Centamin plc (LON: CEY) has today provided a quarterly report for the three months ended 31 December 2019.
· Gold production of 148,387 ounces from the Sukari Gold Mine for the three months to 31 December 2019 (“Q4”), totalling 480,529 ounces for the full year 2019;
· Gross revenue was US$204.1 million in Q4, generated from 137,065 ounces in gold sales at an average realised price of US$1,487 per ounce;
· Gross revenue was US$658.1 million in 2019, generated from 470,020 ounces in gold sales at an average realised price of US$1,399 per ounce;
· Group lost time injury frequency rate of 0.24 per 200,000 workplace hours for Q4 (FY: 0.29) with a continued focus on creating a zero-harm workplace;
· Q4 costs reflected the strong operational performance in the period and brought FY costs in line with guidance: Q4 cash costs of US$605 per ounce produced (FY: US$699/oz) and all-in sustaining costs of US$792 per ounce sold (FY: US$943/oz);
· Strong balance sheet with no debt, no hedging and cash and liquid assets of US$348.9 million, as at 31 December 2019 an increase of almost US$60 million since 30 September 2019;
· Final proposed dividend of 6.0 US cents per share (US$69.4 million), which would bring total 2019 dividend to 10.0 US cents per share (US$115.6 million);
· Excellent underground drill results at Sukari, including high-grade Ptah intercepts of 0.6m @ 1,187 g/t, 1.4m @ 292 g/t and 0.5m @ 547 g/t, confirming high-grade continuity on the east and western contacts; and
· Leadership evolution: Ross Jerrard, Chief Financial Officer was appointed as interim Chief Executive Officer and the process to identify the permanent CEO is well advanced. James Rutherford was appointed as an independent Non-Executive Director and Deputy Chairman to migrate to Chairman during 2020.
· 2020 guidance remains unchanged:
o Production 510,000-540,000 ounces of gold (weighted approximately 60% to H2)
o Open pit material is expected to contribute 75% of the full year production driven by higher grade Stage 4 ore; the balance is scheduled to come from the underground, specifically Ptah as the focus within Amun is development
o Cash costs of production between US$630-680 per ounce produced
o AISC between US$870-920 per ounce sold
· The Sukari life of asset review is ongoing; a series of optimisation studies across each section of the mine are underway, with results expected throughout 2020, identifying areas of improvement;
· Total capital expenditure in Egypt is budgeted to be c.US$190 million:
o c.US$140 million to be spent at Sukari
§ Sustaining capex of c.US$95 million, in line with routine work programme
§ Non-sustaining capex of c.US$45 million, including construction of the second tailings storage facility
o c.US$50 million of treasury will be invested into long-term growth projects, including solar power. The capital outlay is recoverable as per the Concession Agreement
· c.US$20 million of exploration costs to be incurred outside of Egypt, at Doropo, Batie West and ABC projects; and
· Further board changes are planned in 2020 as the Company continues to reshape and strengthen the leadership team.
· The Company received an unsolicited approach from Endeavour Mining. Following a comprehensive and reciprocal due diligence process, the Board unanimously concluded that the possible offer materially undervalued Centamin and its prospects. The Board notes that Endeavour withdrew its possible offer.
· The Board is highly confident in Centamin’s strategy of maximising the value of its asset base and promoting further growth both organically and through accretive opportunities which create value for shareholders. The Group’s business model – centred around our high-quality, cost-advantaged asset base, sustainable reinvestment in growth through exploration, and revitalised culture of continuous improvement – gives us confidence in continuing to deliver strong shareholder returns.
Ross Jerrard, Centamin CEO, commented:
“Centamin has undertaken a number of initiatives in 2019 to improve the consistency at, and increase cash flow from, the Sukari mine, which have contributed to a strong fourth quarter performance. Consistent operational delivery against the mine plan remains the key objective. The leadership teams have been strengthened and I am confident in our ability not just to deliver in the near term but also to enhance the long-term value at Sukari, and the rest of the portfolio.
Centamin’s mission is to be a multi-asset gold producer of quality, long-life assets. We continue to assess opportunities for value-accretive diversification in conjunction with the investment in organic growth projects that support and increase the long-term value of the Group.”