Yahoo Finance Centamin PLC Announces Interim Report
PERTH, AUSTRALIA / ACCESSWIRE / August 4, 2022 / MARTIN HORGAN, CEO, commented: "Centamin has delivered strong performance against guidance and its long-term plans during the first half of the year. We are now starting to see the benefit of the reinvestment programme as the revised mine plan delivered improved production and costs during Q2 2022. The waste stripping programme has enabled re-entry into the higher grade areas of the open pit while the transition to owner operations in the underground resulted in much improved productivity during Q2 2022. The new solar power plant is expected to yield cost and decarbonisation benefits through H2 2022 and we also look forward to a strong pipeline of news that will highlight the organic growth potential we see across our portfolio of assets. Alongside this emerging growth, we remain committed to delivering shareholder returns and today announce an interim dividend of 2.5 US cents per share."
HIGHLIGHTS
Revenue for H1 2022 was US$382 million from gold sales of 203,587 ounces ("oz") at an average realised gold price of US$1,872/oz
Cash cost of production was US$931/oz produced, and all-in sustaining costs ("AISC") were US$1,446/oz sold
EBITDA was US$153 million with a 40% EBITDA margin
Net profit after tax attributable to shareholders was US$85 million, for a basic EPS of 7.35 US cents
Capital expenditure was US$139 million, including $6 million of non-cash IFRS16 additions. Good progress was made on key capital projects such as the solar plant, paste-fill plant and stages 2 and 3 Tailings Storage Facility 2 ("TSF")
Interim dividend of 2.5 US cents per share equating to a distribution of approximately US$29 million, to be paid to shareholders on 7 October 2022
Group operating cash flow totalled US$128 million and group free cash flow of negative US$25 million reflects the investment in the future of our operations with $133m cash investment in capex, as well as the US$33 million of profit share and royalty distributions to our partner, EMRA.
Strong and flexible balance sheet with available cash and liquid assets of US$175 million, as at 30 June 2022 and after payment of the 2021 final dividend of US$58 million on 15 June 2022
We are continuing to promote diversity across our operations with targets set for the mine in 2022 and beyond. Sukari recruited 11 women in professional positions during the six months ended 30 June 2022 ("H1 2022")
OUTLOOK
Reaffirmed production and cost guidance for 2022 while investing for operational consistency and growth
Gold production of 430,000 to 460,000 oz for the year
Cash costs of US$900-1,000/oz produced
AISC of US$1,275-1,425/oz sold
Given the current inflationary operating environment:
We continue to monitor consumables pricing and review opportunities to offset price increases with cost savings initiatives such as the solar power plant; and
We now anticipate cash costs and AISC for 2022 in the upper end of the guidance range
Capex budget of US$225.5 million
Exploration expenditure for the year is expected to total US$25 million
Full Year 2022 Milestones & Targets
Solar power plant commissioning - Q3 2022
Capital structure review - Q3 2022
Underground expansion study - Q3 2022
Sukari Resource & Reserve update - Q4 2022
Doropo Project (Côte d'Ivoire) pre-feasibility study - Q4 2022
GROUP FINANCIAL SUMMARY
Year on Year ("YoY") comparative | ||||
units | H1 2022 | H1 2021* | % | |
Gold produced | oz | 203,898 | 204,275 | (0)% |
Gold sold | oz | 203,587 | 203,802 | (0)% |
Cash cost | US$'000 | 189,856 | 164,774 | 15% |
Unit cash cost | US$/oz produced | 931 | 807 | 15% |
AISC | US$'000 | 294,406 | 241,705 | 22% |
Unit AISC | US$/oz sold | 1,446 | 1,186 | 22% |
Average realised gold price | US$/oz | 1,872 | 1,799 | 4% |
Revenue | US$'000 | 381,786 | 367,404 | 4% |
EBITDA | US$'000 | 153,116 | 188,480 | (19)% |
Profit before tax | US$'000 | 84,747 | 114,816 | (26)% |
Profit after tax attributable to the parent | US$'000 | 84,737 | 59,484 | 42% |
Basic EPS | US cents | 7.35 | 5.16 | 42% |
Capital expenditure | US$'000 | 138,687 | 78,312 | 77% |
Operating cash flow | US$'000 | 128,380 | 141,853 | (9)% |
Free cash flow | US$'000 | (25,246) | 16,283 | (255)% |
* The 2021 comparative figures for EBITDA, Profit before tax, Operating cash flow and Free cash flow have changed due to amounts
relating to discontinued operations in the Unaudited Interim Consolidated Statement of Comprehensive Income and Unaudited Interim
Consolidated Statement of Cash Flows being reclassified.
WEBCAST PRESENTATION AND CONFERENCE CALL
The Company will host a webcast presentation and conference call today, Thursday, 04 August 2022 at 09.30 BST to discuss the results, followed by an opportunity to ask questions. The 2022 Interim Results presentation should be taken in conjunction with this announcement and can be found on the website: www.centamin.com/investors/presentations-webcasts/.
A replay will be made available on the Company website.
Webcast link:https://www.investis-live.com/centamin/62bc44c5d9438014000fb454/ewer
Conference call dial-in telephone numbers:
United Kingdom +44 (0) 203 936 2999
United States +1 646 664 1960
South Africa +27 (0) 87 550 8441
All other locations +44 (0) 203 936 2999
Participation access code: 061531
PRINT-FRIENDLY VERSION of the half-year results: www.centamin.com/investors/results-reports/
FOR MORE INFORMATION
Please visit the website www.centamin.com or contact:
Centamin plc Michael Stoner, Group Corporate Manager | Buchanan Bobby Morse / Ariadna Peretz / George Cleary + 44 (0) 20 7466 5000 |
ENDNOTES
Guidance
The Company actively monitors the developments of the COVID-19 pandemic and guidance may be impacted if the workforce or operation are disrupted.
Financials
Half year financial data points included within this report are unaudited. Full year financial data points included within this report are audited.
Non-GAAP measures
This statement includes certain financial performance measures which are not GAAP measures as defined under International Financial Reporting Standards (IFRS). These include Cash costs of production, AISC, adjusted EBITDA, Cash and liquid assets, and Free cash flow. Management believes these measures provide valuable additional information for users of the financial statements to understand the underlying trading performance. Definitions and explanation of the measures used are detailed in the Company's 2021 Annual Report https://www.centamin.com/investors/results-reports/. Reconciliations to the nearest IFRS measures are detailed within the Financial Review section of this report.
Profit after tax attributable to the parent
Centamin profit after the profit share split with the Arab Republic of Egypt.
Royalties
Royalties are accrued and paid six months in arrears.
Cash and liquid assets
Cash and liquid assets include cash, bullion on hand and gold sales receivables.
Movements in inventory
Movement in inventory on ounces produced is the movement in mining stockpiles and ore in circuit while the movement in inventory on ounces sold is the net movement in mining stockpiles, ore in circuit and gold in safe inventory.
Gold produced
Gold produced is gold poured and does not include gold in circuit at period end.
Qualified Person
Information of a scientific or technical nature in this document was prepared under the supervision of Craig Barker for the Sukari Underground drilling results and Howard Bills for the surface exploration results. The Qualified Persons are employees of the Company and are not independent of the issuer applying the test set out in Section 1.5 of NI 43-101. Standards of Disclosure for Mineral Projects of the Canadian Securities Administrators.
The Qualified Person has 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.
Forward-looking Statements
This announcement (including information incorporated by reference) contains "forward-looking statements" and "forward-looking information" under applicable securities laws (collectively, "forward-looking statements"), including statements with respect to future financial or operating performance. Generally, these forward-looking statements can be identified by the use of forward-looking terminology such as "believes", "expects", "expected", "budgeted", "forecasts" and "anticipates" and other similar words. Although Centamin believes that the expectations reflected in such forward-looking statements are reasonable, Centamin can give no assurance that such expectations will prove to be correct. Forward-looking statements are prospective in nature and are not based on historical facts, but rather on current expectations and projections of the management of Centamin about future events and are therefore subject to known and unknown risks and uncertainties which could cause actual results to differ materially from the future results expressed or implied by the forward-looking statements. In addition, there are a number of factors that could cause actual results, performance, achievements or developments to differ materially from those expressed or implied by such forward-looking statements; the risks and uncertainties associated with the ongoing impacts of COVID-19 or other pandemic, general business, economic, competitive, political and social uncertainties; the results of exploration activities and feasibility studies; assumptions in economic evaluations which prove to be inaccurate; currency fluctuations; changes in project parameters; future prices of gold and other metals; possible variations of ore grade or recovery rates; accidents, labour disputes and other risks of the mining industry; climatic conditions; political instability; decisions and regulatory changes enacted by governmental authorities; delays in obtaining approvals or financing or completing development or construction activities; and discovery of archaeological ruins. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information or statements, particularly in light of the current economic climate and the significant volatility, uncertainty and disruption caused by COVID-19. Forward-looking statements contained herein are made as of the date of this announcement and the Company disclaims any obligation to update any forward-looking statement, whether as a result of new information, future events or results or except as required by law. Accordingly, readers should not place undue reliance on forward-looking statements.
LEI: 213800PDI9G7OUKLPV84
Company No: 109180
CEO's Review
(H1 2022 vs H1 2021)
I am pleased to deliver this positive update on the Company's activities over the first half of 2022, a period that saw the continued operational delivery against plan at the Sukari Gold Mine ("Sukari") and the simultaneous advancement of numerous projects and work streams that will deliver the full potential of Centamin's portfolio.
Sukari delivered a financial and operating performance in line with our plans in H1 2022 with gold production of 203,898 ounces at an AISC of US$1,446/oz. Production was in line with the corresponding six months in 2021 ("YoY") and the AISC increased by 22% YoY. The production performance takes into account the transition of the underground mining operations from contractor to owner mining during the first quarter of the year while the cost performance is reflective of the current global inflationary cost environment. Despite cost pressures, the Company remains on track to achieve its annual cost and production guidance for 2022 as a result of continued focus on compliance to our operational plans and a strict adherence to cost control and mitigation measures.
H1 2022 was a period of significant reinvestment in the Sukari mine with an elevated level of capex during the period. As a number of studies and projects move towards completion, we expect the capex to reduce through H2 2022 and beyond. These projects underpin our confidence in the long-term potential of Sukari.
Health Safety and Wellbeing
We remain focussed on the protection of our workforce and the local communities that we work in. While the threat of the re-emergence of COVID remains in the background and we maintain our vigilance, the focus in H1 2022 centred on our operational safety performance. We target a zero harm workplace and over the first half of the year we unfortunately suffered a single Lost Time Injury which has been investigated and corrective action plans issued as a result of the review. Notwithstanding this incident, the Lost Time Injury Frequency Rate ("LTIFR") was 0.16 per million hours worked, an 80% improvement YoY and continues the trend of an improvement over the previous period and leaves us on track to meet our annual improvement targets.
Geology
A comprehensive exploration update was published on 7 July 2022. A link to "Group Exploration Update Confirming Growth Potential Across the Portfolio" is available here: https://www.centamin.com/media/company-news/.
The geology team continued to explore the Sukari orebody, targeting extension of the mineralisation in the underground with success in both the current production areas of Amun and Ptah, and also depth extensions of the orebody in the Horus zone. Building on last year's identification of the high grade mineralisation in the Bast zone, further excellent drill results were achieved which continue to support the zone's potential to provide significant high grade gold production to supplement the existing working areas. Notable drill results over the first half of the year included:
Horus Deeps - 54m at 15.1g/t Au, including 3.8m at 161g/t Au and 2.15m at 44.84g/t Au
Ptah - 23m at 7.2g/t Au, including 2m at 14.29g/t Au and 6m at 17.72g/t Au
Amun - 17m at 9.6g/t Au, including 1m at 136g/t Au
Amun - 8.5m at 7.6g/t Au, including 1m at 52.8g/t Au
Bast - 10m at 64g/t Au, including 2m at 199g/t Au
Bast - 4.5m at 267g/t Au, including 4m at 301.29g/t Au
Bast - 17m at 12.5g/t Au, including 2.5m at 6.84g/t Au and 4m at 47.09g/t Au
During the second half of the year the team will complete the update of the resource and reserve estimates for Sukari based on the drilling data up to and including the 30 June 2022 with release of the results scheduled in late Q4 2022.
The surface exploration programme across the mining concession also returned encouraging exploration results and continues to demonstrate the potential for the development of smaller satellite pits that can provide both additional reserves and offer improved operational flexibility to the open pit mining operations. Notable drilling results from the exploration programme included:
Wadi Alam - 22m at 2.9g/t Au from 41m
V Shear East 10m at 2.9g/t Au from 41m
Based on a combination of newly identified targets and a reassessment of existing data on known targets, the surface exploration team will commence a 25km drilling programme across 6 targets in H2 2022 with the aim of developing resources that can be converted to reserves and incorporated into the mine plan at the earliest opportunity.
During April 2022 the Sukari team completed the first airborne geophysical survey in Egypt, a significant step for Centamin and more broadly the emerging Egyptian exploration and mining sector. The results of the survey over the full mining concession area are currently under review and the findings from this landmark initiative will be published in due course.
Production
The Sukari Management Team delivered a robust operational performance in H1 2022. The open pit has started to benefit from the previously announced waste mining programme which commenced in early 2021. Operational flexibility is returning and mining has recommenced in the Eastern zone of the pit providing access to both higher grade ore and another working area to supplement the northern and western areas of the pit. During the period some 40Mt of waste were mined by our own fleet a 4% YoY increase which was driven by increasing in truck productivity as a result of the introduction of the high capacity truck trays and better fleet management optimisation. The waste mining contractor also mined 19Mt of material during the period. Ore tonnes mined were 6Mt at an average grade of 0.99g/t Au a 30% improvement in grade and 16% decrease on tonnes YoY and reflects the availability of higher grade areas in East and West of the pit plus an improvement in grade with depth in the north zone.
The underground team successfully completed the transition from contract mining to owner mining during the first quarter of 2022. After nearly 10 years of contractor mining, the team developed and executed a transition plan that enabled them to deliver a strong second quarter with ore and development tonnes increasing 50% quarter on quarter with an associated improvement in grade of 33% to 4.74g/t. The focus for the balance of the year will be to further bed down the operations and continue the productivity gains seen in Q2 2022, supported by the delivery of additional underground equipment to replace and augment the current fleet.
The plant processed 6Mt of ore, a marginal increase YoY, at an average feed grade of 1.22 g/t Au, a 4% increase YoY reflecting the improved grade of the material mined over the period.
The metallurgical gold recovery rate was 88.2% for the half, in line with budget however, a 1% reduction YoY, with the reduction resulting from a planned mill reline and commissioning of certain process plant upgrades.
During the period, a series of process optimisation studies progressed with the aim of improving overall plant performance including the assessment of gravity gold recovery, floatation, and reagent dosing optimisation.
Human Resources
Employing a progressive approach to the management of the mine and our people, we continue to develop our education and training programmes that seek to identify, develop and promote Egyptian employees into leadership positions. In 2020, we started developing the Centamin Capability Framework, this includes succession planning and training needs analysis to ensure we are attracting the best talent, developing the required skills and empowering the workforce with the knowledge and tools to deliver operational excellence. Several components of the Centamin Capability Framework were advanced in H1 2022 and included:
Leadership Development Programme
Employee Development Pathway
Vocational Education & Training ("VET")
Under the Mobile Plant Apprenticeship Programme (which forms part of the VET) all apprentices satisfactorily passed their units of competency for year 1. This is a great outcome and I offer our congratulations to the students for their hard work and success.
After the establishment of a Sukari Diversity Committee in 2021, I am delighted to report that during the first half of the year Sukari recruited 11 women in professional positions across the mine site including the administration, environmental and geology sections of the operations. This is a first step and we will continue to promote gender diversity across our operations with employment targets set for the mine in 2022 and beyond. This approach has been completed in line with recent changes to the Egyptian labour law that now permits a wider range of roles available to women in the mining sector and we at Centamin are pleased to play our part in the development of the broader Egyptian mining sector.
Projects and Optimisation Work
While maintaining our focus on operational discipline, we have simultaneously continued to maximise the value of Sukari through the execution of a number of projects and studies during the first half of the year in order to support our goal of putting a world class mine around the world class Sukari orebody. The 36MW Solar power plant made good progress during the period and commissioning is planned for Q3 2022 bringing significant cost and carbon emission benefits to the mine site. In parallel the Company has engaged in discussions with the Egyptian authorities around the potential provision of grid power to the mine based on the recent and significant expansion of the national power generation capacity and distribution network. If successful, this initiative offers potential to further reduce operating costs and carbon emissions and we look forward to updating you in due course on this project.
The pastefill plant remains on schedule to be completed by year end and commissioned during Q1 2023. The introduction of pastefill will play a key role in further improving the performance of the underground through maximising the safe extraction of the underground reserves and providing productivity gains in the operations. In parallel, the underground expansion study progressed well and we anticipate providing the initial findings of study work in Q3 2022 as we seek to capitalise on the continued growth of the underground resource base to both extend the underground mine life and increase its annual production capacity.
ESG
I am pleased to report that the mine recorded zero reportable environment and social incidents during the first half of 2022. However further work is required to improve the site Environmental and Social Incident Frequency Rate which is currently trending above target, albeit due to the reporting of minor / less severe category events.
The site's Environmental Management Plan was updated and will undergo further revision to align strategy and objectives with the interim Life of Asset Plan. Work has also commenced to update the Life of Mine Closure and Rehabilitation Plan to support the development a strong legacy for the benefit of our local, regional and national hosts.
Once fully commissioned in Q3, the solar plant will reduce our Scope 1 GHG emissions by 60,000 tCO2-e per annum and help us achieve our short-term target for emissions reduction. In addition to the option of grid connection, we have initiated a broader analysis of decarbonisation options to support establishment of science-based targets for carbon reduction by 2030 and one that strives to algin with a pathway for net-zero emissions by 2050.
In respect of tailings management, work continued to bring our governance processes and management systems in line with the Global Industry Standard on Tailings Management ("GISTM") with the mapping and implementation of numerous initiatives around roles and responsibilities, monitoring and evaluation and assessing the Engineer of Record.
Growth & diversification
In parallel with the operational delivery at Sukari during H1 2022, we have simultaneously advanced our exciting exploration portfolio in Egypt and Cote d'Ivoire.
Eastern Desert Exploration (EDX), Egypt
After the finalisation and award of the exploration permits during early Q2 2022 and alongside the establishment of an exploration team in Marsa Alam, field work commenced at our EDX portfolio initially focussing on the Nugrus block adjacent to the Sukari Mining concession. Initial field work is focussed on bulk leach extractable gold ("BLEG") sampling and mapping, building on the extensive remote sensing work previously completed by the team. At Nugrus, this preparatory work identified targets hosting in excess of 20km of strike extent of alluvial artisanal workings and over 300 hard rock artisanal sites. Following the completion of the Nugrus Block work, operations will move to the Um Rus and Najd blocks during H2 2022 with the aim of identifying priority targets for drill testing at the soonest opportunity. We continue to work with our industry partners to engage with government around the exploitation terms for these newly awarded exploration licences.
Doropo Project, Côte d'Ivoire
Work progressed towards the delivery of the Doropo pre-feasibility study ("PFS") by the end of the year. The field programme has seen the completion of in excess of 100,000 metres of drilling which is expected to convert the majority of the Inferred Resource to the Indicated Resource category and further identified resource growth potential of several of the Main Cluster deposits. At the Kilosegui deposit, which is located 30km southwest of the Main Cluster, the current 7km long Mineral Resource area is open along strike in both directions and down dip.
Work towards the PFS is progressing with many of the major workstreams complete or significantly advanced as described below:
Mineral Resource and Reserve update - With infill drilling now complete, the updated Mineral Resource estimates are currently in progress and are expected to be completed during Q3 2022
Plant design - Comminution test work and the process plant front-end design has been completed
Metallurgical drilling completed, with the metallurgical test work programme underway
Geotechnical drilling programme is now over 75% complete
E&S baseline studies and stakeholder engagement to support the evaluation of options for mine design, sequencing and site infrastructure.
The PFS is expected to be completed late in Q4 2022, which will be followed by a formal decision to proceed with a definitive feasibility study ("DFS")
Stakeholder returns
Fundamental to Centamin's success, and delivery of our purpose to create opportunities for people through mining, is the establishment of broad socio-economic partnerships with our stakeholders, good governance, ethical conduct, and transparency. Under the terms of the Sukari Concession Agreement, the Arab Republic of Egypt received US$33 million in profit share and royalty payments during the period. I am grateful for the open engagement and collaborative partnership we've built with our Egyptian government partners.
Capital Structure Review
We are currently undertaking a capital structure review, assessing operational cashflows across a range of operating scenarios, capital allocation opportunities to support growth, our mix of cash and debt and the dividend policy. The intention is to announce a capital allocation framework during Q3 2022, balancing both growth and sector leading shareholder returns on a through the cycle basis.
Interim Dividend
For 2022, the Board reiterates its intention to recommend a minimum dividend of 5.0 US cents per share for the full year. Today, the Board declares an interim dividend of 2.5 US cents per share to be paid on 7 October 2022, leaving an approximate minimum 2.5 US cents final dividend to be proposed with the 2022 full year results. This reflects the Company's confidence in the outlook for the year, and progress delivering on the reset plans.
OUTLOOK
The first half has seen a period of delivery in compliance with our plans. I'd like to thank our employees and partners for their dedication to ensuring business continuity. Thanks to these efforts, the Company is on track to achieve full year production and cost guidance of 430-460 koz at an AISC in the upper end of the US$1,275-1,425/oz range for 2022.
Centamin is an established long life, cash generative business which offers sector leading dividend returns to shareholders, balanced with active investment to drive future growth through a series of organic growth opportunities in Egypt and West Africa. The Company has a strong balance sheet with US$175 million of available cash and liquid assets as at 30 June 2022, with no debt, hedging or streaming instruments, thereby offering shareholders pure exposure to the gold price.
We look forward to delivering continued operational improvement and expect strong progress with our capital projects and exploration programmes in the second half.
Martin Horgan
CEO
4 August 2022
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SOURCE: Centamin PLC
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