SOURCE: Centamin plc

May 03, 2016 02:00 ET

Centamin plc Results for the Quarter Ended 31 March 2016

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.

Operational Highlights

  • Gold production of 125,268 ounces was a 6% increase on Q4 2015 and 16% higher than Q1 2015.
  • Cash cost of production of US$603 per ounce and all-in sustaining costs (AISC) of US$758 per ounce.
  • Unchanged 2016 annual guidance of 470,000 ounces at US$680 per ounce cash cost of production and US$900 per ounce AISC.
  • Process plant throughput of 2.88Mt was 5% above the base case target rate of 11Mtpa, with scope over the coming quarters for further throughput increases through ongoing optimisation.
  • Open pit mining total material movement of 15.2Mt was a quarterly record with the full annualised rate of 66Mt reached, as scheduled, for the expanded operation in March.
  • Underground mining rates and average grades were above the forecast average for the full year.
  • Continued positive results from underground exploration drilling at Sukari supports the potential for further resource and reserve expansion.
  • Exploration continues to support the potential for near-surface and high-grade economic mineralisation in Burkina Faso. Encouraging results from initial drilling programmes in Côte d'Ivoire.

Financial Highlights

  • EBITDA of US$67.5 million was up 42% on Q4 2015 and up 27% on Q1 2015.
  • Basic earnings per share 3.56 US cents, up 3.75 US cents on Q4 2015 and up 1.06 US cents on Q1 2015.
  • Centamin remains debt-free and un-hedged with cash, bullion on hand, gold sales receivable and available-for-sale financial assets of US$275.7 million at 31 March 2016, up 19.5% on Q4 2015.

Legal Developments in Egypt

  • The Supreme Administrative Court appeal and Diesel Fuel Oil court case are both still on-going. With the potential for the legal process in Egypt to be lengthy, Centamin anticipates a number of hearings and adjournments before decisions are reached. Any enforcement of the Administrative Court decision has been suspended pending the appeal ruling.
                 
                 
        Q1 2016   Q4 2015   Q1 2015
Gold produced   ounces   125,268   117,644   108,233
Gold sold   ounces   123,668   117,351   111,249
Cash cost of production   US$/ounce   603   667   717
AISC   US$/ounce   758   851   858
Average realised gold price   US$/ounce   1,196   1,103   1,216
Revenue   US$'000   148,107   130,196   135,479
EBITDA   US$'000   67,484   47,547   52,988
Profit/(loss) after tax   US$'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

  • Cash cost of production, AISC, EBITDA and cash, bullion on hand, gold sales receivables and available-for-sale financial assets are non-GAAP measures and are defined at the end of the Financial Statements. AISC is defined by the World Gold Council, the details of which can be found at www.gold.org.
  • Basic EPS, EBITDA, AISC, cash cost of production includes an exceptional provision against prepayments, recorded since Q4 2012, to reflect the removal of fuel subsidies which occurred in January 2012 (see Notes 4 and 5 of the Financial Statements)

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:

http://www.rns-pdf.londonstockexchange.com/rns/9440W_-2016-5-2.pdf

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.

OPERATIONAL REVIEW

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
UNDERGROUND MINING            
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$/oz)   603   667   717
Open pit mining   213   232   247
Underground mining   44   42   47
Processing   307   338   369
G&A   39   54   54
AISC(3) (4) (US$/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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