TIDMCEY
RNS Number : 5572W
Centamin PLC
02 August 2018
For immediate release 2 August 2018
Centamin plc ("Centamin" or "the Company")
(LSE:CEY, TSX:CEE)
Centamin plc Interim Results for the Six Months Ended 30 June
2018
Financial Highlights(1,2,3,4)
Six Months ("H1"), ended 30 June 2018
-- Revenue of US$296.4 million, a 2% increase compared to H1
2017 ("YoY"); Gold sales of 228,672 ounces, a 3% decrease YoY.
Average realised gold price of US$1,316 per ounce approximately 7%
increase YoY;
-- EBITDA(1,2,4) of US$129.7 million, a 16% increase YoY;
-- The Group has changed its accounting policy on the treatment
of exploration costs, operating costs now include greenfield
exploration expenses of US$11.8 million (2017 figures have been
restated to include US$9.8 million of exploration expenditure)
which was previously capitalised:
-- Profit before tax(4) of US$80.4 million, a 34% increase YoY;
-- Basic earnings per share after profit share(2,4) ("EPS") of
3.88 US cents, a 136% increase YoY;
-- Operational cash flow of US$122.7 million, a 2% decrease YoY;
-- Free cash flow(1) of US$36.1 million, a 29% decrease YoY;
-- Royalties(1) of US$9.0 million payable to Arab Republic of
Egypt ("ARE") and profit share(1) of US$39.3 million paid to
Egyptian Minerals Resources Authority ("EMRA"), our state
partners;
-- Gross capital expenditure of US$53.9 million, a 56% increase
YoY, in line with the US$113 million(4) budgeted for the full
year;
-- Cash and liquid assets(1,3) of US$303.3 million at 30 June
2018, the Company remains debt-free and unhedged; and
-- Consistent with the dividend policy, the Board declares an
interim dividend of 2.5 US cents per share ("Interim Dividend"),
US$28.9 million, and equivalent to returning 80% of free cash flow
generated in H1.
Second Quarter ("Q2"), ended 30 June 2018
-- Q2 generated free cash flow(1) of US$1.6 million, a 95%
decrease compared to Q2 2017 ("QoQ"). Despite being a weak
operational quarter it was cash flow positive;
-- Q2 revenue of US$123.9 million, a 18% decrease QoQ; Q2 gold
sales of 97,628 ounces, a 19% decrease QoQ. Q2 average realised
gold price of US$1,298 per ounce up approximately 4% QoQ;
-- Q2 cash costs of production(1,2) of US$64.6 million, a 15%
reduction in cost profile QoQ, resulting in a unit cost of US$714
per ounce produced, a 17% increase QoQ; and
-- Q2 all-in sustaining costs ("AISC(1,2) ") of US$102.2
million, a 2% increase QoQ, resulting in a unit cost of US$1,073
per ounce sold, a 29% increase QoQ.
3 months ended 30 6 months ended
June 30 June
units Q2 2018 Q2 2017 % change H1 2018 H1 2017 % change
-------------------------- ------------ -------- -------- --------- -------- -------- ---------
Gold produced oz 92,803 124,641 (26%) 217,099 233,827 (7%)
Gold sold oz 97,628 120,912 (19%) 228,672 235,964 (3%)
Cash cost of production
(1,2) US$'000 64,630 75,965 (15%) 135,942 156,083 (13%)
Unit cash cost US$/oz
of production produced 714 609 17% 637 668 (5%)
AISC (1,2) US$'000 102,212 100,188 2% 209,150 202,265 3%
US$/oz
Unit AISC sold 1,073 829 29% 930 857 9%
Average realised
gold price US$/oz 1,298 1,249 4% 1,316 1,235 7%
-------------------------- ------------ -------- -------- --------- -------- -------- ---------
Revenue US$'000 123,929 151,282 (18%) 296,391 292,005 2%
EBITDA (1,2) US$'000 45,773 63,504 (28%) 129,728 111,745 16%
Profit before
tax(4) US$'000 21,977 35,365 (38%) 80,376 60,014 34%
Basic EPS (2)
(4) US cents 1.32 0.89 48% 3.88 1.64 136%
Capex inc Sukari
exploration(4) US$'000 28,798 19,292 49% 53,877 34,450 56%
Operating cash
flow(4) US$'000 37,247 72,707 (49%) 122,662 125,790 (2%)
Free cash flow
(1) (4) US$'000 1,594 31,232 (95%) 36,075 50,867 (29%)
-------------------------- ------------ -------- -------- --------- -------- -------- ---------
Operational Highlights(1,2)
-- Group Lost Time Injury Frequency Rate ("LTIFR") of 0.06 per
200,000 man hours, a 77% improvement YoY, with one LTI in H1, a
reflection of our ongoing focus and commitment on health and
safety;
-- Sukari Gold Mine ("Sukari") produced 217,099 ounces, a 7% reduction YoY;
-- Cash costs of production(1,2) of US$135.9 million, a 13%
decrease in cost profile YoY, resulting in a unit cost of US$637
per ounce produced, a 5% decrease YoY; and
-- AISC(1,2) of US$209.2 million, a 3% increase YoY, resulting
in a unit cost of US$930 per ounce sold, a 9% increase YoY.
Exploration Highlights(4)
The Group exploration programme delivered positive results
across the portfolio.
-- Sukari underground continues to return excellent results
beyond the existing mineral resource. Recent highlights
include:
Bast zone: 21m @ 37.2 g/t;
9m @ 226.3 g/t, including 0.6m @ 1,050 g/t; and
Porphyry Keel: 57m @ 6.8 g/t, including 27m @ 8.8 g/t.
-- Earlier stage exploration at Cleopatra has proven successful,
identifying good grades on the contact zone. Drill highlights
include 4.2m @ 5.72g/t; 8m @ 4.2g/t. Total US$2.5 million spend on
Cleopatra exploration and development has generated pre-production
revenue of US$5.3 million.
-- Group greenfield exploration(4) spend was US$11.8 million:
Doropo Project, Côte d'Ivoire, resource extension and infill
drilling returned positive results. Drill highlights include: 7m @
23.4 g/t; 8m @ 8.5 g/t; 4.3m @ 6.2 g/t; and
Batie West Project, Burkina Faso, is in the final stages of an
internal scoping study with independent consultants Cube
Consulting.
Outlook
-- Significantly stronger production is expected for the second
half ("H2"), driven by continued improvements in grade from the
open pit as mining progresses into the sulphide ore and an increase
in high grade stoping tonnes from the underground;
-- The Company maintains full year revised guidance of
505,000-515,000 ounces. Whilst improvements in open pit grade are
already being realised, the improvement in underground grade is
scheduled to come through later in Q3; and
-- Unit cash cost of production are on track with guidance of
US$625-US$640 per ounce produced. AISC per ounce sold expected to
trend downwards to within guidance range of US$875-US$890 per ounce
sold in H2 in line with increased production.
____________________________________________________________________________________________________________
(1) Cash cost of production, AISC, EBITDA and cash, bullion on
hand, gold sales receivables, financial assets at fair value
through other comprehensive income and free cash flow are non-GAAP
measures and are defined at the end of the Financial Review
section.
(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 8 of the
financial statements for further details).
(3) Cash and cash equivalents, bullion on hand, gold sales
receivables and financial assets at fair value through other
comprehensive income.
(4) The Group accounting policy for Greenfield exploration
expenditure, has been updated in line with market practice. This
has resulted in prior period results being restated. Accordingly,
YoY comparatives are on a consistent basis. For full details,
please refer to Note 1 of the Financial Statements.
Conference Call
A conference call will be hosted by the Company at 09.00 BST
(UK) today to discuss the results with investors and analysts.
Please find below the required dial-in details. Where possible,
please dial in 10 minutes before. The Results Presentation can be
found on the Company website:
www.centamin.com/investors/presentations/2018 ahead of the
call.
Participant code: 22570038#
UK Toll: +442034281542
UK Toll Free: 08082370040
A replay will be made available on the Company website from
13.00 BST (UK) today.
For further information, please visit the website
www.centamin.com or contact:
Centamin plc Buchanan
Andrew Pardey, Chief Executive Officer Bobby Morse
Alexandra Carse, Investor Relations Chris Judd
+44 (0) 7700 713 738 + 44 (0) 20 7466 5000
alexandra.carse@centamin.je centamin@buchanan.uk.com
CHIEF EXECUTIVE OFFICER'S REVIEW
Centamin produced 217,099 ounces from the Sukari Gold Mine
("Sukari") in the first six months of 2018 ("H1")., a 7% reduction
year on year. On 25 May 2018, the Company revised 2018 annual
production guidance from 580,000 ounces to 505,000-515,000 ounces
produced, due to lower grade delivered from the open pit and
underground. While H1 was a challenging period for the Company in
terms of ounces produced, many operational areas of the mine
performed strongly with record volumes reported from the both the
open pit and process plant.
The open pit delivered 11.6Mt of mined ore, a 109% increase year
on year, from total material movement of 36.9Mt, a 7% increase year
on year. The open pit mined grade was 0.50 g/t, a 20% reduction
year on year. This reflected the lower than expected grade
delivered as mining progressed through the transitional zone of
Stage 4A, providing access to the higher-grade sulphide ore in the
third quarter ("Q3"), the source of open pit ore for the next four
years.
Towards the end of H1, and subsequently, good progress has been
made in the open pit, as mining moves through the lower area of the
transitional zone and accesses improved grades in the sulphide
material.
The underground mine delivered 601kt of ore, a 10% increase year
on year, however the feed grade of 5.7g/t was 30% lower year on
year and below mine plan. The reduction reflected long-hole stoping
equipment availability issues that resulted in a less favourable
mix of low grade development ore. This was compounded by greater
than scheduled dilution from low grade porphyry material within
certain larger stopes as a result of cascading mining method.
Our focus remains firmly on delivering the underground
operations back in line with forecast. The contribution from
cascade mining will be significantly lower during H2, thereby
reducing the impact of grade dilution seen in H1. The deferred
high-grade stopes are scheduled to come through from mid-Q3.
The processing plant delivered an excellent H1, with total ore
processed of 6.2Mt, a 5% increase year on year. Lower head grade of
1.15 g/t, a 16% reduction year on year, reflecting the lower mined
grades from the open pit and underground. Despite the lower head
grade, metallurgical recoveries improved 0.9% to 88.6% following
the continued focus on process controls and enhancements to the
elution circuit.
Egypt has undergone significant economic reform over the past
few years to restore stability and return strong, stable growth.
Headline inflation rates within Egypt have come down to under 14%
from a high of 30% in 2017. In H1, as expected, subsidies were
reduced for consumer fuel and electricity. This did not have a
direct impact on Centamin's cost base - we have been paying
international fuel prices since 2012 - but indirectly, adding to
inflationary pressures across the supply chain. As a
counter-inflationary measure, the bulk of our suppliers are locked
in on long-term contracts minimising cost fluctuations. A
Procurement Committee has been established to independently review
new contracts, contract renewals, tender processes, ensuring the
fair and reasonable justification for any adjustments in fee
structure.
Centamin has delivered a solid financial performance in H1,
irrespective of operational challenges. The improvements achieved
in profitability over H1 2017 were underpinned by 13% year on year
lower cash costs of production reflecting the build up of
stockpiles in line with the mine plan.
Total revenues were 2% higher year on year to US$296.4 million,
reflecting the 7% rise in average realised gold prices US$1,316/oz
offset by a 3% decrease in gold sales. EBITDA increased by 16% to
US$129.7 million, due to higher revenues, lower cash costs of
production and offset by 20% increase in exploration expenses now
included in operating costs following a change in accounting policy
of expensing greenfield exploration costs as incurred.
During H1, total cash costs of production reduced by US$20.1
million, or 13%, year on year, to US$135.9 million. Total mine
production costs (excluding movement in inventory adjustments)
increased by 3% year on year, as a result of increased mining
volumes and higher fuel prices. Unit cash costs of production per
ounce decreased by 5% year on year to US$637/oz, in line with the
full year guidance of US$625-640/oz produced.
All-in sustaining costs per ounce sold increased by US$6.9
million, or 3%, year on year to US$209.2 million predominantly due
to increased sustaining capital expenditure as planned, in
particular underground development and the scheduled fleet rebuild
programme, offset by movement in inventory adjustments. Unit all-in
sustaining costs per ounces sold increased by 9% year on year to
US$930/oz, due to the drop in sold ounces. We anticipate unit AISC
falling in H2 as production improves.
Capital expenditure totalled US$53.9 million, a 56% increase
year on year, and in line with the US$113 million annual guidance
(adjusted for US$22 million greenfield exploration). US$22.6
million was spent on underground mine development and exploration
(ex-Cleopatra) and $28.9 million on other sustaining capex items
such as the scheduled fleet rebuild programme. In addition to
completing the working capital systems upgrade, the 18-month
programme to reduce the stores inventory successfully reached its
target warehouse level with important cash benefits for the Group.
We continue to take a stringent approach to capital allocation,
undertaking continual reviews of the capital programme and other
initiatives to counter cost inflationary pressures.
The Arab Republic of Egypt, our host operating country,
benefitted directly from a total contribution of US$48.3 million in
profit share and royalties.
Free cash flow generated was US$36.1 million, a 29% decrease
year on year. Despite Q2 being a weak operational quarter, it was
cash flow positive, generating US$1.6 million in free cash
flow.
The Company maintained a strong balance sheet, remaining
debt-free and unhedged, with cash and liquid assets of US$303.3
million as at 30 June 2018. Consistent with our dividend policy,
the Board of Directors has declared an interim dividend of 2.5 US
cents per share totalling US$28.9 million to be returned to
shareholders. Details of the dividend can be found overleaf under
2018 Interim Dividend.
Sukari is a world class asset with untapped growth potential as
demonstrated by the continued excellent high-grade underground
drill results, including those from the Bast zone and the Porphyry
Keel. Drill intersections can be found tabled in the Operational
Review section of these results. Cleopatra drilling, although at a
much earlier stage, has proven successful in identifying good grade
on the contact zone, the area between the porphyry and host rock.
The second drilling crew and equipment was mobilised in April and
we expect to see a ramp up in the assay results to start to come
through from Q3 and beyond.
At Doropo in Côte d'Ivoire, we are progressing well towards a
Preliminary Economic Assessment study by H1 2019. Metallurgy,
geotechnical, hydrology, environment and community studies are
currently underway as part of the PEA. At Batie West in Burkina
Faso, a scoping study is currently being undertaken to assess
options for the project.
As a Board update, the process to appoint a non-executive
chairperson is underway. Josef El-Raghy continues as the Chairman
until a successor is appointed.
Centamin's corporate strategy remains focused on the delivery of
low cost operations at our world class Sukari Gold Mine; the solid
foundation from which we are able to generate significant cash
flow, driving shareholder returns and next stage growth investment
within our exploration and development pipeline.
2018 Interim Dividend
In accordance with Centamin's dividend policy, the Board of
Directors declares to pay an Interim Dividend of 2.5 US cents per
ordinary shares (totalling approximately US$28.9 million) for H1,
which equates to returning approximately 80% of free cash flow
generated in H1 to shareholders.
The Interim Dividend will be paid on 28 September 2018 to
shareholders on the register on the Record Date of 31 August 2018.
The Interim Dividend will be paid in US Dollars ("USD"), with an
option for shareholders to elect to receive the dividend in Pounds
Sterling ("GBP"). Currency elections should be made no later than 7
September 2018 with further details of how to do so on the
Company's website
http://www.centamin.com/investors/shareholder-services/dividend-information.
Payments in GBP will be based on the USD/GBP exchange rate on 7
September 2018 and the rate applied will be published on the
website on the 10 September 2018.
London Stock Exchange and Toronto Stock Exchange (T+2)
EX-DIV DATE: 30 August 2018
RECORD DATE: 31 August 2018
LAST DATE FOR RECEIPT OF CURRENCY ELECTIONS: 7 September
2018
PAY DATE: 28 September 2018
The Company's total issued share capital is 1,154,722,984
ordinary shares.
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.
OPERATING REVIEW
3 months ended 30 June 6 months ended 30 June
------------------------- --------------------------------
units Q2 2018 Q2 2017 H1 2018 H1 2017
------------------------------------ ----------- ------------ ----------- ---------------------- --------
Open pit mining
Total material mined kt 18,415 17,493 36,911 34,622
Ore mined kt 5,532 3,060 11,579 5,539
Ore grade mined g/t Au 0.51 0.76 0.50 0.63
Ore grade milled g/t Au 0.59 0.81 0.64 0.77
Strip ratio waste/ore 2.33 4.72 2.19 5.25
------------------------------------ ----------- ------------ ----------- ---------------------- --------
Underground mining
Ore mined from stoping kt 180 174 340 327
Ore mined from development kt 109 119 261 218
Ore grade mined g/t Au 4.62 8.78 5.70 8.16
------------------------------------ ----------- ------------ ----------- ---------------------- --------
Processing
Ore processed kt 3,172 3,056 6,240 5,964
Head grade g/t Au 0.99 1.44 1.15 1.37
Gold recovery % 87.3 86.7 88.6 87.7
Gold produced - dump leach oz 3,028 1,738 5,183 3,786
Total gold production(1) oz 92,803 124,641 217,099 233,828
------------------------------------ ----------- ------------ ----------- ---------------------- --------
Cash cost of production(2,3) US$'000 64,630 75,965 135,942 156,083
Unit Cash cost of production(2,3) US$/oz 714 609 637 668
AISC(3) US$'000 102,212 100,188 209,150 202,266
Unit AISC(3) US$/oz 1,073 829 930 857
------------------------------------ ----------- ------------ ----------- ---------------------- --------
Gold sold oz 97,628 120,912 228,672 235,964
Average realised sales price US$/oz 1,298 1,249 1,316 1,235
------------------------------------ ----------- ------------ ----------- ---------------------- --------
(1) Gold produced is gold poured and does not include gold-in-circuit at period end.
(2) 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 8 of
the financial statements for further details).
(3) 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.
Health and safety
The Group Lost Time Injury Frequency Rate ("LTIFR") for H1 was
0.06, with one Lost Time Injury ("LTI") as recorded from the first
quarter ("Q1"). The Company remains committed to further improving
this health and safety measure towards our zero--harm target with
details of the safety initiatives and employee welfare set out in
the CSR report, which can be found on our website
www.centamin.com.
Sukari Gold Mine, Egypt
Overview
Sukari achieved a zero-harm record in Q2, resulting in an LTIFR
of 0.07 for H1. The site continues to focus on leading indicators
such as hazard reporting and regular routine training.
Sukari produced 217,099 ounces for H1, reflecting the lower open
pit grades as mining progresses through the transitional zone,
providing access to the primary Stage 4A ore, and the lower than
expected grade from the underground, resulting from stope dilution
and increased development tonnes.
Open pit
The open pit delivered total material movement of 36.9Mt. A
total of 11.58Mt of ore was mined at 0.50g/t, of which 5.56Mt @ an
average head grade of 0.64g/t was milled; 1.81Mt at 0.37g/t was
delivered to the dump leach pad, with the balance of approximately
4.2Mt at 0.38 g/t was delivered to the stockpiles. The run of mine
("ROM") ore stockpile at the end of H1 was 6.45Mt at 0.44g/t.
Additional ore tonnes were mined at lower grade compared to plan
due to considerably more 'medium grade' ore tonnes being delineated
from the grade control drilling ahead of mining as we progressed
down through the oxide and transitional zones of the Stage 4A
cutback.
Underground
The underground delivered a total of 601kt of ore; 340kt from
stope mining and 261kt from development. The ratio of
stoping-to-development ore for the period was 55:45. Production
equipment availability and utilisation issues experienced at the
end of Q1, and early Q2, predominantly due to recurring damage to
the long hole drill rig ("LHDR"), reducing stoping volumes and
leading to an increased mix of lower grade ore-drive development
tonnes. There have since been no further disruptions to the LHDR
and stope tonnage improved in line with the revised mine plan. As a
mitigating measure, an additional LHDR is due to arrive on site in
the fourth quarter.
The mined feed grade for H1 was 5.7g/t. This is below the annual
revised guidance of 6.6g/t.
The increase in lower grade development tonnage and disruptions
to the stoping sequence has deferred access to higher grade stopes
by approximately one quarter. Furthermore, stope grades were
impacted by greater than scheduled dilution from low grade porphyry
material in the open stopes. The impact of these stopes reduced
throughout Q2, from 68% to 22% of the total stoping tonnes.
Cascade-stope mining in the upper level of the Amun zone is now
largely complete, reducing any impact of dilution from this stoping
method in H2.
Total underground development was 3,861m, a 12% increase YoY.
Decline development contributed 82m, with remainder ore drive and
cross-cut development in the Amun (2,179m) between 590 and 695
levels and Ptah (1,682m) on the P615 to P700 levels.
Processing
The plant processed 6.24Mt of ore, in line with expectations and
at record half year throughput. Metallurgical recovery averaged
88.6%, a 1.1% improvement on the prior year despite lower feed
grades.
The dump leach operation produced 5,138oz, a 37% increase YoY.
Construction of the second dump leach pad was largely complete by
the end of H1, ahead of irrigation early in the third quarter.
Sukari exploration
Exploration within the Amun and Ptah zones of Sukari is focused
on underground reserve and resource growth. During H1, 20,254m of
infill and extension drilling was completed from the Amun / Ptah
decline. Resource extension diamond drilling during H1 from the
Ptah P735 and P660 decline levels targeted the contact of the Ptah
East Stockwork and the Ptah Keel.
In H2, the exploration from Ptah / Bast will be predominantly
focussed on infill drilling while Amun drilling will concentrate on
the top of the Horus resource extension.
Below are the significant drill intercepts reported in Q2. Note.
Q1 drill intercepts previously reported.
Table 1. Q2 2018 Highlights - Amun / Ptah Decline - Underground
Exploration Significant Drill Intercepts
TENEMENT ID PROSPECT ID HOLE ID Level (mRL) Interval (m) Grade (Au g/t)
------------------- -------------- ----------------------- ------------ ------------- ---------------
SUKARI GOLD MINE AMUN UGRSD0126 671.9 6 7.7
------------------- -------------- ----------------------- ------------ ------------- ---------------
SUKARI GOLD MINE BAST UGD3871 718.2 21 37.2
------------------- -------------- ----------------------- ------------ ------------- ---------------
SUKARI GOLD MINE BAST UGD3897 714.2 9 226.3
------------------- -------------- ----------------------- ------------ ------------- ---------------
SUKARI GOLD MINE BAST includes 714 0.6 1,050
------------------- --------------------------- --------- ------------ ------------- ---------------
SUKARI GOLD MINE PTAH UGRSD0905 483.6 3 20.4
------------------- -------------- ----------------------- ------------ ------------- ---------------
SUKARI GOLD MINE PTAH includes 482.5 0.3 166.2
------------------- --------------------------- --------- ------------ ------------- ---------------
SUKARI GOLD MINE PTAH UGRSD0915 637.7 2.2 58.1
------------------- -------------- ----------------------- ------------ ------------- ---------------
SUKARI GOLD MINE PTAH includes 637.9 1 46.1
------------------- --------------------------- --------- ------------ ------------- ---------------
SUKARI GOLD MINE PTAH and 637.3 0.6 135.7
------------------- --------------------------- --------- ------------ ------------- ---------------
SUKARI GOLD MINE PTAH UGRSD0917 696.7 0.3 12.9
------------------- -------------- ----------------------- ------------ ------------- ---------------
SUKARI GOLD MINE PTAH 696.3 1 11.9
------------------- --------------------------------------- ------------ ------------- ---------------
SUKARI GOLD MINE PTAH UGRSD0926 563.0 1 97.2
------------------- -------------- ----------------------- ------------ ------------- ---------------
SUKARI GOLD MINE PTAH UGRSD0927 387.7 23 5.0
------------------- -------------- ----------------------- ------------ ------------- ---------------
SUKARI GOLD MINE PTAH includes 393.0 10 7.3
------------------- --------------------------- --------- ------------ ------------- ---------------
SUKARI GOLD MINE PTAH UGRSD0928 429.0 57 6.8
------------------- -------------- ----------------------- ------------ ------------- ---------------
SUKARI GOLD MINE PTAH includes 418.0 27 8.8
------------------- --------------------------- --------- ------------ ------------- ---------------
SUKARI GOLD MINE PTAH PUD7695 605.2 1.7 354.8
------------------- -------------- ----------------------- ------------ ------------- ---------------
Cleopatra Exploration Decline
Cleopatra exploration ramped up significantly throughout H1. Two
LM90 rigs drilled 14,209 metres from the 1130 level, Cleo Appian
Way and 1150 level, targeting the high-grade mineralisation on the
eastern contact ahead of the Antony structure and the Ptah Deeps. A
further 295.6 metres of shorter infill exploration drill holes
utilising the production MC rig was competed. Drilling to date has
focused on the eastern and northern Deeps contacts of the
porphyry.
Cleopatra development of 731m produced 66,594 mined tonnes of
mineralised development ore, at an average grade of 2.01 g/t.
Below are the significant drill intercepts reported for
Cleopatra in Q2. Note. Q1 drill intercepts previously reported.
Table 2. Q2 2018 Highlights - Cleopatra Exploration Decline -
Underground Exploration Drill Intercepts
TENEMENT ID PROSPECT ID HOLE ID Level (mRL) Interval (m) Grade (Au g/t)
------------------- -------------- ----------- ------------ ------------- ---------------
SUKARI GOLD MINE CLEO CRSD096 1,012.23 1.1 4.38
------------------- -------------- ----------- ------------ ------------- ---------------
SUKARI GOLD MINE CLEO 990.6 8.8 3.08
------------------- --------------------------- ------------ ------------- ---------------
SUKARI GOLD MINE CLEO 845.3 8 3.43
------------------- --------------------------- ------------ ------------- ---------------
SUKARI GOLD MINE CLEO 776.8 2 3.46
------------------- --------------------------- ------------ ------------- ---------------
SUKARI GOLD MINE CLEO CRSD097A 855.5 20 2.71
------------------- -------------- ----------- ------------ ------------- ---------------
SUKARI GOLD MINE CLEO 773.3 1 3.21
------------------- --------------------------- ------------ ------------- ---------------
SUKARI GOLD MINE CLEO CRSD098A 986.6 5 3.16
------------------- -------------- ----------- ------------ ------------- ---------------
SUKARI GOLD MINE CLEO 933.5 8 4.22
------------------- --------------------------- ------------ ------------- ---------------
SUKARI GOLD MINE CLEO CRSD099 807.3 3 4.11
------------------- -------------- ----------- ------------ ------------- ---------------
SUKARI GOLD MINE CLEO 604.4 1 4.68
------------------- --------------------------- ------------ ------------- ---------------
SUKARI GOLD MINE CLEO CRSD116 1,119.6 4.7 4.40
------------------- -------------- ----------- ------------ ------------- ---------------
SUKARI GOLD MINE CLEO CRSD117 1,121.4 1 4.72
------------------- -------------- ----------- ------------ ------------- ---------------
SUKARI GOLD MINE CLEO CUD128 1,178.3 4 3.58
------------------- -------------- ----------- ------------ ------------- ---------------
SUKARI GOLD MINE CLEO CUD129 1,172.0 4.2 5.74
------------------- -------------- ----------- ------------ ------------- ---------------
SUKARI GOLD MINE CLEO CUD133 1,180.1 1 4.88
------------------- -------------- ----------- ------------ ------------- ---------------
EXPLORATION REVIEW
Côte d'Ivoire
The Group has eleven exploration permits, covering a 3,472km(2)
landholding and a further ten permits under application. The Doropo
Project in north-east Côte d'Ivoire has a 1.35Moz Indicated at
1.3g/t and 0.9Moz Inferred at 1.2g/t resource. The exploration
strategy remains focused on near surface resource growth, targeting
a maiden reserve and completing a Preliminary Economic Assessment
("PEA") by H1 2019. The ABC Project in west Côte d'Ivoire, is
earlier stage greenfield exploration, targeting a maiden resource
by the end of 2018.
The focus in H1 was on developing new prospects within the 7km
radius of the Doropo resource area ("Resource Area"), where the
existing 1.35Moz Indicated at 1.3g/t and 0.9Moz Inferred at 1.2g/t
resource sits, advancing regional Doropo targets within a 35km
radius, and establishing the logistical and geological
infrastructure at the ABC Project.
There was a zero-harm record (LTIFR 0.00) across all project
areas in Côte d'Ivoire during H1. The Group undergoes regular
routine training and a focus on leading indicators to maintain the
highest standards of health and safety.
Doropo Project
In H1 a total of 28,230m (Q2 2018: 13,655m) of reverse
circulation ("RC"), 18,255m of aircore (Q2 2018: 9,799m) and 12,061
of auger drilling (Q2 2018: 9,187m) was completed. The RC drilling
focused on structural extensions within the Resource Area and
earlier stage exploration targets. Multiple structures were
successfully intersected, identifying promising targets for further
work.
Test drilling of strike extensions on the Souwa North structure,
the Chegue Main structure, the Chegue South structure and the
Enioda structure returned positive results. Follow up resource
estimate infill drilling programme commenced along the structures
at the end of Q2. Infill drill results at the less developed Enioda
deposit, confirmed the presence of several new significant
mineralised shoots within the resource and an extension along
strike of oxide continuity to 2km.
As part of the development of new targets in the Resource Area,
several prospects have returned significant results for follow up
drilling from Q3 onwards: The Tchouahinin prospect, following a
re-interpretation of the structural settings and then drill tested,
returned significant mineralisation on the northern side, which
will be a focus for Q3. A new discovery was made, the Hinda
prospect, located between the Souwa and Kekeda deposits. It
includes several narrow-mineralised structures, often hosting
artisanal miners. The first drill results reported for Hinda are
complex but encouraging. A new portion of the interpreted structure
revealed shallow intersections including 7m at 2.7 g/t and 6m at
2.3 g/t. Further drilling will be conducted in Q3.
Outside the current resource area, an infill auger program
commenced along the 8km strike soil anomaly across the Tehini
permits. Results expected in Q3 for further assessment of the
potential on these permits.
Below are the significant drill intercepts reported for the
Doropo Project in Q2. Note. Q1 drill intercepts previously
reported.
Table 3. Q2 2018 Highlights - Doropo Project - Exploration
Significant Drill Intercepts
TENEMENT ID PROSPECT ID HOLE ID From To Interval (m) Grade (Au g/t)
------------- -------------- ---------- ------ ------- ------------- ---------------
Kalamon Chegue Main DPRC2053 97 105 8 1.9
------------- -------------- ---------- ------ ------- ------------- ---------------
Kalamon Chegue Main DPRC2054 26 41 15 3.1
------------- -------------- ---------- ------ ------- ------------- ---------------
Kalamon Chegue Main DPRC2060 92 106 14 1.7
------------- -------------- ---------- ------ ------- ------------- ---------------
Kalamon Chegue Main DPRC2061 129 136 7 1.3
------------- -------------- ---------- ------ ------- ------------- ---------------
Danoa Enioda DPRC0993 9 14 5 2.3
------------- -------------- ---------- ------ ------- ------------- ---------------
Danoa Enioda DPRC0993 28 38 10 1.8
------------- -------------- ---------- ------ ------- ------------- ---------------
Danoa Enioda DPRC0999 69 78 9 1.6
------------- -------------- ---------- ------ ------- ------------- ---------------
Danoa Enioda DPRC1000 100 119 19 1.4
------------- -------------- ---------- ------ ------- ------------- ---------------
Danoa Enioda DPRC2007 20 30 10 2.8
------------- -------------- ---------- ------ ------- ------------- ---------------
Danoa Enioda DPRC2008 48 62 14 1.8
------------- -------------- ---------- ------ ------- ------------- ---------------
Danoa Enioda DPRC2014 94 98 4 2.7
------------- -------------- ---------- ------ ------- ------------- ---------------
Danoa Enioda DPRC2016 106 111 5 2.1
------------- -------------- ---------- ------ ------- ------------- ---------------
Danoa Enioda DPRC2024 52 64 12 2.9
------------- -------------- ---------- ------ ------- ------------- ---------------
Danoa Enioda DPRC2026 67 75 8 8.5
------------- -------------- ---------- ------ ------- ------------- ---------------
Danoa Enioda DPRC2027 94 107 13 1.4
------------- -------------- ---------- ------ ------- ------------- ---------------
Kalamon Hinda DPRC2041 30 37 7 2.7
------------- -------------- ---------- ------ ------- ------------- ---------------
Kalamon Hinda DPRC2042 59 65 6 2.3
------------- -------------- ---------- ------ ------- ------------- ---------------
Kalamon Kekeda DPRC0974 84 87 3 3.9
------------- -------------- ---------- ------ ------- ------------- ---------------
Kalamon Kekeda DPRC0980 12 15 3 3.4
------------- -------------- ---------- ------ ------- ------------- ---------------
Kalamon Kekeda DPRC0983 5 8 3 6.0
------------- -------------- ---------- ------ ------- ------------- ---------------
Kalamon Tchouahinin DPRC2046 60 66 6 2.5
------------- -------------- ---------- ------ ------- ------------- ---------------
Kalamon Chegue South DPDD1429 88.4 91.8 3.4 2.6
------------- -------------- ---------- ------ ------- ------------- ---------------
Kalamon Chegue South DPDD1429 101 107 6 1.4
------------- -------------- ---------- ------ ------- ------------- ---------------
Kalamon Chegue South DPDD1429 118 121 3 2.1
------------- -------------- ---------- ------ ------- ------------- ---------------
Kalamon Chegue South DPDD1430 103 111.5 8.5 1.5
------------- -------------- ---------- ------ ------- ------------- ---------------
Kalamon Chegue South DPDD1432 140 148.75 8.75 1.5
------------- -------------- ---------- ------ ------- ------------- ---------------
Kalamon Chegue South DPDD1432 162.3 165.8 3.5 1.9
------------- -------------- ---------- ------ ------- ------------- ---------------
Kalamon Han DPDD1433 95 102 7 23.4
------------- -------------- ---------- ------ ------- ------------- ---------------
Kalamon Han DPDD1434 89 96.8 7.8 1.6
------------- -------------- ---------- ------ ------- ------------- ---------------
Kalamon Han DPDD1435 108 121 13 1.3
------------- -------------- ---------- ------ ------- ------------- ---------------
Kalamon Nokpa DPDD1425 97.7 106 8.3 2.1
------------- -------------- ---------- ------ ------- ------------- ---------------
Kalamon Nokpa DPDD1425 113 136.9 23.9 2.0
------------- -------------- ---------- ------ ------- ------------- ---------------
Kalamon Nokpa DPDD1426 96 125 29 2.5
------------- -------------- ---------- ------ ------- ------------- ---------------
Kalamon Nokpa DPDD1427 186.7 191 4.3 6.2
------------- -------------- ---------- ------ ------- ------------- ---------------
Kalamon Nokpa DPDD1427 195 228 33 1.6
------------- -------------- ---------- ------ ------- ------------- ---------------
Kalamon Nokpa DPDD1427 255.4 265 9.6 1.1
------------- -------------- ---------- ------ ------- ------------- ---------------
ABC "Archaean-Birimian Contact" Project
During Q2, both the reconnaissance auger grid and the GAIP
survey were completed across the entire length of the Lolosso
structure in the Kona permit. There is strong correlation between
the GAIP imagery and the gold plus multi-elements results from the
auger, with surface anomalism now expressed over the entire 21km
strike length of the permit. Multiple sub-parallel mineralised
zones have been identified and they will be drill tested from the
fourth quarter ("Q4").
Geologically, the Lolosso structure, is a N-S striking, 300m to
800m wide corridor of calc-silicates and detrital Birimian
sediments sandwiched between granitoids (inferred to be of Archaean
age) to the west and paragneiss on the east. The eastern footwall
contact is a major structural and metamorphic feature which appears
to control the regional setting of the gold mineralisation.
The gold mineralisation is mostly hosted by the detrital
sediments and the gold appears to be associated with a widely
disseminated fine crystalline arsenopyrite. Preliminary
metallurgical test work conducted by Veritas Labs using commercial
1Kg BLEG analysis has shown the Lolosso fresh material to have no
metallurgical issues. A larger sample of fresh material, composited
from HQ drill core drilled in Q1, was shipped to AMMTEC (Perth) at
the end of Q2 for detailed test work.
A total of 1,247m of coring (completion of the program started
in Q1), 2,364m of RC drilling (beginning of a systematic program)
and 8,916m (Q2 2018: 5,832m) of auger drilling was completed. A
total of 4,261m of diamond drilling was completed, with 2,716m
drilled in early Q2 as calibration drilling to better understand
the geology across the Lolosso structure.
Below are the significant drill intercepts reported for ABC
Project in Q2. Note. Q1 drill intercepts previously reported.
Table 4. Q2 2018 Highlights - ABC Project - Exploration
Significant Drill Intercepts
TENEMENT ID PROSPECT ID HOLE ID From To Interval (m) Grade (Au g/t)
------------- ------------- ---------- ------- ------- ------------- ---------------
Kona Lolosso KNDD0001 112.05 135.95 23.9 1.2
------------- ------------- ---------- ------- ------- ------------- ---------------
Kona Lolosso KNDD0001 154 162.25 8.25 1.5
------------- ------------- ---------- ------- ------- ------------- ---------------
Kona Lolosso KNDD0001 174.7 191.8 17.1 1.6
------------- ------------- ---------- ------- ------- ------------- ---------------
Kona Lolosso KNDD0002 102 155 53 1.2
------------- ------------- ---------- ------- ------- ------------- ---------------
Kona Lolosso KNDD0002 158 173.4 15.4 1.0
------------- ------------- ---------- ------- ------- ------------- ---------------
Kona Lolosso KNDD0004 163 170.8 7.8 3.2
------------- ------------- ---------- ------- ------- ------------- ---------------
Kona Lolosso KNDD0004 173 202 29 1.2
------------- ------------- ---------- ------- ------- ------------- ---------------
Kona Lolosso KNDD0005 87 101.9 14.9 0.9
------------- ------------- ---------- ------- ------- ------------- ---------------
Kona Lolosso KNDD0005 110 162 52 0.6
------------- ------------- ---------- ------- ------- ------------- ---------------
In parallel with the drilling, a soil sampling program was
started on the Farako-Nafana permit along the interpreted northern
strike extension of the Lolosso structure.
Exploration drilling through H2 2018 will focus on elevating our
Lolosso deposits to an inferred resource classification. The auger
drilling will complete the infill of the regional grid in Q3 and
provide further targets to drill test from Q4 onwards.
Burkina Faso
The Group's Batie West project in south-west Burkina Faso
comprises one exploitation (mining) licence and nine exploration
permits (including one permit for which notification of grant has
been received) which cover a total of approximately 1,100km(2) .
The 64km(2) Konkera exploitation permit holds a NI43-101 compliant
Indicated resource of 1.9Moz at a grade of 1.7g/t in addition to
Inferred resources of 1.3Moz at a grade of 1.7g/t. Beyond Konkera,
the Group's drill programmes have identified significant additional
potential resources across the exploration areas, most notably at
Napelapera (ca. 10km south of Konkera), and Wadarado (ca. 35km
north of Konkera).
As part of the ongoing review of the project, two exploration
permits were relinquished during Q2 and notification of granting of
the Amimbiri permit was received. The Amimbiri permit surrounds the
northern extension and western border of the Konkera exploitation
licence area. Amimbiri replaces the exploration grounds of the
previously converted Tiopolo permit. A further review of the land
holding will be undertaken as part of the scoping study, which may
result in applications being made to secure additional exploitation
licence areas and, if appropriate, relinquishing further
exploration permits.
With desktop work being undertaken, with the assistance from
Cube Consulting, exploration work at Batie West during H1 2018
focused on trenching, geochemical work and Aircore
reconnaissance-drilling with a view to identifying strike
extensions and potential secondary gold structures alongside the
principal deposits in Konkera and Napelapera and generating new
targets for additional near-surface oxide mineralisation in
peripheral permit areas.
There was a zero-harm rate (LTIFR 0.00) across all project areas
in Burkina Faso during H1 2018. The Group undergoes regular routine
training and a focus on leading indicators to maintain the highest
standards of health and safety.
FINANCIAL REVIEW
The condensed consolidated financial statements have been
prepared in accordance with International Financial Reporting
Standards ("IFRS") as adopted for use by the European Union and in
accordance with the Companies (Jersey) Law 1991.
Now in its ninth year of production, Sukari remains cash
generative and this is reflected in the Group's financial results
for the six months ended 30 June 2018:
-- Revenue of US$296.4 million, a 2% increase compared to H1
2017 ("YoY") (six months ended 30 June 2017: US$292.0 million);
Gold sales of 228,672 ounces, a 3% decrease YoY. Average realised
gold price of US$1,316 per ounce approximately 7% increase YoY;
-- EBITDA(1,2,4) of US$129.7 million, a 16% increase YoY,as a
result of higher revenue and lower cash costs of production offset
by an increase of 4% in other operating costs and an increase of
20% in exploration and evaluation costs, please note the change in
accounting policy where all greenfield exploration costs are now
being expensed as incurred;
-- In line with the Group's updated accounting policy, operating
costs include greenfield exploration expenses of US$11.8 million
(2017 figures have been restated to include US$9.8 million of
exploration expenditure);
-- Profit before tax(4) of US$80.4 million, a 34% increase YoY,
due to the factors outlined above;
-- Basic earnings per share after profit share(2) ("EPS") of
3.88 US cents, a 136% increase YoY, due to higher revenue, lower
cost of sales and lower profit share partially offset by increased
other operating costs and exploration and evaluation costs (six
months ended 30 June 2017: 1.64 US cents);
-- Operational cash flow of US$122.7 million, a 2% decrease YoY,
due to increased revenues and lower cash operating costs per ounce
sold;
-- Cash flow generation with US$36.1 million of free cash
flow(1) generated, down 29% YoY (six months ended 30 June 2017:
US$50.9 million) due to the impact of the factors outlined
above;
-- Cash costs of production(1,2) of US$135.9 million, a 13%
decrease in cost profile YoY, resulting in a unit cost of US$637
per ounce produced, a 5% decrease YoY;
-- AISC(1,2) of US$209.2 million, a 3% increase YoY, resulting
in a unit cost of US$930 per ounce sold, a 9% increase YoY, mainly
due to higher unit production costs, higher sustaining capital
costs resulting from the scheduled fleet rebuild programme and
lower gold ounces sold YoY;
-- Royalties of US$9.0 million to Arab Republic of Egypt ("ARE")
and profit share(1) of US$39.3 million paid to Egyptian Minerals
Resources Authority ("EMRA"), our state partners;
-- Gross capital expenditure of US$53.9 million, a 56% increase
YoY, in line with the US$113 million(4) budgeted for the full
year;
-- Cash and liquid assets(1,3) of US$303.3 million at 30 June
2018, the Company remains debt-free and unhedged; and
-- Consistent with the dividend policy, the Board declares an
interim dividend of 2.5 US cents per share ("Interim Dividend"),
US$28.9 million, and equivalent to returning 80% of free cash flow
generated in H1.
____________________________________________________________________________________________________________
(1) Cash cost of production, AISC, EBITDA and cash, bullion on
hand, gold sales receivables, financial assets at fair value
through other comprehensive income and free cash flow are non-GAAP
measures, please refer to pages 16-18.
(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 8 of the
financial statements for further details).
(3) Cash and cash equivalents, bullion on hand, gold sales
receivables and financial assets at fair value through other
comprehensive income.
(4) The Group accounting policy for greenfield exploration
expenditure, has been updated in line with market practice. For
full details, please refer to Note 1 of the Financial
Statements.
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 of US$303.3 million,
as at 30 June 2018, ahead of the interim dividend payout of 2.5 US
cents per share which equates to US$28.9 million on 28 September
2018.
Revenue
Revenue from gold and silver sales for the period increased by
2% to US$296.4 million (US$292.0 million in six months ended 30
June 2017), with a 7% increase in the average realised gold sales
price to US$1,316 per ounce (US$1,235 per ounce for the six months
ended 30 June 2017) and a 3% decrease in gold sold to 228,672
ounces (235,964 ounces in the six months ended 30 June 2017).
Cost of sales
Cost of sales represents the cost of mining, processing,
refining, transport, site administration, depreciation,
amortisation and movement in production inventories. Cost of sales
is inclusive of US$24.6 million categorised as fuel pre-payments
(refer to Note 8 of the financial statements for further
information) and is down 8% compared with the six months ended 30
June 2017 to US$191.9 million, mainly as a result of:
-- A positive movement in inventory adjustment of US$16.3
million compared to negative movement in inventory adjustment of
US$5.3 million in the six months ended 30 June 2017 reflecting the
significant increase in ore stockpiles over H1;
-- 3% increase in total mine production costs from US$151.6
million to US$156.7 million, due to a 7% increase in mined tonnes
combined with a 5% 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$52.7 million in the six months ended 30 June 2017 to US$51.6
million at 30 June 2018 due to lower production effecting
amortisation rates and US$37.3 million of additions (excl. capital
work in progress) which increased 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 ARE. Other operating costs
increased by US$0.6 million or 4% from US$14.0 million in the six
months ended 30 June 2017 to US$14.6 million in the six months
ended 30 June 2018, mainly as a result of:
-- US$1.2 million increase in net foreign exchange gains (-ve);
-- US$0.3 million increase in royalty paid to the government of
the ARE in line with the increase in gold sales revenue (+ve);
-- US$1.2 million decrease in inventory obsolescence costs (-ve);
-- US$2.4 million increase in corporate and other costs (+ve)
mainly due to increased payroll and compliance costs; and
-- US$0.3 million increase in other expenses (+ve).
Exploration and evaluation expenditure
Exploration and evaluation expenditure comprise expenditure
incurred for exploration activities in Côte d'Ivoire and Burkina
Faso. Exploration and evaluation costs increased by US$2.0 million
or 20% from US$9.8 million in the six months ended 30 June 2017 to
US$11.8 million in the six months ended 30 June 2018. These
expenses are now shown on the income statement after the change in
accounting policy regarding the treatment of Greenfield exploration
and evaluation costs, please refer to note 1 of the financial
statements for the change in accounting policy regarding
exploration and evaluation expenditure.
Finance income
Finance income comprises interest income 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, Centamin recorded a
profit before tax for the six months ended 30 June 2018 of US$80.4
million (six months ended 30 June 2017: US$60.0 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 expense of US$0.01 million for the six months
ended 30 June 2018 was associated with timings in income taxes
provisions and charges.
EMRA profit share
During the six months ended 30 June 2018, US$39.3 million was
paid as profit share payments to the Egyptian Mineral Resources
Authority ("EMRA").
Profit share payments made to EMRA, pursuant to the provisions
of the Concession Agreement, are recognised as a variable charge in
the income statement (below profit after tax) of Centamin,
resulting in a reduction in earnings per share. The profit share
payments during the year will be reconciled against SGM's audited
June financial statements. Any variation between payments made
during the year (which are based on the Company's estimates) and
the audited financial statements, may result in a balance due and
payable to EMRA or advances to be offset against future
distributions.
Earnings per share
Earnings per share (after profit share) of 3.88 US cents for the
six months ended 30 June 2018 increased when compared with the same
period in 2017 of 1.64 US cents. The increase was driven by the
factors outlined above.
Comprehensive income
Other comprehensive income movement was the result of the
revaluation of financial assets at fair value through other
comprehensive income to US$nil.
Financial position
Centamin has a strong and flexible financial position with no
debt, no hedging and cash, bullion on hand, gold sales receivables
and financial assets of US$303.3 million at 30 June 2018 (30 June
2017: US$333.6 million).
As at As at As at
30 June 31 March 30 June
2018 2018 2017
US$'000 US$'000 US$'000
------------------------------------------- --------- --------- ---------
Cash and cash equivalents (note 20) 282,764 395,579 296,980
Bullion on hand (valued at the period-end
spot price) 11,565 18,631 17,116
Gold and silver sales debtor (note 6) 8,926 12,299 19,407
Financial assets at fair value through
other comprehensive income (note 11) - - 125
------------------------------------------- --------- --------- ---------
Cash and cash equivalents, bullion on
hand, gold sales receivables
and available--for--sale financial
assets 303,255 426,509 333,628
------------------------------------------- --------- --------- ---------
The majority of funds have been invested in international
rolling short-term interest money market deposits.
Current assets have decreased by US$89.2 million or 18% from
US$509.3 million at 31 December 2018 to US$420.1 million at 30 June
2018, as a result of:
-- US$8.6 million increase (+ve) in inventory driven by a US$8.9
million decrease (-ve) in collective stores inventory (due to cost
reduction and minimisation initiatives), a US$16.3 million increase
(+ve) in overall combined mining stockpiles and gold in circuit
levels and a US$1.2 million decrease in the provision for obsolete
stores inventory (+ve);
-- US$22.1 million decrease in trade and other receivables
(including gold sale receivables) (-ve);
-- US$1.3 million increase in prepayments (+ve);
-- US$0.1 million decrease in the financial assets at fair value
through other comprehensive income (-ve); and
-- US$76.9 million decrease in net cash (net of foreign exchange
movements) (-ve) driven by the profit for the period less the
payment of the 2017 final dividend of US$115.6 million and a
US$39.2 million payment to EMRA as profit share during the half
year.
Non--current assets have decreased by US$2.0 million or 0.2% to
US$913 million, as a result of:
-- US$48.0 million increase in the cost of property, plant and equipment (+ve);
-- US$51.6 million charge for depreciation and amortisation (-ve); and
-- US$1.6 million decrease in exploration and evaluation assets,
as a result of the drilling programmes in Sukari Hill (-ve). With
the change in accounting policies all Greenfield exploration is no
longer capitalised to the balance sheet and this has been
retrospectively restated.
Current liabilities have decreased by US$22.5 million or 34% to
US$43.9 million, as a result of:
-- US$9.9 million decrease in trade payables and a US$10.8 million decrease in accruals (-ve);
-- US$0.5 million decrease in tax liabilities accrued during the period (-ve); and
-- US$1.3 million decrease in current provisions primarily
driven by a US$5.1 million increase in the fuel provision, a US$4.3
million decrease in withholding tax, customs and rebate provisions
and a US$2.1 million decrease in employee benefit provisions held
at period end (-ve).
Non--current liabilities have increased by US$0.6 million to
US$11.7 million as a result of an increase in the rehabilitation
provision.
There has been a 2.615 million increase in the number of issued
shares over the period due to share-based payment awards
vesting.
Share option reserves reported have decreased by US$0.2 million
to US$4.2 million as result of the vesting of the 2015 RSP awards
on 4 June 2018 offset by the recognition of the share--based
payment expenses for the period and new share-based payment awards
granted in 2018.
Accumulated profits decreased by US$71.2 million to US$602.8
million as a result of:
-- US$80.4 million profit for the period after tax (+ve); offset by
-- US$35.8 million profit share charge to EMRA in the period (-ve);
-- US$115.6 million 2017 shareholder approved final dividend (-ve); and
-- US$0.2 million decrease in the value of the available-of-sale financial asset (-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$3.1 million to US$122.7
million for the six months ended 30 June 2018 compared to the six
months ended 30 June 2017, primarily attributable to the increase
in revenue, driven by a decrease in ounces sold offset by a higher
average realised price, as well as an decrease 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
increased by US$13.5 million for the six months ended 30 June 2018
to US$47.3 million from US$33.8 million in the six months ended 30
June 2017. The primary use of the funds in the period was for
purchase of property, plant and equipment and investment in
underground development at the Sukari site in Egypt.
Net cash flows used in financing activities decreased by US$41.7
million in the six months ended 30 June 2018 to US$154.9 million
(from US$196.6 million in the six months ended 30 June 2017) due to
US$39.8 million decrease in dividends being paid in 2018 relating
to the 2017 final dividend, and a US$1.9 million decrease in
payments to EMRA as profit share.
Effects of exchange rate changes have increased by US$0.9
million as a result of movements of the currencies used across the
operations in the year.
Capital expenditure
The following table provides a breakdown of the total capital
expenditure of the group during Q2 2018:
Quarter ended Quarter Half year Half year
30 June ended ended ended
30 June 30 June 30 June
2018 2017 2018 2017
US$'000 Restated US$'000 Restated
US$'000 US$'000
------------------------------ -------------- --------- ---------- ----------
Underground exploration 1,522 1,364 3,383 2,352
Underground mine development 9,198 8,084 19,150 15,451
Other sustaining capital
expenditure 16,266 8,452 28,851 12,990
------------------------------ -------------- --------- ---------- ----------
Total sustaining capital
expenditure 26,986 17,900 51,384 30,793
------------------------------ -------------- --------- ---------- ----------
Non-sustaining exploration
capitalised(1) (2) 1,812 1,393 2,493 3,657
(1) Only includes US$1.8 million of Sukari expenditure relating
to Cleopatra in non-sustaining capital expenditure.
(2) Please refer to note 1 of the financial statements for the
change in accounting policy regarding exploration and evaluation
expenditure.
Cumulative exploration expenditure capitalised for Cleopatra at
Sukari is US$10.1 million (project to date) offset by
pre-production net revenues of US$9.2 million (refer to notes 2 and
3 to the financial statements for further details) resulting in
US$0.9 million remaining on the statement of financial position at
30 June 2018.
Exploration expenditure
The following table provides a breakdown of the total
exploration expenditure of the group during Q2 2018:
Quarter ended Quarter Half year Half year
30 June ended ended ended
30 June 30 June 30 June
2018 2017 2018 2017
US$'000 Restated US$'000 Restated
US$'000 US$'000
------------------------------- -------------- --------- ---------- ----------
Burkina Faso 951 1,548 3,664 3,409
Côte d'Ivoire 3,869 3,457 8,168 6,413
Sukari Tenement 1,522 1,364 3,383 2,352
Cleopatra 1,812 1,393 2,493 3,657
------------------------------- -------------- --------- ---------- ----------
Total exploration expenditure 8,154 7,762 17,708 15,831
------------------------------- -------------- --------- ---------- ----------
Exploration and evaluation assets - impairment
considerations
As discussed in note 10 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 30 June 2018.
Exchange rates
Foreign exchange gains/(losses) have increased from a US$1.8
million gain to a US$2.9 million gain, resulting in a US$1.1
million increase on the six months ended 30 June 2017.
FINANCIAL REVIEW
Non--GAAP financial measures
Four non--GAAP financial measures are used in this report:
1) EBITDA
EBITDA is a non--GAAP financial measure, which excludes the
following from profit before tax:
-- Finance costs;
-- Finance income; and
-- Depreciation and amortisation.
Management believes that EBITDA is a valuable indicator of the
group's ability to generate liquidity by producing operating cash
flow to fund working capital needs and fund capital expenditures.
EBITDA is also frequently used by investors and analysts for
valuation purposes whereby EBITDA is multiplied by a factor or
"EBITDA multiple" that is based on an observed or inferred
relationship between EBITDA and market values to determine the
approximate total enterprise value of a company. EBITDA is intended
to provide additional information to investors and analysts and
does not have any standardised definition under IFRS and should not
be considered in isolation or as a substitute for measures of
performance prepared in accordance with IFRS. EBITDA excludes the
impact of cash cost of production and income of financing
activities and taxes, and therefore is not necessarily indicative
of operating profit or cash flow from operations as determined
under IFRS. Other companies may calculate EBITDA differently. The
following table provides a reconciliation of EBITDA to profit for
the period before tax.
Reconciliation of profit before tax to EBITDA:
Quarter Quarter Half year Half year
ended ended ended ended
30 June 30 June 30 June 30 June
2018(1) 2017(1) 2018(1) 2017(1)
US$'000 Restated US$'000 Restated
US$'000 US$'000
------------------------------ -------- -------- --------- ---------
Profit before tax 21,977 35,365 80,376 60,014
Finance income (1,319) (646) (2,246) (996)
Depreciation and amortisation 25,115 28,785 51,598 52,727
------------------------------ -------- -------- --------- ---------
EBITDA 45,773 63,504 129,728 111,745
------------------------------ -------- -------- --------- ---------
(1) Profit before tax, depreciation and amortisation and EBITDA
includes a charge to reflect the removal of fuel subsidies (refer
to note 8 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 the '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:
Quarter ended Quarter Half year Half year
ended ended ended
30 June 30 June 30 June 30 June
2018(1) 2017(1) 2018(1) 2017(1)
------------------------------------ --------- ----------- --------- ----------- -------------
Mine production costs (note
3) US$'000 75,817 76,186 156,739 151,639
Less: Refinery and transport US$'000 (347) (319) (737) (697)
Movement of inventory(1) US$'000 (10,840) 98 (20,060) 5,140
------------------------------------ --------- ----------- --------- ----------- -------------
Cash cost of production
- gold produced US$'000 64,630 75,965 135,942 156,082
Gold produced - Total (oz.)
(Excluding Cleopatra) oz 90,458 124,640 213,284 233,827
Cash cost of production
per ounce produced US$/oz 714 609 637 668
------------------------------------ --------- ----------- --------- ----------- -------------
(1) The movement in inventory on ounces produced is only the movement
on mining stockpiles and ore in circuit while the movement on ounces
sold is the net movement on mining stockpiles, ore in circuit and
gold in safe inventory.
A reconciliation has been included below to show the cash cost
of production metric should gold sold ounces be used as a denominator.
Reconciliation of cash cost of production per ounce sold:
Quarter Quarter Half year Half year
ended ended ended ended
30 June 30 June 30 June 30 June
2018(1) 2017(1) 2018(1) 2017(1)
------------------------------------ --------- ----------- --------- ----------- -------------
Mine production costs (note
3)(1) US$'000 75,817 76,186 156,739 151,639
Royalties US$'000 3,808 4,529 9,027 8,739
Movement in inventory(2) US$'000 (8,293) (1,421) (16,308) 5,265
------------------------------------ --------- ----------- --------- ----------- -------------
Cash cost of production
- gold sold(1) US$'000 71,332 79,294 149,458 165,643
------------------------------------ --------- ----------- --------- ----------- -------------
Gold sold - Total (oz.)
(Excluding Cleopatra) oz 95,283 120,912 224,858 235,964
Cash cost of production
per ounce sold US$/oz 749 656 665 702
------------------------------------ --------- ----------- --------- ----------- -------------
(1) Mine production costs and cash cost of production includes a
charge to reflect the removal of fuel subsidies (refer to note 8 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:
Quarter Quarter Half year Half year
ended ended ended ended
30 June 30 June 30 June 30 June
2018(1) 2017(1) 2018(1) 2017(1)
------------------------------- -------- -------- -------- --------- ---------
Mine production costs
(note 3)(1) US$'000 75,817 76,186 156,739 151,639
Movement in inventory US$'000 (8,293) (1,421) (16,308) 5,265
Royalties US$'000 3,808 4,529 9,027 8,739
Corporate administration
costs US$'000 3,919 3,044 8,463 6,053
Rehabilitation costs US$'000 217 157 435 314
Sustaining underground
development and exploration US$'000 10,721 9,448 22,533 17,804
Other sustaining capital
expenditure US$'000 16,266 8,452 28,851 12,990
By--product credit US$'000 (244) (207) (590) (539)
All--in sustaining costs(1)(2) US$'000 102,212 100,188 209,150 202,265
Gold sold - Total (oz.)
(Excluding Cleopatra sales
capitalised) oz 95,282 120,912 224,858 235,964
AISC per ounce sold(1) US$/oz 1,073 829 930 857
------------------------------- -------- -------- -------- --------- ---------
(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 8 to the financial statements for further
details).
(2) Includes refinery and transport.
3) Cash and cash equivalents, bullion on hand, gold sales
receivables and financial assets at fair value through other
comprehensive income
Cash and cash equivalents, bullion on hand, gold sales
receivables and financial assets at fair value through other
comprehensive income is a non-GAAP financial measures. Cash and
cash equivalents, bullion on hand, gold sales receivables and
financial assets at fair value through other comprehensive income
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 financial assets at fair value
through other comprehensive income 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 financial assets at fair value through
other comprehensive income:
As at As at
30 June 30 June
2018 2017
US$'000 US$'000
---------------------------------------------------------------------------- -------- --------
Cash and cash equivalents (note 20) 282,764 296,980
Bullion on hand (valued at the period end spot price) 11,565 17,116
Gold sales receivable (note 6) 8,926 19,407
Financial assets at fair value through other comprehensive income (note 11) - 125
---------------------------------------------------------------------------- -------- --------
Cash and cash equivalents, bullion on hand, gold sales receivables
and financial assets at fair value through other comprehensive income 303,255 333,628
---------------------------------------------------------------------------- -------- --------
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.
Quarter Quarter Half year Half year
ended ended ended ended
30 June 30 June 30 June 30 June
2018 2017 2018 2017
Restated Restated
US$'000 US$'000 US$'000 US$'000
-------------------------------------- --------- --------- --------- ---------
Net cash generated from operating
activities 37,247 72,707 122,662 125,790
Less:
Net cash used in investing activities (24,827) (18,962) (47,321) (33,770)
EMRA profit share payments (10,826) (22,513) (39,266) (41,153)
-------------------------------------- --------- --------- --------- ---------
Free cash flow 1,594 31,232 36,075 50,867
-------------------------------------- --------- --------- --------- ---------
RISK REVIEW
Principal Risks
The operations of the Company are speculative due to the
high-risk nature of its business which includes the acquisition,
financing, exploration, development and operation of mining
properties. These risk factors could materially affect the
Company's future operations and could cause actual events to differ
materially from those described in forward-looking statements
relating to the Company.
There have been no changes in the Company's risks and
uncertainties during the quarter and half year ended 30 June 2018
from those described in the Group's annual management discussion,
analysis and business review for the year ended 31 December 2017 on
pages 30 to 37 of the 2017 Annual Report, available on the Company
website at www.centamin.com/investors/reports/2018, and the Company
does not anticipate any changes in the Company's risks and
uncertainties during the next six months to 31 December 2018. The
key principal risks relate to the following:
-- Single project dependency
-- Sukari Project joint venture risk and relationship with EMRA
-- Gold price
-- Jurisdictional taxation exposure
-- Political risk - Sukari
-- Political risk - West Africa
-- Exploration development
-- Reserve and resource estimations
-- Failure to achieve production estimates
-- Litigation
Centamin takes a number of measures to mitigate risks associated
with its underlying operational and exploration activity which are
monitored and evaluated regularly. Due to the nature of these
inherent risks, it is not possible to give absolute assurance that
mitigating actions will be wholly effective. The Company is exposed
to changes in the economic environment through its operations in
Egypt, as well as its operations in West Africa (Burkina Faso and
Côte d'Ivoire). Relationships with governments and the maintenance
of exploration permits and licence areas remain key risks and a key
focus for all exploration, development and operational
projects.
Following production re-guidance in May of this year the
controls, mitigation and consequences associated with the principal
risk relating to the 'achievement of production estimates' have
been assessed by the board and remain an area for increased
scrutiny and assessment for the remainder of the year.
One of the Company's main objectives is to achieve a target of
zero injuries and for every employee to be safe every day. The
control environment and operating practices in place at the mining
and exploration operations helps reduce the likelihood of harm to
employees. Centamin is committed to attracting, energising,
developing and training its workforce to ensure they are highly
skilled and motivated.
Centamin recognises the value of being a socially responsible
employer and the importance of engaging with the wider community in
the areas in which it operates. By investing in the community and
engaging in projects that directly and positively impact local
people, Centamin can foster a cooperative working environment.
Legal Developments in Egypt
Concession Agreement Appeal
All material has been submitted by the Company to the courts.
The appeal has been stayed pending the decision on Law No. 32 as
referred to below. Consequently, there will be no further hearings
on the Concession Agreement Appeal until a judgment is given on the
Law No. 32 Appeal in the Supreme Constitutional Court. Note. The
Law No. 32 Appeal is independent from the Group and neither Pharaoh
Gold Mine ("PGM") nor Sukari Gold Mine ("SGM") are a party.
The Law No. 32 Appeal is awaiting the State Commissioner to
submit their report to the Supreme Constitutional Court. This is
expected in H1 2019 but subject to change.
Law No. 32 is legislation, enforced and ratified by Parliament
in 2014. The law is designed to protect and encourage foreign
investment in the Arab Republic of Egypt ("ARE") by restricting the
capacity for third parties to challenge contractual agreements
between the Egyptian government and an investor.
Diesel Fuel Oil Litigation
All required documentation has been submitted by the Company to
the courts. EGPC, the counterparty, has the opportunity to submit
the requested documentation before the Court can deliver a
judgment.
Andrew Pardey
Chief Executive Officer
2 August 2018
Set out below are the unaudited consolidated Financial
Statements for the Group, including notes thereto, for the quarter
and six months ended 30 June 2018.
DIRECTORS' RESPONSIBILITY STATEMENT
RESPONSIBILITY STATEMENT OF THE DIRECTORS IN RESPECT OF THE
QUARTER AND SIX MONTHSED 30 JUNE 2018 FINANCIAL REPORT
We confirm that to the best of our knowledge:
(a) the condensed set of interim consolidated financial
statements for the quarter and six months ended 30 June 2018 has
been prepared in accordance with International Accounting Standard
34 'Interim Financial Reporting' as adopted by the European
Union;
(b) the condensed set of interim consolidated financial
statements, which has been prepared in accordance with the
applicable set of accounting standards, gives a true and fair view
of the assets, liabilities, financial position and profit or loss
of the issuer, or the undertakings included in the consolidation as
a whole as required by DTR 4.2.4;
(c) the interim management report includes a fair review of the
information required by DTR 4.2.7R (indication of important events
during the first six months and description of principal risks and
uncertainties for the remaining six months of the year); and
(d) the interim management report includes a fair review of the
information required by DTR 4.2.8R (disclosure of related parties'
transactions and changes therein).
The board of directors that served during all or part of the
quarter and six month period ended on 30 June 2018 and their
respective responsibilities can be found on pages 82 to 93 of the
2017 annual report of Centamin plc.
By order of the Board,
Chief Executive Officer Chief Financial Officer
Andrew Pardey Ross Jerrard
2 August 2018 2 August 2018
UNAUDITED INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE QUARTER AND SIX MONTHSED
30 JUNE 2018
Independent review report to Centamin plc
Report on the interim financial statements
Our conclusion
We have reviewed Centamin plc's unaudited interim condensed
consolidated financial statements (the "interim financial
statements") in the interim results of Centamin plc for the six
month period ended 30 June 2018. Based on our review, nothing has
come to our attention that causes us to believe that the interim
financial statements are not prepared, in all material respects, in
accordance with International Accounting Standard 34, 'Interim
Financial Reporting', as adopted by the European Union and the
Disclosure Guidance and Transparency Rules sourcebook of the United
Kingdom's Financial Conduct Authority.
What we have reviewed
The interim financial statements comprise:
-- the unaudited interim condensed consolidated statement of
financial position as at 30 June 2018;
-- the unaudited interim condensed consolidated statement of
comprehensive income for the six month period then ended;
-- the unaudited interim condensed consolidated statement of
cash flows for the six month period then ended;
-- the unaudited interim condensed consolidated statement of
changes in equity for the six month period then ended; and
-- the explanatory notes to the interim financial statements.
The interim financial statements included in the interim results
for the six month period ended 30 June 2018 have been prepared in
accordance with International Accounting Standard 34, 'Interim
Financial Reporting', as adopted by the European Union and the
Disclosure Guidance and Transparency Rules sourcebook of the United
Kingdom's Financial Conduct Authority. As disclosed in note 1 to
the interim financial statements, the financial reporting framework
that has been applied in the preparation of the full annual
financial statements of the Group is applicable law and
International Financial Reporting Standards (IFRSs) as adopted by
the European Union.
Responsibilities for the interim financial statements and the
review
Our responsibilities and those of the directors
The interim results for the six month period ended 30 June 2018,
including the interim financial statements, is the responsibility
of, and has been approved by, the directors. The directors are
responsible for preparing the interim results for the six month
period ended 30 June 2018 in accordance with the Disclosure
Guidance and Transparency Rules sourcebook of the United Kingdom's
Financial Conduct Authority.
Our responsibility is to express a conclusion on the interim
financial statements in the interim results for the six month
period ended 30 June 2018 based on our review. This report,
including the conclusion, has been prepared for and only for the
company for the purpose of complying with the Disclosure Guidance
and Transparency Rules sourcebook of the United Kingdom's Financial
Conduct Authority and for no other purpose. We do not, in giving
this conclusion, accept or assume responsibility for any other
purpose or to any other person to whom this report is shown or into
whose hands it may come save where expressly agreed by our prior
consent in writing.
What a review of interim financial statements involves
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, 'Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity' issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK) and,
consequently, does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
We have read the other information contained in the interim
results for the six month period ended 30 June 2018 and considered
whether it contains any apparent misstatements or material
inconsistencies with the information in the interim financial
statements.
Other matter
We have not audited nor reviewed the unaudited interim condensed
consolidated statement of comprehensive income for the quarter
ended 30 June 2018; the unaudited interim condensed consolidated
statement of cash flows for the quarter ended 30 June 2018; or any
notes to the interim financial statements presenting information
for the quarter ended 30 June 2018.
PricewaterhouseCoopers LLP
Chartered Accountants
London
2 August 2018
Unaudited interim condensed consolidated statement of
comprehensive income
for the quarter and six months ended 30 June 2018
Quarter Quarter Half year Half year
ended 30 ended 30 ended 30 ended 30
June June June June
2018 2017 2018 2017
(Unaudited) Restated(1) (Unaudited) Restated(1)
(Unaudited) (Unaudited)
Notes US$'000 US$'000 US$'000 US$'000
----------------------------------- ------ ------------- ------------- ------------- -------------
Revenue 2 123,929 151,282 296,391 292,005
Cost of sales 3 (92,562) (103,538) (191,879) (209,606)
----------------------------------- ------ ------------- ------------- ------------- -------------
Gross profit 31,367 47,744 104,512 82,399
Other income 12 424 24 424
Finance income 3 1,319 646 2,246 996
Other operating costs 3 (5,901) (8,445) (14,574) (13,983)
Exploration and evaluation
expenditure (4,820) (5,004) (11,832) (9,822)
Profit for the period
before tax 21,977 35,365 80,376 60,014
Tax 35 (1,098) (10) (1,014)
----------------------------------- ------ ------------- ------------- ------------- -------------
Profit for the period
after tax 22,012 34,267 80,366 59,000
EMRA profit share 4 (6,826) (24,013) (35,766) (40,153)
Profit for the period
after EMRA profit share 15,186 10,254 44,600 18,847
Profit for the period
attributable to:
- the owners of the parent 15,186 10,254 44,600 18,847
----------------------------------- ------ ------------- ------------- ------------- -------------
Other comprehensive income/(loss)
Items that may be reclassified
subsequently to profit
or loss:
Profit/(loss) on financial
assets at fair value
through other comprehensive
income (net of tax) 11 - 1 (125) (91)
----------------------------------- ------ ------------- ------------- ------------- -------------
Other comprehensive income/(loss)
for the period - 1 (125) (91)
----------------------------------- ------ ------------- ------------- ------------- -------------
Total comprehensive income
attributable to:
- the owners of the parent 15,186 10,255 44,475 18,756
----------------------------------- ------ ------------- ------------- ------------- -------------
Earnings per share after
profit share:
Basic (cents per share) 19 1.319 0.892 3.876 1.639
Diluted (cents per share) 19 1.310 0.885 3.850 1.628
----------------------------------- ------ ------------- ------------- ------------- -------------
(1) Restated due to the change in accounting policy, refer to note 1 for further information.
The above unaudited interim condensed consolidated statement of
comprehensive income should be read in conjunction with the
accompanying notes.
Unaudited interim condensed consolidated statement of financial
position
as at 30 June 2018
30 June 31 December 1 January
2018 2017 2017
(Unaudited) Restated(1) Restated(1)
(Unaudited) (Unaudited)
Notes US$'000 US$'000 US$'000
---------------------------------------- ------ ------------- ------------- -------------
Non--current assets
Property, plant and equipment 9 847,502 851,099 868,926
Exploration and evaluation asset 10 65,451 63,885 65,700
Prepayments - - 295
Other receivables 92 96 81
---------------------------------------- ------ ------------- ------------- -------------
Total non--current assets 913,045 915,080 935,002
---------------------------------------- ------ ------------- ------------- -------------
Current assets
Inventories 7 113,836 105,210 128,582
Financial assets at fair value through
other comprehensive income 11 - 125 130
Trade and other receivables 6 12,328 34,467 24,870
Prepayments 8 11,131 9,793 7,508
Cash and cash equivalents 20(a) 282,764 359,680 399,873
---------------------------------------- ------ ------------- ------------- -------------
Total current assets 420,059 509,275 560,963
---------------------------------------- ------ ------------- ------------- -------------
Total assets 1,333,104 1,424,355 1,495,965
---------------------------------------- ------ ------------- ------------- -------------
Non--current liabilities
Provisions 13 11,648 10,961 7,697
---------------------------------------- ------ ------------- ------------- -------------
Total non--current liabilities 11,648 10,961 7,697
---------------------------------------- ------ ------------- ------------- -------------
Current liabilities
Trade and other payables 12 35,865 56,585 47,991
Tax liabilities 3 469 -
Provisions 13 8,001 9,311 3,976
---------------------------------------- ------ ------------- ------------- -------------
Total current liabilities 43,869 66,365 51,967
---------------------------------------- ------ ------------- ------------- -------------
Total liabilities 55,517 77,326 59,664
---------------------------------------- ------ ------------- ------------- -------------
Net assets 1,277,587 1,347,029 1,436,301
---------------------------------------- ------ ------------- ------------- -------------
Equity
Issued capital 14 670,589 668,732 667,472
Share option reserve 15 4,178 4,323 3,048
Accumulated profits 602,820 673,974 765,781
---------------------------------------- ------ ------------- ------------- -------------
Total equity attributable to:
- owners of the parent 1,277,587 1,347,029 1,436,301
---------------------------------------- ------ ------------- ------------- -------------
Total equity 1,277,587 1,347,029 1,436,301
---------------------------------------- ------ ------------- ------------- -------------
(1) Restated due to the change in accounting policy, refer to note 1 for further information.
The above unaudited interim condensed consolidated statement of
financial position should be read in conjunction with the
accompanying notes.
The unaudited interim condensed consolidated financial
statements were approved by the board of directors on 2 August 2018
and signed on its behalf by:
Andrew Pardey Ross Jerrard
Chief executive officer Chief financial officer
2 August 2018 2 August 2018
Unaudited interim condensed consolidated statement of changes in
equity
for the six months ended 30 June 2018
Issued Share option Accumulated Total
capital reserve profits equity
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Notes US$'000 US$'000 US$'000 US$'000
----------------------------------- ------ ------------- ------------- ------------- -------------
Balance as at 1 January 2018 668,732 4,323 778,921 1,451,976
Impact of change in accounting
policy 1 - - (104,947) (104,947)
----------------------------------- ------ ------------- ------------- ------------- -------------
Restated balance as at 1 January
2018 668,732 4,323 673,974 1,347,029
Profit for the period after
tax - - 80,366 80,366
EMRA profit share - - (35,766) (35,766)
Other comprehensive (loss)
for the period - - (125) (125)
----------------------------------- ------ ------------- ------------- ------------- -------------
Total comprehensive income
for the period - - 44,475 44,475
Recognition of share based
payments - 1,712 - 1,712
Transfer of share based payments 1,857 (1,857) - -
Dividend paid - shareholders - - (115,629) (115,629)
Balance as at 30 June 2018 670,589 4,178 602,820 1,277,587
----------------------------------- ------ ------------- ------------- ------------- -------------
Issued Share option Accumulated Total
capital reserve profits equity
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Notes US$'000 US$'000 US$'000 US$'000
----------------------------------- ------ ------------- ------------- ------------- -------------
Balance as at 1 January 2017 667,472 3,048 853,999 1,524,519
Impact of change in accounting
policy 1 - - (88,218) (88,218)
----------------------------------- ------ ------------- ------------- ------------- -------------
Restated balance as at 1 January
2017 667,472 3,048 765,781 1,436,301
Profit for the period after
tax - - 59,000 59,000
EMRA profit share - - (40,153) (40,153)
Other comprehensive (loss)
for the period - - (91) (91)
----------------------------------- ------ ------------- ------------- ------------- -------------
Total comprehensive income
for the period - - 18,756 18,756
Recognition of share based
payments - 1,030 - 1,030
Transfer of share based payments 1,272 (1,272) - -
Dividend paid - shareholders - - (155,437) (155,437)
----------------------------------- ------ ------------- ------------- ------------- -------------
Balance as at 30 June 2017 668,744 2,806 629,100 1,300,650
----------------------------------- ------ ------------- ------------- ------------- -------------
The above unaudited interim condensed consolidated statement of
changes in equity should be read in conjunction with the
accompanying notes.
Unaudited interim condensed consolidated statement of cash
flows
for the quarter and six months ended 30 June 2018
Quarter Quarter Half year Half year
ended 30 ended 30 ended 30 ended 30
June June June June
2018 2017 2018 2017
(Unaudited) Restated(1) (Unaudited) Restated(1)
(Unaudited) (Unaudited)
Notes US$'000 US$'000 US$'000 US$'000
------------------------------- ------ ------------- -------------- ------------- --------------
Cash flows from operating
activities
Cash generated in operating
activities 20(b) 37,247 73,805 123,161 126,781
Income tax refund received - - - 107
Income tax paid - (1,098) (499) (1,098)
Net cash generated by
operating activities 37,247 72,707 122,662 125,790
------------------------------- ------ ------------- -------------- ------------- --------------
Cash flows from investing
activities
Acquisition of property,
plant and equipment (25,464) (16,851) (48,001) (28,757)
Exploration and evaluation
expenditure (682) (2,757) (1,566) (6,009)
Finance income 3 1,319 646 2,246 996
------------------------------- ------ ------------- -------------- ------------- --------------
Net cash used in investing
activities (24,827) (18,962) (47,321) (33,770)
------------------------------- ------ ------------- -------------- ------------- --------------
Cash flows from financing
activities
Dividend paid (115,629) - (115,629) (155,437)
EMRA profit share paid 4 (10,826) (22,513) (39,266) (41,153)
------------------------------- ------ ------------- -------------- ------------- --------------
Net cash used in financing
activities (126,455) (22,513) (154,895) (196,590)
------------------------------- ------ ------------- -------------- ------------- --------------
Net (decrease)/increase
in cash and cash equivalents (114,036) 31,232 (79,555) (104,570)
Cash and cash equivalents
at the beginning of the
period 395,579 265,984 359,680 399,873
Effect of foreign exchange
rate changes 1,221 (236) 2,639 1,677
------------------------------- ------ ------------- -------------- ------------- --------------
Cash and cash equivalents
at the end of the period 20(a) 282,764 296,980 282,764 296,980
------------------------------- ------ ------------- -------------- ------------- --------------
(1) Restated due to the change in accounting policy, refer to note 1 for further information.
The above unaudited interim condensed consolidated statement of
cash flows should be read in conjunction with the accompanying
notes.
Notes to the unaudited interim condensed consolidated financial
statements
for the quarter and six months ended 30 June 2018
NOTE 1: ACCOUNTING POLICIES
Basis of preparation
These unaudited interim condensed consolidated financial
statements have been prepared in accordance with IAS 34 "Interim
Financial Reporting" (IAS 34) as adopted by the European Union and
the requirements of the Disclosure and Transparency Rule sourcebook
(DTR) of the Financial Conduct Authority (FCA) in the United
Kingdom as applicable to interim financial reporting. These
unaudited interim condensed consolidated financial statements are
not affected by seasonality.
The unaudited interim condensed consolidated financial
statements represent a 'condensed set of financial statements' as
referred to in the DTR issued by the FCA. Accordingly, they do not
include all of the information required for a full annual financial
report and are to be read in conjunction with the Group's financial
statements for the year ended 31 December 2017, which were prepared
in accordance with International Financial Reporting Standards
("IFRS") as adopted for use by the European Union. The financial
statements for the year ended 31 December 2017 have been filed with
the Jersey Financial Services Commission. The financial information
contained in this report does not constitute statutory accounts
under the Companies (Jersey) Law 1991, as amended. The financial
information for the year ended 31 December 2017 is based on the
statutory accounts for the year ended 31 December 2017. Readers are
referred to the auditor's report to the Group financial statements
as at 31 December 2017 (available at www.centamin.com).
The accounting policies applied in these interim financial
statements are consistent with those used in the annual
consolidated financial statements for the year ended 31 December
2017 except for the change in accounting policies regarding the
treatment of greenfield exploration costs, see below, and adoption
of new standards and endorsed by the EU which apply for the first
time in 2018 as referred to in the 31 December 2017 Annual Report.
The new pronouncements, IFRS 9 and IFRS 15, do not have a
significant impact on the accounting policies, methods of
computation or presentation applied by the Group, however the
change in accounting policy does have a significant impact and
therefore the prior period consolidated financial statements have
been restated. IFRS 16 is only effective from 1 January 2019 and
its impact on the financial statements is currently being assessed.
The Group has not early adopted any amendments, standards or
interpretations that have been issued but are not yet
effective.
The preparation of these interim condensed consolidated
financial statements requires the use of certain significant
accounting estimates and judgements by management in applying the
Group's accounting policies. There have been no changes to the
areas involving significant judgement and estimates that have been
set out in Note 4 of the Group's annual audited consolidated
financial statements for the year ended 31 December 2017.
Change in accounting policy - Exploration and evaluation
asset
On 1 January 2006 the Group adopted IFRS 6 Exploration for and
Evaluation of Mineral Resources and in accordance with the standard
applied the policy of capitalising all Exploration Expenditure
(both Greenfield and Brownfield Exploration and Evaluation
expenditure).
The Greenfield and Brownfield terms are generally used in the
minerals sector and have been adopted to differentiate high risk
remote exploration activity from near-mine exploration
activity.
a) Greenfield exploration refers to territory, where mineral
deposits are not already developed and has the goal of establishing
a new mine requiring new infrastructure, regardless of it being in
an established mining field or in a remote location. Greenfield
exploration projects can be subdivided into grassroots and advanced
projects embracing prospecting, geoscientific surveys, drilling,
sample collection and testing, but excludes work of brownfields
nature, pit and shaft sinking and bulk sampling.
b) Brownfield exploration, also known as near-mine exploration,
refers to areas where mineral deposits were previously developed.
In brownfield exploration, geologists look for deposits near or
adjacent to an already operating mine with the objective of
extending its operating life and taking advantage of the
established infrastructure.
On review of the accounting policies and to make the financial
statements more relevant to the economic decision-making needs of
users no less reliable and comparable to other companies, it has
been determined that the exploration and evaluation assets
previously recognised for Greenfield exploration is not attributed
any value by the users when assessing the Group, as due to the
early stage of the projects there is a greater risk that the
projects will ultimately become viable and hence economic benefits
will flow to the Group.
To align the financial statements with the needs of the users,
management have decided to change the accounting policy as regards
to Greenfield exploration where all costs will be expensed as
incurred and will not be capitalised to the balance sheet until a
decision is made to pursue a commercially viable project.
Brownfield exploration costs will continue to be capitalised to the
statement of financial position
In accordance with IAS 8 Accounting Policies, Changes in
Accounting Estimates and Errors this revised accounting policy has
to be applied retrospectively. Please also refer to note 10
Exploration and evaluation asset.
The following table summarises the adjustments made to the
statement of financial position on implementation of the change in
accounting policy.
Exploration Accumulated
and evaluation profits
asset (Unaudited) (Unaudited)
US$'000 US$'000
------------------------------------------------- ------------------ ------------
Balance at 1 January 2017 as previously reported 153,918 853,999
Impact of change in accounting policy (88,218) (88,218)
Restated balanced at 1 January 2017 65,700 765,781
------------------------------------------------- ------------------ ------------
Exploration Accumulated
and evaluation profits
asset (Unaudited) (Unaudited)
US$'000 US$'000
--------------------------------------------------- ------------------ ------------
Balance at 31 December 2017 as previously reported 168,832 778,921
Impact of change in accounting policy at 1 January
2017 (88,218) (88,218)
Impact of change in accounting policy during 2017 (16,729) (16,729)
Restated balanced at 31 December 2017 63,885 673,974
--------------------------------------------------- ------------------ ------------
The effects on the statement of comprehensive income and
earnings per share were as follows:
Quarter Quarter Half year Half year
ended 30 ended 30 ended 30 ended 30
June June June June
2018 2017 2018 2017
(Unaudited) Restated (Unaudited) Restated
(Unaudited) (Unaudited)
Notes US$'000 US$'000 US$'000 US$'000
------------------------------- ----- ------------ ------------ ------------ ------------
(Increase) in exploration
and evaluation costs 3 (4,820) (5,004) (11,832) (9,822)
Decrease in impairment
of exploration and evaluation
assets - 2,550 - 2,550
(Decrease) in profit for
the period before tax (4,820) (2,454) (11,832) (7,272)
Earnings per share before
profit share as previously
reported:
Basic (cents per share) 2.330 3.193 8.013 5.764
Diluted (cents per share) 2.314 3.169 7.959 5.723
Earnings per share after
profit share as previously
reported:
Basic (cents per share) 1.737 1.105 4.904 2.272
Diluted (cents per share) 1.726 1.097 4.872 2.256
Restated earnings per share
before profit share:
Basic (cents per share) 19 1.911 2.980 6.984 5.132
Diluted (cents per share) 19 1.899 2.957 6.938 5.095
Restated earnings per share
after profit share:
Basic (cents per share) 19 1.319 0.892 3.876 1.639
Diluted (cents per share) 19 1.310 0.885 3.850 1.628
------------------------------- ----- ------------ ------------ ------------ ------------
Going concern
These financial statements for the period ended 30 June 2018
have been prepared on a going concern basis, which contemplate the
realisation of assets and liquidation of liabilities during the
normal course of operations.
As discussed in Note 18, during 2012 the operation of the mine
was affected by two legal actions. The first of these followed from
a decision taken by Egyptian General Petroleum Corporation ("EGPC")
to charge international, not local (subsidised) prices for the
supply of Diesel Fuel Oil ("DFO"), and the second arose as a result
of a judgment of the Administrative Court in relation to, amongst
other matters, the Company's 160km(2) exploitation lease. 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 directors' belief that the
Group will be able to continue as going concern.
The directors have a reasonable expectation that the Group will
have adequate resources to continue in operational existence for
twelve months from the date of approval of this report. Thus they
continue to adopt the going concern basis of accounting in
preparing these interim condensed consolidated financial
statements.
2. Revenue
An analysis of the group's revenue for the period, from
continuing operations, is as follows:
Quarter Quarter Half year Half year
ended 30 ended 30 ended 30 ended 30
June June June June
2018 2017 2018 2017
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
US$'000 US$'000 US$'000 US$'000
------------------------------------- ------------ ------------ ------------ ------------
Gold sales (Including pre-production
gold sales related to Cleopatra) 127,023 151,075 301,099 291,466
Less: Pre-production gold sales
related to Cleopatra - transferred
to exploration and evaluation asset (3,338) - (5,298) -
------------------------------------- ------------ ------------ ------------ ------------
Gold sales (Excluding pre-production
gold sales related to Cleopatra) 123,685 151,075 295,801 291,466
Silver sales 244 207 590 539
------------------------------------- ------------ ------------ ------------ ------------
123,929 151,282 296,391 292,005
------------------------------------- ------------ ------------ ------------ ------------
All gold and silver sales during the year were made to a single
customer in North America.
3. Profit before tax
Profit for the period has been arrived at after
crediting/(charging) the following gains/(losses) and
income/(expenses):
Quarter Quarter Half year Half year
ended 30 ended 30 ended 30 ended
June June June 30 June
2018 2017 2018 2017
(Unaudited) Restated (Unaudited) Restated
(Unaudited) (Unaudited)
US$'000 US$'000 US$'000 US$'000
-------------------------------------------- ------------ ------------ ------------ ------------
Finance income
Interest received 1,319 646 2,246 996
-------------------------------------------- ------------ ------------ ------------ ------------
Expenses
Cost of sales
Mine production costs (Including
costs related to gold produced from
Cleopatra) (76,503) (76,186) (157,727) (151,639)
Mine production costs related to
gold produced from Cleopatra - transferred
to exploration and evaluation asset 686 - 988 -
-------------------------------------------- ------------ ------------ ------------ ------------
Mine production costs (75,817) (76,186) (156,739) (151,639)
Movement in inventory 8,293 1,421 16,308 (5,265)
Depreciation and amortisation (25,038) (28,773) (51,448) (52,702)
-------------------------------------------- ------------ ------------ ------------ ------------
(92,562) (103,538) (191,879) (209,606)
-------------------------------------------- ------------ ------------ ------------ ------------
Other operating costs
Corporate costs (3,919) (3,044) (8,463) (6,053)
Other expenses (315) (380) (650) (416)
Office related depreciation (78) (13) (150) (25)
Fixed royalty - attributable to the
ARE government (3,808) (4,529) (9,027) (8,739)
Inventory obsolescence 1,217 - 1,217 -
Foreign exchange gain/(loss), net 1,219 (217) 2,934 1,782
Impairment of financial assets at
fair value through other comprehensive
income - (105) - (218)
Provision for restoration and rehabilitation
- unwinding of discount (217) (157) (435) (314)
--------------------------------------------- ------- ------- -------- --------
(5,901) (8,445) (14,574) (13,983)
--------------------------------------------- ------- ------- -------- --------
4. 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 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
2018 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 of
management and the Board making various judgements and estimates
that can affect the amounts recognised in the financial
statements.
a) Income statement and balance sheet impact
Quarter Quarter Half year Half year
ended 30 ended 30 ended 30 ended 30
June June June June
2018 2017 2018 2017
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
US$'000 US$'000 US$'000 US$'000
------------------------------------ ------------ ------------ ------------ ------------
Income statement
EMRA profit share(1) (6,826) (24,013) (35,766) (40,153)
------------------------------------ ------------ ------------ ------------ ------------
Balance sheet
EMRA opening profit share accrual 5,500 1,500 5,000 4,000
EMRA profit share (release)/accrual (4,000) 1,500 (3,500) (1,000)
EMRA closing profit share accrual 1,500 3,000 1,500 3,000
------------------------------------ ------------ ------------ ------------ ------------
(1) Profit share commenced during the third quarter of 2016. The
first two years was a 60:40 split of net production surplus to PGM
and EMRA respectively, from 1 July 2018 this changes to a 55:45
split for the next two year period until 30 June 2020, after which
all net production surpluses are split 50:50.
Quarter Quarter Half year Half year
ended 30 ended 30 ended 30 ended 30
June June June June
2018 2017 2018 2017
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
US$'000 US$'000 US$'000 US$'000
-------------------------------------------- ------------ ------------ ------------ ------------
EMRA profit share (per income statement)(1) (6,826) (24,013) (35,766) (40,153)
EMRA profit share (release)/accrual
(per balance sheet) (4,000) 1,500 (3,500) (1,000)
-------------------------------------------- ------------ ------------ ------------ ------------
EMRA cash payments during the period
(per cash flow statement)(1) (10,826) (22,513) (39,266) (41,153)
-------------------------------------------- ------------ ------------ ------------ ------------
(1) Profit share commenced during the third quarter of 2016. The
first two years was a 60:40 split of net production surplus to PGM
and EMRA respectively, from 1 July 2018 this changes to a 55:45
split for the next two year period until 30 June 2020, after which
all net production surpluses are split 50:50.
Any variation between payments made during the year (which are
based on the Company's estimates) and the SGM audited financial
statements, may result in a balance due and payable to EMRA or
advances to be offset against future distributions. This will be
reflected as an accrual or prepayment in each reporting period.
b) Cash flow statement impact
Quarter Quarter Half year Half year
ended 30 ended 30 ended 30 ended 30
June June June June
2018 2017 2018 2017
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
US$'000 US$'000 US$'000 US$'000
---------------------------------------- ------------ ------------ ------------ ------------
Cash flows
EMRA cash payments during the period(1) 10,826 22,513 39,266 41,153
---------------------------------------- ------------ ------------ ------------ ------------
(1) Profit share commenced during the third quarter of 2016. The
first two years was a 60:40 split of net production surplus to PGM
and EMRA respectively, from 1 July 2018 this changes to a 55:45
split for the next two year period until 30 June 2020, after which
all net production surpluses are split 50:50.
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, historical
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.
5. 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, Côte 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.
Non--current assets other than financial instruments by
country:
As at As at
30 June 31 December
2018 2017
(Unaudited) Restated
(Unaudited)
US$'000 US$'000
------------------- ------------ -------------
Egypt 876,417 878,508
Burkina Faso 36,023 36,094
Côte d'Ivoire 584 451
Corporate 21 27
913,045 915,080
------------------- ------------ -------------
Statement of financial position by operating segment:
As at As at As at As at As at
30 June 30 June 30 June 30 June 30 June
2018 2018 2018 2018 2018
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
US$'000 US$'000 US$'000 US$'000 US$'000
----------------------- ------------- ------------- ------------- ------------- -------------
Total Egypt Burkina Côte Corporate
Faso d'Ivoire
Statement of Financial
Position
Total assets 1,333,104 1,021,477 37,556 1,707 272,364
Total liabilities (55,517) (52,719) (261) (861) (1,676)
----------------------- ------------- ------------- ------------- ------------- -------------
Net assets / Total
Equity 1,277,587 968,758 37,295 846 270,688
----------------------- ------------- ------------- ------------- ------------- -------------
As at As at As at As at As at
31 December 31 December 31 December 31 December 31 December
2017 2017 2017 2017 2017
Restated Restated Restated Restated Restated
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
US$'000 US$'000 US$'000 US$'000 US$'000
----------------------- ------------- ------------- ------------- ------------- -------------
Total Egypt Burkina Côte Corporate
Faso d'Ivoire
----------------------- ------------- ------------- ------------- ------------- -------------
Statement of Financial
Position
Total assets 1,424,355 1,028,927 37,621 888 356,919
Total liabilities (77,326) (73,655) (787) (307) (2,577)
----------------------- ------------- ------------- ------------- ------------- -------------
Net assets / Total
Equity 1,347,029 955,272 36,834 581 354,342
----------------------- ------------- ------------- ------------- ------------- -------------
5. Segment reporting (continued)
Statement of comprehensive income by operating segment:
Quarter ended Quarter ended Quarter Quarter ended Quarter
30 June 30 June ended 30 June ended
30 June 30 June
2018 2018 2018 2018 2018
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
US$'000 US$'000 US$'000 US$'000 US$'000
--------------------------- ------------- ------------- ------------ ------------- ------------
Total Egypt Burkina Côte Corporate
Faso d'Ivoire
--------------------------- ------------- ------------- ------------ ------------- ------------
Statement of Comprehensive
Income
Revenue 123,929 123,929 - - -
Cost of sales (92,562) (92,562) - - -
Gross profit 31,367 31,367 - - -
Other income 12 12 - - -
Finance income 1,319 12 - - 1,307
Other operating costs (5,901) (1,413) (193) (365) (3,930)
Exploration and evaluation
costs (4,820) - (951) (3,869) -
Profit/(loss) for the
period before tax 21,977 29,978 (1,144) (4,234) (2,623)
Tax 35 35 - - -
--------------------------- ------------- ------------- ------------ ------------- ------------
Profit/(loss) for the
period after tax 22,012 30,013 (1,144) (4,234) (2,623)
--------------------------- ------------- ------------- ------------ ------------- ------------
EMRA profit share (6,826) (6,826) - - -
--------------------------- ------------- ------------- ------------ ------------- ------------
Profit/(loss) for the
period after EMRA profit
share 15,186 23,187 (1,144) (4,234) (2,623)
--------------------------- ------------- ------------- ------------ ------------- ------------
Quarter ended Quarter ended Quarter Quarter ended Quarter
30 June 30 June ended 30 June ended
30 June 30 June
2017 2017 2017 2017 2017
Restated Restated Restated Restated Restated
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
US$'000 US$'000 US$'000 US$'000 US$'000
--------------------------- ------------- ------------- ------------ ------------- ------------
Total Egypt Burkina Côte Corporate
Faso d'Ivoire
--------------------------- ------------- ------------- ------------ ------------- ------------
Statement of Comprehensive
Income
Revenue 151,282 151,282 - - -
Cost of sales (103,538) (103,538) - - -
Gross profit 47,744 47,744 - - -
Other income 424 10 - - 414
Finance income 646 11 - - 635
Other operating costs (8,445) (5,400) (53) (38) (2,954)
Exploration and evaluation
costs (5,004) - (1,545) (3,459) -
Profit/(loss) for the
period before tax 35,365 42,365 (1,598) (3,497) (1,905)
Tax (1,098) - - - (1,098)
--------------------------- ------------- ------------- ------------ ------------- ------------
Profit/(loss) for the
period after tax 34,267 42,365 (1,598) (3,497) (3,003)
EMRA profit share (24,013) (24,013) - - -
--------------------------- ------------- ------------- ------------ ------------- ------------
Profit/(loss) for the
period after EMRA profit
share 10,254 18,352 (1,598) (3,497) (3,003)
--------------------------- ------------- ------------- ------------ ------------- ------------
5. Segment reporting (continued)
Half year Half year Half year Half year Half year
ended ended ended ended ended
30 June 30 June 30 June 30 June 30 June
2018 2018 2018 2018 2018
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
US$'000 US$'000 US$'000 US$'000 US$'000
--------------------------- ------------ ------------ ------------ ------------ ------------
Total Egypt Burkina Côte Corporate
Faso d'Ivoire
--------------------------- ------------ ------------ ------------ ------------ ------------
Statement of Comprehensive
Income
Revenue 296,391 296,391 - - -
Cost of sales (191,879) (191,879) - - -
Gross profit 104,512 104,512 - - -
Other income 24 24 - - -
Finance income 2,246 22 - - 2,224
Other operating costs (14,574) (7,310) (139) (449) (6,676)
Exploration and evaluation
costs (11,832) - (3,664) (8,168) -
Profit/(loss) for the
period before tax 80,376 97,248 (3,803) (8,617) (4,452)
Tax (10) (10) - - -
--------------------------- ------------ ------------ ------------ ------------ ------------
Profit/(loss) for the
period after tax 80,366 97,238 (3,803) (8,617) (4,452)
EMRA profit share (35,766) (35,766) - - -
--------------------------- ------------ ------------ ------------ ------------ ------------
Profit/(loss) for the
period after EMRA profit
share 44,600 61,472 (3,803) (8,617) (4,452)
--------------------------- ------------ ------------ ------------ ------------ ------------
Half year Half year Half year Half year Half year
ended ended ended ended ended
30 June 30 June 30 June 30 June 30 June
2017 2017 2017 2017 2017
Restated Restated Restated Restated Restated
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
US$'000 US$'000 US$'000 US$'000 US$'000
--------------------------- ------------ ------------ ------------ ------------ ------------
Total Egypt Burkina Côte Corporate
Faso d'Ivoire
--------------------------- ------------ ------------ ------------ ------------ ------------
Statement of Comprehensive
Income
Revenue 292,005 292,005 - - -
Cost of sales (209,606) (209,606) - - -
Gross profit 82,399 82,399 - - -
Other income 424 10 - - 414
Finance income 996 21 - - 975
Other operating costs (13,983) (8,850) 116 (66) (5,183)
Exploration and evaluation
costs (9,822) - (3,409) (6,413) -
Profit/(loss) for the
period before tax 60,014 73,580 (3,293) (6,479) (3,794)
Tax (1,014) - - - (1,014)
--------------------------- ------------ ------------ ------------ ------------ ------------
Profit/(loss) for the
period after tax 59,000 73,580 (3,293) (6,479) (4,808)
EMRA profit share (40,153) (40,153) - - -
--------------------------- ------------ ------------ ------------ ------------ ------------
Profit/(loss) for the
period after EMRA profit
share 18,847 33,427 (3,293) (6,479) (4,808)
--------------------------- ------------ ------------ ------------ ------------ ------------
Exploration expenditure by operating segment
The following table provides a breakdown of the total
exploration expenditure of the group by operating segment:
Quarter Quarter Half year Half year
ended 30 ended 30 ended ended 30
June June 30 June June
2018 2017 2018 2017
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
US$'000 US$'000 US$'000 US$'000
--------------------------------- ------------ ------------ ------------ ------------
Burkina Faso 951 1,548 3,664 3,409
Côte d'Ivoire 3,869 3,457 8,168 6,413
Egypt (Sukari tenement including
Cleopatra) 3,334 2,757 5,876 6,009
Total exploration expenditure 8,154 7,762 17,708 15,831
--------------------------------- ------------ ------------ ------------ ------------
6. Trade and other receivables
As at As at
30 June 31 December
2018 2017
(Unaudited) (Unaudited)
US$'000 US$'000
----------------------------- ------------ ------------
Current
Gold and silver sales debtor 8,926 31,007
Other receivables 3,402 3,460
----------------------------- ------------ ------------
12,328 34,467
----------------------------- ------------ ------------
Trade and other receivables are classified as financial assets
subsequently measured at amortised cost.
All gold and silver sales during the period were made to a
single customer in North America and are neither past due nor
impaired.
The average age of the receivables is eight days (2017: nine
days). No interest is charged on the receivables. There are no
trade receivables past due or impaired at the reporting date, and
thus no allowance for doubtful debts has been recognised. Of the
trade receivables balance, the gold and silver sales debtor is all
receivable from Asahi Refining of Canada. The amount due has been
received in full subsequent to period end. Other receivables
represent GST and VAT amounts owing from the various jurisdictions
that the group operates in and inventory returns to vendors where
refunds are expected to occur.
The directors consider that the carrying amount of trade and
other receivables is approximately equal to their fair value.
7. Inventories
As at As at
30 June 31 December
2018 2017
(Unaudited) (Unaudited)
US$'000 US$'000
---------------------------------------- ------------ ------------
Mining stockpiles and ore in circuit 48,036 31,728
Stores inventory 69,719 78,618
Provision for obsolete stores inventory (3,919) (5,136)
---------------------------------------- ------------ ------------
113,836 105,210
---------------------------------------- ------------ ------------
Inventories are carried at the lower of costs and net realisable
value.
8. Prepayments
As at As at
30 June 31 December
2018 2017
(Unaudited) (Unaudited)
US$'000 US$'000
----------------- ------------ ------------
Current
Prepayments 12,048 7,546
Fuel prepayments (917) 2,247
----------------- ------------ ------------
11,131 9,793
----------------- ------------ ------------
Movement in fuel prepayments
Half year Year ended
ended 30 31 December
June
2018 2017
(Unaudited) (Unaudited)
US$'000 US$'000
--------------------------------------- ------------ ------------
Balance at the beginning of the period 2,247 877
Fuel prepayment recognised 24,043 42,869
Less: Provision charged to:
Mine production costs (23,550) (39,030)
Property, plant and equipment (3,152) (2,761)
Inventories (505) 292
Balance at the end of the period (917) 2,247
--------------------------------------- ------------ ------------
8. Prepayments (continued)
Cumulative fuel prepayment and provision recognised
As at As at
30 June 31 December
2018 2017
(Unaudited) (Unaudited)
US$'000 US$'000
------------------------------ ------------ ------------
Fuel prepayment recognised 301,297 274,088
Less: Provision charged to:
Mine production costs (280,580) (257,030)
Property, plant and equipment (20,032) (16,880)
Inventories (1,603) (1,098)
Fuel advance down payment (2,247) 3,167
------------------------------ ------------ ------------
Diesel Fuel Oil ("DFO") dispute
As more fully described in note 18 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
the funds and for this reason has fully provided against the
prepayment of US$301.3 million to 30 June 2018 of which US$24.0
million was provided for in the six months ended 30 June 2018. In
the event the appeal is successful a separate claim would then need
to be brought in order to recover funds.
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$13.1 million in the
profit and loss for the quarterly period and US$24.6 million for
the half year period.
Quarter ended 30 June Quarter ended 30 June
2018 2017
---------------------------------------- ----------------------------------------
Before Before
Adjustment Adjustment Total Adjustment Adjustment Total
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
------------------------------ ------------ ------------ ------------ ------------ ------------ ------------
Expenses
Cost of sales
Mine production costs (65,014) (10,803) (75,817) (62,185) (14,001) (76,186)
Movement in inventory 10,613 (2,320) 8,293 (679) 2,100 1,421
Depreciation and amortisation (25,038) - (25,038) (28,773) - (28,773)
------------------------------ ------------ ------------ ------------ ------------ ------------ ------------
(79,439) (13,123) (92,562) (91,637) (11,901) (103,538)
------------------------------ ------------ ------------ ------------ ------------ ------------ ------------
Half year ended 30 June Half year ended 30 June
2018 2017
-------------------------- ------------------------------------------------------
Before Before
Adjustment Adjustment Total Adjustment Adjustment Total
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
------------------------------ ------------ ------------ ------------ ------------ ------------ ------------
Expenses
Cost of sales
Mine production costs (133,189) (23,550) (156,739) (129,203) (22,436) (151,639)
Movement in inventory 17,364 (1,056) 16,308 (8,167) 2,902 (5,265)
Depreciation and amortisation (51,448) - (51,448) (52,702) - (52,702)
------------------------------ ------------ ------------ ------------ ------------ ------------ ------------
(167,273) (24,606) (191,879) (190,072) (19,534) (209,606)
------------------------------ ------------ ------------ ------------ ------------ ------------ ------------
9. Property, plant and equipment
Mine Capital
Half year ended 30 June Office Plant Mining development work
2018 (Unaudited) and in
equipment Buildings equipment equipment properties progress Total
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
------------------------------ --------- --------- --------- --------- ----------- -------- ---------
Cost
Balance at 31 December
2017 6,796 2,051 591,101 274,976 457,113 37,998 1,370,035
Transfers from capital
work in progress - - - - 16,411 (16,411) -
Additions 240 - 2,769 17,864 - 27,128 48,001
Balance at 30 June 2018 7,036 2,051 593,870 292,840 473,524 48,715 1,418,036
------------------------------ --------- --------- --------- --------- ----------- -------- ---------
Accumulated depreciation
Balance at 31 December
2017 (5,890) (548) (156,921) (163,902) (191,675) - (518,936)
Depreciation and amortisation (232) (69) (14,078) (19,735) (17,484) - (51,598)
Balance at 30 June 2018 (6,122) (617) (170,999) (183,637) (209,159) - (570,534)
------------------------------ --------- --------- --------- --------- ----------- -------- ---------
Year ended 31 December
2017 (Unaudited)
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)
------------------------------ --------- --------- --------- --------- ----------- -------- ---------
Net book value
As at 31 December 2017 906 1,503 434,180 111,074 265,438 37,998 851,099
------------------------------ --------- --------- --------- --------- ----------- -------- ---------
As at 30 June 2018 914 1,434 422,871 109,203 264,365 48,715 847,502
------------------------------ --------- --------- --------- --------- ----------- -------- ---------
The devaluation of the share price of the company has been
considered, however it was concluded that this was not an
impairment indicator. No impairment review has been performed in
2017 or 2018 as no impairment indicators were identified in each
period.
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 and are for the life
of the mine.
10. Exploration and evaluation asset
As at As at
30 June 31 December
2018 2017
(Unaudited) Restated
(Unaudited)
US$'000 US$'000
---------------------------------------------------- ------------- -------------
Balance at the beginning of the period 63,885 65,700
Expenditure for the period 5,876 10,610
Net pre-production gold sales related to Cleopatra (4,310) (4,841)
Transfer to property, plant and equipment - (7,584)
Balance at the end of the period 65,451 63,885
---------------------------------------------------- ------------- -------------
The exploration and evaluation asset relates to the drilling,
geological exploration and sampling of potential ore reserves and
can be attributed to Egypt (US$30.2 million), Burkina Faso (US$35.2
million) and Côte d'Ivoire (US$0.0 million). Please refer to note 1
for the change in accounting policy regarding the treatment of
Greenfield exploration expenditure.
In consideration of the requirements of IFRS 6 and IAS 36,
management is not aware of any information that would otherwise
suggest that an impairment trigger has occurred which would require
a full impairment test to be carried out at 30 June 2018.
11. Financial assets at fair value through other comprehensive
income
As at As at
30 June 31 December
2018 2017
(Unaudited) (Unaudited)
US$'000 US$'000
--------------------------------------------------------- ------------ ------------
Balance at the beginning of the period 125 130
Gain on foreign exchange movement - 86
(Loss) on fair value of investment - other comprehensive
income (125) (91)
Balance at the end of the period - 125
--------------------------------------------------------- ------------ ------------
The financial assets at fair value through other comprehensive
income at period end relates to a 5.33% (2017: 5.33%) equity
interest in Nyota Minerals Limited ("NYO"), a listed public
company, as well as a 0.29% (2017: 0.53%) equity interest in KEFI
Minerals plc ("KEFI"), an AIM listed company.
12. Trade and other payables
As at As at
30 June 31 December
2018 2017
(Unaudited) (Unaudited)
US$'000 US$'000
----------------------------- ------------ ------------
Trade payables 22,648 32,540
Other creditors and accruals 11,717 19,045
EMRA profit share accrual 1,500 5,000
----------------------------- ------------ ------------
35,865 56,585
----------------------------- ------------ ------------
Trade payables principally comprise the amounts outstanding for
trade purchases and ongoing costs. The average credit period taken
for trade purchases is 11 days (2017: 29 days). Trade payables are
interest free for periods ranging from 30 to 180 days. Thereafter
interest is charged at commercial rates. The group has financial
risk management policies in place to ensure that all payables are
paid within the credit timeframe.
The directors consider that the carrying amount of trade
payables approximate their fair value.
13. Provisions
As at As at
30 June 31 December
2018 2017
(Unaudited) (Unaudited)
US$'000 US$'000
--------------------------------------------------------- ------------ ------------
Current
Employee benefits(1) 422 2,510
Fuel(2) 7,050 2,000
Customs, rebates and withholding tax 529 4,801
8,001 9,311
--------------------------------------------------------- ------------ ------------
Non--current
Restoration and rehabilitation(3) 11,302 10,868
Other non-current provisions 346 93
--------------------------------------------------------- ------------ ------------
11,648 10,961
--------------------------------------------------------- ------------ ------------
Movement in restoration and rehabilitation provision
Balance at beginning of the year 10,868 7,697
Additional provision recognised/(provision derecognised) - 2,542
Interest expense - unwinding of discount 434 629
--------------------------------------------------------- ------------ ------------
Balance at end of the period 11,302 10,868
--------------------------------------------------------- ------------ ------------
(1) Employee benefits relate to annual, sick and long service leave entitlements and bonuses.
(2) Fuel provision relates to a backdated fuel charge for Q2 of 2018.
(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% (2017: 8.01%). 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
resulted in a US$2.542m increase in the provision.
14. Issued capital
As at As at
30 June 2018 31 December
2017
(Unaudited) (Unaudited)
---------------------- ----------------------
Number US$'000 Number US$'000
---------------------------------------- ------------- ------- ------------- -------
Fully paid ordinary shares
Balance at beginning of the period 1,152,107,984 668,732 1,152,107,984 667,472
Employee share option scheme - Proceeds
from shares issued 2,615,000 1,406 - -
Transfer from share option reserve - 451 - 1,260
---------------------------------------- ------------- ------- ------------- -------
Balance at end of the period 1,154,722,984 670,589 1,152,107,984 668,732
---------------------------------------- ------------- ------- ------------- -------
The authorised share capital is an unlimited number of no par
value shares.
At 30 June 2018 the trustee of the deferred bonus share plan
held 839,716 ordinary shares (2017: 939,716 ordinary shares)
pursuant to the plan rules.
Fully paid ordinary shares carry one vote per share and carry
the right to dividends.
15. Share option reserve
As at As at
30 June 31 December
2018 2017
(Unaudited) (Unaudited)
US$'000 US$'000
----------------------------------- ------------ ------------
Share option reserve
Balance at beginning of the period 4,323 3,048
Share--based payments expense 1,712 3,156
Transfer to accumulated profits - (621)
Transfer to issued capital (1,857) (1,260)
----------------------------------- ------------ ------------
Balance at the end of the period 4,178 4,323
----------------------------------- ------------ ------------
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.
16. Share--based payments
Performance Share Plan
The Company's shareholder approved performance share plan (PSP)
allows the Company the right to grant Awards (as defined below) to
employees of the Group. Awards may take the form of either
conditional share awards, where shares are transferred
conditionally upon the satisfaction of performance conditions; or
share options, which may take the form of nil cost options or have
a nominal exercise price, the exercise of which is again subject to
satisfaction of applicable performance conditions.
To date the Company has granted the following conditional awards
to employees of the Group.
June 2015 Awards
Of the 5,145,000 awards granted on 4 June 2015 under the PSP,
2,615,000 awards vested to 13 eligible participants on 4 June 2018,
half of which are subject to a two year holding period, based on
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 PSP,
3,459,000 awards remain granted to eligible participants (25 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.
16. Share--based payments (continued)
June 2017 Awards
Of the 3,459,000 awards granted on 4 June 2017 under the PSP,
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.
June 2018 Awards
Of the 4,908,000 awards granted on 27 June 2018 under the PSP,
4,908,000 awards remain granted to eligible participants (42 in
total) applying the following performance criteria:
- 40% of the award shall be assessed by reference to a target total shareholder return.
- 20% of the award shall be assessed by reference to compound growth in EBIDTA.
- 40% 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.
Performance Share Plan awards granted during the period:
PSP 2018
Grant Date 27 June 2018
-------------
Number of instruments 4,908,000
-------------
TSR: Fair value at grant date GBP (1) 0.54
-------------
TSR: Fair value at grant date US$ (1) 0.71
-------------
EBITDA: Fair value at grant date GBP (1) 1.02
-------------
EBITDA: Fair value at grant date US$ (1) 1.34
-------------
Gold Production: Fair value at grant date GBP (1) 1.02
-------------
Gold Production: Fair value at grant date US$ (1) 1.34
-------------
Vesting period (years) 3
-------------
Expected volatility 42.70%
-------------
Expected dividend yield (%) 4.82%
-------------
(1) The vesting of 40% the awards granted under this plan are
dependent on a TSR performance condition. As relative TSR is
defined as a market condition under IFRS 2 "Share--based Payment",
this requires that the valuation model used takes into account the
anticipated performance outcome. We have therefore applied a Monte
Carlo simulation model. The simulation model takes into account the
probability of performance based on the expected volatility of
Centamin and the peer group companies and the expected correlation
of returns between the companies in the comparator group.
The remaining 60% of the awards are subject to EBITDA and gold
production performance conditions. As these are classified as
nonmarket 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.
16. Share--based payments (continued)
Deferred Bonus Share Plan
Deferred Bonus Share Plan awards granted during the period:
DBSP 2018
Grant date 27 June 2018
-------------
Number of instruments 150,000
-------------
Share price / Fair value at grant date Tranche
1 GBP (2) 1.14
-------------
Share price / Fair value at grant date Tranche
1 US$ (2) 1.50
-------------
Share price / Fair value at grant date Tranche
2 GBP (2) 1.08
-------------
Share price / Fair value at grant date Tranche
2 US$ (2) 1.42
-------------
Share price / Fair value at grant date Tranche
3 GBP (2) 1.02
-------------
Share price / Fair value at grant date Tranche
3 US$ (2) 1.34
-------------
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 (%) 4.40%
-------------
Expected dividend yield Tranche 3 (%) 4.82%
-------------
(2) The fair value of the shares awarded under the DBSP were
calculated by using the closing share price on grant date,
converted at the closing GBP:US$ foreign exchange rate on that day.
No other factors were taken into account in determining the fair
value of the shares awarded under the DBSP.
(3) Variable vesting dependent on one to three years of
continuous employment.
17. Commitments
The following is a summary of the Company's outstanding
commitments as at 30 June 2018:
(a) Operating lease commitments
The future aggregate minimum lease payments under
non--cancellable operating leases are as follows:
As at As at
30 June 31 December
2018 2017
(Unaudited) (Unaudited)
US$'000 US$'000
---------------------------------------------------- ------------ ------------
Office premises
No longer than one year 112 115
Longer than one year and not longer than five years 449 459
Longer than five years 449 516
---------------------------------------------------- ------------ ------------
1,010 1,090
---------------------------------------------------- ------------ ------------
Operating lease commitments are limited to office premises in
Jersey. IFRS 16 is only effective from 1 January 2019 and its
impact on the financial statements is currently being assessed.
18. Contingent liabilities and contingent assets
Contingent liabilities
Fuel supply
As set out in note 8 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
18. Contingent liabilities and contingent assets (continued)
Contingent liabilities (continued)
Fuel supply (continued)
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 the funds and for this reason has fully provided against
the prepayment of US$301.3 million. In the event the appeal is
successful a separate claim would then need to be brought in order
to recover funds. Refer to Note 8 of these financial statements for
further details on the impact of this provision on the group's
results for 30 June 2018.
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 affected 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.
18. Contingent liabilities and contingent assets (continued)
Contingent assets
There were no contingent assets at period end (31 December 2017:
nil).
19. Earnings per share ("EPS")
Quarter ended Quarter Half year Half year
30 June ended ended ended
30 June 30 June 30 June
2018 2017 2018 2017
(Unaudited) Restated (Unaudited) Restated
(Unaudited) (Unaudited)
US cents US cents US cents US cents
per share per share per share per share
------------------------------ ------------- ------------ ------------ ------------
Basic earnings per share(1) 1.911 2.980 6.984 5.132
Diluted earnings per share(1) 1.899 2.957 6.938 5.095
------------------------------ ------------- ------------ ------------ ------------
Basic earnings per share(2) 1.319 0.892 3.876 1.639
Diluted earnings per share(2) 1.310 0.885 3.850 1.628
------------------------------ ------------- ------------ ------------ ------------
(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:
Quarter ended Quarter Half year Half year
30 June ended 30 ended ended
June 30 June 30 June
2018 2017 2018 2017
(Unaudited) Restated (Unaudited) Restated
(Unaudited) (Unaudited)
US$'000 US$'000 US$'000 US$'000
--------------------------------- ------------- ------------ ------------ ------------
Earnings used in the calculation
of basic EPS(1) 22,012 34,267 80,366 59,000
Earnings used in the calculation
of basic EPS(2) 15,186 10,253 44,600 18,847
--------------------------------- ------------- ------------ ------------ ------------
(1) Before profit share.
(2) After profit share.
Quarter ended Quarter Half year Half year
30 June ended ended ended
30 June 30 June 30 June
2018 2017 2018 2017
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Number Number Number Number
-------------------------- ------------- ------------- ------------- -------------
Weighted average number
of ordinary shares for
the purpose of basic EPS 1,151,589,716 1,149,892,083 1,150,661,102 1,149,719,471
-------------------------- ------------- ------------- ------------- -------------
Diluted earnings per share
The earnings and weighted average number of ordinary shares used
in the calculation of diluted earnings per share are as
follows:
Quarter Quarter Half year Half year
ended ended 30 ended ended
30 June June 30 June 30 June
2018 2017 2018 2017
(Unaudited) Restated (Unaudited) Restated
(Unaudited) (Unaudited)
US$'000 US$'000 US$'000 US$'000
--------------------------------- ------------ ------------ ------------ ------------
Earnings used in the calculation
of diluted EPS(1) 22,012 34,267 80,366 59,000
Earnings used in the calculation
of diluted EPS(2) 15,186 10,253 44,600 18,847
--------------------------------- ------------ ------------ ------------ ------------
(1) Before profit share.
(2) After profit share.
Quarter ended Quarter Half year Half year
30 June ended ended ended
30 June 30 June 30 June
2018 2017 2018 2017
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Number Number Number Number
------------------------------------ ------------- ------------- ------------- -------------
Weighted average number of ordinary
shares for the purpose of basic
EPS 1,151,589,716 1,149,892,083 1,150,661,102 1,149,719,471
Shares deemed to be issued for
no consideration in respect of
employee options 7,806,081 8,809,667 7,725,168 8,275,634
------------------------------------ ------------- ------------- ------------- -------------
Weighted average number of ordinary
shares used in the calculation
of diluted EPS 1,159,395,797 1,158,701,750 1,158,386,270 1,157,995,105
------------------------------------ ------------- ------------- ------------- -------------
19. Earnings per share ("EPS") (continued)
No potential ordinary shares were excluded from the calculation
of weighted average number of ordinary shares for the purpose of
diluted earnings per share.
20. Notes to the statements of cash flows
(a) Reconciliation of cash and cash equivalents
For the purpose of the statement of cash flows, cash and cash
equivalents includes cash on hand and at bank and deposits.
As at As at
30 June 30 June
2018 2017
(Unaudited) (Unaudited)
US$'000 US$'000
-------------------------- ------------ ------------
Cash and cash equivalents 282,764 296,980
-------------------------- ------------ ------------
(b) Reconciliation of profit for the year to cash flows from
operating activities
Quarter ended Quarter Half year Half year
30 June ended 30 ended ended 30
June 30 June June
2018 2017 2018 2017
(Unaudited) Restated (Unaudited) Restated
(Unaudited) (Unaudited)
US$'000 US$'000 US$'000 US$'000
------------------------------------ ------------- ------------ ------------ ------------
Profit for the period before
tax 21,977 35,365 80,376 60,014
Add/(less) non--cash items:
Depreciation/amortisation of
property, plant and equipment 25,115 28,785 51,598 52,727
Inventory written off - 14 297 14
Foreign exchange (gain)/loss (1,219) 217 (2,934) (1,782)
Share--based payments expense 837 644 1,712 1,030
Finance income (1,319) (646) (2,246) (996)
Provision for obsolete stores
inventory (1,217) 5,685 (1,217) 5,685
Loss on disposal of property,
plant and equipment - 263 - 263
Changes in working capital during
the period:
Decrease/(increase) in trade
and other receivables 719 (9,153) 22,138 1,507
(Increase)/decrease in inventories (5,994) (645) (7,410) 17,101
(Increase)/decrease in prepayments (1,297) 6,872 (1,334) 1,904
Increase/(decrease) in trade
and other payables 361 11,788 (17,220) (5,434)
(Decrease) in provisions (716) (5,384) (599) (5,252)
------------------------------------ ------------- ------------ ------------ ------------
Cash flows generated from operating
activities 37,247 73,805 123,161 126,781
------------------------------------ ------------- ------------ ------------ ------------
(c) Non--cash financing and investing activities
During the period there have been no non--cash financing and
investing activities.
21. Financial instruments' fair value disclosures
The Group has no financial instruments with fair values that are
determined by reference to significant unobservable inputs, i.e.
those that would be classified as level 3 in the fair value
hierarchy, nor have there been any transfers of assets or
liabilities between levels of the fair value hierarchy.
The Group's interest in Nyota Minerals Limited and KEFI Minerals
plc is classified as financial assets at fair value through other
comprehensive income. The Group carries its interest in Nyota
Minerals Limited and KEFI Minerals plc at fair value, and measures
its interest using Level 1 unadjusted quoted prices.
The directors consider that the carrying amounts of financial
assets and financial liabilities carried at amortised cost
approximate their fair value.
The impact of IFRS 9 has been assessed and does not have a
significant impact on the financial statements of the Group.
22. Related party transactions
The related party transactions for the three months ended 30
June 2018 is summarised below:
- Salaries, superannuation contributions, bonuses, LTI's,
consulting and directors' fees of Directors during the three months
ended 30 June 2018 amounted to US$974,036 (30 June 2017:
US$613,504).
- 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 to El--Raghy
Kriewaldt during the three months ended 30 June 2018 were AU$10,440
or US$8,310 (30 June 2017: AU$15,338 or US$11,524), this lease
ended in May 2018.
The related party transactions for the six months ended 30 June
2018 is summarised below:
- Salaries, superannuation contributions, bonuses, LTI's,
consulting and directors' fees of Directors during the six months
ended 30 June 2018 amounted to US$1,967,107 (30 June 2017:
US$1,202,270).
- 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 to El--Raghy
Kriewaldt during the six months ended 30 June 2018 were AU$26,100
or US$21,013 (30 June 2017: AU$30,675 or US$23,231), this lease
ended in May 2018.
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). Nine transactions have
been entered into at the date of this report, seven in 2018 and two
in 2017 to a total value of US$25.5 million.
23. Subsequent events
The Directors declared an interim dividend of 2.5 US cents per
share on Centamin plc ordinary shares (totalling approximately
US$28.9 million). The interim dividend for the half year period
ended 30 June 2018 will be paid on 28 September 2018 to
shareholders on the register on the Record Date of 31 August
2018.
Other than the above, there were no other significant events
occurring after the reporting date requiring disclosure in the
financial statements.
Forward looking 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 news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR FKDDNKBKBPFK
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August 02, 2018 02:01 ET (06:01 GMT)
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