Tue, 19 Nov 2019

Centamin PLC Announces Q3 2019 Report

ACCESSWIRE
23 Oct 2019, 16:01 GMT+10

PERTH, AUSTRALIA / ACCESSWIRE / October 23, 2019 / Quarterly Report for the three months ended 30 September 2019

HIGHLIGHTS

Operational

Improved Group lost time injury frequency rate ('LTIFR') of 0.11 per 200,000 workplace hours, for the third quarter ('Q3');

Gold production of 98,045 ounces from the Sukari Gold Mine ('Sukari') in Q3, bringing production for the first nine months of 2019 ('YTD') to 332,141 ounces;

Gross revenue was US$160.8 million from 108,826 ounces in gold sales, at an average realised gold price of US$1,478 per ounce;

Open pit delivered continued grade improvements; Mining rates on the higher-grade Stage 4 West wall were slower than scheduled;

Underground production exceeded plan, driven by approximately 50kt of marginal material mined reclassified as low-grade development ore and processed through the plant;

Processing plant throughput of 3.2Mt of ore in Q3 (YTD: 9.8Mt), at a 94.3% plant utilisation rate;

Absolute cash costs of production and all-in sustaining costs ('AISC') continue to track better than budget for Q3 and YTD; and

As a function of lower production volumes, unit cash costs for Q3 are US$860 per ounce produced (YTD: US$742/oz) and AISC are US$1,141 per ounce sold (YTD: US$1,006/oz).

Environmental, Social and Governance

CEO succession process actively underway, managed by Nomination Committee and global executive search firm, Korn Ferry;

Two independent non-executive director appointments, Dr Catharine Farrow and Ms Marna Cloete, collectively bringing sector leading technical, financial, capital market and government relations experience to the Board;

Strengthening operational competencies with further key appointments at the Sukari mine site;

On track to exceed our water management target for 2019 of 50:50 water usage (recycled water: fresh-water draw); Q3 water usage was 85:15 (YTD: 87:13); and

Completed the Sukari solar project preliminary study, indicating a minimum 30MW solar plant would provide robust returns, providing an alternative daylight power source, reducing the current reliance on fossil fuels by a minimum of 12% and thereby reducing operating costs. An EPC(M) tender process underway, feeding into a final feasibility study for Board approval.

Exploration

Excellent Sukari underground drilling results returned in Q3, including but not limited to:

o 1m @ 358g/t (Ptah, Western contact)

o 1m @ 121g/t (Amun, Top of Horus)

o 13.5m @ 13.2g/t (Ptah, Porphyry Keel)

o 1m @ 21.1g/t (Horus Deeps), and

o 2m @ 83g/t (Cleopatra)

Horus Deeps extensional drilling intersected the Horus mineralised structure to the North, below the Ptah, Porphyry Keel;

Doropo Project mineral resource update on nine months of drilling:

o M&I resource of 61.3Mt at1.24g/t for 2.44Moz, and inferred resource of 30.1Mt at 1.1g/t for 1.04Moz;

o 15% increase in contained metal

23% increase in M&I resource tonnes, including maiden resource in the Measured category

A new, significant, 10km long gold-mineralised anomaly at the Doropo Project, the Kilosegui deposit located within 20km of the main resource area. A new Mineral Resource estimate based on resource drilling on the previously delineated 1.8km strike length yielded an Indicated Mineral Resource of 3.6Mt at 1.0g/t for 0.12Moz contained, and 10.5Mt at 1.0g/t for 0.33Moz (included within the Mineral Resource update); and

Greenfield exploration at the highly prospective ABC Project significantly improved the interpretation of the mineralised orebody and resulted in the identification of two high grade lithological contacts bracketing the larger low-grade corridor.

Financial

Interim dividend of 4.0 US cents per share (US$46.4 million) was distributed to shareholders on 27 September 2019;

Strong and flexible balance sheet with no debt, no hedging and cash and liquid assets of US$289.4 million, as at 30 September 2019, after interim dividend distribution;

Net cash generated from operating activities was US$39.2 million. After Sukari profit share distribution and Group investing activities, Group free cash flow was US$4.1 million (YTD: US$39.7 million); and

Total expenditure (capex and exploration expense) was lower than budget for Q3 (US$27.3 million) and YTD (US$85.7 million).

Q4 Outlook

October production (to date) is in line with plan and on track to be the strongest monthly performance for the year to date; The bottom end of full year production guidance, 490,000 ounces, remains the target for the year;

Full year cost guidance remains unchanged, guiding towards the respective top end of the full year guidance ranges: cash costs of US$675-725 per ounce produced, and AISC of US$890-950 per ounce sold;

The key focus for this quarters production target is the mining of the higher-grade ore as scheduled from Stage 4 West of the open pit;

Strong free cash flow generation expected in Q4, driven by improved gold sales and reduced costs, supports the Board's expectation to maintain the 2019 final dividend at a minimum of 4 US cents per share;

The Company is currently undertaking a consolidated life of asset ('LOA') review at Sukari, incorporating independent optimisation studies across all sections of the mine; and

Q4 2019 Results are scheduled to be published on 15 January 2020.

Corporate Strategy

The Company's strategy remains long-term production of profitable ounces, maximising free cash flow generation. Near to longer-term profit improving initiatives are expected to ease cost pressures and reduce the cost base.

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.

Andrew Pardey, CEO, commented:

'This quarter was one of continuing transition. Further key staff changes were made at Sukari as we continue to strive for increased performance in key areas of the operation. The operational leadership team have commenced a comprehensive review, supported by external consultants, across all sections of the mine, including mining methodology and infrastructure.

Centamin has a strong culture of cost-discipline and accountability which has resulted in significant free cash flow generation and commitment to shareholder returns. During the quarter we distributed an interim dividend of 4 US cents per share (US$46.4m) taking total shareholder dividends to in excess of US$500 million and we remain confident that we will generate significant cash flow and thus, an attractive dividend at the full year.'

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