Centamin — Q3 2018 Earnings Presentation
35 slides from Centamin's earnings presentation, Nov 1, 2018
Slide 1: Q3 2018 Results Presentation
Q3 2018 RESULTS PRESENTATION 1 November 2018
Slide 2: Disclosures
DISCLOSURES Forward Looking Statements Forward Looking Statements: There are risks associated with an investment in the shares of expressed or implied by the forward-looking statements. Such factors include, among others, Centamin plc (“Centamin” or “the Company”). Recipients of this presentation sh
Slide 3: Temporary Production Challenges
TEMPORARY PRODUCTION CHALLENGES Successfully being addressed 2018 YTD 2018 FULL YEAR units Q3 2018 Q2 2018 % change 9Mon 30 Sept 2018 Guidance(1,2,3) Gold production oz 117,720 92,803 27% 334,819 480,000 Cash costs of production US$/oz produced 619 714 (13%) 631 625-640 All-in sustaining cost US$/oz
Slide 4: 2018 Production Guidance
2018 PRODUCTION GUIDANCE REVISED FULL YEAR GUIDANCE Q3 2018 2018 YTD Q4 2018 units (1) GUIDANCE GUIDANCE (3) (2) 9 Jan 2018 ACTUALS ACTUALS FORECAST 05 Jun 2018 1 Nov 2018 Open pit Total material mined Mt 70.5 75 19.9 56.8 19.7 76.5 Total ore mined Mt 17.7 20 6.6 18.1 4.6 23 Overall grade g/t 0.7 0.
Slide 5: Board and Senior Management Structure
BOARD AND SENIOR MANAGEMENT STRUCTURE Commitment to highest standard of corporate governance BOARD OF DIRECTORS Josef El- Strong, balance, multidisciplinary Ind’t Non - Succession process Board Raghy Executive underway Executive • Dr Ibrahim Fawzy joined the Chairman Chairman Board in Q3. • Dr Fawzy
Slide 6: Investment Case
INVESTMENT CASE Supported by strong fundamentals Asset Quality Financial Flexibility Large, world class asset : Top 10 Tier One Assets by AISC, production and LOM US$292m cash and liquid assets as at 30 Sept 2018 Low cost, bulk tonnage mine No debt >20yrs LOM (vs gold sector avg ~10yrs*) with reserv
Slide 7: World Class Asset
WORLD CLASS ASSET Bulk tonnage, low cost, long life mine Top 10 Global Tier One Assets by 2017 AISC (US$/oz) $749 $752 $705 $709 $722 $643 $661 $588 $533 $493 Cortez Olimpiada Sukari Cadia Merian Kumtor Loulo-Gounkoto Pueblo Viejo Kalgoorlie Kibali (Barrick) (Polyus) (Centamin) (Newcrest) (Newmont -
Slide 8: Proven Operational Track Record
PROVEN OPERATIONAL TRACK RECORD In a new mining frontier 700 Commissioned Commenced Plant expansion $2,100 /oz Stage 1, 4Mtpa underground Fuel subsidy Short-term issues removed to 10Mtpa plant mining being addressed 600 $1,800 /oz 551 545 480 500 $1,500 /oz 439 400 357 377 146 $1,200 /oz 300 263 $90
Slide 9: Long Term Sustainability
LONG TERM SUSTAINABILITY Successful track record achieving resource expansion Resource Evolution (Moz Au) Sukari Open Pit Reserves Since 2013 (koz Au) Only a fraction of the Company’s resources have been extracted to date 7,700 528 7,200 (1,028) 2.4 2.9 1.3 ~50% reserve 1.8 replacement 1.9 1.0 1.9 2
Slide 10: Operational Review
OPERATIONAL REVIEW
Slide 11: Open Pit
OPEN PIT Mining Stage 4 Q3 2018 OPEN PIT OPEN PIT ORE MINED GRADE AND FEED GRADE 1.40 ▪ Completed mining of the Stage 4 transitional zone, as 1.20 Start of Stage 4A guided 1.00 ▪ Record material moved of 19.9Mt 0.80 0.60 ▪ Record ore tonnes mined of 6.6Mt @ 0.64 g/t, 0.40 comprising: 0.20 ➢ 2.7Mt @
Slide 12: Open Pit: Grades improving slightly ahead of expectations
OPEN PIT Grades improving slightly ahead of expectations Factors impacting Cause Response Q3 Outcome performance ✓ Stage 4 mining of the transitional ✓ Enhanced grade control drilling zone complete ✓ Personnel change ✓ 20% increase in ore tonnes, • Transitional zone thicker than ✓ Increase mining ra
Slide 13: Underground
UNDERGROUND Significant operational turnaround; further improvements to come Q3 2018 UNDERGROUND UNDERGROUND ORE MINED AND AVERAGE GRADE ▪ Total production 327kt at 5.18g/t, a 12% improvement 350 12.0 in grade QoQ 300 10.0 ▪ Production from stoping, 199kt at 6.16g/t 250 8.0 ▪ Ore from development 12
Slide 14: Underground: Significant operational turnaround
UNDERGROUND Significant operational turnaround; further improvements to come Factors impacting Cause Response Q3 Outcome performance ✓ LHDR fully operational; No ‐ Repaired LHDR equipment utilisation or • Long hole drill rig ("LHDR") ‐ High-grade stope sequence availability issues to report; damaged
Slide 15: Processing
PROCESSING Exceeding 12.5Mtpa Q3 2018 PERFORMANCE PLANT PERFORMANCE 1,550 91% ▪ Strong performance across the process plant 1,500 90% 1,450 ▪ Plant throughput of 3.1Mt 1,400 89% 88% ▪ Head grade of 1.29g/t, a 31% increase QoQ 1,350 87% 1,300 ▪ Improved metallurgical recovery rates to 88.7% 1,250 86%
Slide 16: Financial Review
FINANCIAL REVIEW
Slide 17: Q3 2018 Financial Review
Q3 2018 FINANCIAL REVIEW Robust financial position • Maintained strong and flexible balance sheet of US$292.2m cash and liquid assets, after payment of US$28.9m interim dividend; • Negative Group free cash flow of US$1m, driven by timing of gold sales receipts vs production; Q4 expects to be highly
Slide 18: Cost Management
COST MANAGEMENT Bottom half of global gold producing cost curve1 Q3 2018 PERFORMANCE Q3 2018 COST REVIEW ▪ The build-up in stockpiles has 2018 FULL helped to reduce costs YEAR Q3 2018 Q2 2018 % change YTD 2018 ▪ Minimised cost inflation Guidance (2,3,4) pressures Average realised sales US$/oz 1,206
Slide 19: Cost Breakdown
COST BREAKDOWN Q3 2018 PERFORMANCE Other 9% 10% Other 9% 9% ▪ FX and split between cost centres Labour 9% 9% AUD 15% 15% remained largely flat QoQ ▪ Fuel price remained flat Q2 2018 to Q3 Fuel 20% 19% 2018; but volume of fuel increased 24% ▪ Solar feasibility study: EGP* 26% ▪ Detailed tender proces
Slide 20: Continued Focus on Cost Control
CONTINUED FOCUS ON COST CONTROL Q3 MINE PRODUCTION COSTS (US$M) Q3 OPERATING COSTS PER TONNE (US$/t) 2.00 Mine production costs of US$81.5m, 1.50 up 8% QoQ 1.00 0.50 0.00 $0M Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2015 2015 2015 2015 2016 2016 2016 2016 2017 2017 2017 2017 2018 2018 2018 $5M O
Slide 21: 2018 Group Free Cash Flow Projection
2018 GROUP FREE CASH FLOW(1) PROJECTION CASH FLOW 2018 YTD INDICATIVE Q4 2018 CASH FLOW (2) CASH FLOW 2018 REVISED GUIDANCE 9Mon ACTUALS At 145koz; Au US$1200; AISC US$745/oz(2) 9Mon ACTUALS + 3Mon INDICATION 480koz; AISC US$890/oz Excess Cash Flow 1. Free cash flow is a non-GAAP measure and is defi
Slide 22: Prioritising Shareholder Returns
PRIORITISING SHAREHOLDER RETURNS Continual dividend stream Dividend Policy Min dividend 30% of Sukari cash flow Maintain min $250-$300m cash balance Growth capital investment Excess Cash returned to shareholders as dividend build $242 $142 Free Cash Flow $115 (US$ mm) $38 $36 2014 2015 2016 2017 H1
Slide 23: Financial Flexibility
FINANCIAL FLEXIBILITY Robust financial position CLEAN BALANCE SHEET Q3 BALANCED CASH FLOW DISTRIBUTION Operating Cash Flow US$292m cash & liquid assets* SUSTAINING CAPEX & EXPLORATION Interim dividend US$29m payout Investment in future growth 43% No debt PROFIT SHARE & ROYALTIES 34% Contribution to
Slide 24: Exploration Review
EXPLORATION REVIEW
Slide 25: Group Exploration Pipeline
GROUP EXPLORATION PIPELINE CAPEX lite, self-funded, organic growth pipeline NEAR TERM SUSTAINABILITY Sukari Underground Sukari Underground Cleopatra Exploration Decline Amun/Ptah Decline Resource extension drilling continued to return excellent Successful early stage results identifying good grades
Slide 26: Unlocking Sukari's Full Potential
UNLOCKING SUKARI’S FULL POTENTIAL Sukari Underground long-section: Q3 2018 drill intercepts highlights NEAR TERM SUSTAINABILITY 26 26
Slide 27: Unlocking Sukari's Full Potential
UNLOCKING SUKARI’S FULL POTENTIAL Amun/Top of Horus cross-section; Q3 2018 drill intercepts highlights Excellent results: ➢ outside of the existing resource ➢ Near to current development Sustainability: ➢ Future upside potential for UG mine ➢ Testing potential at depth to the South 27
Slide 28: Unlocking Sukari's Full Potential
UNLOCKING SUKARI’S FULL POTENTIAL Regional field exploration to identify the porphyry source RED SEA 5km Marsa Alam Sukari North Prospects N ▪ Sukari is a world-class gold district (+15Moz) hosted on a major Arabian Sukari V Nubian Shield thrust belt Mine Shear ▪ Sukari Resources are currently drill
Slide 29: Diversified Portfolio
DIVERSIFIED PORTFOLIO Active exploration and potential development pipeline in West Africa Q3 WORK PROGRAMME ▪ US$4.7m Q3 West Africa exploration spend ▪ Doropo Project, Cote d’Ivoire ▪ 22,500m drilled targeting resource extension ahead of updated resource estimation in Q1 2019 and regional, near re
Slide 30: Medium Term Growth
MEDIUM TERM GROWTH Doropo Project, Cote d’Ivoire potential to be next development project PEA UPDATE Q3 DRILL HIGHLIGHTS 37m @ 6.4g/t 10m @ 6.4g/t 15m @ 8.4g/t ▪ Geotechnical and 40m @ 2.7g/t 6m @ 9.4g/t 9m @ 9.7g/t 12m @ 6.5g/t hydrological studies 11m @ 5.5g/t 5m @ 10.7g/t complete ▪ Metallurgical
Slide 31: Doropo Project, Côte d'Ivoire
DOROPO PROJECT, CÔTE D’IVOIRE PEA underway; Targeting maiden reserve H1 2019 Q3 RESULTS – NOKPA DEPOSIT Q3 DRILL HIGHLIGHTS – NOPKA DEPOSIT One of the core structures within the Resource area Highlights include: • Continues to return encouraging results • 10m @ 6.4g/t – from 26m downhole depth • Inf
Slide 32: Long Term Growth Opportunity
LONG TERM GROWTH OPPORTUNITY ABC Project, Cote d’Ivoire – greenfield exploration KONA PERMIT, LOLOSSO STRUCTURE ▪ Geological mapping confirmed Lolosso structure extends ~60km, over the FarakoNafana permit ▪ Prelim met work shows no issues. Detailed met work expected in H2 2018 ABC Project license ho
Slide 33: ABC Project, Côte d'Ivoire
ABC PROJECT, CÔTE D’IVOIRE Targeting maiden resource LOLOSSO STRUCTURE, SOUTHERN ZONE ▪ Wide spaced systematic 100m reconnaissance drill programme ▪ Identifying some encouraging mineralised zones ▪ Follow up tighter spaced drilling underway in Q4. Lolosso structure, cross-section showing continuatio
Slide 34: Key Catalysts
KEY CATALYSTS Near term deliverables Continue to deliver operational improvements at Sukari ❑ Deliver updated guidance of 480koz @AISC nearing the top end of the range, US$875-$890/oz sold ❑ Return excess free cash flow generated to shareholders ❑ Deliver Sukari solar project feasibility study ❑ Con
Slide 35: Contacts
Andrew Pardey Chief Executive Officer Ross Jerrard Chief Financial Officer Alexandra Carse Investor Relations