Centamin Egypt Limited
TSX : CEE
LSE : CEY

Centamin Egypt Limited

February 01, 2011 03:36 ET

Centamin Egypt Limited Quarterly Report for the Three Months Ended 31 December 2010

TORONTO, ONTARIO--(Marketwire - Feb. 1, 2011) - Centamin Egypt Limited ("Centamin" or "the Company") (TSX:CEE)(LSE:CEY), the gold mining group in Egypt, is pleased to announce its quarterly update.

HIGHLIGHTS

Operations

  • Record quarterly gold production of 53,189 ounces was achieved from the Company's Sukari Gold Mine, with production averaging over 20,000 ounces per month in November and December.
  • Record quarterly material movement of 6Mt from the Sukari open pit.
  • Cash operating cost averaged US$498 per ounce for the quarter.
  • Successful installation of the steel liner and lifter system in the SAG Mill in early November increased process plant throughput rate and availability for the remainder of the quarter. No further issues were encountered or expected from this area.
  • First development ore from the underground development was mined and processed following intersection and access to the high grade Hapi Zone.
  • Close spaced stope definition drilling commenced to provide key information for the assessment of the optimal underground mining method to be employed for commercial ore extraction. 
  • Expected 2011 production will be in the range of 250-290,000 ounces with average cash costs around US$450/oz. Further guidance is planned for mid 2011 as more information becomes available on the timing and scale of commercial underground production rates.

Mine Expansion / Development

  • Stage 3 construction activities remained on schedule during the quarter with the completion of civil works and the arrival of the secondary crusher to site. The project remains on schedule and budget for mid 2011 commissioning.
  • The Stage 4 Scoping Study was completed confirming the superior project economics of a 10Mtpa expansion and determining the optimum process and mining configuration to achieve the same.
  • Front end engineering and design work commenced on the Stage 4 expansion with a view to long lead time items being ordered late Q1 – early Q2 2011.
  • A further 881m of underground development advance was made for the quarter, with the development focus shifting to ore drive and cross cut development ahead of trial stoping.
  • Eight drill rigs continued resource definition drilling activities targeting Amun, Hapi and Pharaoh gold zones with a revised resource statement expected during Q1 2011.

Corporate/Finance Activities

  • Operating profit for the quarter of US$18.4m.
  • Cash and liquid bullion assets of US$166M.
  • The Company raised net proceeds of US$132M during the quarter via a share placement.
  • The Company remains debt free and unhedged.
  • All capital and ongoing operating expenses continue to be financed from cash flows generated by the Company's gold revenues.

Current Political Situation in Egypt

Recent political events in Egypt have not affected the safety of the Company's employees or its day to day operations at its flagship project, Sukari. The Company looks forward however to a speedy resolution to the current uncertainty and remains confident that such resolution will not negatively impact on the Company's investment.

Commenting on the quarterly results, Josef El-Raghy, Chairman of Centamin said

"As expected, the installation of steel liners and lifters in the SAG mill during the quarter has substantially improved plant operations and reliability. The two consecutive months of record gold production in November and December demonstrate the deliverability of a substantially higher production profile in 2011 with our existing operations. This production will be further enhanced following the completion of Stages 3 and 4 of the plant expansion, as well as the continued ramp up of production from the underground mine."

SUKARI GOLD MINE

Production Statistics

    December 2010 Quarter September 2010 Quarter June 2010 Quarter March 2010 Quarter
Ore Mined ('000t) 2,123 1,682 1,400 984
Total Mined ('000t) 5,975 4,916 5,305 4,326
Strip Ratio waste/ore 1.8 1.9 2.8 3.4
Ore Processed ('000t) 773 605 847 919
Head Grade (g/t) 2.30 1.75 1.37 1.41
Gold Recovery (%) 88.1 82.6 86.5 90.0
Gold Produced - Total (1) (oz) 53,189 30,243 30,236 36,621
Gold Produced - Dump Leach (oz) 2,387 3,049 2,791 -
Cash Operating Cost of Production (2) US$/oz 498 638 569 403
Gold Sold (oz) 35,150 31,228 30,759 32,994
Average Sales Price US$/oz 1,369 1,239 1,203 1,105
Notes:-  
(1) Gold produced is gold poured and does not include gold-in-circuit at period end.
(2) Cash operating costs excludes royalties, exploration and corporate administration expenditure.

Operational Performance Overview

For the December quarter, a total of 2.1Mt of ore @ 1.07g/t Au was mined with a total quarterly material movement of 6.0Mt and resultant waste to ore ratio of 1.8:1. This represents the highest quarterly ore movement to date and a 21% increase over the previous quarter mining activity. The increase in production is attributable to improved excavator productivity, coupled with the production benefit from the fourth Terex RH120 excavator, which began production during Q3. Mining of the Stage 1 pit was completed through to the 1052mRL and Stage 2 mining progressed to the 1136mRL. Mining also commenced in Stage 1A cutback on the eastern flank of Stage 1, with mining completed to the1100mRL.

A variety of ancillary equipment to support mining and related project activities was delivered during the quarter. A CAT993K front end loader is currently being commissioned, whilst three CAT785C 150t dump trucks and further ancillary equipment are scheduled for delivery during the first half of 2011 to support the projected increase in mining volume and as part of the 5Mtpa plant expansion.

Process plant throughput for the December quarter of 772,900 tonnes was 28% above the previous quarter, underpinning the benefit of the introduction of the SAG mill steel liner and lifter system in early November. As outlined in the previous quarter, the steel liner and lifter system replaced the polymet system which was prone to intermittent failure. The installation of the steel liners has enabled a sustainable increase in mill throughput and availability.

Dump leach pads continue to be irrigated with a total placement by end of quarter of approximately 2.8Mt of low grade ore at an average dumped grade of 0.5 g/t.

Resultant cash cost per ounce for the quarter was US$498, in line with expectations following the replacement of the polymet liner and lifter system during the quarter.

Underground Mine Development

Underground development recorded an overall advance of 881 meters for the quarter, including continued development of the main Amun decline (105m), ore drives and cross cut development (640m) as well as completion of the ventilation decline and escape way infrastructure. The main ventilation exhaust fan was successfully installed and commissioned during the quarter which will allow further decline development to take place in the coming quarters. 

Following the intersection of the high grade Hapi Zone mineralisation as expected at the 920 level, a total of 39,577 tonnes @ 6.1g/t of development ore was produced during the quarter. By the end of the quarter, ore drive development had continued through to the 905 level.

A total of 672m of underground definition drilling was completed during the quarter. Determination of the optimal underground mining method shall take place during the first half of 2011, following completion of definition drilling program.

Exploration

During the quarter, resource definition drilling continued to be mainly concentrated in the Hapi, Amun Deeps and Pharaoh zones. In total, 16,663m of diamond drilling was completed during the quarter. The current drill program continues to show success in targeting the down dip and along strike extension of the Hapi Zone and other parallel high grade structures within the main porphyry. These zones along the entire strike length of Sukari Hill (2.5km) are the target of the comprehensive infill and extension drilling with 8 diamond coring rigs:

D1583 - 19m @ 2.85g/t from 53m
D1588 - 10m @ 3.26g/t from 174m
D1588 - 100m @ 1.52g/t from 462m
D1589 - 10m @ 5.53g/t from 152m
D1591 - 23m @ 3.65g/t from 530m
D1592 - 43m @ 1.19g/t from 35m
D1601 - 51m @ 1.43g/t from 235m

SUKARI PROJECT EXPANSION

Stage 3 Expansion – Secondary Crushing

Construction activities continued throughout the quarter with steel erection on the transfer tower, crusher building and screening building all underway, following mobilisation of the principal construction contractor. Steel erection is well progressed with completion of steel deliveries due in early 2011. Installation of the secondary crushing equipment to site is scheduled throughout the first quarter of 2011.

Stage 3 is targeting a mill throughput increase to 5Mtpa and project completion is expected in mid 2011.

Capital expenditure for the quarter and calendar year were US$6M and US$8.5M respectively.

Stage 4 Expansion – 10Mtpa

During the quarter, the Stage 4 scoping study was completed. The Company announced that the preferred process flow route selected was a conventional SAG/Ball Mill grinding configuration (similar to the current plant configuration) due to its comparable economics and existing site operating knowledge with the Sukari orebody. 

Final Board commitment for the Stage 4 expansion is expected during the first half of 2011, following completion of front end engineering and design activities. Stage 4 completion is targeted to occur in 2012.

It is intended that both Stage 3 and Stage 4 expansions will be financed entirely from cash flow generated from production and gold sales.

RESOURCE AND RESERVE DEFINITION

Sukari Global Resource (as at 01 June 2010)

0.5 g/t Cut-off Au Tonnes (Mt) Grade (g/t Au) Gold (Moz)
Measured & Indicated 235.73 1.45 10.99
Inferred 68.9 1.6 3.5
TOTAL 304.6 1.48 14.5
Notes to table: Figures in table may not add correctly due to rounding. Proven and probable ore reserves are included in mineral resources. Figures are below the August 2010 mined surface.

Sukari Mineral Reserve (as at 01 August 2010)

Proven Probable Mineral Reserve
Tonnes (Mt) Au (g/t) Tonnes (Mt) Au (g/t) Tonnes (Mt) Au (g/t) Cont Au (Moz)
102.4 1.09 142.9 1.19 245.4 1.15 9.1
The mineral reserves are based on the resource model announced on 08 June 2010 which includes drilling up to 31 May 2010 and below the August 2010 mined surface, a gold price of US$900 per ounce and a cut-off grade of 0.3 g/t Au for oxide transition and sulphide material.

To view the Sukari Global Resource and Mineral Reserve Growth graph, please visit the following link: http://media3.marketwire.com/docs/sukari.pdf.

CORPORATE ACTIVITIES

At the end of the quarter, the Company had US$166M in available cash and liquid bullion assets. The Company remains debt free and unhedged.

During December 2010, the Company raised net proceeds of US$132M, following the successful placement of 51.5M shares at 167 pence. Centamin intends to use the net proceeds for the next stage of its growth strategy. 

Mr Herbert Stuart Bottomley retires as a non executive director of the Company effective 02 February 2011. The Board would like to thank Stuart for all of his time, effort and guidance over the past five years, and wishes him the best in his personal endeavours.

On behalf of Centamin Egypt Limited

Josef El-Raghy, Chairman

01 February 2011

Centamin Egypt Limited will host a conference call on Tuesday, 01 February 2011 at 11:30am (London, UK time) to update investors and analysts on its quarterly results. Participants may join the call by dialling one of the following four numbers, approximately 10 minutes before the start of the call. Participant pass code: 862573#
   
From UK: (toll free) 0800 368 1895 From US: (toll free) 1866 928 6049
From Canada: (toll free) 1866 561 8617 From rest of world: + 44 20 3140 0693
   
A live audiowebcast of the call will be available on: http://mediaserve.buchanan.uk.com/2011/centamin010211/registration.asp.
   
A replay of the webcast will be available on the same link from 1.00 pm (London, UK time) on Tuesday, 01 February 2011.

COMPETENT PERSONS STATEMENT

Quality Assurance and Control and Qualified Person

The information in this report that relates to ore reserves has been compiled by Mr Andrew Pardey. Mr Pardey is a Member of the Australasian Institute of Mining and Metallurgy and is a full time employee of the Company. He has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity he is undertaking, to qualify as a "Competent Person" as defined in the 2004 Edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves" and is a "Qualified Person" as defined in the "National Instrument 43-101 of the Canadian Securities Administrators" and "CIM Definition Standards For Mineral Resources and Mineral Reserves" of December 2005 as prepared by the CIM Standing Committee on Reserve Definitions of the Canadian Institute of Mining. Mr Pardey's written consent has been received by the Company for this information to be included in this report in the form and context which it appears.

The information in this report that relates to mineral resources is based on work completed independently by Mr Nicolas Johnson, who is a Member of the Australian Institute of Geoscientists. Mr Johnson is a full time employee of Hellman and Schofield Pty Ltd and has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a "Competent Person" as defined in the 2004 edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves" and is a "Qualified Person" as defined in "National Instrument 43-101 of the Canadian Securities Administrators". Mr Johnson consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

Information in this report which relates to exploration, geology, sampling and drilling is based on information compiled by geologist Mr Richard Osman who is a full time employee of the Company, and is a member of the Australasian Institute of Mining and Metallurgy with more than five years experience in the fields of activity being reported on, and is a 'Competent Person' for this purpose and is a "Qualified Person" as defined in "National Instrument 43-101 of the Canadian Securities Administrators". His written consent has been received by the Company for this information to be included in this report in the form and context which it appears.

All exploration and resource samples were analysed by Ultra Trace Pty Ltd, Canning Vale, Western Australia. All mine based production samples were analysed by Sukari Assay Laboratory, Egypt.

Refer to the updated Technical Report which was filed in December 2010 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 issue.

CORPORATE INFORMATION

CORPORATE DIRECTORY

Directors
Mr Josef El-Raghy, Chairman
Mr Harry Michael, Chief Executive Officer
Mr Trevor Schultz, Executive Director of Operations
Mr H Stuart Bottomley, Senior Non Executive Director
Mr Colin Cowden, Non Executive Director
Dr Thomas Elder, Non Executive Director
Professor G Robert Bowker, Non Executive Director
 
Senior Management
Mr Marco Di Silvio, Chief Financial Officer
Mrs Heidi Brown, Company Secretary
 
Registered Office
57 Kishorn Road, Mount Pleasant WA 6153, Australia
Tel: + 61 8 9316 2640
Fax: + 61 8 9316 2650
Email: centamin@centamin.com.au
Website: www.centamin.com
 
Egypt Office
361 El-Horreya Road, Sedi Gaber, Alexandria, Egypt
Tel: + 203 5411 259
Fax: + 203 522 6350
 
Auditor
Deloitte Touche Tohmatsu
Level 14, 240 St Georges Terrace, Perth WA 6000
 
Share Registries
 
Australia
Computershare Investor Services Pty Ltd
Level 2, 45 St Georges Terrace
Perth WA 6000
Telephone: + 61 8 9323 2000
 
Canada
Computershare
100 University Avenue, 8th Floor
Toronto, Ontario, ON M5J 2Y1
Telephone: + 1 416 263 9311
 
United Kingdom
Computershare Investor Services
PO Box 82, The Pavilions, Bridgwater Road
Telephone: + 44 870 702 0003
 
Stock Exchange Listings
London Stock Exchange, LSE code: CEY
Toronto Stock Exchange, TSX code: CEE

ABOUT CENTAMIN EGYPT LIMITED

Centamin is a mineral exploration, development and mining company that has been actively exploring in Egypt since 1995. The principal asset of Centamin is its interest in the Sukari Project, located in the Eastern Desert of Egypt. Construction at the Sukari Project commenced in March 2007 with the first gold bar being produced on 26 June 2009.

Optimal design throughput at the Sukari Gold Project was achieved during December 2009. In January 2010, the Company announced that the Sukari Gold Project had achieved yet another important milestone with the commencement of gold exports to a nominated overseas gold refinery.

The Sukari Project is the first large-scale modern gold mine in Egypt. Centamin's operating experience in Egypt gives it a significant first-mover advantage in acquiring and developing other gold projects in the prospective Arabian-Nubian Shield.

FORWARD LOOKING STATEMENTS

Certain information contained in this report, including any information on Centamin's plans or future financial or operating performance and other statements that express management's expectations or estimates of future performance, constitute forward-looking statements. Such statements are based on a number of estimates and assumptions that, while considered reasonable by management at the time, are subject to significant business, economic and competitive uncertainties. Centamin cautions that such statements involve known and unknown risks, uncertainties and other factors that may cause the actual financial results, performance or achievements of Centamin to be materially different from the Company's estimated future results, performance or achievements expressed or implied by those forward-looking statements. These factors include the inherent risks involved in exploration and development of mineral properties, changes in economic conditions, changes in the worldwide price of gold and other key inputs, changes in mine plans and other factors, such as project execution delays, many of which are beyond the control of Centamin.

Nothing in this report should be construed as either an offer to sell or a solicitation to buy or sell Centamin securities.

ABN 86 007 700 352

Contact Information

  • Centamin Egypt Limited
    Josef El-Raghy
    Chairman
    + 61 (8) 9316 2640 or + 203 5411 259
    www.centamin.com
    or
    Buchanan Communications Limited
    Bobby Morse / Katharine Sutton
    + 44 (0) 20 7466 5000