Centamin plc Results for the Second Quarter and Half Year Ended 30 June 2016 and Interim Dividend Announcement

Transcription

1 For immediate release 10 August 2016 Centamin plc ("Centamin" or "the Company") (LSE:CEY, TSX:CEE) Centamin plc Results for the Second Quarter and Half Year Ended 30 June 2016 and Interim Dividend Announcement Centamin plc ("Centamin", the Group or "the Company") (LSE: CEY, TSX: CEE) is pleased to announce its results for the second quarter ended 30 June Q Operational Highlights (1),(2) Gold production of 140,306 ounces was a 12% increase on Q and 30% higher than Q Cash cost of production of US$461 per ounce and all-in sustaining costs (AISC) of US$669 per ounce annual production guidance of between 520,000 and 540,000 (previously 470,000) ounces at a cash cost of production of between US$530 and US$550 (previously US$680) per ounce and AISC of between US$720 and US$750 (previously US$900) per ounce. Record process plant throughput of 2.93 million tonnes (Mt); a 2% increase on the previous quarter. Recovery of 89.5%, up by 1% over the first quarter, reflects on-going optimisation of the process plant. The underground mine delivered 256kt of ore, (a 9% decrease on Q1 2016), at a grade of 9.3g/t (up 19% on Q1 2016). Continued positive results from underground exploration drilling at Sukari, with an updated resource and reserve estimate scheduled during the second half of the year. Development of a new exploration decline commenced in August 2016 within the north-eastern Cleopatra zone of Sukari Hill, aimed at testing the potential for further reserve growth and additional underground production of up to 1Mt per annum. Initial project expenditure is expected to be US$11.5 million. Exploration continues to support the potential for near-surface and high-grade economic mineralisation in Burkina Faso. Encouraging results from the exploration programme in Côte d Ivoire. Financial Highlights (1),(2) EBITDA of US$101.6 million was up 51% on Q1 2016, driven by an increase in realised gold prices and gold sales volumes together with improved operational efficiencies and lower overall costs. Centamin remains debt-free and un-hedged with cash, bullion on hand, gold sales receivable and availablefor-sale financial assets of US$332.2 million at 30 June 2016, up US$56.5 million over the quarter. Interim dividend of 2 US cents per ordinary share versus an interim payment of 0.97 US cents in Basic earnings per share of US cents; up 78% on Q Legal Developments in Egypt The Supreme Administrative Court (SAC) appeal and Diesel Fuel Oil court case are both still on-going. During the quarter, the SAC stayed the Concession Agreement appeal until the Supreme Constitutional Court rules on the validity of Law 32 of There remains potential for the legal process in Egypt to be lengthy and further discussion of both cases is provided later in this report. Q Q Q Q Gold produced ounces 140, , , ,233 Gold sold ounces 141, , , ,249 Cash cost of production US$/ounce AISC US$/ounce Average realised gold price US$/ounce 1,268 1,196 1,188 1,216 Revenue 180, , , ,231 EBITDA 101,605 67,484 37,308 52,988 Profit before tax 73,379 40,850 18,841 28,566 EPS US cents

2 Cash generated from operations 96,144 60,482 49,729 56,463 (1) Cash cost of production, AISC, EBITDA and cash, bullion on hand, gold sales receivables and available-for-sale financial assets are non-gaap measures and are defined at the end of the Financial Statements. AISC is defined by the World Gold Council, the details of which can be found at (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) Andrew Pardey, CEO of Centamin, commented: The Sukari operation has continued to build on the strong start to the year, with total first half production of 265,574 ounces of gold. The continued optimisation of the processing operation saw plant throughput increase further during the second quarter, remaining above our base case forecast rate of 11Mt per annum. The open pit delivered an increase in ore material movement and the underground mine continued to deliver both tonnes and grade in excess of our base case forecast. Our 2016 guidance has been updated to reflect the strong first half, with expected full year production of between 520,000 and 540,000 ounces at a cash cost of production of US$530 to US$550 per ounce and AISC of US$720 to US$750 per ounce. The key focus for the operation during the coming quarters remains on realising the potential for sustained productivity and cost improvements. Centamin will host a conference call on Wednesday, 10th August at 9.00am (London, UK time) to update investors and analysts on its results. Participants may join the call by dialling one of the following three numbers, approximately 10 minutes before the start of the call. UK Toll Free: International Toll number: Canada Toll free: Participant code: # A recording of the call will be available four hours after the completion of the call on: UK Toll Free: International Toll number: Playback Code: # Via audio link at CHIEF EXECUTIVE OFFICER S REPORT Second quarter gold production of 140,306 ounces represents a 12% increase on the previous quarter as the Sukari process plant saw increased throughput rates, higher grades and improved metallurgical recoveries. EBITDA of US$101.6 million was up 51% on the previous quarter, driven by a 15% increase in gold sales and a 6% rise in the average realised gold price, combined with a strong US$142 per ounce (24%) reduction in the cash cost of production to US$461 per ounce. The quarterly reduction in the unit cash cost of production was primarily a function of both the higher gold output and also a 5% decrease in mine production costs to US$67.8 million. Following on from progress in the first quarter, operating expenditure was reduced despite the continued increase in processing rates and a slight increase in fuel price over the preceding quarter, reflecting improved cost efficiencies. Despite the quarterly increase, fuel prices remained below originally forecast levels. Sukari s solid cash flow margins were also highlighted by a US$89 per ounce (12%) quarterly reduction in AISC to US$669 per ounce. The reduction in cash cost of production was offset by an increase in sustaining costs. Centamin s balance sheet continued to strengthen, ending the period with US$332.2 million of cash, bullion on hand, gold sales receivable and available-for-sale financial assets. This is an increase of US$56.5 million for the quarter following expenditure on exploration of US$12.0 million in West Africa. Centamin remains committed to its policy of being 100% exposed to the gold price through its un-hedged position. 2

3 In line with our dividend policy and our commitment to maintain a return of capital to our shareholders, the company is pleased to announce an interim dividend payment to 30 June 2016 of 2 US cents per share (30 June 2015 dividend of 0.97 US cents per share). The lost time injury (LTI) frequency rate at Sukari for Q2 was 0.62 per 200,000 man-hours. Whilst this represented an increase on the first quarter s achievement, and our long-term target, of zero LTIs, we continue to view this as a solid achievement considering Sukari is the first modern gold mine in Egypt. Safety remains a priority and we continue to develop the health and safety culture across our operations. Processing rates were 2% higher than the prior quarter and 7% above our base case 11Mtpa annualised forecast rate as optimisation continued. We continue to see potential for sustained production rates in excess of this base case, although note an expected increase in plant stoppages related to planned maintenance during the third quarter, which may result in a quarterly decrease in throughput. Recoveries of 89.5% were 1% higher than the previous quarter and 1.5% above our forecast for the full year. Work continues on developing the potential to improve and sustain recoveries at the 90% level at increasing throughput rates. The open pit delivered total material movement of 15,080kt, a 1% decrease on the previous quarter, with 3,425kt of ore, a 42% increase on the previous quarter. Grades increased in line with the mine plan, with an average head grade to the plant of 0.99g/t, up 19% from Q The underground mine delivered 256kt of ore (a 9% decrease on Q1 2016) at a grade of 9.3g/t (up 19% on Q1 2016). The focus for the operation remains to deliver a minimum of 1Mt per annum of ore at an average grade which is consistently at, or above, the current underground reserve average grade of 6g/t. To reflect the strong operating performance and fuel price reductions during the first half of the year, we update our full year guidance to between 520,000 and 540,000 ounces at a cash cost of production of US$530 to US$550 per ounce and AISC of US$720 to US$750 per ounce. With gold output now established at target levels for the expanded Sukari operation, we remain focussed on realising further increases in productivity and cost efficiencies. We continue to note that optimisation of the mining and processing operations is ongoing and offers the potential in the coming quarters to deliver higher gold output and lower costs than our base case outlook. Further support for resource expansion and the long-term sustainability of high-grade production at Sukari from the underground mine continues to be provided by results from on-going exploration drilling, as highlighted in the following pages of this report. A resource and reserve update is planned during the second half of the year. The continued success of the underground mining and exploration programmes provides support for our decision to commence a new exploration decline within the north-eastern Cleopatra zone of Sukari Hill. This development started in August 2016, with an expected expenditure of US$11.5 million over an approximate 9-month period. Drive development and underground exploration drilling will target multiple zones of high-grade mineralisation, as interpreted from existing data. The initial project is aimed at developing infrastructure with the capacity to support mining rates of up to 1 million tonnes per annum from this area. Ultimate production rates will depend on future results from the programme, and would be in addition to the current underground ore production from the Amun and Ptah declines. Our exploration in Burkina Faso continues to build evidence of a number of potentially economic mineralised structures. We continue to test the potential for lateral and depth extensions at these more advanced targets, with priority on the Wadaradoo and Napalapera prospect areas. In Côte d Ivoire, first-pass drilling over targets defined by geochemical and geophysical surveys has indicated the potential over a number of prospects for laterally significant mineralisation. Developments in the two litigation actions, Diesel Fuel Oil and Concession Agreement, are described in further detail in Note 7 to the financial statements. In respect of the Concession Agreement case, the Supreme Administrative Court has stayed the Concession Agreement appeal until the Supreme Constitutional Court has ruled on the validity of Law 32 of The Company continues to believe that it has a strong legal position and, in addition, that it will ultimately benefit from Law 32 which restricts the capacity for third parties to challenge any contractual agreement between the Egyptian government and an investor. This law, whilst in force and ratified by the new parliament, is currently under review by the Supreme Constitutional Court. In the event that 3

4 the Supreme Constitutional Court rules that Law 32 is invalid, the Group remains confident that its appeal will be successful on the merits. No final decision has been taken by the courts regarding the Diesel Fuel Oil case and the Company is aware of the potential for delays in the Egyptian legal system Interim Dividend The Directors declared an interim dividend of 2 US cents per share on Centamin plc ordinary shares (totalling approximately US$23 million). The interim dividend for the half-year period ending 30 June 2016 will be paid on 7 October 2016 to shareholders on the register on the Record Date of 9 September London Stock Exchange (T+2) EX-DIV DATE: 8 September 2016 RECORD DATE: 9 September 2016 LAST DATE FOR RECEIPT OF CURRENCY ELECTIONS: 16 September 2016 PAY DATE: 7 October 2016 Toronto Stock Exchange (T+3) EX-DIV DATE: 7 September 2016 RECORD DATE: 9 September 2016 PAY DATE: 7 October 2016 The dates set out above are based on the directors' current expectations and may be subject to change. If any of the dates should change, the revised dates will be announced by press release and will be available at As a Jersey incorporated company, there is no requirement for Centamin plc to make any withholding or deduction on account of Jersey tax in respect of the dividend. Shareholders who wish to elect to receive sterling dividends can mandate payments directly to their UK bank or building society by visiting the Investor Centre website at or by completing the dividend mandate form which is available at and posting it back to the registrars in accordance with the instructions set out in the form. The currency election mandate will be applicable for shareholders with a UK bank account. Our registrars have also arranged a global payment service allowing payment directly to your designated account, please visit or for details. The global payment service is a service provided by the registrars for shareholders registered on the LSE and transfer charges may apply. The last date for shareholder currency elections and payment mandates to be received by the Company will be 16 September Please note, the registrars retain mandates previously provided by shareholders and will apply the instructions for this and future dividends. The currency conversion rate for those electing to receive sterling will be based on the foreign currency exchange rates on 16 September The rate applied will be published on the Company s website on 19 September

5 OPERATIONAL REVIEW Sukari Gold Mine: Q Q Q Q OPEN PIT MINING Ore mined (1) ( 000t) 3,425 2,405 1,751 2,562 Ore grade mined (Au g/t) Ore grade milled (Au g/t) Total material mined ( 000t) 15,080 15,157 13,671 15,996 Strip ratio (waste/ore) UNDERGROUND MINING Ore mined from development ( 000t) Ore mined from stopes ( 000t) Ore grade mined (Au g/t) Ore processed ( 000t) 2,928 2,876 2,667 2,478 Head grade (g/t) Gold recovery (%) Gold produced dump leach (oz) 2,431 2,993 4,715 4,814 Gold produced total (2) (oz) 140, , , ,233 Cash cost of production (3) (4) (US$/oz) Open pit mining Underground mining Processing G&A AISC (3) (4) (US$/oz) Gold sold (oz) 141, , , ,249 Average realised sales price (US$/oz) 1,268 1,196 1,188 1,216 (1) Ore mined includes delivered to the dump leach pad in Q g/in Q2 2015). (2) Gold produced is gold poured and does not include gold-in-circuit at period end. (3) Cash cost of production exclude royalties, exploration and corporate administration expenditure. Cash cost of production and AISC are non-gaap financial performance measures with no standard meaning under GAAP. For further information and a detailed reconciliation, please see Non-GAAP Financial Measures section below. (4) Cash cost of production and AISC 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). Health and safety - Sukari The lost time injury (LTI) frequency rate for Q was 0.62 per 200,000 man-hours (Q2 2015: 0.16 per 200,000 man-hours), with a total of 1,281,666 man-hours worked (Q2 2015: 1,238,861). Developing the health and safety culture onsite has resulted in improved reporting of incidents compared to previous periods and, although there remains further room for improvement, Centamin views its LTI frequency rate as a solid achievement considering Sukari is the first modern gold mine in Egypt. Open pit The open pit delivered total material movement of 15,080kt in the quarter, a decrease of 1% on Q due to lower fleet utilization and a 10% increase on the prior year period. Mining continued to focus on the Stage 3A and 3B areas of the open pit, in line with the mine plan. Ore production from the open pit was 3,425kt at 0.90g/t with an average head grade to the plant of 0.99 g/t, in line with the mine plan and our forecast. The ROM ore stockpile increased by 521kt to 1,012kt by the end of the quarter. During the second half of the year, ore mining rates are scheduled to be higher than originally forecast as mining progresses through the lower benches of the current stage (3A) and upper portions of the next stage (3B) of pit development. We continue to expect grades to progressively increase towards the reserve average of 1.05g/t. 5

6 Underground mine Ore production from the underground mine was 256kt, a 9% decrease on Q and a 9% decrease on the prior year period. The ratio of stoping-to-development ore mined increased, with 56% of ore from stoping (143kt) and 44% of ore from development (113kt). Ore tonnages from stopes decreased by 1% on the first quarter. The average mined grade in Q2 2016was 9.3 g/t and comprised ore from stoping at 8.5 g/t and ore from development at 10.2 g/t. Total development during the quarter, including the Amun, Ptah and Horus declines, was 2,105 metres. Development within mineralised areas of Amun accounted for 1,052 metres and took place between the 710 and 665 levels (350 to 395 metres below the underground portal). Ptah development in mineralised porphyry totalled 579 metres on the P790 and P705 levels. Work on the exhaust ventilation circuits for both the Amun and Ptah declines progressed, ensuring sufficient ventilation as the decline continues to extend deeper into the orebody. A total of 2,964 metres of grade control diamond drilling were completed, aimed at short-term stope definition, drive direction optimisation and underground resource development. Positive results continue and support extensions of development drives and stoping blocks. A further 6,223 metres of drilling continued to test for extensions of the orebody at depth, below the current Amun and Ptah zones. Processing Quarterly throughput at the Sukari process plant was 2,928kt, a 2% increase on Q and a 10% increase on the prior year period. Plant productivity of 1,432 tonnes per hour (tph) represented a 1% increase on Q and a 5% increase on the prior year period. Processing levels above the base case forecast of 11Mtpa continued through Q resulting in a quarterly record for both throughput and gold produced. This achievement was a result of a continuous focus on improving operational control, in addition to a reduction in unplanned downtime in the crushing and milling circuits. Plant metallurgical recovery was 89.5%, a 1% increase on Q and a 0.8% decrease on the prior year period. Recovery remained high throughout the quarter through increasing flotation mass pull and operating all the Stirred Media Detritors (SMDs) in the fine-grinding circuit at higher utilisation rates, in order to achieve the target grind size at the increased throughputs rates. Over the coming quarters, the commissioning of a copper sulphate mixing facility is expected to improve the quality of the return water from the tailings storage facility. This in turn is expected to further stabilize the flotation circuits, leading to increased recoveries. The dump leach operation produced 2,431oz, 19% lower than Q1 2016, which is within the quarter plan. Exploration Centamin s explore to develop" strategy is focussed on defining, through the exploration process, the optimal path to development for projects which can provide material returns on shareholder s capital. The Company aims to undertake systematic exploration programmes over large-area licence packages within geologically prospective regions; and will only operate within stable jurisdictions offering a fiscally-attractive framework for mining investment. Development decisions are made on the basis that Centamin will take a self-performing, self-funding and staged approach to project construction and operation. Through this value-driven and long-term growth objective, and with its strong cash flows and healthy balance sheet, the Company believes that it is well positioned to become a multi-asset gold producer maintaining a lowest-quartile cost profile and peer-leading shareholder returns. 6

7 Sukari Drilling from underground remains a focus of the Sukari exploration programme as new development provides improved access to test for high-grade extensions of the deposit. The ore body remains open at depth and further underground drilling of the Sukari deposit will continue during During the second quarter, both rigs were drilling from sites on the Ptah 875 level, with drill cuddies currently being developed on the Ptah 735 level. Selected results received during the second quarter from the underground drilling programme, which are in addition to those previously disclosed, include the following: Hole ID From (m) Width (m) Grade (Au g/t) UGRSD UGRSD UGRSD UGRSD UGRSD0589_W UGRSD UGRSD UGRSD0708_W UGRSD0714_W Cleopatra Exploration Decline The existing underground operations at Sukari have demonstrated that the western contact zone between the main porphyry and the surrounding metasedimentary rock units is highly prospective for high-grade gold mineralisation. This contact has limited drilling in the north western portion of Sukari Hill, where the porphyry is approximately three hundred metres wide and access for surface drill rigs is limited. High grades have been observed along the north-eastern flank of Sukari Hill, where an interpreted en-echelon set of three mineralised zones are named Cleopatra, Julius and Antoine. Cleopatra outcrops as two distinct quartz veins on the north eastern flank of Sukari Hill, whereas Julius and Antoine do not outcrop. The zones are interpreted as commencing on the eastern porphyry contact, dipping broadly to the west. This project is designed to commence development along strike within the upper Cleopatra zone. In addition to providing geological information, exploration drilling will be carried out from this central drive. This drilling will target both the western porphyry contact, from the wadi level down 400m, and the lower Cleopatra, Julius and Antoine areas. 7

8 The initial project will be developed in two phases. Phase 1 has a projected cost of US$5 million, with 1,370 metres of development and 96,422 tonnes of mined material to be completed over a 5-month period. Phase 2 has a projected cost of US$6.5 million, with 1,057 metres of development and 54,409 tonnes of mined material to be completed over a 5-month period. Phase 2 is planned to commence four months after the start of Phase 1. Surface preparation for site infrastructure and the decline portal are underway with decline development commencing in August The initial project is aimed at developing infrastructure with the capacity to support mining rates of up to 1 million tonnes per annum from this area. Ultimate production rates will depend on future results from the development and exploration drilling, and will be in addition to the current underground ore production from the Amun and Ptah declines. Other prospects Whilst exploration remains focused on Sukari Hill, there are seven other prospects that have been identified within the 160km 2 Sukari tenement area which are close enough such that ore could be trucked to the existing processing plant. Resource and Reserve An updated resource and reserve estimate is expected to be completed during the second half of Burkina Faso The exploration strategy in Burkina Faso is to continue to systematically explore and drill-test numerous targets along the 160km length of greenstone belt contained within the circa-2,200km 2 licence holding. Results from these programmes will lead to resource development during the second half of During the second quarter Reverse Circulation (RC) and diamond (DD) drilling has been carried out at a number of prospects, with a primary focus on the Wadaradoo and Napalapera areas. The drilling fleet comprised of 5 multipurpose RC/DD rigs which completed 59,329m RC and 2,533m DD during the quarter, as well as 1 aircore (AC) rig which drilled a total of 18,403m. Exploration at Wadaradoo has focused on Wadaradoo North, Wadaradoo Main and Wadaradoo Far East with four multipurpose rigs based in the area. At Wadaradoo North, a flat-lying reverse thrust containing silica and albite bleaching quartz-pyrite veining was drilled to a vertical depth of 230m. High-grade mineralisation is currently defined over a strike length of approximately 450m, having been closed off to the south at the intersection of a large northeast structure. Key results during the quarter include 15g/t from 156m, 4.4g/t from 143m and 42g/t (including visible gold) from 201m. To the south, a second structure was intersected beneath the main structure with 6.5g/t from 198m. An initial study is underway to assess the requirement for additional drilling. At Wadaradoo Far East, follow-up regional exploration and RC drilling is being conducted on targets defined by IP, mapping, AC drilling and artisanal workings. 8

9 Wadaradoo significant RC and DD drill intersections, downhole Hole ID From (m) Width (m) Grade (Au g/t) WDRC WDRC WDRC WDRC WDRC WDRC WDRC WDRD WDRD WDRD An extension of the Napalapera exploration permit to the border with Côte d Ivoire was granted in March, and a drill program was completed on a 50x50m spacing throughout the permit. Three shallow-plunging high-grade shoots have been identified on dilational folds within the mineralised structure. Best results during the quarter included 17.4g/t from 50m; 8.4g/t from 150m and 3.56g/t from 170m. Initial studies will determine if further drilling is required. Napelepera significant RC and DD drill intersections, downhole Hole ID From (m) Width (m) Grade (Au g/t) NPRC NPRC NPRD NPRD NPRD NPRD Côte d Ivoire Centamin now has five permits in Côte d Ivoire covering circa-1,665km 2 across the border from Batie West in Burkina Faso. Ten permits remain under application, some of which are expected to be granted during A total of 17,355m of RC was drilled during the quarter over several prospects identified from IP surveys, auger drilling, soil sampling, trenching and structural mapping of artisanal workings. Several new prospects returned significant high-grade tenors. The Han prospect is a 10 to 20m-wide structure with a shallow dip of approximately 25 degrees, and has currently been tested over a 2km strike length to 100m vertical depth. Mineralisation remains open at depth and along strike. A sulphide-rich shear zone in the granite is overprinted by silica-sericite-albite-hematite alteration, with high-grade intersections including 5.3 g/t and 3.9 g/t. The Nokpa prospect, identified from IP anomalies, lies within a complex structural zone where a doleritic dyke intersects other known mineralised trends (Souwa and Chegue). A halo of intense hematite alteration has been developed around mineralised channels, with significant results including 10.1 g/t, 5 g/t and 3.3 g/t. On the Solo prospect, high-grade gold mineralisation is hosted by a sub-vertical quartz vein. Drilling results include 5.8 g/t and 5 g/t. 9

10 The Enioda prospect (continuity of Napelepera from Burkina Faso) has continued to deliver coherent intersections over a 2.2km strike length. Some of the previously tested high-grade zones of Souwa have been extended to an 80m vertical depth with similar high grade tenors, including 4.7 g/t. The Souwa structure is very similar in geometry and mineralisation to the Han structure, located approximately 7.5km away. Further drilling is planned to test for high-grade mineralisation up to 200m vertical depth. At the Doropo project, testing continues of several gold-bearing structures within the granite in the close vicinity of previously-defined prospects. Several of these structures are shallow dipping, large and continuous shear zones, with others being smaller-scale quartz veins/shear zones featuring significant plunging shoots. Global interpretation and target generation commenced towards the end of the quarter, integrating all geological, geophysical, geochemical and drilling data. Côte d Ivoire significant RC drill intersections, downhole Prospect Enioda Han Nokpa Solo Souwa HoleID From (m) Width (m) Grade (Au g/t) DPRC DPRC DPRC DPRC DPRC DPRC DPRC DPRC DPRC DPRC DPRC DPRC DPRC DPRC DPRC DPRC DPRC DPRC DPRC DPRC DPRC DPRC DPRC

11 FINANCIAL REVIEW In its seventh year of production, the Sukari Gold Mine remains highly cash generative and this is reflected in the group s financial results for the quarter ended 30 June 2016: Revenue Q revenues of US$180.1 million were up 45% compared with Q due to a 7% rise in average realised gold prices and a 36% increase in gold sales. Cash cost of production decreased to US$461 per ounce produced from US$706 in Q The main contributing factors were the higher gold production, improved operational cost efficiencies and a lower fuel price compared with Q AISC of US$669 per ounce sold was lower than the comparable prior year period of $853 per ounce, mainly due to the factors described above and the rescheduling of certain sustaining capital cost items. During Q2 there was a lower quarterly expenditure on sustaining capital than is expected for the remainder of the year. EBITDA increased by 172% to US$101.6 million compared to Q2 2015, due to 25% higher gross operating margins as a result of the increased revenue and the lower cash cost of production. Profit before tax of US$73.4 million was 289% higher than Q2 2015, mainly due to the 25% higher gross operating margins. Earnings per share of US cents, was 282% higher than Q2 2015, mainly due to the higher gross operating margins. Operational cash flow of US$96.1 million was 93% higher than Q2 2015, due to the factors affecting EBITDA, offset by an increase in working capital outflows. Revenue from gold and silver sales for the quarter increased by 45% to US$180.1 million (US$124.2 million in Q2 2015), with a 7% increase in the average realised gold sales price to US$1,268 per ounce (US$1,188 per ounce in Q2 2015) and a 36% increase in gold sold to 141,802 ounces (104,168 ounces in Q2 2015). Cost of sales Cost of sales represents the cost of mining, processing, refining, transport, site administration, depreciation, amortisation and movement in production inventories. Cost of sales is inclusive of exceptional items of US$4.7 million in relation to fuel charges (refer to Notes 4 and 5 to the financial statements for further information) and down 1% compared with the prior year period to US$96.9 million, as a result of: (a) a 11% decrease in total mine production costs to from US$76.6 million to US$67.8 million, despite a 10% increase in mined tonnes combined with a 10% increase in processed tonnes as a result of improved operational efficiencies and lower overall costs; offset by (b) a 54% increase in depreciation and amortisation charges from US$18.5 million to US$28.4 million as higher production physicals, and reclassification of exploration & evaluation expenditure to property, plant and equipment, increased the associated amortisation charges; and (c) a 78% decrease in movement in production inventories costs from US$2.9 million to US$0.6 million. Other operating costs Other operating costs comprises expenditure incurred for communications, consultants, directors fees, stock exchange listing fees, share registry fees, employee entitlements, general office administration expenses, the unwinding of the restoration and rehabilitation provision, foreign exchange movements, the share of profit/loss in associates and the 3% production royalty payable to the Egyptian government. Other operating costs increased by 41% on the prior year period to US$10.3 million, as a result of: (a) a US$0.3 million decrease in net foreign exchange movements from a US$0.8 million gain to a US$0.5 million gain; (b) a US$1.7 million increase in royalty paid to the government of the Arab Republic of Egypt in line with the increase in gold sales revenue; and (c) a US$1.0 million increase in corporate costs. 11

12 Finance income Finance income reported comprises interest revenue applicable on the Company s available cash and term deposit amounts. The movements in finance income are in line with the movements in the Company s available cash and term deposit amounts. Profit before tax As a result of the factors outlined above, the group recorded a profit before tax for the quarter ended 30 June 2016 of US$73.4 million (Q US$18.8 million). Earnings per share Earnings per share of US cents compares with US cents per share for Q The increase was driven by the factors outlined above. Comprehensive income Other comprehensive income was US$0.05 million and relates to the revaluation of available-for-sale financial assets. Financial position Centamin has a strong and flexible financial position with no debt, no hedging and cash, bullion on hand, gold sales receivables and available-for-sale financial assets of US$332.2 million at 30 June 2016, up from US$230.7 million at 31 December At 30 June 2016 As at 31 Dec 2015 At 30 June 2015 Cash at Bank 281, , ,978 Bullion on hand 15,809 10,492 13,089 Gold sales receivable 34,524 20,472 24,198 Available for sale financial assets , , ,588 The majority of funds have been invested in international rolling short-term interest money market deposits. Current assets have increased from Q to Q by US$109.3 million or 30% to US$472.0 million, as a result of: (a) an increase in net cash inflows of US$82.0 million net of foreign exchange movements; and (b) a US$9.1 million decrease in collective stores inventory value to US$97.4 million; (c) a US$4.0 million decrease in overall mining stockpiles, gold in circuit levels and finished goods inventory values to US$24.3 million; (d) a US$14.0 million increase in gold sale receivables; (e) a US$26.3 million increase in prepayments due to the reclassification of the advance payments made to EMRA of $28.8 million from non-current assets to current assets offset by a reduction in other prepayments of US$2.5 million. Non-current assets have decreased from Q to Q by US$31.2 million to US$1,021.1 million, as a result of: (a) US$26.5 million expenditure for property, plant and equipment (comprising of plant and mining equipment and rehabilitation asset); (b) US$55.2 million charges for depreciation and amortisation; (c) US$26.2 million increase in exploration and evaluation assets, as a result of the drilling programmes in Sukari Hill, the Sukari tenement area, Burkina Faso and Côte d Ivoire; (d) a US$28.8 million decrease in prepayments due to the reclassification of the advance payments made to EMRA of $28.8 million from non-current assets to current assets. 12

13 Current liabilities have decreased from Q to Q by US$13.9 million to US$40.7 million due to a: (a) US$11.4 million decrease in payables and accrual balances; (b) US$6.8 million decrease in the income tax liabilities balance through the settlement of the income tax obligation appearing in the financial accounts as at the end of December 2015; and a (c) US$4.4 million increase in current provisions. Non-current liabilities have increased from Q to Q by US$0.3 million to US$7.4 million as a result of an increase in the rehabilitation provision. The value of issued capital has increased from Q to Q by US$1.9 million due to the vesting of awards under the employee share plans. Share option reserves reported have decreased from Q to Q by US$0.8 million to US$1.6 million as result of the forfeiture and vesting of awards and the resultant transfer to accumulated profits and issued capital respectively, offset by the recognition of the share-based payments expenses for the period. Accumulated profits increased from Q to Q by US$90.6 million as a result of a: (a) (b) (c) US$113.5 million profit for the period attributable to the shareholders of the Company; and a US$0.1 million gain on available-for-sale financial assets in relation to the Company s shareholding in KEFI Minerals plc; offset by a US$22.9 million final dividend payment in respect of the year ended 31 December 2015 paid to shareholders in the first half of the year. Cashflow Net cash flows generated by operating activities comprise receipts from gold and silver sales and interest income, offset by operating and corporate administration costs. Cash flows have increased from Q to Q by US$46.4 million to US$96.1 million, primarily attributable to: (a) an increase in revenue, due to an increase in gold sold ounces combined with a higher average realised price; offset by (b) a net increase in the cash outflows in relation to the working capital balances of receivables, inventories, prepayments and payables. Net cash flows used in investing activities comprise exploration expenditure and capital development expenditures including the acquisition of financial and mineral assets. Cash outflows have increased by US$12.3 million from Q to Q to US$27.8 million. The primary use of the funds in the second quarter was for investment in underground development at the Sukari site in Egypt and exploration expenditures incurred in West Africa. Net cashflows generated by financing activities comprise the dividend payments made to shareholders. Effects of exchange rate changes have decreased by US$1.8 million as a result of marginal strengthening of some of the functional currencies used within the operation in the quarter. 13

14 Capital Expenditure Q Capital Expenditure A breakdown of capital expenditure for the Group during Q is as follows: US$ million Open pit development - Underground mine development (1) 9.1 Other sustaining capital expenditure 6.8 Total Sustaining Capex 15.9 Exploration 12.0 (1) Includes underground exploration drilling CORPORATE UPDATE On 16 May 2016, Kevin Tomlinson resigned as non-executive director of the Company. Following the resignation, the Board and Nomination Committee will be meeting to discuss the composition of the Board and its committees. On 4 June 2016, the Company granted 4,999,000 conditional awards to 31 employees of the Group under the shareholder approved restricted share plan. Of the awards granted on 4 June 2015, 3,845,000 conditional awards remain granted to 18 eligible employees. A summary of the restricted share plan is set out in note 14 of the Interim Condensed Consolidated Financial Statements. PRINCIPAL RISKS AFFECTING THE CENTAMIN GROUP The operations of the Company are speculative due to the high risk nature of its business which includes the acquisition, financing, exploration, development and operation of mining properties. These risk factors could materially affect the Company s future operations and could cause actual events to differ materially from those described in forward-looking statements relating to the Company. There have been no changes in the Company s risks and uncertainties during the six month period ended 30 June 2016 from those described in the Group s annual management discussion, analysis and business review for the year ended 31 December 2015, and the Company does not anticipate any changes in the Company s risks and uncertainties during the next six months to 31 December The key principal risks relate to the following: Single project dependency Sukari Project joint venture risk and relationship with EMRA Gold price and currency exposure Jurisdictional taxation exposure Political risk Sukari Political risk West Africa Reserve and resource estimations Failure to achieve production estimates Litigation risks Centamin takes a number of measures to mitigate risks associated with its underlying operational and exploration activity which are monitored and evaluated regularly. Due to the nature of these inherent risks, it is not possible to give absolute assurance that mitigating actions will be wholly effective. The Company is exposed to changes in the economic environment through its operations in Egypt, as well as its operations in West Africa (Burkina Faso and Côte d Ivoire). Relationships with governments and the maintenance of exploration permits and licence areas remain key risks and key focus for all exploration, development and operational projects. 14

15 One of the Company s main objectives is to achieve a target of zero injuries and for every employee to be safe every day. The control environment and operating practices in place at the mining and exploration operations helps reduce the likelihood of harm to employees. Centamin is committed to attracting, energising, developing and training its workforce to ensure they are highly skilled and motivated. Centamin recognises the value of being a socially responsible employer and the importance of engaging with the wider community in the areas in which it operates. By investing in the community and engaging in projects that directly and positively impact local people, Centamin can foster a cooperative working environment. LEGAL ACTIONS 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. During the quarter, the Supreme Administrative Court stayed the Concession Agreement appeal until the Supreme Constitutional Court rules on the validity of Law 32 of If the Supreme Constitutional Court upholds Law 32, the Group is advised that it will benefit from its provisions. In the event that the Supreme Constitutional Court rules that Law 32 is invalid, the Group remains confident that its appeal will be successful on the merits. 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 will rule in Centamin s favour, based on the legal merits 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. 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 fuel supplier based on the international price for diesel. The Company has fully provided against the prepayment of US$216.6 million as an exceptional item, of which US$8.4 million has been made during the HY Refer to Note 4 of the accompanying interim condensed consolidated financial statements for further details on the impact of this exceptional provision on the Group's results for Q In November 2012 the Group received a further demand from its fuel supplier for the repayment of fuel subsidies received in the period from late 2009 through to January 2012, for EGP403 million (approximately US$45 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 thus far 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. 15

16 COST RECOVERY AND PROFIT SHARE Based on the Company s calculation there was no Profit Share due to EMRA as at 30 June 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 elected to make advance payments against future profit share from 2013 and the value of the payments to date amounts to US$28.75 million. The advance payments were made in order to demonstrate goodwill towards the Egyptian government. These payments will be netted off against any future Profit Share that becomes payable to EMRA. Andrew Pardey Chief Executive Officer Set out below are the unaudited consolidated Financial Statements for the Group, including notes thereto, for the quarter and half year ended 30 June

17 CENTAMIN PLC RESPONSIBILITY STATEMENT We confirm that to the best of our knowledge: (a) (b) (c) (d) the condensed set of interim consolidated financial statements for the quarter and half year ended 30 June 2016 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 ); 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; the interim management report includes a fair review of the information required by DTR 4.2.7R (indication of important events during the first six months and description of principal risks and uncertainties for the remaining six months of the year); and 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 Ross Jerrard 10 August August

18 CENTAMIN PLC UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE QUARTER AND HALF YEAR ENDED 30 JUNE

19 CENTAMIN PLC CONTENTS INDEPENDENT REVIEW REPORT TO CENTAMIN PLC 20 UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 22 UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION 24 UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 25 UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS 26 NOTES TO THE UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 27 19

20 Independent review report to Centamin plc Report on the unaudited interim condensed consolidated financial statements Our conclusion We have reviewed Centamin plc's unaudited interim condensed consolidated financial statements (the "interim financial statements") in the results for the second quarter and half year ended 30 June 2016 of Centamin plc. Based on our review, nothing has come to our attention that causes us to believe that the interim financial statements are not prepared, in all material respects, in accordance with International Accounting Standard 34, Interim Financial Reporting, as adopted by the European Union and the Disclosure Rules and Transparency Rules of the United Kingdom s Financial Conduct Authority. What we have reviewed The interim financial statements comprise: the unaudited interim condensed consolidated statement of comprehensive income for the six months ended 30 June 2016; the unaudited interim condensed consolidated statement of financial position as at 30 June 2016; the unaudited interim condensed consolidated statement of changes in equity for the six months ended 30 June 2016; the unaudited interim condensed consolidated statement of cash flows for the six months ended 30 June 2016; and the explanatory notes to the interim financial statements. The interim financial statements included in the results for the second quarter and half year ended 30 June 2016 have been prepared in accordance with International Accounting Standard 34, Interim Financial Reporting, as adopted by the European Union and the Disclosure Rules and Transparency Rules of the United Kingdom s Financial Conduct Authority. As disclosed in note 1 to the interim financial statements, the financial reporting framework that has been applied in the preparation of the full annual financial statements of the Group is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union. Responsibilities for the interim financial statements and the review Our responsibilities and those of the directors The results for the second quarter and half year ended 30 June 2016, including the interim financial statements, is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the results for the second quarter and half year ended 30 June 2016 in accordance with the Disclosure Rules and Transparency Rules of the United Kingdom s Financial Conduct Authority. Our responsibility is to express a conclusion on the interim financial statements in the results for the second quarter and half year ended 30 June 2016 based on our review. This report, including the conclusion, has been prepared for and only for the company for the purpose of complying with the Disclosure Rules and Transparency Rules of the United Kingdom s Financial Conduct Authority and for no other purpose. We do not, in giving this conclusion, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing. What a review of interim financial statements involves We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and, consequently, does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. 20