Centamin looking to return Sukari to 'full potential'
Centamin’s board proposed a final dividend of three US cents per share in its unaudited results for 2018 on Monday, totalling $34.6m and bringing the total dividend for the year ended 31 December to 5.5 cents per share, or $63.5m.
The FTSE 250 company said that equated to 100% of free cash flow generated being returned to shareholders.
It reported revenue of $603.2m - an 11% decrease on 2017, which Centamin said was driven by gold sales of 484,322 ounces, which was a 10% decrease year-on-year.
The company’s average realised gold price was “largely unchanged” on 2017,at $1,267 per ounce.
Cash costs of production totalled $289.4m, which was a 4% decrease year-on-year, with the board putting it down to an increase in stockpiles, a further reduction in collective stores inventory and improved open pit productivity.
Collectively, that offset inflationary cost pressures from rising input costs, such as fuel and reagents, and increased consumption, as a result of increased volumes mined and processed.
Centamin’s unit cash cost increased 13% over 2017 to $624 per ounce produced, which was in line with the reduction in ounces produced, while its all-in sustaining costs totalled $420.1m, which was broadly in line with the prior year.
The company’s unit all-in sustaining costs rose 12% year-on-year to $884 per ounce sold, which was also in line with the reduction in ounces sold.
EBITDA for the year totalled $257.9m, which was a 17% fall over 12 months earlier, which the directors said was primarily driven by reduced volumes of production and increased operating costs.
Profit before tax totalled $152.7m for the year, making for a decrease of 26%.
Royalties of $18.4m were payable to the Arab Republic of Egypt for the year, with a profit share of $76.4m paid to the Egyptian Minerals Resources Authority (EMRA), which were the firm’s government partners.
Basic earnings per share totalled 6.5 cents - a 22% decrease year-on-year, reflecting the scheduled ratchet from a 60:40 ratio to 55:45 Centamin-to-EMRA in the Sukari Gold Mine profit share mechanism from July, as well as reduced production.
Operational cash flow fell 34% to $223.4m, which was put down to a 7% increase in mine production costs, driven by increased volumes of material moved, as well as the other factors outlined by Centamin.
Free cash flow of $63.4m was generated in 2018, which was a fell of 56% over 2017, due to the reduced volume produced and a scheduled change in profit share economics.
Centamin’s cash and liquid assets totalled $322.3m at year-end on 31 December, after the distribution of the interim dividend of $28.9m, or 2.5 cents per share, on 28 September.
The company confirmed it remained debt-free and unhedged.
“Ten years ago, we produced our first gold bar from Sukari, a seminal milestone in the company's history and the Egyptian modern mining industry,” said Centamin chairman Josef El-Raghy.
“Today, we have produced in excess of 3.8Moz of gold from Sukari, with greater than 15 years scheduled future production from this global Tier 1 gold asset.
“This year, against an operationally challenging backdrop, Centamin produced 472,418 ounces of gold, delivered a solid cost performance and returned excellent exploration results across our portfolio of assets.”
El-Raghy said the firm’s workforce responded to the operational challenges with “dexterity and professionalism” and, together with a new team in place, he said the board was confident in returning Sukari back to its full potential.
“We recognise the impact of these short-term challenges on the shareholder experience and would like to take this opportunity to thank you for your support and engagement.
“Free cash flow generated was $63.4m, demonstrating the underlying resilience and financial robustness of the business.
“The board of Directors would like to recommend a final dividend of three cents, subject to AGM approval, bringing the 2018 total dividend to 5.5 cents, equivalent to approximately 100% of free cash flow to shareholders.”