Centamin releases 3Q21 report

Highlights

• Gold production for 3Q21 was slightly ahead of schedule at 103 546 oz, bringing production for the nine months of the year (YTD) to 307 821 oz, and the company remains on track to achieve 2021 production guidance.
• Revenue generated of US$182.9 million from gold sales of 103 514 oz at an average realised gold price of US$1764/oz sold.
• Cash costs of US$846/oz produced (YTD: US$820/oz) and all-in sustaining costs (AISC) of US$1266/oz sold (YTD: US$1197/oz), and the company remains on track to achieve 2021 cost guidance.
• Adjusted group free cash flow of US$6.9 million (YTD: US$23.8 million) was ahead of budget reflecting stronger gold price partially offset by increased mining costs driven by more open pit material mined.
• Growth capital projects progressed on schedule with US$67.6 million of CAPEX (YTD: US$146.9 million).
• Egyptian exploration bid round terms signed and finalised, securing approximately 3000 km2 of highly prospective greenfield landholding within the Eastern Desert of the Egyptian Arabian Nubian Shield.
• Strong balance sheet with no debt, no hedging and cash and liquid assets of US$256.1 million, as at 30 September 2021, after US$46.1 million interim dividend distribution on 30 September 2021.
• Full COVID-19 protocols remain in place and operations, supply chains and gold shipments have not been materially impacted.

Martin Horgan, CEO, commented: “This quarter marked another period of solid operational delivery. We entered the final quarter in a good position and remain firmly on track to meet our stated guidance for 2021. As outlined at the recent geology capital markets event, the company has been busy progressing several growth projects at the same time as delivering the Sukari operational reset. Centamin continues to generate positive free cash flow whilst delivering increased investment into key capital projects, underpinning the long-term sustainability of Sukari. Further to this, we very much look forward to updating the market on the results of our Sukari Life of Asset optimisation work, which we expect to announce on Wednesday the 1st of December.”

Outlook

On track to meet full year 2021 guidance.

• Gold production guidance maintained: 400 000 – 430 000 oz, targeting the midpoint of 415 000 oz.
• Cost guidance maintained: cash costs of US$800 – US$900/oz produced and AISC of US$1150 – US$1250/oz sold, targeting the lower half of both the guidance ranges.
• CAPEX guidance maintained: US$225 million, with a 65% spend in 2H21 (previously 55%) due to timing adjustments to the payment schedule.
• Exploration expenditure guidance maintained at US$17 million.
• The company will publish updated Sukari mineral reserve and resource statements and the results of the Sukari Life of Asset (Phase 2) optimisation work programme on 1 December 2021.

Production (3Q21 vs 2Q1)

Sukari gold production for the quarter was 103 546 oz, a 3% improvement q/q and slightly ahead of budget. YTD gold production for the first nine months of the year was 307 821 oz and remains on track to meet 2021 guidance.

Opencast mining

Record quarterly total material moved (waste + ore) of 31.7 million t (YTD: 79.8 million t), a 24% increase q/q, driven by improved operating efficiencies and productivities leading to continued owner-operator fleet outperformance and contract-mining reaching capacity run rate ahead of schedule.

Opencast ore mining in 3Q21 continued to focus on the Stage 5 North and Stage 4 West areas. Total open pit ore mined for the quarter was 2.9 million t (YTD: 9.7 million t), a 4% reduction q/q, at an average mined grade of 1.02 g/t gold (Au) (YTD: 0.84 g/t Au), a 34% improvement q/q driven by scheduled higher grades delivered from Stage 4 West.

Record total open pit waste material mined for the quarter was 28.7 million t (YTD: 70.1 million t), a 27% increase q/q, driven by the continued ramp up of the opencast waste-stripping programme. The owner-operated fleet moved 20.3 million t and the contract-miner moved 8.4 million t of waste material. The strip ratio for the quarter was 9.9:1 (waste:ore) (YTD: 7.2:1). Collectively, year to date, the owner operator and contractor have outperformed the schedule by 17%.

Underground mining

Total material mined (waste + ore) of 301 000 t (YTD: 871 000 t), a 4% reduction q/q.

Total ore mined was 201 000 t (YTD: 594 000 t) at an average combined (stoping and development) grade of 4.47 g/t Au (YTD: 4.94 g/t). In line with the mine plan, this represented a 10% reduction in ore tonnes q/q and a 4% reduction in grade q/q.

The underground ore split was 138 000 t of ore mined from stopes, at an average grade of 4.69 g/t Au, and 63 000 t of ore mined from development, at an average grade of 4g/t Au.

The Sukari underground mining tender process progressed well during the quarter. The independently run process has reached the evaluation phase, including assessing several competitive contractor proposals and a cost and risk benefit analysis of both contract-mining versus owner-operator mining the underground operations.

Processing

The plant processed 2.9 million t of ore (YTD: 8.7 million t), a 3% increase q/q, at an average feed grade of 1.29 g/t Au (YTD: 1.21 g/t), a 10% improvement q/q. There were several planned maintenance projects completed during the quarter, including mill relining and polyurethane coating spray. The metallurgical gold recovery rate was 88.7% for the quarter (YTD: 89.1%), less than a 1% reduction q/q.

During the quarter, the low-grade stockpiles increased from 18.8 million t to 18.9 million t at 0.46 g/t Au.

Exploration

Total exploration expenditure in the quarter was US$2.7 million (YTD: US$7.5 million).

Doropo Project (Côte d’Ivoire): Pre-feasibility study (PFS) progressed throughout the quarter, including commencing the 70 000 m reverse circulation and environmental and social impact assessment (ESIA) baseline work programme. The PFS remains on track for completion during mid-2022.

ABC Project (Côte d’Ivoire): An updated mineral resource estimate was announced in September, doubling the gold mineral resource to 2.16 million oz at 0.93 g/t inferred. A further contiguous permit was secured – the Windou permit – which extends the landholding along the Sassandra Fault system to 90 km. Soil sampling ongoing across all three permits, Farako-Nafana, Kona and Windou with the aim of delineating additional exploration targets for further investigation.

Egyptian Bid Round: Finalised and signed exploration terms, securing approximately 3000 km2 of highly prospective greenfield acreage within the Eastern Desert of the Egyptian Arabian Nubian Shield:

• Nugrus Block (1086 km2) – the licenses surrounding the Sukari Mining Concession targeting potential satellite deposits and low CAPEX mill feed to the Sukari processing plant.
• Najd Block (1374 km2) – located 100 km northwest of Sukari in the Central Eastern Desert, exploring for a potential standalone operation.
• Um Rus Block (524 km2) – is a new block of licenses, located 40 km north of Sukari, exploring for a potential standalone operation. Note: The previously announced Samyoky Block (705 km2) has been relinquished for the preferred Um Rus block.

Read the article online at: https://www.globalminingreview.com/finance-business/19102021/centamin-releases-3q21-report/