Financial highlights
· Gross revenue1 for the six months ended 30 June 2019 (“H1”) was US$292.4 million from gold sales of 224,129 ounces at an average realised gold price of US$1,305 per ounce;
· Cash cost of production was US$692 per ounce produced, within annual guidance of US$675-725 per ounce; All-in sustaining cost (“AISC”) was US$940 per ounce sold, within annual guidance of US$890-950 per ounce;
· EBITDA2,3 of US$117.1 million, a 41% EBITDA margin, and profit before tax of US$59.6 million, offers competitive profit margins;
· Adjusted Group free cash flow3,4 generated US$35.7 million, after profit share with our partner, the Egyptian state; Total direct financial payments in Egypt, by way of profit share and royalties, US$ 48.1 million;
· Total Group sustaining, development and growth capital and exploration expenditure of US$58.4 million, in line with annual guidance;
· Strong and flexible balance sheet with no debt, no hedging and cash and liquid assets3 of US$326.6 million, as at 30 June 2019, after payment in May of US$34.7 million for the 2018 final dividend; and
· The Board declares an interim dividend of US$46.2 million (4.0 US cents per share), bringing cumulative dividends paid to shareholders to approximately US$500 million.
Outlook
· Centamin maintains annual guidance for 2019: gold production of 490,000-520,000 ounces, at cash cost2,3 of US$675-725 per ounce produced and AISC2,3 of US$890-950 per ounce sold; Production and free cash flow3,4 expected to be stronger in the second half (“H2”) predominantly driven by improved grades from the open pit; Costs to trend downwards in line with the expected increased production in H2; and
· Centamin baseline outlook for production in 2020 and 2021 of 510,000-540,000 ounces per annum, at cash cost of US$630-680 per ounce produced and AISC of US$870-920 per ounce sold; Baseline outlook excludes any upside from plant and open pit optimisation, underground grade improvement, Cleopatra stoping, and regional exploration; Full details of these baseline estimates and upside drivers can be found in the Operation Review.
1 Gross revenue from gold sales includes US$4.7 million in pre-production gold sales from Cleopatra development ore.
2 Basic EPS, EBITDA, cash cost of production and AISC reflect a provision against prepayments following the removal of fuel subsidies in January 2012 (refer to note 2.4 of the financial statements for further details).
3 Cash cost of production, AISC, EBITDA, Cash, bullion on hand, gold sales receivables, financial assets at fair value through profit and loss and Adjusted free cash flow are non-GAAP measures and are defined at the end of the Financial Review section.
4 Adjustments made to free cash flow, for example acquisitions of financial assets at fair value through profit and loss, which are completed through specific allocated available cash reserve.
Andrew Pardey, CEO commented: “Six months into our tenth year of commercial production, Centamin continues to make good progress delivering on its corporate strategy. The Company is a high margin gold producer, delivering reliable stakeholder returns through strong free cash flow generation.
In-line with the Company’s well-established strategy of returning surplus cash to shareholders, the Centamin Board of Directors are pleased to declare an interim dividend of US$46.2 million, bringing total returns to shareholders in dividends since 2014 to c.US$500 million. The Board’s decision to increase the interim dividend was based on the Company’s strong financial position, assessment of near and medium-term capital allocation and confidence in future cash flow generation.
Looking forward, as the outlook for the business continues to improve, in the second half of 2019 we expect to deliver stronger production and increasing free cash flow. Today, Centamin has provided baseline estimates for Sukari’s production and cost guidance through to 2021 on a mining plan that is designed to maximise returns to all of our stakeholders through the delivery of profitable ounces.
We are confident in the delivery of this baseline outlook and are focused on driving further future growth and value enhancing opportunities.”
Conference Call and Webcast Presentation
The Company will be hosting a conference call and webcast presentation today, Wednesday, 31 July at 08.30 BST to discuss the results with investors and analysts.
Please find below the required participation details for the call:
Conference call
Dial-in telephone number: +44 203 936 2999
Participant access code: 629086
Webcast presentation
Follow this link to join the webcast: https://www.investis-live.com/centamin/5d1b17539add6d1100e71d87/zpzp
A replay of the webcast will be made available on the Company website by the close of business today.
