Results for the Quarter Ended 30 September 2012
Centamin plc ("Centamin" or "the Company")
(LSE: CEY, TSX: CEE)
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For immediate release |
14 November 2012 |
Results for the Third Quarter and Nine Months Ended 30 September 2012
Centamin plc ("Centamin" or "the Company") (LSE: CEY, TSX: CEE) is pleased to announce its results for the third quarter ended30 September 2012.
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· Record quarterly earnings, with basic earnings per share 5.53 cents, up 43% quarter-on-quarter and 22% on the prior year period.
· Record quarterly EBITDA $67.1 million, up 22% quarter-on-quarter and 25% on the prior year period.
· Gold production 60,922 ounces, down 10% quarter-on-quarter but up 20% on the prior year period.
· Cash costs US$539 per ounce at subsidised fuel prices; $724 per ounce including fuel prepayments.
· Stage 4 plant expansion (to 10Mtpa) commissioning activities to begin in Q1 2013, with the bulk of commissioning to start in Q2 2013. Budgeted 2013 total ore processed remains unchanged at 6.1 million tonnes. Expenditure to date is US$176.9million of the total $287.6m ex-contingency forecast.
· Centamin remains debt-free and un-hedged with cash, bullion on hand, gold sales receivable and liquid assets of US$181.7 million as at 30 September 2012.
· 2012 production guidance of 250,000 ounces maintained, with cash costs of US$550 per ounce atsubsidisedfuel prices; or US$700 per ounce inclusive of fuel prepayments.
· Drilling continued at the V-Shear porphyry with results to date in the 0.3-0.6 g/t range. A gravity survey has commenced to help define the limits of the porphyry and to test the surrounding areas.
· Initial results in Ethiopia confirm the existence of low grade mineralisation, with drilling on-going.
· Engagement with government on fuel subsidy ongoing.
· Centamin and the Egyptian Mineral Resources Authority (EMRA) continue to work closely to appeal the October 30thAdministrative Court ruling which determined the conversion of the Sukari 160km2 "exploitation lease" invalid. Operations are continuing as normal.
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Q3 2012 |
Q2 2012 |
Q3 2011 |
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Total Gold Production (oz) |
60,922 |
67,422 |
50,539 |
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Cash Cost of Production¹,4 (US$/oz) |
539 |
565 |
562 |
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Average Sales Price (US$) |
1,679 |
1,610 |
1,721 |
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Revenue (US$M) |
103.1 |
96.8 |
89.1 |
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EBITDA²,³,4 (US$M) |
67.1 |
54.9 |
53.6 |
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Basic EPS4 (cents) |
5.53 |
3.87 |
4.52 |
Josef El-Raghy, Chairman of Centamin, said: "The team at Sukari once again delivered a strong set of operating results which are particularly pleasing given the several cumulative issues that were faced and addressed during the quarter. Open pit tonnages continued to increase according to plan and the operation as a whole entered the fourth quarter well placed to meet our unchanged full year production guidance of 250,000 ounces."
Centamin will host a conference call on Wednesday, 14 November 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.
From UK: (toll free) 0800 368 1895
From Canada: (toll free) + 1866 561 8617
From rest of world: +44 203 140 0693
Participant pass code: 677677#
A live audio webcast of the call will be available on:
http://mediaserve.buchanan.uk.com/2012/centamin141112/registration.asp
A group analyst briefing will be held simultaneously at 9.00am at the offices of Buchanan, 107 Cheapside, London, EC2V 6DN
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: (toll free) +1866 561 8617
From US: (toll free) +1866 928 6049
From rest of world: +44 203 140 0693
Participant pass code: 858703#
For more information please contact:
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Centamin plc Josef El-Raghy, Chairman Andy Davidson, Head of Business Development and Investor Relations |
+44 20 7569 1671 |
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Buchanan Bobby Morse Cornelia Browne Gabriella Clinkard |
+44 20 7466 5000 |
About Centamin plc
Centamin is a mining company that has been actively exploring in Egypt since 1995. The principal asset of Centamin is its interest in the large scale, low cost Sukari Gold Mine, located in the Eastern Desert of Egypt. 2010 was Sukari's maiden year of production, with 150,000 ounces of gold produced. In 2011, production expanded to over 200,000 ounces, with production forecast to increase further in the following years.
The Sukari Gold Mine is the first and currently only large-scale modern gold mine in Egypt. Centamin's operating experience in Egypt gives it a significant first-mover advantage in acquiring and developing other gold projects in the prospective Arabian-Nubian Shield.
In 2011 the Group acquired Sheba Exploration(UK) Plc("Sheba") and now has interests in four mineral licences in Ethiopia where it is conducting further exploration activities.
CHAIRMAN'S STATEMENT
The third quarter saw Centamin deliver our strongest set of financial results to date with record EBITDA of US$67.1 million, up 22% on the second quarter and a 25% increase on the corresponding quarter in 2011. This was achieved despite a number of minor but cumulative challenges to production at Sukari which have all now been resolved. Mining and processing operations continue to perform in line with budget and we expect to meet our unchanged full year guidance of 250,000 ounces at US$550 per ounce at subsidised fuel prices and US$700 per ounceinclusive of fuel repayments.
Construction of the Stage 4 expansion was a little slower than expected during the quarter with the consequence that, whilst some commissioning activities will begin in Q1, we now anticipate the bulk of commissioning to commence in Q2 2013. All key long lead time items have been delivered or are scheduled for delivery and as such we continue to expect the full 10 million tonne per annum rate to be achieved in the later part of 2013. Our longer-term growth projects showed good progress, with encouraging signs of a potentially significant mineralised porphyry from drilling of the V-Shear prospect at Sukari, plus some early indications of mineralisation from drilling at our Ethiopian projects.
Centamin is committed to its policy of being 100% un-hedged and therefore fully exposed to the high gold price environment. Our balance sheet remains strong, with cash, bullion on hand and liquid assets of US$181.7 million at the end of September and with capex for Stage 4 fully financed by Pharaoh Gold Mines ("PGM"), Centamin's 100% owned subsidiary, from cost recoveries generated from operating cash flow.
The Sukari project has seen Centamin invest over US$700 million in Egypt to date and we remain committed to our significant expansion program. Management and the Board of Directors take very seriously any threat to the Company's operating title, its investment, the livelihood of its employees and the interests of its other stakeholders. We will therefore spare no effort to defend our position which at all times has been in accordance with the terms of the Concession Agreement (law 222 of 1994), Egyptian law and international best practice for both mining and foreign direct investment. We look forward to presenting our case against the October 30th administrative court ruling, which we believe will give us very strong grounds for a successful appeal. The appeal is expected to be lodged in the next week or so. We will continue to keep the market informed of progress and, in the meantime, continue to operate at Sukari and to deliver on the Stage 4 expansion project which is projected to be funded out of cost recoveries.
OPERATIONAL REVIEW
Production
Sukari Gold Mine production summary:
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Q3 2012 |
Q2 2012 |
Q3 2011 |
9 months ended 30 September 2012 |
9 months ended 30 September 2011 |
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Ore Mined - Open Pit |
('000t) |
1,653 |
1,816 |
2,129 |
4,472 |
4,380 |
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Ore Grade Mined - Open Pit |
(Au g/t) |
1.00 |
1.07 |
0.96 |
0.99 |
NR |
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Ore Grade Milled - Open Pit |
(Au g/t) |
1.34 |
1.19 |
NR |
1.21 |
NR |
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Total Open Pit Material Mined |
('000t) |
6,970 |
6,579 |
5,847 |
18,368 |
13,429 |
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Strip Ratio |
(waste/ore) |
3.2 |
2.6 |
1.8 |
3.1 |
2.1 |
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|
|
|
|
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Ore Mined - Underground Development |
('000t) |
40 |
53 |
47 |
150 |
127 |
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Ore Mined - Underground Stopes |
('000t) |
53 |
63 |
11 |
141 |
15 |
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Ore Grade Mined - Underground |
(Au g/t) |
9.01 |
8.68 |
10.4 |
8.65 |
NR |
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Ore Processed |
('000t) |
1,004 |
1,269 |
954 |
3,293 |
2,545 |
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Head Grade |
(g/t) |
2.10 |
1.99 |
1.82 |
1.93 |
1.88 |
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Gold Recovery |
(%) |
86.7 |
84.3 |
85.5 |
85.3 |
85.9 |
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Gold Produced - Dump Leach |
(oz) |
1,617 |
1,318 |
2,921 |
4,838 |
8,362 |
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Gold Produced - Total |
(oz) |
60,922 |
67,422 |
50,539 |
177,415 |
143,734 |
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|
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|
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Cash Cost of Production |
(US$/oz) |
539 |
565 |
562 |
568 |
532 |
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Open Pit Mining |
(US$/oz) |
180 |
194 |
NR |
NR |
NR |
|
Underground Mining |
(US$/oz) |
35 |
50 |
NR |
NR |
NR |
|
Processing |
(US$/oz) |
257 |
263 |
NR |
NR |
NR |
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G&A |
(US$/oz) |
67 |
58 |
NR |
NR |
NR |
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|
|
|
|
|
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Gold Sold |
(oz) |
60,794 |
60,673 |
51,570 |
174,168 |
165,072 |
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Average Realized Sales Price |
(US$/oz) |
1,679 |
1,610 |
1,721 |
1,644 |
1,546 |
Notes:- (1) Ore mined includes 11kt @ 0.48g/t delivered to the dump leach in Q3 2012 (104kt @ 0.50g/t in Q2 2012;264kt @ 0.42g/t in Q1 2012;
977kt @ 0.55g/t in Q3 2011; 224kt @ 0.5g/t in Q2 2011 and 435kt @ 0.6g/t in Q1 2011).
(2) Gold produced is gold poured and does not include gold-in-circuit at period end.
(3) Cash costs exclude royalties, exploration and corporate administration expenditure.
(4) Realised Sales Price reflects actual sales price realised during the period i.e. excludes Gold receivable.
(5) Historic Cash cost of production now reflect adoption of IFRIC 20.
NR - Not Reported.
Centamin produced60,922 ounces of gold in Q3 2012, which is a 10% decrease on Q2 2012 but a20% increase on Q3 2011.
The lower quarter-on-quarter production was a result of: (a)a 28% decrease in tonnes milled (to circa 1Mt) versus Q2, due to the impact of a scheduled SAG mill reline in September and the illegal strike in July, and (b) a 16% reduction inproduction from the underground high grade stopes due to lower than planned underground mining contractor equipment availability. Thenegative impact was partly reduced by feeding ore with a 6% higher grade to the mills (2.10g/t in Q3 compared to 1.99g/t in Q2) as underground and open pit head grades increased.
Sukari's production profile for the year will see a larger proportion of ounces delivered in Q4 due to a higher mill throughput, in line with that achieved in Q2, and an increasing overall headgrade. As such our full year production guidance of 250,000 ounces remains intact.
Open Pit
The open pit delivered total material movement of 7.0Mt for the quarter, an increase of 6% on Q2 2012 and 19% on the prior year period, as additional mining faces opened up with improved equipment productivity and utilization.
Ore production from the open pit was 1.7Mt at 1.0g/t withan average head grade to the plant of 1.34g/t. The ROM ore stockpile balance increased by 82kt to 579kt by the end of the quarter.
Mining continued to focus on Stage 2A and Stage 2B down to the 1040RL and 1028RL respectively. In Stage 3 development work continued with minor production commencing in preparation for large scale load and haul activities.
Underground Mine
Ore production from the underground mine was 93kt. The ratio of stoping-to-development ore mined decreased this quarter, with 43% of development ore (40kt) and 57% of stoping ore (53kt). Production from stoping continues to ramp up whilst a significant focus on longer term development is also maintained to ensure mine sustainability.
In spite of poor equipment availability, restricting mining of the higher grade stopes with the remote 'boggers' (load haul dump machinery, or LHD's), grades continued to be reasonably high, with a head grade of 9.01g/t from the underground mine in Q3. The grade was below the annual production guidance range of 10-12g/t as the majority of the stope material for the quarter continued to be mined from the lower grade stockwork stopes, combined with lower grade development drives being mined to access diamond drill sites. However, during the last part of the quarter, higher grade material was again able to be mined and access drives to further stopes were completed. Development of access to the higher grade areas continues. Higher grade material in the 10-12g/t range is scheduled for mining in the remaining quarter.
A further 431.3 metres of development took place between the 878 and 830 levels to access additional stoping blocks that will be mined during 2012 and 2013. A total of 1,859.6 metres of diamond drilling was completed during the quarter for both short-term stope definition, open pit resource modelling and underground resource development whilst a further494.5 metres of drilling to test the depth extensions below the current Amun zone and into the Horus zone was completed.
Development of the Ptah Decline, which will move towards the north of the Sukari deposit and provide access to the high grade Julius zone, began in October 2011 and had advanced 313.0 metres by the quarter end. The Ptah Decline, which will access at least two production centres, will take underground activity away from the pit shell over the next two years. This decline will therefore allow Centamin to maintain two separate underground production sources once the Amun Decline becomes part of the open pit.
The anticipated capital cost of the Ptah Decline is US$18 million, which will see the decline reach the first ore blocks to be developed below the middle of SukariHill. It is expected that this initial development work will be complete in early 2013.
Processing
The quarterly throughput in the Sukari processing plant was 1,004kt, 5% higher than the corresponding quarter in 2011 and 21% lower than Q2 due to the SAG mill reline and also illegal strike action in July.
Productivity of the processing plant was 624 tonnes per hour (tph) for the quarter, down 4% on 652 tph in Q2 due to the impact of the scheduled SAG mill reline in September and the strike in July.
Plant metallurgical recoveries were 86.7%, which is a 2.4% increase on Q2. Recoveries are expected to remain consistent until the new carbon regeneration kiln is commissioned in early 2013.
The dump leach operation produced 1,617oz in Q3, a 23% increase on Q2. 11kt of low grade oxide ore at 0.48g/t was delivered to the pads in preparation for irrigation, bringing the total ore placed on the dump leach to approximately 6.0Mt at 0.50g/t. Dump leach volumes pumped back to the CIL Plant were deliberately reduced to minimise issues associated with the carbon fouling and carbon regeneration and the impact on recoveries. Volumes will return to planned levels once the new carbon regeneration kiln is commissioned in early 2013.
Fuel Costs
In light of the on-going discussions with the Egyptian Government regarding the Company's entitlement to the national subsidy for diesel, it was necessary during Q3 to continue to advance funds to our fuel supplier, Chevron, based on the international price for diesel. However, in line with previous practice, Management have treated these fund advances as prepayments which at this stage are not expensed, to the extent that they represent a premium to the price payable for subsidised diesel. Should these prepayments be expensed, the cash costs for Q1 would increase by US$108 to US$717 per ounce, Q2 would increase by US$164 per ounce to US$729 per ounce and Q3 would increase by US$185to US$724 per ounce. The total amount of the prepayment at the end of the quarter was US$27.7 million.
As noted in the quarterly report for the quarter ended 30 June 2012, the Company has, with the support of the EMRA, commenced judicial review proceedings in Egypt in relation to this matter. 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 either the negotiations or the court proceedings be successfully concluded.
STAGE 4 EXPANSION
Construction continueson Stage 4 of the process plant expansion which will expand Sukari capacity from 5Mtpa to 10Mtpa. The capital cost of the Stage 4 expansion which is funded by PGM out of cost recoveries, remains within budgeted expectations of US$287.6 million (excluding contingency), with expenditure to date of US$176.9 million.
During the period some delays in the Stage 4 construction process occurred with the consequence that, whilst some commissioning activities will begin in Q1, we now anticipate the bulk of commissioning to commence in Q2 2013. Despite this short delay, there is no change to the expected 6.1 million tonnes of ore processed in 2013, nor any other of the other parameters as outlined in the May 2012 optimised mine plan. This plan and forecast, which requires the completion of Stage 4 commissioning by Q4 2013, was sufficiently conservative to accommodate delays of this nature.
Main Plant
Detailed engineering is 96% complete and the final issue, evaluation and award of equipment packages is on-going. SAG and Ball Mill shells were delivered during the quarter and all major civil works in the grinding area were completed. Various construction fronts are open within the main plant area and no long lead time items represent a risk to schedule at this stage.
Power Station
The engineering design and procurement are 100% complete. Civil, structural and mechanical works continue around power house, fuel treatment, workshop buildings and day tank area. Electrical work on cable tray installation and earthing are on-going.
Sea Water Pipeline
Orders have been placed for motorized valves, flanges and above ground pipe work. The installation contract tender has been completed and awarded to Egyptian Maintenance Co. (EMC) with civil works on the pipeline commencing during the quarter. Engineering for the Petroleum & Process Industries (ENPPI) are finalising the electrical equipment supply.
Tailings Storage Facility
The construction process for the Tailings Storage Facility ("TSF") is 90% complete.Construction by earthworks contractor together with mining is on-going.
Capital Expenditure
A breakdown of the major cost areas to date is as follows:
· Mining Equipment US$32.0 million
· Processing Plant US$90.1 million
· Power Plant US$35.4 million
· Other US$19.4 million
US$176.9 million
Major contributors to the payments made in Q3 were as follows:
· Mining Equipment US$12.5 million
· Processing Plant US$17.2 million
· Power Plant US$2.3 million
· Other US$6.2 million
US$38.2 million
EXPLORATION UPDATE
Sukari Hill
Centamin's resources at Sukari are 13.13Moz Measured & Indicated and 2.3Moz Inferred, which include reserves of 10.1Moz. Drilling continued from the underground development drives and the drilling programme will build up to four underground based exploration/resource drill rigs throughout 2012.
We aim to continue adding ounces to Sukari's already significant resource base and plan to provide an updated resource and reserve statement during the first half of 2013.
Regional Exploration
Drilling continued in the V-Shear and Kurdeman prospects. Drilling at V-Shear continued to test the extent of the porphyry as this represents the first significant zones of porphyry encountered away from the Sukari Hill. Assays received to date have generally been in the lowgrade range between 0.3 and 0.6 g/t and work is underway to determine the extents and controls on the mineralisation of this porphyry. A gravity survey is planned in Q4 (commenced in early November) over this area to help in defining this porphyry and surrounding areas.
Growth Beyond Sukari
The third pillar of Centamin's growth strategy is growth beyond Sukari. Centamin has interests in 4 exploration licences in northern Ethiopia and drilling at the first property, UnaDeriam, began in Q1. Ethiopia is a geologically prospective terrain that is historically underexplored. There is an emerging gold mining industry and significant artisanal gold mining activities. Through a well-funded and focused exploration effort, Centamin hopes to replicate its success in Egypt in exploring and developing gold assets.
During Q3 the Company continued diamond drilling at UnaDeriam and samples have been dispatched to assay laboratories in South Africa. Previous work on the tenement had outlined an 8km long gold in soil anomaly. Several historical open hole percussion drill holes confirmed the existence of significant sub-surface gold mineralisation with +20 metre intersections.
The turnaround time in assays from South Africa has been slower than expected and alternatives are being put in place to improve this.
Centamin intends to continue to grow and diversify its asset base through targeted acquisitions of exploration and development prospects in the region and beyond.
FINANCIAL REVIEW
Centamin has a strong and flexible financial position with no debt, no hedging and cash, bullion and liquid assets of US$181.7 million at 30 September 2012, down marginally from US$183m at the end of June 2012. Cash, bullion on hand and liquid assets is a non-GAAP financial measure and includes cash, bullion, gold sales receivable and liquid assets.
· Cash at Bank US$124.6 million
· Gold Sales Receivable US$26.9 million
· Liquid assets - listed equities US$7.9 million
· Bullion on hand US$22.3 million
Bullion on hand was higher than expected due to some minor logistical delays in shipping gold at the end of the period. These issues were resolved, with the gold having been shipped shortly after the period end and to be realised as revenue in Q4.
Sukari generated revenue of US$103.1 million in the third quarter, a 7% increase on the previous quarter. Revenue reported comprises proceeds from gold and silver sales.
Centamin's unit cash costs (including fuel subsidy) were US$539 per ounce, $26 per ounce lower than in Q2. This reduction is primarily a result of improved productivities in both the mine and the mill areas, more than offsetting the lower production. Including fuel prepayments (excluding the fuel subsidy), the Q2 unit cash costs were US$724/oz, $5 lower than in Q2 reflecting a higher quarter-on-quarter international fuel price.
Operating cash costs reduced quarter-on-quarter by US$5.3m or 14% to $32.8 million. Processing costs were 2% lower versus Q2 due to a 13% decrease in plant utilisation. Mining costs were down significantly by 16% versus Q2 as a result of better utilisation of equipment, lower maintenance charges as well as the need for less drilling and blasting during the period.
The Company reported EBITDA of $67.1 million, a 25% increase on Q3 2011 and a 22% increase on the previous quarter. The key drivers were:
(a) a moderate increase in revenue, as described above
(b) a decrease in the cash cost of production, as described above
(c) a $1.8 million increasein inventory movement
(d) a 34% decrease in corporate costs to $1.3 million, and
(e) a foreign exchange gain of $2.0 million.
Basic Earnings per Share for the quarter was 5.53 cents,a 22% increase on Q3 2011 and a 43% increase on the previous quarter. The increase is mainly due to the effects noted above and offset by a 45% quarter-on-quarter increase in depreciation and amortisation to $7.5 million, a result of an increase in the underlying capitalised preproduction costs and mine development properties.
CORPORATE UPDATE
Chief Executive Officer Appointment Process
The Board continues on an on-going basis to assess the options for ensuring that the Company has the right leadership to best further its future development and at present the Board believes that there is no urgent requirement to fill the CEO position. In arriving at this decision the Board has taken into account the degree and breadth of experience brought to the senior management team by Chief Operating Officer, Andrew Pardey, Chief Financial Officer, Pierre Louw and Head of Business Development and Investor Relations, Andy Davidson, as well as the requirements of the UK Corporate Governance Code. In relation to the Code, the Board believes the interests of shareholders are best served by the current arrangement and that the Company is not at risk from an undue concentration of decision-making authority by the temporary combination of the Chairman and Chief Executive Officer roles. In reaching this conclusion, the Board has taken into consideration the strong presence of highly experienced independent non-executive directors on the Board and the structure of the Board Committees designed to devolve away from the Chairman the responsibility and control of certain key areas of Board responsibility.
Egyptian Court Litigation (post-period end)
A ruling was made on 30th October by the administrative court in Egypt, in relation to a claim brought by Hamdy El Fakharany, an independent member with the previous parliament. The ruling makes it clear that it rejects any request to terminate or treat as invalid the Concession Agreement entered into between the Arab Republic of Egypt, the Egyptian Mineral Resources Authority ("EMRA") and Centamin's wholly owned subsidiary PGM, and approved by the People's Assembly as law 222 of 1994. The judgement further makes it clear that PGM had made the necessary notifications to be entitled to be granted an "exploitation lease" in accordance with the Concession Agreement. However, the judgement states that, although agreement was reached between PGM and EMRA with respect to the grant of the 160km2 "exploitation lease" at Sukari, sufficient evidence was not submitted to Court in order to demonstrate that, as required by the terms of the Concession Agreement, the requisite approval from the relevant Minister had been obtained, and thus the Court determined that the process of the conversion to an exploitation lease was therefore invalid. Centamin, however, is in possession of the executed original lease documentation which clearly shows such approval from the Minister of Petroleum and Mineral Resources. It appears that this document was not listed in the documents supplied to the Court. As such the Company is confident that this matter can be resolved during the appeal process.
Pending the appeal hearing, the notice of "objection to enforcement", lodged on 31st October has the effect of "staying" (postponing) the implementation of any judicial decision for a period until any hearing on such notice. As notified to the market on 31st October, the appeal process would be accompanied by a further request for the decision to be "stayed" pending the outcome of a final court hearing. Centamin therefore remains confident that normal operations at Sukari will be maintained whilst our appeal case is heard.
The Company continues to work in close co-operation with EMRA and both parties are currently in the process of initiating the necessary vigorous action to appeal this decision. The formal appeal is expected to be lodged shortly.
Cost recovery and profit share
Based on current gold prices, production forecasts and operating expenses, it is expected that there will be a net production surplus (revenue in excess of production royalty and cost recoveries) available for sharing betweenEMRA and PGM for the Egyptian financial year ending 30 June 2013. The amount of this will clearly be dependent in large part on the success of the operations during this period.
OUTLOOK
Centamin remains focused on advancing all three pillars of our growth strategy. At Sukari, we are committed to delivering on our full year production guidance of 250,000 ounces, a 25% increase in production from 2011. The full year cash cost forecast remains at US$550 per ounce at subsidised fuel prices and, inclusive of fuel pre-payments, at approximately US$700 per ounce. Even after fuel advance prepayments, PGM (Centamin's 100% owned subsidiary) is still projected to be able to fund Sukari's 2012 capex from cash flow received from cost recoveries and the operation remains a relatively low cost one. We are on track to further consolidate our position asa significant mid-tier gold producer,with the commissioning of the Stage 4 expansion during 2013 and the on-going ramp-up towards 450-500,000 ounces production per annum from 2015. Our regional exploration efforts within the 160km2 Sukari tenement continue to look promising and with the commencement of drilling at UnaDeriam in Ethiopia our diversification within the highly prospective and under-explored Arabian Nubian Shield is underway.
Josef El-Raghy
Chairman
14 November 2012
CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS
This document contains "forward-looking information" which may include, but is not limited to, statements with respect to the future financial or operating performance of Centamin plc ('Centamin' or 'the Company'), its subsidiaries (together 'the Group'), affiliated companies, its projects, the future price of gold, the estimation of mineral reserves and mineral resources, the realization 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 operations 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. Often, but not always, forward-looking statements can be identified by the use of words such as "plans", "expects", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "targets", "aims", "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 Centamin, its subsidiaries and affiliated companies to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Readers are cautioned that forward-looking statements may not be appropriate for other purposes than outlined in this document. 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 U.S. 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; as well as those factors referred to in the section entitled "Risks and Uncertainties"section of the Management discussion & analysis. The reader is also cautioned that the foregoing list of factors is not exhausted of the factors that may affect the Company's forward-looking statements.
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 document 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. 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.
QUALIFIED PERSON AND QUALITY CONTROL
Information of a scientific or technical nature in this document was prepared under the supervision of Andrew Pardey, BSc. Geology, Chief Operating Officer of Centamin plc and a qualified person under the Canadian National Instrument 43-101.
Refer to the technical report entitled "Mineral Resource and Reserve Estimate for the Sukari Gold Project, Egypt" dated 14 March 2012 and filed on SEDAR atwww.sedar.com, 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.
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