SOURCE: Centamin plc

August 12, 2015 02:00 ET

Centamin plc Results for the Second Quarter and Half Year Ended 30 June 2015 and Interim Dividend Announcement

PERTH, AUSTRALIA--(Marketwired - Aug 12, 2015) - Centamin plc ("Centamin", the "Group" or "the Company") (LSE: CEY) (TSX: CEE) is pleased to announce its results for the second quarter ended 30 June 2015.

Operational Highlights(1),(2)

  • Gold production of 107,781 ounces was in line with the first quarter and up 33% on Q2 2014.
  • Cash cost of production of US$706 per ounce and all-in sustaining costs (AISC) of US$853 per ounce.
  • 2015 production guidance of between 430,000 and 440,000 ounces.
  • With higher anticipated production and our continued focus on cost control, we expect to achieve below the previously guided cash cost of production of US$700 per ounce and AISC of US$950 per ounce.
  • Record process plant throughput of 2.67Mt was 7% above the 10Mtpa nameplate capacity.
  • Recovery of 90.3%, up by 2% over the first quarter, reflects on-going optimisation of the process plant.
  • Underground mining slightly above forecast with 282kt of ore mined at an average grade of 6.3g/t. 
  • Underground drilling at Sukari continues to support further resource and reserve expansion potential.
  • Encouraging results from exploration programmes in Ethiopia, Burkina Faso and Côte d'Ivoire.

Financial Highlights(1),(2)

  • EBITDA of US$37.3 million was down 30% on Q1 2015, as lower operating costs were offset by a fall in realised gold prices and a reduction in gold sales volumes.
  • Centamin remains debt-free and un-hedged with cash, bullion on hand, gold sales receivable and available-for-sale financial assets of US$212.6 million at 30 June 2015.
  • Interim dividend of 0.97 cent per ordinary share versus an interim payment of 0.87 cent in 2014.
  • Basic earnings per share of 1.65 cents; down 34% on Q1 2015.

Legal Developments in Egypt

  • The Supreme Administrative Court appeal and Diesel Fuel Oil court case are both still on-going. Centamin is aware of the potential for the legal process in Egypt to be lengthy and it anticipates a number of hearings and adjournments before decisions are reached. Operations continue as normal and any enforcement of the Administrative Court decision has been suspended pending the appeal ruling.
                     
        Q2 2015   Q1 2015   Q2 2014   Q1 2014
Gold produced   ounces   107,781   108,233   81,281   74,241
Gold sold   ounces   104,168   111,249   79,350   78,957
Cash cost of production   US$/ounce   706   717   783   744
AISC   US$/ounce   853   858   NR   NR
Average realised gold price   US$/ounce   1,188   1,216   1,291   1,298
Revenue   US$'000   124,192   135,231   102,624   102,725
EBITDA   US$'000   37,308   52,988   32,617   34,265
Profit before tax   US$'000   18,841   28,566   11,330   20,593
EPS   US cents   1.65   2.50   0.99   1.87
Cash generated from operations   US$'000   49,729   56,643   20,139   27,833
                     
(1)     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/.
(2)     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 Note 4 of the Financial Statements)
NR -   Not Reported.
       

Andrew Pardey, CEO of Centamin, commented: "The first half of the year at Sukari focused on ramping up the productivity of the expanded plant and increasing the development of both the underground and open pit mining operations. At the same time Centamin is pleased to have generated strong cash flows, allowing both increased dividend payments to shareholders and continued investment in exploration, despite the continued pressure on the gold price. We are now beginning to reap the benefits of our investment in the higher processing capacity at Sukari, with expected further improvements in productivity in the quarters ahead. We remain confident of achieving our current guidance on gold production and low cash costs, and in generating free cash whilst we endeavour to generate additional value through our exploration programmes at Sukari and in Burkina Faso, Côte D'Ivoire and Ethiopia."

Centamin will host a conference call on Wednesday, 12th August 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: 080 8237 0040
International Toll number: +44 20 3428 1542
Canada Toll free: 1866 404 5783
Participant code: 27847585#

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: 660948#
Via audio link at http://www.centamin.com/centamin/investors

CHIEF EXECUTIVE OFFICER'S REPORT

Centamin's EBITDA of US$37.3 million was down 30% on the first quarter and up 14% on Q2 2014, as the expanded Sukari operation continued to deliver competitive returns under the weak gold price environment. Gold production was comparable with the first quarter and a 2% fall in the average realised gold price, coupled with a reduction in gold sales volumes, were partially offset by an $11 per ounce decrease in the cash cost of production to US$706 per ounce, mainly due to a reduction in the fuel price offset by a slight increase in open pit mining and processing costs.

All-in sustaining costs (AISC) of US$853 per ounce was below full year guidance, mainly due to the planned scheduling of certain sustaining capital cost items to later in the year and the above-mentioned reduction in the fuel price. 

The cash generation further strengthened our balance sheet, which ended the period with US$212.6 million of cash, bullion on hand, gold sales receivable and available-for-sale financial assets. This reflects an increase of US$16.8 million during the quarter, net of a US$22.7 million payment in relation to the final dividend for 2014. 

In line with our policy to maintain a return of capital to our shareholders, and supported by the robust cash flows from Sukari, I am pleased to announce today an interim dividend payment for the current financial year of 0.97 cent per share.

The second quarter delivered stronger than anticipated production with processing rates 7% above the 10Mtpa nameplate capacity, as finer material was fed to the milling circuit due to improved blasting and greater availability of the secondary crushers. Also of note was an improvement in metallurgical recoveries to 90.3%, above the forecast level of 88%. The increase was mainly driven by greater efficiencies in the fine-grinding circuit, in addition to a re-configuration of the final leaching stages and improved performance of the new carbon regeneration kiln. Work continues to ensure recoveries are sustained at these higher levels.

The open pit delivered total material movement of 13,671kt for the quarter, a decrease of 15% on Q1 2015, due to lower fleet utilization and productivity. Mined ore grades of 0.76g/t remained in line with our forecast. 

The underground mine delivered 282kt of ore, a 7% increase on Q1 2015, at an average grade of 6.3g/t in line with the mining plan. The focus for the operation remains to consistently deliver ore at an average grade of at least 6g/t.

We continue to expect higher quarterly production rates of 450,000-500,000 ounces per annum in the second half of the year, driven by further improvements in plant throughput and progressive increases in open pit grades towards the reserve average of 1.05g/t. As previously announced, as a result of the stronger than expected production in the second quarter, we have updated our full year production guidance to between 430,000 and 440,000 ounces. With this higher expected production, and our continued focus on cost control, we expect to achieve below our previous full year guidance for cash cost of production of US$700 per ounce and AISC of US$950 per ounce. 

Some progress has been made to date in optimising productivity from the various areas of the expanded Sukari operation and there remains scope for further significant improvements and production increases over the coming quarters. In particular, we remain confident that the expanded plant will achieve, in time, throughput levels materially above nameplate and that the underground operation will continue to deliver stable grades at the current mining rates. The additional shareholder value that can be gained from our continued drive to maximize productivity and reduce unit costs has the potential to be substantial and requires no material capital expenditure.

Further support for resource expansion and the long-term sustainability of high-grade production at Sukari from the underground mine continues to be provided by results from on-going exploration drilling, as highlighted in the following pages of this report. Exploration at our projects in Burkina Faso, Côte D'Ivoire and Ethiopia also continue to provide encouraging results.

Centamin remains committed to its policy of being 100% exposed to the gold price through its un-hedged position.

The two litigation actions, Supreme Administrative Court appeal (SAC Appeal) and Diesel Fuel Oil court case (DFO Case), progressed in line with our expectations during the half year and are described in further detail in Note 7 to the financial statements. In respect of the former, the Company continues to believe that it has a strong legal position and, in addition, that it will ultimately benefit from law 32/2014, 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. Law 32/2014 is currently under review by the Supreme Constitutional Court of Egypt. We are aware of the potential for the legal process in Egypt to be slow and for cases to be subject to delays and adjournments but we remain confident of the merits of the two cases.

2015 Interim Dividend

The Directors declared an interim dividend of 0.97 cent per share (US$0.0097) on Centamin plc ordinary shares (totalling approximately US$11 million). The interim dividend for the half-year period ending 30 June 2015 will be paid on 9 October 2015 to shareholders on the register on the Record Date of 4 September 2015.

London Stock Exchange (T+2)
EX-DIV DATE: 3 September 2015
RECORD DATE: 4 September 2015
LAST DATE FOR RECEIPT OF CURRENCY ELECTIONS: 18 September 2015
PAY DATE: 9 October 2015

Toronto Stock Exchange (T+3)
EX-DIV DATE: 2 September 2015
RECORD DATE: 4 September 2015
PAY DATE: 9 October 2015

The dates set out above are based on the Directors' current expectations and may be subject to change. If any of the dates should change, the revised dates will be announced by press release and will be available at www.centamin.com.

As a Jersey incorporated company, there is no requirement for Centamin plc to make any withholding or deduction on account of Jersey tax in respect of the dividend.

Shareholders who wish to elect to receive sterling dividends can mandate payments directly to their UK bank or building society by visiting the Investor Centre website at www.investorcentre.co.uk/je or by completing the dividend mandate form which is available at www.centamin.com and posting it back to the registrars in accordance with the instructions set out in the form. The currency election mandate will be applicable for shareholders with a UK bank account. Our registrars have also arranged a global payment service allowing payment directly to your designated account, please visit www.investorcentre.co.uk/je or www.centamin.com for details. The global payment service is a service provided by the registrars for shareholders registered on the LSE and transfer charges may apply.

The last date for shareholder currency elections and payment mandates to be received by the Company will be 18 September 2015. Please note, the registrars retain mandates previously provided by shareholders and will apply the instructions for this and future dividends. The currency conversion rate for those electing to receive sterling will be based on the foreign currency exchange rates on 18 September 2015. The rate applied will be published on the Company's website on 21 September 2015.

Please click on, or follow the link below to view the full announcement:

http://www.rns-pdf.londonstockexchange.com/rns/7706V_1-2015-8-11.pdf

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