GENERATING CAPITAL RETURNS INTERIM RESULTS 2018

Transcription

1 GENERATING CAPITAL RETURNS INTERIM RESULTS 2018

2 DISCLOSURES Forward Looking Statements Forward Looking Statements: There are risks associated with an investment in the shares of Centamin plc ( Centamin or the Company ). Recipients of this presentation should review the risk factors and other disclosures regarding Centamin referred to in the section entitled Principal risks affecting the Centamin Group in (i) our most recent Annual Information Form; and (ii) our Management Discussion & Analysis reports, in each case available at This presentation contains "forward-looking statements" (which include forward-looking information within the meaning of Canadian securities legislation) which may include, but are not limited to, statements with respect to the future financial or operating performance of the Company, its subsidiaries, affiliated companies, its projects (including the Sukari mine), the future price of gold, the estimation of mineral reserves and resources, the realisation of mineral reserve and resource estimates, the timing and amount of estimated future production, revenues, margins, costs of production, estimates of initial capital, sustaining capital, operating and exploration expenditures, costs and timing of the development of new deposits, costs and timing of future exploration, requirements for additional capital, foreign exchange risks, governmental regulation of mining and exploration operations, timing and receipt of approvals, consents and permits under applicable mineral legislation, environmental risks, title disputes or claims, limitations of insurance coverage and regulatory matters. These forward-looking statements are provided for the purposes of assisting the reader in understanding the Company s financial position and results of operations as at and for the periods ended on certain dates, and to present information about management s current expectations and plans relating to the future. Readers are cautioned that forward-looking statements may not be appropriate for other purposes than outlined in this presentation. Often, but not always, forward-looking statements can be identified by the use of words such as "plans", "hopes", aims, assumes, seeks, targets, projects, "expects", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates", or "believes" or variations (including negative variations) of such words and phrases, or may be identified by statements to the effect that certain actions, events or results "may", "could", "would", should, "might" or "will" be taken, occur or be achieved. Forward-looking statements involve known and unknown risks, uncertainties and a variety of material factors (many of which are beyond the Company s control) which may cause the actual results, performance or achievements of the Company, its subsidiaries and affiliated companies to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such factors include, among others, future price of gold; general business, economic, competitive, political and social uncertainties; the actual results of current exploration and development activities; conclusions of economic evaluations and studies; fluctuations in the value of the US dollar relative to the local currencies in the jurisdictions of the Company s key projects; changes in project parameters as plans continue to be refined; possible variations of ore grade or projected recovery rates; accidents, labour disputes or slow-downs and other risks of the mining industry; climatic conditions; political instability, insurrection or war; civil unrest or armed assault; labour force availability and turnover; delays in obtaining financing or governmental approvals or in the completion of exploration and development activities. The reader is also cautioned that the foregoing list of factors is not exhaustive. Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results to differ from those anticipated, estimated or intended. Forward-looking statements contained herein are made as of the date of this presentation and, except as required by applicable law, the Company disclaims any obligation to update any forward-looking statements, whether as a result of new information, future events or results or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. Competent Persons: Information in this presentation which relates to exploration, geology, sampling and drilling is based on information compiled by geologist, Mr Norm Baillie, who, as an accredited Chartered Professional Geologist and Manager through the Geological Society of the United Kingdom and the Australasian Institute of Mining and Metallurgy, is an Competent Person for this purpose and a Qualified Person as defined in National Instrument of the Canadian Securities Administrators. Refer to the Company s annual report for 2017, for further discussion of the extent to which the estimate of mineral resources/reserves may be materially affected by any known environmental, permitting, legal, title, taxation, socio-political, or other relevant issues. 2

3 H1 REVIEW Produced 217,099 ounces of gold at US$637/oz cash costs and US$930/oz AISC. Maintained full year revised guidance of 505, ,000 ounces Progress overcoming short-term operational challenges 2018 Guidance (1) H H % change Gold production koz % Cash costs of production (2) US$/oz produced % All-in sustaining cost (2) US$/oz sold % Factors impacting performance Cause Response Open pit grade Underground stope tonnage Transitional zone thicker than expected with lower than expected grades Long hole drill rig ("LHDR") damaged, causing disruptions and temporary suspension of stoping Increased cascade stoping leading to increased dilution Enhanced grade control drilling Personnel change Repaired LHDR, restoring availability and utilisation in line with mine plan Stope tonnes improved High-grade stope sequence deferred 3 months A reserve LHDR ordered, expected in Q4 Underground development grade Increased development tonnages due to lower stoping production Personnel change Underground stope grade Greater than expected dilution from high-volume mining method (cascade stope mining) 1. As per full year revised guidance published on 25 May Non-GAAP measures and are defined in the Financial Review of our Interim Results, announced 2 August 2018 Reducing contribution from higher dilution mining methods Improved controls 3

4 H1 REVIEW Solid financial performance Successfully minimised cost inflation across the Group, in spite of reduced production, increased sustaining capex and fuel cost pressure. Generated positive cash flow of US$36.1m, throughout operationally challenging quarters Maintained strong and flexible balance sheet of US$303.3m cash and liquid assets, with no debt, no hedging, no streaming Committed to shareholder returns with 2.5 US cent declared interim dividend, equivalent of returning 80% of FCF, while self funding our pipeline of potential development projects units H H % change Operating cash flow US$m % Capex (inc Sukari expl) US$m % Profit Share US$m % Free Cash Flow (1) US$m % Dividend US cents Cash and liquid assets (1,2) US$m % 1. Non-GAAP measures and are defined in the Financial Review of our Interim Results, announced 2 August Cash and liquid assets including cash and cash equivalents, bullion on hand at market price, gold sales receivable and financial assets at fair value of US$303.3m as at 30 June

5 H1 REVIEW Exploration delivered positive results across the portfolio NEAR TERM Sukari Underground Cleopatra Exploration Decline Successful early stage results identifying good grades on the contact zone Self-funding project due to pre-production revenue generation SUSTAINABILITY Sukari Underground Amun/Ptah Decline Resource extension drilling continued to return excellent results 37.2g/t; 226g/t; 57m 6.8g/t Underpinning the long term sustainability of the underground MEDIUM TERM Doropo Project Near resource, near surface extension drilling returned positive results Updated resource and reserve/pea expected H LONG TERM ABC Project Wide spaced drilling and geochem results indicate extensive gold mineralised system Target maiden resource H

6 FINANCIAL REVIEW

7 FINANCIAL RESULTS 3 months ended 30 June 6 months ended 30 June units Q Q % change H H % change Revenue US$m (18%) % EBITDA (1) US$m (28%) % Profit before tax US$m (38%) % Profit share to EMRA US$m (52%) (5%) Net profit US$m % % Basic EPS after profit share US % % Sustaining capex US$m % % Non-sustaining capex US$m % (32%) Free cash flow (1) US$m (95%) (29%) Dividend declared US / US$m 2.5 / / Working capital excl. stockpile (2) US$m (26%) Cash and liquid assets (3) US$m (9%) 1. Non-GAAP measures and are defined in the Financial Review of our Interim Results, announced 2 August Stores inventory, prepayments and trade receivable less trade payable 3. Cash and liquid assets including cash and cash equivalents, bullion on hand at market price, gold sales receivable and financial assets at fair value of US$303.3m as at 30 June

8 COST MANAGEMENT 3 months ended 30 June 6 months ended 30 June Q Q % change H H % change Average realised sales price US$/oz 1,298 1,249 4% 1,316 1,235 7% 2018 Guidance Mine production costs US$m % % Cash cost of production US$m (15%) (13%) 322.6* AISC US$m % % 450* Gold produced oz (26%) (7%) Gold sold oz (19%) (3%) 505, ,000 Unit cash cost of production US$/oz produced % (5%) Unit AISC US$/oz sold 1, % % H1 highlights: Minimised cost inflation pressures Fuel cost impact (direct / indirect) Systems and controls Exploration expense accounting change Approximate calculations based on mid-point in guidance range. H2 milestones Downward trend in unit AISC as increase in ounces produced 8

9 COST BREAKDOWN SUKARI Mine Production Costs (US$m) GROUP Cost Centres GROUP FX Exposure G&A US$9m Refinery & transport US$1m Other 10% 10% Labour 9% 9% Other 10% 8% AUD 15% 16% Fuel 18% 16% OP mining US$55m EGP* 24% 21% Contractors 25% 27% Processing US$81m USD 51% 55% UG mining US$11m Consumables 38% 38% H1 2018: US$157m H H H H EGP includes fuel costs which are linked to USD prices Group cost centre and FX breakdown incorporates all group expenditure including capex 9

10 Sustaining capex Exploration DISCIPLINED CAPITAL ALLOCATION US$135m Burkina Faso Côte d'ivoire Egypt: Cleopatra (excl. revenue) FY2018 Capex Budget (including US$22m greenfield exploration) of US$135m H US$64m (47%) spent $51m sustaining capex Fleet rebuild programme spend peaked Working capital systems upgrade complete Stores inventory reached target warehouse level Sukari UG exploration Sukari UG development Other sustaining capex H and beyond Optimisation of maintenance programme Deferral of non-critical sustaining capex items Procurement Committee established to review/negotiate supply contracts and tender processes Results driven exploration model FY 2018 CAPEX 10

11 FINANCIAL FLEXIBILITY STRONG FINANCIAL POSITION BALANCED CASH FLOW US$303m cash & liquid assets * No debt No hedging No gold loans Investment in future growth Sustaining capital 34% Exploration 10% Contribution to operating country and local community Royalties and profit share 32% No gold streams Free cash flow 24% Solid cash flow generation * Cash and liquid assets including cash and cash equivalents, bullion on hand at market prce, gold sales receivable and financial assets at fair value of US$303.3m as at 30 June

12 PRIORITISING SHAREHOLDER RETURNS Operating Cash Flow Sustaining Capex & Mine Development Profit Share SUSTAINABLE DIVIDEND STREAM US 2.5 interim dividend for 2018, represents 80% of Free Cash Flow c. US$420m returned to shareholders in 5 years First use of Sukari cash flow is minimum dividend payment Further dividends in light of potential growth capital DIVIDEND HISTORY Free Cash Flow Minimum dividend 30% of Sukari cash flow Maintain minimum $250-$300m cash balance Growth capital investment Excess Cash returned to shareholders as dividend Final Dividend Interim Dividend 12

13 OPERATIONAL REVIEW

14 HEALTH AND SAFETY Annual LTIFR (per 200,000 hours worked) People and workplace safety is our number one priority H Industry leading health and safety record, targeting zeroharm Group H1 LTIFR is 0.06 per 200,000 man hours worked Health and satety training forms a critical part of delivering sustainable operations, along with continued professional development training that ensures operational excellence and career advancement H Total man hrs worked LTI LTIFR per 200,000 hours GROUP 1,623, Sukari 1,433, Burkina Faso 40, Cote d Ivoire 149, Cote d Ivoire maintains a zero harm safety record since exploration began, with Q2 LTIFR 0.00: Ten consecutive quarters without an LTI, over a total of 1,161,200 man hours worked Burkina Faso maintains a zero-harm record, Q2 LTIFR 0.00: Sixth consecutive quarter without an LTI, over a total of 391,789 man hours worked 14

15 OPEN PIT OPERATIONS H OPEN PIT Excellent mining productivity with total material moved of 36.9Mt, a record six-month figure for the mine Transitional zone has delivered more tonnes and lower grades than planned 11.6Mt total ore mined at a grade of 0.51g/t, comprising: 0.64g/t delivered to the mill 0.37g/t delivered to the dump leach 0.39g/t delivered to low grade stockpile 2018 OUTLOOK Exiting transitional zone in Q3, into primary ore in Q4 Expected FY2018 overall open pit mill feed of ~0.71 g/t Overall ore grade ~0.58 g/t 15

16 UNDERGROUND OPERATIONS H UNDERGROUND UNDERGROUND ORE MINED AND AVERAGE GRADE Total production 601kt at 5.69g/t Production from stoping, 340kt at 5.86g/t Ore from development 261kt at 5.48g/t Stoping tonnages impacted by equipment availability 55:45 stoping : development split H1 grades lower than plan due to: Development / stoping mix Dilution within large cascading stopes Development Ore Stoping Ore Amun/Ptah Grade OUTLOOK Better balance of stoping and development tonnes ~60:40 stoping development split for FY2018 High grade deferred stopes expected to be accessed from Q3 Significantly lower stope dilution from cascading mining scheduled over balance of the year TOTAL DEVELOPMENT METRES (MINERALISED + WASTE) 2,500 2,000 1,500 1, Tighter control on development headings Development Metres 16

17 PROCESSING PLANT 2018 PERFORMANCE AND OUTLOOK Strong performance across the process plant Plant throughput in H1 of 6.2Mt, running at an annualised rate >12.4Mtpa due to record productivity levels H1 head grade of 1.15g/t due to lower mined grades Improved metallurgical recovery rates to 88.6% (vs. 87.5% H1 2017) despite lower grade PLANT PERFORMANCE 1,550 1,500 1,450 1,400 1,350 1,300 1,250 1,200 1, % 95% 90% 85% 80% 75% 70% Irrigation of the second dump leach pad commenced in Q PROCESSING PLANT THROUGHPUT (Mtpa) Plant Productivity ORE PROCESSED AND FEED GRADE Recovery ,000 3,000 2,000 1, F Total Ore Processed Plant Feed Grade 17

18 EXPLORATION REVIEW

19 SUKARI LONG TERM SUSTAINABILITY Unlocking the underground: Q drill intercepts highlights MEDIUM TERM GROWTH 2.5 km BAST 37.2g/t 226.3m N CLEOPATRA CLEOPATRA PTAH BAST AMUN OSIRIS 3.08g/t 3.43g/t 4.4g/t 3.58g/t 5.74g/t PORPHYRY KEEL PTAH 5.0g/t 7.3g/t 58.1g/t 6.8g/t 8.8g/t 97.2g/t 354.8g/t NEAR TERM GROWTH HORUS PORHYRY TOP OF HORUS SUKARI LONG-SECTION Sukari Porphyry UG Reserve Shapes UG Development Open Pit Shell UG Resource Shapes UG Future Ore-Drives Design Fig 1. Sukari Gold Mine Underground long-section

20 CÔTE D IVOIRE Doropo Project - PEA underway CHEGUE SOUTH Fig 2. Resource Area geochem and soil sample grade distribution 20

21 CÔTE D IVOIRE Doropo Project - PEA underway Doropo Resource Area Initial 1.35Moz Indicated, 0.9Moz Infered resource concentrated within a 7km radius Main structures remain open; H1 drilling of structural extensions returned positive results at Souwa, Chegue, Chegue South and Enioda Follow up drilling on the Tchouachinin and Hinda prospects Early met work positive. Detailed met results expected in Q3. 2.5g/t 6.2g/t 14g/t 4g/t 6.4g/t 11.2g/t 10.4m@ 2.1g/t 3.7g/t 2.5g/t 3.4g/t 1.9g/t 3.1g/t 38.3g/t 2.8g/t 12m 2.9g/t 8.5g/t 3,9g/t 6g/t 23.4g/t 1.6g/t 1.3g/t Doropo Regional License Area Structured exploration programme of the 35km radius area: geological mapping, soil geochem infill auger drill program along 8km strike soil anomaly 21

22 CÔTE D IVOIRE ABC Project targeting maiden resource Fig 3. ABC Project license holding Fig 4. Kona Permit geochem mapping 22

23 CÔTE D IVOIRE ABC Project targeting maiden resource Kona permit, Lolosso structure 4,261m diamond drilling completed in H1, including 2,716m drilled early in Q2 as calibration drilling. 8,916m auger drilling completed and GAIP survey extension Geological mapping confirmed Lolosso structure extends ~60km, over the FarakoNafana permit. Prelim met work shows no issues. Detailed met work expected in Q3. Fig 4. Lolosso structure, cross-section showing continuation at depth 23

24 SUMMARY

25 NEAR TERM DELIVERABLES Deliver solid H2 operational performance and subsequently deliver on revised guidance of koz at AISC of US$875-$890/oz sold Return excess cash to shareholders Sukari solar project feasibility study expected in H Appointment of a non-executive Chairman expected in H Sukari underground updated reserve and resource expected H Doropo Project: update resource and complete PEA by H ABC Project: maiden resource expected H Significant exploration target generation across the portfolio Continued downward trend in Group LTIFR 25

26 INVESTMENT CASE Asset Quality Top 20 producing gold mine >500koz Au single asset Low cost, bulk tonnage mine >20yrs LOM (vs gold sector avg ~10yrs*) with reserve and resource growth potential Near term, near-mine / capex lite production growth potential LON:CEY / TSE:CEE 100% free float FTSE 250 Financial Flexibility No debt No hedging No streaming Minimum cash balance of US$ m Stakeholder Returns Meaningful contributor to our host country/partners Minimum dividend of 30% of Sukari cash flow Excess FCF will also be returned Maintain social license to operate *Referenced RBC Capital Markets Active Growth Pipeline Sukari UG Amun/Ptah reserve replacement Sukari UG Cleopatra exploration & development Doropo infill and expansion drilling Batie West scoping study underway ABC greenfield target generation 26

27 APPENDIX

28 CONTINUED FOCUS ON COST CONTROL OPEN PIT MINING COST PER TONNE UNDERGROUND MINING COST PER TONNE Open Pit Mining Cost per Tonne (US$/t) Overall Underground Cost per Tonne (US$/t) Stoping Cost per Tonne (US$/t) PROCESSING COST PER TONNE ALL-IN SUSTAINING COSTS Processing Cost per Tonne (US$/t) All-In Sustaining Costs (US$m) Gold Sold (koz) Note: Overall Underground Cost per Tonne calculated as expensed and capitalised mining costs divided by total tonnes moved from underground Stoping Cost per Tonne calculated as expensed mining cost divided by stoped ore produced 28

29 Andrew Pardey Chief Executive Officer Ross Jerrard Chief Financial Officer Alexandra Carse Investor Relations