Centamin Egypt Limited
TSX : CEE
LSE : CEY

Centamin Egypt Limited

May 05, 2011 06:00 ET

Centamin Egypt Limited-Quarterly Report for the Three Months Ended 31 March 2011

TORONTO, ONTARIO--(Marketwire - May 5, 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

  • Quarterly gold production of 45,204 ounces was achieved from the Sukari Gold Mine.
  • Cash operating cost averaged US$525 per ounce for the quarter.
  • Average gold sales price US$1,405.
  • Although some key supplies suffered short term interruptions, operations were largely unaffected by the recent political events in Egypt.
  • SAG mill steel liner and lifter configuration performed to design standard during the quarter, following installation in Q4 2010.
  • Expected 2011 gold production guidance of an estimated 250-290,000 ounces remains intact, however, with the events that transpired during the quarter, it is prudent to guide towards the lower end of this range. 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 commissioning commenced on 01 May 2011, two months ahead of the mid-2011 schedule and on budget. Construction activities remained on schedule during the quarter with the completion of all major activities.
  • Front end engineering and design work continued on the Stage 4 expansion. Orders for long lead items are expected to commence early in Q2 2011.
  • A further 783m of underground development advance was completed during the quarter, with ore drive and cross cut development continuing. Initial trial stoping commenced during the quarter.
  • Exploration drilling on the Sukari hill returned a significant intercept of 201m @ 2.30g/t from 568m which included 67m @ 5.89g/t (from 702m). This intercept is outside the currently defined ultimate pit design and approximately 1km north of the current underground decline. Eight drill rigs continue to work on the licence area with a revised resource statement expected during the second half of 2011.

Corporate/Finance Activities

  • Record quarterly operating profit of US$56.1M.
  • Cash and liquid assets of US$185.6M, up from US$166M.
  • Mr Mark Arnesen, Mr Mark Bankes and Mr Ed Haslam were appointed as non executive directors and Mr Herbert Stuart Bottomley retired as a non executive director during the quarter. Mr Colin Cowden and Dr Thomas Elder shall be retiring in the forthcoming quarter.
  • The Company remains debt free and unhedged.
  • All capital and ongoing operating expenses continue to be financed from cash flows generated by gold revenues from the Sukari Gold Mine.

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

"This quarter saw the most profitable performance of the Company to date at a time which presented some unusual and unforeseen challenges. The Company's personnel deserve great credit for navigating a safe path through these events and delivering solid production results. With the recent early commissioning of Stage 3 and the significant drill intercepts in the north of the Sukari Hill, the Company continues to bring to realisation the true potential of this world class deposit".

SUKARI GOLD MINE

Production Statistics

March
2011
Quarter
December
2010
Quarter
September
2010
Quarter
June
2010
Quarter
Open Pit Ore Mined (1)('000t)1,2122,1231,6821,400
Total Open Pit Material Mined('000t)4,5525,9754,9165,305
Strip Ratiowaste/ore2.81.81.92.8
U/ground Development Ore Mined('000t)414000
Ore Processed('000t)741773605847
Head Grade(g/t)1.942.301.751.37
Gold Recovery(%)86.788.182.686.5
Gold Produced - Dump Leach(oz)2,6762,3873,0492,791
Gold Produced - Total (2)(oz)45,20453,18930,24330,236
Cash Operating Cost of Production (3)US$/oz525498638569
Gold Sold(oz)63,24035,15031,22830,759
Average Sales PriceUS$/oz1,4051,3691,2391,203
Notes:-
(1)Includes 435k tonnes @ 0.61 g/t placed on dump leach pads.
(2)Gold produced is gold poured and does not include gold-in-circuit at period end.
(3) Cash operating costs excludes royalties, exploration and corporate administration expenditure.

Operational Performance Overview

For the March quarter, a total of 1.2Mt of ore @ 1.10g/t Au was mined with a total quarterly material movement of 4.6Mt and resultant waste to ore ratio of 2.8:1. As previously announced, material movement from the open pit mining operation was reduced late in the quarter due primarily to delays in the delivery of blasting accessories. The minor supply interruptions have since been resolved with material movement rates expected to return to normal during the course of the second quarter. Mining of the Stage 1 pit progressed to the 1040mRL (approximately 60 metres below wadi level) and Stage 2 mining progressed to the 1124mRL. Mining continued in the Stage 1A cutback on the eastern flank of Stage 1 down to the 1076mRL.

A variety of ancillary equipment to support mining and related project activities was commissioned during the quarter with three CAT785C 150t dump trucks and further ancillary equipment scheduled for delivery during the second quarter of 2011 to support the projected increase in mining volume as part of the 5Mtpa plant expansion.

Process plant throughput for the December quarter of 741,148 tonnes, 4% below the previous quarter with the first change out of the SAG mill liners successfully completed during the last week of March. The SAG mill steel liner and lifter system provided much improved rates of throughout and availability.

Dump leach pads continue to be irrigated with a total placement by end of quarter of approximately 3.0Mt of low grade ore at an average dumped grade of 0.5 g/t.

Resultant cash cost per ounce for the quarter was US$525, in line with expectations given the reduced material movement from open pit operations and the planned mill reline activities late in the quarter.

Underground Mine Development

Underground development recorded an overall advance of 783 metres for the quarter, including continued development of the main Amun decline (113m), ore drives and cross cut development (670m) as well as associated 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.

Trial stoping of the high grade Hapi Zone commenced during the quarter, with a total of 40,662 tonnes @ 7.29g/t of development ore produced during the quarter. By the end of the quarter, ore drive development had continued through to the 890 level.

A total of 1,571m 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 programme.

Exploration

During the quarter, resource definition drilling continued to be mainly concentrated in the Hapi, Amun Deeps and Pharaoh zones and in converting inferred resource into measured and indicated status. In total, 14,960m of diamond drilling was completed during the quarter. The current drill programme 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.

Significant assays returned were as follows:-

D1601 -11m @ 2.18g/t from 287m
D1609 -26m @ 2.08g/t from 703m
D1611 -12m @ 13.36g/t from 455m
D1612 -201m @ 2.30g/t from 568m including
67m @ 5.89g/t from 702m
D1624 -19m @ 2.14g/t from 266m

SUKARI GOLD MINE EXPANSION

Stage 3 Expansion – Secondary Crushing

Construction activities continued throughout the quarter with all major civil and erection works now completed. Installation of the conveyor drives is scheduled for the second quarter of 2011 with commissioning activities scheduled thereafter.

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

Capital expenditure for the quarter and project to date was US$4.5M and US$13.0M respectively.

Stage 4 Expansion – 10Mtpa

Front end engineering and design activities continued during the quarter based upon the selected conventional process flow route of SAG/Ball Mill grinding configuration (similar to the current plant configuration).

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

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

RESOURCE AND RESERVE DEFINITION

Sukari Global Resource

0.5 g/t Cut-off AuTonnes
(Mt)
Grade
(g/t Au)
Gold
(Moz)
Measured & Indicated235.731.4510.99
Inferred68.91.63.5
TOTAL304.61.4814.5
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

ProvenProbableMineral Reserve
Tonnes (Mt)Au
(g/t)
Tonnes (Mt)Au
(g/t)
Tonnes (Mt)Au
(g/t)
Cont Au
(Moz)
102.41.09142.91.19245.41.159.1
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.

Sukari Global Resource and Mineral Reserve Growth

To view the graph associated with this press release, please visit the following link: http://media3.marketwire.com/docs/cee_0505_graph.pdf

CORPORATE ACTIVITIES

At the end of the quarter, the Company had US$185M in available cash and liquid assets. The Company remains debt free and unhedged.

The Company announced several changes to its Board during the quarter. Mr Mark Arnesen, Mr Mark Bankes and Mr Ed Haslam were appointed as non executive directors, adding a breadth of experience to the Centamin Board. Mr Herbert Stuart Bottomley retired as a non executive director during the quarter, and Mr Colin Cowden and Dr Thomas Elder are due to retire at the conclusion of the Company's Annual General Meeting on 26 May 2011. The Board would like to thank all the retiring directors for their efforts and guidance over the years and for helping to establish Centamin as a gold producer.

On behalf of Centamin Egypt Limited

Josef El-Raghy, Chairman

05 May 2011

Centamin Egypt Limited will host a conference call on Thursday, 05 May 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 1895From US: (toll free) 1866 928 6049
From Canada: (toll free) 1866 561 8617From rest of world: + 44 20 3140 0693

A live audiowebcast of the call will be available on: http://mediaserve.buchanan.uk.com/2011/centamin050511/registration.asp

A replay of the webcast will be available on the same link from 1.00 pm (London, UK time) on Thursday, 05 May 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 Edward Haslam, Senior Non Executive Director
Mr Colin Cowden, Non Executive Director
Dr Thomas Elder, Non Executive Director
Professor Robert Bowker, Non Executive Director
Mr Mark Arnesen, Non Executive Director
Mr Mark Bankes, 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 Gold Mine, located in the Eastern Desert of Egypt. Construction at the Sukari Gold Project commenced in March 2007 with the first gold bar being produced on 26 June 2009.

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

The Sukari Gold Mine 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

    Buchanan Communications Limited
    Bobby Morse / Katharine Sutton
    + 44 (0) 20 7466 5000