TIDMCEY
RNS Number : 9585Z
Centamin PLC
27 May 2021
27 May 2021
Centamin plc
("Centamin" or "the Company" or "Group", including its
subsidiaries)
LSE: CEY / TSX: CEE
WEST AFRICAN PORTFOLIO REVIEW CONFIRMS POSITIVE GROWTH
POTENTIAL
Centamin is pleased to announce the results of the Company's
review of its West African exploration portfolio, following which
the Board has approved the commencement of a pre-feasibility study
("PFS") at Doropo, a further exploration programme at ABC and a
review of the third-party development options at Batie West.
The review, which commenced in H2 2020, was designed to evaluate
the potential development prospects of the portfolio, to rank each
project and to define the pathway to realising value. The review
was led by the Company's Projects team, with the support of
industry-leading consultants, including Lycopodium, Cube
Consulting, Knight Piesold and ECG Engineering.
highlights
-- The Doropo Project shows strong development potential with
the completion of a positive preliminary economic assessment
("PEA"):
-- US$234 million post-tax net present value ("NPV(5%) ") with a
21% internal rate of return ("IRR") at US$1,450/oz gold price
-- US$487 million NPV(5%) with a 33% IRR at consensus gold price
per ounce of US$1,829/oz ("consensus")
-- Total development capital expenditure ("CAPEX") of US$275
million, including a 15% contingency
-- 13 year life of mine ("LOM") based on the updated mineral
resource estimate of 0.16 million ounces (Measured and Indicated)
and 5.21 million ounces (Inferred) of gold, with potential to
further increase gold resources across the permits
-- Average annual gold production of 207,800 ounces for the
first five years, averaging 150,956 ounces over the LOM, for a
total of 2.0 million ounces produced at an average AISC of
US$904/oz
-- Board has approved US$14 million spend to advance the project to PFS stage by mid-2022.
-- The ABC Project continues to deliver strong priority
greenfield target generation along the 60km Lolosso Gold Corridor
("LGC") and the Board has approved a further US$3 million
exploration programme for the Kona and FarakoNafana permits for the
period to June 2022.
-- The PEA for the Batie West Project also delivers positive results:
-- US$63 million NPV(5%) with an 11% IRR at US$1,450/oz gold price
-- US$282 million NPV(5%) and a 26% IRR at consensus gold price
-- Total development CAPEX of US$265 million, including a 15% contingency
-- 8.5 year LOM based on the updated mineral resource estimate
of 2.13 million ounces (Measured and Indicated) and 0.1 million
ounces (Inferred) of gold
-- Average annual gold production averaging 139,994 ounces over
the LOM, for a total production of 1.2 million ounces of gold at an
average AISC of US$998/oz
-- B oard has approved the assessment of third-party development
options as the project does not currently meet Centamin's
investment criteria.
MARTIN HORGAN, CEO commented: "Building a strong active growth
pipeline is central to our strategy, while maintaining our capital
allocation discipline. Today's announcement of a positive
preliminary economic study at Doropo and the exploration potential
at the earlier stage ABC, demonstrate the quality and potential of
our portfolio.
The Batie West Project has potential to deliver a profitable
mine, but not one that would currently meet our strict investment
criteria. We are now initiating a review of development options for
this asset.
The Doropo Project is very exciting and is our priority growth
target outside of Egypt, showing excellent potential to become
Centamin's second mine. Our highly experienced team has proven
expertise at delivering successful gold projects in West Africa and
will now commence the PFS, the results of which we look forward to
announcing in mid-2022."
west africa PROJECT pipeline By ranK
DOROPO ABC BATIE WEST
PROJECT PROJECT PROJECT
Location Côte d'Ivoire Côte d'Ivoire Burkina Faso
=================================== =================== =================== ====================
Priority Rank 1 2 3
Stage PEA Greenfield PEA
Exploration
Resources
Measured & Indicated 0.16Moz 0.65Moz 2.13Moz
Inferred 5.21Moz 0.5Moz 0.1Moz
Life of Mine ("LOM") 13 years n/a 8.5 years
Production & Costs
Years 1-5 (average)
Production (koz) 208 n/a 148
AISC (US$/oz) 769 n/a 974
LOM (average)
Production (koz) 151 n/a 140
AISC (US$/oz) 904 n/a 998
Capital expenditure (US$m) 275 n/a 265
=================================== =================== ===================
Economics
US$1,450/oz gold price
Post-tax NPV(5%) (US$m) 234 n/a 63
IRR (%) 21 n/a 11
Consensus gold price (US$1829/oz)
Post-tax NPV(5%) (US$m) 487 n/a 282
IRR (%) 33 n/a 26
=================================== =================== =================== ====================
Next Steps Complete PFS MRE update Assessing strategic
by mid-2022 by mid-2022 opportunities
=================================== =================== =================== ====================
Note. The PEA(s) are preliminary in nature and include the use
of Inferred mineral resources that are considered too speculative
geologically to have the economic considerations applied to them
that would enable them to be categorised as mineral reserves and,
as such, there is no certainty that the studies will be realised.
Mineral resources that are not mineral reserves do not have
demonstrated economic viability.
FOR MORE INFORMATION
Please visit the website www.centamin.com or contact:
Centamin plc Buchanan
Alexandra Barter-Carse, Corporate Communications Bobby Morse / Kelsey Traynor
+44 (0) 7700 713 738 + 44 (0) 20 7466 5000
investors@centamin.je centamin@buchanan.uk.com
BACKGROUND
doropo project (Côte d'ivoire)
The Doropo Project ("Doropo") consists of seven exploration
permits, covering an area of approximately 2,300km(2) . Doropo is
in the northeast of Côte d'Ivoire, between the Comoè National Park
and the international border with Burkina Faso, and approximately
650km north of Abidjan.
Geologically, Doropo lies entirely within the
Tonalite-Trondhjemite-Granodiorite domain, bounded on the eastern
side by the Boromo-Batie greenstone belt, in Burkina Faso, and by
the Tehini-Hounde greenstone belt on the west.
Currently 67% of the defined mineral resource deposits sit
within a 10km radius, with the Vako and Kilosegui deposits 15km and
30km, respectively, to the southwest. Mineralisation is associated
with discrete structures of intense silica-sericite alteration,
focused within and along the margins of narrow (between 5-10 metres
wide, expanding to 20-25 metres in areas) dextral shear zones.
During 2020 the Company's experienced exploration team has
completed approximately 74,000 metres of drilling which supported
year-on-year total resource growth at Doropo. The updated Mineral
Resource estimate, as prepared by Cube Consulting, is 2.34 million
tonnes at 2.13g/t gold containing 0.16 million ounces of gold
Indicated resources and 142.9 million tonnes at 1.13g/t containing
5.21 million ounces of gold Inferred resources ("MRE") representing
a 50% increase in total mineral resources. Although the revised
approach has led to a reclassification of some material previously
included as Measured and Indicated, 70,000 metres of drilling will
be completed as part of the PFS work programme to bring the
resources into the M&I categories.
Positive Preliminary Economic Assessment
Doropo shows good development potential with the positive PEA
demonstrating a 13-year life of mine with the potential to produce
208koz per annum over the first five years of production for an
initial development capital cost of US$275 million including a 15%
of contingency. Sustaining capital costs are forecast to be US$90
million, including a closure provision of US$18 million. The
project supports a post-tax NPV(5%) of US$234 million and IRR of
21% at a long-term gold price of US$1,450/oz.
The Doropo PEA is based on the updated MRE but work does not
include Tchouahinan, Nare, Hinda and Vako deposits. The opportunity
to include these deposits might be re-evaluated at later assessment
phases.
The PEA assumes contractor open pit mining to access multiple
pits, with oxide ore recovered by conventional free milling, carbon
in leach ("CIL") processing flowsheet and an additional sulphide
floatation and ultra-fine grind concentrate for the sulphide ore. A
processing rate of 4.9 million tonnes per annum is anticipated for
the free milling material dropping to 4.4 million tonnes per annum
in the fresh material. Based on metallurgical test work, overall
recoveries are forecast to average 90% in the free milling material
and fresh ores over the life of mine.
A total of 2.0 million ounces are forecast to be recovered over
the life of mine at an average cash cost of US$796/oz and an AISC
of US$904/oz.
Power is anticipated to be generated through a 27MW liquefied
natural gas ("LNG") power station which will be built and operated
by an independent power provider. A lined tailings storage facility
has been assumed and designed to an ANCOLD specification, with a
cyanide destruction circuit for tailings management.
Next Steps
The PEA confirms that Doropo has robust economics and excellent
potential to become a profitable producing mine suitable for
Centamin's investment criteria and strategy. The Board has approved
US$14 million of spend over the next twelve months to progress to a
PFS. This includes a 70,000-metre infill drilling programme,
geotechnical drilling programme, open pit optimisation, further
metallurgical testing, and environmental and social screening and
scoping assessments.
The Company expects to announce the PFS in mid-2022.
Abc project (CÔTE D'IVOIRE)
The ABC Project ("ABC") is in northwest Côte d'Ivoire,
approximately 550km northwest of Abidjan and 460km west of
Centamin's Doropo project.
ABC comprises two exploration permits, Kona and FarakoNafana,
which cover 750km(2) of prospective geology straddling the
Sassandra Shear Zone along the contact zone between the Birimian
terrane to the east and the Archaean craton to the west.
Exploration by the Company to date has delineated a north to south
trending gold-mineralised corridor - the Lolosso Gold Corridor
("LGC") - over a 30km strike length within the Kona permit. The
Company has made applications for a further five exploration
permits covering potential strike extensions to this mineralised
belt.
ABC is at an early stage of exploration, however, exploration
drilling in 2019-20 has delineated gold mineralisation over a 10km
strike length at the Kona Central and Kona South prospects. In
addition, geochemical anomalies indicate potential gold
mineralisation at the Kona North prospect and at the FarakoNafana
permit - although these areas have not yet been drill-tested.
Geology
The LGC is typically 300m to 800m wide and the underlying
geology comprises a greenschist to lower amphibolite facies
Birimian age volcano-sedimentary package thrusted between an
earlier granitoid block of Archaean age to the west and Birimian
paragneiss on the east. The eastern footwall contact is a major
structural and metamorphic feature, and it controls the regional
setting of the gold mineralisation along the corridor. The
paragneiss is interpreted to be the stratigraphic continuity of the
detrital sediments but has a higher metamorphic grade.
Surface geochemistry maps the core of the LGC along a 23km
strike length, which runs north to south through the Kona permit.
The two main prospects, identified by the initial mapping and rock
chip sampling, were subdued silicified ledges in the topography.
These anomalous ridges developed into the Kona South and Kona
Central Prospects. On a regional scale, mapping and airborne
magnetic and radiometric data identifies the LGC as a 60km
structural feature.
Reverse Circulation ("RC") and Core drilling (50 metre drill
hole spacing) at the Kona South and Kona Central prospects has
delineated significant widths of mineralisation at the contact of a
calc-silicate and psammite unit, with gold mineralisation confined
to the latter more brittle rock type.
Next Steps
A US$3 million exploration budget for the period to June 2022
has been approved for further exploration of the ABC permits. Soil
geochemical surveys are currently underway covering both permit
areas, which will likely generate further drill targets within the
LGC. In addition, closer spaced drilling (25 x 50 metre) will be
undertaken to better define the continuity of gold mineralisation
at Kona South and Kona Central prospects and exploration drilling
is also planned for the Kona North prospect and at FarakoNafana.
Further metallurgical work, as well as gold deportment and
mineralogical studies, will also be carried out on the Kona South
and Kona Central mineralisation.
batie west project (Burkina Faso)
The Batie West Project ("Batie West") consists of one
exploitation license valid until November 2021 and four exploration
permits, covering an area of approximately 380km(2) . Batie West is
in the southwest of Burkina Faso, within the Southern Noumbiel
Province, bordering Ghana and Côte d'Ivoire, and is approximately
290km southwest of the Burkinabe capital of Ouagadougou.
Batie West is 10km northeast of the Doropo main mineral resource
area. Geologically, Batie is hosted along the south-western margin
of the Birimian Boromo greenstone belt, on the Batie West Shear
Zone ("BWSZ"). The BWSZ is a major crustal scale shear zone that
traverses the western margin of the greenstone belt.
Batie West has three main orebodies: Konkera Main, Konkera North
and Kouglaga. The Konkera deposits are a shear zone hosted style
quartz-vein gold deposit. Similar deposits are found in the late
Proterozoic Birimian terranes of West Africa. Gold mineralisation
is typically associated with quartz veins with minor amounts of
carbonate, tourmaline, sulphides and native gold.
Aligned with our disciplined capital allocation framework, there
has been no drilling at Batie West since 2018. Through reassessment
of existing data sets and independent reports, the Company has
built upon work done previously, to iteratively assess the
viability of the project.
Positive PEA
Batie West is a viable project with an 8.5-year life of mine
producing on average 140koz per annum for an initial development
capital cost of US$265 million, including 15% of contingency. The
project forecasts a post-tax NPV(5%) of US$63 million using long
term gold price of US$1,450/oz gold price.
The Batie West PEA is based only on the mineral resource
estimate of 56.7 million tonnes at 1.2g/t containing 2.13 million
ounces of gold Measured and Indicated resources, and 2.8 million
tonnes at 1.1g/t containing 0.1 million ounces of gold Inferred
resources. This study does not include Konkera Main East, which is
relatively small and was found to be uneconomic to process and not
included in the current mine planning.
The study utilised an open pit, contractor mining operation with
optimisation studies completed for Konkera Main, Konkera North and
Kouglaga to accommodate a staged development for each deposit,
allowing for efficient resource extraction at acceptable stripping
ratios. Extensive previous test work alongside a more recent review
by Lycopodium resulted in processing via conventional free milling
and CIL processing and an additional sulphide floatation and
ultra-fine grind concentrate grind for the fresh ore. Like Doropo,
a process rate of 4.9 million tonnes per annum is anticipated for
the free milling material dropping to 4.4 million tonnes per annum
in the fresh material. Based on metallurgical test work, recoveries
are forecast to be 81%, including the free milling material and
fresh ores.
A total of 1.2 million ounces of gold are forecast to be
recovered over the life of mine at average cash costs of US$859/oz
and AISC of US$998/oz.
Power is anticipated to be generated through a 27MW LNG power
station which will be built and operated by an independent power
provider. A lined tailings storage facility has been assumed and
designed to ANCOLD specification, with a cyanide destruction
circuit for tailings management.
Next Steps
The study confirms that Batie West has viable economics and
strong potential to become a profitable producing mine but ranked
against the Company's project pipeline and internal hurdles for
capital allocation, is non-core for Centamin and the Company will
strategically assess third party opportunities to develop or
realise the project's value.
MINERAL RESOURCE ESTIMATES
The mineral resource data presented in the tables included in
this document comprise a summary extract for the mineral resource
reports for the Group's properties in West Africa and do not
include the mineral resources for the Company's flagship asset,
Sukari Gold Mine. For comparative purposes, data for 2020 has been
included where possible. Numbers have been rounded and therefore
there may be small differences in the totals. Varying cut-off
grades have been clearly stated.
2021 2020
Category Tonnage Grade Gold Tonnage Grade Gold
Content Content
(Moz) (Moz)
==================== =========== ========= =========
(Mt) (g/t) (Mt) (g/t)
==================== =========== ======== ====== ========= ======== ====== =========
DOROPO PROJECT Measured - - - 5.2 1.52 0.26
0.5g/t cut-off
grade Indicated 2.34 2.13 0.16 56.1 1.21 2.18
=========== ======== ====== ========= ======== ====== =========
M+I 2.34 2.13 0.16 61.3 1.22 2.44
================================ ======== ====== ========= ======== ====== =========
Inferred 142.9 1.13 5.21 30.1 1.1 1.04
ABC PROSPECT Measured - - - - - -
0.5g/t cut-off
grade Indicated 20 1.03 0.65 20 1.03 0.65
=========== ======== ====== ========= ======== ====== =========
M+I 20 1.03 0.65 20 1.03 0.65
================================ ======== ====== ========= ======== ====== =========
Inferred 16 0.9 0.5 16 0.9 0.5
BATIE WEST PROJECT Measured - - - - - -
0.5g/t cut-off
grade Indicated 56.7 1.17 2.13 34 1.70 1.92
=========== ======== ====== ========= ======== ====== =========
M+I 56.7 1.17 2.13 34 1.70 1.92
================================ ======== ====== ========= ======== ====== =========
Inferred 2.8 1.1 0.1 25 1.7 1.3
================================ ======== ====== ========= ======== ====== =========
RESOURCE NOTES
Doropo Project
-- The estimation method is Ordinary Kriging using dynamic
anisotropy and Local Uniform Conditioning
-- Classifications of Indicated and Inferred has been based
primarily on the estimation quality parameters, including the
quality of the domain variograms, the conditional bias slope and
average distance to informing data
-- The reported estimates are limited to blocks with a maximum
depth of 250 metres below surface and within 80 metres of drill
hole data
-- All available data was used as at 31 October 2020
-- A cut-off grade of 0.5 g/t gold is used for reporting as it
is believed that the majority of the reported resources can be
mined at that grade.
ABC Project
-- The estimation method is Multiple Indicator Kriging using GS3 software
-- Indicated resources occur in areas drilled at approximately
50 x 50 metre spacing and Inferred resources exist in areas of
broader spaced drilling
-- The reported estimates are limited to blocks with a maximum
depth of 250 metres below surface and within 100 metres of drill
hole data
-- All available ABC data was used as of 10 December 2018
-- A cut-off grade of 0.5 g/t gold is used for reporting as it
is believed that the majority of the reported resources can be
mined at that grade.
The Doropo and ABC resource data sets include Reverse
Circulation and Diamond drill data with gold estimates based on
50-gram Fire Assay analysis completed at Bureau Veritas Mineral
Laboratories, Abidjan.
Batie West Project
-- The open pit Mineral Resources are estimates of recoverable
tonnes and grade using Multiple Indicator Kriging with block
support correction produced using GS3 software
-- Indicated resources occur in areas drilled at approximately
25 x 50 metre spacing and Inferred resources exist in areas of
broader spaced drilling
-- The reported open pit Mineral Resource estimate is restricted
to a US$1,900/oz pit shell and reported using a 0.5 g/t gold
cut-off grade. The reported Mineral Resource extends over a strike
length of approximately 5.2km, a width of 480 metres and extends to
a depth of 310 metres
-- All available Reverse Circulation and Diamond drilling
samples were used as at 1 January 2020. The resource data set
comprised 106,738 two-metre down hole composite samples.
Qualified persons
Information of a scientific or technical nature in this
document, including but not limited to the Mineral Reserve and
Mineral Resource estimates, was prepared by and under the
supervision of the Group Qualified Persons, Howard Bills, Group
Exploration Manager, and Craig Barker, Group Mineral Resource
Manager, and independent Qualified Person(s) as below:
-- Doropo Project: Richard Adams of Cube Consulting Pty Ltd
-- ABC Project: Rupert Osborn of H&S Consultants Pty Ltd
A "Qualified Person" is as defined by the National Instrument
43-101 of the Canadian Securities Administrators. The named
Qualified Person(s) 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. Each Qualified
Person consents to the inclusion of the information in this
document in the form and context in which it appears.
Investors should be aware that the figures stated are estimates
and no assurances can be given that the stated quantities of metal
will be produced.
Mineral Resource Estimates contained in this document are based
on available data as at:
-- Doropo Project 31 October 2020
-- ABC Project 10 December 2018
-- Batie West Project 1 January 2020
NOTES
Guidance
The Company actively monitors the developments of the COVID-19
pandemic and timelines may be impacted if the workforce (including
contractors), supply chain or scheduled activities are
disrupted.
Consensus gold price
Source: BMO Capital Markets. Five-year consensus gold price of
US$1,829/oz, as at 31 March 2021.
Financials
Financial data points included within this report are
unaudited.
The PEA(s) are preliminary in nature and include the use of
Inferred mineral resources that are considered too speculative
geologically to have the economic considerations applied to them
that would enable them to be categorised as mineral reserves and,
as such, there is no certainty that the studies will be realised.
Mineral resources that are not mineral reserves do not have
demonstrated economic viability.
Non-GAAP measures
This statement includes certain financial performance measures
which are not GAAP measures as defined under International
Financial Reporting Standards (IFRS). These include Cash costs of
production and AISC. Management believes these measures provide
valuable additional information for users. Definitions and
explanation of the measures used are detailed in the Company's 2020
Annual Report https://www.centamin.com/investors/results-reports/
.
Forward-looking Statements
This announcement (including information incorporated by
reference) contains "forward-looking statements" and
"forward-looking information" under applicable securities laws
(collectively, "forward-looking statements"), including statements
with respect to future financial or operating performance.
Generally, these forward-looking statements can be identified by
the use of forward-looking terminology such as "believes",
"expects", "expected", "budgeted", "forecasts" and "anticipates"
and include statements concerning targets for future and further
grown, timing to complete the PFS, development potential, expected
NPV(5%) and CAPEX, potential increases in resources and other
future plans or expectations. Although Centamin believes that the
expectations reflected in such forward-looking statements are
reasonable, Centamin can give no assurance that such expectations
will prove to be correct. Forward-looking statements are
prospective in nature and are not based on historical facts, but
rather on current expectations and projections of the management of
Centamin about future events and are therefore subject to known and
unknown risks and uncertainties which could cause actual results to
differ materially from the future results expressed or implied by
the forward-looking statements. In addition, there are a number of
factors that could cause actual results, performance, achievements
or developments to differ materially from those expressed or
implied by such forward-looking statements; the risks and
uncertainties associated with the ongoing impacts of COVID-19 or
other pandemic, general business, economic, competitive, political
and social uncertainties; the results of exploration activities and
feasibility studies; assumptions in economic evaluations which
prove to be inaccurate; currency fluctuations; changes in project
parameters; future prices of gold and other metals; possible
variations of ore grade or recovery rates; accidents, labour
disputes and other risks of the mining industry; climatic
conditions; political instability; decisions and regulatory changes
enacted by governmental authorities; delays in obtaining approvals
or financing or completing development or construction activities;
and discovery of archaeological ruins. There can be no assurance
that forward-looking statements will prove to be accurate, as
actual results and future events could differ materially from those
anticipated in such information or statements, particularly in
light of the current economic climate and the significant
volatility, uncertainty and disruption caused by the outbreak of
COVID-19. Forward-looking statements contained herein are made as
of the date of this announcement and the Company disclaims any
obligation to update any forward-looking statement, whether as a
result of new information, future events or results or otherwise.
Accordingly, readers should not place undue reliance on
forward-looking statements.
LEI: 213800PDI9G7OUKLPV84
Company No: 109180
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