PERTH, AUSTRALIA–(Marketwired – May 3, 2016) – Centamin plc (LSE: CEY) (TSX: CEE)
Centamin plc (“Centamin” or the “Company”)
(LSE: CEY; TSX:CEE)
Centamin plc Results for the Quarter ended 31 March 2016
Centamin plc (“Centamin” or the “Company”) (LSE: CEY; TSX: CEE) is pleased to announce its unaudited results for the three months ended 31 March 2016.
Legal Developments in Egypt
|Q1 2016||Q4 2015||Q1 2015|
|Cash cost of production||US$/ounce||603||667||717|
|Average realised gold price||US$/ounce||1,196||1,103||1,216|
|Profit/(loss) after tax||US$’000||40,850||(2,081)||28,566|
|Basic EPS||US cents||3.56||(0.19)||2.50|
|Cash generated from operations||US$’000||60,482||53,410||56,643|
Notes to highlights
Andrew Pardey, CEO of Centamin, commented: “The first quarter marked a solid start to the year, with a 42% quarterly increase in EBITDA to US$67.5 million driven by production at Sukari of 125,268 ounces of gold and a continued downward trend in costs. Cash cost of production of US$603 per ounce and AISC of US$758 per ounce were a material reduction on the previous quarter and below our full year guidance. Operationally, processing was a highlight and a key driver of the increase in gold output, with plant throughput rising above our base forecast rate of 11Mt per annum as the optimisation programme continued. With quarterly production rates expected to remain within the 450,000 to 500,000 ounces per annum range, our full year guidance remains unchanged at 470,000 ounces at US$680 per ounce cash cost of production and US$900 per ounce AISC. The key focus for the operation during the coming quarters is on realising the potential for sustained productivity and cost improvements.”
To view the full announcement please click the following link:
Centamin will host a conference call on Tuesday, 3rd May 2016 at 9.00am (London, UK time) to update investors and analysts on its results. Participants may join the call by dialling one of the following three numbers, approximately 10 minutes before the start of the call.
UK Toll Free: 0808 237 0040
International Toll number: +44 203 428 1542
Canada Toll free: 1866 404 5783
Participant code: 84900650#
A recording of the call will be available four hours after the completion of the call on:
UK Toll Free: 0808 237 0026
International Toll number: +44 20 3426 2807
Playback Code: 671356#
Via audio link at http://www.centamin.com/centamin/investors
CHIEF EXECUTIVE OFFICER’S REPORT
First quarter gold production of 125,268 ounces represented a 6% increase on the previous quarter. A comparable increase in gold sales, together with an 8% rise in the average realised gold price and a 10% reduction in the cash cost of production to US$603 per ounce, saw EBITDA increase by 42% on the previous quarter to US$67.5 million.
The quarterly reduction in unit cash cost of production was primarily a function of both the higher gold production and also an 8% decrease in mine production costs to US$71.6 million. The lower operating expenditure was achieved despite higher processing and open pit mining rates, and reflects improved cost efficiencies in addition to a continued reduction in fuel prices.
Sukari’s strong free cash flows and competitive returns were also highlighted by first quarter AISC of US$758 per ounce, below our full year guidance of US$900 per ounce. In addition to the factors affecting the cash cost of production, there was a lower quarterly expenditure on sustaining capital than is expected for the remainder of the year.
Centamin’s balance sheet continued to build strength, ending the period with US$275.7 million of cash, bullion on hand, gold sales receivable and available-for-sale financial assets. This marked an increase of US$45 million during the quarter, and followed expenditure on exploration (excluding Sukari underground drilling) of US$12.0 million, supported by continued positive drill results from West Africa. Centamin remains committed to its policy of being 100% exposed to the gold price through its un-hedged position.
Safety remains a priority and therefore it is pleasing to note that during the period we reached our safety target of zero lost time injuries.
Processing rates were 4% higher than the prior quarter and 5% above our base case 11Mtpa forecast rate as optimisation continued. Recoveries of 88.6% were in line with both the previous quarter and our forecast for the full year. Work continues on developing the potential to improve and sustain recoveries at the 90% level at increasing throughput rates.
The open pit delivered total material movement of 15,157kt, an increase of 10% on Q4 2015 due to improved fleet utilisation and productivity. During March, mining reached the full annualised rate of 66 million tonnes as scheduled for the expanded operation and higher quarterly mining rates are expected in the second quarter. Mined ore grades of 0.87g/t were below expected levels for the full year as production focussed on lower grade sections of the ore body. Pit development has progressed according to the current mine plan and grades mined and milled increased towards the reserve average by the end of the quarter, as expected.
The underground mine delivered 281kt of ore, a 6% decrease on Q4 2015, at an average grade of 7.77g/t (compared with 7.05g/t in Q4 2015). The focus for the operation remains to consistently deliver ore at an average grade of at least 6g/t.
Production is forecast to remain in the 450,000 to 500,000 ounces per annum range and we maintain our full year guidance of 470,000 ounces at US$680 per ounce cash cost of production and US$900 per ounce AISC. With gold output now established at target levels for the expanded Sukari operation, we remain focussed on realising further increases in productivity and cost efficiencies. Whilst our forecasts remain unchanged, we continue to note that optimisation of the mining and processing operations is ongoing and offers the potential in the coming quarters to deliver increased gold output and lower costs than this base case outlook.
Our exploration in Burkina Faso continues to build evidence of a number of potentially economic high-grade mineralised structures, in addition to extensive areas of lower-grade mineralisation. We continue to test the potential for lateral and depth extensions at these more advanced targets, with priority on the Wadaradoo and Napalapera prospect areas. In Côte d’Ivoire, first-pass drilling over targets defined by geochemical and geophysical surveys has indicated the potential over a number of prospects for laterally significant mineralisation.
Developments in the two litigation actions, Diesel Fuel Oil and Concession Agreement, are described in further detail in Note 7 to the financial statements. No final decision has been taken by the courts regarding the Diesel Fuel Oil case and the Company is aware of the potential for delays in the Egyptian legal system. In respect of the Concession Agreement case, the Company continues to believe that it has a strong legal position and, in addition, that it will ultimately benefit from law no 32 of 2014, which came into force in April 2014 and which restricts the capacity for third parties to challenge any contractual agreement between the Egyptian government and an investor. This law, whilst in force and ratified by the new parliament, is currently under review by the Supreme Constitutional Court of Egypt. After a series of delays and adjournments, the Concession Agreement appeal has now been set down for judgment on 24 May 2016. If the judgment is a final judgment, the Company expects it will be in its favour. However, it has been advised that the Egyptian legal system allows for the possibility of an interim judgment staying the appeal until the Supreme Constitutional Court has ruled on the validity of law no 32.
Sukari Gold Mine
|Q1 2016||Q4 2015||Q1 2015|
|OPEN PIT MINING|
|Ore mined (1) (‘000t)||2,405||2,229||2,562|
|Ore grade mined (Au g/t)||0.87||0.77||0.78|
|Ore grade milled (Au g/t)||0.83||0.75||0.95|
|Total material mined (‘000t)||15,157||13,754||15,996|
|Strip ratio (waste/ore)||5.30||5.17||5.24|
|Ore mined from development (‘000t)||145||151||129|
|Ore mined from stopes (‘000t)||136||149||135|
|Ore grade mined (Au g/t)||7.77||7.05||6.01|
|Ore processed (‘000t)||2,876||2,758||2,478|
|Head grade (g/t)||1.49||1.47||1.48|
|Gold recovery (%)||88.5||88.5||88.3|
|Gold produced – dump leach (oz)||2,993||3,417||4,814|
|Gold produced – total (2) (oz)||125,268||117,644||108,233|
|Cash cost of production(3) (4) (US$/oz)||603||667||717|
|Open pit mining||213||232||247|
|AISC(3) (4) (US$/oz)||758||851||858|
|Gold sold (oz)||123,668||117,351||111,249|
|Average realised sales price (US$/oz)||1,196||1,103||1,216|
(1) Ore mined includes 0t delivered to the dump leach in Q1 2016 (217kt @ 0.52 g/t in Q1 2015).
(2) Gold produced is gold poured and does not include gold-in-circuit at period end.
(3) Cash cost of production exclude royalties, exploration and corporate administration expenditure. Cash cost of production and AISC are non-GAAP financial performance measures with no standard meaning under GAAP. For further information and a detailed reconciliation, please see “Non-GAAP Financial Measures” section below.
(4) Cash cost of production and AISC include an exceptional provision against prepayments to reflect the removal of fuel subsidies which occurred in January 2012 (see notes 4 and 5 to the financial statements).
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