as previously reported. The changes
included:
Year ended Year ended
31 December 31 December
2017 2016
US$'000 US$'000
----------------------------------------------------------- ----------- -----------
Stock obsolescence provision reallocated to inventories(1)
(Decrease) in inventory (5,136) (2,500)
Decrease in provisions 5,136 2,500
Prepayments reallocation(2)
Increase in prepayments 6,272 5,480
(Decrease) in inventory (6,272) (5,480)
----------------------------------------------------------- ----------- -----------
(1) Per IAS 2 Inventories, it is required to show the provision
for obsolete inventory within the inventory note as the inventory
balance in the statement of financial position should be net of
such a provision, as such this has been reclassified from
provisions to inventory.
(2) Prepayments for items within the inventory balance were
identified by management for which the risks and rewards of
ownership had not passed, and as such these have been reclassified
from inventory to prepayments.
Principles of consolidation
The consolidated financial statements are prepared by combining
the financial statements of all the entities that comprise the
consolidated entity, being the Company (the parent entity) and its
subsidiaries. Subsidiaries are all entities (including structured
entities) over which the group has control, as defined in IFRS 10
'Consolidated financial statements'. Consistent accounting policies
are employed in the preparation and presentation of the
consolidated financial statements.
The consolidated financial statements include the information
and results of each subsidiary from the date on which the Company
obtains control and until such time as the Company ceases to
control such entity. The group controls an entity when the group is
exposed to, or has rights to, variable returns from its involvement
with the entity and has the ability to affect those returns through
its power over the entity.
In preparing the consolidated financial statements, all
intercompany balances and transactions, and unrealised profits
arising within the consolidated entity are eliminated in full.
Sukari Gold Mines ("SGM") is jointly owned by PGM and EMRA on a
50% basis. For accounting purposes, SGM is wholly consolidated
within the Centamin group of companies reflecting the substance and
economic reality of the Concession Agreement (see note 23) and will
therefore recognise a non--controlling interest ("NCI") for EMRA's
participation. Furthermore, based on the requirements of the
Concession Agreement, payments to NCI meet the definition of a
liability and will be recorded in the income statement and
statement of financial position (below profit after tax), as the
EMRA profit share, on the date that a net production surplus
becomes available. Payment made to EMRA pursuant to the provisions
of the Concession Agreement is based on the net production surplus
available as at 30 June, being SGM's financial year end. Pursuant
to the Concession Agreement, the provisions of which are described
more fully below, whilst PGM is responsible for funding SGM's
activities, PGM is also entitled to recover the following costs and
expenses payable from sales revenue (excluding the royalty payable
to the Arab Republic of Egypt ("ARE")): (a) all current operating
expenses incurred and paid after the initial commercial production;
(b) exploration costs, including those accumulated to the
commencement of commercial production (at the rate of 33.3% of
total accumulated cost per annum); and (c) exploitation capital
costs, including those accumulated prior to the commencement of
commercial production (at the rate of 33.3% of total accumulated
cost per annum).
EMRA is entitled to a share of 50% of SGM's net production
surplus which is defined as 'revenue less payment of the fixed
royalty to Arab Republic of Egypt ("ARE") and recoverable costs'.
However, in accordance with the terms of the Concession Agreement,
in the first and second years in which there is a profit share, PGM
will be entitled to an additional 10% of net production surplus and
an additional 5% in the third and fourth years. Any payment made to
EMRA pursuant to these provisions of the Concession Agreement will
be recognised as a variable charge in the income statement (below
profit after tax) of Centamin, which will lead to a reduction in
the earnings per share.
Going concern
These financial statements for the year ended 31 December 2017
have been prepared on a going concern basis, which contemplate the
realisation of assets and liquidation of liabilities during the
normal course of operations.
The group meets its day--to--day working capital requirements
through existing cash resources. As discussed in note 22, the
operation of the mine has been 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.
Having assessed the principal risks and the other matters
discussed in connection with the long term viability statement
(refer to the risk management report included within the annual
report), the directors considered it appropriate to adopt the going
concern basis of accounting in preparing the financial
statements.
Accounting policies
Accounting policies are selected and applied in a manner which
ensures that the resulting financial statements satisfy the
concepts of relevance and reliability, thereby ensuring that the
substance of the underlying transactions or other events is
reported. These policies have been consistently applied to all the
years presented, unless otherwise stated.
The following significant policies have been adopted in the
preparation and presentation of these financial statements:
Cash and cash equivalents
Cash comprises cash on hand and demand deposits. Cash
equivalents are short term, highly liquid investments that are
readily convertible to known amounts of cash and which are subject
to an insignificant risk of changes in value.
Financial instruments
Financial assets and financial liabilities are recognised in the
group's balance sheet when the group becomes a party to the
contractual provisions of the instrument.
Financial liabilities and equity
Debt and equity instruments are classified as either financial
liabilities or as equity in accordance with the substance of the
contractual arrangement as defined below.
Equity instruments
An equity instrument is any contract that evidences a residual
interest in the assets of an entity after deducting all of its
liabilities. Equity instruments issued by the group are recognised
at the proceeds received, net of direct issue costs.
Other financial liabilities
Other financial liabilities, including borrowings, are initially
measured at fair value, net of transaction costs. Other financial
liabilities are subsequently measured at amortised cost using the
effective interest method, with interest expense recognised on an
effective yield basis.
Derecognition of financial liabilities
The group derecognises financial liabilities when, and only
when, the group's obligations are discharged, cancelled or they
expire.
Financial assets
Financial assets are recognised when, and only when, the entity
becomes a party to the contractual provisions of the instrument,
and are initially measured at fair value, net of transaction costs
except for those financial assets classified as at fair value
through the profit or loss which are initially measured at fair
value.
Subsequent to initial recognition, investments in subsidiaries
are measured at cost in the Company financial statements. Other
financial assets are loans and receivables. The classification
depends on the nature and purpose of the financial assets and is
determined at the time of initial recognition.
An entity shall derecognise a financial asset when, and only
when the contractual rights to the cash flows from the financial
asset expire or it transfers the financial asset by transferring
its rights to the related cash flows.
Effective interest method
The effective interest method is a method of calculating the
amortised cost of a financial asset and of allocating interest
income over the relevant period. The effective interest rate is the
rate that exactly discounts estimated future cash receipts through
the expected life of the financial asset, or, where appropriate, a
shorter period, to the net carrying amount on initial
recognition.
Available--for--sale ("AFS") financial assets
Listed shares and listed redeemable notes held by the group that
are traded in an active market are classified as being AFS and are
stated at fair value. Fair value is determined in the manner
described in note 28. Gains and losses arising from changes in fair
value are recognised in other comprehensive income and accumulated
profits with the exception of impairment losses, interest
calculated using the effective interest method and foreign exchange
gains and losses on monetary assets, which are recognised directly
in profit or loss. Where the investment is disposed of or is
determined to be impaired, the cumulative gain or loss previously
recognised in the investments revaluation reserve is reclassified
to profit or loss.
Dividends on AFS equity instruments are recognised in profit or
loss when the group's right to receive the dividends is
established.
The fair value of AFS monetary assets denominated in a foreign
currency is determined in that foreign currency and translated at
the spot rate at the balance sheet date. The foreign exchange gains
and losses that are recognised in profit or loss are determined
based on the amortised cost of the monetary asset. Other foreign
exchange gains and losses are recognised in other comprehensive
income.
Loans and receivables
Trade receivables, loans and other receivables that have fixed
or determinable payments that are not quoted in an active market
are classified as loans and receivables. Loans and receivables are
measured at amortised cost using the effective interest rate method
less impairment. Interest is recognised by applying the effective
interest rate except for short term receivables when the
recognition of interest would be immaterial.
Impairment of financial assets
Financial assets, other than those at FVTPL, are assessed for
indicators of impairment at each reporting date. Financial assets
are impaired where there is objective evidence that as a result of
one or more events that occurred after the initial recognition of
the financial asset the estimated future cash flows of the
investment have been impacted. For financial assets carried at
amortised cost, the amount of the impairment is the difference
between the asset's carrying amount and the present value of
estimated future cash flows, discounted at the original effective
interest rate.
The carrying amount of the financial asset is reduced by the
impairment loss directly for all financial assets with the
exception of trade receivables where the carrying amount is reduced
through the use of an allowance account. When a trade receivable is
uncollectible, it is written off against the allowance account.
Subsequent recoveries of amounts previously written off are
credited against the allowance account. Changes in the carrying
amount of the allowance account are recognised in profit or
loss.
With the exception of available--for--sale equity instruments,
if, in a subsequent period, the amount of the impairment loss
decreases and the decrease can be related objectively to an event
occurring after the impairment was recognised, the previously
recognised impairment loss is reversed through profit or loss to
the extent the carrying amount of the investment at the date the
impairment is reversed does not exceed what the amortised cost
would have been had the impairment not been recognised.
In respect of AFS equity instruments, any subsequent increase in
fair value after an impairment loss is recognised in other
comprehensive income.
Derecognition of financial assets
The group derecognises a financial asset only when the
contractual rights to the cash flows from the asset expire, or when
it transfers the financial asset and substantially all the risks
and rewards of ownership of the asset to another entity. If the
group neither transfers nor retains substantially all the risks and
rewards of ownership and continues to control the transferred
asset, the group recognises its retained interest in the asset and
an associated liability for amounts it may have to pay. If the
group retains substantially all the risks and rewards of ownership
of a transferred financial asset, the group continues to recognise
the financial asset and also recognises a collateralised borrowing
for the proceeds received.
Employee benefits
A liability is recognised for benefits accruing to employees in
respect of wages and salaries, annual leave, long service leave and
sick leave when it is probable that settlement will be required and
they are capable of being measured reliably.
Liabilities recognised in respect of employee benefits expected
to be settled within twelve months, are measured at their nominal
values using the remuneration rate expected to apply at the time of
settlement. Liabilities recognised in respect of employee benefits
which are not expected to be settled within twelve months are
measured at the present value of the estimated future cash flows to
be made by the consolidated entity in respect of services provided
by employees up to reporting date.
Superannuation
The Company contributes to, but does not participate in,
compulsory superannuation funds (defined contribution schemes) on
behalf of the employees and directors in respect of salaries and
directors' fees paid. Contributions are charged against income as
they are made.
Exploration, evaluation and development expenditure
Exploration and evaluation expenditures in relation to each
separate area of interest are recognised as an exploration and
evaluation asset in the year in which they are incurred where the
following conditions are satisfied:
-- the rights to tenure of the area of interest are current; and
-- at least one of the following conditions is also met:
o the exploration and evaluation expenditures are expected to be
recouped through successful development and exploration of the area
of interest, or alternatively, by its sale; or
o exploration and evaluation activities in the area of interest
have not at the reporting date reached a stage which permits a
reasonable assessment of the existence or otherwise of economically
recoverable reserves, and active and significant operations in, or
in relation to, the area of interest are continuing.
Exploration and evaluation assets are initially measured at cost
and include acquisition of rights to explore, studies, exploration
drilling, trenching and sampling and associated activities. General
and administrative costs are only included in the measurement of
exploration and evaluation costs where they are related directly to
operational activities in a particular area of interest.
Exploration and evaluation assets are assessed for impairment
when facts and circumstances (as defined in IFRS 6 'Exploration for
and evaluation of mineral resources') suggest that the carrying
amount of exploration and evaluation assets may exceed its
recoverable amount. The recoverable amount of the exploration and
evaluation assets (or the cash generating unit(s) to which it has
been allocated, being no larger than the relevant area of interest)
is estimated to determine the extent of the impairment loss (if
any). Where an impairment loss subsequently reverses, the carrying
amount of the asset is increased to the revised estimate of its
recoverable amount, but only to the extent that the increased
carrying amount does not exceed the carrying amount that would have
been determined had no impairment loss been recognised for the
asset in previous years.
Where a decision is made to proceed with development in respect
of a particular area of interest, the relevant exploration and
evaluation asset is tested for impairment, reclassified to mine
development properties, and then amortised over the life of the
reserves associated with the area of interest once mining
operations have commenced.
Mine development expenditure is recognised at cost less
accumulated amortisation and any impairment losses. When commercial
production in an area of interest has commenced, the associated
costs are amortised over the estimated economic life of the mine on
a units of production basis.
Changes in factors such as estimates of proved and probable
reserves that affect unit of production calculations are dealt with
on a prospective basis.
Foreign currencies
The individual financial statements of each group entity are
presented in its functional currency being the currency of the
primary economic environment in which the entity operates. For the
purpose of the consolidated financial statements, the results and
financial position of each entity are expressed in US dollars,
which is the functional currency of most companies in the group and
the presentation currency for the consolidated financial statements
except for the UK subsidiaries which are denominated in Great
British pounds and the Australian subsidiaries which are
denominated in Australian dollars.
In preparing the financial statements of the individual
entities, transactions in currencies other than the entity's
functional currency are recorded at the rates of exchange
prevailing on the dates of the transactions. At each reporting
date, monetary items denominated in foreign currencies are
retranslated at the rates prevailing at the reporting date.
Non--monetary items carried at fair value that are denominated in
foreign currencies are retranslated at the rates prevailing on the
date when the fair value was determined.
Non--monetary items that are measured in terms of historical
cost in a foreign currency are not retranslated. Exchange
differences are recognised in profit or loss in the period in which
they arise.
Segment reporting
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision-maker.
The chief operating decision-maker, who is responsible for
allocating resources and assessing performance of the operating
segments, has been identified as the board of directors.
Inventories
Inventories are valued at the lower of cost and net realisable
value. Costs including an appropriate portion of fixed and variable
overhead expenses are assigned to inventory on hand by the method
appropriate to each particular class of inventory, with the
majority being valued on a weighted average cost basis. Net
realisable value represents the estimated selling price less all
estimated costs of completion and costs necessary to make the
sale.
Inventory comprises ore stockpiles, gold in circuit and finished
goods which are valued by applying absorption costing
methodology.
Interests in joint arrangements
The group applies IFRS 11 'Joint arrangements'. Under IFRS 11
investments in joint arrangements are classified as either joint
operations or joint ventures depending on the contractual rights
and obligations each investor. Joint ventures are accounted for
using the equity method. In relation to its interests in joint
operations, the group recognises its share of assets and
liabilities; revenue from the sale of its share of the output; and
its share of expenses.
SGM is wholly consolidated within the Centamin group of
companies, reflecting the substance and economic reality of the
Concession Agreement (see note 23).
Leased assets
Leased assets are classified as finance leases when the terms of
the lease transfer substantially all the risks and rewards
incidental to ownership of the leased asset to the lessee. All
other leases are classified as operating leases.
Operating lease payments are recognised as an expense on a
straight--line basis over the lease term, except where other
systematic basis is more representative of the time pattern in
which economic benefits from the leased asset are consumed.
Contingent rentals arising under operating leases are recognised as
an expense in the period in which they are incurred.
Property, plant and equipment ("PPE")
PPE is stated at cost less accumulated depreciation and
impairment. PPE will include capitalised development expenditure.
Cost includes expenditure that is directly attributable to the
acquisition of the item as well as the estimated cost of
abandonment. In the event that settlement of all or part of the
purchase consideration is deferred, cost is determined by
discounting the amounts payable in the future to their present
value as at the date of acquisition. Subsequent costs are included
in the asset's carrying amount or recognised as a separate asset,
as appropriate, only when it is probable that future economic
benefits associated with the item will flow to the group and the
cost of the item can be measured reliably. The carrying amount of
the replaced part is derecognised. All other repairs and
maintenance are charged to the income statement during the
financial period in which they are incurred. The cost of PPE
includes the estimated restoration costs associated with the
asset.
Depreciation is provided on PPE. Depreciation is calculated on a
straight--line basis so as to write off the net cost or other
revalued amount of each asset over its expected useful life to its
estimated residual value.
The estimated useful lives, residual values and depreciation
method are reviewed at the end of each annual financial period,
with the effect of any changes recognised on a prospective
basis.
Freehold land is not depreciated.
The following estimated useful lives are used in the calculation
of depreciation:
Plant and equipment 2 - 20 years
Office equipment 3 - 7 years
Mining equipment 2 - 13 years
Buildings 4 - 20 years
The gain or loss arising on the disposal or scrappage of an
asset is determined as the difference between the sales proceeds
and the carrying amount of the asset and is recognised in
income.
Mine development properties
Where mining of a mineral resource has commenced, the
accumulated costs are transferred from exploration and evaluation
assets to mine development properties, net of any pre-production
revenues.
Amortisation is first charged to new mine development ventures
from the date of first commercial production. Amortisation of mine
properties is on a unit of production basis resulting in an
amortisation charge proportional to the depletion of the proved and
probable ore reserves. The unit of production can be on a tonnes or
an ounce depleted basis.
Capitalised underground development costs incurred to enable
access to specific ore blocks or areas of the underground mine, and
which only provide an economic benefit over the period of mining
that ore block or area, are depreciated on a units of production
basis, whereby the denominator is estimated ounces of gold in
proven and probable reserves within that ore block or area where it
is considered probable that those resources will be extracted
economically.
Stripping activity assets
The group defers stripping costs incurred (removal of mine waste
materials which provide improved access to further quantities of
material that will be mined in future periods). This waste removal
activity is known as stripping. There can be two benefits accruing
to the entity from the stripping activity:
-- usable ore that can be used to produce inventory; and
-- improved access to further quantities of material that will be mined in future periods.
The costs of stripping activity to be accounted for in
accordance with the principles of IAS 2 'Inventories' to the extent
that the benefit from the stripping activity is realised in the
form of inventory produced. The costs of stripping activity which
provides a benefit in the form of improved access to ore is
recognised as a non--current stripping activity asset where the
following criteria are met:
-- it is probable that the future economic benefit (improved
access to the ore body) associated with the stripping activity will
flow to the entity;
-- the entity can identify the component of the ore body for
which access has been improved; and
-- the costs relating to the stripping activity associated with
that component can be measured reliably.
When the costs of the stripping activity asset and the inventory
produced are not separately identifiable, production stripping
costs are allocated between the inventory produced and the
stripping activity asset by using an allocation basis that is based
on a relevant production measure. A stripping activity asset is
accounted for as an addition to, or as an enhancement of, an
existing asset and classified as tangible or intangible according
to the nature of the existing asset of which it forms part. A
stripping activity asset is initially measured at cost and
subsequently carried at cost or its revalued amount less
depreciation or amortisation and impairment losses. A stripping
activity asset is depreciated or amortised on a systematic basis,
over the expected useful life of the identified component of the
ore body that becomes more accessible as a result of the stripping
activity. The stripping activity asset is depreciated using a units
of production method based on the total ounces to be produced over
the life of the component of the ore body.
Deferred stripping costs are included in "stripping assets",
within tangible assets. These form part of the total investment in
the relevant cash generating unit, which is reviewed for impairment
if events or a change in circumstances indicate that the carrying
value may not be recoverable. Amortisation of deferred stripping
costs is included in operating costs.
As at 31 December 2017, no stripping costs have been
deferred.
Impairment of assets (other than exploration and evaluation and
financial assets)
At each reporting date, the group reviews the carrying amounts
of its tangible and intangible assets to determine whether there is
any indication that those assets have suffered an impairment loss.
If any such indication exists, the recoverable amount of the asset
is estimated in order to determine the extent of the impairment
loss (if any). For the purposes of assessing impairment, assets are
grouped at the lowest levels for which there are largely
independent cash inflows (cash generating units).
Recoverable amount is the higher of fair value loss costs to
sell and value in use. In assessing value in use, the estimated
future cash flows are discounted to their present value using a
pre--tax discount rate that reflects current market assessment of
the time value of money and the risks specific to the asset for
which the estimates of future flows have not been adjusted.
If the recoverable amount of a cash generating unit is estimated
to be less than its carrying amount, the carrying amount of the
cash generating unit is reduced to its recoverable amount. Where an
impairment loss subsequently reverses, the carrying amount of the
cash generating unit is increased to the revised estimate of its
recoverable amount, but only to the extent that the increased
carrying amount does not exceed the carrying amount that would have
been determined had no impairment loss been recognised for the cash
generating unit in prior years.
A reversal of an impairment loss is recognised immediately in
profit or loss, unless the relevant asset is carried at a revalued
amount, in which case the reversal of an impairment loss is treated
as a revaluation increase.
Revenue
Revenue is measured at the fair value of the consideration
received or receivable for goods and services in the normal course
of business, net of discounts, VAT and other sales--related
taxes.
Sale of goods
Revenue from the sale of mineral production is recognised when
the group has passed the significant risks and rewards of ownership
of the mineral production to the buyer, it is probable that
economic benefits associated with the transaction will flow to the
group, the sales price can be measured reliably, and the group has
no significant continuing involvement and the costs incurred or to
be incurred in respect of the transaction can be measured reliably.
This is when insurance risk has passed to the buyer and the goods
have been collected at the agreed location.
Where the terms of the executed sales agreement allow for an
adjustment to the sales price based on a survey of the mineral
production by the buyer (for instance an assay for gold content),
recognition of the revenue from the sale of mineral production is
based on the most recently determined estimate of product
specifications.
Pre--production revenues
Income derived by the entity prior to the date of commercial
production is offset against the expenditure capitalised and
carried in the consolidated statement of financial position. All
revenues recognised after commencement of commercial production are
recognised in accordance with the revenue policy stated above. The
commencement date of commercial production is determined when
stable and sustained production capacity has been achieved.
Production royalty
The Arab Republic of Egypt ("ARE") is entitled to a royalty of
3% of net sales revenue (revenue net of freight and refining costs)
as defined from the sale of gold and associated minerals from the
Sukari Gold Mine. This royalty is calculated and recognised on
receipt of the final certificate of analysis document received from
the refinery. Due to its nature, this royalty is not recognised in
cost of sales but rather in other operating costs.
Other income
Interest income
Interest income is recognised when it is probable that the
economic benefits will flow to the group and the amount of income
can be measured reliably. Interest income is accrued on a time
basis, by reference to the principal outstanding and at the
effective interest rate applicable, which is the rate that exactly
discounts estimated future cash receipts through the expected life
of the financial asset to that asset's net carrying amount.
Share--based payments
Equity settled share--based payments with employees and others
providing similar services are measured at the fair value of the
equity instrument at grant date. Fair value is measured by the use
of the Black--Scholes model. Where share--based payments are
subject to market conditions, fair value was measured by the use of
a Monte--Carlo simulation. The fair value determined at the grant
date of the equity settled share--based payments is expensed over
the vesting period, based on the consolidated entity's estimate of
shares that will eventually vest.
Equity settled share--based transactions with other parties are
measured at the fair value of the goods or services received,
except where the fair value cannot be estimated reliably, in which
case they are measured at the fair value of the equity instruments
granted, measured at the date the entity obtains the goods or the
counterparty renders the service. The fair value of the employee
services received in exchange for the grant of the options is
recognised as an expense. The total amount to be expensed is
determined by reference to the fair value of the options
granted:
-- including any market performance conditions (for example, an entity's share price);
-- excluding the impact of any service and non--market
performance vesting conditions (for example, profitability and
remaining an employee of the entity over a specified time period);
and
-- including the impact of any non--vesting conditions (for
example, the requirement for employees to save or holding shares
for a specific period of time).
When the options are exercised, the Company issues new shares.
The proceeds received net of any directly attributable transaction
costs are credited to share capital (nominal value) and share
premium.
The expected life used in the model has been adjusted, based on
management's best estimate, for the effects of
non--transferability, exercise restrictions, and behavioural
considerations. Further details on how the fair value of equity
settled share--based transactions has been determined can be found
in note 20. At each reporting date, the group revises its estimate
of the number of equity instruments expected to vest. The impact of
the revision of the original estimates, if any, is recognised in
profit or loss over the remaining vesting period, with
corresponding adjustment to the equity settled employee benefits
reserve.
Issued capital
Ordinary shares are classified as equity. Incremental costs
directly attributable to the issue of new shares or options are
shown in equity as a deduction, net of tax, from the proceeds.
Where the Company or other members of the consolidated group
purchases the Company's equity share capital, the consideration
paid is deducted from the total shareholders' equity of the group
and/or of the Company as treasury shares until they are cancelled.
Where such shares are subsequently sold or reissued, any
consideration received is included in shareholders' equity of the
group and/or the Company.
Taxation
Income tax expense represents the sum of the tax currently
payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the
period. Taxable profit differs from profit as reported in the
consolidated statement of comprehensive income because of items of
income or expense that are taxable or deductible in other periods
and items that are never taxable or deductible. The group's
liability for current tax is calculated using tax rates that have
been enacted or substantively enacted by the end of the reporting
period.
Deferred tax
Deferred tax is recognised on temporary differences between the
carrying amounts of assets and liabilities in the financial
statements and the corresponding tax bases used in the computation
of taxable profit. Deferred tax liabilities are generally
recognised for all taxable temporary differences. Deferred tax
assets are generally recognised for all deductible temporary
differences to the extent that it is probable that taxable profits
will be available against which those deductible temporary
differences can be utilised. Such deferred tax assets and
liabilities are not recognised if the temporary difference arises
from goodwill or from the initial recognition (other than in a
business combination) of other assets and liabilities in a
transaction that affects neither the taxable profit nor the
accounting profit.
Deferred tax liabilities are recognised for taxable temporary
differences associated with investments in subsidiaries and
associates, and interests in joint ventures, except where the group
is able to control the reversal of the temporary difference and it
is probable that the temporary difference will not reverse in the
foreseeable future. Deferred tax assets arising from deductible
temporary differences associated with such investments and
interests are only recognised to the extent that it is probable
that there will be sufficient taxable profits against which to
utilise the benefits of the temporary differences and they are
expected to reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at the
end of each reporting period and reduced to the extent that it is
no longer probable that sufficient taxable profits will be
available to allow all or part of the asset to be recovered.
Deferred tax assets and liabilities are measured at the tax
rates that are expected to apply in the period in which the
liability is settled or the asset realised, based on tax rates (and
tax laws) that have been enacted or substantively enacted by the
end of the reporting period. The measurement of deferred tax
liabilities and assets reflects the tax consequences that would
follow from the manner in which the group expects, at the end of
the reporting period, to recover or settle the carrying amount of
its assets and liabilities.
Deferred tax assets and liabilities are offset when there is a
legally enforceable right to set off current tax assets against
current tax liabilities and when they relate to income taxes levied
by the same taxation authority and the group intends to settle its
current tax assets and liabilities on a net basis.
Restoration and rehabilitation
A provision for restoration and rehabilitation is recognised
when there is a present legal or constructive obligation as a
result of exploration, development and production activities
undertaken, it is probable that an outflow of economic benefits
will be required to settle the obligation, and the amount of the
provision can be measured reliably. The estimated future
obligations include the costs of dismantling and removal of
facilities, restoration and monitoring of the affected areas. The
provision for future restoration costs is the best estimate of the
present value of the expenditure required to settle the restoration
obligation at the reporting date. Future restoration costs are
reviewed annually and any changes in the estimate are reflected in
the present value of the restoration provision at each reporting
date.
The initial estimate of the restoration and rehabilitation
provision relating to exploration, development and mining
production activities is capitalised into the cost of the related
asset and amortised on the same basis as the related asset, unless
the present obligation arises from the production of the inventory
in the period, in which case the amount is included in the cost of
production for the period. Changes in the estimate of the provision
of restoration and rehabilitation are treated in the same manner,
except that the unwinding of the effect of discounting on the
provision is recognised as a finance cost within other operating
costs rather than being capitalised into the cost of the related
asset.
4. Critical accounting judgments
Critical judgments in applying the entity's accounting
policies
The following are the critical judgments that management has
made in the process of applying the group's accounting policies and
that have the most significant effect on the amounts recognised in
the financial statements.
Management has discussed its critical accounting judgments and
associated disclosures with the Company's audit and risk
committee.
Ore Reserves
Estimates of recoverable quantities of reserves include
assumptions on commodity prices, exchange rates, discount rates and
production costs for future cash flows. It also involves assessment
and judgment of complex geological models. The economic, geological
and technical factors used to estimate ore reserves may change from
period to period. Changes in ore reserves affect the carrying
values of mine properties, property, plant and equipment, provision
for rehabilitation assets and deferred taxes. Ore reserves are
integral to the amount of depreciation and amortisation charged to
the consolidated statement of comprehensive income and the
calculation in the valuation of inventory.
Production forecasts from the underground mine at Sukari are
partly based on estimates regarding future resource and reserve
growth. It should be specifically noted that the potential quantity
and grade from the Sukari underground mine is conceptual in nature,
that there has been insufficient exploration to define a mineral
resource and that it is uncertain if further exploration will
result in the target being delineated as a mineral resource.
Mineral reserve and resource statement
The group published a Mineral Reserve and Resource statement for
the Sukari gold mine on 10 January 2018 with an effective date of
30 June 2017. The group reports its Mineral Resources and Ore
Reserves in accordance with NI 43-101. The most current statement
has used an assumed gold price of US$1,300 per ounce as a basis of
preparation. The information on the Mineral Resources and Ore
Reserves is prepared by Qualified Persons as defined by the
instrument.
There are numerous uncertainties inherent in estimating Mineral
Resources and Ore Reserves. Assumptions that are valid at the time
of estimation may change significantly when new information becomes
available.
Impairment of assets (other than exploration and evaluation and
financial assets)
IFRS requires management to test for impairment if events or
changes in circumstances indicate that the carrying amount of a
finite lived asset may not be recoverable. Management has concluded
that there is no indication that an impairment exists, nor have any
indicators arisen after the reporting period and are therefore not
required to perform a full impairment review under IAS 36.
In making its assessment as to the possibility of whether
impairments losses having arisen, management considered the
following indications:
-- internal sources of information;
-- external sources of information; and
-- litigation.
The key assumptions previously applied in impairment reviews
are:
-- forecast gold prices;
-- discount rate;
-- production volumes;
-- reserves and resources report; and
-- costs and recovery rates.
Recovery of capitalised exploration evaluation and development
expenditure
The group's accounting policy for exploration and evaluation
expenditure results in exploration and evaluation expenditure being
capitalised for those projects where such expenditure is considered
likely to be recoverable through future extraction activity or sale
or where the exploration activities have not reached a stage which
permits a reasonable assessment of the existence of reserves.
This policy requires management to make certain estimates and
assumptions as to future events and circumstances, in particular
whether the group will proceed with development based on existence
of reserves or whether an economically viable extraction operation
can be established. Such estimates and assumptions may change from
period to period as new information becomes available. If,
subsequent to the exploration and evaluation expenditure being
capitalised, a judgment is made that recovery of the expenditure is
unlikely or the project is to be abandoned, the relevant
capitalised amount will be written off to the income statement.
Litigation
The group exercises judgment in measuring and recognising
provisions and the exposures to contingent liabilities related to
pending litigation, as well as other contingent liabilities (see
note 22 to the financial statements). Judgment is necessary in
assessing the likelihood that a pending claim will succeed, or a
liability will arise, and to quantify the possible range of the
financial settlement.
The group is currently a party to two legal actions both of
which could affect its ability to operate the mine at Sukari in the
manner in which it is currently operated and adversely affect its
profitability. The details of this litigation, which relate to the
loss of the Egyptian national subsidy for Diesel Fuel Oil and the
Concession Agreement under which Sukari operates, are given in note
22 to the financial statements and in the most recently filed
Annual Information Form ("AIF") which is available on SEDAR at
www.sedar.com. Although it is possible to quantify the effects of
the loss the national fuel subsidy, it is not currently possible to
quantify with sufficient precision the impact of any restrictions
placed on the terms of the group's operations under the Concession
Agreement.
Every action is being taken to contest these decisions,
including the making of formal legal appeals and, although their
resolution may still take some time, management remains confident
that a satisfactory outcome will ultimately be achieved. In the
meantime, however, the group is continuing to pay international
prices for Diesel Fuel Oil. With respect to the Administrative
Court ruling, on 20 March 2013 the Supreme Administrative Court
upheld the Company's application to suspend this decision until the
merits of the Company's appeal are considered and ruled on, thus
providing assurance that normal operations 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 management's belief that the
group will be able to continue as going concern.
Going concern
Under guidelines set out by the UK Financial Reporting Council
("FRC"), the directors of UK listed companies are required to
consider whether the going concern basis is the appropriate basis
of preparation of financial statements.
Based on a detailed cash flow forecast prepared by management,
in which it included any reasonably possible change in the key
assumptions on which cash flow forecast is based, the directors
have a reasonable expectation that the group will have adequate
resources to continue in operational existence for 12 months from
31 January 2018. Key assumptions underpinning this forecast
include:
-- litigation as discussed in note 22 to the financial statements;
-- forecast gold price;
-- production volumes; and
-- costs and recovery rates.
These financial statements for the year ended 31 December 2017
have therefore been prepared on a going concern basis, which
contemplate the realisation of assets and liquidation of
liabilities during the normal course of operations, in preparing
the financial statements.
Accounting treatment of Sukari Gold Mines ("SGM")
SGM is consolidated within the Centamin group of companies,
reflecting the substance and economic reality of the Concession
Agreement (see note 23 to the financial statements). The IFRS 10
definition of control encompasses three distinct principles, which,
if present, identify the existence of control by an investor over
an investee, hence forming a parent-subsidiary relationship:
-- Power over the investee.
-- Exposure, or rights, to variable returns from its involvement with the investee.
-- The ability to use its power over the investee to affect the
amount of the investor's returns.
An investor has power over an investee when the investor has
existing rights that give it the current ability to direct the
relevant activities (i.e. the activities that significantly affect
the investee's returns). The following is a list of some of the
relevant activities which the Company directs through Pharaoh Gold
Mines NL (holder of an Egyptian branch) in relation to the
operation of the Sukari Gold Mines:
-- Conducting exploration, development, production and marketing operations.
-- Coordinating SGM operations and activities, including its dealings with all contractors and subcontractors.
-- Bearing ultimate responsibility for all costs and expenses
required in carrying out any and all operations under the CA.
-- Funding the operations of (SGM) and recovering costs and
expenses throughout the life of the mine (i.e. exploration,
development and production phases).
-- Funding additional exploration and expansion programs during the production phase.
-- Preparing SGM's work programs and budget covering the
operations to be carried out throughout the life of the mine and
approval of the same.
-- Approval of the annual budget.
-- Approval of expenditure and recharges.
-- Custody of SGM's stock and management of its funds,
-- Shipping, marketing and selling of all gold and associated metals produced.
-- Entering into and managing gold sales or hedging contracts and forward sale agreements.
-- Appointment of the Chairman of the Board of Directors.
The Company is therefore exposed to the variable returns, has
the ability to affect the amount of those returns, has power over
SGM through its ability to direct its relevant activities and
therefore meets all the criteria to consolidate the SGM's results
within the Centamin group of companies to reflect the substance and
economic reality of the Concession Agreement.
Other critical accounting judgements, estimates and assumptions
are discussed in the following notes
Gold Price
The realised gold price has a direct impact on the group's
post-tax profit for the year and cash generation. Please refer to
market risk note 28(c).
Fuel price
Diesel fuel oil is one of the single biggest individual costs
for the operation. Any variation in the fuel price has a direct
impact on the mine production costs. Please refer to market risk
note 28(d).
Depreciation of capitalised underground mine development
costs
Depreciation of capitalised underground mine development costs
at the Sukari Gold Mine is based on reserve estimates. Management
and directors believe that these estimates are both realistic and
conservative, based on current information. Please refer to market
risk note 28(j).
5. Revenue
An analysis of the group's revenue for the year, from continuing
operations, is as follows:
31 December 31 December
2017 2016
US$'000 US$'000
-------------------------------------------------------------------------------------------- ----------- -----------
Gold sales (Including pre-production gold sales related to Cleopatra) 680,513 686,306
Less: Pre-production gold sales related to Cleopatra - transferred to exploration and
evaluation
asset (6,170) -
-------------------------------------------------------------------------------------------- ----------- -----------
Gold sales (Excluding pre-production gold sales related to Cleopatra) 674,343 686,306
Silver sales 1,167 1,081
-------------------------------------------------------------------------------------------- ----------- -----------
675,510 687,387
-------------------------------------------------------------------------------------------- ----------- -----------
All gold and silver sales during the year were made to a single
customer in North America.
6. Profit before tax
Profit for the year has been arrived at after
crediting/(charging) the following gains/(losses) and expenses:
31 December 31 December
2017 2016
US$'000 US$'000
------------------------------------------------------------------------------------------- ----------- -----------
Finance income
Interest received 2,729 917
Expenses
Cost of sales
Mine production costs (Including costs related to gold produced from Cleopatra) (308,892) (288,317)
Mine production costs related to gold produced from Cleopatra - transferred to exploration
and evaluation asset 1,329 -
------------------------------------------------------------------------------------------- ----------- -----------
Mine production costs (307,563) (288,317)
Movement in inventory (2,490) 5,926
Depreciation and amortisation (104,288) (106,885)
------------------------------------------------------------------------------------------- ----------- -----------
(414,341) (389,276)
------------------------------------------------------------------------------------------- ----------- -----------
31 December 31 December
2017 2016
US$'000 US$'000
--------------------------------------------------------------------- ----------- -----------
Other operating costs
Corporate compliance (1,281) (1,746)
Auditing fees (656) (641)
Corporate consultants (338) (370)
Communications and IT (188) (169)
Salary and wages (6,202) (5,353)
Travel, accommodation and entertainment (731) (859)
Office rents and lease payment (166) (156)
Other administration expenses (193) (207)
Insurances (387) (225)
Other taxes (3) (1,400)
Employee equity settled share--based payments (2,535) (2,478)
--------------------------------------------------------------------- ----------- -----------
Corporate costs (sub-total) (12,680) (13,604)
Impairment reversal - 484
Other provisions (1,170) -
Provision for stock obsolescence (2,636) (2,500)
Office related depreciation (274) (87)
Fixed royalty - attributable to the Egyptian government (20,404) (20,575)
Foreign exchange gain/(loss), net 1,470 5,025
Finance charges (341) (239)
Loss on disposal of asset (263) -
Provision for restoration and rehabilitation - unwinding of discount (629) (581)
--------------------------------------------------------------------- ----------- -----------
(36,927) (32,077)
--------------------------------------------------------------------- ----------- -----------
7. EMRA profit share
EMRA is entitled to a share of 50% of SGM's net production
surplus which can be defined as 'revenue less payment of the fixed
royalty to Arab Republic of Egypt ("ARE") and recoverable costs'.
However, in accordance with the terms of the Concession Agreement,
in the first and second years in which there is a profit share, PGM
will be entitled to an additional 10% of net production surplus and
an additional 5% in the third and fourth years.
Payments made to EMRA pursuant to the provisions of the
Concession Agreement are recognised as a variable charge in the
income statement (below profit after tax) of Centamin, which leads
to a reduction in the earnings per share. The profit share payments
during the year will be reconciled against SGM's audited financial
statements. The SGM financial statements for the year ended 30 June
2017 have not been signed off at the date of this report and are in
the process of being audited.
Certain terms of the Concession Agreement and amounts in the
cost recovery model may also vary depending on interpretation and
management and the Board making various judgments and estimates
that can affect the amounts recognised in the financial
statements.
a) Income statement and balance sheet impact
31 December 31 December
2017 2016
US$'000 US$'000
---------------------------------- ----------- -----------
Income statement
EMRA profit share(1) (112,629) (51,253)
---------------------------------- ----------- -----------
Balance sheet
EMRA opening profit share accrual 4,000 -
EMRA accrual/(release) 1,000 4,000
EMRA closing profit share accrual 5,000 4,000
---------------------------------- ----------- -----------
(1) Profit share commenced during the third quarter of 2016.
Any variation between payments made during the year (which are
based on the Company's estimates) and the SGM audited financial
statements, may result in a balance due and payable to EMRA or
advances to be offset against future distributions. This will be
reflected as an accrual or prepayment in each reporting period.
b) Cash flow statement impact
31 December 31 December
2017 2016
US$'000 US$'000
-------------------------------------- ----------- -----------
Cash flows
EMRA cash payments during the year(1) 111,629 18,503
-------------------------------------- ----------- -----------
(1) Profit share commenced during the third quarter of 2016.
EMRA and PGM benefit from advance distributions of profit share
which are made on a weekly/fortnightly basis and proportionately in
accordance with the terms of the Concession Agreement. Future
distributions will take into account ongoing cash flows, historic
costs that are still to be recovered and any future capital
expenditure. All profit share payments will be reconciled against
SGM's audited June financial statements for current and future
periods.
c) SGM cash flow statement extract
In order to reconcile the cash payments made during the period,
the SGM cash flow statement is tabled below:
31 December 31 December
2017 2016
US$'000 US$'000
--------------------------------------------- ----------- -----------
Cash flows
Cash available for profit share(1) 279,073 118,133
--------------------------------------------- ----------- -----------
60% Profit share to Pharaoh Gold Mines NL(2) (167,444) (70,880)
40% Profit share to EMRA(3) (111,629) (47,253)
EMRA accrual 1,000 4,000
--------------------------------------------- ----------- -----------
(1) After US$5,898 million was paid to Pharaoh Gold Mines NL as a cost recovery payment in 2017.
(2) 100% owned subsidiary of Centamin plc with a registered
Egyptian branch, refer to note 23 Subsidiaries.
(3) Profit share commenced during the third quarter of 2016.
8. Tax
The group operates in several countries and, accordingly, it is
subject to the various tax regimes in the countries in which it
operates. From time to time the group is subject to a review of its
related tax filings and in connection with such reviews, disputes
can arise with the taxing authorities over the interpretation or
application of certain rules to the group's business conducted
within the country involved. If the group is unable to resolve any
of these matters favourably, there may be an adverse impact on the
group's financial performance, cash flows or results of operations.
In the event that management's estimate of the future resolution of
these matters changes, the group will recognise the effects of the
changes in its consolidated financial statements in the period that
such changes occur.
In Egypt, Pharaoh Gold Mines NL has entered into a concession
agreement that provides that the income generated by Sukari Gold
Mining Company's activities is granted a long term tax exemption
from all taxes imposed in Egypt, other than the fixed royalty
attributable to the Egyptian government.
Relevance of tax consolidation to the consolidated entity
In Australia, Centamin Egypt Limited and Pharaoh Gold Mines NL,
both wholly owned Australian resident entities within the group,
have elected to form a tax--consolidated group from 1 July 2003 and
therefore are treated as a single entity for Australian income tax
purposes. The head entity within the tax--consolidated group is
Centamin Egypt Limited. Pharaoh Gold Mines NL, which has a
registered Egyptian branch, benefits from the "Branch Profits
Exemption" whereby foreign branch income will generally not be
subject to Australian income tax. Ampella Mining Limited is a
single entity for Australian income tax purposes.
Nature of tax funding arrangements and tax--sharing
agreements
Entities within the tax--consolidated group have entered into a
tax funding arrangement and a tax--sharing agreement with the head
entity. Under the terms of the tax--funding agreement, Centamin
Egypt Limited and each of the entities in the tax--consolidated
group have agreed to pay a tax--equivalent payment to or from the
head entity, based on the current tax liability or current tax
asset of the entity. Such amounts are reflected in amounts
receivable from or payable to other entities in the
tax--consolidated group.
The tax--sharing agreement entered into between members of the
tax--consolidated group provides for the determination of the
allocation of income tax liabilities between the entities should
the head entity default on its tax payment obligations. No amounts
have been recognised in the financial statements in respect of this
agreement as payment of any amounts under the tax--sharing
agreement is considered remote.
Tax recognised in profit is summarised as follows:
Tax expense
31 December 31 December
2017 2016
US$'000 US$'000
--------------------------------------------------- ----------- -----------
Current tax
Current tax expense in respect of the current year (2,063) (821)
--------------------------------------------------- ----------- -----------
Deferred tax - -
--------------------------------------------------- ----------- -----------
Total tax expense (2,063) (821)
--------------------------------------------------- ----------- -----------
The tax expense for the year can be reconciled to the profit per
the consolidated statement of comprehensive income as follows:
31 December 31 December
2017 2016
US$'000 US$'000
-------------------------------------------------------------------------------------- ----------- -----------
Profit before income tax 224,094 266,829
Tax expense calculated at 0% (2016: 0%)(1) of profit before tax - -
Tax effect of amounts which are not deductible/taxable in calculating taxable income:
Effect of tax different tax rates of subsidiaries operating in other jurisdictions (2,063) (821)
-------------------------------------------------------------------------------------- ----------- -----------
Tax expense for the year (2,063) (821)
-------------------------------------------------------------------------------------- ----------- -----------
(1) The tax rate used in the above reconciliation is the
corporate tax rate of 0% payable by Jersey corporate entities under
the Jersey tax law (2016: 0%). There has been no change in the
underlying corporate tax rates when compared to the previous
financial period.
Tax recognised in the balance sheet is summarised as
follows:
31 December 31 December
2017 2016
US$'000 US$'000
---------------------------- ----------- -----------
Current tax liabilities 469 -
Non-current tax liabilities 23 -
---------------------------- ----------- -----------
9. Segment reporting
The group is engaged in the business of exploration and mining
of precious metals, which represents three operating segments, two
in the business of exploration and one in mining of precious
metals. The board is the group's chief operating decision maker
within the meaning of IFRS 8. Management has determined the
operating segments based on the information reviewed by the board
for the purposes of allocating resources and assessing
performance.
The board considers the business from a geographic perspective
and a mining of precious metals versus exploration for precious
metals perspective. Geographically, management considers the
performance in the Egypt, Burkina Faso, Cote d'Ivoire and Corporate
(which includes Jersey, United Kingdom and Australia). From a
mining of precious metals versus exploration for precious metals
perspective, management separately considers the Egyptian mining of
precious metals from the West African exploration for precious
metals in these geographies. The Egyptian mining operations derive
its revenue from sale of gold while the West African entities are
currently only engaged in precious metal exploration and do not
currently produce any revenue.
The board assesses the performance of the operating segments
based on profits and expenditure incurred as well as exploration
expenditure in each region. Egypt is the only operating segment
mining precious metals and therefore has revenue and cost of sales
whilst the remaining operating segments do not. All operating
segments are reviewed by the board as presented and are key to the
monitoring of ongoing performance and assessing plans of the
Company, hence the change is disclosure from prior external
reporting.
Non--current assets other than financial instruments by
country:
31 December 31 December
2017 2016
US$'000 US$'000
------------------- ----------- -----------
Egypt 878,509 898,423
Burkina Faso 68,589 62,232
Côte d'Ivoire 31,202 18,248
Corporate 41,727 44,317
1,020,027 1,023,220
------------------- ----------- -----------
Statement of financial position by operating segment:
31 December 31 December 31 December 31 December 31 December
2017 2017 2017 2017 2017
US$'000 US$'000 US$'000 US$'000 US$'000
----------------------- ----------- ----------- ----------- ------------- -----------
Total Egypt Burkina Cote d'Ivoire Corporate
Faso
Statement of Financial
Position
Total assets 1,529,302 1,028,927 70,116 31,640 398,619
Total liabilities (77,326) (73,655) (786) (307) (2,578)
Net assets / Total
Equity 1,451,976 955,272 69,330 31,333 396,041
----------------------- ----------- ----------- ----------- ------------- -----------
31 December 31 December 31 December 31 December 31 December
2016 2016 2016 2016 2016
US$'000 US$'000 US$'000 US$'000 US$'000
----------------------- ----------- ----------- ----------- ------------- -----------
Total Egypt Burkina Cote d'Ivoire Corporate
Faso
----------------------- ----------- ----------- ----------- ------------- -----------
Statement of Financial
Position
Total assets 1,584,183 1,059,554 63,494 18,826 442,309
Total liabilities (59,664) (54,943) (1,538) (298) (2,885)
Net assets / Total
Equity 1,524,519 1,004,611 61,956 18,528 439,424
----------------------- ----------- ----------- ----------- ------------- -----------
Statement of comprehensive income by operating segment:
31 December 31 December 31 December 31 December 31 December
2017 2017 2017 2017 2017
US$'000 US$'000 US$'000 US$'000 US$'000
--------------------------- ----------- ----------- ----------- ------------- -----------
Total Egypt Burkina Cote d'Ivoire Corporate
Faso
--------------------------- ----------- ----------- ----------- ------------- -----------
Statement of Comprehensive
Income
Revenue 675,510 675,510 - - -
Cost of sales (414,341) (414,341) - - -
Gross profit 261,169 261,169 - - -
Other income 680 23 - - 657
Other operating
costs (36,927) (25,483) 197 96 (11,737)
Impairment of
exploration and
evaluation assets (3,557) - (35) (972) (2,550)
Finance income 2,729 41 - - 2,688
Profit/(loss)
for the year before
tax 224,094 235,750 162 (876) (10,942)
Tax (2,063) (513) - - (1,550)
--------------------------- ----------- ----------- ----------- ------------- -----------
Profit/(loss)
for the year after
tax 222,031 235,237 162 (876) (12,492)
EMRA profit share (112,629) (112,629) - - -
--------------------------- ----------- ----------- ----------- ------------- -----------
Profit/(loss)
for the year after
EMRA profit share 109,402 122,608 162 (876) (12,492)
--------------------------- ----------- ----------- ----------- ------------- -----------
31 December 31 December 31 December 31 December 31 December
2016 2016 2016 2016 2016
US$'000 US$'000 US$'000 US$'000 US$'000
--------------------------- ----------- ----------- ----------- ------------- -----------
Total Egypt Burkina Cote d'Ivoire Corporate
Faso
--------------------------- ----------- ----------- ----------- ------------- -----------
Statement of Comprehensive
Income
Revenue 687,387 687,387 - - -
Cost of sales (389,276) (389,276) - - -
Gross profit 298,111 298,111 - - -
Other income - - - - -
Other operating
costs (32,077) (21,032) (549) (170) (10,326)
Impairment of
exploration and
evaluation assets (122) (37) - - (85)
Finance income 917 72 - - 845
Profit/(loss)
for the year before
tax 266,829 277,114 (549) (170) (9,566)
Tax (821) (43) - - (778)
--------------------------- ----------- ----------- ----------- ------------- -----------
Profit/(loss)
for the year after
tax 266,008 277,071 (549) (170) (10,344)
EMRA profit share (51,253) (51,253) - - -
--------------------------- ----------- ----------- ----------- ------------- -----------
Profit/(loss)
for the year after
EMRA profit share 214,755 225,818 (549) (170) (10,344)
--------------------------- ----------- ----------- ----------- ------------- -----------
Exploration expenditure by operating segment
The following table provides a breakdown of the total
exploration expenditure of the group by operating segment:
1 January 1 January
to 31 December to 31 December
2017 2016
US$ million US$ million
-------------------------------------------- --------------- ---------------
Burkina Faso 6.4 26.3
Cote d'Ivoire 13.9 12.7
Egypt (Sukari tenement including Cleopatra) 10.6 10.5
Total exploration expenditure 30.9 49.5
-------------------------------------------- --------------- ---------------
10. Trade and other receivables
31 December 31 December
2017 2016
US$'000 US$'000
----------------------------- ----------- -----------
Non--current
Other receivables - deposits 96 81
----------------------------- ----------- -----------
96 81
----------------------------- ----------- -----------
31 December 31 December
2017 2016
US$'000 US$'000
------------------------------ ----------- -----------
Current
Gold and silver sales debtors 31,007 23,009
Other receivables 3,460 1,861
------------------------------ ----------- -----------
34,467 24,870
------------------------------ ----------- -----------
Trade and other receivables are classified as loans and
receivables and are therefore measured at amortised cost.
All gold and silver sales during the year were made to a single
customer in North America and are neither past due or impaired.
The average age of the receivables is 9 days (2016: nine days).
No interest is charged on the receivables. There are no trade
receivables past due and impaired at the reporting date, and thus
no allowance for doubtful debts has been recognised. Of the trade
receivables balance, the gold and silver sales debtor is all a
receivable from Asahi Refining of Canada. The amount due has been
received in full subsequent to year end. Other receivables
represent GST and VAT amounts owing from the various jurisdictions
that the group operates in and inventory returns to vendors where
refunds are expected to occur.
The directors consider that the carrying amount of trade and
other receivables is approximately equal to their fair value.
11. Inventories
31 December 31 December
2017 2016
US$'000 US$'000
------------------------------------------- ----------- -----------
Mining stockpiles and ore in circuit 31,728 34,217
Stores inventory(1) 78,618 96,865
Provision for obsolete stores inventory(2) (5,136) (2,500)
------------------------------------------- ----------- -----------
105,210 128,582
------------------------------------------- ----------- -----------
(1) Prepayments for items within the inventory balance were
identified by management for which the risks and rewards of
ownership had not passed, and as such these have been reclassified
from inventory to prepayments, refer to note 3.
(2) Per IAS 2 Inventories, it is required to show the provision
for obsolete inventory within the inventory note as the inventory
balance in the statement of financial position should be net of
such a provision, as such this has been reclassified from
provisions to inventory, refer to note 3.
--
12. Prepayments
31 December 31 December
2017 2016
US$'000 US$'000
----------------- ----------- -----------
Current
Prepayments(1) 7,545 6,631
Fuel prepayments 2,248 877
----------------- ----------- -----------
9,793 7,508
----------------- ----------- -----------
(1) Prepayments for items within the inventory balance were
identified by management for which the risks and rewards of
ownership had not passed, and as such these have been reclassified
from inventory to prepayments, refer to note 3.
31 December 31 December
2017 2016
US$'000 US$'000
------------- ----------- -----------
Non--current
Prepayments - 295
------------- ----------- -----------
- 295
------------- ----------- -----------
Movement in fuel prepayments
31 December 31 December
2017 2016
US$'000 US$'000
------------------------------------- ----------- -----------
Balance at the beginning of the year 877 3,169
Fuel prepayment recognised 42,869 23,014
Less: Provision charged to:
Mine production costs (39,030) (22,844)
Property, plant and equipment (2,761) (2,269)
Inventories 292 (193)
Balance at the end of the year 2,247 877
------------------------------------- ----------- -----------
Cumulative fuel prepayment and provision recognised
31 December 31 December
2017 2016
US$'000 US$'000
------------------------------ ----------- -----------
Fuel prepayment recognised 274,088 231,218
Less: Provision charged to:
Mine production costs (257,030) (218,000)
Property, plant and equipment (16,880) (14,120)
Inventories (1,098) (1,390)
Fuel advance down payment 3,167 3,169
------------------------------ ----------- -----------
Diesel Fuel Oil ("DFO") dispute
As more fully described in note 22 below, the group is currently
involved in court action concerning the price at which it is
supplied with DFO. Since January 2012, the group has had to pay for
DFO at the international price rather than the subsidised price
which it believes it is entitled to. It is seeking recovery of the
funds advanced since 2012 through court action. 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$274.1 million to 31 December 2017 of
which US$42.9 million was provided for during 2017.
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 the Diesel Fuel Oil dispute is shown below.
This has resulted in a net charge of US$41.9 million in the
profit and loss for the year.
31 December 2017 31 December 2016
--------------------------------- ---------------------------------
Before Before
adjustment Adjustment Total adjustment Adjustment Total
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
------------------------------ ---------- ---------- --------- ---------- ---------- ---------
Expenses
Cost of sales
Mine production costs (268,533) (39,030) (307,563) (265,473) (22,844) (288,317)
Movement in inventory 341 (2,831) (2,490) 7,710 (1,784) 5,926
Depreciation and amortisation (104,288) - (104,288) (106,885) - (106,885)
------------------------------ ---------- ---------- --------- ---------- ---------- ---------
(372,480) (41,861) (414,341) (364,648) (24,628) (389,276)
------------------------------ ---------- ---------- --------- ---------- ---------- ---------
The effect on earnings per share is shown below:
31 December 2017 31 December 2016
------------------------------- -------------------------------
Before Before
adjustment Adjustment Total adjustment Adjustment Total
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
---------------------------------------- ---------- ---------- ------- ---------- ---------- -------
Earnings per share before profit share:
Basic (cents per share) 22.942 (3.639) 19.303 25.315 (2.145) 23.170
Diluted (cents per share) 22.765 (3.611) 19.154 25.188 (2.134) 23.054
---------------------------------------- ---------- ---------- ------- ---------- ---------- -------
Earnings per share after profit share:
Basic (cents per share) 13.150 (3.639) 9.511 20.850 (2.145) 18.705
Diluted (cents per share) 13.049 (3.611) 9.483 20.746 (2.134) 18.612
---------------------------------------- ---------- ---------- ------- ---------- ---------- -------
13. Property, plant and equipment
Mine Capital
Office Plant Mining development work
and in
equipment Buildings equipment equipment properties progress Total
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
---------------------------------------- --------- --------- --------- --------- ----------- -------- ---------
Cost
Balance at 31 December 2016 6,052 2,019 584,113 249,491 365,902 75,775 1,283,352
Additions 744 32 7,304 25,485 3,186 40,122 76,873
Increase in rehabilitation asset - - - - 2,542 - 2,542
Transfers from capital work in progress - - - - 77,899 (77,899) -
Transfers from exploration and
evaluation asset - - - - 7,584 - 7,584
Disposals - - (316) - - - (316)
Balance at 31 December 2017 6,796 2,051 591,101 274,976 457,113 37,998 1,370,035
---------------------------------------- --------- --------- --------- --------- ----------- -------- ---------
Accumulated depreciation
Balance at 31 December 2016 (5,400) (412) (127,913) (129,610) (151,091) - (414,426)
Depreciation and amortisation (490) (136) (29,060) (34,292) (40,584) - (104,562)
Disposals - - 52 - - - 52
---------------------------------------- --------- --------- --------- --------- ----------- -------- ---------
Balance at 31 December 2017 (5,890) (548) (156,921) (163,902) (191,675) - (518,936)
---------------------------------------- --------- --------- --------- --------- ----------- -------- ---------
Cost
Balance at 31 December 2015 5,535 1,194 582,854 241,316 316,304 32,469 1,179,672
Additions 547 825 1,474 8,733 2,075 43,306 56,960
Transfers - - - - 47,523 - 47,523
Disposals (30) - (215) (558) - - (803)
Balance at 31 December 2016 6,052 2,019 584,113 249,491 365,902 75,775 1,283,352
---------------------------------------- --------- --------- --------- --------- ----------- -------- ---------
Accumulated depreciation
Balance at 31 December 2015 (4,867) (293) (98,504) (100,826) (103,715) - (308,205)
Depreciation and amortisation (558) (119) (29,496) (29,424) (47,376) - (106,973)
Disposals 25 - 87 640 - - 752
---------------------------------------- --------- --------- --------- --------- ----------- -------- ---------
Balance at 31 December 2016 (5,400) (412) (127,913) (129,610) (151,091) - (414,426)
---------------------------------------- --------- --------- --------- --------- ----------- -------- ---------
Net book value
As at 31 December 2016 652 1,607 456,200 119,881 214,811 75,775 868,926
---------------------------------------- --------- --------- --------- --------- ----------- -------- ---------
As at 31 December 2017 906 1,503 434,180 111,074 265,438 37,998 851,099
---------------------------------------- --------- --------- --------- --------- ----------- -------- ---------
No impairment review was performed in 2016 or 2017 as no
indicators of impairment were identified.
Assets that have been cost recovered under the terms of the
Concession Agreement in Egypt are included on the statement of
financial position under property plant and equipment due to the
Company having right of use of these assets. These rights will
expire together with the Concession Agreement.
14. Exploration and evaluation asset
31 December 31 December
2017 2016
US$'000 US$'000
--------------------------------------------------- ----------- -----------
Balance at the beginning of the period 153,918 152,077
Expenditure for the period 30,896 49,487
Net pre-production gold sales related to Cleopatra (4,841) -
Transfer to property, plant and equipment (7,584) (47,524)
Impairment of exploration and evaluation asset (3,557) (122)
--------------------------------------------------- ----------- -----------
Balance at the end of the period 168,832 153,918
--------------------------------------------------- ----------- -----------
The exploration and evaluation asset relates to the drilling,
geological exploration and sampling of potential ore reserves and
can be attributed to Egypt (US$28.7 million) Burkina Faso (US$109.4
million, including items relating to the acquisition of Ampella
Mining Limited) and Côte d'Ivoire (US$30.7 million). The impairment
of exploration and evaluation assets relates to costs of permits
that have expired and have not been renewed.
15. Available--for--sale financial assets
31 December 31 December
2017 2016
US$'000 US$'000
-------------------------------------------------------------- ----------- -----------
Balance at the beginning of the period 130 163
Loss on foreign exchange movement 86 (78)
Gain on fair value of investment - other comprehensive income (91) 45
Balance at the end of the period 125 130
-------------------------------------------------------------- ----------- -----------
The available--for--sale financial asset at period end relates
to a 5.33% (2016: 5.33%) equity interest in Nyota Minerals Limited
("NYO"), a listed public company, as well as a 0.29% (2016: 0.53%)
equity interest in KEFI Minerals plc ("KEFI"), an AIM listed
company.
Management made the decision to sell its interest in Nyota and
the financial asset is classed as a current asset.
16. Trade and other payables
31 December 31 December
2017 2016
US$'000 US$'000
----------------------------- ----------- -----------
Trade payables 32,540 23,734
Other creditors and accruals 24,045 24,257
----------------------------- ----------- -----------
56,585 47,991
----------------------------- ----------- -----------
Trade payables principally comprise the amounts outstanding for
trade purchases and ongoing costs. The average credit period taken
for trade purchases is 29 days (2016: 22 days). Trade payables are
interest free for periods ranging from 30 to 180 days. Thereafter
interest is charged at commercial rates. The group has financial
risk management policies in place to ensure that all payables are
paid within the credit timeframe.
The directors consider that the carrying amount of trade
payables approximate their fair value.
17. Provisions
31 December 31 December
2017 2016
US$'000 US$'000
--------------------------------------------------------- ----------- -----------
Current(4)
Employee benefits(1) 2,510 367
Fuel(2) 2,000 -
Customs, rebates and withholding tax 4,801 3,609
9,311 3,976
--------------------------------------------------------- ----------- -----------
Non--current
Restoration and rehabilitation(3) 10,868 7,697
Other non-current provisions 93 -
--------------------------------------------------------- ----------- -----------
10,961 7,697
--------------------------------------------------------- ----------- -----------
Movement in restoration and rehabilitation provision
Balance at beginning of the year 7,697 7,139
Additional provision recognised/(provision derecognised) 2,542 (23)
Interest expense - unwinding of discount 629 581
--------------------------------------------------------- ----------- -----------
Balance at end of the year 10,868 7,697
--------------------------------------------------------- ----------- -----------
(1) Employee benefits relate to annual, sick and long service leave entitlements and bonuses.
(2) Fuel provision relates to a backdated fuel charge for quarter 4 of 2017.
(3) The provision for restoration and rehabilitation represents
the present value of the directors' best estimate of the future
outflow of economic benefits that will be required to remove the
facilities and restore the affected areas at the group's sites
discounted by 8.01% (2016: 8.17%). This restoration and
rehabilitation estimate, which is reviewed on an annual basis, has
been made on the basis of benchmark assessments of restoration
works required following mine closure and after taking into account
the projected area to be disturbed over the life of the mine, being
20 years. The annual review undertaken as at 31 December 2017 has
resulted in a $2.542m increase in the provision.
(4) Per IAS 2 Inventories, it is required to show the provision
for obsolete inventory within the inventory note as the inventory
balance in the statement of financial position should be net of
such a provision, as such this has been reclassified from
provisions to inventory, refer to note 3.
18. Issued capital
31 December 31 December 2016
2017
---------------------- ----------------------
Number US$'000 Number US$'000
----------------------------------- ------------- ------- ------------- -------
Fully paid ordinary shares
Balance at beginning of the period 1,152,107,984 667,472 1,152,107,984 665,590
Cancellation of shares - - - (17)
Transfer from share option reserve - 1,260 - 1,899
----------------------------------- ------------- ------- ------------- -------
Balance at end of the period 1,152,107,984 668,732 1,152,107,984 667,472
----------------------------------- ------------- ------- ------------- -------
The authorised share capital is an unlimited number of no par
value shares.
At 31 December 2017 the Company held 939,716 ordinary shares in
treasury (2016: 2,109,710 ordinary shares). These shares are held
by the trustee pursuant to the deferred bonus share plan.
Fully paid ordinary shares carry one vote per share and carry
the right to dividends. See note 20 for more details of the share
options.
19. Share option reserve
31 December 31 December
2017 2016
US$'000 US$'000
----------------------------------- ----------- -----------
Share option reserve
Balance at beginning of the period 3,048 2,469
Share--based payments expense 3,156 2,937
Transfer to accumulated profits (621) (459)
Transfer to issued capital (1,260) (1,899)
----------------------------------- ----------- -----------
Balance at the end of the period 4,323 3,048
----------------------------------- ----------- -----------
The share option reserve arises on the grant of share options to
employees under the employee share option plan. Amounts are
transferred out of the reserve and into issued capital when the
options and warrants are exercised/vested. Amounts are transferred
out of the reserve into accumulated profits when the options and
warrants are forfeited.
20. 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.
The awards due to be granted in June 2018 will vest following
the passing of three years. Vesting will be subject to the
satisfaction of the performance conditions (and the two--year
holding period for 50% of the award) which will be divided into
five tranches, as set out in the directors' remuneration report.
These measures are assessed by reference to current market practice
and the remuneration committee will have regard to current market
practice when establishing the precise performance conditions for
awards.
To date the Company has granted the following conditional awards
to employees of the group.
June 2015 Awards
Of the 5,145,000 awards granted on 4 June 2015 under the RSP,
3,015,000 awards remain granted to eligible participants (15 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,
4,254,000 awards remain granted to eligible
participants (28 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.
June 2017 Awards
Of the 3,459,000 awards granted on 4 June 2017 under the RSP,
3,459,000 awards remain granted to eligible
participants (37 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 2016
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 2017
Grant date 4 June 2017
--------------------------------------------------------------------- -----------
Number of instruments 3,459,000
TSR: fair value at grant date GBP(1) 1.16
TSR: fair value at grant date US$(1) 1.49
Reserve, EBITDA and Gold Production: fair value at grant date GBP(1) 1.54
Reserve, EBITDA and Gold Production: fair value at grant date US$(1) 1.97
Vesting period (years) 3
Expected volatility 45.68%
Expected dividend yield (%) 3.6%
--------------------------------------------------------------------- -----------
(1) The vesting of 20% of the awards granted under this plan are
dependent on a TSR performance condition. As relative TSR is
defined as a market condition under IFRS 2 'Share--based Payments',
this requires that the valuation model used takes into account the
anticipated performance outcome. We have therefore applied a
Monte--Carlo simulation model. The simulation model takes into
account the probability of performance based on the expected
volatility of Centamin and the peer group companies and the
expected correlation of returns between the companies in the
comparator group. The remaining 80% of the awards are subject to
reserve, EBITDA and gold production performance conditions. As
these are classified as non--market conditions under IFRS 2 they do
not need to be taken into account when determining the fair value.
These grants have been valued using a Black--Scholes model. The
fair value calculated was then converted at the closing GBP:US$
foreign exchange rate on that day.
Deferred bonus share plan ("DBSP")
In 2012, the Company implemented the DBSP, which is a long term
share incentive arrangement for senior management (but not
executive directors) and other employees (participants).
On 4 June 2013, the group offered to both the beneficiaries of
the shares awarded under the Employee Loan Funded Share Plan
("ELFSP") and to the majority of the beneficiaries of the options
granted under the Employee Option Scheme ("EOS") the choice to
replace their awards and options with awards under the DBSP. The
group has accounted for this change as modifications to the
share--based payment plans and will be recognising the incremental
fair value granted, measured in accordance with IFRS 2, by this
replacement over the vesting period of the new DBSP awards.
Under this offer, each participant has been granted a number of
awards under the DBSP equivalent to the number of shares or options
held under the ELFSP and EOS respectively. Such DBSP awards shall
be subject to the terms and conditions of the DBSP and shall
ordinarily vest in three equal tranches on the anniversary of the
grant date, conditional upon the continued employment with the
group. All offers made to participants were accepted. The award of
the deferred shares will not have any performance criteria
attached. They will however be subject to a service period.
DBSP awards granted during the period:
DBSP 2017
Grant date 4 June 2017
--------------------------------------------------------- ------------
Number of instruments 300,000
Share price / Fair value at grant date Tranche 1 GBP (2) 1.66
Share price / Fair value at grant date Tranche 1 US$ (2) 2.13
Share price / Fair value at grant date Tranche 2 GBP (2) 1.61
Share price / Fair value at grant date Tranche 2 US$ (2) 2.06
Share price / Fair value at grant date Tranche 3 GBP (2) 1.54
Share price / Fair value at grant date Tranche 3 US$ (2) 1.97
Vesting period Tranche 1 (years) (3) 1
Vesting period Tranche 2 (years) (3) 2
Vesting period Tranche 3 (years) (3) 3
Expected dividend yield Tranche 1 (%) 3.67%
Expected dividend yield Tranche 2 (%) 3.40%
Expected dividend yield Tranche 3 (%) 3.73%
--------------------------------------------------------- ------------
(1) The fair value of the shares awarded under the DBSP were
calculated by using the closing share price on grant date,
converted at the closing GBP:US$ foreign exchange rate on that day.
No other factors were taken into account in determining the fair
value of the shares awarded under the DBSP.
(2) Variable vesting dependent on one to three years of continuous employment.
21. Commitments
The following is a summary of the Company's outstanding
commitments as at 31 December 2017:
(a) Operating lease commitments
The future aggregate minimum lease payments under
non--cancellable operating leases are as follows:
31 December 31 December
2017 2016
US$'000 US$'000
---------------------------------------------------- ----------- -----------
Office premises
No longer than one year 85 56
Longer than one year and not longer than five years 340 47
Longer than five years 297 -
---------------------------------------------------- ----------- -----------
722 103
---------------------------------------------------- ----------- -----------
Operating lease commitments are limited to office premises in
Jersey.
22. Contingent liabilities and contingent assets
Contingent liabilities
Fuel supply
As set out in note 12 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$22.7 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 has received an
unfavourable State Commissioner's report in the case, however, the
report is non-binding and the group's legal advisors remain of the
view that the group has a strong case. 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$274 million. Refer to Note 12
of these financial statements for further details on the impact of
this provision on the group's results for 31 December 2017.
No provision has been made in respect of the historic subsidies
prior to January 2012 as, based on legal advice, the Company
believes that, notwithstanding the unfavourable State
Commissioner's report, the prospects of a court finding in its
favour in relation to this matter remain very strong.
Concession Agreement court case
On 30 October 2012, the Administrative Court in Egypt handed
down a judgment in relation to a claim brought by, amongst others,
an independent member of 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 and Centamin's wholly-owned
subsidiary Pharaoh Gold Mines, 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.
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. Law 32 of 2014 restricts the
capacity for third parties to challenge contractual agreements
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 (SCC). During Q2 2017,
the SCC re-referred the case to the state commissioner to prepare a
complementary report to an initial report provided by the state
commissioner in Q1 2017 which found Law 32 to be unconstitutional.
The state commissioner's report and complementary report are
advisory and non-binding on the SCC. The Company continues to
believe that it has a strong legal position and that in the event
that the SCC rules that Law 32 is invalid, the group remains
confident that its own 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 year end (31 December 2016:
nil).
23. Subsidiaries
The parent entity of the group is Centamin plc, incorporated in
Jersey, and the details of its subsidiaries are as follows:
Ownership interest
------------------------
31 December 31 December
Country of 2017 2016
incorporation % %
--------------------------------------------------------- ---------------- ----------- -----------
Centamin Egypt Limited Australia(2) 100 100
Pharaoh Gold Mines NL (holder of an Egyptian branch) Australia(2) 100 100
Sukari Gold Mining Co Egypt(4) 50 50
Viking Resources Limited (Liquidated) Australia(2) - 100
North African Resources NL (Liquidated) Australia(2) - 100
Centamin West Africa Holdings Limited UK(3) 100 100
Sheba Exploration Limited (holder of an Ethiopia branch) UK(3) 100 100
Sheba Exploration Holdings Limited(1) UK(3) 100 100
Centamin Group Services Limited Jersey(8) 100 100
Centamin Holdings Limited Jersey(8) 100 100
Centamin Limited Bermuda(7) 100 100
Ampella Mining Limited Australia(2) 100 100
Ampella Share Plan Limited Australia(2) 100 100
Ampella Mining Gold Pty Limited Australia(2) 100 100
West African Gold Reserve Pty Limited Australia(2) 100 100
Ampella Mining Gold SARL Burkina Faso(5) 100 100
Ampella Mining SARL Burkina Faso(5) 100 100
Côte
Ampella Mining Côte d'Ivoire d'Ivoire(6) 100 100
Côte
Centamin Côte d'Ivoire d'Ivoire(6) 100 100
Côte
Ampella Mining Exploration CDI d'Ivoire(6) 100 100
Côte
Centamin Exploration CI d'Ivoire(6) 100 100
Ampella Resources Burkina Faso Burkina Faso(5) 100 100
Konkera SA Burkina Faso(5) 90 90
--------------------------------------------------------- ---------------- ----------- -----------
(1) Previously Sheba Exploration (UK) Plc.
(2) Address of all Australian entities: 57 Kishorn Road, Mount Pleasant, WA 6153
(3) Address of all UK entities: Hill House, 1 Little New Street, London, EC4A 3TR
(4) Address of all Egypt entities: 361 El-Horreya Road, Sedi Gaber, Alexandria, Egypt
(5) Address of all Burkina Faso entities:
Ampella Resources Burkina Faso: 11 BP 1974 Ouaga 11
Ampella Mining SARL: 01 BP 1621 Ouaga 01
Ampella Mining Gold SARL: 11 BP 1974 CMS 11 Ouaga 11
Konkera SA: 11 BP 1974 Ouaga CM11
(6) Address of all Cote d'Ivoire entities: 20 BP 945 Abidjan 20
(7) Address of Bermuda entity: Appleby Corporate Services
(Bermuda) Ltd, Canon's Court, 22 Victoria Street, Hamilton HM EX,
Bermuda
(8) Address of all Jersey entities: 2 Mulcaster Street, St Helier, Jersey. JE2 3NJ
Through its wholly owned subsidiary, PGM, the Company entered
into the Concession Agreement with EMRA and the Arab Republic of
Egypt granting PGM and EMRA the right to explore, develop, mine and
sell gold and associated minerals in specific concession areas
located in the Eastern Desert of Egypt. The Concession Agreement
came into effect under Egyptian law on 13 June 1995.
In 2005 PGM, together with EMRA, were granted an exploitation
lease over 160km(2) surrounding the Sukari Gold Mine site. The
exploitation lease was signed by PGM, EMRA and the Egyptian
Minister of Petroleum and gives tenure for a period of 30 years,
commencing 24 May 2005 and extendable by PGM for an additional 30
years upon PGM providing reasonable commercial justification.
In 2006 SGM was incorporated under the laws of Egypt. SGM was
formed to conduct exploration, development, exploitation and
marketing operations in accordance with the Concession Agreement.
Responsibility for the day--to--day management of the project rests
with the general manager, who is appointed by PGM.
The fiscal terms of the Concession Agreement require that PGM
solely funds SGM. PGM is however entitled to recover from sales
revenue recoverable costs, as defined in the Concession Agreement.
EMRA is entitled to a share of SGM's net production surplus or
profit share (defined as revenue less payment of the fixed royalty
to ARE and recoverable costs). As at 31 December 2015, PGM had not
recovered its cost and accordingly, no EMRA entitlement had been
recognised at that date. During 2016 payments to EMRA commenced as
advance profit share distributions. Any payment made to EMRA
pursuant to these provisions of the Concession Agreement will be
recognised as a variable charge in the income statement.
The Concession Agreement grants certain tax exemptions,
including the following:
-- from 1 April 2010, being the date of commercial production,
the Sukari Gold Mine is entitled to a 15--year exemption from any
taxes imposed by the Egyptian government on the revenues generated
from the Sukari Gold Mine. PGM and EMRA intend that SGM will in due
course file an application to extend the tax free period for a
further 15 years. The extension of the tax free period requires
that there has been no tax problems or disputes in the initial
period and that certain activities in new remote areas have been
planned and agreed by all parties;
-- PGM and SGM are exempt from custom taxes and duties with
respect to the importation of machinery, equipment and consumable
items required for the purpose of exploration and mining activities
at the Sukari Gold Mine. The exemption shall only apply if there is
no local substitution with the same or similar quality to the
imported machinery, equipment or consumables. Such exemption will
also be granted if the local substitution is more than 10% more
expensive than the imported machinery, equipment or consumables
after the additional of the insurance and transportation costs;
-- PGM, EMRA and SGM and their respective buyers will be exempt
from any duties or taxes on the export of gold and associated
minerals produced from the Sukari Gold Mine;
-- PGM at all times is free to transfer in US$ or other freely
convertible foreign currency any cash of PGM representing its share
of net proceeds and recovery of costs, without any Egyptian
government limitation, tax or duty;
-- PGM's contractors and sub--contractors are entitled to import
machinery. Equipment and consumable items under the "Temporary
Release System" which provided exemption from Egyptian customs
duty; and
-- legal title of all operating assets of PGM will pass to EMRA
when cost recovery is completed. The right of use of all fixed and
movable assets remains with PGM and SGM.
24. Auditor's remuneration
The analysis of the auditor's remuneration is as follows:
31 December 31 December
2017 2016
US$'000 US$'000
-------------------------------------------------------------------------------------------- ----------- -----------
Fees payable to the Company's auditor and its associates for the audit of the Company's
annual
financial statements 374 386
Additional fees relating to the prior year - 10
Fees payable to the Company's auditor and its associates for other services to the group
- the audit of the Company's subsidiaries 86 94
-------------------------------------------------------------------------------------------- ----------- -----------
Total audit fees 460 490
-------------------------------------------------------------------------------------------- ----------- -----------
Non--audit fees:
Audit related assurance services - interim review 107 109
Other assurance services 52 15
Risk management and advisory services 13 -
Other services 24 27
-------------------------------------------------------------------------------------------- ----------- -----------
Total non--audit fees 196 151
-------------------------------------------------------------------------------------------- ----------- -----------
The audit and risk committee and the external auditor have
safeguards in place to avoid the possibility that the auditor's
objectivity and independence could be compromised. These safeguards
include the implementation of a policy on the use of the external
auditor for non--audit related services.
Where it is deemed that the work to be undertaken is of a nature
that is generally considered reasonable to be completed by the
auditor of the Company for sound commercial and practical reasons,
the conduct of such work will be permissible provided that it has
been pre--approved. All these services are also subject to a
predefined fee limit. Any work performed in excess of this limit
must be approved by the audit and risk committee.
25. Joint arrangements
The consolidated entity has an interest in the following joint
arrangement:
Percentage interest
------------------------
31 December 31 December
2017 2016
Name of joint operation % %
-------------------------------- ----------- -----------
Egyptian Pharaoh Investments(1) 50 50
-------------------------------- ----------- -----------
(1) Dormant company.
The group has a US$1 (cash) interest in the above joint
operation. The amount is included in the consolidated financial
statements of the group. There are no capital commitments arising
from the group's interests in the joint operation as disclosed in
note 21.
26. Earnings per share ("EPS")
31 December 31 December
2017 2016
US cents US cents
per share per share
------------------------------ ----------- -----------
Basic earnings per share(1) 19.303 23.170
Diluted earnings per share(1) 19.154 23.054
------------------------------ ----------- -----------
Basic earnings per share(2) 9.511 18.705
Diluted earnings per share(2) 9.438 18.612
------------------------------ ----------- -----------
(1) Before profit share.
(2) After profit share.
Basic earnings per share
The earnings and weighted average number of ordinary shares used
in the calculation of basic earnings per share are as follows:
31 December 31 December
2017 2016
US$'000 US$'000
------------------------------------------------- ----------- -----------
Earnings used in the calculation of basic EPS(1) 222,031 266,008
Earnings used in the calculation of basic EPS(2) 109,402 214,755
------------------------------------------------- ----------- -----------
(1) Before profit share.
(2) After profit share.
31 December 31 December
2017 2016
Number Number
------------------------------------- ------------- -------------
Weighted average number of ordinary
shares for the purpose of basic EPS 1,150,221,295 1,148,092,347
------------------------------------- ------------- -------------
Diluted earnings per share
The earnings and weighted average number of ordinary shares used
in the calculation of diluted earnings per share are as
follows:
31 December 31 December
2017 2016
US$'000 US$'000
--------------------------------------------------- ----------- -----------
Earnings used in the calculation of diluted EPS(1) 222,031 266,008
Earnings used in the calculation of diluted EPS(2) 109,402 214,755
--------------------------------------------------- ----------- -----------
(1) Before profit share.
(2) After profit share.
31 December 31 December
2017 2016
Number Number
-------------------------------------- ------------- -------------
Weighted average number of ordinary
shares for the purpose of basic
EPS 1,150,221,295 1,148,092,347
Shares deemed to be issued for no
consideration in respect of employee
options 8,993,379 5,755,404
-------------------------------------- ------------- -------------
Weighted average number of ordinary
shares used in the calculation of
diluted EPS 1,159,214,674 1,153,847,751
-------------------------------------- ------------- -------------
No potential ordinary shares were excluded from the calculation
of weighted average number of ordinary shares for the purpose of
diluted earnings per share.
27. Notes to the statements of cash flows
(a) Reconciliation of cash and cash equivalents
For the purpose of the statement of cash flows, cash and cash
equivalents includes cash on hand and at bank and deposits.
31 December 31 December
2017 2016
US$'000 US$'000
-------------------------- ----------- -----------
Cash and cash equivalents 359,680 399,873
-------------------------- ----------- -----------
(b) Reconciliation of profit for the year to cash flows from
operating activities
31 December 31 December
2017 2016
US$'000 US$'000
----------------------------------------------------------------------- ----------- -----------
Profit for the year before tax 224,094 266,829
Add/(less) non--cash items:
Depreciation/amortisation of property, plant and equipment 104,562 106,973
Inventory obsolescence provision 2,636 2,500
Foreign exchange (gain) (1,757) (4,312)
Impairment (reversal of)/loss on available--for--sale financial assets (91) 45
Loss on disposal of property, plant and equipment 263 -
Impairment of exploration and evaluation assets 3,557 122
Share--based payments expense 2,535 2,478
Changes in working capital during the period:
(Increase) in trade and other receivables (9,596) (1,085)
Decrease in inventories 20,736 3,693
Increase in prepayments (2,286) (3,474)
Decrease/(increase) in trade and other payables 9,859 (1,838)
Increase in provisions 8,598 2,880
----------------------------------------------------------------------- ----------- -----------
Cash flows generated from operating activities 363,110 374,811
----------------------------------------------------------------------- ----------- -----------
(c) Non--cash financing and investing activities
During the year there have been no non--cash financing and
investing activities.
28. Financial instruments
(a) Group risk management
The group manages its capital to ensure that entities within the
group will be able to continue as a going concern while maximising
the return to stakeholders through the optimisation of the cash and
equity balance. The group's overall strategy remains unchanged from
the previous financial period.
The group has no debt and thus not geared at the year-end or in
the prior year. The capital structure consists of cash and cash
equivalents and equity attributable to equity holders of the
parent, comprising issued capital and reserves as disclosed in
notes 18 and 19. The group operates in Australia, Jersey, Egypt,
Burkina Faso and Côte d'Ivoire. None of the group's entities are
subject to externally imposed capital requirements.
The group utilises inflows of funds toward the ongoing
exploration and development of the Sukari Gold Mine in Egypt, and
the exploration projects in Burkina Faso and Côte d'Ivoire.
Categories of financial assets and liabilities
31 December 31 December
2017 2016
US$'000 US$'000
---------------------------- ----------- -----------
Financial assets
Available--for--sale assets 125 130
Cash and cash equivalents 359,680 399,873
Trade and other receivables 33,745 24,337
---------------------------- ----------- -----------
393,550 424,340
---------------------------- ----------- -----------
Financial liabilities
Trade and other payables 56,585 47,991
---------------------------- ----------- -----------
(b) Financial risk management and objectives
The group's overall risk management programme focuses on the
unpredictability of financial markets and seeks to minimise
potential risk adverse effects and ensure that net cash flows are
sufficient to support the delivery of the group's financial targets
whilst protecting future financial security. The group continually
monitors and tests its forecast financial position against these
objectives.
The group's activities expose it to a variety of financial
risks: market; commodity; credit; liquidity; foreign exchange; and
interest rate. These risks are managed under board approved
directives through the audit committee. The group's principal
financial instruments comprise interest bearing cash and cash
equivalents. Other financial instruments include trade receivables
and trade payables, which arise directly from operations.
It is, and has been throughout the period under review, group
policy that no speculative trading in financial instruments be
undertaken.
(c) Market risk
The group operates internationally and is exposed to foreign
exchange risk arising from various currency exposures, primarily
with respect to the Australian dollar, Great British pound and
Egyptian pound. Foreign exchange risk arises from future commercial
transactions and recognised assets and liabilities that are
denominated in a currency that is not the entity's functional
currency. The risk is measured by regularly monitoring, forecasting
and performing sensitivity analyses on the group's financial
position.
Financial instruments denominated in Great British pound,
Australian dollar and Egyptian pound are as follows:
Great British pound Australian dollar Egyptian pound
------------------------ ------------------------ ------------------------
31 December 31 December 31 December 31 December 31 December 31 December
2017 2016 2017 2016 2017 2016
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
---------------------------- ----------- ----------- ----------- ----------- ----------- -----------
Financial assets
Cash and cash equivalents 193 1,303 1,493 4,114 488 705
Available--for--sale assets 110 113 15 17 - -
---------------------------- ----------- ----------- ----------- ----------- ----------- -----------
303 1,416 1,508 4,131 488 705
---------------------------- ----------- ----------- ----------- ----------- ----------- -----------
Financial liabilities
Trade and other payables 79 391 4,569 628 2,259 7,780
---------------------------- ----------- ----------- ----------- ----------- ----------- -----------
79 391 4,569 628 2,259 7,780
---------------------------- ----------- ----------- ----------- ----------- ----------- -----------
Net exposure 224 1,025 (3,061) 3,503 (1,771) (7,075)
---------------------------- ----------- ----------- ----------- ----------- ----------- -----------
The following table summarises the sensitivity of financial
instruments held at the reporting date to movements in the exchange
rate of the Great British pound, Egyptian pound and Australian
dollar to the US dollar, with all other variables held constant.
The sensitivities are based on reasonably possible changes over a
financial period, using the observed range of actual historical
rates.
Impact on profit Impact on equity
------------------------ ------------------------
31 December 31 December 31 December 31 December
2017 2016 2017 2016
US$'000 US$'000 US$'000 US$'000
------------------------ ----------- ----------- ----------- -----------
US$/GBP increase by 10% (18) (81) (10) (10)
US$/GBP decrease by 10% 18 81 10 10
------------------------ ----------- ----------- ----------- -----------
US$/AUD increase by 10% (136) (314) (2) (2)
US$/AUD decrease by 10% 136 314 2 2
------------------------ ----------- ----------- ----------- -----------
US$/EGP increase by 10% (44) 639 - -
US$/EGP decrease by 10% 44 (639) - -
------------------------ ----------- ----------- ----------- -----------
The group's sensitivity to foreign currency has decreased at the
end of the current period mainly due to the decrease in foreign
currency cash holdings in Australian dollars and a corresponding
increase in US dollar cash holdings.
The amounts shown above are the main currencies which the group
is exposed to. Centamin also has small deposits in euro (US$63,530)
and West African franc (US$452,530), and net payables of
US$2,259,367 in euro and US$865,760 in West African franc. A
movement of 10% up or down in these currencies would have a
negligible effect on the assets/liabilities.
The group has not entered into forward foreign exchange
contracts. Natural hedges are utilised wherever possible to offset
foreign currency liabilities. The Company maintains a policy of not
hedging its currency positions and maintains currency holdings in
line with underlying requirements and commitments.
(d) Commodity price risk
The group's future revenue forecasts are exposed to commodity
price fluctuations, in particular gold and fuel prices. The group
has not entered into forward gold hedging contracts.
Gold Price
The table below summarises the impact of increases/decreases of
the average realised gold price on the group's post-tax profit for
the year. The analysis is based on the assumption that the average
realised gold price per ounce had increased/decreased by 10% with
all other variables held constant.
Decrease 31 December Increase
by 10% 2017 by 10%
-------- ----------- --------
US$/oz US$/oz US$/oz
---------------------------- -------- ----------- --------
Average realised gold price 1,135 1,261 1,387
---------------------------- -------- ----------- --------
US$'000 US$'000 US$'000
---------------------------- -------- ----------- --------
Profit after tax 156,145 222,031 288,075
---------------------------- -------- ----------- --------
Fuel price
Any variation in the fuel price has an impact on the mine
production costs. The analysis is based on the assumption that the
average fuel price had increased/decreased by a few US$ cents per
litre with all other variables held constant.
Decrease 31 December Increase
by 10% 2017 by 10%
--------- ----------- ---------
US$/litre US$/litre US$/litre
--------------------------------------- --------- ----------- ---------
Fuel price 0.40 0.46 0.50
--------------------------------------- --------- ----------- ---------
US$'000 US$'000 US$'000
--------------------------------------- --------- ----------- ---------
Increase/(Decrease) in mine production
costs (8,933) - 5,955
--------------------------------------- --------- ----------- ---------
Profit after tax 230,964 222,031 216,076
--------------------------------------- --------- ----------- ---------
(e) Interest rate risk
The group's main interest rate risk arises from cash and short
term deposits and is not considered to be a material risk due to
the short term nature of these financial instruments. Cash deposits
are placed on term period of no more than 30 days at a time.
The financial instruments exposed to interest rate risk and the
group's exposure to interest rate risk as at balance date were as
follows:
Weighted
average One to More than
effective Less than twelve twelve
interest one month months months Total
rate
% US$'000 US$'000 US$'000 US$'000
----------------------------------- --------- --------- ------- --------- -------
31 December 2017
Financial assets
Variable interest rate instruments 0.52 179,360 175,860 - 355,220
Non--interest bearing - 38,330 - - 38,330
----------------------------------- --------- --------- ------- --------- -------
217,690 175,860 - 393,550
----------------------------------- --------- --------- ------- --------- -------
Financial liabilities
Non--interest bearing - 56,585 - - 56,585
----------------------------------- --------- --------- ------- --------- -------
56,585 - - 56,585
----------------------------------- --------- --------- ------- --------- -------
31 December 2016
Financial assets
Variable interest rate instruments 0.24 200,330 200,223 - 400,553
Non--interest bearing - 23,788 - - 23,788
----------------------------------- --------- --------- ------- --------- -------
224,118 200,223 - 424,341
----------------------------------- --------- --------- ------- --------- -------
Financial liabilities
Non--interest bearing - 47,991 - - 47,991
----------------------------------- --------- --------- ------- --------- -------
Non--interest bearing 47,991 - - 47,991
----------------------------------- --------- --------- ------- --------- -------
(f) Liquidity risk
The group's liquidity position is managed to ensure that
sufficient funds are available to meet its financial commitments in
a timely and cost effective manner.
Ultimate responsibility or liquidity risk management rests with
the board, who has established an appropriate management framework
for the management of the group's funding requirements. The group
manages liquidity risk by maintaining adequate cash reserves and
management monitors rolling forecasts of the group's liquidity on
the basis of expected cash flow. The tables above reflect a
balanced view of cash inflows and outflows and shows the implied
risk based on those values. Trade payables and other financial
liabilities originate from the financing of assets used in the
group's ongoing operations. These assets are considered in the
group's overall liquidity risk. Management continually reviews the
group liquidity position including cash flow forecasts to determine
the forecast liquidity position and maintain appropriate liquidity
levels.
One to More than
Less twelve twelve
than
one month months months Total
US$'000 US$'000 US$'000 US$'000
----------------------------------- --------- ------- ---------- -------
31 December 2017
Financial assets
Variable interest rate instruments 179,360 175,860 - 355,220
Non--interest bearing 38,330 - - 38,330
----------------------------------- --------- ------- ---------- -------
217,690 175,860 - 393,550
----------------------------------- --------- ------- ---------- -------
Financial liabilities
Non--interest bearing 56,585 - - 56,585
----------------------------------- --------- ------- ---------- -------
56,585 - - 56,585
----------------------------------- --------- ------- ---------- -------
31 December 2016
Financial assets
Variable interest rate instruments 200,330 200,223 - 400,553
Non--interest bearing 23,788 - - 23,788
----------------------------------- --------- ------- ---------- -------
224,118 200,223 - 424,341
----------------------------------- --------- ------- ---------- -------
Financial liabilities
Non--interest bearing 47,991 - - 47,991
----------------------------------- --------- ------- ---------- -------
47,991 - - 47,991
----------------------------------- --------- ------- ---------- -------
(g) Credit risk
Credit risk refers to the risk that a counterparty will default
on its contractual obligations resulting in financial loss to the
group. The group has adopted a policy of only dealing with
credit--worthy counterparties and obtaining sufficient collateral
or other security where appropriate, as a means of mitigating the
risk of financial loss from defaults. The group measures credit
risk on a fair value basis. The group's credit risk is concentrated
on one entity, the refiner Asahi, but the group has good credit
checks on customers and none of the trade receivables from the
customer has been past due. Also, the cash balances held in
Australian dollars which are held with a financial institution with
a high credit rating.
The gross carrying amount of financial assets recorded in the
financial statements represents the group's maximum exposure to
credit risk without taking account of the value of collateral or
other security obtained.
(h) Fair value
The carrying amount of financial assets and financial
liabilities recorded in the financial statements represents their
respective fair values, principally as a consequence of the short
term maturity thereof.
(i) Fair value measurements recognised in the statement of
financial position
The following table provides an analysis of financial
instruments that are measured subsequent to initial recognition at
fair value, grouped into Levels 1 to 3 based on the degree to which
the fair value is observable:
-- Level 1 fair value measurements are those derived from quoted
prices (unadjusted) in active markets for identical assets or
liabilities;
-- Level 2 fair value measurements are those derived from inputs
other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly (i.e. as
prices) or indirectly (i.e. derived from prices); and
-- Level 3 fair value measurements are those derived from
valuation techniques that include inputs for the asset or liability
that are not based on observable market data (unobservable
inputs).
2017
--------------------------------
Level 1 Level 2 Level 3 Total
-------------------------------------- ------- ------- ------- -----
Available--for--sale financial assets 125 - - 125
-------------------------------------- ------- ------- ------- -----
2016
--------------------------------
Level 1 Level 2 Level 3 Total
-------------------------------------- ------- ------- ------- -----
Available--for--sale financial assets 130 - - 130
-------------------------------------- ------- ------- ------- -----
There were no financial assets or liabilities subsequently
measured at fair value on Level 3 fair value measurement bases.
(j) Ore reserves
Production forecasts from the underground mine at Sukari are
partly based on estimates regarding future mineral reserve and
resource growth. It should be specifically noted that the potential
quantity and grade from the Sukari underground mine is conceptual
in nature, that there has been insufficient exploration to define a
mineral resource and that it is uncertain if further exploration
will result in the target being delineated as a mineral
resource.
The following disclosure provides information to help users of
the financial statements understand the judgements made about the
future and other sources of estimation uncertainty. The key sources
of estimation uncertainty described in note 4 and the range of
possible outcomes are described more fully below.
Depreciation of capitalised underground mine development
costs
Depreciation of capitalised underground mine development costs
at the Sukari Gold Mine is based on reserve estimates. Management
and directors believe that these estimates are both realistic and
conservative, based on current information. The analysis is based
on the assumption that the reserve estimate has increased/decreased
by 10% with all other variables held constant.
Decrease 31 December Increase
by 10% 2017 by 10%
-------- ----------- --------
US$'000 US$'000 US$'000
--------------------------------- -------- ----------- --------
Amortisation of rehabilitation
asset (within mine development
properties) (367) (342) (321)
--------------------------------- -------- ----------- --------
Amortisation of mine development
properties (remainder) (42,035) (40,242) (38,749)
--------------------------------- -------- ----------- --------
Mine development properties -
net book value 263,619 265,437 266,951
--------------------------------- -------- ----------- --------
Property plant and equipment
- net book value 849,281 851,099 852,613
--------------------------------- -------- ----------- --------
29. Key management personnel compensation
Key management personnel are persons having authority and
responsibility for planning, directing and controlling the
activities of the group, directly or indirectly, including any
director (executive or otherwise) of the group.
The aggregate compensation made to key management personnel of
the consolidated entity and the Company is set out below:
31 December 31 December
2017 2016
US$ US$
----------------------------- ----------- -----------
Short term employee benefits 6,919,135 5,846,954
Long term employee benefits - -
Post--employment benefits 8,037 7,764
Share--based payments 2,174,475 2,301,743
----------------------------- ----------- -----------
9,101,647 8,156,461
----------------------------- ----------- -----------
30. Related party transactions
(a) Equity interests in related parties
Equity interests in subsidiaries
Details of the percentage of ordinary shares held in
subsidiaries are disclosed in note 23.
Equity interests in associates and jointly controlled
arrangements
Details of interests in joint ventures are disclosed in note
25.
(b) Key management personnel compensation
Details of key management personnel compensation are disclosed
above in note 29.
(c) Key management personnel equity holdings
The details of the movement in key management personnel equity
holdings of fully paid ordinary shares in Centamin plc during the
financial period ended 31 December 2017 are as follows:
Balance Granted as Granted as Balance at
at
1 January remuneration remuneration Net other 31 December
31 December 2017 2017 ("DBSP") ("RSP") change(1) 2017
----------------- ---------- ------------ ------------ ------------ -----------
J El--Raghy(2) 53,849,372 - - (43,349,372) 10,500,000
A Pardey 2,692,601 - 440,000 (33,333) 3,099,268
T Schultz 30,000 - - 2,600 32,600
G Haslam 102,056 - - - 102,056
M Arnesen 49,000 - - - 49,000
M Bankes 150,000 - - - 150,000
R Jerrard 875,000 - 420,000 - 1,295,000
Y El--Raghy 869,530 - 72,000 (262,777) 678,753
C Boreham 1,182,977 - 209,000 (66,666) 1,325,311
J Stephens - 300,000 329,000 - 629,000
N Bailie - - 166,000 - 166,000
M Smith 670,000 - 166,000 (133,333) 702,667
D Le Masurier 540,000 - 107,000 (100,000) 547,000
H Brown 460,000 - 56,000 (200,000) 316,000
----------------- ---------- ------------ ------------ ------------ -----------
(1) "Net other change" relates to the on--market acquisition or
disposal of fully paid ordinary shares.
(2) Includes the El-Raghy family.
Since 31 December 2017 to the date of this report there have
been no transactions notified to the Company under DTR 3.1.2.R.
The details of the movement in key management personnel equity
holdings of fully paid ordinary shares in Centamin plc during the
financial period ended 31 December 2016 are as follows:
Balance Granted as Granted Balance
at as at
1 January remuneration remuneration Net other 31 December
31 December 2016 2016 ("DBSP") ("RSP") change(1) 2017
----------------- ---------- ------------ ------------ ------------ -----------
J El--Raghy(2) 71,445,086 - - (17,595,714) 53,849,372
T Schultz 30,000 - - - 30,000
G Haslam 102,056 - - - 102,056
M Arnesen 49,000 - - - 49,000
M Bankes 150,000 - - - 150,000
A Pardey 2,968,800 - 690,000 (966,199) 2,692,601
R Jerrard - - 875,000 - 875,000
Y El--Raghy 780,633 - 140,000 (51,103) 869,530
C Boreham 1,039,644 - 210,000 (66,667) 1,182,977
M Smith - 400,000 270,000 - 670,000
D Le Masurier 500,000 - 160,000 (120,000) 540,000
H Brown 650,000 - 60,000 (250,000) 460,000
----------------- ---------- ------------ ------------ ------------ -----------
(1) "Net other change" relates to the on market acquisition or
disposal of fully paid ordinary shares.
(2) Includes the El-Raghy family.
(d) Key management personnel share option holdings
There were no options held, granted or exercised during the year
by directors or senior management in respect of ordinary shares in
Centamin plc.
(e) Other transactions with key management personnel
The related party transaction for the year ended 31 December
2017 is summarised below:
- Salaries, superannuation contributions, bonuses, LTI's,
consulting and directors' fees paid to Directors during the year
ended 31 December 2017 amounted to US$4,001,383 (31 December 2016:
US$3,754,145).
- Josef El--Raghy is a director and shareholder of El--Raghy
Kriewaldt Pty Ltd ("El--Raghy Kriewaldt"). El--Raghy Kriewaldt
provides office premises to the Company. All dealings with
El--Raghy Kriewaldt are in the ordinary course of business and on
normal terms and conditions. Rent and office outgoings paid to
El--Raghy Kriewaldt during the period were AU$70,564 or US$54,269
(31 December 2016: AU$69,600 or US$51,710).
(f) Transactions with the government of Egypt
Royalty costs attributable to the government of Egypt of
US$20,404,473 (2016: US$20,574,673) were incurred in 2017.
Profit share to EMRA of US$112,629,332 (2016: US$51,253,333) was
incurred in 2017.
(g) Gold sales agreement
On 20 December 2016, SGM entered into a contract with the
Central Bank of Egypt ("CBE"). The agreement provides that the
parties may elect, on a monthly basis, for the CBE to supply SGM
with its local Egyptian currency requirements for that month (to a
maximum value of EGP50 million). In return, SGM facilitates the
purchase of refined gold bullion for the CBE from SGM's refiner,
Asahi Refining. This transaction has been entered into as SGM
requires local currency for its operations in Egypt (it receives
its revenue for gold sales in US dollars). Two transactions have
been entered into at the date of this report, pursuant to this
agreement and the values related thereto are as follows:
31 December 31 December
2017 2016
US$ US$
--------------- ----------- -----------
Gold purchased 5,619,063 -
Refining costs 3,303 -
Freight costs 8,500 -
5,630,866 -
--------------- ----------- -----------
At 31 December 2017 the net payable in EGP owing to the Central
Bank of Egypt is approximately the equivalent of US$43,660.
(h) Transactions with other related parties
Other related parties include the parent entity, subsidiaries,
and other related parties.
During the financial period, the Company recognised tax payable
in respect of the tax liabilities of its wholly owned
subsidiaries.
Payments to/from the Company are made in accordance with terms
of the tax funding arrangement.
During the financial period the Company provided funds to and
received funding from subsidiaries.
All amounts advanced to related parties are unsecured. No
expense has been recognised in the period for bad or doubtful debts
in respect of amounts owed by related parties.
Transactions and balances between the Company and its
subsidiaries were eliminated in the preparation of consolidated
financial statements of the group.
31. Dividends per share
The dividends paid in 2017 were US$184,388,830 and are reflected
in the consolidated statement of the changes in equity for the
period (2016: US$46,072,599).
A final dividend in respect of the year ended 31 December 2017
of 10.0 US cents per share, totalling approximately US$115.2
million has been proposed by the board of directors and is subject
to shareholder approval at the annual general meeting on 26 March
2018. These financial statements do not reflect this dividend
payable.
As announced on 9 January 2017, the update to the Company's
dividend policy sets a minimum pay-out level relative to cash flow
while considering the financial condition of, and outlook for, the
Company. When determining the amount to be paid the board will take
into consideration the underlying profitability of the Company and
significant known or expected funding commitments. Specifically,
the board will aim to approve an annual dividend of at least 30% of
the Company's net cash flow after sustaining capital costs and
following the payment of profit share due to the government of
Egypt.
32. Subsequent events
As referred to in note 31 subsequent to the year end, the board
proposed a final dividend for 2017 of 10.0 US cents per share.
Subject to shareholder approval at the annual general meeting on 26
March 2018, the final dividend will be paid on 6 April 2018 to
shareholders on the record date of 23 March 2018.
There were no other significant events occurring after the
reporting date requiring disclosure in the financial
statements.
This report contains certain forward--looking statements. These
statements are made by the directors in good faith based on the
information available to them up to the time of their approval of
this report and such statements should be treated with caution due
to the inherent uncertainties, including both economic and business
risk factors, underlying any such forward--looking information.
QUALIFIED PERSON AND QUALITY CONTROL
Please refer to the technical report entitled "Mineral Resource
and Reserve Estimate for the Sukari Gold Project, Egypt" effective
on 30 June 2015 and issued on 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 as well as details of
the qualified persons and quality control.
Investors should be aware that the reserve and resource estimate
dated 30 June 2017, and announced on 10 January 2018 does not
constitute a material change on the prior reserve and resource
estimate and an updated NI 43-101 resource and reserve report was
not required to be prepared.
Information of a scientific or technical nature in this document
was prepared under the supervision of Quinton De Klerk of Cube
Consulting Pty Ltd, Australia, a qualified person under the
Canadian National Instrument 43-101.
The total mineral resource was prepared by Norman Bailie of
Centamin plc. The open pit mineral reserve and underground mineral
reserve were prepared by Quinton De Klerk of Cube Consulting Pty
Ltd, Australia. The underground mineral resource was prepared by
Mark Zammit of Cube Consulting Pty Ltd, Australia. Mr Bailie, Mr
Zammit and Mr De Klerk are Qualified Persons under the Canadian
National Instrument 43-101.
Such qualified persons have verified the data disclosed,
including sampling, analytical, and test data underlying the
information or opinions contained in this announcement in
accordance with standards appropriate to their qualifications.
Cautionary note regarding forward--looking statements
There are risks associated with an investment in the shares of
Centamin. Recipients of this presentation should review the risk
factors and other disclosures regarding Centamin contained in the
preliminary prospectus and subsequent annual reports and Management
Discussion and Analysis reports of Centamin that have been filed
with Canadian securities regulators and are available at
www.sedar.com.
This announcement contains "forward-looking information" (or
"forward-looking statements") which may include, but are not
limited to, statements with respect to the future financial or
operating performance of the Company, its subsidiaries and its
projects (including the Sukari Project), the future price of gold,
the estimation of mineral reserves and resources, the realisation
of mineral reserve estimates, the timing and amount of estimated
future production, revenues, margins, costs of production, capital,
operating and exploration expenditures, costs and timing of the
development of new deposits, costs and timing of construction,
costs and timing of future exploration, the timing for delivery of
plant and equipment, requirements for additional capital, foreign
exchange risk, government regulation of mining and exploration
operations, environmental risks, reclamation expenses, title
disputes or claims, insurance coverage and the timing and possible
outcome of pending litigation and regulatory matters. Often, but
not always, forward-looking statements can be identified by the use
of words such as "plans", "hopes", "expects", "is expected",
"budget", "scheduled", "estimates", "forecasts", "intends",
"anticipates", or "believes" or variations (including negative
variations) of such words and phrases, or state that certain
actions, events or results "may", "could", "would", "might" or
"will" be taken, occur or be achieved.
Forward-looking information involves and is subject to known and
unknown risks, uncertainties and other factors which may cause the
actual results, performance or achievements of the Company and/or
its subsidiaries to be materially different from any future
results, performance or achievements expressed or implied by the
forward-looking information. Such factors include, among others,
general business, economic, competitive, political and social
uncertainties; the actual results of current exploration activities
and feasibility studies; assumptions in economic evaluations which
prove to be inaccurate; fluctuations in the value of the United
States dollar and the Canadian dollar relative to each other, to
the Australian dollar and to other local currencies in the
jurisdictions in which the Company operates; changes in project
parameters as plans continue to be refined; future prices of gold
and other metals; possible variations of ore grade or recovery
rates; failure of plant, equipment or processes to operate as
anticipated; accidents, labour disputes or slow downs and other
risks of the mining industry; climatic conditions; political
instability, insurrection or war; arbitrary decisions by
governmental authorities; delays in obtaining governmental
approvals or financing or in the completion of development or
construction activities. Discovery of archaeological ruins of
historical value could lead to uncertain delays in the development
of the mine at the Sukari Project.
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 information,
there may be other factors that cause actions, events or results to
differ from those anticipated, estimated or intended.
Forward-looking information contained herein is made as of the date
of this announcement and the Company disclaims any obligation to
update any forward-looking information, whether as a result of new
information, future events or results or otherwise. There can be no
assurance that forward-looking information or statements will prove
to be accurate, as actual results and future events could differ
materially from those anticipated in such information or
statements. Accordingly, readers should not place undue reliance on
forward-looking statements.
This announcement contains periodic regulated information.
LEI: 213800PDI9G7OUKLPV84
Company No: 109180
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR FKKDPKBKBDDN
(END) Dow Jones Newswires
January 31, 2018 02:00 ET (07:00 GMT)
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