Josef El-Raghy, Chairman of Centamin, commented: "Testament to the quality of our team and the quality of our assets, the past year has seen the Company firmly consolidate its position as one of the world’s leading low cost gold producers. The Sukari Gold Mine produced 544,658 ounces of gold in 2017, at a cash cost of production of US$554/oz and all-in sustaining cost of US$790/oz at an average realised gold price of US$1,261/oz, generating US$676 million in revenue, US$326 million in EBITDA and US$224 million in pre-tax profits. Commercially in operation for eight years, Sukari has maintained cash costs in the lowest quartile in the industry, averaging US$614/oz since commercial production commenced in 2010.
The central tenet of our corporate strategy is delivering returns to stakeholders. Following a strong operational and financial performance throughout the year, the board of directors is delighted to propose a final dividend for 2017 of 10 US cents per share, for approval at the forthcoming Annual General Meeting on 26 March 2018. This represents a proposed full year dividend of 12.5 US cents per share, totalling a full year pay-out of US$144 million, which is equivalent to approximately 100% of our free cash flow in 2017.”
Fourth Quarter, ending 31 December 2017.
? Cash costs of production of US$453 per ounce, a 6% improvement quarter on quarter (“QoQ”) on Q3 2017 and a 15% improvement year on year (“YoY) on Q4 2016, driven predominantly by an increase in ounces produced. The benefits of an increase in produced ounces (driven by increases in processed tonnes and grade) was slightly offset by an increase in fuel and reagent costs;
? All-in sustaining costs (“AISC(1)“) of US$744 per ounce sold, were 2% higher QoQ and 3% higher YoY, mainly due to increased production costs and higher sustaining capital costs as a result of the planned fleet rebuilds.
Full Year, ending 31 December 2017
? Strong cash flow generation with US$142 million of free cash flow(1) generated in 2017, down 41% on the prior year (2016: US$242 million) almost entirely due to the impact of increased profit share payments;
? 2017 revenues of US$676 million were down 2% on the prior year (2016: US$687 million) with a 0.4% increase in realised gold prices offset by a decrease in gold sales;
? Cash costs increased to US$554 per ounce produced (2016: US$513), driven predominantly by an increase in mined and processed tonnes and an increase in fuel and reagent costs;
? AISC(1) of US$790 per ounce sold matched our forecast but was an increase on the prior year (2016: US$694), mainly due to increased production costs and higher sustaining capital costs resulting from planned fleet rebuilds;
? EBITDA(1) decreased by 13% to US$326 million, as a result of increased production and operating costs and the slight decrease in revenues;
? Profit before tax decreased by 16% to US$224.1 million, due to the factors outlined above;
? Earnings per share after profit share of 9.51 US cents were down 49% on the prior year due to lower revenue, higher costs and, most significantly, the impact of the first full year of profit share (2016: 18.71 US cents);
? Operational cash flow of US$359 million was 2% lower than 2016, due to the lower gold production base with higher gold prices offset by a higher cost base;
? Total capital expenditure for 2017 of US$107.5 million was a 2% increase on the prior year (2016: US$105.6 million). The US$19 million increase in sustaining capital (including the scheduled fleet rebuild programme) was largely offset by a US$17 million reduction in the non-sustaining capitalised exploration costs across the group;
? Cash and liquid assets (3) of US$418 million at 31 December 2017; and
? Centamin remains debt-free and unhedged.
Proposed Final Dividend
o Subject to shareholder approval at the Company’s annual general meeting on Monday 26 March 2018:
o Proposed final dividend of 10 US cents per share (US$115.2m);
o Total dividend of 12.5 US cents per share, including the interim dividend of 2.5 US cents per share (paid out 29 September 2017);
o Proposed total dividend pay-out of approximately US$144 million, equivalent to approximately 100% of free cash flow in 2017; and
o Record date on 23 March 2018; Pay date on 6 April 2018.
Operational Highlights (1),(2)
? Full year gold production was 544,658 ounces, above guidance of 540,000 ounces and 1% decrease year on year (“YoY”);
? Record processing throughput of 12.0Mt, a 4% improvement YoY and above our base case forecast rate of 11.8 Mtpa.
? Record open pit total material movement (waste plus ore) of 70.9Mt, a 14% improvement YoY.
? Record open pit ore production of 16.09Mt, a 47% improvement YoY, at an average mined grade of 0.66g/t. This included 3,965kt at 0.29g/t delivered to the dump leach pads. The average head grade to the plant from the open pit was 0.89g/t, a 6% decrease YoY; and
? Total underground ore mined of 1.14Mt, a 12% improvement YoY, at a grade of 8.28g/t, an 8% decrease YoY, marking the third consecutive year of sustained annualised rate above our base case forecast of 1Mt per annum.
o Underground ore from stoping was 684kt, a 21% increase YoY, at a grade of 8.88g/t;
o Underground ore from development was 461kt, a 1% increase YoY at a grade of 7.39g/t.
? Exploration at Sukari drives high grade underground reserve expansion in excess of annual depleted mined ounces;
? Exploration success in Côte d’Ivoire has expanded last year’s maiden resource at Doropo Project to 1.35Moz gold Indicated and 0.9Moz gold Inferred, with the main structure remaining open;
? Exciting new discovery at the ABC Project in Côte d’Ivoire where exploration delineated an outcropping 12km strike-length gold bearing structure; and
In Burkina Faso, drilling targeted resource and reserve expansion near Konkera.
? Forecast gold production for 2018 is 580,000 ounces, a 6.5% increase on 2017 actual production, with the mine plan forecasting a relatively balanced quarterly production profile over the year;
? Forecast cash cost of production for 2018 of US$555 per ounce and all-in-sustaining cost of US$770 per ounce;
? 2018 capital expenditure of US$135 million including US$37.5 million for non-sustaining exploration;
? Processing plant throughput of 12.3Mtpa, with the installation of the fourth secondary crusher increasing capacity;
? 70.5Mt total open pit material scheduled to be mined; 17.7Mt total open pit ore scheduled to be mined at an overall grade of 0.70g/t including dump-leach and stock-pile material, with open pit feed grade in line with open pit reserve grade;
? Open pit mining activities will be focused on Stage 4A of the north wall, the predominant source of ore over the next five years;
? 1.3Mt total underground ore scheduled to be mined at a grade of 7.2 g/t; comprising a 65:35 split between stoping and development ore, respectively;
? Ongoing decline development and exploration at Cleopatra, to access the high grade western contact, a key near term growth catalyst; Ongoing underground decline development at Amun and Ptah, to access the Horus, Bast and Osiris zones, which are key drivers of medium term growth;
? Four exploration rigs allocated to focus on underground reserve replacement and resource expansion drilling as the orebody remains open in multiple directions;
? Further resource development in West Africa, with resource expansion and definition continuing at the Doropo Project in north-east Côte d’Ivoire and resource definition drilling in Burkina Faso; and
? Follow up exploration work continues after encouraging first pass drill results from the ABC project in western Côte d’Ivoire delineated an outcropping 12km strike gold bearing structure.
Legal Developments in Egypt
? The Supreme Administrative Court appeal and Diesel Fuel Court Case are both on-going. With the potential for the legal process in Egypt to be lengthy there may be a number of hearings and adjournments before decisions are reached. There were no developments during the year in the two litigation actions.
Q4 2017 Q4 2016 2017 2016
Gold produced ounces 154,298 136,787 544,658 551,036
Gold sold ounces 153,490 130,959 539,726 546,630
Cash cost of production
US$/ounce 453 536 554 513
US$/ounce 744 720 790 694
Average realised gold price
US$/ounce 1,278 1,207 1,261 1,256
US$’000 190,413 158,307 675,510 687,387
US$’000 103,301 81,762 325,927 372,885
Profit before tax
US$’000 81,351 58,870 224,094 266,829
US cents 3.81 3.17 9.51 18.71
Capital expenditure including exploration
US$’000 33.4 25.7 107.5 105.6
Cash generated from operations
US$’000 113,454 69,869 358,811 366,295
(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 Review.
(2) Basic EPS, EBITDA, cash cost of production and AISC reflect a provision against prepayments to reflect the removal of fuel subsidies which occurred in January 2012 (refer to note 12 of the financial statements for further details).
(3) Cash and cash equivalents, bullion on hand, gold sales receivables and available?for?sale financial assets
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