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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Centamin Plc | LSE:CEY | London | Ordinary Share | JE00B5TT1872 | ORD NPV (DI) |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.90 | 0.73% | 125.00 | 125.40 | 125.60 | 126.90 | 124.60 | 124.90 | 4,950,253 | 16:35:06 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Metal Mining Services | 891.26M | 92.28M | 0.0797 | 15.76 | 1.45B |
TIDMCEY
RNS Number : 2631F
Centamin PLC
11 November 2015
For immediate release 11 November 2015
Centamin plc ("Centamin" or "the Company")
(LSE:CEY, TSX:CEE)
Centamin plc Results for the Third Quarter and Nine Months Ended 30 September 2015
Centamin plc ("Centamin" or "the Company") and its subsidiaries (the "Group") (LSE: CEY, TSX: CEE) is pleased to announce its results for the third quarter ended 30 September 2015.
Operational Highlights(1),(2)
-- Gold production of 105,413 ounces was in line with the second quarter and a 13% increase on Q3 2014.
-- Cash cost of production of US$767 per ounce and all-in sustaining costs (AISC) of US$918 per ounce, versus US$706 per ounce and US$853 per ounce respectively in the previous quarter.
-- 2015 production guidance of between 430,000 and 440,000 ounces. With higher anticipated fourth quarter 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.
-- Process plant throughput of 2.67Mt was 7% above the 10Mtpa nameplate capacity.
-- Open pit mining rates and grades in line with forecast. Underground mine delivered 312kt of ore, an 11% increase on Q2 2015, at an average grade of 6.45g/t in line with the mining plan.
-- Exploration drilling in Burkina Faso and Côte d'Ivoire has outlined mineralisation over a number of prospects, and has identified structurally controlled higher-grade zones.
-- Updated Sukari Resource and Reserve estimate announced in September 2015. Total combined open pit and underground Mineral Reserve estimate of 8.8 Moz, up 7% from 8.2 Moz at 30 September 2013.
Financial Highlights(1),(2)
-- EBITDA of US$31.3 million was down 16% on Q2 2015, with a 5% reduction in gold prices together with increased operating costs and an adverse movement in production inventory and ore stockpiles.
-- Centamin remains debt-free and un-hedged with cash, bullion on hand, gold sales receivable and available-for-sale financial assets of US$216.1 million at 30 September 2015.
-- Basic earnings per share of 0.55 cents; down 67% on Q2 2015 due to the factors affecting EBITDA and a 36% increase in depreciation and amortisation, following the reserve update at 30 June 2015 and a consequent increase in the amortisation charge for capitalised underground development.
Legal Developments in Egypt
-- The Supreme Administrative Court appeal and Diesel Fuel Oil court case are both still on-going. Centamin is aware of the potential for the legal process in Egypt to be lengthy and it anticipates a number of hearings and adjournments before decisions are reached. Operations continue as normal and any enforcement of the Administrative Court decision has been suspended pending the appeal ruling.
Hot Features
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Q3 2015 Q2 2015 Q3 2014
------------------------- ----------- -------- -------- --------
Gold produced ounces 105,413 107,781 93,624
Gold sold ounces 104,803 104,168 91,575
Cash cost of production
(1,2) US$/ounce 767 706 771
AISC (1,2) US$/ounce 918 853 NR
Average realised gold
price US$/ounce 1,131 1,188 1,267
------------------------- ----------- -------- -------- --------
Revenue US$'000 118,529 124,192 116,116
EBITDA (1,2) US$'000 31,304 37,308 37,810
Profit before tax (2) US$'000 6,253 18,841 15,821
EPS (2) US cents 0.55 1.65 1.39
Cash generated from
operations (2) US$'000 31,261 49,729 31,236
------------------------- ----------- -------- -------- --------
(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 (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: "Gold output from Sukari during the third quarter was comparable with both the first and second quarters and in line with our forecast for the period, with production continuing to build on the progressive ramp-up of the expanded operation. Plant productivity remained significantly above the 10Mtpa nameplate capacity and the ongoing process of optimisation is expected to deliver our base case rate of 11Mtpa during the fourth quarter. The underground mine has now delivered consecutive quarters at production rates significantly in excess of our annual forecast and at consistent grades of at least 6g/t, therefore demonstrating the potential for this part of the operation to sustain production in excess of our longer-term forecasts. Further development of the open pit has now set the stage to deliver the required tonnages at grades in the region of the reserve average from the fourth quarter onwards. Full year guidance is between 430,000 and 440,000 ounces at a cash cost of production of below US$700 per ounce and below the previously guided AISC of US$950 per ounce."
Centamin will host a conference call on Wednesday, 11th November 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
Participant code: 42792283#
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: 663773#
Via audio link at http://www.centamin.com/centamin/investors
________________________________
CHIEF EXECUTIVE OFFICER'S REPORT
Third quarter gold production of 105,413 ounces was in line with our forecast and was comparable with both the first and second quarters. The average realised gold price fell by 5% on the previous quarter which, together with a 6% increase in mine production costs and a US$3.2 million increase of the movement in production inventory and ore stockpiles, resulted in EBITDA of US$31.3 million, down 16% on the second quarter and down 17% on Q3 2014.
Sukari has continued to deliver competitive returns, as reflected by all-in sustaining costs (AISC) of US$918 per ounce for the quarter, below our original full year guidance of US$950 per ounce mainly due to further re-scheduling of certain sustaining capital cost items. We expect full year production of between 430,000 and 440,000 ounces. With higher anticipated fourth quarter 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.
Positive cash flow saw Centamin's balance sheet further strengthened, ending the period with US$216.1 million of cash, bullion on hand, gold sales receivable and available-for-sale financial assets. The cash and cash equivalents component of this total increased during the quarter by US$15.6 million. There was a US$12.2 million reduction in gold sales receivables during the quarter, offset by a US$11.1 million reduction in trade and other payables.
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 7% above the 10Mtpa nameplate capacity, with continuing optimisation focussing on the secondary crusher liners and improvements to the screen configurations. Scheduled work around the CIL circuit impacted recoveries, which fell back to 88.2% from the 90.3% level achieved in the second quarter, with a return towards the higher levels expected during the fourth quarter as the work is completed.
The open pit delivered total material movement of 14,344kt, an increase of 5% on Q2 2015 due to improved fleet utilisation and productivity, with further improvements and therefore higher mining rates expected during the fourth quarter. Pit development has progressed over the year to date according to the mine plan and mined ore grades of 0.74g/t were in line with our forecast.
The underground mine delivered 312kt of ore, an 11% increase on Q2 2015, at an average grade of 6.45g/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.
Production rates are expected to increase to a rate of 450,000-500,000 ounces per annum from the fourth quarter onwards, driven by ongoing optimisation of the processing plant to deliver our base case expectation of 11Mtpa, and an increase in open pit ore grades towards the reserve average of 1.03g/t. Our longer-term production and cost forecasts remain unchanged and there remains scope for significant additional production increases as productivity in the various areas of the expanded Sukari operation is further optimised.
(MORE TO FOLLOW) Dow Jones Newswires
November 11, 2015 02:00 ET (07:00 GMT)
An updated resource and reserve estimate for Sukari in September provided further support to our production forecasts and our expectation of a long life and low cost operation that will continue to generate significant cash flow even under the current weak gold price environment. Open pit reserves of 8.3 million ounces increased over the previous estimate by approximately 0.5 million ounces, net of mining depletion. This increase was due to lower mining and processing costs associated with the recent reduction in international fuel prices and continued drilling from the underground. The estimate was based on assumptions conservatively above current operating costs. Reserves were based on a US$1,300 per ounce gold price, consistent with previous estimates and allowing for comparisons exclusive of short-term volatility in the gold market over the expected plus 19-year life of the operation. Continued growth of the underground resource and reserve demonstrates the ongoing potential for further material increases over the coming years as development and drilling continues to extend along strike and at depth.
Our exploration programmes in West Africa continue to build momentum. In Burkina Faso, at the Wadaradoo, Napalapera and Torkera prospects, drilling has indicated the presence of structurally controlled high-grade mineralised zones in addition to extensive lower-grade mineralisation. In Côte d'Ivoire, first-pass drilling over targets defined by geochemical and geophysical surveys has outlined mineralised zones over a number of prospects. We continue to test the potential for lateral and depth extensions at these more advanced prospects, whilst also progressing the numerous other prospects within our significant land packages.
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 during the quarter 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.
OPERATIONAL REVIEW
Sukari Gold Mine:
9 Months 9 Months
ended ended 30
30 September September
Q3 2015 Q2 2015 Q3 2014 2015 2014
---------------------------------- ------- ------- ------- ------------- ----------
OPEN PIT MINING
Ore mined (1) ('000t) 2,204 1,751 2,693 6,518 6,813
Ore grade mined
(Au g/t) 0.74 0.76 0.74 0.76 0.68
Ore grade milled
(Au g/t) 0.69 0.75 0.82 0.79 0.82
Total material mined
('000t) 14,344 13,671 11,406 44,012 31,015
Strip ratio (waste/ore) 5.51 6.81 3.20 5.75 3.60
---------------------------------- ------- ------- ------- ------------- ----------
UNDERGROUND MINING
Ore mined from development
('000t) 154 127 120 409 349
Ore mined from stopes
('000t) 158 155 128 449 335
Ore grade mined
(Au g/t) 6.45 6.30 6.67 6.26 6.38
---------------------------------- ------- ------- ------- ------------- ----------
Ore processed ('000t) 2,673 2,667 2,388 7,817 5,831
Head grade (g/t) 1.35 1.32 1.40 1.38 1.46
Gold recovery (%) 88.2 90.3 88.0 88.9 88.2
Gold produced -
dump leach (oz) 2,697 4,715 3,587 12,506 12,902
Gold produced -
total (2) (oz) 105,413 107,781 93,624 321,427 249,145
Cash cost of production(3)
(4) (US$/oz) 767 706 771 730 767
Open pit mining 272 224 250 247 248
Underground mining 49 48 65 48 65
Processing 384 381 405 378 395
G&A 62 53 51 57 59
AISC(3) (4) (US$/oz) 918 853 NR 876 NR
---------------------------------- ------- ------- ------- ------------- ----------
Gold sold (oz) 104,803 104,168 91,575 300,546 249,882
Average realised
sales price (US$/oz) 1,131 1,188 1,267 1,256 1,284
---------------------------------- ------- ------- ------- ------------- ----------
(1) Ore mined includes 21kt @ 0.46g/t delivered to the dump leach pad in Q3 2015 (132kt @ 0.43 g/t in Q3 2014).
(2) Gold produced is gold poured and does not include gold-in-circuit at period end.
(3) Cash cost exclude royalties, exploration and corporate administration expenditure. Cash cost 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 reflect an exceptional provision against prepayments to reflect the removal of fuel subsidies which occurred in January 2012 (refer to Notes 4 and 5 respectively to the financial statements for further details).
NR - Not Reported.
Health and safety - Sukari
The lost time injury (LTI) frequency rate for Q3 2015 was zero per 200,000 man-hours (Q3 2014: 0.45 per 200,000 man-hours), with a total of 1,286,733 man-hours worked (Q3 2014: 1,345,096). This is in line with our target of zero injuries and having every employee go home safely every day. Centamin views its low LTI frequency rate as a solid achievement particularly as Sukari is the first modern gold mine in Egypt.
Open pit
The open pit delivered total material movement of 14,344kt, an increase of 5% on Q2 2015 due to improved fleet utilisation and productivity, and a 26% increase on the prior year period. Mining continued to focus on the Stage 3A and 3B areas and the northern and eastern walls of the open pit, in line with the mine plan.
Open pit ore production was 2,204kt (up 26% on the previous quarter) at 0.74g/t. The average head grade to the plant of 0.69g/t was marginally below our original forecast due to some rescheduling of lower grade material, with grades mined and milled increasing by the end of the quarter, as expected. The ROM ore stockpile balance decreased by 297kt to 1,030kt by the end of the quarter.
Further improvements in fleet utilisation and productivity are expected to deliver continued increases in ore mining rates during the fourth quarter. With pit development having progressed over the year to date in line with the mine plan, grades remain set to increase towards the reserve average of 1.03g/t during the fourth quarter.
Underground mine
Ore production from the underground mine was 312kt, an 11% increase on Q2 2015 and a 26% increase on the corresponding quarter from the prior year. The ratio of stoping-to-development ore mined decreased slightly, with 51% of ore from stoping (158kt; up 2% on Q2) and 49% from development (154kt; up 21% on Q2).
Grades were in line with forecast with an average mined grade of 6.45g/t, comprising ore from stoping at 7.3g/t and from development at 5.5g/t.
Development during the quarter, including the Amun and Ptah decline, advanced a total of 2,201 metres. Development within mineralised areas of Amun accounted for 1,499 metres and took place between the 815 and 695 levels (245 to 365 metres below the underground portal), including advance of the Amun decline through areas of low-grade ore. Ptah development in mineralised areas took place over 511 metres on the P810 and P790 levels (250 and 270 metres below the underground portal).
The Hannibal drive, aimed at providing access for future pit development through the second-highest point of Sukari Hill, was completed to breakthrough and subsequently blasted.
A total of 2,780 metres of grade control diamond drilling were completed, aimed at short-term stope definition, drive direction optimisation and underground resource development. A further 5,602 metres of drilling continued to test the depth extensions below the current Amun and Ptah zones, and included 137m drilled from the Hannibal drive to test for mineralisation around the top of Sukari Hill.
Processing
Quarterly throughput at the Sukari process plant was 2,673kt, a 12% increase on the prior year reflecting the ramp-up of ore treatment through the new Stage 4 plant circuit. Processed tonnages were in line with the second quarter and 7% above the nameplate capacity of 10Mtpa as optimisation of the secondary crushers liners continued along with improvements to the screen configurations. Plant productivity of 1,342 tonnes per hour (tph) represented a 7% increase on the prior year period and a 1% decrease on the second quarter.
(MORE TO FOLLOW) Dow Jones Newswires
November 11, 2015 02:00 ET (07:00 GMT)
Plant metallurgical recoveries were 88.2%, a 0.2% increase on the prior year period but 2.3% down on the second quarter due to the adverse impact of scheduled work around the CIL circuit. The majority of this work was completed within the quarter and recoveries are expected to improve again during the fourth quarter.
The dump leach operation produced 2,697oz, a 43% decrease on the second quarter and a 25% decrease on the prior year period due to the scheduled reduction in availability of suitable ore.
Exploration
Sukari
Drilling from underground remains a focus of the Sukari exploration programme as new development provides improved access to test potential high-grade extensions of the deposit. The ore body has not yet been closed off to the north, south or at depth and further underground drilling of the Sukari deposit will take place during 2015, predominantly from both the Amun and Ptah declines.
Selected results received during the third quarter from the underground drilling programme, which are in addition to results disclosed previously, include the following:
Amun and Ptah significant diamond drill intersections, downhole. (Note the underground portal is located at the 1060m RL elevation).
Hole Number From Interval Gold Target
(m) (m) (g/t)
------ -------------- ------ --------- ------- --------------------------
AMUN UGRSD0411 275.8 2.3 39.1 Quartz vein 535m RL
------ -------------- ------ --------- ------- --------------------------
UGRSD0411 242.0 6.3 13.1 Quartz vein 570m RL
--------------------- ------ --------- ------- --------------------------
UGRSD0411 268.0 13.2 48.2 Breccia 545m RL
--------------------- ------ --------- ------- --------------------------
UGRSD0412B 121.4 10.6 16.4 Western contact 675mRL
--------------------- ------ --------- ------- --------------------------
Quartz vein at Western
UGRSD0417 78.8 21.1 46.1 contact 710mRL
--------------------- ------ --------- ------- --------------------------
UGRSD0417 203.2 0.6 129.0 Western contact 640mRL
--------------------- ------ --------- ------- --------------------------
Quartz vein near Western
UGRSD0533 47.0 9.0 9.9 contact 815mRL
--------------------- ------ --------- ------- --------------------------
Breccia at Western
PTAH UGRSD0534 164.1 0.9 85.2 contact 710mRL
------ -------------- ------ --------- ------- --------------------------
Breccia near Western
UGRSD0540 107.0 1.0 55.3 contact 770mRL
--------------------- ------ --------- ------- --------------------------
Stockwork lode near
UGRSD0545 86.0 5.0 50.8 Western contact 790mRL
--------------------- ------ --------- ------- --------------------------
Stockwork lode at Western
UGRSD0569_W1 265.1 21.9 12.5 contact 625mRL
--------------------- ------ --------- ------- --------------------------
Burkina Faso
Centamin's systematic exploration programme includes geological mapping, geophysical surveys, soil sampling, auger drilling, aircore (AC) drilling, reverse circulation (RC) and diamond (DD) drilling.
The strategy for 2015 is to continue to systematically explore the entire 160km strike length of the belt and drill-test the numerous prospects. It is expected this will lead into further resource development work in late 2015 progressing into 2016.
A signed ministerial decree approving the Tiopolo mining licence, which hosts the existing Indicated resource of 1.92 million ounces and Inferred resource of 1.33 million ounces, was issued on 5th March 2015. A subsequent application has been made to postpone development and continue exploration, as provisioned in the Burkina Faso Mining Code.
During the quarter RC/DD drilling has occurred at a number of prospects, including Wadaradoo and Napelapera. AC drilling has targeted areas in close proximity to known mineralisation at Torkera and Wadaradoo. Auger drilling has continued first pass evaluation at Danhal, and detailed ground coverage around Wadaradoo. The drilling fleet comprised 3 RC/DD rigs (31,504m RC and 1,272m DD drilled), 2 AC rigs (26,031m drilled) and 3 Auger rigs (13,439m drilled).
An IP geophysical survey commenced and was still ongoing at the end of the quarter. To date, five untested chargeability anomalies have been identified. The most significant of these is located 3km west of Aminbiri, near the contact of the Batie West Shear Zone with granodiorite. The targets are being ranked and prioritised for drill testing.
Exploration at Wadaradoo has focused on the Wadaradoo Main and Wadaradoo East areas. Drilling at Wadaradoo Main has continued to target a south-plunging shoot on the main 020deg structure and two 320-330deg trending structures. The shoot was intersected in 2 drill holes; with mineralised zones of 2m @ 7.8g/t and 19m @ 3.3 g/t Au in drill hole WDRD491; and 7m @ 2.2g/t and 13m @ 8.2g/t in drill hole WDRC492. A number of other structural targets have been identified in the immediate vicinity. Mapping, Auger and AC drilling are currently covering these areas as a precursor to RC drilling.
At Wadaradoo East, exploration has targeted the higher-grade lenses within a broad halo of low-grade mineralisation. Increasing data has helped to improve our understanding of the geological controls and therefore the predictability of mineralised zones. Zones of higher-grade mineralisation can now be traced for 200m along strike and remain open in all directions. Exploration will continue down dip and along strike.
Wadaradoo significant RC and DD drill intersections, downhole
From Interval Gold
HoleID (m) (m) (g/t)
--------- ----- --------- -------
WDRC118 140 10 1.99
--------- ----- --------- -------
WDRC394 194 10 3.30
--------- ----- --------- -------
WDRC432 61 17 1.32
--------- ----- --------- -------
WDRC440 191 5 5.30
--------- ----- --------- -------
WDRC450 39 2 34.60
--------- ----- --------- -------
WDRC472 42 4 6.46
--------- ----- --------- -------
WDRC485 66 2 27.20
--------- ----- --------- -------
WDRC492 225 13 8.18
--------- ----- --------- -------
WDRC493 224 3 8.78
--------- ----- --------- -------
WDRC495 124 7 3.00
--------- ----- --------- -------
WDRD117 164 11 3.39
--------- ----- --------- -------
WDRD351 329 14 2.46
--------- ----- --------- -------
WDRD395 217 14 5.26
--------- ----- --------- -------
WDRD395 238 17 2.99
--------- ----- --------- -------
WDRD423 262 8 4.31
--------- ----- --------- -------
WDRD423 275 5 4.81
--------- ----- --------- -------
WDRD424 248 10 3.03
--------- ----- --------- -------
WDRD491 270 19 3.30
--------- ----- --------- -------
Two permits covering a total area of 6.46km(2) along strike of Napelapera were granted in the third quarter. A programme consisting of 48 RC drill holes was completed to test extensions of the main Napelapera mineralised structure to the south, and also other nearby targets. Assays received to date (including those summarised in the table below) highlight a zone of higher-grade mineralisation. Further work will be determined once all results are received and analysed.
Napelapera significant RC and DD drill intersections, downhole
From Interval Gold
HoleID (m) (m) (g/t)
--------- ----- --------- -------
NPRC383 8 2 7.45
--------- ----- --------- -------
NPRC398 6 4 2.62
--------- ----- --------- -------
NPRC399 16 7 12.33
--------- ----- --------- -------
NPRC402 58 11 1.87
--------- ----- --------- -------
NPRC404 69 13 4.99
--------- ----- --------- -------
NPRC405 103 4 12.27
--------- ----- --------- -------
NPRC406 55 14 1.67
--------- ----- --------- -------
NPRC407 78 9 1.38
--------- ----- --------- -------
NPRC409 17 10 1.40
--------- ----- --------- -------
NPRC418 70 4 6.19
--------- ----- --------- -------
Drilling at Torkera has returned encouraging results, as highlighted below. The drill programme targeted mineralised shoots which plunge moderately to the north. Results indicate that the stacked shoots have good continuity and remain open down plunge. Gold mineralisation at this prospect is associated with quartz veining, with low sulphide abundance, and is concentrated along a sharp basalt/volcanoclastic contact. A follow up drill program is being designed.
(MORE TO FOLLOW) Dow Jones Newswires
November 11, 2015 02:00 ET (07:00 GMT)
Tokera significant RC and DD drill intersections, downhole
Gold
HoleID From Interval (g/t)
--------- ----- --------- -------
TKRC087 155 6 4.81
--------- ----- --------- -------
TKRC088 3 10 5.43
--------- ----- --------- -------
TKRC088 34 9 2.21
--------- ----- --------- -------
TKRD085 125 11 5.33
--------- ----- --------- -------
TKRD090 179 5 4.29
--------- ----- --------- -------
Côte d'Ivoire
Centamin now has four permits in Côte d'Ivoire covering a c.1,517km(2) area across the border from Batie West in Burkina Faso (see previous section). Field work continued in the third quarter and the completed airborne magnetic and radiometric survey continues to be used for geological interpretation and target generation. First pass RC drilling on priority targets is planned during the remainder of 2015, aimed at a path towards resource development in 2016.
The Danoa licence, west of the Kalamon licence, was granted by the Ministry of Mines in July. It is believed this licence contains the extension of the Napelapera mineralised structure southward into Cote d'Ivoire. AC drilling commenced in September, aimed at testing approximately 4km of strike length, including 2km with large artisanal workings centred over quartz veining.
Three permits remain under application and are expected to be granted in 2016, following which exploration will focus on regional surface geochemistry aimed at identifying anomalies for first-pass drilling.
Soil sampling progressed on the Doropo West, Varale and Kalamon permits. A 7,349m auger drilling program, utilising two rigs, in eastern Kalamon and Doropo West was completed in August. A trenching program commenced towards the end of the quarter on soil and magnetic anomalies defined over the 'Greenstones Extend' zone, west of the village of Varale.
AC drilling commenced during the quarter with 23,553 metres completed to date. Key intersections are highlighted below for the Kekeda, Souwa and Tchouahinin prospects. IP surveys and RC drilling programs are under preparation for the Kekeda and Souwa prospects.
Côte d'Ivoire significant AC drill intersections, downhole
Prospect HoleID From Gold
Interval (g/t)
------------- ---------- ----- --------- -------
Kekeda DPAC0145 20 18 0.97
------------- ---------- ----- --------- -------
Kekeda DPAC0146 20 10 9.82
------------- ---------- ----- --------- -------
Kekeda DPAC0147 18 4 5.51
------------- ---------- ----- --------- -------
Kekeda DPAC0148 12 8 2.68
------------- ---------- ----- --------- -------
Kekeda DPAC0149 2 16 1.79
------------- ---------- ----- --------- -------
Kekeda DPAC0166 6 6 5.44
------------- ---------- ----- --------- -------
Souwa DPAC0346 8 5 4.33
------------- ---------- ----- --------- -------
Souwa DPAC0361 14 12 0.98
------------- ---------- ----- --------- -------
Souwa DPAC0368 2 10 1.70
------------- ---------- ----- --------- -------
Souwa DPAC0404 6 7 4.98
------------- ---------- ----- --------- -------
Souwa DPAC0405 0 18 0.80
------------- ---------- ----- --------- -------
Tchouahinin DPAC0517 4 4 2.50
------------- ---------- ----- --------- -------
Tchouahinin DPAC0540 26 12 1.00
------------- ---------- ----- --------- -------
Ethiopia
Drilling at Una Deriem continued to test the eastern soil anomaly, which runs parallel to the main soil anomaly, on 400m spaced lines. Results from the eastern structure continued to show patchy low grade intercepts, as highlighted below. A review of the project is being undertaken.
Una Deriem significant diamond drill intersections, downhole
From Interval Gold
HoleID (metres) (metres) (g/t)
--------- ---------- ---------- -------
UDM0060 28 29 1.24
--------- ---------- ---------- -------
UDM0062 120 1 35.40
--------- ---------- ---------- -------
UDM0067 11 3 8.73
--------- ---------- ---------- -------
UDM0067 135 29 0.79
--------- ---------- ---------- -------
The BLEG results received for the Ondonok Dabus licence in western Ethiopia showed a number of anomalous samples, particularly in the northern portion of the licence area. A review of the data is being undertaken.
FINANCIAL REVIEW
Centamin has a strong and flexible financial position with no debt and no hedging. The Company held cash, bullion on hand, gold sales receivables and available-for-sale financial assets of US$216.1 million at 30 September 2015, up from US$212.6 million at 30 June 2015. The cash and cash equivalents component of this total increased during the quarter by US$15.6 million. For further information, please see the "Non-GAAP Financial Measures" section.
At 30 September At 30 September
2015 2014
---------------------- ----------------- -----------------
Cash at Bank US$190.6 million US$109.9 million
---------------------- ----------------- -----------------
Gold Sales Receivable US$12.0 million US$20.0 million
---------------------- ----------------- -----------------
Available for US$0.2 million US$0.6 million
sale financial
assets
---------------------- ----------------- -----------------
Bullion on hand US$13.3 million US$9.8 million
---------------------- ----------------- -----------------
Total US$216.1 million US$140.3 million
---------------------- ----------------- -----------------
The trade and other receivables balance reduced by US$10.6 million to US$15.0 million at the end of the period, mainly due to the US$12.2 million reduction in the gold sales receivables noted in the above table. The impact from this reduction on working capital was offset by a corresponding US$11.1 million reduction in the trade and other payables balance to US$26.3 million at the end of the period.
Centamin's unit cash cost of production was US$767 per ounce, an increase of US$61 over the second quarter due to a reduction in process plant recovery rates and increased open pit mining costs associated with higher maintenance charges and blast hole drilling rates.
During the remainder of the year the cash cost of production is expected to reduce, due to a reversal of the factors described above and as increasing plant throughput and improving grades drive higher quarterly production rates.
A breakdown of capital expenditure for the Group during the period is as follows:
US$ million
---------------------- ------------
Open pit development -
---------------------- ------------
Underground mine
development (1) 7.7
---------------------- ------------
Other sustaining
capital expenditure 1.0
---------------------- ------------
TOTAL SUSTAINING
CAPEX - SUKARI 8.7
---------------------- ------------
EXPLORATION 6.2
---------------------- ------------
(1) Includes underground development drilling
AISC were US$918 per ounce, below the original full year guidance of US$950 per ounce mainly due to further re-scheduling of certain sustaining capital cost items.
EBITDA for the period was US$31.3 million, down 16% on the previous quarter. The key contributing factors were:
(a) a 5% or a US$5.7 million decrease in revenue, driven by a comparable reduction in the average realised gold price; partially offset by
(b) a 6% or a US$4.4 million increase in mine production costs, and
(c) a US$3.2 million increase of the movement in production inventory and ore stockpiles; resulting from a US$0.3 million positive movement in the third quarter against a US$3.0 million negative movement in the previous quarter.
Basic earnings per share for the period was 0.55 US cents, down 67% on the previous quarter. In addition to the factors listed above, the key contributing factor was a 36% increase in applicable depreciation and amortisation expense from $18.5 million in Q2 2015 to $25.1 million in this quarter. This is as a result of the reserve update at 30 June 2015 and a consequent increase in the amortisation charge for capitalised underground development.
As noted in Subsequent Events, further to the declaration of an interim dividend of 0.97 cent per share (US$0.0097) on Centamin plc ordinary shares (totaling approximately US$11 million), the interim dividend for the half year period ending 30 June 2015 was paid on 9 October 2015 to shareholders on the register on the Record Date of 4 September 2015.
CORPORATE UPDATE
BDO LLP have recently been engaged to provide internal audit services to the Group. The partner in charge of the engagement is working with the chairman of the Audit and Risk Committee to define the scope of work for 2015 and 2016. Further details of the work carried out by the internal auditor and scope of the engagement will be published in the 2015 Annual Report.
LEGAL ACTIONS
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As detailed in Note 7 of the accompanying interim condensed consolidated financial statements, the Group's appeal against the 30 October 2012 ruling by the Egyptian Administrative Court remains on-going. Centamin does not currently see the need to take the matter to proceedings outside of Egypt as Centamin remains of the belief that the Egyptian Supreme Administrative Court (SAC) will rule in Centamin's favour, based on the legal merit of the case.
The Group continues to benefit from the full support of the Ministry of Petroleum and EMRA, both in the appeal and at the operational level.
It should be noted that law 32/2014, was passed in April 2014, restricting the capacity for third parties to challenge any contractual agreements between the Egyptian government and an investor. The Company's legal advisers have confirmed that Centamin is likely to benefit from this law in the SAC Appeal. The validity of law 32/2014 is currently being challenged in the Egyptian Constitutional Court but Centamin believes the challenge is unlikely to succeed and that the original claim in relation to the Sukari Concession Agreement, which was brought by a third party and is subject to an on-going court appeal, should, in due course, be dismissed under the provisions of law 32/2014.
In light of the on-going dispute with the Egyptian Government regarding the price at which diesel fuel oil (DFO) is supplied to the mine at Sukari, it has been necessary since January 2012 to advance funds to our fuel supplier, Chevron, based on the international price for diesel. The Company has fully provided against the prepayment of US$197.7 million as an exceptional item, of which US$11.1 million was provided for during Q3 2015. Refer to Notes 4 and 5 of the accompanying interim condensed consolidated financial statements for further details on the impact of this exceptional provision on the Group's results for Q3 2015.
In November 2012 the Group received a further demand from Chevron for the repayment of fuel subsidies received in the period from late 2009 through to January 2012, for EGP403 million (approximately US$52.0 million at current exchange rates). No provision has been made in respect of the historic subsidies prior to January 2012 as, based on legal advice that it has received to date, the Company believes that the prospects of a court finding in its favour in relation to this matter are strong.
As disclosed previously, the Company has commenced proceedings in the Administrative Court in Egypt in relation to these matters. The Company remains of the view that an instant move to international fuel prices is not a reasonable outcome and will look to recover any funds advanced to date at the higher rate should the court proceedings be successfully concluded. Please refer to Note 7 to the accompanying interim condensed consolidated financial statements and the most recently filed Annual Information Form (AIF) for further information.
With the exception of the relationships with EMRA and the Egyptian government referred to above, we do not believe there are any third party relationships which are critical to the Group's success or which would have a material impact upon the Group's position if the relationship broke down.
COST RECOVERY AND PROFIT SHARE
Based on the Company's calculation there was no 'Net Profit Share' due to EMRA as at 30 September 2015, nor is any likely to be due as at 30 June 2016. It is expected that there will be profit share due to EMRA for the Sukari Gold Mine ("SGM") financial year ending 30 June 2017, based on budgeted production, operating expense forecasts and gold price. Centamin has elected to make advance payments against future profit share since 2013 to the value of US$28.75 million, in order to demonstrate goodwill towards the Egyptian government. No additional payments were made during the period.
OUTLOOK
We remain focussed at Sukari on realising the potential for further production growth whilst maintaining a strong control on costs, with the objective of generating substantial free cash flow even under the current challenging gold prices. As highlighted by our interim dividend, paid in October, we intend to continue returning 15-30% of this free cash flow to our shareholders, in line with our dividend policy, and to allocate the remainder towards our medium and long-term objective of organic growth aimed at realising incremental shareholder value and returns.
Safety remains a priority and we continue to target a lost time injury frequency rate of zero.
Guidance for 2015 is between 430,000 and 440,000 ounces at below US$700/oz cash cost of production and below US$950/oz AISC. Production is expected to achieve the 450,000-500,000 ounce per annum target rate during the fourth quarter of this year.
Development of the open pit has progressed well during the course of the year to date and higher-grade ore is expected to be mined during the fourth quarter. Delivery of the required tonnages is expected to be sustained thereafter on an annual basis at around the reserve average grade of 1.03g/t.
Exploration at Sukari will continue to prioritise extensions of the high-grade underground resource and reserve and we continue to expect this to support a long-term life of the operation.
Outside of Sukari, we continue to expect a total exploration expenditure of approximately US$25 million in 2015, with the largest proportion on the advanced exploration programme in Burkina Faso. Our exploration tenements in Côte d'Ivoire and Ethiopia are green field exploration sites and therefore require lower exploration spend. In line with our overall exploration strategy, the actual expenditure on these projects is results-driven and the current estimated expenditures are therefore subject to on-going revisions.
We will continue to evaluate potential opportunities to grow the business through the acquisition of projects offering the potential for the Company to deliver on its strategic objectives.
Andrew Pardey
Chief Executive Officer
Set out below are the unaudited consolidated Financial Statements for the Group, including notes thereto, for the quarter and nine months ended 30 September 2015.
RESPONSIBILITY STATEMENT
We confirm that to the best of our knowledge:
(a) the condensed set of interim consolidated financial statements for the quarter and half year ended 30 September 2015 has been prepared in accordance with International Accounting Standard 34 'Interim Financial Reporting' as adopted by the European Union and as issued by the International Accounting Standards Board ("IASB");
(b) the condensed set of interim consolidated financial statements, which has been prepared in accordance with the applicable set of accounting standards, gives a true and fair view of the assets, liabilities, financial position and profit or loss of the issuer, or the undertakings included in the consolidation as a whole as required by DTR 4.2.4";
(c) the interim management report includes a fair review of the information required by DTR 4.2.7R (indication of important events during the first nine months and description of principal risks and uncertainties for the remaining three months of the year); and
(d) the interim management report includes a fair review of the information required by DTR 4.2.8R (disclosure of related parties' transactions and changes therein).
By order of the Board,
Chief Executive Officer Chief Financial Officer
Andrew Pardey Pierre Louw 11 November 2015 11 November 2015
UNAUDITED INTERIM CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
FOR THE QUARTER AND NINE MONTHS ENDED
30 SEPTEMBER 2015
CONTENTS
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 16-17
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION 18
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 19
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS 20
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 21
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE THREE MONTHS ENDED 30 SEPTEMBER 2015
Note 30 September 2015 30 September 2014
-------------------------------------- --------------------------------------
Before Before
exceptional Exceptional exceptional Exceptional
items items Total items items Total
US$'000 (1) US$'000 US$'000 (1) US$'000
US$'000 US$'000
------------ ------------- --------- ------------ ------------- ---------
Revenue 3 118,529 - 118,529 116,116 - 116,116
Cost of sales 4 (95,199) (10,584) (105,783) (77,549) (16,420) (93,969)
------------ ------------- --------- ------------ ------------- ---------
Gross profit 23,330 (10,584) 12,746 38,567 (16,420) 22,147
Other operating
costs 4 (6,734) - (6,734) (6,579) - (6,579)
Impairment of
available-for-sale
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financial assets 13 203 - 203 183 - 183
Finance income 4 38 - 38 70 - 70
Profit before
tax 16,837 (10,584) 6,253 32,241 (16,420) 15,821
Tax - - - - - -
Profit for the
period 16,837 (10,584) 6,253 32,241 (16,420) 15,821
------------ ------------- --------- ------------ ------------- ---------
EMRA Profit share - - - - - -
Profit for the
period after
EMRA Profit share 16,837 (10,584) 6,253 32,241 (16,420) 15,821
------------ ------------- --------- ------------ ------------- ---------
Profit for the
period attributable
to:
- the owners
of the parent 16,837 (10,584) 6,253 32,241 (16,420) 15,821
- Non-controlling - - -
interests
------------ ------------- --------- ------------ ------------- ---------
Other comprehensive
income
Items that may
be reclassified
subsequently
to profit or
loss:
Gains/(losses)
on available
for sale financial
assets (net of
tax) (75) - (75) (5) - (5)
Other comprehensive
income for the
period 13 (75) - (75) (5) - (5)
------------ ------------- --------- ------------ ------------- ---------
Total comprehensive
income for the
period net of
tax 16,762 (10,584) 6,178 32,236 (16,420) 15,816
------------ ------------- --------- ------------ ------------- ---------
Total comprehensive
income for the
period attributable
to:
- the owners
of the parent 16,762 (10,584) 6,178 32,236 (16,420) 15,816
- - - - - -
* Non-controlling interests
------------ ------------- --------- ------------ ------------- ---------
Earnings per
share:
Basic (cents
per share) 10 0.740 (0.194) 0.546 2.823 (1.438) 1.385
Diluted (cents
per share) 10 0.734 (0.197) 0.537 2.798 (1.425) 1.373
(1() Refer to Note 4 for further details.
The above Unaudited Interim Condensed Consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying notes.
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE NINE MONTHS ENDED 30 SEPTEMBER 2015
Note 30 September 2015 30 September 2014
-------------------------------------- --------------------------------------
Before Before
exceptional Exceptional exceptional Exceptional
items items Total items items Total
US$'000 (1) US$'000 US$'000 (1) US$'000
US$'000 US$'000
------------ ------------- --------- ------------ ------------- ---------
Revenue 3 378,200 - 378,200 321,464 - 321,464
Cost of sales 4 (268,753) (35,424) (304,177) (209,396) (45,175) (254,571)
------------ ------------- --------- ------------ ------------- ---------
Gross profit 109,447 (35,424) 74,023 112,068 (45,175) 66,893
Other operating
costs 4 (20,974) - (20,974) (18,930) - (18,930)
Impairment of
available-for-sale
financial assets 13 474 - 474 (546) - (546)
Finance income 4 136 - 136 326 - 326
Profit before
tax 89,083 (35,424) 53,659 92,918 (45,175) 47,743
Tax (8) - (8) - - -
Profit for the
period 89,075 (35,424) 53,651 92,918 (45,175) 47,743
------------ ------------- --------- ------------ ------------- ---------
EMRA Profit share - - - - - -
------------ ------------- --------- ------------ ------------- ---------
Profit for the
period attributable
to:
- the owners
of the parent 89,075 (35,424) 53,651 92,918 (45,175) 47,743
- Non-controlling - - - - - -
interests
------------ ------------- --------- ------------ ------------- ---------
Other comprehensive
income
Items that may
be reclassified
subsequently
to profit or
loss:
Losses on available
for sale financial
assets (net of
tax) (175) - (175) (5) - (5)
Other comprehensive
income for the
period 13 (175) - (175) (5) - (5)
------------ ------------- --------- ------------ ------------- ---------
Total comprehensive
income for the
period net of
tax 88,900 (35,424) 53,476 92,913 (45,175) 47,738
------------ ------------- --------- ------------ ------------- ---------
Total comprehensive
income for the
period attributable
to:
- the owners
of the parent 88,900 (35,424) 53,476 92,913 (45,175) 47,738
- - -
* Non-controlling interests
------------ ------------- --------- ------------ ------------- ---------
Earnings per
share:
Basic (cents
per share) 10 7.787 (3.097) 4.690 8.237 (4.005) 4.232
Diluted (cents
per share) 10 7.679 (3.054) 4.625 8.136 (3.956) 4.180
(1() Refer to Note 4 for further details.
The above Unaudited Interim Condensed Consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying notes.
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 SEPTEMBER 2015
Note 30 September 31 December
2015 2014
(Unaudited) (Audited)
US$'000 US$'000
NON-CURRENT ASSETS
Property, plant and
equipment 11 885,960 928,964
Exploration and evaluation
asset 12 144,265 123,999
Prepayments 5 28,750 23,750
Other receivables 53 645
------------ -----------
Total non-current assets 1,059,028 1,077,358
------------ -----------
CURRENT ASSETS
Inventories 131,148 140,628
Available-for-sale
financial assets 13 189 409
Trade and other receivables 14,953 24,973
Prepayments 5 1,277 1,710
Cash and cash equivalents 16a 190,574 125,659
------------ -----------
Total current assets 338,141 293,379
------------ -----------
Total assets 1,397,169 1,370,737
------------ -----------
NON-CURRENT LIABILITIES
Provisions 3,286 3,015
------------ -----------
Total non-current liabilities 3,286 3,015
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------------ -----------
CURRENT LIABILITIES
Trade and other payables 26,294 34,042
Provisions 1,553 307
------------ -----------
Total current liabilities 27,847 34,349
------------ -----------
Total liabilities 31,133 37,364
------------ -----------
Net assets 1,366,036 1,333,373
------------ -----------
EQUITY
Issued capital 8 665,010 661,573
Share option reserve 2,575 4,098
Accumulated profits 698,451 667,702
------------ -----------
Total Equity 1,366,036 1,333,373
------------ -----------
TOTAL EQUITY ATTRIBUTABLE
TO:
* owners of the parent 1,366,036 1,333,373
- -
* non-controlling interest
Total Equity 1,366,036 1,333,373
------------ -----------
The above Unaudited Interim Condensed Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE NINE MONTHS ENDED 30 SEPTEMBER 2015
Share
Issued options Accumulated
Capital reserve profits Total Equity
US$'000 US$'000 US$'000 US$'000
-------- -------- ----------- --------------
Balance as at 1 January
2015 661,573 4,098 667,702 1,333,373
Profit for the period - - 53,651 53,651
Other comprehensive
income for the period - - (175) (175)
-------- -------- ----------- --------------
Total comprehensive
income for the period - - 721,178 1,386,849
Dividend paid - - (22,727) (22,727)
Transfer of share
based payments 3,437 (3,437) - -
Recognition of share
based payments - 1,914 - 1,914
Balance as at 30 September
2015 665,010 2,575 698,451 1,366,036
-------- -------- ----------- --------------
Share
Issued options Accumulated Total Equity
Capital reserve profits US$'000
US$'000 US$'000 US$'000
-------- -------- ----------- --------------
Balance as at 1 January
2014 612,463 5,761 594,624 1,212,848
Profit for the period - - 47,743 47,743
Other comprehensive
income for the period - - (5) (5)
-------- -------- ----------- --------------
Total comprehensive
income for the period - - 47,738 47,738
Issue of shares 48,218 - - 48,218
Own shares acquired
in the period (1,743) - - (1,743)
Transfer of share based
payments 1,521 (1,521) - -
Recognition of share
based payments - 1,805 - 1,805
Available for sale
financial asset reserve - - (5) (5)
Balance as at 30 September
2014 660,459 6,045 642,357 1,308,861
-------- -------- ----------- --------------
The above Unaudited Interim Condensed Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE THREE AND NINE MONTHS ENDED 30 SEPTEMBER 2015
Nine Months
Three Months Ended Ended
30 September 30 September
Note 2015 2014 2015 2014
US$'000 US$'000 US$'000 US$'000
Cash flows from operating
activities
Cash generated in operating
activities 16(b) 31,299 31,306 132,401 79,137
Finance income (38) (70) (136) (326)
--------- --------
Net cash generated by
operating activities 31,261 31,236 132,265 78,811
--------- -------- --------- --------
Cash flows from investing
activities
Acquisition of property,
plant and equipment (9,562) (18,586) (25,073) (61,349)
Exploration and evaluation
expenditure (6,251) (8,083) (20,266) (21,161)
Proceeds from sale /
(Acquisition) of financial
assets - - - 91
Cash acquired through
Ampella Mining Limited
asset acquisition - - - 9,254
Finance income 38 70 136 326
--------- --------
Net cash used in investing
activities (15,775) (26,599) (45,203) (72,839)
--------- -------- --------- --------
Cash flows from financing
activities
Dividend paid - - (22,727) -
Own shares acquired
during the period - - - (1,743)
Net cash provided by
financing activities - - (22,727) (1,743)
--------- -------- --------- --------
Net decrease in cash
and cash equivalents 15,486 4,637 64,335 4,229
Cash and cash equivalents
at the beginning of
the period 174,978 106,398 125,659 105,979
Effect of foreign exchange
rate changes 110 (1,174) 580 (347)
--------- -------- --------- --------
Cash and cash equivalents
at the end of the period 16(a) 190,574 109,861 190,574 109,861
--------- -------- --------- --------
The above Unaudited Condensed Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND NINE MONTHS ENDED 30 SEPTEMBER 2015
NOTE 1: ACCOUNTING POLICIES
Basis of preparation
These unaudited interim condensed consolidated financial statements have been prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting" (IAS 34) as adopted by the European Union and as issued by the International Accounting Standards Board ("IASB") and the requirements of the Disclosure and Transparency Rules (DTR) of the Financial Conduct Authority (FCA) in the United Kingdom as applicable to interim financial reporting.
The unaudited interim condensed consolidated financial statements represent a 'condensed set of financial statements' as referred to in the DTR issued by the FCA. Accordingly, they do not include all of the information required for a full annual financial report and are to be read in conjunction with the Group's financial statements for the year ended 31 December 2014, which were prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB") and adopted for use by the European Union and IFRS as issued by the IASB. The financial statements for the year ended 31 December 2014 have been filed with the Jersey Financial Services Commission. The financial information contained in this report does not constitute statutory accounts under the Companies (Jersey) Law 1991, as amended. The financial information for the year ended 31 December 2014 is based on the statutory accounts for the year ended 31 December 2014. Readers are referred to the auditor's report to the Group financial statements as at 31 December 2014 (available at www.centamin.com).
The accounting policies applied in these interim financial statements are consistent with those used in the annual consolidated financial statements for the year ended 31 December 2014 except for the adoption of a number of amendments issued by the IASB and endorsed by the EU which apply for the first time in 2015. The new pronouncements do not have a significant impact on the accounting policies, methods of computation or presentation applied by the Group and therefore the prior period consolidated financial statements have not been restated. The Group has not early adopted any amendments, standards or interpretations that have been issued but are not yet effective.
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The preparation of these interim condensed consolidated financial statements requires the use of certain significant accounting estimates and judgment by management in applying the Group's accounting policies. There have been no changes to the areas involving significant judgment and estimates that have been set out in Note 4 of the Group's annual audited consolidated financial statements for the year ended 31 December 2014.
Going concern
These financial statements for the period ended 30 September 2015 have been prepared on a going concern basis, which contemplate the realisation of assets and liquidation of liabilities during the normal course of operations.
As discussed in Note 7, during the prior year the operation of the mine was affected by two legal actions. The first of these followed from a decision taken by Egyptian General Petroleum Corporation ("EGPC") to charge international, not local (subsidised) prices for the supply of DFO, and the second arose as a result of a judgment of the Administrative Court of first instance in relation to, amongst other matters, the Company's 160km(2) exploitation lease. In relation to the first decision, the Company remains confident that in the event that it is required to continue to pay international prices, the mine at Sukari will remain commercially viable. Similarly, the Company remains confident that the appeal it has lodged in relation to the decision of the Administrative Court will ultimately be successful, although final resolution of it may take some time. On 20 March 2013 the Supreme Administrative Court upheld the Company's application to suspend the decision until the merits of the Company's appeal are considered and ruled on, thus providing assurance that normal operations will be able to continue during this process.
In the unlikely event that the Group is unsuccessful in either or both of its legal actions, and that the operating activities are restricted to a reduced area, it is the director's belief that the Group will be able to continue as going concern.
The directors have a reasonable expectation that the Group will have adequate resources to continue in operational existence for the foreseeable future. Therefore they continue to adopt the going concern basis of accounting in preparing these interim condensed consolidated financial statements.
NOTE 2: SEGMENT REPORTING
The Group is engaged in the business of exploration for and mining of metals only, which represents a single operating segment. The Board is the Group's chief operating decision maker within the meaning of IFRS 8.
Non-current assets other than financial instruments by country:
30 September 31 December
2015
(Unaudited) 2014
US$'000 (Audited)
US$'000
Egypt 982,769 1,017,003
Ethiopia 12,378 10,327
Burkina Faso 61,381 48,893
Cote d'Ivoire 2,372 977
Australia 1 2
United Kingdom 127 156
------------ -----------
1,059,028 1,077,358
------------ -----------
NOTE 3: REVENUE
An analysis of the Group's revenue for the period, from continuing operations, is as follows:
Three Months Nine Months
Ended Ended
30 September 30 September
(Unaudited) (Unaudited)
2015 2014 2015 2014
US$'000 US$'000 US$'000 US$'000
Gold sales 118,339 115,987 377,514 320,911
Silver sales 190 129 686 553
-------- -------- -------- --------
118,529 116,116 378,200 321,464
-------- -------- -------- --------
NOTE 4: PROFIT BEFORE TAX
Profit for the period has been arrived at after crediting / (charging) the following gains / (losses) and expenses:
Three months ended Three months ended
30 September 2015 30 September 2014
Before Before
exceptional Exceptional Total exceptional Exceptional Total
items items items items
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Finance income
Interest received 38 - 38 70 - 70
------------ ------------- ------- ------------ ------------- -------
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND NINE MONTHS ENDED 30 SEPTEMBER 2015 (CONTINUED)
NOTE 4: PROFIT BEFORE TAX (CONTINUED)
Three months ended 30 Three months ended 30 September
September 2015 2014
Before Before
exceptional Exceptional Total exceptional Exceptional Total
items items items items
Expenses US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Cost of sales
Mine production
costs (69,789) (11,179) (80,968) (55,384) (16,639) (72,023)
Movement in
production inventory
and ore stockpiles (334) 595 261 (106) 219 113
Depreciation
and Amortisation (25,076) - (25,076) (22,059) - (22,059)
------------ ------------- ---------- ------------ ------------- --------
(95,199) (10,584) (105,783) (77,549) (16,420) (93,969)
------------ ------------- ---------- ------------ ------------- --------
Three months ended Three months ended
30 September 2015 30 September 2014
Before Before
exceptional Exceptional Total exceptional Exceptional Total
items items items items
Other operating US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
costs
Fixed royalty
- attributable
to the Egyptian
government (3,547) - (3,547) (3,475) - (3,475)
Corporate costs (3,620) - (3,620) (3,131) - (3,131)
Other expenses (35) - (35) (45) (45)
Other income - - - 379 - 379
Foreign exchange
gain, net 572 - 572 (184) - (184)
Provision for
restoration
and rehabilitation
- unwinding
of discount (90) - (90) (134) - (134)
Depreciation (14) - (14) 11 - 11
(6,734) - (6,734) (6,579) - (6,579)
------------ ------------- ------- ------------ ------------- ---------
Impairment of
available for
sale financial
assets 203 - 203 183 - 183
------------ ------------- ------- ------------ ------------- ---------
Nine months ended Nine months ended
30 September 2015 30 September 2014
Before Before
exceptional Exceptional Total exceptional Exceptional Total
items items items items
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Finance income
Interest received 136 - 136 326 - 326
------------ ------------- ------- ------------ ------------- -------
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND NINE MONTHS ENDED 30 SEPTEMBER 2015 (CONTINUED)
NOTE 4: PROFIT BEFORE TAX (CONTINUED)
Nine months ended Nine months ended
30 September 2015 30 September 2014
Before Before
exceptional Exceptional Total exceptional Exceptional Total
items items items items
Expenses US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Cost of sales
Mine production
costs (202,119) (33,314) (235,433) (147,617) (44,172) (191,789)
Movement in
production inventory
and ore stockpiles 1,399 (2,110) (711) (4,561) (1,003) (5,564)
Depreciation
and Amortisation (68,033) - (68,033) (57,218) - (57,218)
------------ ------------- ---------- ------------ ------------- ---------
(268,753) (35,424) (304,177) (209,396) (45,175) (254,571)
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------------ ------------- ---------- ------------ ------------- ---------
Nine months ended Nine months ended
30 September 2015 30 September 2014
Before Before
exceptional Exceptional Total exceptional Exceptional Total
items items items items
Other operating US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
costs
Fixed royalty
- Attributable
to the Egyptian
government (11,318) - (11,318) (9,619) - (9,619)
Corporate costs (10,797) - (10,797) (10,803) - (10,803)
Other income - - - 379 - 379
Other expenses (98) - (98) (104) - (104)
Foreign exchange
gain, net 1,553 - 1,553 1,664 - 1,664
Provision for
restoration
and rehabilitation
- unwinding
of discount (271) - (271) (403) - (403)
Depreciation (44) - (44) (44) - (44)
(20,973) - (20,973) (18,930) - (18,930)
------------ ------------- ---------- ------------ ------------- ---------
Impairment of
available for
sale financial
assets 474 - 474 (546) - (546)
------------ ------------- ---------- ------------ ------------- ---------
Exceptional items
The directors consider that items of income or expense which are material by virtue of their unusual, irregular or non-recurring nature should be disclosed separately if the consolidated financial statements are to fairly present the financial position and underlying business performance. In order to allow a better understanding of the financial information presented within the consolidated financial statements, and specifically the Group's underlying business performance, the effect of exceptional items are shown below.
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND NINE MONTHS ENDED 30 SEPTEMBER 2015 (CONTINUED)
NOTE 4: PROFIT BEFORE TAX (CONTINUED)
Exceptional items (continued)
Three Months Nine Months
Ended Ended
30 September 30 September
(Unaudited) (Unaudited)
2015 2014 2015 2014
US$'000 US$'000 US$'000 US$'000
Included in Cost of
sales
Mine production costs (11,179) (16,639) (33,314) (44,172)
Movement in production
inventory and ore
stockpiles 595 219 (2,110) (1,003)
--------- -------- --------- --------
(10,584) (16,420) (35,424) (45,175)
--------- -------- --------- --------
In January 2012 the Company received a letter from Chevron to the effect that Chevron would not be able to continue supplying DFO to the mine at Sukari at local subsidised prices. It is understood that the reason that this letter was issued was that Chevron had received a letter instructing it to do so from the Egyptian General Petroleum Corporation ("EGPC"). It is further understood that EGPC itself took the decision to issue this instruction because it had received legal advice from the Legal Advice Department of the Council of State (an internal government advisory department) that companies operating in the gold mining sector in Egypt were not entitled to such subsidies. In addition, the Company received a demand from Chevron in 2012 for the repayment of fuel subsidies received in the period from late 2009 through to January 2012, for EGP403 million (approximately US$52.0 million at current exchange rates).
The Group has taken detailed legal advice on this matter (and, in particular, on the opinion given by Legal Advice Department of the Council of State) and in consequence in June 2012 lodged an appeal against EGPC's decision in the Administrative Courts. Again, the Group believes that its grounds for appeal are strong and that there is every prospect of success. However, as a practical matter, and in order to ensure the continuation of supply, the Group has since January 2012 advanced funds to its fuel supplier, Chevron, based on the international price for diesel. As at the date of the financial statements, no final decision had been taken by the courts regarding this matter. Furthermore, the Group remains of the view that an instant move to international fuel prices is not a reasonable outcome and will look to recover funds advanced thus far should the court proceeding be concluded in its favour. However, management recognises the practical difficulties associated with re-claiming funds from the government and for this reason has fully provided against the prepayment of US$11.1 million and US$32.0 million made during Q3 2015 and the nine months to 30 September 2015 respectively, as an exceptional item, as follows:
(a) a US$11.2 million increase and a US$33.3 million increase in direct mine production costs, and
(b) a US$0.1 million decrease and a US$1.3 million increase in stores inventories.
In addition, there was a US$0.6 million decrease and a US$2.1 million increase in mining stockpiles and ore in circuit. This has resulted in a net decrease of US$10.6 million and US$35.4 million in the profit and loss in Q3 2015 and the nine months to 30 September 2015 respectively.
NOTE 5: PREPAYMENTS
30 September 31 December
2015
(Unaudited) 2014
US$'000 (Audited)
US$'000
Non-current Prepayments
------------ -----------
Advance payment to EMRA (1) 28,750 23,750
------------ -----------
(1) With a view to demonstrating goodwill toward the Egyptian government, PGM has made advance payments to EMRA which will be netted off against future Profit Share that becomes payable to EMRA.
Nine Months Year
Ended
30 September Ended
2015
(Unaudited) 31 December
US$'000 2014
(Audited)
US$'000
Current Prepayments
Prepayments 1,277 1,710
Fuel prepayments - -
------------- ------------
Prepayments 1,277 1,710
------------- ------------
Movement in fuel prepayments (1)
Balance at the beginning of the - -
period
Fuel prepayment recognised 31,969 68,737
Less: Provision charged to (2)
:
Mine production costs (see Note
4) (33,314) (61,564)
Property, plant and equipment - (6,953)
Inventories 1,345 (220)
Balance at the end of the period - -
------------- ------------
(1) The cumulative fuel prepayment recognised and provision charged as at 30 September 2015 is as follows:
Fuel prepayment recognised (US$'000) 197,701
Provision charged to:
Mine production costs (US$'000) 184,663 Property, plant and equipment (US$'000) 11,852 Inventories (US$'000) 1,186
(2) Refer to Note 4, Exceptional Items, for further details.
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND NINE MONTHS ENDED 30 SEPTEMBER 2015 (CONTINUED)
NOTE 6: COMMITMENTS
The following is a summary of the Company's outstanding commitments as at 30 September 2015:
Payments due Total < 1 year 1 to 5 >5 years
US$'000 US$'000 years US$'000
US$'000
Operating Lease Commitments(1) 168 56 112 -
--------- --------- --------- ---------
Total commitments 168 56 112 -
--------- --------- --------- ---------
(1) Operating lease commitments are limited to office premises in Jersey. As a result of the completion of Stage 4 in the prior year, the Group had no commitments for capital expenditure as at 30 September 2015.
NOTE 7: CONTINGENT LIABILITIES AND CONTINGENT ASSETS
Contingent Liabilities
Fuel Supply
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In January 2012, the Group received a letter from Chevron to the effect that Chevron would only be able to supply DFO to the mine at Sukari at international prices rather than at local subsidised prices. It is understood that the reason that this letter was issued was that Chevron had received a letter instructing it to do so from the EGPC. It is further understood that EGPC itself issued this instruction because it had received legal advice from the Legal Advice Department of the Council of State (an internal government advisory department) that companies operating in the gold mining sector in Egypt were not entitled to such subsidies. In November 2012, the Group received a further demand from Chevron for the repayment of fuel subsidies received during the period from late 2009 through to January 2012, for EGP403 million (approximately US$52.0 million at current exchange rates).
The Group has taken detailed legal advice on this matter (and, in particular, on the opinion given by the Legal Advice Department of the Council of State) and in June 2012 lodged an appeal against EGPC's decision in the Administrative Courts. Again, the Group believes that its grounds for appeal are strong and that there is a good prospect of success. However, as a practical matter, and in order to ensure the continuation of supply whilst the matter is resolved, the Group has since January 2012 advanced funds to its fuel supplier, Chevron, based on the international price for fuel.
As at the date of this document, no decision had been taken by the courts regarding this matter. The Group remains of the view that an instant move to international fuel prices is not a reasonable outcome and will look to recover funds advanced to date should the court action be successfully concluded. However, management recognises the practical difficulties associated with reclaiming funds from the government and for this reason has fully provided against the prepayment of US$197.7 million, as an exceptional item. Refer to Notes 4 and 5 of the accompanying financial statements for further details on the impact of this exceptional provision on the Group's results for Q3 2015.
No provision has been made in respect of the historic subsidies prior to January 2012 as, based on legal advice, the Company believes that the prospects of a court finding in its favour in relation to this matter remain very strong.
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND NINE MONTHS ENDED 30 SEPTEMBER 2015 (CONTINUED)
NOTE 7: CONTINGENT LIABILITIES AND CONTINGENT ASSETS (CONTINUED)
Supreme Administrative Court Appeal
On 30 October 2012, the Administrative Court in Egypt handed down a judgment in relation to a claim brought by, amongst others, an independent member of a previous parliament, in which he argued for the nullification of the agreement that confers on the Group rights to operate in Egypt. This agreement, the Concession Agreement, was entered into between the Arab Republic of Egypt, the Egyptian Mineral Resources Authority ("EMRA") and Centamin's wholly--owned subsidiary Pharaoh Gold Mines ("PGM"), and was approved by the People's Assembly as Law 222 of 1994.
In summary that judgment states that, although the Concession Agreement itself remains valid and in force, insufficient evidence had been submitted to Court in order to demonstrate that the 160km(2) exploitation lease between PGM and EMRA had received approval from the relevant Minister as required by the terms of the Concession Agreement. Accordingly, the Court found that the exploitation lease in respect of the area of 160km(2) was not valid although it stated that there was in existence such a lease in respect of an area of 3km(2) . Centamin, however, is in possession of the executed original lease documentation which clearly shows that the 160km(2) exploitation lease was approved by the Minister of Petroleum and Mineral Resources. It appears that an executed original document was not supplied to the Court at first instance.
Upon notification of the judgment the Group took various steps to protect its ability to continue to operate the mine at Sukari. These included lodging a formal appeal before the Supreme Administrative Court on 26 November 2012. In addition, in conjunction with the formal appeal the Group applied to the Supreme Administrative Court to suspend the initial decision until such time as the court was able to consider and rule on the merits of the appeal. On 20 March 2013 the Court upheld this application thus suspending the initial decision and providing assurance that normal operations would be able to continue whilst the appeal process was under way.
EMRA lodged its own appeal in relation to this matter on 27 November 2012, the day after the Company's appeal was lodged, supporting the Group's view in this matter. Furthermore, in late December 2012, the Minister of Petroleum lodged a supporting appeal and shortly thereafter publicly indicated that, in his view, the terms of the Concession Agreement were fair and that the exploitation lease was valid. The Minister of Petroleum also expressed support for the investment and expertise that Centamin brings to the country. The Company believes this demonstrates the government's commitment to the Group's investment at Sukari and the government's desire to stimulate further investment in the Egyptian mining industry.
The Company does not yet know when the appeal will conclude, although it is aware of the potential for the process in Egypt to be lengthy. The Company has taken extensive legal advice on the merits of its appeal from a number of leading Egyptian law firms who have confirmed that the proper steps were followed with regard to the grant of the 160km(2) lease. It therefore remains of the view that the appeal is based on strong legal grounds and will ultimately be successful. In the event that the appellate court fails to be persuaded of the merits of the case put forward by the Group, the operations at Sukari may be adversely effected to the extent that the Group's operation exceeds the exploitation lease area of 3km(2) referred to in the original court decision.
The Company remains confident that normal operations at Sukari will be maintained whilst the appeal case is heard.
Contingent Assets
There were no contingent assets at period-end (31 December 2014: nil).
NOTE 8: ISSUED CAPITAL
Fully Paid Ordinary Three Months Year Ended
Shares Ended
30 September 31 December
2015 2014
(Unaudited) (Audited)
Number US$'000 Number US$'000
Balance at beginning of the period 1,152,107,984 661,573 1,101,397,381 612,463
Issue of shares (1) - - 50,710,603 48,218
Own shares acquired during the
period - - - (1,743)
Transfer from share options reserve - 3,437 - 2,635
Balance at end of the period 1,152,107,984 665,010 1,152,107,984 661,573
------------- ------- -------------- --------
(1) Relates to the ordinary shares that were admitted to trading as consideration for the acquisition of Ampella Mining Limited.
Fully paid ordinary shares carry one vote per share and carry the right to dividends.
The authorised share capital is an unlimited number of no par value shares.
As at the date of this report the Company held 5,993,041 ordinary shares in treasury. (2)
(2) Refers to shares held by the trustee pursuant to the Deferred Bonus Share Plan
NOTE 9: RELATED PARTY TRANSACTIONS
The related party transactions for the three months ended 30 September 2015 are summarised below:
- Salaries, superannuation contributions, bonuses, share based payments, consulting and Directors' fees paid to Directors during the three months ended 30 September 2015 amounted to US$559,115 (30 September 2014: US$633,507).
- Mr J El-Raghy is a Director and shareholder of El-Raghy Kriewaldt Pty Ltd ("ELK"), which provides office premises to the Company in Australia. All dealings with ELK are in the ordinary course of business and on normal terms and conditions. Rent paid to ELK during the three months ended 30 September 2015 amounted to US$10,629 (30 September 2014: US$13,225).
The related party transactions for the nine months ended 30 September 2015 are summarised below:
- Salaries, superannuation contributions, bonuses, share based payments, consulting and Directors' fees paid to Directors during the nine months ended 30 September 2015 amounted to US$1,635,959 (30 September 2014: US$2,144,146).
- Mr J El-Raghy is a Director and shareholder of El-Raghy Kriewaldt Pty Ltd ("ELK"), which provides office premises to the Company in Australia. All dealings with ELK are in the ordinary course of business and on normal terms and conditions. Rent paid to ELK during the nine months ended 30 September 2015 amounted to US$33,822 (30 September 2014: US$39,398).
NOTE 10: EARNINGS PER SHARE
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Basic earnings per share are calculated using the weighted average number of shares outstanding. Diluted earnings per share are calculated using the treasury stock method. In order to determine diluted earnings per share, the treasury stock method assumes that any proceeds from the exercise of dilutive stock options and warrants would be used to repurchase common shares at the average market price during the period, with the incremental number of shares being included in the denominator of the diluted earnings per share calculation. The diluted earnings per share calculation excludes any potential conversion of options and warrants that would increase earnings per share.
Three Months Nine Months
Ended Ended
30 September 30 September
(Unaudited) (Unaudited)
2015 2014 2015 2014
Cents Cents Cents Cents
Per Share Per Share Per Share Per Share
Basic earnings per
share 0.546 1.385 4.690 4.232
------------- ------------- ------------- -------------
Diluted earnings per
share 0.537 1.373 4.625 4.180
------------- ------------- ------------- -------------
Basic earnings per share
The earnings and weighted average number of ordinary shares used in the calculation of basic earnings per share are as follows:
Three Months Nine Months
Ended Ended
30 September 30 September
(Unaudited) (Unaudited)
2015 2014 2015 2014
US$'000 US$'000 US$'000 US$'000
Earnings used in the
calculation of basic
EPS 6,253 15,821 53,651 47,743
---------- ---------- ---------- ----------
Three Months Nine Months
Ended Ended
30 September 30 September
(Unaudited) (Unaudited)
2015 2014 2015 2014
No. No. No. No.
Weighted average number
of ordinary shares
for the purpose of
basic EPS 1,146,114,943 1,141,953,267 1,143,955,365 1,128,044,065
------------- ------------- ------------- -------------
Diluted earnings per share
The earnings and weighted Three Months Nine Months
average number of ordinary Ended Ended
shares used in the 30 September 30 September
calculation of diluted (Unaudited) (Unaudited)
earnings per share
are as follows:
2015 2014 2015 2014
US$'000 US$'000 US$'000 US$'000
Earnings used in the
calculation of diluted
EPS 6,253 15,821 53,651 47,743
---------- ---------- ---------- ----------
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND NINE MONTHS ENDED 30 SEPTEMBER 2015 (CONTINUED)
NOTE 10: EARNINGS PER SHARE (CONTINUED)
Three Months Nine Months
Ended Ended
30 September 30 September
(Unaudited) (Unaudited)
2015 2014 2015 2014
No. No. No. No.
Weighted average number
of ordinary shares
for the purpose of
diluted EPS 1,165,023,281 1,152,099,098 1,159,942,550 1,142,059,235
------------- ------------- ------------- -------------
Weighted average number
of ordinary shares
for the purpose of
basic EPS 1,146,114,943 1,141,953,267 1,143,955,365 1,128,044,065
Shares deemed to be
issued for no consideration
in respect of employee
options 18,908,338 10,145,831 15,987,185 14,015,170
------------- ------------- ------------- -------------
Weighted average number
of ordinary shares
used in the calculation
of diluted EPS 1,165,023,281 1,152,099,098 1,159,942,550 1,142,059,235
------------- ------------- ------------- -------------
NOTE 11: PROPERTY, PLANT AND EQUIPMENT ((1)
Three Months
Ended 30
September Land Plant Mine
2015 Office and and Mining Development Stripping Capital
(Unaudited) equipment buildings equipment equipment properties Asset WIP Total
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Cost
Balance at
31 December
2014 5,383 1,142 565,811 220,654 228,192 - 121,252 1,142,434
Additions 553 44 18,333 19,334 73,056 - (84,977) 26,343
Transfers - - - - - -
----------- ----------- ----------- ----------- ------------ ---------- ---------- ----------
Balance at
30 September
2015 5,936 1,186 584,144 239,988 301,248 - 36,275 1,168,777
----------- ----------- ----------- ----------- ------------ ---------- ---------- ----------
Accumulated
depreciation
Balance at
31 December
2014 (4,254) (177) (67,744) (71,798) (69,497) - - (213,470)
Depreciation
and
amortisation (856) (104) (23,048) (21,866) (23,473) - - (69,347)
----------- ----------- ----------- ----------- ------------ ---------- ---------- ----------
Balance at
30 September
2015 (5,110) (281) (90,792) (93,664) (92,970) - - (282,817)
----------- ----------- ----------- ----------- ------------ ---------- ---------- ----------
Year Ended
31 December
2014 (Audited)
Cost
Balance at
31 December
2013 4,625 171 284,902 178,374 182,974 - 426,461 1,077,507
Additions 17 - 8 - 6,979 - 61,252 68,256
Decrease
in
rehabilitation
asset - - - - (5,161) - - (5,161)
Acquisition
of subsidiary 1,080 1,131 814 1,224 - - 3 4,252
Disposals (571) (160) (724) (391) - - (574) (2,420)
Transfers 232 - 280,811 41,447 43,400 - (365,890) -
----------- ----------- ----------- ----------- ------------ ---------- ---------- ----------
Balance at
31 December
2014 5,383 1,142 565,811 220,654 228,192 - 121,252 1,142,434
----------- ----------- ----------- ----------- ------------ ---------- ---------- ----------
Accumulated
depreciation
Balance at
31 December
2013 (3,051) (23) (42,747) (46,326) (34,774) - - (126,921)
Acquisition
of subsidiary (765) (146) (649) (1,224) - - - (2,784)
Depreciation
and
amortisation (730) (8) (24,456) (24,373) (34,723) - - (84,290)
Disposals 292 - 108 125 - - - 525
----------- ----------- ----------- ----------- ------------ ---------- ---------- ----------
Balance at
31 December
2014 (4,254) (177) (67,744) (71,798) (69,497) - - (213,470)
----------- ----------- ----------- ----------- ------------ ---------- ---------- ----------
Net book
value
As at 31
December
2014 1,129 965 498,067 148,856 158,695 - 121,252 928,964
----------- ----------- ----------- ----------- ------------ ---------- ---------- ----------
As at 30
September
2015 826 905 493,352 146,324 208,278 - 36,275 885,960
----------- ----------- ----------- ----------- ------------ ---------- ---------- ----------
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(1) Legal title of all operating assets of PGM pass to EMRA when cost recovery of those assets is complete. The right of use of all fixed and movable assets remains with PGM and SGM for no charge over the life of mine.
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND NINE MONTHS ENDED 30 SEPTEMBER 2015 (CONTINUED)
NOTE 12: EXPLORATION AND EVALUATION ASSETS
Nine Months Year Ended
Ended
30 September 31 December
2015 2014
(Unaudited) (Audited)
US$'000 US$'000
Balance at the beginning of
the period 123,999 59,849
Expenditure for the period 20,266 28,841
Acquisition of Ampella Mining
Limited - 37,637
Impairment of exploration
and evaluation asset - (2,328)
------------- ------------
Balance at the end of the
period 144,265 123,999
------------- ------------
The exploration and evaluation asset relates to the drilling, geological exploration and sampling of potential ore reserves.
NOTE 13: AVAILABLE-FOR-SALE FINANCIAL ASSETS
The unrealised losses on available-for-sale investments recognised in other comprehensive income were as follows:
Three Months Nine Months
Ended Ended
30 September 30 September
(Unaudited) (Unaudited)
2015 2014 2015 2014
US$'000 US$'000 US$'000 US$'000
Loss on fair value of
investment - other comprehensive
income (75) (5) (175) (5)
-------- -------- -------- --------
The available for sale financial asset at period-end relates to a 6.66% (2014: 11.40%) equity interest in Nyota Minerals Limited ("NYO"), a listed public company, as well as a 0.96% (2014: 1.6%) equity interest in KEFI Minerals plc ("KEFI").
As a result of the prolonged decline in the fair value in the prior year of the investment in Nyota, the prior period devaluation had been recognised as an impairment loss in the Statement of Comprehensive Income as follows.
Three Months Nine Months
Ended Ended
30 September 30 September
(Unaudited) (Unaudited)
2015 2014 2015 2014
US$'000 US$'000 US$'000 US$'000
Impairment loss 203 183 474 (546)
-------- -------- -------- --------
NOTE 14: SHARE BASED PAYMENTS
No share based payments were awarded or granted to Employees during the third quarter.
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND NINE MONTHS ENDED 30 SEPTEMBER 2015 (CONTINUED)
NOTE 15: FINANCIAL INSTRUMENTS' FAIR VALUE DISCLOSURES
The Group has no financial instruments with fair values that are determined by reference to significant unobservable inputs, i.e. those that would be classified as level 3 in the fair value hierarchy, nor have there been any transfers of assets or liabilities between levels of the fair value hierarchy.
The Group's interest in Nyota Minerals Limited and KEFI Minerals plc is classified as an available for sale financial asset (see note 13). The Group carries its interest in Nyota Minerals Limited and KEFI Minerals plc at fair value, and measures its interest using Level 1 unadjusted quoted prices.
The director's consider that the carrying amounts of financial assets and financial liabilities carried at amortised cost approximate their amortised cost.
NOTE 16: NOTES TO THE STATEMENTS OF CASH FLOWS
(a) Reconciliation of cash and cash equivalents
For the purpose of the statements of cash flows, cash and cash equivalents includes cash on hand and at bank and deposits.
Three Months Nine Months
Ended Ended
30 September 30 September
(Unaudited) (Unaudited)
2015 2014 2015 2014
US$'000 US$'000 US$'000 US$'000
Cash and cash equivalents 190,574 109,861 190,574 109,861
-------- -------- -------- --------
(b) Reconciliation of profit for the period to cash flows from operating activities
Three Months Nine Months
Ended Ended
30 September 30 September
(Unaudited) (Unaudited)
2015 2014 2015 2014
US$'000 US$'000 US$'000 US$'000
Profit for the period 6,253 15,821 53,651 47,743
Add/(less) non-cash items:
Depreciation / amortisation
of property, plant and
equipment 25,089 22,047 68,078 57,262
Inventory write off - 11 - -
Shares received in KEFI - (379) - (379)
Increase / (Decrease)
in provisions (64) 554 1,516 1,133
Foreign exchange rate
(gain) / loss, net (682) 323 (2,133) (420)
Impairment of available-for-sale
financial assets (203) 183 (474) 546
Share based payment expense 556 832 1,915 1,805
Changes in working capital
during the period :
(Increase) / Decrease
in trade and other receivables 10,758 (1,956) 10,020 2,950
Decrease / (Increase)
in inventories (491) 1,249 9,479 6,169
(Increase) / Decrease
in prepayments (572) (5,987) (4,567) (5,390)
Decrease / (Increase)
in trade and other payables (9,345) (1,391) (5,084) (32,281)
Cash flows generated
from operating activities 31,299 31,306 132,401 79,137
-------- -------- -------- ---------
NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE AND NINE MONTHS ENDED 30 SEPTEMBER 2015 (CONTINUED)
NOTE 16: NOTES TO THE STATEMENTS OF CASH FLOWS (CONTINUED)
(c) Non-cash financing and investing activities
There have been no non-cash financing and investing activities during the current or comparative period quarter other than the Ampella asset acquisition as disclosed in Note 12.
NOTE 17: SUBSEQUENT EVENTS
Further to the declaration of 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 was paid on 9 October 2015 to shareholders on the register on the Record Date of 4 September 2015.
Other than the above, there has not arisen in the interval between the end of the financial period and the date of this report any item, transaction or event of a material and unusual nature likely in the opinion of the Directors of the Company to affect significantly the operations of the Company, the results of those operations, or the state of affairs of the Company in subsequent financial periods.
The accompanying Form 52 109FS Certification of interim filings are published, inter alia, for the purposes, of discharging the Company's obligations arising in connection with the listing of its shares on the Toronto Stock Exchange.
NON-GAAP FINANCIAL MEASURES
Three non-GAAP financial measures are used in this report:
1) EBITDA: "EBITDA" is a non-GAAP financial measure, which excludes the following from profit before tax:
-- Finance costs; -- Finance income; and -- Depreciation and amortisation.
Management believes that EBITDA is a valuable indicator of the Group's ability to generate liquidity by producing operating cash flow to fund working capital needs and fund capital expenditures. EBITDA is also frequently used by investors and analysts for valuation purposes whereby EBITDA is multiplied by a factor or "EBITDA multiple" that is based on an observed or inferred relationship between EBITDA and market values to determine the approximate total enterprise value of a company. EBITDA is intended to provide additional information to investors and analysts and does not have any standardized definition under IFRS and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. EBITDA excludes the impact of cash costs and income of financing activities and taxes, and therefore is not necessarily indicative of operating profit or cash flow from operations as determined under IFRS. Other companies may calculate EBITDA differently. The following table provides a reconciliation of EBITDA to profit for the year attributable to the Company.
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Reconciliation of profit before tax to EBITDA:
Quarter Quarter Quarter Quarter
ended ended ended ended
30 Sep 30 Sep 30 Sep 30 Sep
2015 2015 2014 2014
Before Including Before Including
Exceptional Exceptional Exceptional Exceptional
items items(1) items items(1)
US$'000 US$'000 US$'000 US$'000
------------------- ------------- ------------- ------------- -------------
Profit before
tax 16,837 6,253 32,241 15,821
------------------- ------------- ------------- ------------- -------------
Finance income (38) (38) (70) (70)
------------------- ------------- ------------- ------------- -------------
Depreciation
and amortisation 25,089 25,089 22,059 22,059
------------------- ------------- ------------- ------------- -------------
EBITDA 41,888 31,304 54,230 37,810
------------------- ------------- ------------- ------------- -------------
Nine months Nine months Nine months Nine months
ended ended ended ended
30 Sep 30 Sep 30 Sep 30 Sep
2015 2015 2014 2014
Before Including Before Including
Exceptional Exceptional Exceptional Exceptional
Items Items(1) Items Items(1)
US$'000 US$'000 US$'000 US$'000
------------------- ------------- ------------- ------------- -------------
Profit before
tax 89,083 53,659 92,918 47,743
------------------- ------------- ------------- ------------- -------------
Finance income (136) (136) (326) (326)
------------------- ------------- ------------- ------------- -------------
Depreciation
and amortisation 68,077 68,077 57,218 57,218
------------------- ------------- ------------- ------------- -------------
EBITDA 157,024 121,600 149,810 104,635
------------------- ------------- ------------- ------------- -------------
(1) Profit before tax, Depreciation and amortisation and EBITDA includes an exceptional provision to reflect the removal of fuel subsidies (refer to Note 4 of the Financial Statements for further details).
2) Cash cost and all-in sustaining costs (AISC) per ounce calculation: Cash cost and AISC per ounce are non-GAAP financial measures. Cash cost of production per ounce is a measure of the average cost of producing an ounce of gold, calculated by dividing the operating costs in a period by the total gold production over the same period. Operating costs represent total operating costs less administrative expenses, royalties, depreciation and amortisation. Management uses this measure internally to better assess performance trends for the Company as a whole. The Company believes that, in addition to conventional measures prepared in accordance with GAAP, certain investors use such non-GAAP information to evaluate the Company's performance and ability to generate cash flow. The Company believes that these measures provide an alternative reflection of the Group's performance for the current period and are an alternative indication of its expected performance in future periods. Cash cost is intended to provide additional information, does not have any standardised meaning prescribed by GAAP and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. This measure is not necessarily indicative of operating profit or cash flow from operations as determined under GAAP. Other companies may calculate these measures differently.
During June 2013 the World Gold Council (WGC), an industry body, published a Guidance Note on the AISC metric, which gold mining companies can use to supplement their overall non-GAAP disclosure. AISC is an extension of the existing 'cash cost' metric and incorporates all costs related to sustaining production and in particular recognising the sustaining capital expenditure associated with developing and maintaining gold mines. In addition, this metric includes the costs associated with developing and maintaining gold mines. In addition, this metric includes the costs associated with corporate office structures that support these operations, the community and rehabilitation costs attendant with responsible mining and any exploration and evaluation costs associated with sustaining current operations. AISC per ounce is arrived at by dividing the dollar value of the sum of these cost metrics, by the ounces of gold produced.
Reconciliation of Cash Cost per Ounce:
Quarter Quarter Quarter Quarter
ended ended ended ended
30 Sep 30 Sep 30 Sep2014 30 Sep
2015 2015 Before 2014
Before Including Exceptional Including
Exceptional Exceptional Items Exceptional
Items Items(1) Items(1)
------------------------- ----------- ------------- ------------- ------------- -------------
Mine production
costs (Note 4) (US$'000) 69,789 80,968 55,384 72,023
------------------------- ----------- ------------- ------------- ------------- -------------
Less: Refinery
and transport (US$'000) (131) (131) (20) (20)
------------------------- ----------- ------------- ------------- ------------- -------------
Cash cost of production (US$'000) 69,658 80,837 55,364 72,003
------------------------- ----------- ------------- ------------- ------------- -------------
Gold Produced -
Total (oz) 105,413 105,413 93,624 93,624
------------------------- ----------- ------------- ------------- ------------- -------------
Cash cost per ounce (US$/oz) 661 767 592 771
------------------------- ----------- ------------- ------------- ------------- -------------
Reconciliation of AISC per ounce:
Quarter Quarter Quarter Quarter
ended ended ended ended
30 Sep 30 Sep 30 Sep 30 Sep
2015 2015 2015 2015
Before Including Before Including
Exceptional Exceptional Exceptional Exceptional
Items Items(1) Items Items
------------------------------ ----------- ------------- ------------- ------------- -------------
Mine production
costs(2) (Note
4) (US$'000) 69,789 80,968
------------------------------ ----------- ------------- ------------- ------------- -------------
Royalties (US$'000) 3,547 3,547
------------------------------ ----------- ------------- -------------
Corporate and administration
costs (US$'000) 3,620 3,620
------------------------------ ----------- ------------- -------------
Rehabilitation
costs (US$'000) 90 90
------------------------------ ----------- ------------- -------------
Underground development (US$'000) 7,717 7,717
------------------------------ ----------- ------------- -------------
Other sustaining
capital expenditure (US$'000) 1,016 1,016
------------------------------ ----------- ------------- -------------
By-product credit (US$'000) (190) (190)
------------------------------ ----------- ------------- -------------
All-in sustaining
costs (US$'000) 85,588 96,768
------------------------------ ----------- ------------- -------------
Gold Produced -
Total (oz) 105,413 105,413
------------------------------ ----------- ------------- -------------
All in-sustaining
costs per ounce (US$/oz) 812 918 NR NR
------------------------------ ----------- ------------- ------------- ------------- -------------
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