Growth Through Cash Flow Investor Presentation June 2016

Transcription

1 Growth Through Cash Flow Investor Presentation June 2016

2 Disclosures 2 Forward Looking Statements: There are risks associated with an investment in the shares of Centamin. Recipients of this presentation should review the risk factors and other disclosures regarding Centamin contained in the preliminary prospectus and subsequent annual reports and Management Discussion and Analysis reports of Centamin that have been filed with Canadian securities regulators and are available at It should be specifically noted that the potential quantity and grade from the Sukari underground mine is conceptual in nature, that there has been insufficient exploration to define a mineral resource and that it is uncertain if further exploration will result in the target being delineated as a mineral resource. This presentation contains "forward-looking information" (or "forward-looking statements") which may include, but are not limited to, statements with respect to the future financial or operating performance of the Company, its subsidiaries and its projects (including the Sukari Project), the future price of gold, the estimation of mineral reserves and resources, the realization of mineral reserve estimates, the timing and amount of estimated future production, revenues, margins, costs of production, capital, operating and exploration expenditures, costs and timing of the development of new deposits, costs and timing of construction, costs and timing of future exploration, the timing for delivery of plant and equipment, requirements for additional capital, foreign exchange risk, government regulation of mining and exploration operations, environmental risks, reclamation expenses, title disputes or claims, insurance coverage and the timing and possible outcome of pending litigation and regulatory matters. Often, but not always, forward-looking statements can be identified by the use of words such as "plans", "hopes", "expects", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates", or "believes" or variations (including negative variations) of such words and phrases, or statethat certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved. Forward-looking information involves and is subject to known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company and/or its subsidiaries to be materially different from any future results, performance or achievements expressed or implied by the forward-looking information. Such factors include, among others, general business, economic, competitive, political and social uncertainties; the actual results of current exploration activities and feasibility studies; assumptions in economic evaluations which prove to be inaccurate; fluctuations in the value of the United States dollar and the Canadian dollar relative to each other, to the Australian dollar and to other local currencies in the jurisdictions in which the Company operates; changes in project parameters as plans continue to be refined; future prices of gold and other metals; possible variations of ore grade or recovery rates; failure of plant, equipment or processes to operate as anticipated; accidents, labour disputes or slow downs and other risks of the mining industry; climatic conditions; political instability, insurrection or war; arbitrary decisions by governmental authorities; delays in obtaining governmental approvals or financing or in the completion of development or construction activities. Discovery of archaeological ruins of historical value could lead to uncertain delays in the development of the mine at the Sukari Project. Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking information, there may be other factors that cause actions, events or results to differ from those anticipated, estimated or intended. Forward-looking information contained herein is made as of the date of this presentation and the Company disclaims any obligation to update any forward-looking information, whether as a result of new information, future events or results or otherwise. There can be no assurance that forward-looking information or statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information or statements. Accordingly, readers should not place undue reliance on forward-looking statements. Competent Persons: Information in this presentation which relates to resource, reserve, exploration, geology, sampling and drilling is based on information prepared and approved 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 of the Canadian Securities Administrators. Refer also to the technical report entitled Mineral Resource and Reserve Estimate for the Sukari Gold Project, Egypt dated30 January 2014 and filed on SEDAR at 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 otherrelevant issues.

3 3 Growth Company at Bottom of Cycle Asset Quality Cash Flow Shareholder Returns Growth World class Sukari mine in Egypt 20+ years L.O.M US$186m CFO 2015 US$60m CFO Q US$276m in cash and liquid assets Zero debt Share price outperformance (+165% since Jan-14) (+97% since Jan-15)* Peer leading dividend Sukari optimising production growth beyond base case Exploration in highly prospective West Africa Social Responsibility *As at 24-June Compared with FTSE Gold Mines Index +31% since Jan-14 and +58% since Jan-15

4 4 Centamin at a Glance Sukari Gold Mine, Egypt Operating mine Production since Moz resource 8.8Moz reserve Expected +20-year mine life Burkina Faso Advanced exploration 2,200km 2 licence holding 3.2Moz resource at Konkera Multiple prospects along >100km structure Focus on high grades near surface >270,000m drilled to date Côte D Ivoire Early stage exploration 1,520km 2 licence holding +1,800km 2 licences under application Highly prospective across the border from Burkina Faso Production 2016 guidance 470koz at US$900/oz AISC c.500koz p.a. from 2017 with reducing AISC Financial 2015 Revenues - US$508m 2015 EBITDA - US$205m Q EBITDA: US$67.5m Cash & liquid assets: US$276m Debt: zero

5 5 Centamin in 4 Key Charts Sukari LTIFR per 200,000 hours Safety zero-harm target -90%,000 ounces Au Production * consistent growth 1,000 Cash Costs * delivering reductions 500 Cash Build * post div & exploration 100 US$ per ounce US$m (balance sheet) US$m (cash flow) Cash Cost of Production AISC Exploration Dividend Cash & Liquid Assets * Total gold production includes estimated production from the underground mine. Note that the potential quantity and grade of the forecast underground production is conceptual in nature. There has been insufficient exploration to fully define a mineral resource and it is uncertain if further exploration will result in the target being delineated as a mineral resource

6 6 Free Cash Flow: Financing Dividend and Growth YTD F 2017F 2018F 2019F Gold Production koz Realised Gold Price US$/oz 1,570 1,667 1,384 1,258 1,159 1, Revenue US$m Cash Cost of Production US$m (113) (176) (237) (275) (313) (76) (320) (317) (319) (316) US$/oz Cash Operating Margin US$m Royalty US$m (13) (13) (15) (14) (15) (4) (17) (18) (18) (18) Other cost of sales US$m (8) Capex - Underground US$m (32) (45) (30) (31) (31) (9) (35) (32) (32) (32) Capex - Other Sustaining US$m (22) (3) (61) (9) (5) (3) (40) (59) (47) (47) Corporate G&A US$m (5) (10) (11) (13) (15) (2) (13) (13) (13) (13) AISC US$m (182) (238) (343) (340) (388) (94) (424) (438) (429) (426) US$/oz Change in Working Capital US$m (15) 12 (41) (55) Profit Share US$m (48) (57) (71) Operational Free Cash Flow US$m Capex - Growth US$m (62) (176) (177) (23) 0 0 0??? Exploration - Growth US$m (23) (15) (15) (26) (34) (13) (25) (25) (25) (25) Dividend Paid US$m (10) (34) 0 (34) (34) (34) (34) Other Investing & Financing Cash Flow US$m (4) (2) (1) 3 (5) Free Cash Flow US$m 54 8 (73) Effect of FX on cash balance US$m 1 3 (3) (2) (2) (1) Cash & Liquid Assets US$m The staged expansion of Sukari was funded from Free Cash Flow Projected cash build (after dividend & exploration) finances next-stage growth * Total gold production includes estimated production from the underground mine. Note that the potential quantity and grade of the forecast underground production is conceptual in nature. There has been insufficient exploration to fully define a mineral resource and it is uncertain if further exploration will result in the target being delineated as a mineral resource

7 7 Focus on Cost Control Year-on-year decrease in operating costs per tonne mined/milled Fuel price reductions a key factor in 2015 Focus from 2016 to drive costs below current forecasts Potential improvements in productivity as the expanded operation is optimised Open Pit US$ per tonne mined UG US$ per tonne mined * Processing US$ per tonne milled YTD 2016F onward YTD 2016F onward YTD 2016F onward *Cost of stoping divided by the ore tonnes mined from stoping. Note that development is treated as a sustaining capital cost

8 Sukari Gold Mine 8

9 9 The Sukari Gold Mine Concession Agreement (Law 222 of 1994) Law 222 of 1994 concession agreement issued by way of Presidential decree and enshrined in Egyptian law 160 km 2 exploitation license to 2031 and option to extend for further 30 years to 2061 No taxes (corporate/vat/ etc) and duties for 15 years from 2010 and option to extend for further 15 years to % royalty Profit Share following full cost recovery due to commence in 2017 CENTAMIN PLC Resources / Reserves 14.0Moz M&I / 8.8Moz P&P 100% Gold Production 1.9Moz produced to date since % operating surplus* ( Profit Share ) PHARAOH GOLD MINES 50% SUKARI GOLD MINES 50% EMRA 50% operating surplus ( Profit Share ) 3% royalty to ARE * An additional 10% of proceeds is paid to PGM in the first 2 years of Profit Share, reducing to 5% in the following 2 years Life of Mine Investment to date Employees/suppliers ~20 years US$2.3bn (capex and opex) US$101m paid to end 2015 in royalty plus advances on Profit Share (at CEY discretion) c.1,300 Egyptians and 70 expats >270 Egyptian company suppliers

10 10 Sukari: 2 mines in km N Porphyry Open pit mine Final pit shell at end of c.20-year mine life 0.8km 1.0 km Looking East Underground mine Mined stopes Current development Planned development N Looking North

11 11 Sukari Open Pit c.190mt total material mined to date; c.1,550mt remaining* Mining rates scaled up from 2013 to feed the expanded process plant Base case target of 66-67Mt p.a. total material movement (~5.9x life-of-mine strip ratio) Fleet supports up to 100Mt p.a. mining rate Million Tonnes Open pit head grades reverting towards reserve average in Grade (g/t) OP ore mined OP Plant Feed Grade OP waste mined Reserve grade Final open pit shell (20-year mine life) LOM ore remaining in reserve*: 1.09g/t = 8.0Moz * Basis June 2015 reserve statement (see appendix)

12 12 Underground and Open Pit Mining to Date N Ore Mined ( 000 tonnes) 1,400 1,200 1, Looking East Underground a strong ramp-up to base case 1Mpta at 6g/t reserve grade Grade (g/t) Mined stopes Current development Development ore Stoping ore Mined grade Looking North

13 13 Sukari Underground: Long Life of Mine Recent results from underground drilling (subsequent to June 2015 reserve estimate) 17.9g/t 6.8g/t 111g/t 6.7g/t 13.6g/t 9.1g/t 50.8g/t 12.5g/t Ptah Life-of-mine access to depth extents. 2.5 km 258g/t 150g/t 48.2g/t Stopes mined 2010 to date 289g/t Amun Initial focus area for mining. 78g/t 39.8g/t 46.1g/t 108g/t N Final open pit c.1,550mt ore + waste Amun - Looking North UG grade (g/t Au)

14 14 On the Path Towards 12Mtpa 11Mtpa base case processing rate achieved from Q Process optimisation is on-going, aimed at targeting 12Mtpa Plant 1 (Stage 3) operated consistently 15-20% 5Mtpa nameplate from Q Stage 4 (nameplate 10Mtpa) Mtpa Stage 3 (nameplate 5Mtpa) Million Tonnes 0.5 Q Q2 Q3 Q4 Q Q2 Q3 Q4 Q Q2 Q3 Q4 Q Q2 Q3 Q4 Q Q2 Q3 Q4 Q Nameplate Plant 1 Ore Processed Plant 2 Ore Processed

15 Centamin s upside 15

16 16 Sukari: Production Upside Through Optimisation Plant throughput - target c.12mtpa vs. current 11Mtpa forecast Plant recovery - target 90% vs. current 88% forecast Underground - infrastructure capacity of c.1.5mt p.a. ore vs. current mining rate of Mtpa Open pit - fleet capacity in excess of forecast 66Mtpa mining rate

17 17 Sukari: Regional Exploration Sukari 160km 2 licence contains multiple prospects identified by geochemical anomalies Potential for both high grade (structurally-controlled) and lower-grade (intrusive-related) satellite deposits Limited drilling beyond Sukari Hill 26g/t Au 2.2g/t Au 5g/t Au 4.1g/t Au 20.8g/t Au 55g/t Au 29.2g/t Au 13.5g/t Au

18 18 Growth Beyond Egypt: Focus on Exploration Limited high-quality acquisition targets within our focus regions (Africa & Arabian-Nubian Shield) Centamin s exploration strategy is focused on: - Significant land holdings in prospective regions - Operating in stable jurisdictions with attractive fiscal regimes - Becoming a multi-asset gold producer maintaining lowest quartile cost profile 2016 exploration budget (outside Sukari) of US$25m Metres drilled by CEY (post-acquisition) Burkina Faso Côte D'Ivoire Diamond 14,097 - RC 255,425 24,492 Air Core 121,431 40,446 Auger 97,590 72,911

19 19 West Africa: District Scale Exploration c.2,200km 2 in Burkina Faso c.1,520km 2 in Côte D Ivoire + c.1,800km 2 under application Existing 3.2Moz resource* at Konkera Multiple high-grade areas (focus on Wadaradoo and Napelapera) *1.9Moz Indicated & 1.3Moz Inferred Resource at Konkera prospect

20 20 Burkina Faso: Wadaradoo One of Several Emerging Prospects Numerous high-grade targets along a +5km trend Mineralisation along main shear and secondary structures Potential porphyry- and granitoid-hosted areas Positive preliminary metallurgical testwork

21 21 Côte D Ivoire Early Stage Exploration Initial results support exploration model within granitoids Similar geology and structural trends as the Napelapera prospect in Burkina Faso

22 Summary 22

23 23 Self-Funding the Next-Stage of Organic Growth Forecast year end cash balance post-profit Share*, dividend (at 2015 level) and exploration US$1,400/oz gold US$ million US$1,200/oz gold Ability to fund next-stage project development from forecast cash reserves F 2017F 2018F 2019F Cash Held as Treasury Cash Build at US$$1,200/oz gold Cash Build at US$$1,400/oz gold * Profit Share forecasts are estimated as per the terms of the Concession Agreement. Centamin elected to make advance payments against future profit share between 2013 and 2015 to the value of US$28.75 million, in order to demonstrate goodwill towards the Egyptian government. The recovery of these prepayments has not been included in these forecasts

24 24 Summary: Shareholder Returns and Value-Driven Growth TRACK RECORD OF PROJECT DELIVERY Sukari staged construction delivered on budget Staged expansion = no debt requirement 2016 guidance 470koz rising to c.500koz in 2017 NEXT-STAGE GROWTH Funded from excess cash flows Advanced exploration in Burkina Faso Long-term growth from Cote D Ivoire FREE CASH FLOW No further expansion capex at Sukari Low cost: US$900/oz. AISC and trending lower Long +20 year expected mine life SHAREHOLDER RETURNS US$276m cash and liquid assets No debt and no hedging Competitive dividend policy OPTIMISING PRODUCTION Further production/cost upside at Sukari No additional expansion capex required Significant reserve expansion potential

25 Appendix 25

26 26 The Board Josef El-Raghy Chairman Overseen Centamin s transition from junior explorer to FTSE250 & TSX-listed gold producer Expertise in capital markets. Former director of CIBC Wood Gundy and Paterson Ord Minnett Andrew Pardey Chief Executive Officer Built Sukari Gold Mine in Egypt. Previously COO and General Manager, Operations at Sukari Geologist, previously with AngloGold Ashanti and Kalgoorlie Condolidated Gold Mines Ed Haslam Senior NED and Deputy Chairman 35 years in mining industry Senior advisor to Strategic Worldwide. Former CEO and director of Lonmin and various other board roles Mark Arnesan NED Chartered accountant specialising in resources sector. Structuring & negotiation of financing for major projects Director of ARM Advisors Trevor Schultz NED >40 years experience at executive and board level in mining industry. Executive Director 2008 to ex-ashanti Mark Bankes NED International corporate finance lawyer specialising in resources sector Partner at Norton Rose before starting Bankes Consulting EURL, in 2007

27 27 Sukari Production Forecasts - Open pit total material movement of 66Mtpa - Plant throughput at 11Mtpa and 88% metallurgical recovery - Underground mining assumed at 1Mtpa and 6g/t* * the potential quantity and grade of the forecast underground production is conceptual in nature. There has been insufficient exploration to fully define a mineral resource and it is uncertain if further exploration will result in the target being delineated as a mineral resource.

28 28 Sukari Resources Sukari Total Mineral Resource Measured Indicated Total Measured + Indicated Inferred Cut-off Tonnes Grade Tonnes Grade Tonnes Grade Gold Tonnes Grade Gold g/t Au (Mt) (g/t Au) (Mt) (g/t Au) (Mt) (g/t Au) (Moz) (Mt) (g/t Au) (Moz) Totals may not equal the sum of the components due to rounding adjustments. The Mineral Resource estimate is based on the open pit mined surface as at 30 June 2015 and adjusted for underground mine workings as at 30 June All available assays as at February Resource data set comprises 252,449 two metre down hole composites and surface rock chip samples. Mineral Resources are reported inclusive of those resources converted to Proven and Probable Mineral Reserves. The resources are estimates of recoverable tonnes and grades using Multiple Indicator Kriging with block support correction. Measured Resources lie in areas where drilling is available at a nominal 25 x 25 metre spacing, Indicated resources occur in areas drilled at approximately 25 x 50 metre spacing and Inferred resources exist in areas of broader spaced drilling. The resource model extends from 9700mN to 12200mN and to a maximum depth of 0mRL (a maximum depth of approximately 1,000 metres below wadi level). Sukari Underground Mineral Resource (included within the total resource above) Resource Tonnes ( 000 t) Grade (g/t Au) Gold ( 000 oz) Measured 1, Indicated 2, Total M&I 4, ,020 Inferred 6, ,240 Totals may not equal the sum of the components due to rounding adjustments. The Mineral Resource is reported above 2g/t within interpreted mineralised domains. The Mineral Resource estimate is depleted by underground mine workings as at 30 June All available information has been used including mapping from underground mining and assays as at June Available resource data resulted in 21,369 one metre down hole composites used for grade estimation. The Mineral Resources were estimated utilising a single Indicator weighted Kriging method (IK) to estimate gold for each of the mineralisation domains. Measured Mineral Resources are defined by a drill spacing of at least 20m x 20m and confined to the interpreted mineralisation defined by underground mine development. Indicated Mineral Resources are defined as areas outside the Measured Mineral Resource and defined by approximately 20m x 20m drill spacing. Inferred Mineral Resources include all remaining estimated mineralisation defined by a drill spacing of approximately 50m x 50m. Mineral Resources are reported inclusive of those resources converted to Proven and Probable Mineral Reserves. The underground resource is located within the boundaries of the open pit resource, and is included within that total.

29 29 Sukari Reserves Sukari Open Pit Mineral Reserve Tonnes Grade Gold (Mt) (g/t Au) (Moz) Proven Probable Stockpile Total Key Factors on Reserve Estimate Changes Totals may not equal the sum of the components due to rounding adjustments. Based on mined surface as at 30 June 2015 and a gold price of US$1,300 per ounce. International diesel price reductions allowed a lower diesel price assumption, resulting in a lowering of the mining cost and the CIL processing costs. Diesel price used was US$0.70/litre and the previous diesel price was US$0.84/litre, current fuel price for Sukari is US$0.52/litre Cut-off grades: CIL oxide 0.40g/t, CIL transitional 0.42g/t, CIL sulphide 0.42g/t, Dump Leach oxide 0.08g/t. Designed underground reserves detailed below do not form part of the open pit reserve. Sukari Underground Mineral Reserve Tonnes ( 000 t) Grade (g/t Au) Gold ( 000 oz) Proven 1, Probable 1, Total 2, Totals may not equal the sum of the components due to rounding adjustments. Based on underground mine workings as at 30 June Stopes for reserves estimation are designed using a 3g/t cut-off and mining dilution applied at 0.8g/t as all stopes are located in mineralised porphyry and 10% mining loss is then assumed to allow for stope bridges and material left in stopes after mining. Mineral Resources are reported inclusive of resources converted to Proven and Probable Mineral Reserves * includes resource growth, changes to reserve parameters (e.g. gold price, cost inputs ex-fuel, pit design) and adjustments for underground mined stopes/development

30 Sukari Process Flow Sheet 30

31 31 Ptah Zone (Looking North) Focus of Reserve Growth Cross-sections 450 metres apart

32 32 Burkina Faso: Napelapera Broad and consistent mineralised zones over 4km open along strike Higher grade zones intersected in the south Hosted in granodiorite Positive preliminary metallurgical testwork

33 33 Industry-leading Dividend Yield 2014 dividend US2.86 cents/share (c.us$33m payout) 2015 dividend US2.94 cents/share (c.us$34m payout) >100 further gold producers that do not pay a dividend Source: SNL

34 34 CONTACT US Andrew Pardey, Chief Executive Officer Andy Davidson, Head of Investor Relations +44 (0)