2012 Annual Results PERTH, AUSTRALIA -- (Marketwire) -- 03/27/13 -- Centamin plc ("Centamin" or "the Company") (LSE: CEY) (TSX: CEE) For immediate release 27 March 2013 Centamin plc ("Centamin" or "the Company") (LSE:CEY, TSX:CEE) 2012 Annual Results Centamin is pleased to announce its audited annual results for the period ended 31 December 2012. HIGHLIGHTS FOR THE YEAR (1) (2) (3) Centamin delivered strong operational and financial results in 2012, producing 262,828 ounces of gold (2011: 202,699 ounces) and generating profit after tax for the year of US$199 million (2011: US$194.0 million). Through the Group's emphasis on rigorous cost control, Centamin has continued to reap the benefits of the high gold price, and this was enhanced further by its debt-free and unhedged position. Now in its third year of production, the Sukari Gold Mine is highly cash generative, providing EBITDA of US$233.3 million (2011: US$211.4 million), a 10% increase on 2011, and a robust cash and cash equivalents balance of US$147.1 million (2011: US$164.2 million) as at 31 December 2012. 2012 presented some operating environment challenges, however a solid second quarter and a record fourth quarter of production have shown that a substantially larger production profile is achievable for Sukari. This potential for production growth combined with the Group's reserves, a significant expansion programme, a solid financial position, and an experienced team means Centamin is well positioned for 2013, as is shown by the following: * Basic earnings per share 18.27 cents, up 2% on prior year. * Record EBITDA US$233.3 million, up 10% on the prior year. * Full year production was 262,828 ounces, a 30% increase on 2011 and above guidance of 250,000 ounces. * Cash costs of production of US$669 per ounce (equivalent to US$530 per ounce versus US$556 per ounce in 2011 at subsidized fuel prices). * Stage 4 plant expansion (to 10Mtpa) commissioning activities began in Q1 2013 with the new power station commissioned in January 2013 and new blowers and compressors to be commissioned in Q2 2013. The bulk of commissioning will commence, and be complete, in the second half of 2013. Expenditure to date is US$228.5 million of the total forecast US$325 million including contingency. * Centamin remains debt-free and unhedged with cash, bullion on hand, gold sales receivable and available-for-sale financial assets of US$219.4 million as at 31 December 2012. * Drilling continued at the V-Shear porphyry and commenced at the Kurdeman prospect. * A gravity survey, aimed at targeting and defining porphyries beneath the wadi sediments was completed late in 2012 with results due in Q2 2013. * Results in Ethiopia confirm the existence of low grade mineralisation, with drilling continuing. During the year Centamin was involved in two separate court cases directly relevant to the operation of the mine at Sukari. The first of these was triggered by a decision taken by the Egyptian General Petroleum Company (EGPC) to charge international prices, not local (subsidised) prices for the supply of Diesel Fuel Oil ("DFO"). The second case saw a judgment by an Egyptian Administrative Court in relation to the validity of the Company's 160km2 exploitation lease; although on 20 March 2013 the Supreme Administrative Court upheld the Company's application to suspend this decision until the merits of the Company's appeal are considered and ruled on, thus providing assurance that normal operations would be able to continue during this process. Both of these cases are described in detail elsewhere in this report (refer to Note 20 of the Financial Statements). Every action is being taken to contest the decisions, including the making of formal legal appeals and, although their resolution may take some time, we remain confident that a satisfactory outcome will ultimately be achieved. With respect to the DFO case, management however recognises the practical difficulties associated with re-claiming funds from the government and, for this reason, have fully provided against the prepayment of US$41.4 million as an exceptional item (refer to Note 6 of the Financial Statements). In the meantime the Group is continuing to pay international prices for DFO. In addition the Group during the year received a demand from Chevron for the repayment of fuel subsidies received in the period from late 2009 through to January 2012, amounting to some US$60 million (EGP403 million). 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 remain strong. (1) Cash cost of production, EBITDA and cash, bullion on hand and available-for-sale financial assets are non-GAAP measures. For further information and a detailed reconciliation refer to the "Non-Gaap Financial Measures" at the end of the Financial Statements. (2) Basic EPS, EBITDA, Cash costs of Production reported includes an exceptional provision against prepayments recorded in Q4 to reflect the removal of fuel subsidies which occurred in January 2012 (refer to Note 6 of the Financial Statements for further details). The provision had no impact on the 2011 results. (3) Historic cash cost of production,EBITDA and Basic EPS now reflect adoption of IFRIC 20 (refer to Note 3 of the Financial Statements for further details). ________________________________________________________________________ Centamin will host a conference call on Wednesday, 27 March at 8.00am (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. From UK: Canada: Rest of world: 08082380673 +18664949885 +44 (0) 1452 569335 Participant pass code: 24856273 A second call (Q&A only) will be held for North American analysts and investors at 2.00pm (London, UK time) / 9.00am EST. Participants may join the call by dialling one of the following three numbers, approximately 10 minutes before the start of the call. From Canada: US: Rest of world: +18664949885 +18666551591 +44 (0) 1452 569335 Participant pass code: 24859029 _____________________________________________________________________ STRATEGIC REVIEW Our growth strategy seeks to optimise exposure through the mining value chain: exploration, development and operations. Whilst disciplined and sustainable growth on our existing projects remains a key focus, we continue to evaluate potential opportunities to grow through the acquisition of projects which offer the potential for the Company to realise strong investment returns. 2013 will mark the year when the Stage 4 plant expansion is commissioned, the Sukari project concludes its investment phase and our annual capital expenditure requirements for the mine begin to reduce significantly. Based on the Company's calculation there was no 'Net Profit Share' due to EMRA as at 30 June 2012, nor is any likely to be due as at 30 June 2013. Furthermore, it is expected that there will be profit share due to EMRA for the SGM financial year ending 30June 2014, based on production, gold price and operating expense forecasts. Following discussions with EMRA and with a view to demonstrating goodwill toward the Egyptian government, an advance payment has been made subsequent to year endto the value of US$8.2 million. Maintaining our Social License Maintaining good community relations is a core part of our operational strategy and corporate governance standards. As the first mining company in Egypt in modern times, we strive to set an example of a socially responsible industry through adopting a good neighbour policy. We take every action to ensure Sukari has the minimum impact on the social environment, as well as to deliver positive benefits to Egypt and the community as a result of our investment. In 2012 we nurtured dialogue, maintained open channels of communication and built positive and constructive relations with all our stakeholders including the community in areas in which we operate. The Board approved principles and strategies for the pursuit of corporate sustainable development (CSD) initiatives. Our work force is remunerated well above the average for Egypt and our career development programmes are highly valued. In general we enjoy a very positive and constructive relationship with our employees. Unfortunately, however, we had two strikes at Sukari during the year. The first was a legal strike and was settled on the basis of a broad and above-inflation increase in employee allowance payments. The second strike was illegal, involving only a small element of our work force, and was settled with no pay increases and with the help of the Ministry of Labour. These disputes are set against a background of multiple and prolonged industrial disputes in many quarters of the Egyptian economy. Targets for 2013 For the year 2013, we project production of 320,000 ounces at a cash operating cost of US$700 per ounce, at international fuel prices, which will mark the third year of successive growth in output from Sukari, and another step on the way to our long-term target for the project of 450-500,000 ounces per annum from 2015 onwards at an industry-competitive cost of production. The key drivers of production growth this year will be a continued period of elevated head grades from both the open pit and underground mines and increasing the underground ore tonnes mined to 500,000t, as well as commissioning of the Stage 4 plant expansion to double the processing plant's nameplate capacity to 10 million tonnes per annum. Although construction of Stage 4 was steady during the first half of 2012, the second half saw an impact from strikes at Sukari, in some of the ports and at some of the local Egyptian suppliers, as well as temporary disruptions to the operation's fuel supply and gold exports, hence our in-country working capital position. This translated to delivery delays for key items, materials and services and thus a delay to the anticipated commissioning of the expanded plant, the bulk of which is now expected to commence in the second half of 2013 and with completion before the end of the year. As part of the implementation of Stage 4 the Company is in discussions with EMRA and other government departments in relation to securing the necessary permits to increase daily ammonium nitrate ("AN") consumption and blasting accessories in order to increase open pit mining rates to the required level to feed the expanded plant. This process is expected to be completed during the year. The capital expenditure programme for 2013 has two key focus areas: completion of the Stage 4 plant expansion and the on-going development of the underground mine. The total Stage 4 capital expenditure estimate is US$325 million including contingency, with US$228.5 million spent by the end of 2012 and the bulk of the remaining capital expenditure due in 2013. The budget for the underground expansion is US$20 million and will take the new decline ("Ptah") to its target depth below the existing area of operation. Underground drilling will continue to test the potential for significant resource and reserve expansion and the development of multiple production sources. CHAIRMAN'S STATEMENT Dear Shareholders 2012 represented the third full year of production at Sukari, a period in which your company further extended its track record of successive annual production growth. The operation delivered a record 262,828 ounces of gold at a cash cost of production of US$669 per ounce, which was ahead of guidance of 250,000 ounces at US$700 per ounce (with fuel at international prices) set out at the beginning of the year. The operating team in Egypt deserve immense credit for this performance in a year where challenges were again presented and overcome. The ability to perform well in all circumstances is key to a successful operation, particularly one that is growing as rapidly as Sukari, and shareholders should take comfort from the team's demonstrated ability to deliver growth, whilst maintaining a strong emphasis on rigorous cost control. Sukari's safety performance was also a significant improvement on the previous year with a lost time injury frequency rate of 0.69 per 200,000 man-hours achieved during the period. It was again pleasing to note that no significant environmental incidents have taken place. The Stage 4 expansion to double the processing plant's nameplate capacity to 10 million tonnes per annum is the key to the next stage of output growth and delivery of our stated long-term production target for Sukari of 450-500,000 ounces per annum from 2015 onwards. The construction team made great inroads through 2012 on what is a major construction effort, which continued to be funded out of the proceeds of production at Sukari. Although construction was steady during the first half of the year, the second half saw an impact from strikes, both at Sukari and within the local supply chain, and also disruptions to gold exports and hence our in-country working capital position. This translated to delivery delays for key items, materials and services, with the effect that the bulk of commissioning will commence in the second half of 2013 and be complete before year end. The capital cost estimate of the Stage 4 expansion which is funded by PGM out of cost recoveries, is US$325 million including contingency, with expenditure at the end of 2012 of US$228.5 million. Production growth was complemented by continued drilling of Sukari Hill from both surface and underground, with the aim of replenishing and increasing the resource and reserve base, and an update resource and reserve statement will be delivered in the second half of 2013. The expanding underground development in particular provides increasing drilling access to the northern and depth extents of the deposit. Exploration activities continued on the seven other prospects in the 160km2 Sukari exploitation lease within trucking distance of the Sukari plant. The first significant signs of low grade porphyry away from Sukari Hill were identified at the V-Shear prospect and work continues to determine the extents and controls on this mineralisation. Elsewhere, on-going drilling at the Kurdeman prospect offers the potential to fast-track high grade ore to supplement the existing underground production. Further regional drilling of the Sukari licence is planned for 2013. Drilling in Ethiopia continued on our four exploration licences in the north of the country. Centamin intends to continue to grow and diversify its project pipeline through targeted acquisitions of exploration and development prospects in the region and beyond. Despite the negative effect of having to pay higher costs for fuel for much of 2012, costs that were incurred as direct consequence of a decision taken by EGPC, which we are robustly contesting in Court, financially, our position remains strong with approximately US$220 million held in cash, bullion, gold sales receivables and available-for-sale financial assets, no debt and no hedging. With revenues of US$426 million and a profit for the year of US$199 million, Sukari continued to demonstrate in 2012 that it remains highly cash generative and well placed to fund its growth from cost recoveries. We have exited the year as we had planned with a strong cash position and having made a significant investment and progress toward completing Stage 4. Completion of Stage 4 will mark the end of a major expansion and investment programme at Sukari. Our appeal against the 30 October 2012 ruling by the Egyptian Administrative Court, which we believe is based on an incorrect assertion that there was a lack of evidence with respect to our exploitation lease at Sukari, remains on-going. Very importantly on 20 March 2013 the Supreme Administrative Court approved our application to suspend enforcement of the 30 October ruling until the conclusion of the appeal process and this will allow operations at Sukari to continue whilst the court process runs its course. We have full confidence in our legal title and our appeal case and also highlight the separate supporting appeals lodged by the Ministry of Petroleum and the Egyptian Mineral Resource Authority (EMRA). It is our belief that this re-enforces the government's publicly-stated view that the terms of our Concession Agreement are fair and that Centamin's continued investment and operation at Sukari are both necessary and welcome. I would like to thank the Minister of Petroleum and EMRA for standing by us throughout the year and I look forward to the continued co-operation as we deliver on our stated goals. I would like to close by thanking all those at Sukari, in Alexandria, London, Jersey and Perth for their efforts in 2012 as Centamin continued on its journey to becoming an established gold producer. In a year where there were many events that required your Board's attention it was a year that the depth, professionalism and dedication of your Non-Executive Directors came to the fore. I would like to thank deeply the Board for their counsel. Despite and because of the challenges that we have faced in 2012, your company remains well positioned to deliver outstanding growth and shareholder returns in the coming years. I look forward to updating you further over the course of 2013 either at our AGM, which this year will be held in Jersey on 23 May, or at our presentation to shareholders that will be held in London on 16 May. Josef El-Raghy Chairman Please click here for the full 2012 Annual Results http://www.rns-pdf.londonstockexchange.com/rns/9770A_-2013-3-27.pdf This information is provided by RNS The company news service from the London Stock Exchange END Contacts: RNS Customer Services 0044-207797-4400 email@example.com http://www.rns.com
2012 Annual Results
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