Centamin Egypt Limited-Quarterly Report For the Three Months Ended 30 September 2011
TORONTO, ONTARIO -- (Marketwire) -- 10/31/11 -- Centamin Egypt Limited ('Centamin' or 'the Company') (TSX: CEE)(LSE: CEY) is pleased to announce its results for the three months to 30 September 2011.
HIGHLIGHTS
-- Gold production of 50,539 ounces achieved from the Sukari Gold Mine, 67%
higher than the corresponding period last year and 5% higher than the
previous quarter
-- Cash operating cost of US$635 per ounce, US$3 an ounce lower than the
corresponding period last year (US$638/oz) and 5% higher than the
previous quarter (US$606/oz)
-- Average gold sales price received of US$1,721 per ounce, 39% higher than
the corresponding period last year (US$1,239) and 11% higher than the
previous quarter (US$1,545)
-- Mining production rates returned to normal during the quarter as the
issuing of explosive products by Police Blast Inspectors continued
uninterrupted from late July
-- Process plant throughput reached a quarterly record of 954kt, 58% higher
than the corresponding period last year and 12% higher than the previous
quarter
-- The second secondary crusher was successfully commissioned and the
Company is progressing towards achieving a consistent 5Mtpa processing
rate
-- The Stage 4 10Mtpa plant expansion remains on schedule for commissioning
in Q1 2013 with expenditure to date US$24.6 million
-- Approval and commencement of the Ptah decline that will access the
central 'keel' of the Sukari orebody (Julius Zone)
-- Regional exploration on the Sukari licence continued, with positive
results continuing to be received from the V-Shear prospect, including
28m @ 2.98 g/t (from 11m)
-- Operating profit of US$43.4 million with cash and liquid assets of
US$201.3 million as at 30 September 2011
-- The Company remains on course to achieve production guidance of 200-
210,000 ounces in 2011 at a cash cost of approximately US$550 per ounce
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Q3 2011 Q2 2011 Q3 2010
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Total Gold Production (oz) 50,539 47,991 30,243
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Cash Operating Cost of Production
(US$/oz) 635 606 638
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Average Sales Price (US$) 1,721 1,545 1,239
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Revenue (US$M) 89.1 78.0 38.8
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EBITDA (US$M) 62.0 58.3 28.6
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Basic EPS (cents) 3.97 4.42 1.43
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Josef El-Raghy, Chairman of Centamin, said: 'The Sukari Gold Project has performed in line with management expectations in August and September, generating strong earnings once again and underpinning gold production, which will deliver on the production guidance given for 2011. The investment in our assets, along with both major surface and underground expansion projects, provides the platform to grow the business significantly in 2012 and beyond.'
Centamin will host a conference call on Monday 31 October 2011 at 11:00am (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 (0) 203 140 0693
Participant pass code: 713493#
A live audio webcast of the call will be available on: http://mediaserve.buchanan.uk.com/2011/centamin311011/registration.asp
About Centamin Egypt Limited
Centamin is a mineral exploration, development and mining company that has been actively exploring in Egypt since 1995. The principal asset of Centamin is its interest in the Sukari Gold Mine (resources of 14.5Moz and reserves of 9.1Moz), located in the Eastern Desert of Egypt. Construction at the Sukari Gold Project commenced in March 2007 with first gold being produced on 26 June 2009.
The Sukari Gold Mine is the first 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 Centamin acquired Sheba Exploration Plc and now has interests in 4 mineral licences in Ethiopia where it is conducting further exploration activities.
CHIEF EXECUTIVE OFFICER'S STATEMENT
Operational Performance
Gold production was in line with the Company's revised targets, with open pit mine production rates recovering rapidly during August following a return to normal issuing activities by Police Blast Inspectors. With higher material movements from the open pit, focus returned to Stage 2 pit development and completion of the Stage 1 pit. As a result, nearly a million tonnes of low grade oxide ore was delivered to the Dump Leach operation in preparation for irrigation, and bench working areas increased, providing improved productivities.
Underground stope production increased late in the quarter as multiple stopes came on line whilst development continued in the Amun Decline, as well as in various ore drive and cross cut developments. The progress on these fronts collectively delivered the highest quarterly ore production from the underground to date.
The process plant also delivered record quarterly throughput, driven by both improved productivity as a result of the commissioning of the second secondary crusher as well as improved overall plant availability. Plant metallurgical recoveries, whilst continuing to improve, could and should be better given recoveries were hampered by downtime affecting the ultra fine grinding circuit (liner replacement) and the tails thickener (rake and pump repair). Both areas are now on line and operational.
Underground operating cost per ounce was lower than expected due to the costs of stoping being relatively low compared to the overall contribution in ounces from the underground operation. Conversely the open pit operating cost per ounce was higher than expected due to low material movement in July and resultant lower feed grades due to pit development being behind schedule as a result of the now resolved blast product issues. In addition one-off insurance payments, maintenance costs and a change in lubricant supplier for the power plant added to cost pressure.
It is expected that in the coming quarters these two production areas will increase and decrease respectively in production ounces and relative cost per ounce.
Production Statistics(4)
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Q3 2011 Q2 2011 Q1 2011 Q4 2010 Q3 2010
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Ore Mined - Open Pit(1) ('000t) 2,129 1,039 1,212 2,123 1,682
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Ore Grade Mined - Open Pit Au g/t 0.96 NR NR NR NR
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Total Open Pit Material
Mined ('000t) 5,847 3,030 4,552 5,975 4,916
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Strip Ratio waste/ore 1.8 1.9 2.8 1.8 1.9
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Ore Mined - Underground
Development ('000t) 47 39 41 40 -
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Ore Mined - Underground
Stopes ('000t) 11 4 - - -
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Ore Grade Mined -
Underground Au g/t 10.4 NR NR NR
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Ore Processed ('000t) 954 850 741 773 605
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Head Grade (g/t) 1.82 1.82 1.94 2.30 1.75
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Gold Recovery (%) 85.5 85.0 86.7 88.1 82.6
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Gold Produced - Dump Leach (oz) 2,921 2,765 2,676 2,387 3,049
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Gold Produced - Total(2) (oz) 50,539 47,991 45,204 53,189 30,243
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Surface Operations Cost of
Production $/oz 843 NR
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U/ground Operations Cost
of Production $/oz 208 NR
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Cash Operating Cost of
Production (3) $/oz 635 606 525 498 638
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Gold Sold (oz) 51,570 50,262 63,240 35,150 31,228
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Average Sales Price US$/oz 1,721 1,545 1,405 1,369 1,239
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Notes:-
(1) Ore mined includes 977kt @0.55.g/t delivered to the dump leach.
(2) Gold produced is gold poured and does not include gold-in-circuit at
period end.
(3) Cash operating costs excludes royalties, exploration and corporate
administration expenditure.
(4) With the commencement of underground commercial production the company
will henceforth report underground tonnes, grade and cost/oz.
NR - Not Reported
Open Pit Operations
Staged pit development progressed well during the quarter, with mining focused primarily in the Stage 1 and 2 pits, taking development down to 1016RL and 1100RL respectively. Total material movement from the open pit totalled 5,847kt, which resulted in an increase in high grade ROM stocks (greater than 0.9g/t) to 706kt and an additional 977kt delivered to the dump leach operation.
An additional three CAT 785s dump trucks were commissioned during the quarter to cater for the longer hauls as pit development proceeds at depth and along strike.
Pioneering work continued in the Stage 3 pit in preparation for large scale load and haul activities to commence in 2012.
Underground Operations
Development of the Amun Decline advanced 101m during the quarter, almost reaching the 845 Level take off point. An exploration drive commenced at the 850 Level, which will be used as a platform for extensive down dip and exploratory drilling to determine the broad extent of the Amun Deeps zone. This programme is scheduled to commence late in the first quarter of 2012.
Ore drive development continued on the 890 and 875 Levels (668m) with cross cut development taking place on the 860 (exhaust drive) and 850 levels (122m) with the Main Exhaust Fan successfully installed and commissioned.
Five production slot rises were completed, with stoping commencing on the 920 and 905 Levels bringing a total of four stopes on line by the end of the quarter and contributing approximately 11kt of ore with the balance of 47kt of ore coming from development. With stope development now advanced, a larger contribution of ore production from stope extraction can be expected in the coming quarters.
Process Operations
The process plant achieved a record throughput of 954kt during the quarter, as the Stage 3 secondary crushing circuit continued to be optimised and overall plant availability improved. This delivered a 12% improvement in throughput from the previous quarter. Metallurgical recoveries also continued to improve with better grind and reagent control, but were hampered mid-month with downtime affecting the fine grind circuit as well as the tails thickener. Both of these areas are back on line.
Dump Leach Operations
A total of 2,921 ounces was recovered from the dump leach operation during the quarter, with approximately 977kt @ 0.55g/t delivered for new cell development. This has brought the total ore placed on dump leach pads to approximately 5.1Mt @ 0.50g/t.
Stage 4 Expansion
The 10Mtpa project expansion progressed during the quarter with detailed engineering of the process plant 46% complete. Tender designs have been issued for major equipment items with equipment packages awarded in all key areas. The power plant EPC contract was awarded to Wartsila, a Finnish corporation which manufactures and services power sources and other equipment in natural resources sector, with detailed design and ordering of equipment commencing during the quarter.
Sea water pipeline engineering and design to double the volume of water delivered to Sukari progressed, with tender packages scheduled to go out during the fourth quarter. Initial deposits for mining mobile equipment have been placed with production slots locked in. Tails storage facility expansion has commenced in preparation for the larger deposition rates expected with the expanded plant operations.
As at the end of the quarter the project remained on schedule for commissioning in Q1 2013 with expenditure to date of US$24.6 million.
Underground Expansion
Board approval was received to commence the Ptah Decline that will access the high grade Julius Zone at depth in the northern extent of the Sukari main deposit. It is envisaged that this development will increase the underground production rate to approximately 500,000 tonnes per year from 2013. The anticipated capital cost of accessing this high grade zone will be US$18 million.
Exploration
Sukari Main
Surface diamond drilling continued in the main Sukari deposit on Sukari Hill with 12,734m completed during the quarter. The most significant intercepts included:
D1673 33m @ 2.83 g/t (from 105m)
D1682 73m @ 1.42 g/t (from 472m)
D1684 71m @ 2.59 g/t (from 519m)
As the underground mine further develops it is envisaged that the remaining surface drilling for the main deposit will be limited to two modified surface inclined rigs to target the northern part Sukari Hill, which has historically been difficult to reach. The balance of resource definition drilling will be undertaken from underground drill points and within exploration drives. The Company plans to announce a resource update in Q4 2011.
Sukari Regional Exploration
Both RC and diamond drilling continued on the V-Shear prospect completing 1000m of RC and 1290m diamond drilling during the quarter. The most significant intercepts (all RC) are as follows:
VSRC002 4m @ 100.7 g/t (from 30m) and
10m @ 4.71 g/t (from 151m)
VSRC007 28m @ 2.98 g/t (from 11m) and
12m @ 2.15 g/t (from 52m)
Ethiopia
Mobilisation of resources and personnel into Ethiopia commenced during the quarter with drilling commencement expected at Una Deriam in Q4 2011.
Harry Michael
Chief Executive Officer
31 October 2011
COMPETENT PERSONS STATEMENT
Quality Assurance and Control and Qualified Person
The information in this report that relates to ore reserves has been compiled by Mr Andrew Pardey. Mr Pardey is a Member of the Australasian Institute of Mining and Metallurgy and is a full time employee of the Company. He has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity he is undertaking, to qualify as a 'Competent Person' as defined in the 2004 Edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves' and is a 'Qualified Person' as defined in the 'National Instrument 43-101 of the Canadian Securities Administrators' and 'CIM Definition Standards For Mineral Resources and Mineral Reserves' of December 2005 as prepared by the CIM Standing Committee on Reserve Definitions of the Canadian Institute of Mining. Mr Pardey's written consent has been received by the Company for this information to be included in this report in the form and context which it appears.
The information in this report that relates to mineral resources is based on work completed independently by Mr Nicolas Johnson, who is a Member of the Australian Institute of Geoscientists. Mr Johnson is a full time employee of Hellman and Schofield Pty Ltd and has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a 'Competent Person' as defined in the 2004 edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves' and is a 'Qualified Person' as defined in 'National Instrument 43-101 of the Canadian Securities Administrators'. Mr Johnson consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.
Information in this report which relates to exploration, geology, sampling and drilling is based on information compiled by geologist Mr Richard Osman who is a full time employee of the Company, and is a member of the Australasian Institute of Mining and Metallurgy with more than five years' experience in the fields of activity being reported on, and is a 'Competent Person' for this purpose and is a 'Qualified Person' as defined in 'National Instrument 43-101 of the Canadian Securities Administrators'. His written consent has been received by the Company for this information to be included in this report in the form and context which it appears.
All exploration and resource samples were analysed by Ultra Trace Pty Ltd, Canning Vale, Western Australia. All mine based production samples were analysed by Sukari Assay Laboratory, Egypt.
Refer to the updated Technical Report which was filed in December 2010 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 issue.
FORWARD LOOKING STATEMENTS
Certain information contained in this report, including any information on Centamin's plans or future financial or operating performance and other statements that express management's expectations or estimates of future performance, constitute forward-looking statements. Such statements are based on a number of estimates and assumptions that, while considered reasonable by management at the time, are subject to significant business, economic and competitive uncertainties. Centamin cautions that such statements involve known and unknown risks, uncertainties and other factors that may cause the actual financial results, performance or achievements of Centamin to be materially different from the Company's estimated future results, performance or achievements expressed or implied by those forward-looking statements. These factors include the inherent risks involved in exploration and development of mineral properties, changes in economic conditions, changes in the worldwide price of gold and other key inputs, changes in mine plans and other factors, such as project execution delays, many of which are beyond the control of Centamin.
Nothing in this report should be construed as either an offer to sell or a solicitation to buy or sell Centamin securities.
ABN 86 007 700 352
Contacts:
Centamin Egypt Limited
Josef El-Raghy
Executive Chairman
61 8 9316 2640 or 20 3 5411 259
Centamin Egypt Limited
Katharine Sutton
Head of Investor Relations
61 8 9316 2640 or 20 3 5411 259
katharine.sutton@centamin.com
www.centamin.com.au
Buchanan
Bobby Morse
44 (0) 20 7466 5000
Buchanan
Gabriella Clinkard
44 (0) 20 7466 5000