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DRiVEn
GRoWtH
centamin plc
Annual report 2014
investment case
centamin plc is a mineral exploration,
development and mining company
dual listed on the London and toronto
Stock Exchanges.
Centamin’s principal asset, the Sukari Gold Mine, began
production in 2009 and is the first large scale modern
gold mine in Egypt, with an estimated 20 year mine
life and production which is rapidly increasing to an
annualised rate of 450,000‑500,000 ounces.
The major capital investment phase at Sukari is now
complete allowing the generation of free cash flow and
the opportunity for future growth and shareholder returns.
Visit us online
centamin.com
Inside this report
Strategic report
A detailed look at the
Company’s strategic objectives
for 2015, its progress on
strategy and operational and
performance highlights in 2014.
Financial highlights
Operational highlights
Year in pictures
Centamin at a glance
Chairman’s statement
Chief Executive Officer’s report
Directors’ report
A detailed report which
provides information on the
Board and management’s
composition, governance
and remuneration structure
as well as the Company’s
control environment.
Board of Directors
Senior management
Corporate governance
Nomination report
Remuneration report
Audit and Risk Committee report
Strategic priorities
1 Cash generation
2 Shareholder returns
3 Growth
Business model
Progress on strategy
Operational review
Financial review
Principal risks
18
20
22
26
28
30
38
42
Corporate social responsibility statement 46
02
03
04
06
10
14
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60
62
69
72
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Financial statements
The financial statements
and comprehensive notes
covering the year ended
31 December 2014.
Directors’ responsibilities
Independent auditor’s report
Consolidated statement of
comprehensive income
Consolidated statement
of financial position
94
95
102
103
Consolidated statement
of changes in equity
Consolidated statement
of cash flows
Notes to the consolidated
financial statements
104
105
106
Shareholder information
Company legal form and structure
Summary information for the
shareholders and stakeholders
of the Company.
Glossary
Advisers
144
146
148
Centamin plc Annual report 2014 | 01
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Strategic report
Financial highlights
Our financial highlights demonstrate how we have delivered
on our strategic priorities: 1 to generate substantial free
cash flow from operations and 2 to provide returns to
shareholders which stand out against our peer group.
Revenue
(US$’000)
503,825
472,581
Cash in hand at year end
(US$’000)
Profit before tax
(US$’000)
125,659
105,979
234,973
183,959
114,096
81,562
2013
2014
2013
2014
2013(2)
2013
2014(2)
2014
2014 total
472,581
2014 total
125,659
2013: 503,825
2013: 105,979
2014 total
81,562
2013: 183,959
2014 quarterly operating cash costs
(US$ per ounce)(1)
744
783
771
571
602
655
592
519
Earnings per share
(cents)
21.55
16.87
12.74
7.21
Q1
Q1
Q2
Q2
Q3
Q3
Q4
Q4
2013(2)
2013
2014(2)
2014
2014 total
729
2013: 663
Excluding fuel subsidy(2)
Including fuel subsidy
2014 total
7.21
2013: 16.87
(1) Cash operating costs are non‑GAAP financial performance measures with no standard meaning under International Financial Reporting Standards (“IFRS”)
as adopted by the European Union and Article 4 of the IAS Regulation IFRS.
(2) Excluding fuel subsidy (full international price), this has been presented for comparative purposes to reflect the fuel price differential had the prepayments
been expensed during the year (refer to Note 6 to the financial statements for further details).
(3) For the purpose of the statement of cash flows, cash and cash equivalents includes cash on hand and at bank and deposits.
02
| Centamin plc Annual report 2014
Operational highlights
Our operational highlights illustrate how we have delivered
on our strategic priority 3 to use cash reserves to fund our
next stage of growth.
2014 quarterly production
(ounces)
2014 quarterly ore processed
(‘000t)
128,115
2,597
2,388
93,624
74,241
81,281
1,957
1,486
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
2014 total
377,261
2013: 356,943
2014 total
8,428
2013: 5,684
Sukari resources and reserves(1)
(million ounces)
Proven & Probable(1)
Measured & Indicated(2)
8.2
13.4
Inferred
1.4
Lost time incident frequency rate (“LTIFR”) based on 200,000 man‑hours: 0.39 (2013: 0.36)
(1) Resource and reserve statement announced on 18 December 2013.
(2) Includes production since 30 September 2013.
(3) Includes production since 30 June 2013.
Centamin plc Annual report 2014 | 03
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Strategic report
Year in pictures
Our operating experience in Egypt gives us significant
first mover advantage in acquiring and developing other
gold projects in the prospective region and beyond.
Open pit
Open pit ore tonnes mined amounted to 10.9Mt in
2014. Mining was predominately from the Stage 3
area and development work progressed in the
Gazelle and Eastern Hills area.
Further information in the operational review.
www.centamin.com
Underground
The underground mine
delivered a total of 1Mt of
ore at 6.10g/t. The expansion
of the underground mine
continued with the further
development in both the Ptah
and Amun declines.
04
| Centamin plc Annual report 2014
New thickener at the
process plant
Raw water pond to feed the
process plant
Production
Ore processed was a record year of 8.4Mt.
Commissioning of the Stage 4 expansion to
double capacity to nameplate 10Mtpa tonnes was
completed in the second half of 2014. Nameplate
capacity stood at 10Mtpa at the end of June 2014.
Further information in the operational review.
www.centamin.com
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Advanced exploration
A systematic drilling programme is under way to
expand the resource on the licences in Burkina
Faso and Côte d’Ivoire. A total of 9,302m (including
362.8m diamond drilling) have been drilled in 2014
following the acquisition of ASX listed, Ampella
Mining Limited earlier in 2014.
Further information in the operational review.
www.centamin.com
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Centamin plc Annual report 2014 | 05
Strategic report
Centamin at a glance
Our flagship project, the large‑scale and low‑cost
Sukari Gold Mine, is located in the eastern desert
of Egypt where production is rapidly increasing to
an annualised rate of 450,000‑500,000 ounces.
Sukari mine
Alexandria
Cairo
Egypt
The location of the Sukari Gold Mine.
Sukari has been operating since 2010
and has an estimated 20‑year mine life
based on the 8.2 million ounce reserve
(as at 30 September 2013), with
significant potential for further growth.
Centamin remains in a robust position to continue delivering
on its track record of production growth and solid free
cash flow generation, as shown by the following highlights
from 2014:
• production of 377,261 ounces, a 6% increase on 2013
and a 5th successive year of production growth;
• cash cost of production of US$729 per ounce;
• average realised gold price of US$1,257 per ounce;
• completion of the US$331.2 million Stage 4
expansion project; and
• processing throughput exceeded the expanded 10Mtpa
plant nameplate capacity in the fourth quarter.
06
| Centamin plc Annual report 2014
Production history since 2010
(ounces)
377,261
356,943
262,828
202,699
150,289
2010
2011
2012
2013
2014
Open pit
Underground
Open pit mining operation
Underground mining operation
The open pit delivered total material movement of 44,820kt
for the year, an increase of 7% on the prior year.
Ore production from the underground mine was a record
968kt, a 65% increase on 2013.
Sukari Hill exploration
Amun and Ptah declines
Surface drilling from January to April 2014 continued
in the northern portions of the Sukari Hill deposit
(through the Ra and Gazelle zones and into the northern
Pharaoh Zone).
A total of 6,625m of development was completed, including
5,701m which was mineralised (4,737m in Amun, and 961m
in Ptah) and associated with stoping blocks planned for
mining in 2015‑17.
Regional exploration
Sukari underground exploration
Seven other prospects besides Sukari Hill have been
identified on the 160km2 Sukari tenement area and
exploration is being conducted under the principle that
ore from these prospects would be trucked to the existing
processing plant.
Drilling from underground remains a focus of the Sukari
exploration programme and was progressively stepped
up during the year. Continued underground development
provided improved access to test potential high‑grade
extensions of the deposit, which remains open to the north
and at depth.
Open pit mining
Underground mining
million tonnes
grade (g/t)
thousand tonnes
grade (g/t)
50
40
30
20
10
0
2010 2011 2012 2013 2014
2.0
1.5
1.0
0.5
0.0
OP ore mined
OP waste mined
OP head grade
1,200
1,000
800
600
400
200
0
2010 2011 2012 2013 2014
Ore tonnes
mined
Grade
16
14
12
10
8
6
4
2
0
Centamin plc Annual report 2014 | 07
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Strategic report
Centamin at a glance continued
The Stage 4 expansion project represented
US$331.2 million of capital expenditure to double
the processing plant’s nameplate capacity from
five million tonnes per annum (“Mtpa”) to 10Mtpa.
Sukari mine continued
Production
Processing
The Sukari plant processed 8.4Mt of ore in 2014, a 48%
increase on 2013 (5.7Mt), reflecting the commencement
of ore treatment through the new Stage 4 plant
circuit. The Stage 4 expansion project represented
US$331.2 million of capital expenditure to double the
processing plant’s nameplate capacity from five million
tonnes per annum (“Mtpa”) to 10Mtpa. Commissioning of
the new circuit was successfully completed in the second
half of 2014.
Ore processed and feed grade
million tonnes
grade (g/t)
12
10
8
6
4
2
0
2010 2011 2012 2013 2014
Ore processed
Feed grade
2.5
2.0
1.5
1.0
0.5
0.0
Plant productivity
productivity (tph)
recovery
1,200
1,000
800
600
400
200
0
2010 2011 2012 2013 2014
Productivity
(tph)
Recovery
96%
94%
92%
90%
88%
86%
84%
82%
80%
08
| Centamin plc Annual report 2014
Centamin’s portfolio includes advanced exploration
in Burkina Faso and early exploration in Ethiopia and
Côte d’Ivoire.
Exploration
Burkina Faso
Ethiopia
Côte d’Ivoire
Ethiopia
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Advanced exploration: Burkino Faso
Early stage exploration
In March, Centamin acquired ASX‑listed Ampella Mining
Limited, thus gaining exploration rights over a highly
prospective circa 2,200km2 region of Burkina Faso (“Batie
West”) containing a 1.9Moz Indicated and 1.3Moz Inferred
resource at the Konkera Prospect. Fieldwork is aimed at
expanding the near‑surface resource through a systematic
drilling, sampling and surveying programme over the
numerous highly prospective target areas within this district.
Centamin’s portfolio also includes early stage exploration in
highly prospective areas of Côte d’Ivoire and Ethiopia.
Côte d’Ivoire
As part of the Ampella transaction, Centamin acquired three
licences in Côte d’Ivoire covering a circa 1,200km2 area
across the border from Batie West in Burkina Faso. A further
four licences are under application.
Konkera resource
(million ounces)
Measured
& Indicated
1.92
Inferred
1.33
An ongoing programme of mapping, rock chip sampling
auger drilling and geochemistry is aimed at processing a
rapid and efficient assessment of the exploration permits
potential and then either move prospects into advanced
exploration or move to new permit areas.
Ethiopia
Centamin continued exploration on its tenement in Una
Deriem in northern Ethiopia, and in total, 2,547.9m were
drilled in 2014 bringing total drilling for the region to
13,783m. A new licence known as the ‘Ondonok Dabus’
Licence was awarded and regional works are under way.
A limited exploration programme was carried out on two
licence areas under joint venture with AIM‑listed Alecto
Minerals. Initial results were not as anticipated and as such
led to the cancellation of this agreement in early 2015.
Centamin plc Annual report 2014 | 09
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Strategic report
Chairman’s statement
Our growth strategy seeks
to optimise exposure
through the mining
value chain: exploration,
development and
operations.
Josef El‑Raghy
Chairman
Centamin’s corporate strategy seeks to deliver peer‑leading
shareholder returns by taking gold projects from
exploration, through development and into production.
In this respect, 2014 was a pivotal year for the Company.
Our flagship Sukari Gold Mine saw the successful
commissioning of the US$331 million Stage 4 process
plant expansion, marking the project’s transition out of the
investment phase and into a sustainable period of free
cash flow generation over an expected minimum 20‑year
mine life. In recognition of this and due to the Company’s
strong financial position, the Board of Directors initiated a
dividend programme during 2014 with a maiden interim
dividend of 0.87 US cents per share. The Company is now
pleased to announce the approval of a final dividend for
2014 of 1.99 US cents per share (totalling approximately
US$23 million) which represents for the full year, a pay‑out
level of approximately 30% of our free cash flow as defined
by our dividend policy.
The strong ramp‑up in production rates associated with the
expansion presented a number of operational challenges
during 2014. Although our strong track record of delivery
against annual gold production guidance was affected by
lower‑than‑expected processing rates and underground
grades, resulting in revised guidance, the fourth quarter saw
annualised rates in excess of our long term 450‑500,000
ounce target. Full year production of 377,261 ounces was
a 6% increase on 356,943 ounces in 2013. This strong end
to the year was achieved as plant throughput exceeded the
expanded 10Mtpa nameplate capacity and open pit grades
increased in line with the mine plan.
Cost control remains an absolute focus of the Company
and it is pleasing to note that, despite full year production
of around 10% lower than forecast at the start of the year,
the cash operating cost of US$729/oz was only marginally
above our original US$700/oz guidance. In line with
the strong production rate, Q4 cash operating costs of
US$655/oz point towards the long‑term potential of the
operation to deliver highly‑competitive cash margins.
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| Centamin plc Annual report 2014
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Processing plant at Sukari
Centamin remains committed to its policy of being 100%
exposed to the gold price through its unhedged position
and our balance sheet remains strong, with US$162.8 million
in cash, bullion on hand, gold sales receivables and
available‑for‑sale financial assets as at 31 December 2014.
During 2014 Centamin made good progress in securing
its longer‑term growth objectives. The completion of the
Ampella Mining acquisition in March gave us a substantial
footprint in the highly prospective regions of Burkina
Faso and Côte d’Ivoire. Subsequent to completion of
the acquisition, a systematic exploration programme was
initiated aimed at developing the potential for further
significant growth of the 1.9Moz Indicated and 1.3Moz
Inferred resource.
The impact of a weaker gold price environment contributed
towards a 29% year‑on‑year reduction of EBITDA to
US$165.4 million. Profit after tax of US$81.6 million was
down 56% on 2013 and earnings per share of 7.21 cents
compare with 16.87 cents in 2013. Gold production
guidance for 2015 is 420,000 ounces at a cash operating
cost of US$700/oz and all‑in‑sustaining cost (“AISC”) of
US$950/oz. The northern and eastern walls of the open pit
are a focus for 2015 and, as mining progresses through the
upper portions of the next stage of pit development, grades
are scheduled to progressively increase to the reserve
average in the second half of the year, when production
is expected to increase to the 450‑500,000 ounce per
annum rate.
Over the medium term, continued optimisation and higher
productivity rates, in particular within the processing and
underground mining operations, offer good potential for
further production growth and reductions in AISC for no
additional capital expenditure for expansion. We therefore
remain confident that Sukari will continue to deliver further
incremental growth over the coming years.
Centamin plc Annual report 2014 | 11
Strategic report
Chairman’s statement continued
We take every action to ensure Sukari has the minimum
impact on the social environment, as well as to deliver
positive benefits to Egypt and the community as a result
of our investment.
Whilst disciplined and sustainable growth on our existing
projects remains a key focus, we continue to evaluate
opportunities to grow through the acquisition of projects
which offer the potential for the Company to deliver on its
strategic objectives.
The two litigation actions, Diesel Fuel Oil and Concession
Agreement, progressed in line with our expectations during
the year and are described in further detail in Note 20 to the
financial statements. In respect of the latter, the Company
continues to believe that it has a strong legal position and,
in addition, that it will ultimately benefit from the new law
no. 32 of 2014, which came into force in April 2014 and
which restricts the capacity for third parties to challenge any
contractual agreement between the Egyptian government
and an investor. This new law is currently under review by
the Supreme Constitutional Court of Egypt. We are aware of
the potential for the legal process in Egypt to be slow and
for cases to be subject to delays and adjournments but we
remain confident of the merits of the two cases.
The Group continues to benefit from the full support of the
Ministry of Petroleum and EMRA, both in the Concession
Agreement appeal and at the operational level. As part
of our long‑term strategy, we look forward to continuing
to share the benefits of this substantial investment as the
operation, having transitioned from its initial period of
construction, sets the stage for a new era of gold mining
in Egypt.
Subsequent to the year end, Andrew Pardey was appointed
as Chief Executive Officer (“CEO”) and joined the Board
as an executive director from 1 February 2015. Andrew has
been a driving force behind Sukari’s growth into one of the
world’s leading gold mines and of Centamin’s development
from a junior exploration company into one of the largest
gold producers in North Africa. His experience and
stewardship will be of invaluable benefit to the business
as it continues to develop and realise its next stages of
growth. In my role as Chairman I look forward to continuing
to work with the Company towards delivering substantial
shareholder value through further development of our
portfolio of assets.
Trevor Schultz resigned as an executive director and was
appointed as a non‑executive director from 1 May 2014,
coinciding with the successful completion of construction
of the Stage 4 expansion and hand over to operations for
commissioning. Trevor has made an invaluable contribution
to the establishment of Sukari as a globally‑significant
gold mining operation, in particular with his recent role in
overseeing the construction of the Stage 4 process plant.
Such a major construction project that was completed
with minimal cost and time overruns is testament to his
strong leadership and experience. I am delighted that the
Company and its shareholders continue to benefit from
Trevor’s counsel in his role as a non‑executive director.
Subsequent to the year‑end, Professor G Robert
Bowker (aged 65) retired as a non‑executive director,
effective from 26 January 2015. Bob has been involved with
the Company since 2008 and during this time the Centamin
team have benefited greatly from his insightful view of the
political landscape in Egypt and the wider region. Bob has
provided valued counsel to those that he has worked with
over the years and has been a part of the evolution of the
Company from explorer to Egypt’s first modern gold miner.
All of us at Centamin wish him well in the future.
This year, the Chairman of the Corporate Governance
Committee has presented the corporate governance
report. As Chairman of the Board I agree and endorse
both this report and the values of good governance
reflected in it. In my view Board effectiveness has been
achieved, in no small part, by ensuring that communication
channels are open between all Board members and
regular information is presented to the Board allowing
all members to contribute knowledgeably at Board
meetings and in discussions between the executives
and non‑executive directors.
12
| Centamin plc Annual report 2014
I would like to close by thanking all those at Sukari, in
Alexandria, Ethiopia, Burkina Faso, Côte d’Ivoire, Jersey
and Perth for their efforts in 2014 as Centamin continued
on its journey to becoming an established cash‑generative
gold producer.
Your Company remains well positioned to deliver
outstanding shareholder returns in the coming years as
we adhere to our philosophy of focusing on free cash flow
generation, returns to shareholders and growth through
exploration. I look forward to updating you further over
the course of 2015, and would welcome you to join us
at our AGM, which this year will be held in London on
18 May 2015.
This strategic review, progress on strategy, key performance
indicators and business model together form the Strategic
Report, which has been approved by the Board of Directors.
By order of the Board for and on behalf of Centamin plc.
Josef El‑Raghy
Chairman
23 March 2015
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Blast hole drilling in Sukari pit
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Centamin plc Annual report 2014 | 13
Strategic report
Chief Executive Officer’s report
Centamin is entering a
sustainable period of cash
generation, which it will
use to reward shareholders
through dividends and
ongoing growth.
Andrew Pardey
Chief Executive Officer
Dear shareholders
2014 was another year of production growth for Sukari
and overall performance bodes well for the potential of the
operation to generate significant free cash flow over the
coming years. The Stage 4 project to double nameplate
capacity at the process plant to 10 million tonnes per annum
(Mtpa) was completed during the first half of the year for a
total capital expenditure of US$331.2 million. The project
was completed on budget and with limited timeline
over‑runs, representing a solid achievement in itself, but is
all the more notable when set against the various external
challenges that were faced, particularly during the early
stages of the construction period.
Whilst affected by periods of below‑expected productivity,
progressive increases in plant throughput continued as
commissioning activities took effect and the nameplate
10Mtpa capacity was reached, and exceeded, from
September onwards.
The fourth quarter was another record for both open pit
and underground mining rates and productivity in both of
these areas remains strong. Following government approval
in the fourth quarter for the increase in Ammonium Nitrate
(“AN”) usage, the open pit is now on a secure footing to
deliver the scheduled material movements as required for
the expanded operation. The underground mine continued
to deliver strong increases in volumes through 2014,
achieving above‑target levels by year end, although with
lower grades than originally forecast. With the operation
now appropriately scaled for the higher processing
rate, the focus for 2015 is on reducing grade volatility
and thereafter leveraging the potential for additional
productivity increases.
The efficiency gains delivered with the production
ramp‑up are indicated by a material year‑on‑year decrease
in operating costs per tonne, in both the mining and
processing areas. This is a trend we expect to continue in
the coming quarters as the expanded operation continues
to be optimised.
14
| Centamin plc Annual report 2014
Our strategic priorities
As the new Chief Executive Officer, I have summarised below the strategic aims for the Company
over the coming years, which are threefold:
1
2
Cash
generation
Shareholder
return
3
Growth
To generate substantial
free cash flow from
operations.
To provide returns
to shareholders which
stand out against our
peer group.
To use cash reserves
to fund our next stage
of growth.
See page 18
See page 20
See page 22
Centamin’s track record of safety is an aspect of our
performance of which I am both pleased and eager to
improve. Developing a strong culture of health and safety
awareness onsite has resulted in improved reporting of
incidents compared to previous years and our LTI frequency
rate of 0.39 per 200,000 man‑hours in 2014 (0.36 in 2013)
is a solid achievement, especially when considering Sukari
is the first modern gold mine in Egypt. Nevertheless, there
remains room for improvement and our target is for zero
injuries and having every person go home safely every day.
Subsequent to the year end, an unfortunate incident
occurred in Burkina Faso on a public road near the Konkera
village which resulted in one of our local employees being
fatally wounded and another sustaining injuries. The
wellbeing of our employees is a priority for Centamin and a
thorough investigation into this bandit attack, on two of our
vehicles, has been carried out. Further additional security
measures have been proposed following the incident and
these are being implemented. There was no impact on
operational activity as a result of the incident.
Centamin plc Annual report 2014 | 15
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Chief Executive Officer’s report continued
The focus for 2015 is to continue production growth
at Sukari whilst maintaining a strong control on costs,
with the objective of generating substantial free cash flow
even under challenging gold price assumptions.
The greenhouse gas emissions reporting required by
Schedule 7 of The Large and Medium‑Sized Companies
and Groups (Accounts and Reports) Regulations 2008 as
amended by The Companies Act 2006 (Strategic Report
and Directors’ Report) Regulations 2013, is a requirement
only on UK incorporated quoted companies. Centamin has,
however, provided information relating to this legislation in
the CSR report.
See pages 46 to 57
Maintaining good community relations is a core part of our
operational strategy and corporate governance standards.
As the first mining company in Egypt in modern times, we
strive to set an example of a socially responsible industry
through adopting a good neighbour policy. We take every
action to ensure Sukari has the minimum impact on the
social environment, as well as to deliver positive benefits to
Egypt and the community as a result of our investment, and
further details of our various initiatives can be found in the
CSR report.
Our work force is remunerated well above the average for
Egypt and our career development programmes are highly
valued. In general we enjoy a very positive and constructive
relationship with our employees.
Outlook
The focus for 2015 is to continue production growth at
Sukari whilst maintaining a strong control on costs, with
the objective of generating substantial free cash flow even
under challenging gold price assumptions. We intend to
return 15‑30% of this cash flow to our shareholders, in line
with our dividend policy, and to allocate the remainder
towards our medium and long‑term objective of organic
growth aimed at realising incremental shareholder value
and returns.
Safety remains a priority and our target is a lost time injury
rate of zero during 2015.
Guidance for 2015 is for 420,000 ounces at US$700/oz
cash operating cost and US$950/oz all‑in‑sustaining cost.
Production is expected to achieve the 450‑500,000 ounce
per annum target rate from second half of 2015 onwards.
In the open pit, the focus will continue on the northern
and eastern cutback to expose higher grade ore from the
second half of the year. This will ensure that the operation
is on a secure footing to sustain, on an annual basis, the
required tonnages at reserve‑average grades.
We aim to build on the significant productivity increases
from the underground mine by targeting a reduction in
grade volatility.
As we achieve these targets, and during the next two
to three year period, we intend to continue optimising
the various areas of the expanded Sukari operation
with the ultimate aim of delivering further production
increases. The productivity levels achieved during 2013
in the pre‑expansion process plant, together with the
various design improvements implemented during the
Stage 4 project build, provide us with confidence that the
expanded plant will achieve, in time, production levels
materially above nameplate capacity. At the underground
mine, as stable grade delivery is achieved at the current
mined volumes, we see potential for further incremental
productivity increases.
The additional shareholder value that can be gained from
the continued drive for efficiency has the potential to be
significant and requires no significant capital expenditure.
No capital expenditure for expansion or project
development is planned for 2015.
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| Centamin plc Annual report 2014
Exploration at Sukari continues to prioritise extensions of
the high‑grade underground resource and reserve and we
expect to continue to deliver positive news in line with the
strong results to date. A resource and reserve update is
planned during 2015.
Outside of Sukari, we expect a total exploration expenditure
of circa US$20 million in 2015, with the largest proportion
on the advanced exploration programme in Burkina Faso.
Our exploration tenements in Côte d’Ivoire and Ethiopia
are no less prospective, requiring a lower exploration spend
due to their earlier stage. In line with our overall exploration
strategy, the actual expenditure on these projects is results
driven and the current estimated expenditures are therefore
subject to ongoing revisions.
We will continue to evaluate potential opportunities to
grow the business through the acquisition of projects
offering the potential for the Company to deliver on its
strategic objectives.
Finally, I would like to thank all my colleagues for their
hard work over the years including the employees onsite
at Sukari, those on the exploration sites in Burkina Faso,
Ethiopia and Côte d’Ivoire as well as those in the corporate
and administration offices in Jersey and Australia. I would
also like to thank your Board of Directors for their support
over the years and I am very much looking forward to 2015
and beyond.
Andrew Pardey
Chief Executive Officer
23 March 2015
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Processing plant at Sukari
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Centamin plc Annual report 2014 | 17
Strategic report
Strategic report
Strategic priority
1
Cash generation
Competitive costs, rising
production and completion
of expansion capex
Highlights
• No debt
• No hedging
• Investment phase
complete
www.centamin.com
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| Centamin plc Annual report 2014
With a robust balance sheet and strong cash flow generation
from Sukari, we have financial flexibility to grow our business
both organically as well as through strategic acquisitions.
Target production
Production continues
to rise towards the
450k‑500k
ounce per annum level
New processing plant completed
following Stage 4 expansion
Haulage truck with Sukari Hill
in the background
With the completion of the Stage 4 expansion project in 2014, the Sukari
operation has transitioned out of its investment phase, where cash flows were
used to fund the staged construction, and into a sustainable period of free
cash flow generation over the remaining life of mine. As production continues
to rise towards the 450‑500,000 ounce per annum level, all‑in‑sustaining costs
are expected to be in the range of US$900‑950 per ounce. Centamin has no
debt or hedging and is therefore financially robust, is well positioned to benefit
from a recovery in the gold price, and has the financial flexibility to grow both
organically and through strategic acquisitions.
Cash in hand
at year end
(US$’000)
125,659
105,979
Cash operating cost
of production
(US$ per ounce)
729
663
2013
2014
2013
2014
2014 total
125,659
2013: 105,979
2014 total
729
2013: 663
Centamin plc Annual report 2014 | 19
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Strategic report
Strategic priority
2
Shareholder
returns
Dividend returns a priority,
with excess cash flow to
fund next‑stage growth
Highlights
• Annual dividend range
15‑30% of net cash flow
• Maiden interim dividend
of 0.87 US cents per share
• Final dividend of
1.99 US cents per share
www.centamin.com
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| Centamin plc Annual report 2014
Our Company is placed in a strong competitive position,
with a profile of low cost production, solid growth potential
and a stable balance sheet.
Returns
Interim dividend of
0.87 US cents
/share
Final dividend of
1.99 US cents
/share
Safe assembly of the conveyor belt
under the primary crusher
Employees charging the blast holes
Having successfully built a substantial gold mining operation through a staged
expansion programme and with a total of circa US$1 billion capital investment
in Egypt, the Company is placed in a strong competitive position, with low cost
production, solid growth potential and a stable balance sheet. In recognition of
this, the Board of Directors declared in August 2014 a maiden interim dividend
of 0.87 US cents per share, which totalled an approximate US$9.9 million
payout. An additional final dividend for 2014 of 1.99 US cents per share (totalling
approximately US$23 million) will be paid to shareholders following the AGM on
18 May 2015. The ex‑dividend date is 23 April 2015 for LSE listed shareholders
and 22 April 2015 for TSX listed shareholders. The Record Date for both
exchanges is 24 April 2015.
Dividend policy aim
Annual dividend within the range of 15‑30% of the Company’s net cash flow
after sustaining capital costs and following the payment of profit share due to
the EMRA.
Centamin plc Annual report 2014 | 21
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Strategic report
Strategic priority
3
Growth
Developing a well‑balanced
project pipeline, with
potential to add incremental
shareholder value as a
priority over increasing
group production
Highlights
• Ramp up production
to circa 500k ounces
per annum
• Advanced exploration
in Burkino Faso
• Ongoing evaluation of
M&A opportunities
www.centamin.com
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Become a multi‑asset gold producer maintaining
lowest quartile cost profile.
Open pit at Sukari
Drill rig in place at the open pit
Growth
2015 guidance of
420,000 ounces
at cash cost of US$700 per ounce
Our strategy with regard to growth is summarised in the table below
Near term (1‑2 years)
Continuing the production ramp up at Sukari to 450‑500,000 ounces
per annum
Resource/reserve replacement and expansion at Sukari, with a focus on
underground high grade
Resource expansion in Burkina Faso through systematic drilling prospects
Target generation and maiden resource in Ethiopia and Côte d’Ivoire
Continue to evaluate selective M&A opportunities with the potential to
develop low‑cost projects
Medium term (3‑5 years)
Exceed 500,000 ounces per annum at Sukari through optimising productivity
and continued expansion of the underground operation
Resource/reserve expansion at Sukari, with a focus on underground high grade
Development/production in Burkina Faso
Results‑driven progression of Côte d’Ivoire and Ethiopia exploration
Continue to evaluate selective M&A opportunities with the potential to
develop low‑cost projects
Long term (5+ years)
Continue to expand Group reserves and production through exploration
Become a multi‑asset gold producer maintaining lowest quartile cost profile
Continue to evaluate selective M&A opportunities with the potential to
develop low‑cost projects
Centamin plc Annual report 2014 | 23
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Sukari – production growth
Forecast production from the Sukari Gold Mine for 2015
is 420,000 ounces at a cash operating cost of US$700 per
ounce. This would represent an 11% increase on 2014
production of 377,261 ounces and would become the sixth
successive year of growth at Sukari.
From the second half of 2015, we expect sustained
production from Sukari at an annualised rate of between
450,000‑500,000 ounces. This is based on the following
target operational parameters:
Target rate per annum
Tonnes milled (total)
Open pit tonnes milled
Underground tonnes milled
Open pit head grade
Underground head grade
Recovery
‘000t
‘000t
‘000t
g/t
g/t
%
10,000‑11,000
9,000‑10,000
1,000
1.0‑1.1
6.5
88%
Gold production
‘000oz
450‑500
Over the coming quarters, continued optimisation and
higher productivity rates throughout the operation offer
good potential for further production growth and reductions
in AISC for no additional capital expenditure.
Over time we will be seeking to obtain performance
from the enlarged plant at a throughput rate in line
with the performance of the pre‑expansion plant, which
operated at 15‑20% above nameplate capacity (5Mtpa)
throughout 2013.
Results from the underground resource drilling programme
continue to provide support that the operation can sustain
production and grade levels in excess of the above
assumptions. It is our objective to demonstrate this potential
over the coming quarters.
Strategic report
Strategic priority
3
Growth continued
Six successive years of
growth achieved at Sukari
24
| Centamin plc Annual report 2014
Sukari – resource and reserve expansion
Early stage exploration – Côte d’Ivoire and Ethiopia
Centamin has a large resource and reserve base and,
through the continued exploration of Sukari Hill and the
160km2 Sukari tenement area, there is significant potential
to further extend the already significant life of mine.
Centamin’s exploration strategy on its early‑stage projects is
to process a rapid and efficient assessment of each permit’s
potential and then either develop selected prospects or
move to new areas.
As part of the Ampella transaction, Centamin acquired
three licences in Côte d’Ivoire covering a circa 1,200km2
area across the border from Batie West in Burkina Faso.
The objective for 2015 is to be in a position where the three
current permits are geologically covered with prospects
identified and first pass RC drilling completed, with a path
towards resource development in 2016. A further four
licences are under application and are expected to be
granted in early 2015. These will be covered by regional
surface geochemistry and anomalies identified for the first
pass aircore drilling in 2016.
Our exploration programme in Ethiopia is focused on
the Una Deriem tenement in the north, where drill results
indicate the presence of high‑grade mineralisation
warranting further exploration, and the recently acquired
‘Ondonok Dabus’ licence in the west where regional works
are under way.
See operational review on pages 30 to 37
Drilling from underground remains a focus and was
progressively stepped up through 2014. New development
provided improved access to test potential high‑grade
extensions of the deposit, which remains open to the north
and at depth. Results to date are highly encouraging and
provide support to our expectation for a significant life of
the underground operation.
Surface exploration has identified seven other prospects
besides Sukari Hill on the 160km2 Sukari tenement area and
exploration is being conducted under the principle that
ore from these prospects would be trucked to the existing
processing plant.
The current resource and reserve statements were published
in December 2013 and an updated reserve and resource
statement is expected to be announced in 2015.
Advanced exploration – Burkina Faso
The Company progressed its long‑term growth strategy
during 2014 by acquiring ASX listed Ampella Mining
Limited, which held exploration rights over a highly
prospective circa 2,200km2 region of Burkina Faso (“Batie
West”) containing a 1.9Moz Indicated and 1.3Moz Inferred
resource at the Konkera Prospect.
Fieldwork subsequent to the acquisition continues to be
aimed at expanding the near‑surface resource through a
systematic drilling, sampling and surveying programme over
the numerous highly prospective target areas within this
district. Our current expectation is to commit, in due course,
to an economically viable and low‑cost project, and we will
continue to test the results of the exploration programme
on an on‑going basis with this objective in mind.
Centamin plc Annual report 2014 | 25
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Business model
Our value chain starts from early stage explorer to precious metal extractor and the people, investment and culture drive
that success.
Value chain
Greenfields
exploration
Advanced
exploration
Production
Sale of precious metals
to refiners
Along this journey, relationships with employees, governments, suppliers, local communities and stakeholders are key to
the success of the Company.
S t r a t e g ic relationships
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Employe
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• Equity capital
• Safety culture
• Infrastructure
• Qualified personnel
• Sustaining
capital
• Geological expertise
• Systematic work
programmes
• Contractors
• Legal framework
• Exports
• Government
stability
• Fiscal regime
• Agents
• Refining contracts
• Manufacturers
• Service providers
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C o m m u
Employees: welfare, training,
professional development, wages,
benefits, sustainable operations.
Communities: infrastructure,
conservation, healthcare,
engagement, concessions.
Governments: profit share, GDP,
new industries, job creation,
engagement, resource allocation.
Suppliers: local economy, local
suppliers, government suppliers,
contracts, imports.
Refiners: exports, commodities.
Shareholders: governance,
strategy, engagement.
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Our key strengths:
How we generate free 1 cash flow
and deliver 2 shareholder returns
How we 3 grow from exploration to gold mine producer
Operate
Maximise productivity and profitability at our flagship project, the Sukari
Gold Mine, through enhancing operational efficiencies and maintaining a
continual focus on cost control.
Leverage Centamin’s management expertise and in‑house technical
resources to improve shareholder returns from operational and exploration/
development‑stage projects.
Develop
Production ramp‑up at Sukari towards the long‑term production target of
450,000‑500,000 ounces of gold per annum.
Identify and pursue opportunities to further improve economic returns
from Sukari.
Identify exploration‑stage projects which offer the potential to materially
enhance shareholder returns and advance their development through
to production.
Minimise the requirement for additional finance to fund future growth
opportunities through the utilisation of existing cash flows and cash reserves.
Explore
Define additional resources and reserves at Sukari which offer the potential
to improve the economic returns from the operation. Priority is given to
exploration of further potential high grade regions of the underground mine
and regional prospects within the Sukari tenement.
Provide opportunities for future production growth, through the execution
of systematic and cost efficient exploration programmes within the
Company’s project interests outside of Sukari, currently represented
by projects in Ethiopia, Burkina Faso and Côte d’Ivoire.
Acquire
Evaluate opportunities for Centamin to acquire assets with the potential to
further increase overall returns to its shareholders.
Unlock value in acquisition targets through the application of Centamin’s
technical expertise and financial resources.
Sustain
Ensure Centamin maintains its licence to operate through prioritising the
safety and health of its employees, good environmental stewardship,
the wellbeing of the communities in which it operates, and adherence to
best governance practices, from the earliest stages of exploration until
mine closure.
Track record of
project delivery
Completion: investment phase
at Sukari complete.
Production
2015 guidance of 420,000oz,
rising to 450‑500,000oz
annualised from H2 2015.
Focus on cost control
Capex: Sukari staged
construction delivered on
budget.
Low operating cost: Sukari
guidance of US$700/oz.
Low all‑in‑sustaining capex:
Sukari guidance US$950/oz
in 2015.
Optimising production
Upside: further production and
cost upside potential.
Long life: Sukari has an
estimated 20 year mine life.
Explore: further exploration
potential to extend mine life.
Stable finances and
shareholder returns
Capex: no further expansion
capex at Sukari.
Cash: US$125.7 million cash
and equivalents.
Debt free: unhedged and
debt free, cash flows used
to fund staged growth.
Dividend: competitive
dividend policy.
Next stage of growth
Cash flow: excess cash flow to
fund future exploration.
Acquisitions: financial flexibility
to acquire value‑accretive
projects.
Advanced exploration
projects: Burkina Faso at
Batie West.
Early‑stage exploration
projects: Ethiopia and
Côte d’Ivoire.
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Progress on strategy
Our KPIs and targets for 2015 are set out below:
Strategic priority
KPIs achieved during 2014
KPIs set for 2015
KPI
1
Cash generation
• Cash operating cost of
US$729 per ounce.
• 377,261 ounces produced
(re‑guided in the year).
• Targeted US$700 cash operating
cost per ounce.
• Targeted US$950 per ounce.
all‑in sustaining cost.
• 420,000 ounces forecast for 2014.
2
• Dividend policy announced in
2014 and maiden dividend of
0.87 US cents/share.
• Annual dividend of between
15‑30% net cash flow after
sustaining capex and profit share.
Shareholder return
3
Growth
• Commissioning of Stage 4 and scale
up to nameplate capacity of 10Mtpa
in Q3 2014.
• Target production rate: increase to a
rate of 450,000‑500,000 per annum
during the second half of 2015.
• Systematic drilling programmes
at Sukari underground to deliver
further resource and reserve growth.
• Resource/reserve replacement and
expansion at Sukari, with a focus on
underground high grade.
• Exploration programme over licence
• Resource expansion through
areas in Burkina Faso.
systematic drilling programmes.
• Exploration programme over licence
areas in Ethiopia and Côte d’Ivoire.
• Maintaining low yearly LTIFR.
• First pass drilling on priority targets,
providing the foundation for
resource development in 2016.
• Reduction in LTIFRs.
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Strategic priority
KPIs achieved during 2014
KPIs set for 2015
In 2014 Centamin’s strategy was to maximise free cash flow,
through the value of our current assets and to increase our
reserve and resource base.
KPI
CASH
Cash operating cost
of production
Cash generated
from operations
Q4 2014
Q4 2013
2014
2013
US$ per ounce
655
711
729
663(2)/515(3)
US$’000
32,791
30,497
111,602
245,143
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PROFITABILITY
Profit before tax(3)
US$’000
Profit before tax and
post‑exceptional item(1)(2)
EPS(3)
US$’000
Cents
EPS post‑exceptional item(1)(2)
Cents
Q4 2014
51,178
33,819
4.48
2.96
Q4 2013
42,269
30,661
3.88
2.81
PRODUCTIVITY
Open pit ore mined
Underground ore mined
Ore processed
Gold recovery
Gold produced
Revenue
GOVERNANCE
Health and safety
‘000t
‘000t
‘000t
%
Ounces
US$’000
Q4 2014
Q4 2013
4,123
284
2,597
87.0
128,115
151,117
3,161
174
1,400
89.9
91,546
111,200
Frequency rate per
200,000 man‑hours
Q4 2014
Q4 2013
0.30
0.48
2014
144,096
81,562
12.74
7.21
2014
10,936
968
8,428
87.8
377,261
472,581
2014
0.39
2013
234,973
183,969
21.55
16.87
2013
11,664
587
5,684
88.6
356,943
503,825
2013
0.36
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No changes have been made to the source of data or calculation methods used in the year.
(1) Results reflect an exceptional provision against prepayments to reflect the removal of fuel subsidies. Subsidies were removed in January 2012
(refer to Note 6 to the financial statements for further details).
(2) Excluding fuel subsidy, (refer to Note 6 to the financial statements for further details).
(3) Including fuel subsidy, (refer to Note 6 to the financial statements for further details).
Centamin plc Annual report 2014 | 29
Strategic report
Operational review
In this section we
feature our operational
performance, exploration
review, principal
risks, financial review
and corporate social
responsibility.
30
| Centamin plc Annual report 2014
Health and safety – Sukari
The LTIFR for 2014 was 0.39 per 200,000 man‑hours
(2013: 0.36 per 200,000 man‑hours), with a total
of 5,620,444 man‑hours worked during 2014
(2013: 6,702,908). Developing the health and safety culture
onsite has resulted in improved reporting of incidents
compared to previous years and, although there remains
further room for improvement, Centamin views its LTI
frequency rate as a solid achievement considering Sukari is
the first modern gold mine in Egypt.
Open pit
The open pit delivered total material movement of 44,820kt
for the year, an increase of 7% on the prior year and related
to an increase in mining fleet capacity. Whilst mining rates
for the year were below the original forecast, as a result of
delays in receipt of government approval for an increase
in daily usage of AN (received in October 2014), this did
not impact production and rates have increased to the
required level to feed the expanded plant. The additional
AN has allowed us to review our cut back strategies to
ensure a continuous supply of ore from the open pit to
feed the plant.
Ore production from the open pit was 10.94Mt at 0.80g/t
with an average head grade fed to the plant of 0.97g/t.
The ROM ore stockpile balance increased by 0.42kt to
2.17kt by the end of the year. Mining was primarily from
the Stage 3A area, which provided access to higher‑grade
sulphide portions of the ore‑body during the second half of
the year.
Underground mine
Ore production from the underground mine was a
record 968kt, a 65% increase on 2013. The ratio of
stoping‑to‑development ore mined increased, with 52% of
stoping ore (504kt) and 48% of development ore (464kt).
Ore tonnages from stopes increased by 78% on the
previous year.
An average head grade of 6.1g/t was mined in 2014, with
stope production grade of 6.6g/t and development grade
of 5.5g/t during the year. Grade from development ore
was below original expectations and was a decline from
2013, impacted by mining dilution with locally complex
geological structures offsetting some areas of high‑grade
mineralisation. Drill results support continuity of the higher
grades into areas planned for further development.
Ore production from the underground mine
was a record 968kt, a 65% increase on 2013.
Sukari Gold Mine production summary
Open pit mining
Ore mined(1) (‘000t)
Ore grade mined (g/t Au)
Ore grade milled (g/t Au)
Total material mined (‘000t)
Strip ratio (waste/ore)
Underground mining
Ore mined from development (‘000t)
Ore mined from stoping (‘000t)
Ore grade mined (g/t Au)
Ore processed (‘000t)
Head grade (g/t)
Gold recovery (%)
Gold produced – dump leach (oz)
Gold produced – total(2) (oz)
Cash cost of production(3)(4) (US$/oz)
Open pit mining
Underground mining
Processing
G&A
Gold sold (oz)
Average realised sales price (US$/oz)
Year ended
31 December
2014
Year ended
31 December
2013
Q4 2014
10,936
4,123
11,664
0.80
0.97
1.00
1.31
0.81
1.25
44,820
13,804
41,718
3.1
2.4
2.6
464
504
6.10
8,428
1.56
87.8
115
169
5.43
2,597
1.71
87.0
304
283
9.66
5,684
2.12
88.6
15,564
2,564
12,382
377,261
128,115
356,943
729
241
59
375
54
655
228
48
334
45
663
271
44
297
51
Q4 2013
3,161
0.77
1.27
9,642
2.1
87
87
8.25
1,400
2.13
89.9
3,804
91,546
711
291
50
293
77
375,300
125,416
363,576
1,257
1,203
1,384
88,856
1,249
(1) Ore mined includes 221kt @ 0.46g/t delivered to the dump leach in Q4 2014 (1,015kt @ 0.45g/t in Q4 2013). Gold produced is gold poured and does
not include gold‑in‑circuit at period end. Cash operating costs exclude royalties, exploration and corporate administration expenditure.
(2) Gold produced is gold poured and does not include gold‑in‑circuit at period end.
(3) Cash costs exclude royalties, exploration and corporate administration expenditure. Cash cost is a non‑GAAP financial performance measure with no
standard meaning under GAAP. For further information and a detailed reconciliation, please see glossary for definition.
(4) Cash costs of production reflect an exceptional provision against prepayments to reflect the removal of fuel subsidies which occurred in January 2012
(refer to Notes 3 and 6 respectively to the financial statements for further details).
Centamin plc Annual report 2014 | 31
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Strategic report
Operational review continued
2014 capital expenditure
A breakdown of capital expenditure during 2014 is
as follows:
Stage 4 processing plant
Operational fleet expansion
Total expansion – Sukari
Open pit development
Underground mine development(1)
Other sustaining capital expenditure
Total sustaining – Sukari
Exploration capitalised(2)
(1) Includes underground exploration drilling
US$ million
3.4
4.5
7.9
20.7
31.1
8.6
60.4
64.2
(2) Includes the Ampella Mining Ltd asset acquisition for a total consideration
of US$48.5 million (which includes a cash component of US$9.3 million
and additional assets of US$1.6 million), with the balance representing
exploration expenditure on other licence areas (excluding Sukari
underground drilling).
Capital expenditure – Stage 4 expansion
The Stage 4 process plant expansion to double the Sukari
process plant throughput was 100% completed during
the first half of 2014 for a total capital expenditure of
US$331.2 million. Nameplate capacity stood at 10Mtpa at
the end of June.
A breakdown of the major cost areas of the total project
expenditure, up to 31 December 2014 is as follows:
Mining equipment
Processing plant
Power plant
Other
Total Stage 4 project expenditure
US$ million
53.7
168.6
38.9
70.0
331.2
Development in mineralised areas took place between the
875 and 755 levels. A total of 5,701 metres of mineralised
development (4,737 metres in Amun, and 961 metres in
Ptah) were completed during the year, associated with
stoping blocks planned for mining during 2015 to 2017.
Total development for the mine was 6,625 metres including
Amun and Ptah decline development.
The exhaust ventilation circuit for the Ptah decline was
progressed, ensuring sufficient ventilation as the decline
extends deeper into the orebody. Ore drive development
continued on the Ptah 860 and 875 levels and exploration
drill cuddies were also completed on the 875 and
860 levels.
A total of 10,925 metres of grade control diamond drilling
were completed during 2014, aimed at short‑term stope
definition, drive direction optimisation and underground
resource development. A further 36,971 metres of HQ and
NQ drilling continued to test the depth extensions below
the current Amun and Ptah zones.
Processing
The annual throughput of the Sukari plant was 8.4Mt
in 2014, a 48% increase on 2013 and reflecting the
commencement of ore treatment through the new Stage 4
plant circuit. Whilst slightly behind the start‑of‑year
schedule, commissioning activities proceeded well and
supported a ramp‑up to the expanded 10Mt per annum
nameplate capacity in the third quarter of 2014. The trend
towards higher levels of throughput continued in the
fourth quarter, with plant productivity of 1,330 tonnes per
hour (tph) representing an 87% increase on 2013 annual
productivity rates.
Productivity levels have now increased for eight successive
quarters. Our objective is for the process plant in due
course to run at a throughput rate comparable with
the performance of the pre‑expansion plant, which
operated at 15‑20% above nameplate capacity (5Mtpa)
throughout 2013.
Metallurgical recoveries were 87.8%, which is a 0.8%
decrease on 2013. Work is continuing to optimise the
operational controls and improve circuit stability to ensure
recoveries return to previous levels above 88% at the
increased rate of throughput. The commissioning of the new
carbon regeneration kiln was completed in mid 2014 and
has seen a positive impact.
The dump leach operation produced 15,411oz in 2014,
a 26% increase on 2013.
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Exploration
Sukari
Drilling from underground remains a focus of the Sukari exploration programme and drilling rates were progressively
increased as new development provided improved access from below surface to test potential high‑grade extensions of
the deposit. The ore body has not yet been closed off to the north, south or at depth and further underground drilling of
the Sukari deposit will take place during 2015, predominantly from both the Amun and Ptah declines.
Select results received during the fourth quarter from the underground drilling programme which have not yet been
included in the resource base and which are in addition to results previously‑reported during 2014, include the following:
Amun
Hole number
UGRSD0216
UGRSD0217
UGRSD0218
UGRSD0226
UGRSD0228
UGRSD0230
UGRSD0232
Ptah
Hole number
UGRSD0524
UGRSD0525
UGRSD0528
UGRSD0531
UGRSD0532
UGRSD0537
Depth (m)
From
10.9
138
146.55
99.6
106
126.3
136
168.7
159
Depth (m)
From
7
74.6
90.3
113
148
207
21
78
216.15
57.15
111.6
133
330.6
To
13
147.4
147.4
100.4
108
132
137.4
174
165.35
To
11
88
93
130.9
155.6
224
26.3
83
218
62
122.5
135
333.1
Interval (m)
2.1
9.4
0.85
0.8
2
5.7
1.4
5.3
6.35
Au (g/t)
22.08
25.7
258
44.48
11.58
12.7
19.39
29.9
7.57
Interval (m)
Au (g/t)
4
13.4
2.7
17.9
7.6
17
5.3
5
1.85
4.85
10.9
2
2.5
6.6
4.2
14.7
5.2
10.3
4.1
5.8
25.5
50.5
7.6
4.1
10.7
27.5
Surface drilling from January to April 2014 continued in the northern portions of the Sukari Hill deposit (through the Ra and
Gazelle zones and into the northern Pharaoh Zone).
Seven other prospects besides Sukari Hill have been identified on the 160km2 Sukari tenement area and exploration is
being conducted under the principle that ore from these prospects would be trucked to the existing processing plant.
Reverse circulation (24,441m) and diamond drilling (703m) programmes were completed during 2014 on the Quartz Ridge
prospect to the east of the hill. Diamond drilling to the south at the Kurdeman prospect (1,459m) was also completed.
Centamin plc Annual report 2014 | 33
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Strategic report
Operational review continued
Resources and reserves – Sukari
Mineral resources and reserves at Sukari are shown in the following tables. Mineral resources were calculated as at
30 June 2013 and reserves were effective as of 30 September 2013(1).
The relevant NI43‑101 resource and reserve report was filed in January 2014 on SEDAR and is available at www.sedar.com
or on the Company’s website. The work satisfies the reporting requirements of the JORC (2012) and CIM (2004) guidelines
for reporting mineral resources.
An updated reserve and resource statement is expected to be issued during 2015.
(1) Proven and Probable mineral reserves are included in mineral resources. The reserves include ounces produced since September 2013.
Open pit resource
Measured
Indicated
Measured plus Indicated
Inferred
Cut off
0.3
0.4
0.5
0.7
1.0
Tonnes
Mt
183.81
145.65
118.71
82.55
52.90
Grade
g/t Au
0.98
1.15
1.31
1.62
2.06
Tonnes
Mt
201.54
164.30
135.05
97.39
64.35
Grade
g/t Au
1.06
1.22
1.39
1.70
2.14
Tonnes
Mt
385.35
309.95
253.76
179.94
117.25
Contained
gold
(Moz)
Grade
g/t Au
1.02
1.19
1.35
1.66
2.11
12.64
11.86
11.01
9.60
7.95
Tonnes
Mt
39.5
31.9
26.1
18.7
12.5
Contained
gold
(Moz)
Grade
g/t Au
1.1
1.3
1.5
1.9
2.4
1.40
1.33
1.26
1.14
0.96
• Totals may not equal the sum of the components due to rounding adjustments.
• The mineral resource estimate is based on the mined surface as at 30 June 2013 and adjusted for historical, current and
planned underground mining.
• All available assays as at June 2013.
• Resource data set comprises 234,788 two metre down hole composites and surface rock chip samples.
• Proven and Probable mineral reserves are included in mineral resources. The relevant NI43‑101 resource and reserve
report was filed in January 2014 on SEDAR and is available at www.sedar.com or on the Company’s website.
• 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).
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| Centamin plc Annual report 2014
Underground resource
Sukari underground reserve
Mineral resources for the underground have been
independently estimated from, and are exclusive of, the
open pit resource.
Resource
Measured
Indicated
Total M&I
Inferred
Tonnes
(‘000 t)
537
3,805
4,342
2,925
Grade
(g/t Au)
12.8
5.1
6.1
5.2
Contained
gold
(‘000oz)
222
622
844
489
• Totals may not equal the sum of the components due to
rounding adjustments.
• The underground resource has been generated from
available drilling (35,000 metres and 12,300 face
samples) and modelled using a 2g/t cut off to determine
resource outlines.
Sukari open pit reserve
Resource
Proven
Probable
Stockpile
Total
Tonnes
(Mt)
Grade
(g/t Au)
Contained
gold
(Moz)
112
100
16
228
1.04
1.16
0.45
1.05
3.76
3.73
0.23
7.70
• Totals may not equal the sum of the components due to
rounding adjustments.
• Based on mined surface as at 30 September 2013 and a
gold price of US$1,300 per ounce.
• Cut‑off grades (gold): CIL oxide 0.20g/t, CIL transitional
0.45g/t, CIL sulphide 0.44g/t, dump leach oxide 0.08g/t.
• Designed underground reserves detailed below do not
form part of the open pit reserve.
Resource
Proven
Probable
Total
Tonnes
(‘000 t)
520
1,815
2,335
Grade
(g/t Au)
11.4
6.0
7.2
Contained
gold
(‘000oz)
191
349
540
• Totals may not equal the sum of the components due to
rounding adjustments.
• Based on mined surface as at 30 September 2013 and a
gold price of US$1,300 per ounce.
• Stopes for reserves are then designed using a 3g/t cut off
and mining dilution applied at 15% @ 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.
Information of a scientific or technical nature in this
document in respect to the underground operation
was prepared under the supervision of Chris Boreham,
Underground Mine Manager of Centamin plc and Declan
Franzmann of Cross Crosscut Consulting, Australia who
are qualified as competent persons under the Canadian
National Instrument 43‑101.
Information of a scientific or technical nature in this
document in respect to the open pit was prepared under
the supervision of Patrick Smith of AMC Consultants Pty Ltd
Australia who is qualified as a competent person under the
Canadian National Instrument 43‑101.
Centamin plc Annual report 2014 | 35
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Operational review continued
Burkina Faso
Centamin’s tenements in Burkina Faso, collectively known
as the Batie West permits, are Danhal, Donko, Dounkou,
Gbingbina, Mabera, Tiopolo, Niorka, Bottara, Kaldera,
Kpere Batie, Timboura and Kpere.
Subsequent to the Ampella acquisition, Centamin
has recommenced field activities at Batie West, with a
systematic programme including RC, diamond and auger
drilling, geophysical surveys, geochemical sampling and
geological mapping. Drilling has been completed at the
Pampouna (2,685m), Konkera South (230m), Tonsu (491m)
and Tonior (3,303m) prospects for a total of 9,302m,
including 362.8m of diamond drilling.
A geophysical survey at the Wadaradoo prospect has
identified continuous chargeability and resistivity anomalies
which are proving to be useful for defining drill targets.
Further work is being undertaken at the Napelepera
East prospect.
Ampella’s mining licence application in relation to the
Tiopolo Permit was passed to the Council of Ministers
during 2014. The signed ministerial decree was issued in
the post‑reporting period, on the 5 March 2015 and an
application is being made to postpone development and
continue exploration, as provided for in the Burkina Faso
Mining Code.
Essential components of our health and safety management
systems are being integrated into our exploration
programme at Batie West. This process includes an
orientation and induction for employees and contractors
to ensure adherence to our strict policies and procedures.
The Batie West camp site has a well‑equipped clinic which
includes a full‑time paramedic.
The strategy for 2015 is to continue to systematically
explore the entire 160km strike length of the belt and
drill‑test the prospectivity of the prospects. It is expected
this will lead into further resource development work in late
2015 progressing into 2016.
Konkera resource
A summary of the February 2013 resource estimate is as follows, using a cut‑off of 0.5g/t Au:
• Indicated resource of 34.2 million tonnes at 1.7g/t gold for 1.92 million ounces gold.
• Inferred resource of 25.0 million tonnes at 1.7g/t gold for 1.33 million ounces gold (using an 0.5g/t gold cut‑off).
Measured
Indicated
Measured plus Indicated
Inferred
Cut off
0.5
1.0
2.0
Tonnes
Mt
Grade
g/t Au
Tonnes
Mt
Grade
g/t Au
Tonnes
Mt
0.0
0.0
0.0
0.0
0.0
0.0
34.2
26.3
9.2
1.7
2.0
3.2
34.2
26.3
9.2
Contained
gold
(Moz)
Grade
g/t Au
1.7
2.0
3.2
1.92
1.72
0.93
Tonnes
Mt
25.0
16.8
6.6
Contained
gold
(Moz)
Grade
g/t Au
1.7
2.1
3.2
1.33
1.37
0.68
The resource, reported in February 2013 by Ampella, was prepared using JORC (2004) guidelines. In accordance with
NI 43‑101 section 7.1 (2) the Qualified Person (QP), Don Maclean of Ravensgate has reviewed the classification criteria for
JORC (2004) and National Instrument (NI) 43‑101 Resources and is of the opinion that in this instance there are no material
differences and that the Konkera February 2013 Resource Estimate meets the criteria to be classified as a NI 43‑101
Inferred and Indicated resource.
Summary details in relation to the HSES aspects of exploring in Burkina Faso are set out in the CSR report.
36
| Centamin plc Annual report 2014
Côte d’Ivoire
Centamin has three licences in Côte d’Ivoire covering a
circa 1,200km2 area across the border from Batie West
in Burkina Faso. A further four licences are currently
under application.
A new permit known as the ‘Ondonok Dabus’ Licence,
located in the west of Ethiopia close to the regional capital
of Asosa, has been awarded. Early‑stage regional works are
underway, including access tracking and introductions to the
local authorities.
In September 2013 Centamin entered into joint venture
with AIM‑listed Alecto Minerals plc to pursue existing
and new opportunities identified by Alecto in Ethiopia.
The initial joint venture projects related to two exploration
licences Wayu Boda and Aysid Meketel. The Company
gave formal notice to Alecto in February 2015 terminating
the joint venture. Centamin’s rights in the Wayu Boda and
Aysid Metekel licences have reverted back to Alecto, such
that Alecto will hold 100% of the licences and will assume
responsibility for the ongoing commitments in respect of
the licences.
Andrew Pardey
Chief Executive Officer
23 March 2015
Field work commenced with the technical team completing
mapping, rock chip sampling and auger drilling
geochemistry. Permits and authorisations for an airborne
magnetic and radiometric survey were being prepared.
The objective for 2015 is to geologically assess the three
current permits, identify prospects and undertake first pass
RC drilling on priority targets, aimed at a path towards
resource development in 2016.
The four permits that are under application are expected to
be granted in early 2015, and are planned to be covered
by regional surface geochemistry aimed at identifying
anomalies for first‑pass aircore drilling in 2016.
Ethiopia
Centamin continued exploration on its tenement in Una
Deriem in northern Ethiopia, and in total, 2,548m were
drilled in 2014 totalling 13,783m for the region.
Trench intercepts including 20m at 1.08g/t and 22m
at 1.48g/t indicate the presence of significant surface
mineralisation. Drilling continued to test continuity of
mineralisation and positive drill results along strike.
Results received for four holes (UDM44‑47) indicated patchy
mineralisation.
View of processing plant from the top
of the ore stockpile conveyor
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Financial review
Through the Group’s
emphasis on maximising
productivity and maintaining
rigorous cost control,
Centamin has continued
to return strong earnings
and cash flow generation
despite the weaker gold
price environment.
Pierre Louw
Chief Financial Officer
The financial statements have been prepared in accordance
with International Financial Reporting Standards (“IFRS”)
as issued by the International Accounting Standards Board
(“IASB”) and adopted for use by the European Union and
in accordance with the Companies (Jersey) Law 1991.
The Group financial statements comply with Article 4 of
the EU IAS Regulation.
Through the Group’s emphasis on maximising productivity
and maintaining rigorous cost control, Centamin has
continued to return strong earnings and cash flow
generation despite the weaker gold price environment,
with average realised gold prices of US$1,257 per ounce
being US$127 per ounce lower than in the prior year. Now
in its sixth year of production, the Sukari Gold Mine remains
highly cash generative, with a competitive cash operating
cost of production of US$729 per ounce and solid EBITDA
of US$165.4 million.
Centamin remains committed to its policy of being 100%
exposed to the gold price through its unhedged position,
and maintained a robust cash and cash equivalents balance
of US$125.7 million as at 31 December 2014.
Centamin announced a maiden interim dividend
in August 2014 of 0.87 US cents per ordinary share
(US$9.9 million total distribution) and, subject to
shareholder approval at the AGM on 18 May 2015,
a final dividend of 1.99 US cents per share (totalling
approximately US$23 million) is proposed to be paid on
29 May 2015 to shareholders on the register as of 24 April
2015. The ex‑dividend date is 23 April 2015 for LSE listed
shareholders and 22 April 2015 for TSX listed shareholders.
During the first half of the year the Group acquired Ampella
Mining Limited for a total consideration of US$48.5 million.
This included a cash component of US$9.3 million and
assets of US$1.6 million. The transaction has been
accounted for as an asset acquisition, using fair value
measurement principles, with exploration rights covering
an area of 2,200km2 in Burkina Faso and 1,200km2 on
Côte d’Ivoire, recorded as an addition to mineral properties
in the period.
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The Company proposed a final dividend for 2014
of 1.99 US cents per share (approx. US$23 million),
for a total full year dividend of 2.86 US cents per share.
Revenue
Other operating costs
Revenue from gold and silver sales has decreased by 6% to
US$473 million, as a result of a 3% increase in gold sold to
375,300 ounces offset by a 9% decrease in the average gold
price to US$1,257 per ounce.
Cost of sales
Cost of sales represents the cost of mining, processing,
refinery, transport, site administration and depreciation and
amortisation, as well as pre‑production costs incurred prior
to commercial production and movement in production
inventory. Cost of sales is inclusive of exceptional items of
US$62.5 million (refer to Note 6 to the financial statements
for further information) and has increased by 29% to
US$358.3 million, as a result of:
(a) a 16% increase in mine production costs to
US$275.9 million, primarily due to an increase in
activity year on year with tonnes moved increasing
by 7% and tonnes treated by 48%;
(b) a 66% increase in depreciation and amortisation from
US$50.8 million to US$84.2 million, a result of an increase
in the underlying and mine development properties
due to the commissioning of Stage 4 in addition to the
change in accounting estimate of the useful economic
life of the Sukari plant and equipment capitalised within
plant and equipment; offset by
Other operating costs reported comprises expenditure
incurred for communications, consultants, directors’ fees,
stock exchange listing fees, share registry fees, employee
entitlements, general office administration expenses, the
unwinding of the restoration and rehabilitation provision,
foreign exchange movements, the share of profit/loss in
associates and the 3% production royalty payable to the
Egyptian government. Other operating costs increased by
40% to US$30.4 million, as a result of:
(a) a US$12.5 million increase in net foreign exchange
movements from a US$9.5 million gain to a
US$2.9 million loss; and
(b) a US$1.1 million donation (loss on disposal of assets) of
two generators to Marsa Alam; offset by
(c) a US$1.6 million decrease in the share of loss of
associate, as a result of having written off the costs
associated with the interest held in Sahar during 2013;
(d) a US$0.9 million decrease in royalty paid to the
government of the ARE in line with the decrease in
gold sales revenue; and
(e) a US$2.3 million decrease in corporate costs.
Other charges
Impairment charges have been recorded as follows:
(c) a US$1.9 million credit for movement in production
inventory a result of an increased addition to the ROM
ore stockpile.
(a) a US$2.3 million write off of capitalised exploration costs
in relation to the joint venture with Alecto Minerals plc;
and
(b) a US$0.4 million impairment loss recognised in relation
to the investment in Nyota Minerals Limited.
Centamin plc Annual report 2014 | 39
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Financial review continued
Finance income
Finance income reported comprises interest revenue
applicable on the Company’s available cash and term
deposit amounts. The movements in finance income are in
line with the movements in the Company’s available cash
and term deposit amounts.
Net profit
As a result of the factors outlined above, the
Group recorded a net profit before tax for the
year ended 31 December 2014 of US$81.6 million
(2013: US$184.0 million).
Earnings per share
Earnings per share of 7.21 cents compare with 16.87 cents
in 2013. The decrease was driven by the lower net profit, as
outlined above, as well as an increase of 4.4% in share count
as a result of the Ampella acquisition.
Comprehensive income
Other comprehensive income has decreased by
US$6.8 million to US$0.1 million as a result of the
revaluation of available‑for‑sale financial assets. The prior
increase was a result of the cumulative loss that had
been recognised in other comprehensive income being
reclassified from equity to profit.
Financial position
At 31 December 2014, the Group had cash and
cash equivalents of US$125.7 million compared to
US$106.0 million at 31 December 2013. The majority of
funds have been invested in international rolling short‑term
higher interest money market deposits.
Non‑current assets have increased by US$48.0 million or 5%
to US$1,077.4 million, as a result of:
(a) exploration and evaluation assets have increased by
US$64.2 million to US$124.0 million as a result of the
drilling programmes in Sukari Hill, the Sukari tenement
area, Ethiopia, Burkina Faso and Côte d’Ivoire, this
increase is inclusive of a US$2.3 million write off of
expenditure in relation to the joint venture with Alecto
Minerals plc;
(b) a US$4.8 million increase in prepayments to EMRA in
relation to advance payments against future profit share;
(c) a US$65.0 million increase in property, plant of
equipment, mainly relating to net capitalised
work‑in‑progress costs of US$68.3 million (comprising
US$3.4 million for the Stage 4 processing plant,
US$4.5 million for the open pit mining fleet expansion,
US$20.7 million for open pit development, US$31.1
million for underground development and US$8.6
million for other sustaining capital expenditure) and
US$4.3 million in relation to the acquisition of Ampella
Mining Limited, offset by a US$5.2 million reduction in
the rehabilitation asset and disposals of US$2.3 million.
This is offset further by a depreciation and amortisation
charge of US$84.2 million; and
(d) a US$0.6 million decrease in the available‑for‑sale
financial assets to US$0.4 million as a result of:
i) a US$1.0 million devaluation (including foreign
exchange loss) in the shares held in Nyota
together with the sale of eleven million shares for
US$0.1 million; offset by
ii) a US$0.4 million increase as a result of the receipt of
Current assets have increased by US$24.0 million or 9% to
US$293.4 million, as a result of:
the KEFI shares.
(a) stores inventory has increased by US$3.6 million to
US$104.9 million as a result of the commissioning of
Stage 4. Mining stockpiles and ore in circuit inventory has
increased by US$1.9 million to US$35.8 million as a result
of the increase in gold in circuit at period end;
Current liabilities have decreased by US$43.9 million
to US$34.4 million as a result of the management of
creditor days.
Non‑current liabilities reported during the period have
decreased by US$4.6 million as a result of:
(b) the completion of the Stage 4 expansion resulting in
an increase in the cash inflows and a US$19.0 million
increase in the cash reserves; offset by
(a) a change in estimate of the future rehabilitation costs as
a result of a detailed review having being undertaken as
at year end as a result of the commission of Stage 4; and
(c) a US$0.6 million decrease in gold sale receivables.
(b) the unwinding of the discount on the provision
for rehabilitation.
Issued capital has increased by US$49.1 million due to the
issue of shares in relation to the acquisition of Ampella
and vesting of awards offset by US$1.7 million of own
shares acquired.
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Share option reserves reported have decreased by
US$1.6 million to US$4.1 million as result of the forfeiture
and vesting of awards and the resultant transfer to
accumulated profits and issue capital respectively, offset by
the recognition of the share‑based payments expense.
Accumulated profits increased by US$73.1 million as a result
of the increase in the profit for the year attributable to the
shareholders of the Company of US$81.6 million together
with a US$0.1 million loss on available‑for‑sale financial
assets in relation to the KEFI shares and a US$1.5 million
transfer from the share options reserve as a result of the
forfeiture of awards, offset by the US$9.9 million interim
dividend payment.
Cash flows
Net cash flows generated by operating activities comprise
receipts from gold and silver sales and interest revenue,
offset by operating and corporate administration costs.
Cash flows have decreased by US$133.5 million to
US$111.6 million, primarily attributable to:
(a) a decrease in revenue, due to a lower average realised
price offset by higher gold sales;
(b) an increase in cash outflows flows in relation to
receivables and payables;
(c) a decrease in gross margins as a result of the decrease in
the average realised gold price; offset by
Net cash flows used in investing activities comprise
exploration expenditure and capital development
expenditures at Sukari including the acquisition of financial
and mineral assets. Cash outflows have decreased by
US$204.1 million to US$78.8 million. The primary use of
the funds during the year was for investment in capital
work‑in‑progress in relation to the Stage 4 development,
the open pit and underground development, additional
mining assets and exploration expenditures incurred, which
was offset by US$9.3 million cash acquired through the
assets acquired in Ampella Mining Limited.
Net cash flows generated by financing activities comprise
the exercising of shares issued under the Company’s
Loan Funded Share Plans (“LFSPs”) and options under
the Employee Share Option Plan (“ESOP”) respectively in
addition to dividends paid. During the year:
(a) 1.7 million of the Company’s own shares valued at
US$1.7 million were acquired and awarded as part
of the Deferred Bonus Share Plan; and
(b) a US$9.9 million interim dividend was paid during
the year.
Effects of exchange rate changes have decreased by
US$2.0 million as a result of the strong performance of the
US$ to the Euro and A$.
(d) a decrease in cash outflows in relation to inventories
and prepayments, as a result of the commissioning of
Stage 4.
Pierre Louw
Chief Financial Officer
23 March 2015
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Year ended
Year ended
31 December 31 December
2013
2014
Revenue(1)
Profit before tax(3)
Basic EPS(3)
Diluted EPS(3)
EBITDA(2)(3)
Net cash generated from operations(3)
Cash and cash equivalents
Group production
Attributable sales
Group cash operating costs(2)(3)
Total assets
US$’000
472,581
US$’000
81,564
Cents
Cents
7.21
7.11
503,825
183,969
16.87
16.77
US$’000
165,384
234,167
US$’000
111,602
245,143
US$’000
125,659
105,979
Ounces
377,261
356,943
Ounces
375,300
363,576
US$ per ounce
729
663
US$’000 1,370,737
1,298,727
Percentage
change
(6%)
(56%)
(57%)
(58%)
(29%)
(54%)
19%
6%
3%
10%
6%
(1) See total revenue which is analysed in Note 5 to the financial statements.
(2) EBITDA and cash operating costs are non‑GAAP financial performance measures with no standard meaning under International Financial Reporting
Standards (“IFRS”) as adopted by the European Union and Article 4 of the IAS Regulation IFRS.
(3) Results reflect an exceptional provision against prepayments to reflect the removal of fuel subsidies (refer to Notes 3 and 6 to the financial statements for
further details).
Centamin plc Annual report 2014 | 41
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Principal risks
Centamin takes a number of measures to mitigate risks
associated with its underlying operational and exploration
activity which are monitored and evaluated regularly.
Risks identified are rated in two distinct categories,
‘probability of occurrence’ and ‘overall impact on
the Company’.
Both categories are rated as high (H), medium (M) or low
(L). The first category concerns how likely the risk is to
occur and the second is based on the relative impact on
the Company if the risk did occur. This is balanced by the
mitigation steps in place.
Principal risks affecting the Centamin Group
The exploration for and development of metals and mineral
resources, together with the construction and development
of mining operations is a speculative activity that involves a
high degree of risk.
Centamin conducts a variety of risk assessments throughout
the year, which are reviewed by the Audit and Risk
Committee and the Board in accordance with best practice
guidelines and in compliance with the UK Corporate
Governance Code and relevant Canadian requirements.
Centamin takes a number of measures to mitigate risks
associated with its underlying operational and exploration
activity which are monitored and evaluated regularly.
Due to the nature of these inherent risks, it is not possible
to give absolute assurance that mitigating actions will be
wholly effective.
The descriptions below describe the current status of
the key risks affecting Centamin and its operational and
exploration activities together with the measures to mitigate
risk and the preserved risk by management.
Assessed risks
Principal risks
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Principal risks
Corporate risk register
Operational risk assessment register
Business continuity planning
Open pit mining
Underground mining
Process plant
Supply and warehouse Information technology HSES environment
Exploration
Site security
Advanced exploration
The table above shows the risk matrix structure and review
and hierarchy
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Low
Medium
High
Likelihood of occurrence
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Risk category
Description of potential risks
Mitigation/commentary
Mitigating factors include continued longer
term growth and expansion through
exploration and acquisition targets both
inside and outside of Egypt. The regional
exploration of the licence portfolio in Burkina
Faso and Côte d’Ivoire continues on the
existing 1.92Moz Indicated and 1.33Moz
Inferred resource.
Until further production growth beyond
Sukari is identified the potential impact
remains high, however, safeguarding the
project is paramount to the Company and
the required systems, policies and practices
are in place to identify, assess and reduce
these threats.
Mitigating factors also include ensuring
co‑operative and timely correspondence and
maintaining good relations with EMRA.
Loss of
revenues due to
single project
dependency for
near‑term revenues
Likelihood: medium
Impact:
high
Sukari Project
joint venture risk
and relationship
with EMRA
Likelihood: medium
Impact: medium
The Sukari project currently constitutes Centamin’s main mineral
resource and sole mineral reserve and near‑term production and
revenue. The Project itself has two distinct ore sources (open pit and
underground), the processing plant has two separate flotation circuits
and two separate power stations. Whilst one project the nature of
the design of the plant provides adequate mitigation and reduces
the relative likelihood of dependence compared to a single layer
plant design.
However, there is still a risk of any adverse development affecting the
progress of the Sukari Project such as, but not limited to, restrictions
on operating, import and export permissions, unusual and unexpected
geologic formations, seismic activity, rock bursts, cave‑ins, flooding
and other conditions involved in the drilling and removal of material,
any of which could result in damage to, or destruction of, mines and
other producing facilities, or any other event leading to a reduction in
production or closure of mines or other producing facilities, damage
to life or property, environmental damage, hiring suitable personnel
and engineering contractors, or securing supply agreements on
commercially suitable terms.
SGM is owned jointly by PGM and EMRA, with equal board
representation, whilst responsibility for the day‑to‑day management of
SGM rests with the general manager, who is appointed by PGM. The
board of SGM operates by way of simple majority. As such, should the
board of SGM be unable to reach consensus on a matter requiring
board‑level approval or in the event of any dispute arising between
PGM and EMRA, which PGM is unable to amicably resolve, it may have
to participate in arbitration or other proceedings to resolve the dispute,
which could have a material and adverse effect on Centamin’s business,
results of operations, financial performance and prospects.
Any dispute with EMRA may adversely affect Centamin’s ability to
manage the Sukari Project in the most effective way. Such a dispute
could arise under the cost recovery and profit share provisions of the
Sukari Concession Agreement.
The successful management of the Sukari Gold Mine is in part
dependent on maintaining a good working relationship with EMRA. The
Group has regular meetings with officials from EMRA and invests time in
liaising with relevant ministry and other governmental representatives.
Management and the Board of Directors believe the Group has a
positive and constructive working relationship with EMRA. The Group
complies with all terms and conditions of the Concession Agreement
covering the Sukari Gold Mine. EMRA has equal representation on
the Board of Sukari Gold Mines and is involved to that extent in
approving and auditing all work programmes and expenditures. EMRA
inspectors are closely involved in monitoring all aspects of the Sukari
operations. Current discussions with EMRA are focused on determining
the exact timing and quantum of the first payment of profit sharing for
Sukari and the interpretation of certain provisions of the Concession
Agreement. Centamin has shown its willingness to assist EMRA
through prepayments in relation to future profit share made in 2013
and 2014. Whilst the impact of any dispute could have the potential to
be problematic, management believes there is a low probability of a
material deterioration in relationships with EMRA.
Centamin plc Annual report 2014 | 43
Strategic report
Principal risks continued
Risk category
Description of potential risks
Mitigation/commentary
Failure to achieve
production
estimates
Likelihood: low
Impact: medium
Centamin currently prepares estimates of future gold production for
its ongoing development of the Sukari Gold Mine. There can be no
assurance that Centamin will achieve its production estimates and such
failure could have a material and adverse effect on Centamin’s future
cash flows, profitability, results of operations and financial condition.
The realisation of production estimates are dependent on, amongst
other things: the accuracy of mineral reserve and resource estimates;
the accuracy of assumptions regarding ore grades and recovery rates;
ground conditions (including hydrology); physical characteristics of
ores; the presence or absence of particular metallurgical characteristics;
the accuracy of estimated rates and costs of mining ore haulage, the
availability of suitable machinery and equipment and consumables
(including access to and permitting for sufficient quantities of
ammonium nitrate and related blasting products), skilled labour and
processing capacity and all logistics for consumables and parts. During
2014 due to various factors previously disclosed it was necessary to
reduce the guidance for 2014 and this also had an impact on the
guidance for 2015.
Reserve and
resource estimates
Likelihood: medium
Impact:
low
Mineral resource and reserve figures are prepared by Centamin Group
personnel, with the assistance of independent geologists. By their
nature, mineral resources and reserves are estimates based on a range
of assumptions, including geological, metallurgical technical and
economic factors. There can be no guarantee that the anticipated
tonnages or grades expected by Centamin will be achieved.
Currency and gold
price risk
Likelihood: medium
Impact:
high
A significant portion of Centamin’s operating expenses are incurred
in US dollars, Australian dollars, Egyptian pounds and Great British
pounds, whilst its revenues from gold sales are in US dollars.
Furthermore, Centamin does not currently maintain any facilities for
hedging its exposure to currencies or the price of gold.
Any appreciation in currencies other than US dollars in which the Group
incurs material expenses or adverse fluctuations in the gold spot price,
could have a material and adverse effect on Centamin’s business, results
of operations, financial performance and prospects.
Litigation risks
Likelihood: medium
Impact:
high
Centamin’s finances, and its ability to operate in Egypt, may be severely
adversely affected by current and any future litigation proceedings and
it is possible that further litigation could be initiated against Centamin
at any time. Centamin is currently involved in litigation that relates both
to (a) the validity of its exploitation lease at Sukari and (b) the price at
which it can purchase Diesel Fuel Oil.
Whilst there can be no certainties,
production to date has provided confidence
in management’s estimation and mine
planning methods and with the expanded
processing plant becoming fully operational
in 2014, the prospect of improvements in
reliable forecasting is increased the risk of
failure to meet production estimates has
been reduced from high to moderate likely
occurrence.
The impact on the Company (and investors)
remains moderate, as failure to achieve
production estimates can adversely affect
the profitability of the Company and its
share price.
Management has implemented processes
to continuously monitor and evaluate the
current life of the Sukari Gold Mine, mine
plans and production targets. The most
recent technical update was completed in
the Form 43‑101F1 dated 30 January 2014
and is available at www.sedar.com. This took
into account the latest drill results, higher
cost environment and the timing of the
Stage 4 commissioning. Whilst there are no
certainties, production to date has provided
confidence in management’s estimation and
mine planning methods.
Centamin manages its exposure to gold
price fluctuations by retaining a focus on
keeping operating costs as low as possible.
However, the risks relating to gold price
reductions remain high, as it is the Group’s
policy not to hedge its gold price exposure.
The Group has not entered into forward
foreign exchange contracts. Natural hedges
are utilised wherever possible to offset
foreign currency liabilities.
In order to mitigate this risk Centamin has:
a) engaged appropriate legal advice and
continues to actively pursue its legal rights
with respect to the existing litigation and
its legal advisers believe that Centamin
will ultimately be successful in both of
these cases; and
b) management and the Company’s legal
advisers monitor both activity in court and
local media for signs of any litigation that
may threaten its operations, finances or
prospects.
The potential for serious impact should be
balanced against Centamin’s adherence
to local laws and agreements, as well as
the Egyptian government’s support of
Centamin’s investment and the new law 32
of 2014 that should protect Centamin
against litigation of this nature as well the
fact that Egypt and Australia have in place a
bilateral investment treaty.
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Risk category
Description of potential risks
Mitigation/commentary
Centamin actively monitors legal and
political developments in Egypt, West
Africa and Ethiopia and actively engages in
dialogue with relevant government and legal
policy makers to discuss all key legal and
regulatory developments.
In respect to the Company’s operations
in Egypt, the potential for serious impact
should be balanced against the Egyptian
government’s support of Centamin’s
investment and contribution to both revenue
and development of the mining industry.
In respect to West Africa and Ethiopia,
policy has developed over many years to
encourage foreign investment and the
development of mining operations, which
continues to be the focus of governments
in these regions.
Political risk
Likelihood: medium
Impact:
high
Centamin’s exposure to production and exploration activities are
primarily in Egypt, a country which has been subject to civil and
military disturbance in the last two years. There is no assurance that
future political and economic conditions in Egypt will not result in the
government of Egypt adopting different policies respecting foreign
development and ownership of mineral resources. Any such change in
policy may result in changes in laws affecting ownership of assets, use
of explosives, tenure and mineral concessions, taxation, royalties, rates
of exchange, environmental protection, labour relations, repatriation of
income and return of capital, which may affect both Centamin’s ability
to undertake exploration, development and operational activities in
respect of future properties as well as its ability to continue to explore,
develop and operate those properties in respect of which it has
obtained mineral exploration and exploitation rights to date. Egypt also
has limited experience of large scale mining operations and current laws
do not necessarily reflect current international practices (for example in
relation to 24 hour blasting techniques).
The Concession Agreement with EMRA and the Egyptian government,
was declared into Egyptian Law No. 222 of 1994 which further protects
the Company’s licence rights. The Law received full parliamentary
approval as required by Egyptian law.
In 2014, Centamin acquired ASX‑listed Ampella Mining Limited and
now operates on exploration licences in Burkina Faso and Côte d’Ivoire.
Centamin continues to operate on its existing exploration licences in
the North of Ethiopia and also on licences held in the south and west
of Ethiopia through the tenements held through the joint venture with
Alecto Minerals plc.
There is no assurance that future political and economic conditions
in these countries will not result in the governments adopting
different policies in respect to foreign development and ownership
of exploration and exploitation licences.
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Strategic report
Corporate social responsibility statement
The Committee is
responsible for making
recommendations to the
Board on all matters in
connection with issues of
the environment, workplace
health and safety, and
the development of
sustainable engagement
with communities and
stakeholders.
Trevor Schultz
Chairman of the HSES Committee
Dear shareholders
I am presenting this report in my capacity as Chairman
of the HSES Committee, a committee of the Board of
Centamin plc.
The Committee is responsible for making recommendations
to the Board on all matters in connection with issues of
the environment, workplace health and safety, and the
development of sustainable engagement with communities
and stakeholders.
In compliance with the reporting requirements set out in the
Committees Charter, during the year the HSES Committee
worked closely with management to:
• develop and implement HSES policies in Burkina Faso
and Côte d’Ivoire following the acquisition of Ampella
Mining Limited in 2014;
• develop internal reporting to help identify and mitigate
events which impact upon the lost time due to injury
(“LTI”) frequency rate;
• review monthly and quarterly reporting on corporate
sustainable development (“CSD”) issues and initiatives;
• review environmental, health, safety and contingency
planning issues; and
• receive updates, reports and associated KPIs in relation
to new and existing initiatives designed to support local
social and environmental projects.
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We aspire to the highest standard of corporate social
responsibility and take our duty to ensure safe and
sustainable operations very seriously at all stages, from
initial and advanced exploration through to production.
Key issues were raised by the Committee during the year,
such as the need to remove or reduce the scrap yard at
Sukari and understanding the improvements (quarter on
quarter) in HSES records. The Committee was encouraged
by the following during the year:
• improvements in LTIFR during Q3 2014 which remained
at low levels over the course of the year (although slightly
above 2013 and higher than target rates);
• hygiene standards improved progressively during
the year;
In addition, the Committee considered the sustainability
and environmental issues in relation to the newly acquired
resource in Burkina Faso. The Committee were encouraged
by the proposals set out in the EIA for Burkina Faso which
allowed the Committee to consider the likely resource
needs for future operational activity.
The report below covers the key HSES issues for Sukari and
concludes with information relating to the newly acquired
resource in Burkina Faso.
• regular and progressive training programmes at Sukari;
and
• management of the scrap area at Sukari.
Trevor Schultz
Chairman of HSES Committee
23 March 2015
The Committee visit Sukari at least annually and take
the opportunity to meet with senior personnel onsite as
well as members of the HSES department. This helps the
Committee have a clear understanding of the controls,
procedures and HSE practices in place onsite.
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Strategic report
Corporate social responsibility statement continued
Case study – tool box talk
The tool box talks are an effective and easy tool for
safety communication. Full time trainers are available in
almost all operational departments to provide in‑field
training and coaching for the work force. Tool box talks
before shifts are used to address safety issues, tips and
lessons learnt.
The talk provides an environment for interactive
discussion and promotes a safety conscious culture.
This timely safety communication addresses numerous
safety aspects and supplements formal training.
Our safety professionals are continuously developing
material for the talks in a simple form using brief text,
photos and drawings. The tool has proved to be a very
successful method of continuous safety learning.
Training
A training plan is set and safety‑specific training is rolled
to employees based on business and employee needs.
All training is undertaken by the onsite HSE department.
Mandatory training is rolled out for all departments,
area‑specific training, field training and coaching.
The following areas highlight the Company’s commitment
to a comprehensive training programme which we believe
provide the best means of reducing work place incidents:
• a tailored safety induction programme for new
employees, contractors and visitors;
• incident investigation;
• training modules addressing job hazard analysis, risk
assessments, incident investigations, work permits, first
aid, fire extinguishing, and hazard identification; and
• technical competence tuition, such as isolation training,
lifting procedures, confined space entry, hot work and
working at height.
Training is repeated regularly through refresher courses
and employees are all tested to ensure a high level of
understand and application.
Proactive approach and emergency response planning
Centamin implements a rigorous approach to emergency
preparedness and response. Such programmes represent an
important element of our safety management system. Being
alert and fully prepared for any emergency should minimise
the magnitude and consequences for any unprecedented
event. We have developed a detailed emergency plan with
full emergency response procedures for different scenarios.
Health, Safety, Environmental and
Sustainability Committee
The Health, Safety, Environment and Sustainability
Committee members at the date of this report
are Trevor Schultz (Chairman), Mark Bankes and
Kevin Tomlinson, all of whom are independent directors
of the Company. Bob Bowker, who retired in January 2015,
served as Chairman of the Committee during 2014.
Health and safety
The Company strives for a harm free, healthy and
productive work place. We have invested in robust systems,
procedures and controls to manage occupational health and
safety risks to an acceptable level. These working practices
allow us to comply with local legislation, licence and permit
conditions, as well as international best practice standards.
In 2014, we maintained low levels of lost time injury
frequency rate (“LTIFR”) whereby we aim to operate in an
injury free environment, however 2014 was above our target
and slightly above our 2013 rate.
Safety conscious culture
Safety is the responsibility of each and every employee
(including members of staff, senior management and heads
of department) and the level of safety is a function of the
collective behaviour of all individuals. Accordingly we invest
in maintaining a safety conscious culture in our work place,
encouraging individual accountability for working safely.
This is done via ongoing training and safety initiatives as set
out further below.
We continuously work on developing the safety culture of
our employees through strengthening their accountability
for the safe conduct of work place and imbedding the
concepts of doing work the right safe way. Safety is
discussed at pre‑shift meetings, daily planning meetings
and weekly safety meetings. Safety alerts are also
periodically issued and sent to all employees.
Environmental policy
An environmental policy has been established with the
aim of ensuring environmental protection and sustainable
development. The policy is based on pollution prevention
and abatement approaches to protect the environment,
community and indigenous people.
The environmental management scheme for the Sukari
Project includes a monitoring programme designed to
evaluate compliance with local environmental laws and
regulations, company policies and international best
practices. It provides information for periodic review
and adjustment of the environmental management
plan ensuring that environmental protection is achieved
through early detection and mitigation of negative
environmental impacts.
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We require all contractors operating onsite to adhere to
the Company’s health and safety policies and procedures.
We ensure they have the same health and safety induction
training and also have full access to the health services
available to our employees onsite.
Evaluating safety performance and safety
performance indicators
The monitoring systems in place address:
• workplace and occupational health parameters;
• fitness to work; and
• adherence to procedures and standards.
The performance evaluation is undertaken by an in‑house
team and reviewed by a third party. Monitoring includes the
collation of data, medical surveillance, auditing and visual
inspection, as well as systematic observation of the work
and behaviour of staff.
Reactive or responsive evaluation is also undertaken to
investigate and analyse incidents and identify root causes
to help implement corrective measures.
Employees and contractors are encouraged and expected
to report all hazards and near‑misses for investigation and
analysis. This embodies the principles adopted by the
HSES policies and procedures that everyone shares and
contributes in a responsible manner to creating a safe
working environment.
A core element of our management system is to assess our
safety performance and identify needs for improvement.
Briefing meeting before shift
Case study – establishing a capable
emergency team
Creating and maintaining a qualified emergency team
is an essential element of emergency preparedness.
At Sukari, we have structured a very competent
response and rescue team to be immediately and
efficiently mobilised in case of emergency situations.
The team has received ample training and was coached
for a year by a resident emergency response expert.
The capacity building programme includes theoretical
and practical training as well as drills to simulate
different emergency situations. The team is equipped
with the required response equipment, supplies and
rescue facilities. A training plan is implemented to
ensure full competence of the team.
Our emergency arrangements include fire response
drills, fire control panel testing (with manual call
points) and smoke detectors, foam and water fire
suppression systems as well as a fire truck for intense
fires. A medical evacuation scheme (MEDIVAC) is in
place supported by first aid facilities, a fully equipped
clinic with doctors and qualified nurses as well as an
ambulance for transportation to the nearest medical
centres or hospitals. In addition, we coordinate with
external entities and authorities for support during a
fire. These include the local fire station, air transport
companies, police and hospitals.
Risk assessment is integrated into all operational activities
onsite and we continuously evaluate potential and actual
hazards, their probability and likely outcomes to determine
the level of risk and appropriate risk mitigation and
safeguards. A variety of different procedures and systems
have been developed and implemented including the
Work Permit System and Job Hazard Analysis for new and
non‑recurrent activities.
Our approach towards emergency preparedness and
response planning is detailed, rigorous and well‑rehearsed,
ensuring the mine is fully prepared for any conceivable
emergency. In 2014, we rehearsed 102 emergency drills
of different types at Sukari.
An inspection programme operates to ensure all emergency
response equipment is maintained and is fit for purpose at
all times.
Contractor management
Contractors are integrated into the Company’s health and
safety onsite programme whether for long periods of time
or for short assignments and contractor safety is a key
element of our safety management system. Currently there
are nearly 500 permanent contractors at Sukari.
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Corporate social responsibility statement continued
Our safety performance in 2014 saw a considerable
improvement in the medical treated injury (“MTI”) frequency
rate, with a small increase in our lost time injury (“LTI”)
frequency rate. We have had no fatal incidents at Sukari.
The monitoring plan at Sukari covers the following
key areas:
• workplace environment to detect areas that might need
further controls;
• stability of structures to detect any potential movement,
cracks or other instabilities;
• occupational health parameters to detect health impacts
due to work‑related matters;
• fitness to work to detect cases under the influence of
alcohol or illegal drugs; and
• implementation of safety procedures and standards to
ensure they are adhered to and well assimilated.
Monitoring methodology includes measurements,
medical surveillance, auditing, visual inspection, as well as
systematic observation of the work and behaviour of staff.
Measurements are performed through in‑house capabilities
as well as third‑party entities.
The information collated from these processes is reported
to the Committee on a monthly and quarterly basis.
The evaluation of our safety performance is essential to
indicate the effectiveness of our systems and controls and
identify opportunities for continuous improvement.
Face shovel in open pit
Case study – traffic safety on site
Traffic safety at Sukari is a key aspect of our safety
management system. We have a well‑developed
system of standards for traffic management and ensure
the safe interaction of surface mobile equipment
on roads, within and adjoining the site property
and facilities.
A permit system at Sukari is adopted for site driving
with more stringent requirements for in‑pit driving.
Different areas of site have set speed limits and are
equipped with traffic signage showing instructions to
follow. Vehicle pre‑start checking is a fixed practice
each shift.
All vehicles are equipped with specialised safety
features, flashlights and whip aerials and flags for
improved visibility. Road maintenance, grading
and sheeting are routinely carried out to maintain a
consistent gradient and smooth surface. Inspection is
periodically undertaken to make sure procedures and
standards are adhered to.
A defensive driving practical training course
is rolled out to operators and evaluations are
periodically undertaken.
2014
Frequency
2013
Frequency
2012
Frequency
rate(1)
rate(1)
rate(1)
2011
Frequency
rate(1)
Fatality
(“FA”)
Lost time
injury
(“LTIF”)
Medical
treatment
injury
(“MTIF”)
—
—
—
—
0.39
0.36
0.69
1.25
0.39
1.28
1.37
1.07
(1) based on 200,000 working hours
We are now focusing on our exploration project in Batie to
ensure the full integration of health and safety procedures
and systems. Data is being reported periodically to feed into
Centamin’s performance monitoring system performance.
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Health and wellbeing
Our employees and contractors
Sukari has a well‑equipped clinic providing health and
emergency related services on a 24/7 basis. A doctor and
qualified nurse manage the clinic and provide professional
services in normal conditions. It is also equipped to respond
to emergency situations. An equipped ambulance is
continuously on call to transfer any cases that need higher
medical treatment to the Marsa Alam hospital, about 40km
away from Sukari.
Medical tests, including blood analysis, are conducted
particularly for laboratory personnel and those working with
chemicals and metals. Health tests are also mandatory for
people working in the kitchen.
Our health programme has a special focus on food safety
and hygiene, given we have a large mess that provides meals
to about 1,500 employees and contractors per day. In 2014,
a wellbeing programme focused on hygiene and food
safety management was undertaken, with in‑house hygiene
professionals supervising, inspecting and auditing standards
at Sukari as well as periodic external audits. In 2014, the
programme yielded very satisfactory results and a higher
level of hygiene was achieved and maintained. Detected
discrepancies were addressed by corrective actions.
In 2014, the following audits were also carried out and the
outcomes were as follows:
• internal environmental audits confirmed the results were
within acceptable limits;
• water quality testing carried out by an external laboratory
confirmed no major anomalies;
• air quality audits conducted by Cairo University recorded
no anomalies and confirmed that Sukari was compliant
with required standards; and
• emissions were reported to be at safe levels, as required
by Egyptian law and international standards set by the
World Bank.
Our people are core to the success of our business.
Accordingly, we actively invest in securing the full spectrum
of skills and competencies needed for effective operations.
The Company’s activities provide direct and indirect
employment, training and work experience to many
Egyptian nationals, as well as creating an immediate
revenue stream for the local economy and the Egyptian
government.
Our workforce has witnessed considerable growth since we
started production in 2010, both in terms of the number
of employees and the range of skills and expertise now
required by our workforce.
In Egypt, we employ 1,296 people of whom 95% are
Egyptian nationals and 5% are experienced mining
professionals, which is well below the legal percentage of
10% as per the Egyptian laws. Approximately 50% of our
Egyptian nationals are from upper Egypt, the area where
Sukari is situated, which typically has less economic activity
than the more prosperous areas around the Nile Delta.
Only 1% of our Egyptian workforce are women, mainly
because social conditions in Egypt and in the Middle East in
general do not encourage the work of female employees in
remote sites away from their children. A greater percentage
of women are employed throughout the Centamin
administrative offices.
The table below sets out the number of people employed
by the Group (excluding contractors) by country, during the
years stated.
Year ended
Year ended
31 December 31 December 31 December 31 December 31 December
2010
Year ended
Year ended
Year ended
2014
2012
2013
2011
Year ended
30 June
2010
Year ended
30 June
2009
Egypt
Australia
Jersey
Ethiopia
Burkina Faso
Côte d’Ivoire
Total
1,296
1,340
1,120
1,106
985
816
362
1
10
31
64
11
1
9
37
—
—
2
7
45
—
—
2
2
47
—
—
3
—
—
—
—
3
—
—
—
—
2
—
—
—
—
1,413
1,387
1,174
1,157
988
819
364
The table above excludes contractors onsite. The number of contractors onsite at Sukari, Egypt during the year averaged
491 individuals.
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Corporate social responsibility statement continued
Human resources principles
Capacity building and development
We strongly encourage and support our employees to be
self‑motivated and to realise their career potential. We work
with all our employees closely and encourage those who
show keenness and desire to develop new personal skills
and experience.
We value regular communication and feedback with
employees which helps enhance the efficiency, effectiveness
and safety of everyday activities and overall operational
performance.
Non‑Egyptian foreign experts are required onsite for
their expertise and experience in the mining industry,
and to enable their skills and experiences to be shared
under programmes to further train and develop Egyptian
nationals. Around 5% of the Sukari workforce are
experienced expatriate mining personnel and 95% of
the workforce at Sukari are Egyptian nationals which is
increasing further as new and existing employees gain more
skills and experience. Moreover, more Egyptians are being
promoted to higher managerial levels.
In addition to creating a positive work environment, the
Company believes it is important that employees enjoy
their time before and after work. The majority of our
people live in the Sukari camp, and thus we have invested
in a variety of leisure facilities such as playing fields, a
gymnasium, a library, internet access, satellite television and
a swimming pool. Special barbecue dinners are also held
at the beach or around Sukari and sports tournaments are
regularly organised.
Our policies set out the Company’s approach and principles
in regard to human resource management, recruitment and
retention. Our policies aim to ensure that:
• new or current employees are not discriminated against
by the Company due to their religion, nationality or
political views or background;
• all employees have the opportunity for promotion based
on their ability to perform the relevant job, without
regard to personal characteristics that are unrelated
to job requirements;
• harassment of employees by anyone and in any way is
not tolerated;
• forced and compulsory labour are not allowed in any
work related to our activities;
• all employees are entitled to a safe, healthy work
environment, and each employee is accountable for his
or her HSE performance in the Company;
• we are committed to the highest ethical standards and
behaviour and our Code of Conduct requires adherence
to our principles and promotes confidence in the
integrity of the Company; and
• child labour is prohibited, whether in our permanent
employment or in contractors’ workforces.
Contractors are required by their agreements to abide by
these requirements, and follow‑up checks are undertaken
seeking to establish that our conditions are met.
We expect every one of our employees to uphold our
core values of honesty and integrity. All employees are
encouraged to treat their fellow colleagues with respect,
dignity and common courtesy. We believe this will foster
a safe working environment.
Annual performance appraisals are undertaken for all
employees. The appraisal covers several areas including the
employee’s job knowledge, skills attained during the year,
quality of work and initiative and innovation.
The review is undertaken by the immediate supervisor and
the appraisal performance is agreed with the section head.
The appraisal process also identifies the need for training
or coaching, modified responsibilities or opportunities to
undertake more challenging roles and responsibilities.
Training conducted onsite with
employees and contractors
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The environment
Our policies outline our commitment to environmental
responsibility. Safeguarding the environment, and coaching
and training our employees to reduce the impact of our
activities are essential parts of our operations.
We remain committed to maintaining, and whenever
possible exceeding, the high level of environmental
performance that we have achieved during 2014.
Maintaining an environmentally responsible culture
We run a well‑established programme for training and
awareness of environmental impacts. The programme
addresses different environmental fields including
chemical management, waste management, emissions
and water conservation, as well as general environmental
management practices.
An environmental and social impact assessment
(“ESIA”) was prepared as part of the project feasibility
study at Sukari. We strive to maintain high standards
of environmental performance and meet, and when
practical exceed relevant legal requirements. The system is
supported by a robust documentation system that ensures
the maintenance of required registers, documents and
renewal of required permits.
Resource management
Systems and procedures are in place to ensure correct
and safe handling of chemicals and hazardous materials.
Risk assessments are carried out for handling and usage
of all chemicals and hazardous materials. Controls include
containment, automatic alarms and shut‑off systems.
Preventative maintenance programmes for tanks and
equipment are also in place. Emergency response plans
and facilities ranging from spill kits and eye wash stations
to chemical suits address potential requirements for
responding to chemical or hazardous waste spillages
or incidents.
We fully acknowledge the importance of managing
chemicals in a sound manner so as to minimise harm
to the environment or the health of employees. Hazard
communication and chemical management handling is
a core component of our training programme and our
continuous education system. The systems in place set
safe conditions for the transportation, storage, labelling
and handling of chemicals.
Water management and groundwater protection
We recognise responsible water use is a key component for
our sustainability programme and our policies commit us to
conserve natural resources.
As a result, we closely monitor our water use, strive to
reduce our water footprint and take steps to safeguard
water quality.
Water is a critical component to our processes and thus it
is essential to secure a sustainable source of water for our
operations. In an area with limited fresh water resources or
municipal water, we rely on a sea water intake and pipeline
from the Red Sea to provide a sustainable water supply to
the mine.
As a secondary source of water, we have beach wells where
sea water infiltrates into groundwater. We have desalination
plants for generating fresh water for the process plant and
for domestic use.
The sea water pumped to site is used, and reused
throughout the process plant ensuring maximum usage of
this resource without needlessly taking more water from the
intake pipeline.
Groundwater protection measures have been incorporated
in the design of the tailing storage facility and other
components where a layer of gypsum and a HPDE liner
are used to prevent seepage. Workshops have concrete
working areas to prevent seepage. Five monitoring bores
are downstream from the tailing storage facility to detect
any potential contamination. In 2014, the monitoring of
these bores showed no contamination.
Desalinated water used in camps and offices is tested to
ensure its quality accords with chemical and bacteriologic
parameters. Bottled water used for drinking is also
periodically tested as a double check on suppliers and
storage procedures. All samples are compliant with
Egyptian legal requirements.
In 2014, we used a total of 8,298,474m3 per year with an
increase of 82% on 2013 4,210,886m3 due to the expansion
in operations in 2014. About 99% of the water consumed at
Sukari is sea water and therefore there is no impact on fresh
water resources.
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Corporate social responsibility statement continued
Fuel
consumption
(litres)
CO2
equivalent
(tonnes)
80,228,770
229,181
109,422,636 308,146
CO2
equivalent
per ounce
of gold
0.64
0.82
2013
2014
Forecast emissions based on the 2014 intensity and
targeted production of 420,000 oz/yr are estimated at
344,400 CO2 equivalent (tonnes).
A review of alternative fuel sources to supply the processing
plant is ongoing, but to date there have been no
viable alternatives.
Diesel power station onsite
Energy
Marsa Alam, the region in which the Sukari mine is located,
is a remote area with no direct connection to any power
grid. The city has its own power plant whose capacity is
only sufficient for residential use not industrial needs.
Consequently, the project at Sukari powers the
entire processing plant through its own onsite diesel
power station.
In 2014, Sukari consumed a total of 109,422,636 litres of
diesel, an increase of 36% from 2013’s 80,228,770 litres.
This was due to the construction phase and the consequent
expanded plant. About 66% of this quantity is used in
power generation and the rest is used in operating mobile
equipment and vehicles and in operation.
Calculation of the direct greenhouse gases (GHG)
emissions is based on the Intergovernmental Panel
on Climate Change (“IPCC”) Guidelines for National
Greenhouse Gas Inventories. In 2014, the Sukari mine
generated 308,146.6(1) tonnes of CO2 equivalent against
production of 377,261 oz/yr. The emissions intensity for
2014 was 0.82 tonnes of CO2 equivalent per ounce of gold
produced for 2014. This is compared to the consumption of
80,228,770 litres of diesel in 2013 to produce 356,943 oz/yr.
The GHG generated in 2013 was 229,181.4 tonnes of CO2
equivalent, with 0.64 emissions intensity.
(1) Scope 1 emissions are direct emissions occurring from sources
that are controlled directly through the operating company, Sukari
Gold Mines. There are no material external purchases of power.
Exploration beyond Sukari and overheads occurring at the corporate
offices in other locations are not considered material for the
purposes of these calculations.
Case study – creating value from garbage
Our solid waste management system acknowledges
the value of garbage and sees it as a benefit for others.
We adopt a system for waste segregation at source.
We segregate our food waste from other inorganic
waste in the kitchen. Employees dispose of waste in
the different designated bins. The food waste bins are
stored in the waste refrigerator overnight to preserve
the food until HEPCA, our solid waste contractor
collects both types of wastes.
HEPCA, the Hurghada Environmental Protection
and Conservation Association is our partner in
the solid waste management system. As per our
mutual agreement, our organic waste is delivered to
neighbouring Bedouins to be used as animal fodder.
The inorganic waste is mechanically processed
by HEPCA in preparation for further processing in
specialised recycling facilities. The material recovery
unit is totally operated by Bedouin employees who
were trained and are now working in different positions
in the unit. We are very proud that we are part of this
community development project.
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Emissions, effluents and wastes
Programmes are in place to manage emissions, effluents,
non‑process waste, waste rock and tailings. All our industrial
water streams are re‑circulated within our operations.
Sewage is treated in a tertiary wastewater treatment plant
and the treated water is used in landscaping. To ensure
effective performance periodic checks and inspections
are conducted on the treated wastewater.
Our monitoring activities in 2014 confirmed that we
remained within legal requirements and international best
practice standards in respect of the following areas:
• ambient air quality in the camp area (in terms of dust
and emissions);
• dust concentration in different work areas;
• noise and illumination;
• work environment emissions, including carbon
monoxide, sulphur dioxide and ammonia;
• stack emissions due to fuel combustion;
• quality of treated wastewater; and
• quality of groundwater.
We maintain a salvage area where valuable wastes are
temporarily stored until transferred offsite or recycled in
different areas onsite.
The waste management system in place at Sukari, Egypt
sets out the correct handling of storage and disposal of
waste material. The system is focused on:
• waste minimisation through adequate storage
management to avoid stockpiling;
• maximising onsite recycling and reuse of different types
of wastes;
• recovery of valuable material;
• reuse of treated wastewater streams; and
• disposal of material in an environmentally
acceptable manner.
A key focus for the Committee has been improving the rate
in which waste material is transferred offsite or recycled.
Biodiversity
Centamin is committed to protecting the wildlife unique
to the eastern desert by minimising the impact of our
operations on the environment. We are conscious that
the sea near Sukari is renowned for its crystal‑clear water,
and includes a variety of coral reefs and marine biota.
The desert environment is characterised by its scarce
terrestrial biodiversity resources, and the area of Marsa
Alam also includes the Wadi El‑Gemal Protectorate,
one of Egypt’s largest environmental protectorates,
with about 100km of pure beach and desert landscapes.
Biodiversity conservation principles were integrated into the
project design for Sukari from the outset and are applied to
all of our activities.
Processing plant at Sukari
While we maintained careful monitoring of areas of potential
concern, such as migratory bird movement across the area,
there were no incidents reported of adverse impact on
wildlife as a result of operations at Sukari during 2014.
Land management and rehabilitation
Mining is a business that deals directly with natural
resources and it is inevitable that land will be disturbed.
For our part, we are committed to leaving a positive legacy
for coming generations and development initiatives.
Accordingly, upon closure, the goal is to transfer Sukari
to a stable and self‑sustaining condition, after taking into
account the beneficial uses of the site and surrounding land.
Due consideration will be given to environmental and social
impacts to avoid long‑term challenges for parties that live
close by or depend on the area.
The planning for the closure of the mine aims to ensure
that mining activities are soundly phased out, the mine is
closed in an environmentally proper manner, a physically
and chemically stable landform is maintained, with minimal
erosion and minimal potential for dust generation and that
the hazards are reduced to levels equal to or below those
naturally existing within the surrounding environment.
A draft restoration and rehabilitation plan is updated
each year. A provision for restoration and rehabilitation
is included in the annual budget. The provision for future
restoration costs is the best estimate of the present value of
the expenditure required to settle the restoration obligation
at the reporting date.
In addition to the long‑term rehabilitation plan, we
undertake short‑term rehabilitation and restoration activities
especially for construction sites and for spills. As mentioned,
we have a wide range of spill kits and personnel are trained
for clean‑up operations.
Centamin plc Annual report 2014 | 55
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Strategic report
Corporate social responsibility statement continued
Community and society
Community development initiatives
Centamin recognises that it has a responsibility to support
and enhance the community in which it operates, and
to minimise its impact on the environment and local
people at every stage of its activities. We consider good
community relations as a key component of continued
operational success as well as a corporate requirement.
We are committed to acting at all times in a socially
responsible manner.
Stakeholder engagement
We attach considerable importance to maintaining dialogue
with the local community in areas in which we operate.
A public consultation system has been in place at Sukari
since the project design phase, and during the construction
phase. With mining in operation we have maintained open
channels of communication with all our stakeholders for the
purpose of information disclosure.
In providing opportunities for raising concerns
and grievances we have been pleased to find that
throughout 2014, as in previous years, the Sukari mine
continues to be welcomed by the local community and
government authorities.
We have supported infrastructure and services in Marsa
Alam for a number of years. The initiatives include:
Infrastructure:
• provision of generators of capacity 3.2Mw to upgrade
Marsa Alam power station;
• continuing to supply electricity to a neighbouring
Bedouin settlement of 200 people;
• supporting the youth centre at Marsa Alam;
• financing the maintenance activities undertaken in
Marsa Alam institutes and schools; and
• maintenance of Sukari statues in Marsa Alam.
Social involvement:
• sponsoring local events and celebrations including the
orphans’ day, police day and the environment day; and
• donation of equipment and furniture to local authorities
in Marsa Alam. Such as the civil defence authority and
groundwater department.
Social welfare:
• financing the surgery for Bedouins in Marsa
Alam hospital;
• financing daily Iftars during Ramadan for unprivileged
individuals in Marsa Alam; and
• distributing food at feasts.
Enhancing education:
• training of 60 geology and engineering students at
Sukari in the summer vacation; and
Raw seawater pond at Sukari
• organising field visits to Sukari for students and officials.
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The process in developing the EIA included a
comprehensive stakeholder consultation for the project
and the relocation requirements associated with the
project. In comparison to Sukari, Batie project extends in
villages and occupied areas and thus a relocation for some
farms, houses and public areas will be carried out.
A comprehensive relocation plan has been prepared while
calculating all financial aspects. This process engaged all
concerned stakeholders including farmers, land owners,
local chiefs and local committees have been formed
to follow‑up the process. With the further optimisation
and design of the project, the relocation plan will be
refined accordingly.
To date, the following projects have been taken forward by
Centamin since the acquisition of Ampella:
• provision of essential anti‑venoms to Batie;
• establishment of a water bore in Wadarado village;
• repair of a school in Djikando Village; and
• sponsorship of local events and school sports activities.
Stakeholder engagement remains a key element
throughout the exploration and advanced exploration
phase. This will become increasingly important as the
Company proves the resource and is able to develop
an operating mine in the region. Centamin, through
the Ampella local subsidiaries, will continue to engage
with the local community for our projects in Batie in
Burkina Faso.
Advanced exploration
Burkina Faso
Health and safety
Following the acquisition of Ampella Mining Limited in
2014, essential components of our health and safety
management system have been implemented in Burkina
Faso. These include employee and contractor orientation
and induction training. The Batie camp site has a
well‑equipped clinic operated by ISOS and the clinic has
a full‑time paramedic. Vehicle safety and travel is also an
important aspect of the system.
As reported in the operational review, subsequent to the
year end, an unfortunate incident occurred on a public
road near the Konkera village which resulted in one of
our local employees being fatally wounded and another
sustaining injuries. The wellbeing of our employees is a
priority for Centamin and a thorough investigation into this
bandit attack, on two of our vehicles, has been carried out.
Further additional security measures have been proposed
following the incident and these are being implemented.
There was no impact on operational activity as a result of
the incident.
Environmental assessment and community projects
Centamin has contributed to a number of projects
for the local community of Batie in Burkina Faso.
An environmental impact assessment study (“EIA”)
has been carried out in accordance with Burkina Faso
legislation and regulations.
Of particular note in connection with the EIA were the
specific issues relating to the human environment and
these were identified, as follows:
• relocation of communities directly impacted;
• relocation of cashew tree plantations;
• identification of sacred and religious sites;
• social acceptability and job creation;
• economic impact assessment; and
• community projects.
Centamin plc Annual report 2014 | 57
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Directors’ report
Board of Directors
Josef El‑Raghy
Chairman
(and CEO until January 2015)
Andrew Pardey
Chief Executive Officer
(COO since May 2012)
Josef El‑Raghy has been
responsible for overseeing
the transition of the Company
from small explorer, through
construction and into
production.
Andrew Pardey was appointed
CEO and director of the Board
of Centamin plc on 1 February
2015. Andrew served as General
Manager – Operations at the
Sukari Gold Mine before his
previous appointment as Chief
Operating Officer in May 2012.
Trevor Schultz
Executive director
(and non‑executive director
since 1 May 2014)
Trevor Schultz has made an
invaluable contribution to the
establishment of Sukari as a
globally significant gold mining
operation, and in particular for
his recent role in overseeing
the construction of the Stage 4
process plant. He was executive
director – operations since
20 May 2008.
G Edward Haslam
Senior independent
non‑executive director
In addition to his role as
senior independent director,
Edward Haslam has carried
out additional corporate
governance functions over the
past few years for Centamin,
while the roles of CEO and
Chairman were combined.
Director since
26 August 2002
Director since
1 February 2015
Director since
20 May 2008
Director since
23 March 2011
Board meetings attended
5/5
Board meetings attended
5/5
Board meetings attended
5/5
Board meetings attended
5/5
Experience
Josef holds a Bachelor of
Commerce degree from the
University of Western Australia
and subsequently became a
director of both CIBC Wood
Gundy and Paterson Ord
Minnett.
Experience
Andrew was a major driving
force in bringing Sukari into
production, having joined
during the mine’s construction
phase and was instrumental in
the successful transition of the
operation through construction
and into production.
Andrew holds a BSc in
Geology and has over 25 years’
experience in the mining and
exploration industry, having
previously held senior positions
in Africa, Australia and other
parts of the world with Guinor
Gold Corporation, AngloGold
Ashanti and Kalgoorlie
Consolidated Gold Mines.
Experience
With more than 40 years’
experience at executive and
board level, Trevor Schultz has
a Masters Degree in Economics
from Cambridge University, a
Masters of Science degree in
mining from the Witwatersrand
University and has completed
the Advanced Management
Program at Harvard University.
Experience
Edward has been non‑executive
director (and chairman) from
June 2007 to April 2012 of the
LSE listed Talvivaara plc and
since 1 May 2004 has been
a non‑executive director of
Aquarius Platinum Ltd. In 1981,
Edward joined Lonmin, he was
appointed a director in 1999
and chief executive officer in
November 2000 before retiring
in April 2004. Edward is a Fellow
of the Institute of Directors (UK).
Committee memberships
HSES Committee
Committee memberships
Audit and Risk Committee
Remuneration Committee
Nomination Committee
Compliance and Corporate
Governance Committee
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Mark Bankes
Independent
non‑executive director
Mark Arnesen
Independent
non‑executive director
Kevin Tomlinson
Independent
non‑executive director
Mark Bankes is an international
corporate finance lawyer. Mark
specialises in international
securities, mining policy and
agreements, mergers and
acquisitions and international
restructurings for the
resource sector.
Mark Arnesen has extensive
expertise in the structuring
and negotiation of finance for
major resource projects. Mark
is a chartered accountant with
over 20 years’ experience in the
resources industry.
Kevin Tomlinson was previously
managing director of Investment
Banking at Westwind Partners/
Stifel Nicolaus Weisel where
he advised a number of
gold, base metal and nickel
companies, including Centamin.
Director since
24 February 2011
Director since
24 February 2011
Director since
17 January 2012
Board meetings attended
5/5
Board meetings attended
5/5
Board meetings attended
5/5
Experience
Mark has an MA from
Cambridge University and
joined Norton Rose in 1984.
He worked in both London and
Hong Kong and was a partner
at Norton Rose LLP from 1994
to 2007 before starting his own
business, Bankes Consulting
EURL, in October 2007.
Experience
Mark is currently the sole
director of ARM Advisors
Proprietary Limited and has
also been on the board of Gulf
Industrials Limited. Mark holds
a Bachelor of Commerce and
Bachelor of Accounting degrees
from the University of the
Witwatersrand.
Experience
Kevin holds a Master of Science
degree in Geology from the
University of Melbourne in
Victoria, Australia. He began
his career as a geologist
30 years ago and has worked
with various Australian and
Canadian‑based natural
resources companies, where
he has held the positions of
chief executive officer and
exploration manager.
Committee memberships
Compliance and Corporate
Governance Committee
HSES Committee
Audit and Risk Committee
Committee memberships
Audit and Risk Committee
Compliance and Corporate
Governance Committee
Remuneration Committee
Nomination Committee
Committee memberships
HSES Committee
Remuneration Committee
Nomination Committee
Centamin plc Annual report 2014 | 59
Directors’ report
Senior management
Finance
Business development
Pierre Louw
Chief Financial Officer
Liesel Sobey
Group Accountant
Andrew Davidson
Head of Investor Relations
Richard Osman
Business Development Manager
Pierre is a senior manager with
broad hands‑on experience
gained over the past 25 years
within the mining industry
in both major and mid‑tier
gold and copper producing
companies. He has a National
Diploma in Financial Accounting
from the University of
Johannesburg and is a member
of the South African Institute of
Professional Accountants. Pierre
has extensive international
experience having worked in
Tanzania, Australia, Zambia
and his native South Africa. His
professional experience include
working at AngloGold Ashanti,
Equinox and JCI.
Liesel is a chartered accountant
with over 16 years’ experience
in the corporate sector and
public practice. Before joining
Centamin in June 2012 Liesel
served as a director within the
Assurance and Advisory division
at Deloitte Touche Tohmatsu
in Perth. Through her role
at Deloitte, Liesel had been
associated with the Company
since 2006. Liesel is a member
of the South African Institute
of Chartered Accountants,
the Institute of Chartered
Accountants in Australia and
holds a Bachelor of Accounting
Science from SAICA and a
Bachelor of Commerce Honours
(Accounting) from the University
of Natal.
Prior to joining Centamin in
August 2012, Andy worked for
nine years as a mining analyst,
including three years as an
equity research director at the
London‑based investment bank
Numis Securities. Before this,
Andy was a senior exploration
geologist within the mining
industry, including six years
with Ashanti Goldfields where
he was closely involved in the
discovery and development of
the world‑class Geita project in
Tanzania. Andy holds an MSc in
Mineral Project Appraisal from
the Royal School of Mines and
a BSc in Geology. He is also
a member of the Institute of
Materials, Minerals and Mining.
Richard Osman is a geologist
and holds a Master’s degree
in Mining Geology from
the Camborne School of
Mines. He has over 16 years’
experience in the mining
industry, having worked in
exploration, open pit mining
and the evaluation of mineral
properties internationally.
Richard previously worked at
the Company’s Sukari mine in
Egypt for over twelve years
in exploration, resource
development and as open
pit mine manager. Prior to
this Richard was employed
for five years at the Big Bell
operation in Western Australia
owned by Harmony Gold.
Since 19 April 2011
Since 11 June 2012
Since 13 August 2012
Since 3 February 2014
Operations
Youssef El‑Raghy
GM – Egyptian Operations
Terry Smith
GM – Sukari
Chris Boreham
Underground Mine Manager
An officer graduate of the
Egyptian Police Academy,
Youssef El‑Raghy held senior
management roles within the
Egyptian police force for a
period in excess of ten years,
having attained the rank of
captain, prior to joining the
Group. He has extensive
contacts within the government
and industry and maintains
excellent working relationships
with all of the Company’s
stakeholders within Egypt.
Terry Smith is a qualified
mining engineer and member
of the Australasian Institute
of Mining and Metallurgy.
Terry has 35 years’ experience
in the mining industry and
over 20 years’ experience in
general management and site
management roles.
Terry has worked in both open
pit and underground operations
for both owners and contracting
firms. His experience covers
the gold, copper, lead, zinc,
diamonds and coal industries
in Australasia, Africa and
South America.
Chris Boreham holds a BEng
(mining) degree from the
University of Sydney and a
graduate diploma of business,
first class mine manager’s
certificate in WA, Queensland
and New South Wales. He is a
member AusIMM and has over
27 years’ experience in the
mining industry, having worked
predominantly in gold and
copper mines.
Chris’ significant experience
in the design and operation
of hard rock mining, extends
to managing personnel, risk
mitigation and operational
health and safety.
Since 13 April 2006
Since 14 June 2012
Since January 2010
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Corporate and compliance
Lynne Gregory
General Counsel
Before joining Centamin,
Lynne was legal director at
Charles Russell LLP, prior to
which she was a solicitor at
Allen & Overy and Baker &
McKenzie in London. She has
worked for over 20 years as a
lawyer specialising in complex
international commercial
litigation and arbitration for
corporate clients in a variety of
sectors. Lynne holds a degree
in law from University College
London as well as professional
qualifications from the
College of Law.
Doaa Abou Elailah
Group Sustainability and
Business Development Manager
Doaa has worked closely with
Centamin for ten years initially
as an adviser before joining
the Company in 2013. Doaa
has more than 18 years of
experience as a consultant in
health and safety, environment
and community affairs. Doaa
has provided technical support
to numerous industries and
facilities in Egypt and the
Middle East across a broad
range of sectors including
mining, oil and gas, industrial
production, infrastructure
and tourism. Doaa holds MSc
and BSc honours degrees in
Chemical Engineering from the
University of Cairo.
Darren Le Masurier
Company Secretary
Heidi Brown
Subsidiary director
and secretary
Darren Le Masurier is a Fellow
of the Association of Chartered
Certified Accountants and
has over 15 years’ experience
in corporate administration,
governance and offshore
regulation in Jersey. Prior to
joining Centamin, Darren
worked at the fiduciary and law
firm Ogier in Jersey for over ten
years, providing professional
company secretarial,
accounting, administration and
director services for a diverse
range of corporate clients
and structures.
Heidi Brown is a Fellow
Chartered Secretary (FCIS,
FGIA) with over 17 years’
experience in the finance and
securities industries. She holds a
Graduate Certificate of Applied
Finance and Investment and a
Diploma of Financial Advising
from the Financial Services
Institute of Australasia. Heidi
was the Company Secretary
of Centamin from 2004
until 2012, and continues to
act as Company Secretary
and director of Centamin’s
Australian subsidiaries.
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Since 1 September 2013
Since 1 May 2013
Since 8 July 2013
Since 23 January 2003
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Centamin plc Annual report 2014 | 61
Directors’ report
Corporate governance
The communication
channels between senior
management and the
Board have enabled
open discussion on the
requirement and content
of public disclosures, to
meet regulatory obligations
as well as ensuring the
shareholders are properly
informed about key events.
Mark Bankes
Chairman of the Compliance/
Corporate Governance Committee
Dear shareholders
I am presenting this corporate governance report in
my capacity as Chairman of the Compliance/Corporate
Governance Committee, a committee established by
the Board of the Company whose function is to make
recommendations to the Board on matters such as:
(a) the implementation, maintenance and monitoring of
the Company’s corporate compliance programme
and its Code of Conduct, taking account of applicable
government and industry standards, legal and business
trends and public policy issues; and
(b) the Company’s activities in the area of corporate
compliance that might impact upon its business
operations or public image.
The Company is incorporated in Jersey, Channel Islands.
The Company is by virtue of the Listing Rules, subject to
the Corporate Governance Code (“Code”) issued by the
UK Financial Reporting Council and therefore the Company
must confirm that it has complied with all relevant provisions
of the Code or to explain areas of non‑compliance. The
Code can be found on the Financial Reporting Council’s
website www.frc.org.uk.
In addition, the Company is required to follow the principles
of corporate governance set out in the best practice
recommendations of the Toronto Stock Exchange, in
particular those recommendations in National Policy 58‑201
– Corporate Governance Guidelines (“NP 58‑201”).
This report sets out the key areas the Board has focused on
during the year, from a corporate governance perspective,
together with details of the roles of the key Board members
and an assessment of the effectiveness of the Board.
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Fundamental to the Group’s corporate governance policy
and practice is that all directors and employees reflect the
Company’s key values of accountability, fairness, integrity
and openness.
The key areas of activity for the development of the
Company’s approach to corporate governance are
listed below:
• external audit tender process resulting in the
appointment of PWC.
See Audit and Risk Committee report
• appointment of the new CEO and separate role
of Chairman.
See nomination report
• development of the executive remuneration and
further disclosure.
See remuneration report
• evaluation of Board and Committee
composition changes.
See nomination report
I am able to advise that, following the recent appointment
of our new Chief Executive Officer, Andrew Pardey,
the previously combined roles of Chairman/CEO are
now separate.
The communication channels between senior management
and the Board have enabled open discussion on the
requirement and content of public disclosures, to meet
regulatory obligations as well as ensuring the shareholders
are properly informed about key events.
Having consulted with the non‑executive directors we
believe that the format of the Board, in conjunction with
the activities of the various Board Committees allows
open debate with the directors able to engage on matters
of executive management policy, performance and risk
management. This framework allows them to effectively
monitor the performance of management and develop
proposals on strategy.
Mark Bankes
Chairman of the Compliance/
Corporate Governance Committee
23 March 2015
Centamin plc Annual report 2014 | 63
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Directors’ report
Corporate governance continued
Compliance statement
Throughout the year ended 31 December 2014, the
Company has been in compliance with the provisions set
out in the Code with the exception of the following matters:
The roles of Chairman and Chief Executive Officer (“CEO”)
were both exercised by Josef El‑Raghy during 2014. This
matter has now been addressed, following the appointment
of Andrew Pardey as the Company’s CEO effective from
1 February 2015. Josef El‑Raghy, the Company’s interim
CEO, will continue in his role as Chairman.
Some of the additional responsibilities undertaken by the
senior independent non‑executive director will, over the
course of 2015, revert to the Chairman. The enhanced
role undertaken by the senior independent non‑executive
director was put in place to ensure that control of certain
key areas of Board responsibility was devolved away from
the Chairman while the roles were combined.
It should be noted that both the Code and best practice
recommendations favour that the Chairman be an
independent director on appointment. Josef El‑Raghy is
not an independent non‑executive Chairman within the
meaning of the Code. As such, the senior independent
non‑executive director will continue to take an active role to
ensure the Board’s ongoing effectiveness in all respects.
It is noted that in the case of the directors’ remuneration
report, the disclosures have exceeded the obligations on
the Company given its incorporation in Jersey. However,
the Company considers such enhanced disclosure is
appropriate to allow shareholders to compare the Company
with UK incorporated FTSE 350 listed companies. It has also
incorporated many additional and voluntary disclosures in
its strategic report.
How the Board of Directors operates
The Board sets and implements the strategic aims and
values of the Company, providing strategic direction to
management. The specific matters reserved to the Board
are set out in the Board Charter which is available on the
Company’s website at www.centamin.com. The matters
reserved for the Board include any significant matters
affecting the Group. The key activities and standing agenda
items for the Board are summarised below.
For further information on key Board activity
See strategic report
www.centamin.com
Key activities of the Board in 2013/14:
• review, approval and implementation of the business
case and acquisition of Ampella Mining Limited;
• review and approval of the updated resource and reserve
statements and associated compliance document
(43‑101);
• review, approval and implementation of the JV with
Alecto Mineral plc;
• approval of the appointment of the Company’s new
external auditor, PWC, following the formal audit
tender process;
• approve dividend policy and maiden interim dividend;
• review of KPIs for the executive directors and senior
management and reviewing performance appraisals;
• review of succession planning, diversity and Board
performance and evaluation; and
• monitor the Group’s relationship with EMRA and review
and approve any advance payments to EMRA.
Standing agenda items for the Board:
• reports and updates from the Chairmen of the respective
Board Committees;
• Sukari operational review and monthly reporting;
• exploration updates for the sites in Burkina Faso,
Côte d’Ivoire and Ethiopia;
• setting budgets and production guidance for the year;
• litigation updates on the Company’s ongoing court
hearings (details of which can be found in Note 4);
• review and approval of the Company’s quarterly,
half yearly and annual financial statements;
• review of the AGM circular, dividend proposals and
compliance reports and policies;
• review of the Company’s principal risks and
orchestrating the ongoing development of the
Company’s risk appetite;
• review of material contracts; and
• review of business development opportunities.
As indicated below, the Board has established Audit and
Risk, Compliance/Corporate Governance, Nomination,
Remuneration and Health, Safety, Environmental and
Sustainability Committees. The Board has delegated certain
matters to the Committees which can be viewed in their
respective charters available on the Company’s website
at www.centamin.com.
www.centamin.com
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Leadership
The Chairman, Josef El‑Raghy, is responsible for ensuring
the business is run in accordance with the Board’s strategy.
Following the appointment of the new CEO, Josef’s
previous responsibilities for implementing strategy and
overseeing the day‑to‑day running of the business will be
handed over to Andrew Pardey during the course of 2015.
The management team and Board are relatively few in
number and are, therefore, actively involved in, and made
aware of, all the major activities of the Group. They can
therefore ensure the Company’s actions are aligned with
the strategic aims of the Group.
Areas of focus for the Board in 2015
Strategic planning – the Board regularly reviews and
approves strategic plans and initiatives put forward by
management and the executive, including geographical
diversification. Details of the strategic objectives for cash
generation, shareholder return and the growth of the
Company can be found in the strategic report.
Communications – the Board oversees the Company’s
public communications with shareholders and other
stakeholders and plans further developments to aid the flow
of information between the Company’s operations, senior
management and the Board.
The responsibilities of the Board and key roles within the
organisation are set out below:
The Chairman:
• lead the Board and ensure it operates effectively;
• ensure all matters on the agenda are given due
consideration and that directors have the opportunity
to contribute to the Board discussion;
• communicate with shareholders in relation to the
Company’s strategic aims and policies; and
• represent the Group before key stakeholders including
government officials (including EMRA).
Non‑executive directors:
• challenge and help develop the Group’s strategy;
• participate as members of the Board and on
certain committees;
• monitor the performance of management;
• be satisfied as to the adequacy and integrity of financial
and other reporting;
• determine appropriate levels of remuneration for
executive directors; and
• raise any concerns with the Board.
Chief Executive Officer:
Risk assessment – the Board has primary responsibility for
identifying the principal risks in the Company’s business
and to ensure the implementation of appropriate systems
to manage these risks. The Board will be reviewing the
updates to the 2014 Code and further evaluating the
processes for identifying and mitigating both operational
and corporate risks.
• develop and implement, short, medium and long term
corporate strategies;
• responsible for day‑to‑day management of the business
and the implementation of the Board’s strategic aims;
and
• promote the highest standards of safety, corporate
compliance and adherence to codes of conduct.
Internal control – the Board, with assistance from the Audit
and Risk Committee oversees the Group’s internal control
and management information systems. The Board will be
reviewing the conclusions of the committee with regard to
the appointment of an externally appointed internal auditor.
Reporting and audit – the Board, through the Audit and
Risk Committee are reviewing proposals to enhance and
streamline the accounting function. The Board will also be
working closely with the newly appointed auditor to assess
whether there are areas where reporting could be improved
further to enhance the business.
Relationship with stakeholders – maintaining, developing
and monitoring relationships with key stakeholders including
EMRA in relation to Sukari and other governments in
Burkina Faso, Côte d’Ivoire and Ethiopia.
For senior management roles and responsibilities
See strategic report
Detailed knowledge of the Group’s activities is essential and,
each year, the Board visit Sukari where they are shown the
underground operation, open pit site and the operations
plant, accompanied by the heads of department based at
Sukari. In addition to regular site visits to Sukari, the senior
members of the management team and executive visit the
exploration sites in Burkina Faso, Côte d’Ivoire and Ethiopia
to ensure the activities in these regions are aligned with the
corporate objectives of the Group.
Centamin plc Annual report 2014 | 65
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Directors’ report
Corporate governance continued
Board appointments and independence
Managing risks and internal controls
There were no Board appointments during the course of
2014, however, in 2015 the vacancy for the position of CEO,
who has also been appointed as an executive director, was
filled. The Nomination Committee, through the process of
succession planning, had ensured that adequate support
and development were given to Andrew Pardey to prepare
him for the role of CEO. After a thorough assessment
of the experience and expertise of Andrew Pardey and
his performance as COO, the Nomination Committee
recommended, and the Board unanimously agreed, to
appoint Andrew Pardey as the Company’s new CEO
effective from 1 February 2015.
The Nomination Committee and the Board also considered
and approved that Josef El‑Raghy, interim CEO, continue in
his role as Chairman of the Board.
As disclosed in the 2013 annual report, following the
completion and commissioning of Stage 4, Trevor Schultz
resigned as an executive director and was appointed a
non‑executive director. Trevor Schultz was subsequently
appointed Chairman of the HSES Committee following the
retirement of Bob Bowker. The Nomination Committee and
the Board were in agreement with the recommendation to
retain the skills, knowledge and experience of Trevor Schultz
on the Board of the Company.
The Company remains compliant with the provisions of
the Code that the Board should have a greater number
of non‑executive directors than executive directors.
The Company continues to be compliant following the
resignation of Bob Bowker in January 2015.
When determining whether a director is independent, the
Board has established a Directors’ Test of Independence
Policy, which is based predominantly on the definition
of independence in Canadian Securities Administrators’
National Instrument 52‑110 – Audit Committees
(“NI 52‑110”), and is available on the Company’s website
or to shareholders upon request. The criteria in NI
52‑110 are mandatory and are more stringent in certain
respects than the independence criteria suggested by the
Code. Based on this policy, the majority of the Board are
considered by the Board to be independent non‑executive
directors.
For a summary of the social conditions in Egypt and the
Middle East and provides an explanation as to the gender
balance in the workforce
See CSR report on page 46
The Board is responsible for satisfying itself that
management has developed and implemented a sound
system of risk management and internal control. Assisted
by the Audit and Risk Committee, management reports to
the Board on the Group’s key risks and the extent to which
it believes these risks are being appropriately managed
and mitigated.
During the year, the Company conducted an assessment of
the control environment of the Group, summarised by the
following key headings:
• corporate governance framework;
• management reporting framework;
• procedures for forecasting and budgeting;
• external reporting obligations and procedures;
• information technology environment; and
• corporate and operational principal risk assessment.
The Board made the following key recommendations
following the review:
• development of segregation of duties and signatory
controls for new exploration assets;
• data capture, information and file sharing procedures for
newly acquired assets;
• enhanced treasury procedures for the diversification of
cash deposits;
• enhanced reporting to the Board for contractor
management and key deliverables;
• the appointment of an outsourced internal auditor; and
• further development of the risk register to include levels
of probability and likely impact of principal risks.
It was noted that the above recommendations were not
seen as significant failings or weaknesses, but reflect the
breadth and scope of the review.
Strategic report covering evaluation and risk mitigation
See page 42
Audit and risk report covering the control environment
See page 88
Board composition and re‑election
It is proposed at the date of this annual report that all
directors will be put forward for re‑election at the AGM.
All directors are subject to annual re‑election.
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The Board of Directors
At the date of this report the Board is made up of a Chairman, Chief Executive Officer, four independent non‑executive
directors and one non‑executive director.
See directors’ details on pages 58 and 59
The following table sets out the number of Board and Committee meetings held during the year and the number of
meetings attended by each director.
Non‑executive
Edward Haslam
Board
Audit and risk
Attended (C.)
5 of 5
Attended
8 of 8
Health, safety,
environmental and
sustainability
Compliance and
corporate
governance
Attended (C.)
4 of 4
Remuneration/
nomination
Attended
4 of 4 / 2 of 2
Trevor Schultz
Mark Arnesen
Mark Bankes
Bob Bowker
Kevin Tomlinson
Executive
Attended
4 of 5
Attended
5 of 5
Attended
5 of 5
Attended
5 of 5
Attended
5 of 5
Josef El‑Raghy
Attended (C.)
5 of 5
Attended (C.)
8 of 8
Attended
7 of 8
Attended
1 of 1
Attended
3 of 3
Attended
4 of 4
Attended (C.)
4 of 4
Attended
4 of 4
Attended
1 of 1
Attended
4 of 4 / 2 of 2
Attended (C.)
4 of 4
Attended
4 of 4
Attended
4 of 4 / 2 of 2
Attended
4 of 4 / 2 of 2
This table excludes meetings held by written resolution or sub‑committees and reflects the membership during 2014.
Mark Arnesen joined the CGC Committee in September 2014 and was replaced on the HSES Committee by Trevor Schultz.
(C.) denotes the Chairperson. Edward Haslam chaired the majority of the Board meetings (in line with the delegation of
certain of the Chairman roles noted above).
Board Committees
The Board Committees are a valuable part of the Company’s corporate governance structure. The workload of the Board
Committees is far greater than the table of scheduled meetings would indicate, as ad‑hoc meetings and communications
occur frequently between the directors and management. Details of the activity of the committees is set out below.
HSES Committee and CSR
See page 46
Nomination Committee
See page 69
Remuneration Committee
See page 72
Audit and Risk Committee
See page 88
Employees
Information relating to employees is contained in the CSR report together with details of the number of employees at
Sukari. Centamin abides by anti‑discrimination legislation in all jurisdictions in which it operates. These principles are also
set out in the Company’s Code of Conduct which sets out the framework in which Centamin expects all staff to operate.
Environmental compliance
The directors are aware of their commitment to environmental, community and social responsibility, details of which can
be found in the CSR report. The Group is currently complying with relevant environmental regulations in the jurisdictions in
which it operates and has no knowledge of any environmental orders or breaches against the Group.
Centamin plc Annual report 2014 | 67
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Directors’ report
Corporate governance continued
Compliance/Corporate Governance Committee
As at the date of this report, the Compliance/Corporate
Governance Committee is chaired by Mark Bankes and its
other members are Edward Haslam and Mark Arnesen.
The committee’s primary functions and responsibilities are
set out in the charter which can be found on the Company’s
website. The activities undertaken during the year included
the following:
• review of progress in respect to the Concession
Agreement court hearing and the DFO litigation (as
detailed further in Note 20 to the financial statements);
• review the implementation plans following the
acquisition of Ampella Mining Limited;
• review the reporting and disclosure requirements as
required by the LSE and TSX;
• assist the Board and management on the requirements
to make public disclosures; and
• monitoring the Company’s systems and controls
(including a review of the policies and procedures).
Shareholder communication
All shareholders are encouraged to attend our AGM on
18 May 2015, which will be held in London. This will be
an excellent opportunity to meet Board members and our
senior management team.
The Board of Directors aims to ensure that shareholders are
provided with important information in a timely manner via
written and electronic communications.
The Chairman, CEO, other directors and our head of
investor relations communicate with major shareholders
on a regular basis through face‑to‑face meetings,
telephone conversations, and analyst and broker briefings
to help better understand the views of the shareholders.
Any material feedback is then discussed at Board level.
In particular the feedback from the certain of the proxy
advisory companies, which provide guidance and voting
recommendations to shareholders, were discussed by
the Board.
Shareholder communication policy reporting to
shareholders through:
• the annual report;
• the annual information form;
• quarterly and half‑yearly reports;
• continuous disclosure requirements;
• webcasts on quarterly results;
• the Annual General Meeting;
• the Company’s website;
• registrar services; and
• electronic and postal notifications.
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Key shareholder and investor relations activities throughout
the year:
Date:
Activity
January/February
2014
March/April 2014
May/June 2014
July/August/
September 2014
•
•
•
Investor conference, London
Investor, analyst site visit, Sukari
Investor conference, South Africa
Investor marketing, North America
Investor marketing, London
•
•
• Analyst and investor conference calls
following annual results
Investor marketing, Edinburgh
Investor marketing, London
•
•
• Analyst and investor conference call
following Q1 results
• Marketing, Zurich
• Conference, Denver
•
• Analyst and investor conference calls
Investor, analyst site visit, Sukari
following Q2 results
October/November
2014
Investor marketing, London
•
• Analyst and investor conference call
following Q3 results
The Board recognises the importance of keeping the
market fully informed of the Group’s activities and of
communicating openly and clearly with all stakeholders.
The Company has established a formal Continuous
Disclosure Policy to ensure this occurs. Details of the
Company’s policies can be found on the Company’s
website. A sub‑committee of the Board monitors
and advises on the Company’s continuous disclosure
obligations. All actions and decisions of the sub‑committee
are presented to the CGC Committee at the next
available meeting.
Details of the Company’s policies and procedures can be
found on the Company’s website.
Shareholder resolutions
In 2014 additional share securities were issued for the
purpose of acquiring Ampella Mining Ltd, which was made
possible by the resolution approved at the 2013 AGM
authorising the issue of further securities, for purposes
such as this recommended take‑over offer. The continued
support of the Company’s shareholders in this way is
recognised and valued by the Board and allows the
Company to further expand and meet the Company’s
long term objectives.
Political donations
Centamin does not make donations to any organisations
with stated political associations.
Supplier and payment policy
It is the Company’s policy that, subject to compliance
with trading terms by the supplier, payments are made in
accordance with terms and conditions agreed in advance
with the supplier. Further details on trade creditors are
provided in Note 15 to the financial statements.
Nomination report
Reviews of management
capabilities and potential
are performed on a routine
basis and resources
allocated to assist with this
continued development.
Dear shareholders
I am presenting this report as Chairman of the Nomination
Committee, a committee established by the Board of the
Company whose primary functions and responsibilities (as
set out in the committee charter) are to:
• make recommendations for the structure, size and
composition of the Board and Board Committees;
• assist with the alignment of directorships held within the
Group’s subsidiary companies;
• review the necessary and desirable competencies, skills,
knowledge and experience of directors;
• review the Board succession plans; and
• make recommendations for the appointment, re‑election
and removal of directors to/from the Board.
The activities undertaken by the committee during the year
include the following:
• reviewing the structure, size and composition of
the Board and Board Committees which resulted in
recommendations to the Board to:
• appoint Mark Arnesen to the CGC Committee;
• appoint Trevor Schultz as a non‑executive director
and appoint him to the HSES Committee in place of
Mark Arnesen;
• appoint Andrew Pardey as CEO and recommend that
Josef El‑Raghy continue as Chairman; and
• appoint Trevor Schultz as Chairman of the HSES
Committee following the retirement of Bob Bowker.
• appointing Heidi Brown to be director of the Group’s
Australian subsidiary companies, to remain compliant
with the Corporations Act;
• considering the requirements for Board diversity
(including gender diversity);
• reviewing the Board succession plans which resulted in
the recommendation and appointment of Andrew Pardey
as the Company’s Chief Executive Officer; and
• making recommendations for the appointment and
re‑election of directors to the Board at the AGM.
Within the remit of the Nomination Committee, there is
a requirement to ensure adequate succession planning is
routinely discussed. Reviews of management capabilities and
potential are performed on a routine basis and resources
allocated to assist with this continued development.
The report provides more detail on the activities, decisions
and policies of the Nomination Committee and Board.
G Edward Haslam
Chairman of the Nomination Committee
23 March 2015
Centamin plc Annual report 2014 | 69
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Directors’ report
Nomination report continued
Nomination Committee
Executive and management team
As at the date of this report, the Nomination Committee
comprises Edward Haslam (Chairman), Mark Arnesen
and Kevin Tomlinson, all of whom are independent
non‑executive directors of the Company. All appointed
members attended all four committee meetings held during
the year.
Board diversity
The Board considered the recommendations of the
Nomination Committee in connection with Board diversity
and in particular gender diversity and the Board has agreed
that whilst all appointments should be continued to be
made on merit, female candidates will be considered
routinely as part of the recruitment process. It is our
intention to identify a suitable female candidate during the
course of the next twelve months. In addition, and as part
of our succession planning, we will continue to appoint and
encourage female professionals to ensure a progressive
pipeline of talent within the Company’s management and
senior management team.
In this last context the committee noted that a number of
females already hold senior positions within the Company,
in the areas of legal, accountancy, HSES and subsidiary
directorships. However, as set out in the CSR report, mining
is traditionally a male dominated industry and of our
Egyptian workforce only 1% are female. This is mainly due
to social conditions in Egypt and in the Middle East where
in general female employees are not encouraged to work at
remote sites. A greater percentage of females are employed
throughout the Group in the administrative offices and at
the Company’s headquarters.
Gender diversity
4
11
Male
Female
Industry experience
1
1
4
2
7
Mining
Legal
Accounting
Company secretarial
Environmental
In developing the Company’s policy on diversity, the Board
has considered the requirements of the Code and the
National Instrument 58‑101.
Years’ experience
3
The Board, through the recommendations of the
Nomination Committee, will provide an update on the
recruitment process in future reporting disclosures.
Details of the current composition of the Board and the
wider management team are set out in the directors’ report.
2
4
2
4
40+ yrs
30+ yrs
25+ yrs
20+ yrs
15+ yrs
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Performance evaluation
The senior independent non‑executive director held
meetings with the non‑executive directors without the
executive directors present, providing feedback to the
full Board. These meetings focused primarily on the
evaluation of the Board’s performance, a performance
evaluation of the Chairman, discussing the quality
of reporting and information flows to the Board and
discussions on the strategic aims and objectives for the
Group. The non‑executives also discussed openly with the
executive directors, the areas they could assist further in
relation to business development.
An evaluation of the Board and its committees was
undertaken during the year and was concluded in March
2015. The Board, in conducting their evaluation, reviewed
the activity, composition and expertise of the committees
and considered their effectiveness taking account of
the following:
• the responsibilities set out in their respective charters;
• activities carried out during the year, taking account of
their mandated duties and responsibilities;
• progress made in respect of their duties and
responsibilities;
• attendance and contribution to the committees; and
• reporting and updates provided to the Board.
The Board noted in particular that the relevant committees
had adapted well to the changes to their composition
during the year and in 2015. The Board also noted the
efforts of the committees to streamline their arrangements,
ensuring that the members of the management team who
were invited to attend and present at the meetings did so in
a concise and orderly fashion.
The Board reviewed its own membership and performance
and this review was concluded in March 2015. The Board
focused primarily on the recent retirement of Bob Bowker
and the skills, knowledge and experience that Bob provided
to the Board. The Board noted that Bob had been with the
Company since 2008, serving as Chairman of the HSES
Committee during that time. The Nomination Committee
had recommended that Trevor Schultz be appointed to
replace Bob as HSES Committee chair. The Board, whose
views were supported by the Nomination Committee,
were agreed that the Board continued to have the required
breadth of expertise and there was no immediate need to
seek a replacement for Bob Bowker.
In addition, the Board discussed in detail the scope and
remit of the new CEO, Andrew Pardey, and specifically
the KPIs and areas of focus for Andrew Pardey and
the handover of certain of Josef El‑Raghy’s assumed
responsibilities as acting CEO.
The Board recognises the requirements of the Code
in appointing an external facilitator to evaluate the
performance of the Board. In June 2013, the Institute of
Directors carried out an evaluation of the Board and the
findings were reviewed and accepted by the non‑executive
directors. During 2015/16 a further evaluation will
be conducted.
The performance of all directors is constantly reviewed
by the Chairman and, periodically, by the Nomination
Committee. The Company deployed a formal process for
evaluation of the Board, the Board members, the Board
Committees and the Chairman during the relevant period
led by the senior independent non‑executive director.
The Board has also had training sessions on various topics
during the year, carried out by PricewaterhouseCoopers LLP
– topics included contractor management, identifying
principal risks and accounting judgments and estimates.
Further training sessions on listing rule requirements given
by London law firms were attended by the Board and
senior management.
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Centamin plc Annual report 2014 | 71
Directors’ report
Remuneration report
With a fifth successive year
of growth at Sukari and
completion of its capital
investment, the Company
is positioned to deliver
further cash generation,
shareholder returns and
future growth.
G Edward Haslam
Chairman of the Remuneration Committee
1. Introduction and annual statement
Background to remuneration decisions
With a fifth successive year of growth at Sukari and
completion of its capital investment, the Company is
positioned to deliver further cash generation, shareholder
returns and future growth:
Cash generation:
• year gold production 377,261 ounces (6% increase
on 2013);
• ‘Stage 4’ expansion project was completed during the
year with throughput exceeding nameplate capacity
from September 2014;
• cash operating costs of US$729 per ounce in line with
budget of US$700 per ounce); and
• safety record of 0.39 LTIFR in 2014 (maintaining a good
track record).
Shareholder returns:
• maiden interim dividend of 0.87 US cents per share paid
in October 2014;
• final dividend of 1.99 US cents per share announced on
23 March 2015; and
• strong financial position US$125.7 million cash and cash
equivalents at year end, post interim dividend.
Growth:
• successful completion of the recommended takeover
offer of Ampella Mining Limited and the implementation
of the work programmes to establish the extent of the
resource; and
• systematic exploration continued in Ethiopia on the
Company’s tenements and the licences.
There are still challenges in respect of the litigation, details
of which are set out in Note 20 to the financial statements.
However, from an operational and financial perspective this
has been another successful year and it is within this context
that the key remuneration decisions for 2014 described
below have been taken by the Remuneration Committee.
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We would like to thank shareholders for their constructive
feedback on the remuneration report. I will continue to
engage with shareholders, proxy advisory firms and other
stakeholders throughout 2015.
I have taken the views of shareholders and proxy advisory
services and further developed our remuneration policy
and practice. We would like to thank shareholders for their
constructive feedback on the remuneration report. I will
continue to engage with shareholders, proxy advisory firms
and other stakeholders throughout 2015. The Company
has taken steps following the AGM in 2014, to address
the concerns of shareholders which resulted in 25% of
the shareholders voting against the remuneration report.
The steps taken include the following:
• separate resolutions in the AGM in 2015 for the approval
of the remuneration policy and application of the policy
(on an advisory basis);
• additional disclosure on executive bonus and the
percentage awarded against the targets; and
• other improvements to the governance structure as set
out in the corporate governance report.
Simple approach to remuneration
The simple approach to remuneration adopted over the
last few years will be continued through to 2015, with the
three elements of base pay, contribution to a pension and
annual bonus.
This year, following the recent appointment of our new
CEO, Andrew Pardey, we are proposing the introduction of
a new long term incentive scheme, for approval at the AGM
on 18 May 2015.
It is intended that Andrew Pardey (CEO) will participate in
the new LTIP in 2015, although Josef El‑Raghy (Chairman)
is not due to participate in the scheme in 2015 because
as a shareholder with a 6.2% interest in the Company,
he remains aligned with the interests of shareholders. Josef
El‑Raghy’s participation in the new scheme will be reviewed
in 2016. The remuneration policy described below includes
details of the proposed new LTIP.
This year we have also introduced a shareholding
requirement for the executive directors.
We believe this simple approach to remuneration allows
a cleaner line of sight for the delivery of performance in
the short term while ensuring that the executives have a
meaningful actual shareholding to directly link their interests
with those of the shareholders. There is no better union
of interest between shareholder and executives than for
executives to be substantial shareholders in their own right.
The Deferred Bonus Share Plan (“DBPS”), now in its third
year, provides a simple yet effective incentive to senior
management and senior employees below board level,
motivating and retaining individuals over the longer term.
40 employees participate in the DBSP, including heads of
department and senior personnel based onsite, as well as
members of the senior management team located at the
head office.
Changes in the Board
Andrew Pardey was appointed Chief Executive Officer on
1 February 2015 with Josef El‑Raghy, interim CEO, standing
down as CEO but continuing in his role as executive
Chairman. On 26 January 2015, Bob Bowker retired from
office. Trevor Schultz stood down as an executive director in
May 2014 and was appointed non‑executive director.
Key remuneration decisions for 2014
Base salary for Josef El‑Raghy, which is paid in sterling,
remains unchanged for the third consecutive year at
GBP500,000 (US$821,582) for 2014 and will remain at this
level for 2015.
The bonus outcome for Josef El‑Raghy for 2014 was 80%
of the maximum opportunity which equates to GBP700,000
(US$1,087,294) and represents 140% of base salary. As Josef
El‑Raghy does not participate in any long term incentive
plan no awards were either granted or vested and hence
the annual bonus plan is the sole incentive arrangement for
Josef El‑Raghy. The bonus calculation is made by reference
to a balanced scorecard which comprises of a combination
of financial, operational and individual performance criteria.
Full details are on page 81
Centamin plc Annual report 2014 | 73
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Directors’ report
Remuneration report continued
1. Introduction and annual statement continued
2. The Committee
Key remuneration decisions for 2014 continued
The executive bonus opportunity and structure for 2014 will
remain the same in 2015. For the executives the maximum
bonus opportunity is 175%. This bonus opportunity
for executives will be reduced to a maximum bonus
opportunity of 125% in any year where an award under
the new LTIP is made.
The Committee membership
The Remuneration Committee is a committee of the
Company and following the retirement of Bob Bowker, is
now represented by three non‑executive directors, namely,
Edward Haslam (Chairman of the committee), Mark Arnesen
and Kevin Tomlinson, all of whom are regarded as wholly
independent.
Josef El‑Raghy does not currently participate in a share
scheme and whilst permitted to participate in the new
LTIP, there are no current plans to award grants to
Josef El‑Raghy. This will be reviewed annually by the
Remuneration Committee.
Following the successful completion of the Stage 4
construction, commissioning and hand over of the
processing plant to operations, Trevor Schultz stood down
as an executive director and was appointed a non‑executive
on 1 May 2014. Trevor Schultz was paid the bonus award
of A$500,000 (US$443,616) in May 2014, as disclosed and
accrued in the 2013 annual report.
No member of the Committee has any financial interest,
other than as shareholder, in the matters decided by the
Committee. None of the members of the Committee
participates in any bonus scheme, long term incentive,
pension or other form of remuneration other than the fees
disclosed below and the statutory superannuation for the
Australian resident directors. There is no actual or potential
conflict of interest arising from the other directorships held
by members of the Committee.
The members of the Committee, position and attendance
details are shown in the table below. The Company
Secretary acts as secretary to the Committee.
Trevor Schultz’s fees as a non‑executive director, effective
from 1 May 2015, are detailed in Section 4 ‘Annual
remuneration report’.
Name
Position
Attendance
in 2014
Attendance
in 2013
Edward Haslam Chairman
4 of 4 meetings
6 of 6 meetings
Kevin Tomlinson Member
4 of 4 meetings
6 of 6 meetings
Mark Arnesen
Member
4 of 4 meetings
6 of 6 meetings
Bob Bowker
Member
4 of 4 meetings
6 of 6 meetings
It has been agreed by the Remuneration Committee that
Josef El‑Raghy’s (Chairman) base pay for 2015 will remain
at the same rate for 2014.
The Remuneration Committee will review Andrew Pardey’s
(CEO) base salary (which is currently £390,000 (US$640,834)
and ensure the overall remuneration is in line with the
market. Any such increase will be phased in two stages
over a two‑year period. Andrew Pardey will likely be offered
the following:
• phase one increase in base salary of between 10%
and 15%;
• a pension, provided as a cash supplement, of between
10% and 20% of base salary;
• annual participation in the LTIP, with awards to be made
in line with the LTIP policy;
• bonus opportunity of 125% of base salary (on the basis
awards are made under the LTIP).
The following report has been made available to the
auditors; PricewaterhouseCoopers LLP, and section 4 (where
indicated), ‘Annual remuneration report’ has been audited
by PricewaterhouseCoopers LLP.
G Edward Haslam
Chairman of the Remuneration Committee
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Activities of the Committee
The Committee met four times in the year and undertook
the following business as indicated in the table below.
Committee
meeting date
5 February 2014
13 May 2014
1 September 2014
11 December 2014
Activity
Review the DRR for the annual report and
finalise the 2014 remuneration policy.
Review the balanced scorecards and key
performance measures for the executive
and senior management.
Make recommendations to the Board to
grant shares to new and existing participants
of the deferred bonus share plan to senior
employees.
Confirmed the forfeiture of awards under
the executive director loan funded share
plan, as the performance criteria were not
achieved and noted that there were no
further participants under this scheme.
Review of the feedback from shareholders
and proxy advisory organisations in relation
to the DRR and remuneration policy.
Finalising the awards to the new and existing
members of the deferred bonus share plan.
Detailed review of the proxy advisory
feedback and action plan to address any
concerns.
Review the proposal to develop a long term
incentive plan for executive directors, for
approval by the shareholders.
Performance reviews for the executive and
management team, taking account of the
balanced scorecards, industry benchmarking
and making recommendations to the Board
for executive and management bonuses.
Review of non‑executive director fees.
Further analysis on the proposed
performance criteria for a new LTIP and
finalising the remuneration policy for
approval at the AGM in 2015.
Evaluation of the committee and charter.
Terms of reference
The responsibilities of the Committee are set out in the
charter which was updated in 2014 and includes:
• the remuneration, recruitment, retention, termination,
superannuation and incentive policies and procedures for
executives and senior management; and
• the performance conditions, criteria and policies for the
Group’s employee and executive incentive share plans.
Advisers to the Committee
During the year the Committee was supported by the
Company Secretary. MEIS Executive Compensation Data
was appointed as adviser to the Committee in respect of
its work on executive remuneration. MEIS does not provide
any other service to the Company and is regarded as
independent by the Committee. MEIS is engaged on an
annual retainer for GBP7,000 for a twelve month period.
MEIS were originally appointed on the recommendation
of the Remuneration Committee and are regarded by
the Committee as providing independent advice as they
have no connections with the directors and officers of the
Company other than this engagement.
Josef El‑Raghy may attend meetings of the Committee to
make recommendations relating to the performance and
remuneration of his direct reports but neither he nor the
Company Secretary are in attendance at meetings when
their own remunerations are under consideration.
3. Our remuneration policy
Introduction
The remuneration report (including the policy and
application of the policy) was put to shareholders on an
advisory basis at the AGM in 2014 and the resolution
was passed by a 74% majority. The remuneration policy
and application of the policy will be subject to separate
non‑binding advisory vote at the AGM on 18 May 2015.
The remuneration policy will be effective following
the AGM.
In developing its remuneration policy the Committee has
had regard to the fact that the business of the Company
is operated outside the UK and in a market which requires
the engagement; motivation and retention of very
particular operational and managerial personnel and skills.
The remuneration policy therefore seeks to:
• position remuneration packages to ensure that they
remain competitive, taking account of all elements of
remuneration and be reflective of the performance of
the Company;
• use external benchmark data on a transparent and open
basis using comparator groups that reflect the industry
and size of the Company;
• provide incentive arrangements for relevant employees
that are based upon pre‑agreed performance criteria
against which individuals will then be tested. Such
incentives should be relevant and stretching;
• provide long term incentives that encourage the
involvement, in the long term, of the performance
of the Company; and
• encourage executives, and in particular executive
directors, to build and then maintain a meaningful
shareholding in the Company.
Centamin plc Annual report 2014 | 75
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Directors’ report
Remuneration report continued
3. Our remuneration policy continued
Introduction continued
Remuneration policy for executive directors
Element
Objective
Details
For 2014
For 2015
Base pay
Base pay to be
set competitively
so as to allow the
motivation and
retention of key
executives of the
calibre and skills
necessary to support
Centamin’s short
and long term
objectives.
Benefits
Benefits may be
provided where
necessary to
ensure competitive
remuneration
packages are
consistent with
the market.
Pay is reviewed annually and any change
ordinarily takes effect from the 1 January.
The base salary for 2014
was as follows:
Josef El‑Raghy
GBP500,000
(US$821,582).
No benefits.
Salaries are benchmarked against a number
of comparator groups as described below to
provide a balanced approach. Increases will
take account of those of the general workforce.
Increases will take account of the performance
of the individual and the benchmarked data
but any increase which exceeds that of the
general work force may only normally be
awarded in cases as a result of a change in
responsibility, or the complexity and nature
of the role or size of the organisation or
the pay level becoming out of line with the
market data.
The normal benefits that may be provided
include such items as car or car allowance,
life assurance, private medical provision,
subscriptions and phones. Normal benefits will
not currently exceed 5% of base pay.
Where necessary, due to the location of
operations of the business, it may be necessary
to provide additional benefits such as private
security, accommodation and reasonable travel
costs or enhanced provision of other benefits.
Additional benefits may not exceed 10% of
base pay.
Therefore normal benefits and additional
benefits will not currently exceed 15% of
base pay.
Pension
Positioned to
ensure competitive
packages and
provision of
appropriate income
for executives in
retirement.
A payment in lieu of pension will be made
between 10% and not more than 20% of base
pay. Where any payment is require to be made
under a statutory provision then this amount
will be included within the above limit.
Josef El‑Raghy receives
a cash payment in lieu of
a pension equivalent to
20% of his base salary.
There is no
intended change in
the policy for 2015
and no increase is
to be awarded on
the 2014 base pay
figures for Josef
El‑Raghy.
Following the
changes to the
Board in 2015,
a review of the
remuneration for
the CEO, Chairman
and SNED will take
place in May 2015.
Normal benefits
and additional
benefits will not
exceed 15% of
base pay.
There is no
intended change
to the pension
contribution for
Josef El‑Raghy.
A pension
contribution
between 10% and
20% of salary for
Andrew Pardey will
be considered by
the Remuneration
Committee.
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Remuneration policy for executive directors
Element
Objective
Details
For 2014
For 2015
Bonus maximum
opportunity of 175%.
Actual outcome for Josef
El‑Raghy was 80% of
maximum.
Bonus maximum
opportunity of
175%, reducing
to a maximum
opportunity of
125% of base salary
in any year an
award is made to
an executive under
the new LTIP.
Annual bonus
To provide a driver
and reward for the
delivery of short
term performance
goals, normally over
the course of the
financial year.
Performance criteria, which are set at the
beginning of each year, are based upon a
balanced scorecard approach. The balanced
scorecard shall be based 70% on financial,
operational and strategic targets and 30% on
individual key tasks.
The performance measures are selected to
provide an appropriate balance between
incentivising executive directors to meet
financial/operational targets for the year and
incentivising them to achieve specific strategic
objectives. In selecting the performance
conditions for each year, consideration will
be given to market expectations and the
performance measures that are generally
regarded as reflective of the performance of
the industry. These will normally be selected
from financial performance measures
(profitability, cost against budget and
operational efficiency), strategic measures
(M&A opportunities, exploration and project
delivery), corporate measures (health and
safety and corporate governance) and
individual tasks.
For executive directors, the maximum annual
bonus opportunity is 175% of base salary,
however a lower amount will be set for
executive directors who participate in the
proposed LTIP. On target bonus is just above
half of the maximum opportunity at 57% of the
maximum.
The Committee may apply claw back to any
bonus where the Committee is of the view
that facts have come to light, which had they
been known at the time would have affected
the Committees decision to pay part or all of
any bonus.
Long term
incentives
To align the
interests of the
executive with that
of the shareholders
through a
meaningful
ownership of shares.
Share
ownership
requirement
To encourage
ownership of
shares and thereby
create a link of
interest between
shareholder and
the executives.
A new long term incentive scheme in proposed
for approval at the 2015 AGM.
No LTIs awarded to
executive directors.
Details of the new LTIP are set out in section 6
on page 85.
For management, but not directors, the
Company has a deferred bonus scheme as
part of the annual bonus. The Company can
require up to 100% of a bonus to be deferred
into shares. Such shares will then be released
typically as to a third at the end of each 12, 24
and 36 month period.
While there was no formal shareholding
requirement for executive directors in 2014,
it is proposed in the remuneration policy that
a formal policy be adopted in 2015.
No formal policy.
Josef El‑Raghy has a
shareholding equivalent
to 9,288% of base pay
which represents 6.2%
as a direct shareholding
in the Company (this
includes certain shares
held by the El‑Raghy
family).
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Awards to Andrew
Pardey are proposed
following approval of
the LTIP at the AGM
in May 2015.
The LTIP is available
to all executives
(and senior
management),
however there are
no current plans
to make awards to
Josef El‑Raghy.
Executive directors
are required to
build a holding
of shares in
the Company
equivalent to 150%
of base salary over
a five year period
from appointment.
Vested shares are
to be included in
the calculation.
Centamin plc Annual report 2014 | 77
Directors’ report
Remuneration report continued
3. Our remuneration policy continued
Policy if a new director is appointed
The Company has a track record of succession planning and
growing and promoting talent internally as demonstrated by
the appointment of the new CEO.
When hiring a new executive director, or promoting an
individual to the Board, the Committee will offer a package
that is sufficient to attract and motivate while aiming to pay
no more than is necessary taking account of market data,
the impact on other existing remuneration arrangements,
the candidate’s location and experience, external market
influences and internal pay relativities.
The structure of the remuneration package of a new
executive director will follow the policy above, however
in certain circumstances, the Committee may use other
elements of remuneration if it considers appropriate with
due regard to the best interests of the shareholders.
In particular, a service contract that contains a longer initial
notice period, tapering down to twelve months over a
set period of time, the buyout of short and or long term
incentive arrangements (taking account of the performance
measures on such incentives) as close as possible on a
comparable basis, the provision of long term incentives
and the provision of benefits such as housing allowance
or similar particularly where it is an expatriate appointment.
The Committee may, where necessary and in the interest
of shareholders, also offer recruitment incentives to facilitate
the recruitment of an appropriate individual subject to the
following limits:
• annual bonus plus buy out short term incentives as
described above will not exceed 175% of base pay; and
• long term incentives will be limited to an aggregate of
250% in the first year or where there is a buy‑out of long
term incentives as described above to 150%.
To facilitate the buy‑out awards outlined above the
Committee may grant awards to a new executive director
under the Listing Rule 9.4.2. The total package offered to a
new recruit will not exceed the overall limits set out in the
Company’s remuneration policy.
Policy on payment for loss of office
The Company’s approach to payment on loss of office
will take account of the circumstances of the termination
of employment. In the case of a good leaver then the
individual will be expected to work through the notice
period and will be entitled to all the benefits under the
service agreement during that period.
In the case of a termination as a result of poor performance
or a breach of any of the material terms of the agreement
then the Company may terminate with immediate effect
without notice and with no liability to make any further
payment to the individual other than in respect of amounts
accrued due at the date of termination.
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In the case that the Company wishes to terminate the
agreement and make a payment in lieu of notice, this
payment shall be phased in monthly or quarterly instalments
over a period of no longer than twelve months (or the notice
period if less) and that any payment should be reduced
in accordance with the duty on the executive to mitigate
his loss. The Company will consider if any bonus amount
is to be included in the calculation when determining
the payment in lieu of notice. Any bonus (if included at
all) would be restricted to the director’s actual period of
service only.
In the case of notice given in connection with and
shortly following a change of control then in the case
of Josef El‑Raghy he is entitled to payment in lieu of an
amount equal to twelve month’s basic salary plus bonus.
Any bonus that may be due to him at the completion
of the change of control, shall be determined by the
Remuneration Committee and such bonus (if any) would
be based on the period only up to the completion of the
change of control, taking account of all the relevant key
performance indicators.
Claw back provisions for executive directors relate to bonus
and holiday taken in advance.
In relation to the LTIP, the Company’s approach to payment
on loss of office will take account of the circumstances of
the termination of employment. In the case of a good leaver
then the individual will be expected to work through the
notice period and will be entitled to all the benefits under
the service agreement during that period.
In the case of a termination as a result of poor performance
or a breach of any of the material terms of the agreement
then all unvested awards and all vested but unreleased
awards will lapse.
In the case of death, annual bonus will be determined
by the Remuneration Committee, which shall determine
the bonus to be paid taking account of the duration in
employment and performance of the Company and long
term incentives shall be treated in the same way as a
good leaver.
Policy on external board appointments
The Company encourages the executive directors to
have non‑executive external appointments provided that
such appointments do not adversely impact on the duties
required to be performed to the Company. Where there are
external appointments the director will retain any fees for
such appointments and will not be liable to account to the
Company for such fees.
Of the executives, Trevor Schultz received remuneration
during 2014 from another external appointment with
Base Resources Limited amounting to US$70,000.
Remuneration policy for non‑executive directors
Element
Objective
Details
For 2014
For 2015
Non‑executive
director fees
To attract and
retain high calibre
non‑executive
directors by
the provision of
competitive fees.
Incentives
No incentives.
The fees were reviewed
in 2013 and the following
applied from 1 April 2013:
• basic fee GBP65,000
(US$106,806);
• chair of a Committee
GBP10,000
(US$16,432); and
• member of a
Committee GBP5,000
(US$8,216).
Non‑executive directors receive annual
fees within an aggregate directors’ fee pool
limited to an amount which is approved
by shareholders.
Fees are reviewed every two years against
the same comparator groups as used for the
executive directors.
Non‑executive directors do not participate in
any incentive arrangements.
Special arrangements exist regarding the fees
for the senior independent non‑executive
director while the roles of CEO and Chairman
were combined. This arrangement is under
review while the orderly hand over of Chairman
duties is returned to the Chairman.
The non‑executive directors do not participate
in any short or long term incentive plans.
The fees payable
to the senior
non‑executive
director will be
reviewed during
the year.
The fees for
the other
non‑executives will
next be reviewed
for 2016. Otherwise
the fees will remain
as for 2013.
There is no
intended change in
the policy for 2014.
Remuneration arrangement across the Company
Our remuneration policy for executive directors is consistent
with that across the Company and aims to attract and
retain high‑performing individuals and to reward success.
Base pay and benefits are set competitively taking account
of the individual’s performance and market data. Annual
incentives are typically linked to local business performance
with a focus on performance against key strategic business
objectives. Key management team members may also
receive some of their annual bonus in shares which are
deferred. At this time there are no all employee share
arrangements but this is kept under review on a regular basis
taking account of the locations the Company operates in and
the appropriateness of share base rewards in such locations.
All employees of Sukari Gold Mine Company (the majority
of whom are based at the Sukari mine site) are subject to a
performance related bonus which is linked to the underlying
operation performance, and cost control measures at the
mine. Further details on employee relations can be found in
the CSR report.
For Josef El‑Raghy the graphs assumes a base salary
as disclosed in this report of GBP500,000, pension
contributions of 20% of base being GBP100,000 and bonus
from zero at the minimum, to 50% of 175% at target, and
175% of base for the maximum. There are no benefits or
long term incentive elements.
For Andrew Pardey, the graphs assume a base salary of
GBP390,000, pension contributions of up to 20% of base
and bonus from zero, to 50% of 125% at target and 125%
of base for the maximum. The graph assumes that Andrew
Pardey will be awarded shares under the terms of the new
LTIP of 150% of his base salary with an initial award of up to
150% of his base salary. For the LTI the assumed values are
zero for minimum, to 50% of the face value of the award at
target and the face value of the award for the maximum.
Implementation of policy
The Company intends to implement the remuneration
policy for 2015 as detailed in this report on remuneration.
Josef El‑Raghy
Andrew Pardey
£875,000
£437,500
£100,000
£100,000
£100,000
£500,000
£500,000
£500,000
17%
83%
42%
10%
48%
59%
7%
34%
20%
£585,000
£292,500
£243,750
£487,500
80%
£78,000
£78,000
£78,000
£390,000
£390,000
£390,000
29%
24%
8%
39%
38%
32%
5%
25%
Min
Mid
Max
Min
Mid
Max
Min
Mid
Max
Min
Mid
Max
Long term incentive
Annual incentive
Pension
Benefits
Base
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Directors’ report
Remuneration report continued
4. Annual remuneration report
What did the executive and non‑executive directors earn in 2014?
Single figure table US$ (Audited)
Executives
Salary
2014
Salary
2013
Benefits
2014
Benefits
2013
Bonus
2014
Bonus
2013
Pension
2014
Pension
2013
LTI
2014
LTI
2013
Total
2014
Total
2013
Josef El‑Raghy
821,582 782,112
Trevor Schultz
276,513 671,348
Total
1,098,095 1,453,460
—
—
—
— 1,087,294 1,082,028 164,316 156,422
—
443,616 777,847
—
—
— 1,530,910 1,859,875 164,316 156,422
—
—
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— 2,073,192 2,020,562
—
720,129 1,449,195
— 2,793,321 3,469,757
Non‑executives
Base fees Base fees
2013
2014
Benefits
2014
Benefits
2013
Bonus
2014
Bonus
2013
Pension
2014
Pension
2013
LTI
2014
LTI
2013
Total
2014
Total
2013
Edward Haslam
244,228 216,030
Bob Bowker
100,180 117,802
Mark Bankes
138,396 128,575
Mark Arnesen
126,535 117,802
Kevin Tomlinson
122,114 112,819
Trevor Schultz
72,357
—
Total
803,810 693,028
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
38,215
10,773
—
—
—
—
11,862
10,773
—
—
—
—
—
—
—
50,077
21,546
—
—
—
—
—
—
—
— 244,228 216,030
—
138,395 128,575
— 138,396 128,575
— 138,397 128,575
— 122,114 112,819
—
72,357
—
— 853,887 714,574
1. Josef El‑Raghy is paid in sterling and his base salary remained unchanged for the third consecutive year at GBP500,000 per annum.
2. The amounts shown in salary in the table above for Trevor Schultz include Egyptian income taxes paid by the Company on behalf
of Trevor Schultz. During 2014 Egyptian income taxes paid by the Company on behalf of Trevor Schultz amounted to US$68,026 in
2014 (2013: US$144,580).
3. Superannuation is payable to Bob Bowker and Mark Arnesen and this is included in the pension column.
4. Directors’ remuneration paid in foreign currency was converted at an average rate during the year. The average A$:US$ exchange
rate for 2014 is 0.8973 and the average GBP:US$ exchange rate for 2014 is 1.6431. Bonus accruals for 2014 applied an exchange
rate of A$:US$0.8156 and GBP:US$1.5533.
5. The pension payable to Josef El‑Raghy represents a cash payment in lieu of contributions to a pension scheme.
6. The bonus for Trevor Schultz represents the bonus accrued in 2013 which was paid following the successful completion of Stage 4,
commission and hand over of the plant to operations in 2014, as disclosed in the 2013 annual report. Trevor served as an executive
director until April 2014 and was appointed a non‑executive on 1 May 2014. The salary paid to Trevor Schultz includes accumulated
entitlement for the period to 30 April 2014, with fees paid as a non‑executive director, effective from 1 May 2014.
Non‑executive director fees
Non‑executive directors receive annual fees within an aggregate directors’ fee pool limited to an amount which is approved
by shareholders. The Committee reviews and recommends, for Board approval, remuneration levels and policies for
directors within this overall directors’ fee pool. The fees which are paid are also periodically reviewed. The current annual
fee rate for non‑executive directors is as follows:
Annual base fee
Chairman of a Board Committee
Member of a Board Committee
Senior independent non‑executive director
(when not performing the role in Note 1)
As at
31 December
2013
As at
31 December
2014
GBP65,000 (US$106,806) GBP65,000 (US$101,674)
GBP10,000 (US$16,432) GBP10,000 (US$15,642)
GBP5,000 (US$8,216)
GBP5,000 (US$7,821)
GBP10,000 (US$16,432) GBP10,000 (US$15,642)
1. With effect from 1 April 2013, the fees payable to Gordon Edward Haslam in his capacity as senior independent director were
increased to take account of the additional duties undertaken while the roles of CEO and Chairman were combined. The total fees
paid to him, on an annual basis, were GBP150,000 (US$244,228) per year. Following the changes to the Board in 2015, these fees
will be subject to a review during 2015. However, given that the Company has an executive Chairman, it is anticipated that he will
continue with an enhanced role with fees commensurate with that role. In keeping with the Company’s policy, Mr Haslam did not
and will not participate in any meeting discussing his fees.
2. These amounts include any statutory superannuation payments where applicable.
3. The Company reviewed the NED fees during 2014. No increases in NED fees were proposed in 2015.
4. The non‑executive directors do not participate in any of the Company’s share plans or incentive plans.
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Base pay
Remuneration of the executive directors and the senior
management team is considered against three criteria
– general pay levels and pay increases throughout the
Company, the performance and skills of the individual
and market data.
Annual bonus
The bonus plan for the executive directors is based upon a
balanced scorecard approach designed to encourage and
reward the delivery of operational performance. For Josef
El‑Raghy the bonus is split 70% business and 30% individual
targets as follows:
In respect of market data for the executive directors and
the senior management team, a selection of five different
comparator groups are used in order to gain a balanced
view of the market data. These comparator groups consist
of a bespoke list of UK and international mining companies,
companies with a similar market capitalisation, companies
with a similar turnover, the Mining Sector and the FTSE 250.
Any increase which exceeds that of the general work force
may only normally be awarded in cases as a result of change
in responsibility, or the complexity and nature of the role or
size of the organisation or the pay level becoming out of
line with the market data.
Pay is reviewed annually and any changes ordinarily take
effect from the 1 January. However, with the appointment
of a new CEO in February 2015, the annual review of pay
for 2015 has been deferred to May 2015.
Taking account of market data has however been
determined that there will be no increases in base pay for
2015 for Josef El‑Raghy. Therefore the base pay for Josef
El‑Raghy of GBP500,000 (US$821,582) will remain at this
level during 2015.
The appointment of the new CEO, Andrew Pardey will likely
see a change in his remuneration package over the next
24 months which may include an increase of base salary in
line with the market, a cash payment in lieu of a pension
equivalent of between 10% and 20% of his base salary and
annual awards under the new LTIP equivalent to 150% of
base salary with an initial annual award of 150%.
• 70% – the business targets are based on:
• 40% – financial (profitability/financial position, cost
against budget and operational efficiency);
• 20% strategic measures (M&A opportunities,
exploration in Egypt and other locations,
project delivery); and
• 10% corporate (corporate governance improvements,
health and safety, production guidance and CSR
development).
• 30% – the individual tasks are based on building
management team and motivation, formalisation
and communications of business strategy, in country
stakeholder management and shareholder relations.
The following graph shows the balance of the
performance criteria.
Performance criteria
30
10
20
40
Financial and
operational
Corporate
Corporate
Strategic
Individual KPI
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Directors’ report
Remuneration report continued
4. Annual remuneration report continued
2015 bonus
2014 bonus (audited)
In reviewing performance against the criteria and in
arriving at the decision the committee considered the key
milestones achieved during the year which Josef El‑Raghy
was instrumental in delivering, which included the following:
Financial and operational:
• profitability/financial position – recommending and
paying to shareholders the Company’s maiden dividend;
• profitability/financial position – strong financial position
US$125.7 million cash and cash equivalents at year end
after the payment of an interim (US$106 million cash and
cash equivalents at 31 December 2013);
• cost against budget – cash operating costs of US$729
per ounce (slightly above budget of US$700 per ounce);
• production achievement – annual gold production
377,261 ounces (5% increase on 2013); and
• operational efficiency – processing throughput above
the expanded 10Mtpa nameplate capacity in the
fourth quarter.
Strategic:
• M&A opportunities – successfully completing the
recommended takeover of Ampella;
• exploration in Egypt and other locations – systematic
exploration continued in Ethiopia on the Company’s
tenements and those licences; and
• project delivery – completing the investment phase of
Sukari (Stage 4 complete).
Corporate:
• corporate governance improvements – engagement
programme with shareholders;
• corporate governance improvements – appointment of
CEO and separation of CEO and Chairman roles; and
• health and safety – safety record of 0.39 LTIFR in 2014
(maintaining a good track record although below the rate
in 2013).
Individual KPIs:
• securing approval for the increase in the daily supply
of AN; and
• M&A activity culminated in a recommended takeover
offer of Ampella Mining Limited to extend exploration
into prospective Burkina Faso.
On this basis the Committee determined that 80% of the
maximum bonus, of 175% of Josef El‑Raghy’s 2014 base
salary had been achieved. This resulted in a payment of
GBP700,000 (US$1,087,294).
Further details on performance targets cannot be disclosed
as these are commercially sensitive.
The bonus for 2015 will be based upon the balanced
scorecard approach above:
• 70% – the business targets:
• 40% – financial (an improvement in profitability, cost
against budget and operational efficiency);
• 20% strategic measures (M&A opportunities,
exploration in Egypt and other locations,
project delivery); and
• 10% corporate (corporate governance improvements,
health and safety, production guidance CSR
development).
• 30% – the individual tasks are based on building
management team and motivation, formalisation
and communication of business strategy, in country
stakeholder management and shareholder relations.
These tasks will include:
• orderly handover of CEO responsibilities to
Andrew Pardey;
• direct stakeholder and investor engagement to
include attending and presenting at roadshows and
conferences throughout the year; and
• maintaining his role as the Company’s Egyptian
political interface.
For Andrew Pardey the bonus opportunity will be based
on a balance scorecard approach which will be finalised by
the Committee in May 2015, but will apply similar business
targets as identified above.
Further details on performance targets cannot be disclosed
as these are commercially sensitive.
Pension arrangements and benefits in kind (audited)
Josef El‑Raghy is entitled to a payment in respect of
pension entitlement equal to 20% of base pay. Andrew
Pardey is likely to be entitled to a pension entitlement of up
to 20% of base pay. Other than statutory superannuation for
Australian resident directors, Bob Bowker and Mark Arnesen
and the payments in lieu of pension above, no pensions or
payments in lieu of pensions are made.
Long term incentives – shares award table (audited)
Josef El‑Raghy does not currently participate in any long
term incentive arrangement. There is a deferred share plan
for senior management. Andrew Pardey has participated in
this plan but is no longer eligible for new awards following
his appointment to the Board. Full details can be found
section 6 below.
Payment to past directors
There are no payments to directors for loss of office.
Payment for loss of office (audited)
There are no payments to past directors of the Company.
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Performance
measure:
Financial and
operational
Strategic
Corporate
Financial and
operational
Individual
Individual KPI
Total
% Target:
% Max
% Awarded of target
Subtotal
40%
20%
10%
30%
100%
70%
35%
17.5%
52.5%
175%
80%
80%
90%
75%
32%
16%
9%
23%
80%
Service agreements for directors
Service agreements for executive directors
Consistent with current best practice the executive directors have rolling contracts with notice periods of twelve months
or less.
Letters of appointment for non‑executive directors
Under the Articles of Association adopted by the Company all directors are now subject to annual re‑election. All members
of the Board offered themselves for either election or re‑election at the last Annual General Meeting of the Company.
Copies of the appointment letters including the terms of service are available at the Company’s registered office or at the
Annual General Meeting. Each of the non‑executive directors have formal letters of appointment and there is no provision
for payments for loss of office.
Josef El‑Raghy
Andrew Pardey
1 September 2010 (as amended subsequently).
1 February 2015.
Twelve months’ notice from either party.
Three months’ notice from either party.
Date of
agreement
Notice
period
Expiry date
No fixed expiry date as rolling contract.
No fixed expiry date as rolling contract.
Pension
Entitlement to 20% of base pay.
No current entitlement.
Benefits
Entitlement in accordance with the remuneration policy.
Entitlement in accordance with the remuneration policy.
Annual
bonus
Eligible to participate in an annual bonus arrangement as
determined by the Committee from time to time.
Eligible to participate in an annual bonus arrangement as
determined by the Committee from time to time.
Long term
incentives
Termination
payment
Eligible to participate in the new LTIP.
Eligible to participate in the new LTIP.
Entitled to be paid salary and pension in respect of the
relevant notice period. In the case of notice given in
connection with and shortly following a change of control,
Josef El‑Raghy will be entitled to payment in lieu of an
amount equal to twelve month’s basic salary together
with any bonus that, in the opinion of the Remuneration
Committee, would have been due to him at the time
of the completion of the change of control taking into
account all the relevant performance indicators.
Entitled to be paid salary and pension in respect of the relevant
notice period. In the case of notice given in connection with
and shortly following a change of control, Andrew Pardey will
be entitled to payment in lieu of an amount equal to twelve
month’s basic salary together with any bonus that, in the opinion
of the Remuneration Committee, would have been due to him at
the time of the completion of the change of control taking into
account all the relevant performance indicators.
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Directors’ report
Remuneration report continued
4. Annual remuneration report continued
Directors’ shareholdings (audited)
There is no formal shareholding requirement but the executive directors are encouraged to hold a meaningful quantity of
shares. The following table shows the current shareholding of each of the directors at the date of this report. Josef El‑Raghy
(and family) currently own 6.2% of the issued share capital of the Company.
Name
Executive directors
Josef El‑Raghy
Andrew Pardey
Non‑executive directors
Trevor Schultz
G Edward Haslam
Mark Bankes
Mark Arnesen
Kevin Tomlinson
As at
As at
31 December 31 December
2013
2014
% of base
salary/fees
71,445,086 71,445,086
2,185,000(1) 1,785,000(1)
9288%
364%
30,000
1,030,000(2)
102,056
150,000
15,000
24,400
102,056
120,000
15,000
—
26%
44%
115%
11%
21%
(1) Includes shares granted under the DBSP.
(2) Includes shares granted under the EDLFSP which lapsed in 2014 as the performance conditions were not met.
5. Comparative remuneration data
Performance graph and CEO remuneration table
The graph below compares the TSR of the Company to the FTSE 250 and the FTSE 350 Mining indices. The graphs show
the return for the last five years.
200
150
100
50
0
Centamin plc
FTSE 350 Mining
FTSE 250
4 Jan 2010
4 Jan 2011
3 Jan 2012
2 Jan 2013
2 Jan 2014
31 Dec 2014
The Remuneration Committee considers that these indices are appropriate comparators of the Company.
Long term
incentives
vesting as
percentage
of maximum
Percentage change in remuneration
The Company has chosen the comparator group as
all the employees of the Centamin Group (excluding
non‑executive directors).
Nil
Nil
Nil
Nil
Total
remuneration
2014
Total
remuneration Percentage
change
2013
Comparator group US$50,985,000 US$52,581,000
Chairman
US$2,073,192 US$2,020,562
3%
2%
1. The total number of individuals employed by the Centamin
Group in 2014 were 1,413 (2013: 1,387 employees).
Single figure
Remuneration
US$1,290,742
US$1,920,644
US$2,020,562
US$2,073,192
Annual
bonus as %
of maximum
65%
80%
75%
80%
2011
2012
2013
2014
1. For 2011 the maximum bonus opportunity was A$1m.
For 2012 and 2013 the maximum bonus opportunity was
175% of base. The Loan Funded Share Plan award made in
2011 to Josef El‑Raghy was voluntarily forfeited in 2012 for no
compensation.
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Model Code that binds the Company. Awards may not be
made following the expiry of ten years from the date of
adoption of the Plan.
The shares to be transferred pursuant to vested awards
may either be newly issued shares, treasury shares, or
existing shares to be transferred pursuant to the Company’s
employee benefits trust, the trustees of which are
Computershare Trustees (Jersey) Limited.
(C) Anti‑dilution and scheme limits
The overall number of shares transferred or transferable
pursuant to awards, when aggregated with all employee
share plans operated by the Company (dilutive shares)
cannot exceed 10% of the issued share capital of the
Company in any ten year rolling period when added
to the dilutive shares.
The overall number of shares transferred or transferable
pursuant to awards for the benefit of executives, when
aggregated with all executive share plans operated by the
Company (executive dilutive shares) cannot exceed 5% of
the issued share capital of the Company in any ten year
rolling period when added to the executive dilutive shares.
For the purposes of these limits, treasury shares will count as
newly issued shares where required by institutional investor
guidelines. Awards or other rights to acquire shares which
have lapsed or have been renounced do not count towards
this limit.
The aggregate market value of any award received by an
award holder may not (assessed on the value of the shares
at the date of granting the award), exceed 150% of the
award holder’s total remuneration as at the date of the
grant of the award. In circumstances the Remuneration
Committee determine as being exceptional, that
limit may be increased to 250% by the Remuneration
Committee for a particular award.
(D) Award price
Award holders are not required to make any payment to
participate in the Plan and no price is payable by the award
holders to enable shares to be transferred in satisfaction
of conditional share awards. Options will either have no
exercise price or a nominal exercise price.
6. Long term incentive arrangements
Introduction
Neither executive director currently participates in any long
term incentive arrangement. There is a deferred share plan
for senior management detailed below. Andrew Pardey was
a member of this scheme but is no longer eligible for new
awards following his appointment as director.
Centamin is proposing the introduction of a new long term
incentive scheme, for approval at the AGM on 18 May 2015.
The aim of the Plan is to introduce a long term incentive
plan that can provide a suitable recruitment and retention
tool for any new or promoted executives and in particular
individuals at executive director level. The Plan, which
complies with best practice guidelines, is to provide a
platform, as part of the remuneration policy, to be used to
provide a long term reward tool for participants. Full details
can be found in the appendix to this report below.
New long term incentive plan
Restricted share plan (“Plan”)
The Plan provides the right for the Company to grant
awards to employees of the Company or any of its
subsidiaries (the “Group”). Awards may take the form of:
(a) conditional share awards, where shares are transferred
conditionally upon the satisfaction of performance
conditions; or (b) share options which may take the form
of nil cost options or have a nominal exercise price,
the exercise of which is again subject to satisfaction of
applicable performance conditions.
Conditional share awards and options together constitute
“awards” under the Plan and those in receipt of awards are
“award holders”.
(A) Eligibility
Awards may be granted under the Plan to all persons who
at the date at which the award is granted under the Plan are
employees of the Group, though at present it is envisaged that
Awards will be reserved for senior management in the Group.
The Remuneration Committee decides to whom awards
are granted, the number of ordinary shares falling under an
award and the precise nature of the performance conditions.
No awards may be granted more than ten years after the date
on which the Plan was adopted by the Company.
(B) Granting of awards
Awards may be granted under the Plan at any point during
the 28 day period following adoption of the Plan, the 42 day
period following the announcement of the annual results of
the Company or at any other period in which the directors
of the Company deem that awards should be granted
due to exceptional circumstances. In no circumstances
shall awards be made at a time when their grant would be
prohibited by or in breach of any law, regulation with force
of law, or rule of an investment exchange on which shares
are listed or traded, part of the Model Code or any other
non‑statutory rule with a purpose similar to any part of the
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Directors’ report
Remuneration report continued
6. Long term incentive arrangements continued
New long term incentive plan continued
(E) Vesting of awards
Awards will vest following the passing of three years
from the date of the award. Vesting will be subject to
satisfaction of Performance Conditions. For the purpose
of the performance conditions, the award will be divided
into up to three tranches to be assessed against separate
performance conditions measured over a three year period.
Although the precise performance conditions may vary
between awards, at the date of adoption of the Plan, the
intention is that the performance conditions will be assessed
as follows:
• 20% of the award shall be assessed by reference to a
target total shareholder return (“TSR”). If the top end of
the TSR target is met (currently anticipated to be if the
Company is ranked equal to or better than the upper
quarter total shareholder return of selected comparator
companies, see below) all 20% of the award tranche
shall vest. If the Company is ranked at the median level
in a table of comparator companies by reference to
TSR, 25% of the award tranche shall vest (i.e. 5% of the
award). Proportionate amounts of the award tranche will
vest for results in between. The comparator group is as
follows: Agnico Eagle Mines Ltd, AngloGold Ashanti,
Centerra Gold, Eldorado Gold, Gold Fields Ltd, Kinross
Gold Corporation, IMGold Resources Inc, Petropavlovsk,
Polyus Gold, Randgold Resources, Yamana Gold, Inc,
Acacia Mining plc/African Barrick, Alacer Gold, B2 Gold
Corp and Endeavour Mining;
• 50% of the Award shall be assessed by reference to
absolute growth in earnings per share (“EPS”). If a
compound annual growth rate in EPS of the Company
of 12% is achieved, all 50% of the award tranche shall
vest. If a compound annual growth rate in EPS of the
Company of 8% is achieved 25% of the award tranche
shall vest (i.e. 12.5% of the Award). Proportionate
amounts of the award tranche will vest for results in
between. With the onset of profit share (expected
from 2017) likely to impact the growth of EPS, the
Remuneration Committee will have the discretion to
make a fair and equitable adjustment, if necessary, to
reflect the impact of profit share when assessing the
growth over the period of the grant. Any such adjustment
will be discussed with key shareholders at the time; and
• 30% of the award shall be assessed by reference to
compound growth in gold production. If a compound
annual growth rate of 10% of gold production is
achieved, all 30% of the award tranche shall vest.
If a compound annual growth rate of 6% of gold
production is achieved 25% of the award tranche shall
vest (i.e. 7.5% of the award). Proportionate amounts of
the award tranche will vest for results in between.
The above measures are assessed by reference to current
market practice and the Remuneration Committee will have
regard to current market practice when establishing the
precise performance conditions for awards.
Where the performance conditions have been met, in the
case of conditional awards, 50% of the total shares under the
award will be issued or transferred to the award holders on
or as soon as possible following the specified vesting date,
with the remaining 50% being issued or transferred on the
second anniversary of the vesting date. In the case of options,
following the vesting date the options will then be exercisable
with the resulting shares being issued or transferred to
the award holders on or as soon as possible following the
exercise, with the remaining 50% being issued or transferred
on the second anniversary of the vesting date.
(F) Exit events
In the event of a takeover, scheme of arrangement,
winding up or compulsory acquisition of the Company, the
vesting of an award may be accelerated. A proportion of
the shares subject to an award equivalent to proportion
of the vesting period which has passed at the date of
the exit event (rounded down to the nearest month) shall
vest, subject to the extent the performance conditions
have been met, to be determined at the discretion of the
Remuneration Committee.
In the event of an internal reorganisation of the Group
which results in a new holding company and where the
shareholders of the new holding company, immediately
after it has obtained control, are substantially the same as
the shareholders of the Company, awards may not vest or
lapse but will be replaced by new awards over shares in the
new holding company.
(G) Leavers
Where an award holder leaves employment with the Group,
their award will immediately suspend and will lapse upon
the expiry of 30 days from the date of leaving, unless the
Remuneration Committee determines that the award
holder should be entitled to retain their award. Where the
Remuneration Committee permits the leaver to retain their
award, a proportion of the award will vest over a proportion
of the award shares which is equivalent to the proportion
of the vesting period which has passed at the date of
leaving (rounded down to the nearest month) subject to
the extent the performance conditions have been met,
to be determined at the discretion of the Remuneration
Committee. The resulting shares will be issued or transferred
to the award holder on the date they would have received
them, had they not left (subject to the same transfer in two
equal tranches).
An award granted under the Plan is not transferable. Awards
will also lapse if an award holder is declared bankrupt or
attempts to assign their award.
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(H) Status of shares
The shares acquired under the Plan will rank pari passu with
the Company’s issued ordinary shares.
(I) Pensionable benefits
The value of any benefit realised under the Plan by award
holders shall not be taken into account in determining any
pension or similar entitlements.
On 4 June 2013, the Company offered to participants of
existing plans the opportunity to replace awards with an
initial one off award under the deferred bonus share plan
and in June 2014, the participants who met the vesting
criteria, received their first tranche, representing one third of
the original award. In addition, a further grant was awarded
to new and existing participants which will vest over the next
three years.
The plan is not open to directors of the Company and any
shares used for the plan are not newly issued shares.
Historic long term incentive plan summary
Employee Loan Funded Share Plan (“ELFSP”)
There are no outstanding awards under this plan and
there is no intention to make further awards under this
plan. This was the rollover plan for the Centamin Egypt
Ltd 2011 ELFSP. Under the plan, employees receive a loan
to buy shares in the Company. The shares were then held
in trust for the employee and at the end of three years
the employees can repay the loan and receive the shares.
This plan is no longer in use.
Director loan funded share plan 2011
There are no outstanding awards under this plan and as
the performance criteria were not met, the awards to the
remaining participants lapsed in 2014. The plan is no longer
in use.
Employee share option plan
There are no outstanding awards under this plan and the
plan is no longer in use. Awards under the plan were subject
to performance criteria for senior management based upon
share price, financial, production or key tasks.
Statement of shareholder voting
At the AGM of the Company on the 16 May 2014 the
following votes for and against the adoption of the
remuneration report were as follows:
For
Against
Withheld
Number
of votes
392,308,097 137,672,263 137,834,974
(74.02%)
(25.98%)
This report was approved by the Board of Directors and
signed on its behalf by:
G Edward Haslam
Chairman of the Remuneration Committee 23 March 2015
(J) Alteration of awards
If there is a variation of the share capital of the Company,
including a rights issue, consolidation, sub‑division or
reduction of share capital that effects the value of awards
under the Plan, the Remuneration Committee may adjust
the awards in a manner that they deem to be fair and
reasonable. In any such circumstances, in the case of awards
which are options, such an adjustment may not increase the
exercise price of the options.
(K) Amendments to the Plan and assumption of awards
The Plan may at any time, on the recommendation of the
Remuneration Committee be amended or added to in
any respect, provided that prior approval of the Company
has been obtained in a general meeting for alterations or
additions to the rules of the Plan which are to the advantage
of award holders in respect of the rules governing eligibility,
entitlement to acquisition of shares under an award, to
whom awards can be granted, Plan limits and individual
limits on participation and the adjustment of awards on a
variation of share capital. Awards granted under previous
schemes operated by the Company may be assumed into,
or satisfied under, the Plan.
Minor amendments to benefit the administration of the
Plan, to take account of a change in legislation or to obtain
or maintain favourable tax, exchange control or regulatory
treatment for award holders or Group companies would not
require approval in a general meeting.
The right is also reserved up to the date of shareholder
approval of the Plan to make such amendments to the Plan
as are considered appropriate, provided they do not conflict
in any material respect with this summary of the rules of
the Plan.
Deferred bonus scheme (not for directors)
This plan, introduced in 2012, allows the annual bonus to
be matched with shares which are then ordinarily released
in three annual tranches, conditional upon the continued
employment with the Group. The plan was introduced as a
review of annual bonus arrangements for management with
the objectives of:
• increasing the variable pay element of remuneration;
• introducing a new retention element in the remuneration
package; and
• linking part of that reward to the medium term share
performance of the Company.
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The committee were
satisfied that the controls
over the accuracy and
consistency of the
information in the 2014
annual report were
sufficiently robust,
having received monthly,
quarterly and annual
reviews on the control
environment and approach
to key accounting policies,
estimates and judgments.
Mark Arnesen
Chairman of the Audit and Risk Committee
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Dear shareholders
The Audit and Risk Committee is made up of three
independent non‑executive directors, myself as Chairman,
Mark Bankes and Edward Haslam. Biographies of the
members of the committee can be found on page 58.
Biographies can be found on page 58
In accordance with the Ontario Securities Commission
requirements, all members of the committee are considered
financially literate (pursuant to section 1.5 of the Multilateral
Instrument 52‑110) and in compliance with the Code, I am
the member with the required relevant financial experience
as a professionally qualified accountant.
The committee operates within the terms of reference set
out in its charter, which were reviewed and updated during
the year and can be found at www.centamin.com/centamin/
investors/corporate‑governance.
The committee was satisfied that the controls over the
accuracy and consistency of the information in the 2014
annual report were sufficiently robust, having received
monthly, quarterly and annual reviews on the control
environment and approach to key accounting policies,
estimates and judgments.
The committee has, at the request of the Board, also
considered whether the annual report is fair, balanced and
understandable. In arriving at that decision, the committee
has been involved in reviewing, at an early stage, the
content of both the financial statements and the strategic,
performance and governance reporting. The assessment
of each component by the committee can be summarised
as follows:
• is the annual report fair and balanced? The committee
concluded that the annual report was ‘fair’ and ‘balanced’
having considered the activity of the Company during
the period and how this activity, KPIs and overall
performance were presented throughout annual
report. An example is the reporting of the positive key
achievements during the year, such as the increase in
throughput following completion of the expanded plant,
but which has been balanced fairly against the backdrop
of a lower gold price and reduced production guidance
in 2014 and 2015; and
• is the annual report clear and understandable? The
Committee recommended the removal and separate
filing of the MD&A compliance document (which is a
Canadian requirement) from the annual report to further
assist with clear and concise messaging. In addition, the
three strategic priorities are imbedded throughout the
report, which aid the user in understanding the strategy
and how this has impacted upon our KPIs and overall
operational and financial performance.
The activities of the committee, its principal responsibilities
and its engagement with the external auditor are set
out below.
External auditor
As set out in the 2013 annual report, the committee
was satisfied with Deloitte LLP, having assessed their
independence, ethical standards and objectivity. However,
following over ten years of external audit provided by
Deloitte, it was decided that the audit for the Company
should be put out to tender. Details of the tender process
are set out in the following section. The tender process
was conducted in compliance with best practice guidelines
and there are no matters in connection with Deloitte’s
resignation as auditor which, in the view of the committee
and the Board, need to be brought to the attention of
shareholders. PricewaterhouseCoopers LLP (“PWC”), were
appointed on 23 June 2014 and have since carried out the
review engagement for the half year ended 30 June 2014
and the statutory audit for the year end 31 December 2014.
The audit opinion can be found on page 95
There has been no rotation of audit partner since PWC’s
appointment. The Company’s policy is to tender the
external audit every ten years.
The committee continues to monitor the auditor’s
objectivity and independence and I am satisfied that
PWC and the Group have appropriate policies and
procedures in place to ensure that these requirements
are not compromised. I am also satisfied that the audit
engagement for the financial year ended 2014 was both
effective and added value to the Group.
PricewaterhouseCoopers carried out the half year review
and annual statutory audit. The auditor presented to the
committee its audit planning approach in the run up to
both audits. The committee, having reviewed the plans,
assessed the content and scope of the audit, ensuring
that the key audit areas were identified and that the audit
approach was appropriate for the Company, given the
committee has a detailed understanding of the controls
in place. The committee then met following each audit
and assessed the efficiency and timeliness in which the
audit was carried out. The committee also reviewed the
recommendations of the auditor and the implementation
by management of those proposals.
There was no material non‑audit work carried out by PWC
during the year, with the majority of the tax advisory services
continuing to be provided by the Deloitte LLP tax teams
in the UK and Australia. The Group’s policy for non‑audit
services sets out the categories which the external auditor
will and will not be allowed to provide to the Group and
those engagements that need pre‑approval of the Group.
Fees for audit services incurred during the year amounted to
US$500,000 including the interim review fee of US$100,000.
Non‑audit fees for PWC were US$125,000. Full details are
set out in Note 22 to the financial statements.
A summary of our policy on non‑audit services and auditor
independence can be found on our website.
PWC have open access to the Board of Directors at all times
and the audit partner and certain of the audit management
team attend and present at relevant committee meetings
throughout the year.
External audit tender process
The committee noted in the 2013 annual report and proxy
materials that having reviewed the Company’s governance
arrangements, taking account of recommendations in the
Code, the committee envisaged commencing an audit
tender process for the Company’s external auditor.
In 2014, the committee carried out a tender for the annual
statutory audit, approaching a number of firms including
mid‑tier and the big four audit firms. The firms were
selected based on their experience, industry knowledge
and matters which, may otherwise, compromise their
independence and objectivity. Deloitte LLP was also
invited to tender for the audit.
Aided by management, the committee assessed each of the
selected firms and shortlisted four firms. These shortlisted
firms were given access to information, materials and
personnel to allow them to prepare for their presentations
to the Committee and senior members of the finance team.
Those involved in the final selection process included
all three members of the committee, Pierre Louw (CFO),
Lynne Gregory (General Counsel) and Liesel Sobey
(Group Accountant).
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Directors’ report
Audit and Risk Committee report continued
External audit tender process continued
The members of this selection panel were impressed
by the quality of the tenders which made the decision
difficult, however, the committee ultimately recommended
the appointment of PricewaterhouseCoopers LLP as the
Company’s external auditor. The Board agreed with the
committee’s recommendation and PWC were then formally
appointed as the Company’s auditor on 23 June 2014.
Deloitte resigned as auditor effective the same date.
PWC will continue to fill the casual vacancy created and the
Board will be recommending the appointment of PWC to
shareholders at the AGM on 18 May 2015.
Internal controls
Activity over the coming year will include progressing a
scoping document in relation to the provision of internal
audit services which will assist the Group and enhance the
control and reporting environment for the financial reporting
team. Whilst this was initially an objective for 2014, an
internal auditor has not been appointed to date, as the
relative size and simplicity of the Group did not warrant
such an appointment. However, following the ramp up of
the processing plant and the growth of our exploration
programmes, it is proposed that the committee identifies a
suitable firm to carry out the internal audit. The committees
will utilise the external statutory audit to assist in identifying
key areas of focus for the provision of internal audit services.
Controls over financial reports and
financial statements
The consolidated financial statements and annual report are
prepared at the Company’s head office in Jersey, where the
Group Accountant and Chief Financial Officer are based.
The accounting information from the Group’s operations
is provided to the head office where the ledgers are
consolidated. Appropriate reconciliations and reviews are
performed at the level of the operation and at the Group’s
head office by way of the performance of monthly, quarterly
and annual reconciliations.
Committee activity in 2014/15
Details of the activities carried out by the committee during
the year are detailed in the table below.
Audit and Risk Committee members
Mark Arnesen
Edward Haslam
Mark Bankes
(Chairman of the committee)
(Member)
(Member)
The AR Committee meetings are regularly attended, by
invitation, by the Chairman, CEO, CFO and the Group
Accountant along with the Company Secretary and General
Counsel. PWC are also invited to attend key meetings.
Separate discussions outside a formal committee meeting
are regularly held between the Audit Partner, the committee
Chairman and the CFO.
Eight meetings of the committee were held during the
year. With the exception of one meeting, where a quorum
of two was present, all other meetings had full attendance
by its members.
Responsibility and activity of the AR Committee
The AR Committee assists the Board in discharging its
responsibilities by exercising due care, diligence and skill
in the following main areas:
Topic
Summary
Activities of the Committee during 2014/15
Financial reporting
and shareholder
communication
The application of
accounting policies
and reporting of
financial information
to shareholders,
regulators and the
general public.
• The review of quarterly, half year and annual results.
• Key accounting policies judgments and estimates (see Note 4).
• Adoption of new accounting standards (see Note 3).
• Review of the annual report, to ensure the content is fair, balanced and understandable for
the users of the annual report.
• Attendance by the committee Chairman at the AGM to answer any shareholder queries.
• Details of the risk management and internal controls are summarised in the corporate
governance report together with the assessment which was undertaken by the Board during
the year.
• Further principal risks and the risk management framework are detailed in the
strategic report.
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Topic
Summary
Activities of the Committee during 2014/15
Internal controls
Management and
internal control
systems, including
business policies and
practices; monitoring
and reviewing the
effectiveness of the
Company’s internal
audit function.
External audit
Risk evaluation
and mitigation
Corporate conduct
and business ethics,
including auditor
independence and
ongoing compliance
with laws and
regulation.
Assessment of the
principal risks facing
the Group and
effectiveness of the
risk management
systems.
The review of regular internal reports from management including analysis on forecasts, actual
budget financial and production reports, information on adherence to internal controls and
recommendations for improvements to the internal control framework.
The review and monitoring of the Company’s internal control and risk management systems,
in compliance with the Code, resulted in a number of recommendations by the committee,
to include:
•
review of the processes and approvals as set out in the concession agreement (to include
timing and modelling of cost recovery and profit share);
• visibility of the ongoing review and monitoring of key contractors;
•
•
IT resilience and data security; and
treasury and banking procedures (including branch accounts).
The committee also reviewed both mandatory and voluntary reporting requirements, by virtue
of its domicile in Jersey, Channel Islands, taking into account stakeholder expectations on the
reporting disclosures of the Group.
The proposed appointment of an internal auditor in compliance with Code C.3.6 is set out in
2015 objectives above.
Details of the risk management and internal controls are summarised in the corporate
governance report together with the assessment which was undertaken by the Board during
the year.
The Group maintains a whistleblowing policy, a copy of which can be found on the
Company’s website.
• Review of the audit planning at the half year and full year and monitor its implementation.
• Assess auditor effectiveness, ensuring the external auditor maintains their independence
and objectivity.
• The adequacy of the auditor’s qualifications, expertise and resources.
• The robustness and perceptiveness of the auditor in its handling of the key accounting and
audit judgments.
The committee reviews the corporate risk registers and operational risk assessments throughout
the year, giving due consideration to the adequacy of controls and safeguards as well as the
approach to risk mitigation. The committee aims to ensure that the Company’s risk appetite
is aligned with the long‑term objectives of the Group. The committee made the following
recommendations to enhance risk reporting and disclosures:
• quarterly reports to the committee summarising the conclusions and discussions of senior
management about actual or perceived risks;
• granularity of the risk weighting, to include both the probability and likelihood of the
principal risks; and
• enhanced reporting to capture the data, allowing the committee to comply with the revised
2014 Code.
The exploration for and development of metals and mineral resources, together with the
construction and development of mining operations is an activity that involves a high degree
of risk. Due to the nature of these inherent risks, it is not possible to give absolute assurance
that mitigating actions will be wholly effective. The table set out in the strategic report
describes the key risks affecting the Company and its underlying operational and exploration
activities together with the measures to mitigate risk. A full list of the principal risks affecting the
Centamin Group can be found in the strategic report.
Accounting for
transactions
Concession
Agreement.
• Cost recovery and accounting treatment across SGM and PGM.
• Maintenance of the PPE register and asset allocation.
• Timing and modelling of future profit share with government.
• Future accounting treatment and recognition of EMRA’s minority interest.
General
Other.
• Review of the committees’ terms of reference taking account of the revisions to the Code
in 2014.
• Review of the effectiveness of the committee.
• Review of subsidiary audit and accounts preparation including consolidation of Ampella
Mining Limited into the Group.
• Review of the carrying value of the investments in other exploration companies.
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Directors’ report
Audit and Risk Committee report continued
Significant issues highlighted during the year by the committee
The following significant issues were highlighted during the year by the committee (full details and analysis are set out in
Note 4 to the financial statements).
Topic
Significant issue
How the committee addressed these issues
External audit
Completion of tender
for external auditor.
Details of how the committee carried out the tender process resulting in the appointment of
PWC are set out in the table above.
Accounting for
transactions
Impairment of
assets (other than
exploration and
evaluation and
financial assets).
Management have concluded that there is no indication that an impairment exists, nor have
any indicators arisen after the reporting period and are therefore not required to perform a full
impairment review under IAS 36.
In making its assessment as to the possibility of whether impairments losses having arisen,
Management considered the following indications:
litigation;
the key assumptions applied in the 31 December 2013 impairment review;
forecast gold prices;
•
internal sources of information;
• external sources of information;
•
•
•
• discount rate;
• production volumes;
•
• costs and recovery rates.
reserves and resources report; and
Accounting for
transactions
Litigation.
The committee reviewed the papers presented by management in respect to IAS 39 and are in
agreement with the conclusions set out above.
The Group exercises judgment in measuring and recognising provisions and the exposures
to contingent liabilities related to pending litigation, as well as other contingent liabilities (see
Note 20 to the financial statements). Judgment is necessary in assessing the likelihood that
a pending claim will succeed, or a liability will arise, and to quantify the possible range of the
financial settlement.
The details of this litigation, which relate to the loss of the Egyptian national subsidy for diesel
fuel oil and the ability of the Group to operate outside the area of 3km2 determined by the
Administrative Court of first instance to be the area of the Sukari exploitation lease, are given
in Note 20 to the financial statements and in the most recently filed Annual Information Form
(“AIF”) which is available on SEDAR at www.sedar.com.
The Committee have reviewed the external legal opinions, the opinions of the Company’s
General Counsel and the facts associated with the litigation and are in agreement with
management on the accounting judgments and agree that in the unlikely event that the
Group is unsuccessful in either or both of its legal actions, and that the operating activities are
restricted to a reduced area, it is management’s belief that the Group will be able to continue
as going concern.
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Topic
Significant issue
How the committee addressed these issues
Accounting for
transactions
Going concern.
Accounting for
transactions
Accounting
treatment of Sukari
Gold Mines (“SGM”).
Under guidelines set out by the UK Financial Reporting Council (“FRC”) the directors of UK
listed companies are required to consider whether the going concern basis is the appropriate
basis of preparation of financial statements.
Based on a detailed cash flow forecast prepared by management, in which any reasonably
possible change in the key assumptions on which cash flow forecast is based, the directors
have a reasonable expectation that the Group will have adequate resources to continue
in operational existence for the foreseeable future. Key assumptions under‑pinning this
forecast include:
litigation as discussed in Note 20 to the financial statements;
•
forecast gold price;
•
• production volumes; and
• costs and recovery rates.
These financial statements for the year ended 31 December 2014 have therefore been
prepared on a going concern basis, which contemplate the realisation of assets and liquidation
of liabilities during the normal course of operations, in preparing the financial statements.
SGM is consolidated within the Centamin Group of companies, reflecting the substance and
economic reality of the Concession Agreement (see Note 21 to the financial statements).
The Group, in considering the relevant activities of SGM, its power over these activities and
exposure to the variable returns has concluded that the Group consolidate this interest.
A non‑controlling interest is recorded in relation to the equity in the subsidiaries that are not
attributable to the Group. Note 21 to the financial statements sets out in detail the accounting
treatment for all the assets, liabilities, income and expense of SGM. The committee reviewed
papers from management and agree with the accounting treatment as set out above.
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Overview
The directors have a reasonable expectation that the Group
will have adequate resources to continue in operational
existence for the foreseeable future. Thus they continue to
adopt the going concern basis of accounting in preparing
the financial statements. The going concern statement is
detailed in full in Note 3 to the financial statements.
External auditor
So far as each current director of the Company is aware, the
auditor has had full access to all relevant information and
the committee has answered any questions raised by the
auditor allowing the auditor to carry out its duties.
The committee recommends to the Board the appointment
of PWC as auditor at the forthcoming Annual General
Meeting. PWC has expressed its willingness to continue
in office as auditor.
As a result of its work during the year, the committee
has concluded that it has acted in accordance with its
terms of reference and has ensured the independence
and objectivity of the external auditor. A member of the
committee will be available at the Annual General Meeting
along with the CFO to answer any questions in relation to
this report.
During the year, the committee carried out an evaluation
of its own performance, taking into consideration the
contribution to the quarterly and annual accounts and the
risk review and risk assessment process. The committee also
considered its composition, the competency, availability and
contribution of its members and did not recommend any
further changes to the Board.
Mark Arnesen
For and on behalf of Audit and Risk
Committee of Centamin plc
23 March 2015
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The directors are also responsible for the preparation of the
strategic report, directors’ report, directors’ remuneration
report, nomination report and corporate governance
statement. These reports are contained within the annual
report and financial statements.
These financial statements for the year ended 31 December
2014 have been prepared on a going concern basis,
which contemplate the realisation of assets and liquidation
of liabilities during the normal course of operations, in
preparing the financial statements.
The directors consider that the annual report and financial
statements, when taken as a whole, are fair, balanced and
understandable and provide the information necessary
for shareholders to assess the Company’s performance,
business model and strategy.
The Board receives written assurances from the CEO and
CFO that to the best of their knowledge and belief, the
Group’s financial position presents a true and fair view and
that the financial statements are founded on a sound system
of risk management, internal compliance and control.
Further, they confirm that the Group’s risk management and
internal compliance is operating efficiently and effectively.
The Board recognises that internal control assurances
from the CEO and CFO can only be reasonable rather
than absolute, and therefore they are not and cannot be
designed to detect all weaknesses in control procedures.
The financial statements have been audited by
the independent audit and accounting firm,
PricewaterhouseCoopers LLP, who were given unrestricted
access to all financial records and related information,
including minutes of all shareholder, Board and
committee meetings.
The financial statements were approved by the Board of
Directors on 23 March 2015 and signed on their behalf by:
Andrew Pardey
Chief Executive Officer
Pierre Louw
Chief Financial Officer
Financial statements
Directors’ responsibilities
Directors’ responsibilities in respect of the
annual report and financial statements
The directors are responsible for preparing the annual
report and financial statements in accordance with the
Companies (Jersey) Law, 1991 (the “Law”) and applicable
laws and regulations. The Law requires the Company to
prepare financial statements in accordance with generally
accepted accounting principles and Company has chosen
to prepare the accounts in accordance with International
Financial Reporting Standards (“IFRS”) as adopted by the
European Union and applicable law.
Under the Law, the directors must not approve the accounts
unless they are satisfied that they give a true and fair view
of the state of affairs of the Group and of the profit or loss
of the Group for that period. In preparing these financial
statements, accounting standards require that directors:
• select suitable accounting policies and apply them
consistently;
• make judgments and accounting estimates that are
reasonable and prudent;
• provide additional disclosures when compliance with the
specific requirements in IFRS are insufficient to enable
users to understand the impact of particular transactions,
other events and conditions on the entity’s financial
position and financial performance; and
• make an assessment of the Company’s ability to continue
as a going concern.
The directors are responsible for keeping adequate
accounting records that are sufficient to show and explain
the Group and Company’s transactions and disclose with
reasonable accuracy at any time the financial position of
the Group and Company and enable them to ensure that
the financial statements comply with the Law. They are also
responsible for safeguarding the assets of the Company and
for taking reasonable steps for the prevention and detection
of fraud and other irregularities.
The directors are responsible for the maintenance and
integrity of the corporate and financial information included
on the Company’s website. Due to the Company’s place of
incorporation and its dual listing, it is subject to legislation
in the United Kingdom, Canada and Jersey governing the
preparation and dissemination of financial statements, which
may differ from legislation in other jurisdictions.
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Independent auditor’s report
to the members of Centamin plc
Report on the Group financial statements
Our opinion
In our opinion, Centamin plc’s Group financial statements (the “financial statements”):
• give a true and fair view of the state of the Group’s affairs as at 31 December 2014 and of its profit and cash flows for the
year then ended;
• have been properly prepared in accordance with International Financial Reporting Standards as adopted by the
European Union (“IFRS”); and
• have been properly prepared in accordance with the requirements of the Companies (Jersey) Law 1991.
What we have audited
Centamin plc’s financial statements comprise:
• the consolidated statement of financial position as at 31 December 2014;
• the consolidated statement of comprehensive income for the year then ended;
• the consolidated statement of cash flows for the year then ended;
• the consolidated statement of changes in equity for the year then ended; and
• the notes to the financial statements, which include a summary of significant accounting policies and other
explanatory information.
Certain required disclosures have been presented elsewhere in the annual report, rather than in the notes to the financial
statements. These are cross‑referenced from the financial statements and are identified as audited.
The financial reporting framework that has been applied in the preparation of the financial statements is applicable law and
IFRS as adopted by the European Union.
Our audit approach
Overview
Overall Group materiality: US$7.7 million which represents a three‑year average of 5% of profit before tax, after exceptional items.
• All audit work on the areas of focus was performed by the Group audit engagement team.
• We focused our audit work on the Sukari Gold Mine in Egypt and its holding company, Pharoah Gold Mines. This involved three site visits to
the Group’s Egyptian operations during the course of the audit.
• The appeal before the Supreme Administrative Court in Egypt concerning the validity of the Sukari Concession Agreement.
• Accounting for the Group’s interest in Sukari Gold Mine.
•
Impairment of the Sukari Gold Mine.
• The claim before the Administrative Court concerning diesel fuel disputes.
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Financial statements
Independent auditor’s report continued
to the members of Centamin plc
The scope of our audit and our areas of focus
We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) (“ISAs (UK & Ireland)”).
We designed our audit by determining materiality and assessing the risks of material misstatement in the financial
statements. In particular, we looked at where the directors made subjective judgments, for example in respect of significant
accounting estimates that involved making assumptions and considering future events that are inherently uncertain. As in
all of our audits, we also addressed the risk of management override of internal controls, including evaluating whether
there was evidence of bias by the directors that represented a risk of material misstatement due to fraud.
The risks of material misstatement that had the greatest effect on our audit, including the allocation of our resources and
effort, are identified as “areas of focus” in the table below. We have also set out how we tailored our audit to address these
specific areas in order to provide an opinion on the financial statements as a whole, and any comments we make on the
results of our procedures should be read in this context. This is not a complete list of all risks identified by our audit.
Area of focus
How our audit addressed the area of focus
The appeal before the Supreme Administrative Court in Egypt
concerning the validity of the Sukari Concession Agreement
Refer to pages 115 and 127 (Notes 4 and 20 to the financial
statements) and page 42 (principal risks and uncertainties).
Centamin is in the process of appealing a ruling passed by the
Egyptian Administrative Court in October 2012.
If the ruling is upheld, the Group’s operations at the Sukari site will
be significantly reduced and there is, therefore, a risk of material
impairment in property, plant and equipment at Sukari, which had a
carrying value of US$999.7 million at 31 December 2014.
The outcome of this case is subject to significant uncertainty due to
ongoing political, social and economic volatility in Egypt.
Accounting for the Group’s interest in Sukari Gold Mine
Refer to pages 107 and 128 (Notes 3 and 21 to the financial
statements) and page 42 (principal risks and uncertainties).
The Group, through its interest in Pharoah Gold Mines NL (“PGM”),
is a 50% shareholder in Sukari Gold Mining Company (“SGM”), the
holder of the Sukari Concession Agreement and operator of Sukari
Gold Mine. The remaining 50% is owned by the Egyptian Mineral
Resources Authority (“EMRA”).
There is an accounting judgment as to whether, for the purposes of
IFRS 10 ‘Consolidated financial statements’ (“IFRS 10”), the Group
controls SGM, or whether joint control exists as defined by IFRS 11
‘Joint arrangements’ (“IFRS 11”).
The directors determined that the Group controls SGM and
should therefore consolidate 100% of its assets, liabilities and results
in the financial statements. This determination included consideration
of whether the Group had power over SGM, exposure or rights to
variable returns from its involvement in SGM and its ability to use its
power over SGM to affect the amount of those returns.
Were SGM to be treated as jointly controlled, this would result in SGM
being accounted for using the equity method of accounting and,
as a result, different recognition, presentation and disclosure in the
financial statements.
We read legal advice from the Group’s external legal counsel
regarding the risk that the Group may not succeed in its appeal
against the Administrative Court and met with the Group’s internal
and external legal counsel to evaluate the directors’ assessment of the
outcome of the court case.
We assessed the competence, capability and objectivity of internal
and external legal counsel by considering professional qualifications,
fee arrangements and other relevant factors.
We also obtained a copy of the Concession Agreement, as signed by
the relevant parties.
The directors have assessed that the Group’s case has strong legal
merit and will ultimately be successful. Based on our work, we
determined that the directors had reflected all available information in
their assessment.
We tested the disclosures in Note 20 to the financial statements and
determined that they were consistent with the requirements of IFRS
and the results of our audit work.
Through the procedures set out below, we considered and challenged
the directors’ assessment of control, based on the recognition
principles set out in IFRS 10.
We read the signed Concession Agreement between the Group
and the Arab Republic of Egypt and determined that the facts
of the arrangement, including commercial terms, were reflected
appropriately in the directors’ assessment.
We read the by‑laws of SGM and assessed the impact of these on the
arrangement. We examined Board meeting minutes to understand the
practical application of these by‑laws and the Concession Agreement.
We then completed a thorough analysis of the requirements of
IFRS 10, including the directors’ assessment of power and, therefore,
the balance of substantive and protective rights present in the
arrangement. The evidence we obtained supported the directors’
assessment that the Group has power over SGM.
We confirmed, by reading the Concession Agreement, that the
Group is, and will continue to be, exposed and have the right to
variable returns.
Based on the procedures above, we also confirmed that the Group
has the ability to use its power over SGM to affect the amount of
its returns.
The evidence we obtained supported the directors’ assessment that
the Group controls SGM.
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Area of focus
How our audit addressed the area of focus
Impairment of the Sukari Gold Mine
Refer to pages 107, 115 and 123 (Notes 3, 4 and 12 to the financial
statements) and page 42 (principal risks and uncertainties).
The Sukari mine is the only “producing” asset within the Group.
Following an impairment assessment in the prior year, prompted by a
decrease in the gold price, the directors have considered whether any
of the following further indicators have occurred in the year:
• significant adverse movements in world gold prices;
• a material change in the factors affecting the discount rate, such as
country risk premium; or
• significant under‑performance against budget.
The directors have concluded that none of these or any other
indicators of impairment has occurred in the year and therefore that
no impairment review is necessary.
In the absence of a formal impairment assessment, there is a risk that
any unidentified material impairment of the asset’s carrying value of
US$999.7 million is not reflected in the financial statements.
Consequently, we focused our work on the directors’ conclusions
regarding the occurrence of any impairment indicators, including
those described above.
The claim before the Administrative Court concerning diesel
fuel disputes
Refer to page 127 (Note 20 to the financial statements) and page 42
(principal risks and uncertainties).
Centamin is involved in an ongoing legal case relating to historical
and current fuel subsidies. The potential amount that could be
recouped by the Group relating to the current subsidy case is
US$165.7 million and the potential amount that the Group could have
to pay if they lose the historical case is US$60.5 million.
To date, the Group has not provided for the historical case, based on
internal and external assessments of the merits of the case, but has
made disclosure of a contingent liability.
In 2014, the Group has disclosed the impact of the current subsidy
case, being the difference between international and subsidised
diesel price that has impacted the Group’s results for the year, as an
exceptional item in the consolidated statement of comprehensive
income. No contingent asset has been recognised.
We assessed whether any potential impairment indicators, including
those identified by the directors, had occurred. To this end, we
performed the following procedures:
• we obtained consensus gold pricing data and compared this to
the pricing included in the directors’ assessment, finding that
changes in gold prices during 2014 were not sufficient to indicate
that an impairment review was needed;
• we used our valuation expertise to assess whether the reduction
in the discount rate considered in the indicator assessment was
within a reasonable range, taking into account a country risk
premium for Egypt and found that it was;
• we determined that, despite a shortfall in gold production
against stated market guidance, there had been no significant
underperformance against budget;
• we determined that there had been no material reduction in
reserves and resources; and
• we used our knowledge of the Group and of the mining industry
to question whether any other events had occurred during the
year that would give rise to an impairment indicator without
identifying any.
Having tested the directors’ impairment indicator assessment, we
concurred that, in spite of the ongoing low price of gold and lower
than expected production, no impairment indicator had occurred in
the year ended 31 December 2014.
We read the legal advice obtained by the directors from their external
legal counsel in connection with the legal case and held meetings
with the Group’s internal and external legal counsel. We used this
information to evaluate the directors’ assessment of the outcome
of the case.
We assessed the competence, capability and objectivity of internal
and external counsel, by considering professional qualifications, fee
arrangements and other relevant factors.
The results of the procedures we performed, as described above,
supported the directors’ accounting treatment, under which no liability
was recognised in respect of the historical case and no asset was
recognised in respect of the current subsidy case.
We challenged the presentation of the impact of the difference
between international and subsidised diesel prices as an exceptional
item and concluded that it was still appropriate because of the
strength of the Group’s case.
We also considered the sufficiency of the disclosure regarding the case and concluded that it was consistent with the
requirements of IFRS and gave a balanced description of the cases.
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Financial statements
Independent auditor’s report continued
to the members of Centamin plc
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial
statements as a whole, taking into account the geographic structure of the Group, the accounting processes and controls,
and the industry in which the Group operates.
Our group audit was scoped by obtaining an understanding of the Group and its environment, including group‑wide
controls, and assessing the risks of material misstatement at group level. The Group is headquartered in Jersey and has
production operations in Egypt, with exploration activity in Ethiopia, Burkina Faso and Côte d’Ivoire.
Based on that assessment, our group audit scope focused primarily on the Sukari Gold Mine in Egypt, the Group’s principal
operation, which was subject to a full‑scope audit, as was Pharoah Gold Mines, which holds the Group’s interest in Sukari.
We made site visits to Sukari and conducted audit fieldwork in Alexandria. During these visits, we observed and discussed
mining operations, including how the Concession Agreement is managed, with local management and met with the
Group’s external in‑country legal counsel in Cairo.
We also performed specific audit procedures on material balances in other Group companies in order to address identified
risks and other matters.
Furthermore, we performed work over the consolidation of the Group’s components and significant head office and
consolidation adjustments. All audit work was performed by the group audit team.
Materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for
materiality. These, together with qualitative considerations, helped us to determine the scope of our audit and the nature,
timing and extent of our audit procedures and to evaluate the effect of misstatements, both individually and on the
financial statements as a whole.
Based on our professional judgment we determined materiality for the financial statements as a whole as follows:
Overall Group materiality
How we determined it
Rationale for benchmark applied
US$7.7 million.
Three‑year average of 5% of profit before tax
after exceptional items.
We used the profit before tax after exceptional items benchmark, a
generally accepted auditing practice and took a three‑year average to
eliminate the effects of gold price volatility.
We agreed with the Audit and Risk Committee that we would report to them misstatements identified during our
audit above US$385,000 as well as misstatements below that amount that, in our view, warranted reporting for
qualitative reasons.
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Going concern
The directors have voluntarily complied with Listing Rule 9.8.6(R)(3) of the Financial Conduct Authority and provided a
statement in relation to going concern, set out on page 94, required for UK companies with a premium listing on the
London Stock Exchange.
The directors have requested that we review the statement on going concern as if the Company were a premium listed UK
company. We have nothing to report having performed our review.
As noted in the directors’ statement, the directors have concluded that it is appropriate to prepare the financial statements
using the going concern basis of accounting. The going concern basis presumes that the Group and Company have
adequate resources to remain in operation, and that the directors intend them to do so, for at least one year from the date
the financial statements were signed. As part of our audit we have concluded that the directors’ use of the going concern
basis is appropriate.
However, because not all future events or conditions can be predicted, these statements are not a guarantee as to the
Group’s and Company’s ability to continue as a going concern.
Other required reporting
Consistency of other information
ISAs (UK & Ireland) reporting
Under ISAs (UK & Ireland) we are required to report to you if, in our opinion:
•
information in the annual report is:
We have no exceptions to report arising
from this responsibility.
• materially inconsistent with the information in the audited financial statements; or
• apparently materially incorrect based on, or materially inconsistent with, our knowledge
of the Group acquired in the course of performing our audit; or
• otherwise misleading.
• The statement given by the directors on page 94, in accordance with provision C.1.1 of the
UK Corporate Governance Code (“the Code”), that they consider the annual report taken
as a whole to be fair, balanced and understandable and provides the information necessary
for members to assess the Group’s performance, business model and strategy is materially
inconsistent with our knowledge of the Group acquired in the course of performing
our audit.
We have no exceptions to report arising
from this responsibility.
• The section of the annual report on page 90, as required by provision C.3.8 of the Code,
describing the work of the Audit and Risk Committee does not appropriately address
matters communicated by us to the Audit and Risk Committee.
We have no exceptions to report arising
from this responsibility.
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Financial statements
Independent auditor’s report continued
to the members of Centamin plc
Adequacy of information and explanations received
Under Companies (Jersey) Law 1991 we are required to report to you if, in our opinion, we have not received all the
information and explanations we require for our audit. We have no exceptions to report arising from this responsibility.
Corporate governance statement
Under the Listing Rules, we are required to review the part of the Corporate Governance Statement relating to the parent
company’s compliance with ten provisions of the UK Corporate Governance Code. We have nothing to report having
performed our review
Other voluntary reporting
Opinions on additional disclosures
Directors’ remuneration report
The Company voluntarily prepares a directors’ remuneration report in accordance with the provisions of the Companies Act
2006. The directors have requested that we audit the part of the directors’ remuneration report specified by the Companies
Act 2006 to be audited as if the Company were a quoted company.
In our opinion, the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance
with the Companies Act 2006.
Corporate Governance Statement
The Company prepares a corporate governance statement that includes the information with respect to internal control
and risk management systems and about share capital structures required by the Disclosure Rules and Transparency Rules
of the Financial Conduct Authority. The directors have requested that we report on the consistency of that information with
the financial statements.
In our opinion, the information given in the Corporate Governance Statement set out on pages 62 to 68 with respect to
internal control and risk management systems and about share capital structures is consistent with the financial statements.
Opinion on other matters
In our opinion the information given in the strategic report and the directors’ report for the financial year for which the
financial statements are prepared is consistent with the financial statements.
Responsibilities for the financial statements and the audit
Our responsibilities and those of the directors
As explained more fully in the Directors’ Responsibilities Statement set out on page 94, the directors are responsible for the
preparation of the financial statements and for being satisfied that they give a true and fair view.
Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and ISAs
(UK & Ireland). Those standards require us to comply with the Auditing Practices Board’s Ethical Standards for Auditors.
This report, including the opinions, has been prepared for and only for the Company’s members as a body in accordance
with Article 113A of the Companies (Jersey) Law 1991 and for no other purpose. We do not, in giving these opinions,
accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose
hands it may come save where expressly agreed by our prior consent in writing.
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What an audit of financial statements involves
An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give
reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error.
This includes an assessment of:
• whether the accounting policies are appropriate to the Group’s circumstances and have been consistently applied and
adequately disclosed;
• the reasonableness of significant accounting estimates made by the directors; and
• the overall presentation of the financial statements.
We primarily focus our work in these areas by assessing the directors’ judgments against available evidence, forming our
own judgments, and evaluating the disclosures in the financial statements.
We test and examine information, using sampling and other auditing techniques, to the extent we consider necessary
to provide a reasonable basis for us to draw conclusions. We obtain audit evidence through testing the effectiveness of
controls, substantive procedures or a combination of both.
In addition, we read all the financial and non‑financial information in the annual report to identify material inconsistencies
with the audited financial statements and to identify any information that is apparently materially incorrect based on, or
materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of
any apparent material misstatements or inconsistencies we consider the implications for our report.
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Richard Spilsbury
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Recognised Auditor
London
23 March 2015
(a) The maintenance and integrity of the Centamin plc website is the responsibility of the directors; the work carried out by the auditor does not involve
consideration of these matters and, accordingly, the auditor accepts no responsibility for any changes that may have occurred to the financial statements
since they were initially presented on the website.
(b) Legislation in Jersey governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
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Financial statements
Consolidated statement of comprehensive income
for the year ended 31 December 2014
Note
5
6
6
14.1
14.2
13
6
7
3
Revenue
Cost of sales
Gross profit
Other operating costs
Impairment of available‑for‑sale
financial assets
Impairment of associate
Impairment of exploration and
evaluation assets
Finance income
Profit before tax
Tax
Profit after tax
EMRA profit share
Profit for the year after
EMRA profit share
Profit for the year attributable to:
31 December 2014
31 December 2013
Before
exceptional
items
US$’000
472,581
Exceptional
items(1)
US$’000
Total
US$’000
Before
exceptional
items
US$’000
Exceptional
items(1)
US$’000
Total
US$’000
—
472,581
503,825
—
503,825
(295,763)
(62,534)
(358,297)
(226,433)
(51,004)
(277,437)
176,818
(62,534)
114,284
277,392
(51,004)
226,388
(30,368)
(21,727)
—
(21,727)
(30,368)
(436)
—
(2,328)
410
—
—
—
—
—
144,096
(62,534)
(436)
—
(12,911)
(1,968)
(2,328)
410
81,562
(6,503)
690
—
—
—
—
(12,911)
(1,968)
(6,503)
690
234,973
(51,004)
183,969
—
—
—
(10)
—
(10)
144,096
(62,534)
81,562
234,963
(51,004)
183,959
—
—
—
—
—
—
144,096
(62,534)
81,562
234,963
(51,004)
183,959
– the owners of the parent
144,096
(62,534)
81,562
234,963
(51,004)
183,959
– non‑controlling interests
Other comprehensive income
Items that may be reclassified
subsequently to profit or loss:
Losses on available‑for‑sale
financial assets (net of tax)
Losses on available‑for‑sale
financial assets transferred
to profit for the year (net of tax)
Other comprehensive
income for the year
Total comprehensive income
attributable to:
– the owners of the parent
– non‑controlling interests
Earnings per share:
Basic (cents per share)
Diluted (cents per share)
(1) Refer to Note 6 for further details.
—
—
—
—
—
—
14.1
(80)
14.1
—
(80)
—
—
—
(80)
(6,150)
—
(6,150)
—
12,911
(80)
6,761
—
—
12,911
6,761
144,016
(62,534)
81,482
241,724
(51,004)
190,720
—
—
—
—
—
—
24
24
12.735
12.567
(5.527)
(5.454)
7.208
7.113
21.551
21.416
(4.68)
(4.65)
16.873
16.767
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Consolidated statement of financial position
as at 31 December 2014
Non‑current assets
Property, plant and equipment
Exploration and evaluation asset
Prepayments
Interests in associates
Other receivables
Total non‑current assets
Current assets
Inventories
Available‑for‑sale financial assets
Trade and other receivables
Prepayments
Cash and cash equivalents
Total current assets
Total assets
Non‑current liabilities
Provisions
Total non‑current liabilities
Current liabilities
Trade and other payables
Tax liabilities
Provisions
Total current liabilities
Total liabilities
Net assets
Equity
Issued capital
Share option reserve
Accumulated profits
Total equity attributable to:
– owners of the parent
– non‑controlling interest
Total equity
31 December 31 December
2013
US$’000
2014
US$’000
Notes
12
13
11
14.2
9
10
14.1
9
11
25
16
15
7
16
928,964
950,586
123,999
23,750
—
645
59,849
18,950
—
—
1,077,358
1,029,385
140,628
135,269
409
24,973
1,710
125,659
293,379
989
25,427
1,678
105,979
269,342
1,370,737
1,298,727
3,015
3,015
7,638
7,638
34,042
78,102
—
307
34,349
37,364
—
139
78,241
85,879
1,333,373
1,212,848
17
18
661,573
612,463
4,098
5,761
667,702
594,624
1,333,373
1,212,848
—
—
1,333,373
1,212,848
The consolidated financial statements were approved by the Board of Directors, authorised for issue on 23 March 2015 and signed on its
behalf by:
Andrew Pardey
Chief Executive Officer
Pierre Louw
Chief Financial Officer
Centamin plc Annual report 2014 | 103
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Financial statements
Consolidated statement of changes in equity
for the year ended 31 December 2014
Share
Issued
capital
US$’000
options Accumulated
profits
reserve
US$’000
US$’000
Total
US$’000
612,463
5,761
594,624
1,212,848
81,562
81,562
—
—
—
48,218
(1,743)
2,635
—
—
—
—
—
—
—
(4,156)
2,493
(80)
81,482
—
—
1,521
—
(80)
81,482
48,218
(1,743)
—
2,493
(9,925)
—
(9,925)
661,573
4,098
667,702
1,333,373
Issued
capital
US$’000
612,463
—
—
—
—
612,463
Share
options Accumulated
profits
reserve
US$’000
US$’000
Total
US$’000
3,477
403,904
1,019,844
—
—
—
2,284
5,761
183,959
183,959
6,761
6,761
190,720
190,720
—
2,284
594,624
1,212,848
Balance as at 1 January 2014
Profit for the year
Other comprehensive income for the year
Total comprehensive income for the year
Issue of shares
Own shares acquired
Transfer of share‑based payments
Recognition of share‑based payments
Dividend paid
Balance as at 31 December 2014
Balance as at 1 January 2013
Profit for the year
Other comprehensive income for the year
Total comprehensive income for the year
Recognition of share‑based payments
Balance as at 31 December 2013
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Consolidated statement of cash flows
for the year ended 31 December 2014
31 December 31 December
2013
US$’000
2014
US$’000
Notes
Cash flows from operating activities
Cash generated in operating activities
Finance income
Net cash generated by operating activities
Cash flows from investing activities
Acquisition of property, plant and equipment
Exploration and evaluation expenditure
Acquisition of financial assets
Acquisition of interests in associates
Cash acquired through AML asset acquisition
Proceeds from sale of available‑for‑sale financial assets
Finance income
Net cash used in investing activities
Cash flows from financing activities
Own shares acquired during the period
Dividend paid
Net cash provided by financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the period
Effect of foreign exchange rate changes
Cash and cash equivalents at the end of the period
25(b)
112,012
245,833
(410)
(690)
111,602
245,143
14.1
14.2
14.1
6
17
(62,305)
(266,711)
(26,201)
(14,670)
—
—
9,254
91
410
(2,456)
(500)
—
822
690
(78,751)
(282,825)
(1,743)
(9,925)
(11,668)
21,183
—
—
—
(37,682)
105,979
147,133
(1,503)
(3,472)
25
125,659
105,979
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Centamin plc Annual report 2014 | 105
Financial statements
Notes to the consolidated financial statements
for the year ended 31 December 2014
1. General information
Centamin plc (the “Company”) is a listed public company,
incorporated in Jersey and operating through subsidiaries
and jointly controlled entities operating in Egypt, Ethiopia,
United Kingdom and Australia. It is the parent company of the
Group, comprising the Company and its subsidiaries and jointly
controlled entities.
Registered office and principal place of business:
Centamin plc
2 Mulcaster Street
St Helier, Jersey JE2 3NJ
The nature of the Group’s operations and its principal activities
are set out in the directors’ report and the strategic report of the
annual report.
2. Adoption of new and revised accounting standards
In the current year, no new and revised Standards and
Interpretations have been adopted that have affected the amounts
reported in these financial statements.
Standards not affecting the reported results nor the
financial position
The following Standards have been adopted by the Group for the
first time for the financial year beginning on or after 1 January 2014:
IFRS 10 ‘Consolidated financial statements’ builds on existing
principles by identifying the concept of control as the determining
factor in whether an entity should be included within the
consolidated financial statements of the parent company.
The standard provides additional guidance to assist in the
determination of control where this is difficult to assess. See Note 3
for the impact on the financial statements.
IFRS 11 ‘Joint arrangements’ focuses on the rights and obligations
of the parties to the arrangement rather than its legal form.
There are two types of joint arrangements: joint operations and
joint ventures. Joint operations arise where the investors have rights
to the assets and obligations for the liabilities of an arrangement.
A joint operator accounts for its share of the assets, liabilities,
revenue and expenses. Joint ventures arise where the investors
have rights to the net assets of the arrangement; joint ventures are
accounted for under the equity method. Proportional consolidation
of joint arrangements is no longer permitted. See Note 3 for the
impact of adoption on the financial statements.
IFRS 12 ‘Disclosures of interests in other entities’ includes the
disclosure requirements for all forms of interests in other entities,
including joint arrangements, associates, structured entities and
other off balance sheet vehicles. This amendment did not have a
significant effect on the Group financial statements.
Had the Group adopted IFRS 10, IFRS 11 and IFRS 12 effective
1 January 2013 as required by the IFRS as issued by the IASB, there
would have been no material impact on the financial statements.
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Amendment to IAS 32 ‘Financial instruments: presentation’ on
offsetting financial assets and financial liabilities. This amendment
clarifies that the right of set‑off must not be contingent on a future
event. It must also be legally enforceable for all counterparties
in the normal course of business, as well as in the event of
default, insolvency or bankruptcy. The amendment also considers
settlement mechanisms. The amendment did not have a significant
effect on the Group financial statements.
Amendment to IAS 36 ‘Impairment of assets’, on the recoverable
amount disclosures for non‑financial assets. This amendment
removed certain disclosures of the recoverable amount of CGUs
which had been included in IAS 36 by the issue of IFRS 13.
This amendment did not have a significant effect on the Group
financial statements.
Amendment to IAS 39 ‘Financial instruments: recognition and
measurement’ on the novation of derivatives and the continuation
of hedge accounting. This amendment considers legislative
changes to ‘over‑the‑counter’ derivatives and the establishment
of central counterparties. Under IAS 39 novation of derivatives
to central counterparties would result in discontinuance of
hedge accounting.
The amendment provides relief from discontinuing hedge
accounting when novation of a hedging instrument meets specified
criteria. This amendment did not have a significant effect on the
Group financial statements.
IFRIC 21, ‘Levies’, sets out the accounting for an obligation to
pay a levy if that liability is within the scope of IAS 37 ‘Provisions’.
The interpretation addresses what the obligating event is that
gives rise to pay a levy and when a liability should be recognised.
The Group is subject to royalty payments to the Egyptian Mineral
Resource Authority (“EMRA”) which meets the definition of a levy,
however, the impact on the Group of adopting this interpretation
is not material.
Other standards, amendments and interpretations which are
effective for the financial year beginning on 1 January 2014 are not
material to the Group.
Beyond the information above, it is not practicable to provide a
reasonable estimate of the effect of these standards until a detailed
review has been completed.
New standards, amendments and interpretations not yet adopted
A number of new standards and amendments to standards and
interpretations are for annual periods beginning after 1 January
2014, and have not been effective applied in preparing these
consolidated financial statement. None of these is expected to
have a significant effect on the consolidated financial statements
of the Group, except the following set out below:
IFRS 9 ‘Financial instruments’, addresses the classification,
measurement and recognition of financial assets and financial
liabilities. The complete version of IFRS 9 was issued in July 2014.
It replaces the guidance in IAS 39 that relates to the classification
and measurement of financial instruments. IFRS 9 retains but
simplifies the mixed measurement model and establishes three
primary measurement categories for financial assets: amortised
cost, fair value through OCI and fair value through profit and loss.
The basis of classification depends on the entity’s business model
and the contractual cash flow characteristics of the financial asset.
Investments in equity instruments are required to be measured
at fair value through profit or loss with the irrevocable option at
inception to present changes in fair value in OCI not recycling.
There is now a new expected credit losses model that replaces the
incurred loss impairment model used in IAS 39.
For financial liabilities there were no changes to classification and
measurement except for the recognition of changes in own credit
risk in other comprehensive income, for liabilities designated at
fair value through profit or loss. IFRS 9 relaxes the requirements
for hedge effectiveness by replacing the bright line hedge
effectiveness tests. It requires an economic relationship between
the hedged item and hedging instrument and for the ‘hedged
ratio’ to be the same as the one management actually use for risk
management purposes. Contemporaneous documentation is still
required but is different to that currently prepared under IAS 39.
The standard is effective for accounting periods beginning on or
after 1 January 2018. Early adoption is permitted. The Group is yet
to assess IFRS 9’s full impact.
IFRS 15 ‘Revenue from contracts with customers’ deals with
revenue recognition and establishes principles for reporting useful
information to users of financial statements about the nature,
amount, timing and uncertainty of revenue and cash flows arising
from an entity’s contracts with customers. Revenue is recognised
when a customer obtains control of a good or service and thus has
the ability to direct the use and obtain the benefits from the good
or service. The standard replaces IAS 18 ‘Revenue’ and IAS 11
‘Construction contracts’ and related interpretations. The standard
is effective for annual periods beginning on or after 1 January 2017
and earlier application is permitted. The Group is assessing the
impact of IFRS 15.
There are no other IFRS or IFRIC interpretations that are not yet
effective that would be expected to have a material impact on
the Group.
3. Summary of significant accounting policies
Basis of preparation
These financial statements are denominated in United States
dollars, which is the functional currency of Centamin plc.
All companies in the Group use the United States dollar as their
functional currency except for the UK subsidiaries which are
denominated in Great British pounds and the Australian subsidiaries
which are denominated in Australian dollars. All financial
information presented in United States dollars has been rounded
to the nearest thousand dollars, unless otherwise stated.
The financial statements have been prepared in accordance with
International Financial Reporting Standards (“IFRS”) as issued
by the International Accounting Standards Board (“IASB”) and
adopted for use by the European Union, the Companies (Jersey)
Law 1991, and IFRS as issued by the IASB, therefore the Group
financial statements comply with Article 4 of the EU IAS Regulation.
The consolidated financial statements have been prepared on a
going concern basis and under the historical cost convention, as
modified by available‑for‑sale financial assets, and financial assets
and financial liabilities (including derivative) instruments at fair value
through profit and loss.
There are no changes in these accounting policies for the year
ended 31 December 2014 except as disclosed below ‘Changes in
accounting policy’.
Changes in accounting policy
On 1 January 2014, the Group adopted IFRS 10 ‘Consolidated
financial statements’, IFRS 11 ‘Joint arrangements’, IFRS 12
‘Disclosure of interests in other entities’, a revised version of IAS 27
‘Separate financial statements’ and a revised version of IAS 28
‘Investments in associates and joint ventures’ which have been
amended for conforming changes based on the issuance of IFRS 10
and IFRS 11. The Group adopted the amendments to the transition
guidance for IFRS 10 and IFRS 11 as well as IFRIC 21 ‘Levies’.
IFRS 10 replaces IAS 27 ‘Consolidated and separate financial
statements’ and SIC‑12 ‘Consolidation – special purpose entities’,
and establishes a single control model that applies to all entities,
including those that were previously considered special purpose
entities under SIC‑12. An investor controls an investee when it has
power over the relevant activities, exposure to variable returns
from the investee, and the ability to affect those returns through its
power over the investee. The assessment of control is based on all
facts and circumstances and the conclusion is reassessed if there is
an indication that there are changes in facts and circumstances.
On adopting IFRS 10, the Group has assessed its interest in its
principal asset, Sukari Gold Mine (“SGM”) which is jointly owned
by the Group’s wholly owned subsidiary Pharaoh Gold Mines
NL (“PGM”) and EMRA on a 50% equal basis. The Group has
considered the relevant activities of SGM and who has the power
over these activities and is exposed to variable returns from its
involvement with SGM and has the ability to affect those returns
through its power over the relevant activities of SGM. Accordingly,
the Group has consolidated this interest.
A Non‑Controlling Interest (“NCI”) is recorded in relation to the
equity in the subsidiaries that is not attributable to the parent.
There has been no impact upon the comparatives as SGM has
previously been 100% proportionally consolidated within the
Group reflecting the substance and economic reality of the
Concession Agreement.
IFRS 12 ‘Disclosure of interests in other entities (including
amendments to the transition guidance for IFRS 10–12 issued
in June 2012)’, which requires annual disclosures of the nature,
associated risks, and financial effects of interests in subsidiaries,
joint arrangements, associates and unconsolidated structured
entities became effective for annual periods beginning on or after
1 January 2013.
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Financial statements
Notes to the consolidated financial statements continued
for the year ended 31 December 2014
3. Summary of significant accounting policies continued
Basis of preparation continued
Changes in accounting policy continued
Changes in accounting estimate
On 1 January 2014, the Group changed its accounting estimate in
relation to the useful economic life of Sukari plant and equipment
capitalised within plant and equipment. Plant and equipment
was previously depreciated on a straight‑line basis over a 45 year
economic life, however, as a result of the commissioning of Stage 4,
the current life of mine is 20 years and as such the useful economic
life of the Sukari plant and equipment has been reduced to 20 years
from 1 January 2014.
The impact of this change is shown below:
Depreciation expense for the year ended
31 December 2014 (old basis)
Depreciation expense for the year ended
31 December 2014 (new basis)
Principles of consolidation
5,843
11,143
The consolidated financial statements are prepared by combining
the financial statements of all the entities that comprise the
consolidated entity, being the Company (the parent entity) and
its subsidiaries. Subsidiaries are all entities (including structured
entities) over which the Group has control, as defined in IFRS 10
‘Consolidated financial statements’. Consistent accounting
policies are employed in the preparation and presentation of the
consolidated financial statements.
The consolidated financial statements include the information and
results of each subsidiary from the date on which the Company
obtains control and until such time as the Company ceases to
control such entity. The Group controls an entity when the Group is
exposed to, or has rights to, variable returns from its involvement
with the entity and has the ability to affect those returns through its
power over the entity.
In preparing the consolidated financial statements, all intercompany
balances and transactions, and unrealised profits arising within the
consolidated entity are eliminated in full.
Sukari Gold Mines (“SGM”) is jointly owned by PGM and EMRA
on a 50% equal basis. For accounting purposes, SGM is wholly
consolidated within the Centamin group of companies reflecting
the substance and economic reality of the Concession Agreement
(see Note 21) and will therefore recognise a non‑controlling
interest (“NCI”) for EMRA’s participation. Furthermore based on
the requirements of the Concession Agreement, payments to NCI
meet the definition of a liability and will be recorded in the income
statement and statement of financial position (below profit after
tax), as the EMRA profit share, on the date that a net production
surplus becomes available. Payment made to EMRA pursuant to
the provisions of the Concession Agreement is based on the net
production surplus available as at 30 June, being SGM’s financial
year end. Pursuant to the Concession Agreement, PGM solely
funds SGM’s activities. PGM is also entitled to recover the following
costs and expenses payable from sales revenue (excluding the
royalty payable to the Arab Republic of Egypt (“ARE”) (a) all current
operating expenses incurred and paid after the initial commercial
production; (b) exploration costs, including those accumulated to
the commencement of commercial production (at the rate of 33.3%
of total accumulated cost per annum); and (c) exploitation capital
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costs, including those accumulated prior to the commencement of
commercial production (at the rate of 33.3% of total accumulated
cost per annum).
EMRA is entitled to a share of 50% (except for, in accordance
with the terms of the Concession Agreement, in the first four
years where it shall be 40% for the first two years and 45% for
the following two years) of SGM’s net production surplus (“EMRA
Profit Share”) (defined as revenue less payment of the fixed royalty
to Arab Republic of Egypt (“ARE”) and recoverable costs). Based
on the Company’s calculation there was no net profit share due
to EMRA as at 31 December 2014, nor is any likely to be due as
at 30 June 2015. Accordingly, no EMRA entitlement has been
recognised to date. Any payment made to EMRA pursuant to these
provisions of the Concession Agreement will be recognised as a
variable charge in the income statement (below profit after tax) of
Centamin, which will lead to a reduction in the earnings per share.
Going concern
These financial statements for the year ended 31 December 2014
have been prepared on a going concern basis, which contemplate
the realisation of assets and liquidation of liabilities during the
normal course of operations.
The Group meets its day‑to‑day working capital requirements
through existing cash resources, as discussed in Note 20, during
2012 the operation of the mine was affected by two legal actions.
The first of these followed from a decision taken by EGPC to charge
international, not local (subsidised) prices for the supply of Diesel
Fuel Oil to Sukari, and the second arose as a result of a judgment
of the Administrative Court in relation to, amongst other matters,
the Company’s 160km2 exploitation lease. With regard to the first
decision, the Company remains confident that in the event that it is
required to continue to pay international prices, the mine at Sukari
will remain commercially viable. Similarly, the Company remains
confident that the appeal it has lodged in relation to the decision of
the Administrative Court will ultimately be successful, although final
resolution of the matter may take some time.
With respect to the legal action, on 20 March 2013 the Supreme
Administrative Court upheld the Company’s application to
suspend the decision until the merits of the Company’s appeal are
considered and ruled on, thus providing assurance that normal
operations would be able to continue during this process. Sukari
has operated as usual throughout the period.
In the unlikely event that the Group is unsuccessful in either or both
of its legal actions, and that the operating activities are restricted to
a reduced area, it is the directors’ belief that the Group will be able
to continue as going concern.
After making enquiries, the directors have a reasonable expectation
that the Group will have adequate resources to continue in
operational existence for the foreseeable future. The Group
therefore continues to adopt the going concern basis in preparing
these financial statements.
Accounting policies
Accounting policies are selected and applied in a manner which
ensures that the resulting financial statements satisfy the concepts
of relevance and reliability, thereby ensuring that the substance
of the underlying transactions or other events is reported. These
policies have been consistently applied to all the years presented,
unless otherwise stated.
The following significant policies have been adopted in the
preparation and presentation of these financial statements:
Cash and cash equivalents
Cash comprises cash on hand and demand deposits. Cash
equivalents are short‑term, highly‑liquid investments that are readily
convertible to known amounts of cash and which are subject to an
insignificant risk of changes in value.
Financial instruments
Financial assets and financial liabilities are recognised in the Group’s
balance sheet when the Group becomes a party to the contractual
provisions of the instrument.
Financial liabilities and equity
Debt and equity instruments are classified as either financial
liabilities or as equity in accordance with the substance of the
contractual arrangement.
Equity instruments
An equity instrument is any contract that evidences a residual
interest in the assets of an entity after deducting all of its liabilities.
Equity instruments issued by the Group are recognised at the
proceeds received, net of direct issue costs.
Financial liabilities
Financial liabilities are classified as either financial liabilities at fair
value through profit or loss (“FVTPL”) or other financial liabilities.
Financial liabilities at FVTPL
Financial liabilities are classified as at FVTPL when the financial
liability is either held for trading or it is designated as at FVTPL.
A financial liability is classified as held for trading if:
•
it has been incurred principally for the purpose of repurchasing it
in the near term; or
• on initial recognition it is part of a portfolio of identified financial
instruments that the Group manages together and has a recent
actual pattern of short‑term profit taking; or
•
it is a derivative that is not designated and effective as a
hedging instrument.
A financial liability other than a financial liability held for trading may
be designated as at FVTPL upon initial recognition if:
• such designation eliminates or significantly reduces a
measurement or recognition inconsistency that would otherwise
arise; or
• the financial liability forms part of a group of financial assets
or financial liabilities or both, which is managed and its
performance is evaluated on a fair value basis, in accordance
with the Group’s documented risk management or investment
strategy, and information about the grouping is provided
internally on that basis; or
•
it forms part of a contract containing one or more embedded
derivatives, and IAS 39 ‘Financial instruments: recognition and
measurement’ permits the entire combined contract (asset or
liability) to be designated as at FVTPL.
Financial liabilities at FVTPL are stated at fair value, with any gains
or losses arising on re‑measurement recognised in profit or loss.
The net gain or loss recognised in profit or loss incorporates any
interest paid on the financial liability and is included in the ‘other
gains and losses’ line item in the income statement.
Other financial liabilities
Other financial liabilities, including borrowings, are initially
measured at fair value, net of transaction costs. Other financial
liabilities are subsequently measured at amortised cost using the
effective interest method, with interest expense recognised on an
effective yield basis. The effective interest method is a method of
calculating the amortised cost of a financial liability and of allocating
interest expense over the relevant period. The effective interest rate
is the rate that exactly discounts estimated future cash payments
through the expected life of the financial liability, or, where
appropriate, a shorter period.
Derecognition of financial liabilities
The Group derecognises financial liabilities when, and only when,
the Group’s obligations are discharged, cancelled or they expire.
Financial assets
Financial assets are recognised and derecognised on trade date
where the purchase or sale of a financial asset is under a contract
whose terms require delivery of the financial asset within the
timeframe established by the market concerned, and are initially
measured at fair value, net of transaction costs except for those
financial assets classified as at fair value through the profit or loss
which are initially measured at fair value.
Subsequent to initial recognition, investments in subsidiaries are
measured at cost in the Company financial statements. Other
financial assets are loans and receivables. The classification
depends on the nature and purpose of the financial assets
and is determined at the time of initial recognition.
Effective interest method
The effective interest method is a method of calculating the
amortised cost of a financial asset and of allocating interest income
over the relevant period. The effective interest rate is the rate
that exactly discounts estimated future cash receipts through the
expected life of the financial asset, or, where appropriate, a shorter
period, to the net carrying amount on initial recognition.
Available‑for‑sale financial assets (“AFS”)
Listed shares and listed redeemable notes held by the Group
that are traded in an active market are classified as being AFS
and are stated at fair value. The Group also has investments in
unlisted shares that are not traded in an active market but that are
classified as AFS financial assets and stated at fair value (because
the directors consider that fair value can be reliably measured). Fair
value is determined in the manner described in Note 26. Gains and
losses arising from changes in fair value are recognised in other
comprehensive income and accumulated profits with the exception
of impairment losses, interest calculated using the effective interest
method and foreign exchange gains and losses on monetary assets,
which are recognised directly in profit or loss. Where the investment
is disposed of or is determined to be impaired, the cumulative gain
or loss previously recognised in the investments revaluation reserve
is reclassified to profit or loss.
Dividends on AFS equity instruments are recognised in profit or loss
when the Group’s right to receive the dividends is established.
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Financial statements
Notes to the consolidated financial statements continued
for the year ended 31 December 2014
3. Summary of significant accounting policies continued
Derecognition of financial assets
Accounting policies continued
Financial assets continued
Available‑for‑sale financial assets (“AFS”) continued
The fair value of AFS monetary assets denominated in a foreign
currency is determined in that foreign currency and translated at
the spot rate at the balance sheet date. The foreign exchange
gains and losses that are recognised in profit or loss are
determined based on the amortised cost of the monetary asset.
Other foreign exchange gains and losses are recognised in other
comprehensive income.
Loans and receivables
Trade receivables, loans and other receivables that have fixed or
determinable payments that are not quoted in an active market
are classified as loans and receivables. Loans and receivables are
measured at amortised cost using the effective interest rate method
less impairment. Interest is recognised by applying the effective
interest rate except for short‑term receivables when the recognition
of interest would be immaterial.
Impairment of financial assets
Financial assets, other than those at fair value through profit or loss,
are assessed for indicators of impairment at each reporting date.
Financial assets are impaired where there is objective evidence
that as a result of one or more events that occurred after the initial
recognition of the financial asset the estimated future cash flows
of the investment have been impacted. For financial assets carried
at amortised cost, the amount of the impairment is the difference
between the asset’s carrying amount and the present value of
estimated future cash flows, discounted at the original effective
interest rate.
The carrying amount of the financial asset is reduced by the
impairment loss directly for all financial assets with the exception
of trade receivables where the carrying amount is reduced
through the use of an allowance account. When a trade receivable
is uncollectible, it is written off against the allowance account.
Subsequent recoveries of amounts previously written off are
credited against the allowance account. Changes in the carrying
amount of the allowance account are recognised in profit or loss.
With the exception of available‑for‑sale equity instruments, if, in a
subsequent period, the amount of the impairment loss decreases
and the decrease can be related objectively to an event occurring
after the impairment was recognised, the previously recognised
impairment loss is reversed through profit or loss to the extent the
carrying amount of the investment at the date the impairment is
reversed does not exceed what the amortised cost would have
been had the impairment not been recognised.
In respect of available‑for‑sale equity instruments, any subsequent
increase in fair value after an impairment loss is recognised in other
comprehensive income.
The Group derecognises a financial asset only when the
contractual rights to the cash flows from the asset expire, or
when it transfers the financial asset and substantially all the risks
and rewards of ownership of the asset to another entity. If the
Group neither transfers nor retains substantially all the risks and
rewards of ownership and continues to control the transferred
asset, the Group recognises its retained interest in the asset and
an associated liability for amounts it may have to pay. If the Group
retains substantially all the risks and rewards of ownership of a
transferred financial asset, the Group continues to recognise the
financial asset and also recognises a collateralised borrowing for the
proceeds received.
Employee benefits
A liability is recognised for benefits accruing to employees in
respect of wages and salaries, annual leave, long service leave and
sick leave when it is probable that settlement will be required and
they are capable of being measured reliably.
Liabilities recognised in respect of employee benefits expected
to be settled within twelve months, are measured at their nominal
values using the remuneration rate expected to apply at the time of
settlement. Liabilities recognised in respect of employee benefits
which are not expected to be settled within twelve months are
measured as the present value of the estimated future cash flows to
be made by the consolidated entity in respect of services provided
by employees up to reporting date.
Superannuation
The Company contributes to, but does not participate in,
compulsory superannuation funds (defined contribution schemes)
on behalf of the employees and directors in respect of salaries and
directors’ fees paid. Contributions are charged against income as
they are made.
Exploration, evaluation and development expenditure
Exploration and evaluation expenditures in relation to each
separate area of interest are recognised as an exploration and
evaluation asset in the year in which they are incurred where the
following conditions are satisfied:
a) the rights to tenure of the area of interest are current; and
b) at least one of the following conditions is also met:
i) the exploration and evaluation expenditures are expected
to be recouped through successful development and
exploration of the area of interest, or alternatively, by its sale;
or
ii) exploration and evaluation activities in the area of interest
have not at the reporting date reached a stage which
permits a reasonable assessment of the existence or
otherwise of economically recoverable reserves, and active
and significant operations in, or in relation to, the area of
interest are continuing.
Exploration and evaluation assets are initially measured at cost
and include acquisition of rights to explore, studies, exploration
drilling, trenching and sampling and associated activities. General
and administrative costs are only included in the measurement of
exploration and evaluation costs where they are related directly to
operational activities in a particular area of interest.
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Exploration and evaluation assets are assessed for impairment when
facts and circumstances (as defined in IFRS 6 ‘Exploration for and
evaluation of mineral resources’) suggest that the carrying amount
of exploration and evaluation assets may exceed its recoverable
amount. The recoverable amount of the exploration and evaluation
assets (or the cash‑generating unit(s) to which it has been allocated,
being no larger than the relevant area of interest) is estimated to
determine the extent of the impairment loss (if any). Where an
impairment loss subsequently reverses, the carrying amount of the
asset is increased to the revised estimate of its recoverable amount,
but only to the extent that the increased carrying amount does not
exceed the carrying amount that would have been determined had
no impairment loss been recognised for the asset in previous years.
Where a decision is made to proceed with development in
respect of a particular area of interest, the relevant exploration
and evaluation asset is tested for impairment, reclassified to mine
development properties, and then amortised over the life of the
reserves associated with the area of interest once mining operations
have commenced.
Mine development expenditure is recognised at cost less
accumulated amortisation and any impairment losses. When
commercial production in an area of interest has commenced,
the associated costs are amortised over the estimated economic life
of the mine on a units of production basis.
Changes in factors such as estimates of proved and probable
reserves that affect unit of production calculations are dealt with
on a prospective basis.
Foreign currencies
The individual financial statements of each group entity are
presented in its functional currency being the currency of the
primary economic environment in which the entity operates.
For the purpose of the consolidated financial statements, the
results and financial position of each entity are expressed in
United States dollars, which is the functional currency of the
Group and the presentation currency for the consolidated financial
statements except for the UK subsidiaries which are denominated
in Great British pounds and the Australian subsidiaries which are
denominated in Australian dollars.
In preparing the financial statements of the individual entities,
transactions in currencies other than the entity’s functional currency
are recorded at the rates of exchange prevailing on the dates of the
transactions. At each reporting date, monetary items denominated
in foreign currencies are retranslated at the rates prevailing at
the reporting date. Non‑monetary items carried at fair value that
are denominated in foreign currencies are retranslated at the
rates prevailing on the date when the fair value was determined.
Non‑monetary items that are measured in terms of historical cost
in a foreign currency are not retranslated. Exchange differences are
recognised in profit or loss in the period in which they arise.
Inventories
Inventories are valued at the lower of cost and net realisable
value. Costs including an appropriate portion of fixed and variable
overhead expenses are assigned to inventory on hand by the
method appropriate to each particular class of inventory, with
the majority being valued on a weighted average cost basis.
Net realisable value represents the estimated selling price less
all estimated costs of completion and costs necessary to make
the sale.
Ore stockpiles, gold in circuit and bullion are valued applying
absorption costing.
Interests in joint ventures
The Group applies IFRS 11 to joint arrangements. Under IFRS 11
investments in joint arrangements are classified as either joint
operations or joint ventures depending on the contractual rights
and obligations each investor. Joint ventures are accounted
for using the equity method. In relation to its interests in joint
operations, the Group recognises its share of assets and liabilities;
revenue from the sale of its share of the output; and its share
of expenses.
SGM is wholly consolidated within the Centamin group of
companies, reflecting the substance and economic reality of the
Concession Agreement (see Note 21).
Leased assets
Leased assets are classified as finance leases when the terms of
the lease transfer substantially all the risks and rewards incidental
to ownership of the leased asset to the lessee. All other leases are
classified as operating leases.
Operating lease payments are recognised as an expense on
a straight‑line basis over the lease term, except where other
systematic basis is more representative of the time pattern in which
economic benefits from the leased asset are consumed. Contingent
rentals arising under operating leases are recognised as an expense
in the period in which they are incurred.
Property, plant and equipment (“PPE”)
Plant and equipment is stated at cost less accumulated depreciation
and impairment. Plant and equipment will include capitalised
development expenditure. Cost includes expenditure that is directly
attributable to the acquisition of the item as well as the estimated
cost of abandonment. In the event that settlement of all or part
of the purchase consideration is deferred, cost is determined by
discounting the amounts payable in the future to their present
value as at the date of acquisition. Subsequent costs are included
in the asset’s carrying amount or recognised as a separate asset, as
appropriate, only when it is probable that future economic benefits
associated with the item will flow to the Group and the cost of the
item can be measured reliably. The carrying amount of the replaced
part is derecognised. All other repairs and maintenance are charged
to the income statement during the financial period in which they
are incurred. The cost of property, plant and equipment includes
the estimated restoration costs associated with the asset.
Depreciation is provided on plant and equipment. Depreciation is
calculated on a straight‑line basis so as to write off the net cost or
other revalued amount of each asset over its expected useful life to
its estimated residual value.
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Financial statements
Notes to the consolidated financial statements continued
for the year ended 31 December 2014
3. Summary of significant accounting policies continued
Accounting policies continued
Property, plant and equipment (“PPE”) continued
a) it is probable that the future economic benefit (improved access
to the ore body) associated with the stripping activity will flow to
the entity;
The estimated useful lives, residual values and depreciation method
are reviewed at the end of each annual financial period, with the
effect of any changes recognised on a prospective basis.
b) the entity can identify the component of the ore body for which
access has been improved; and
c) the costs relating to the stripping activity associated with that
Freehold land is not depreciated.
component can be measured reliably.
The following estimated useful lives are used in the calculation of
depreciation:
Plant and equipment
Office equipment
Mining equipment
Buildings
2 – 20 years
3 – 7 years
2 – 13 years
4 – 20 years
The gain or loss arising on the disposal or scrappage of an asset is
determined as the difference between the sales proceeds and the
carrying amount of the asset and is recognised in income.
Mine development properties
Where mining of a mineral resource has commenced, the
accumulated costs are transferred from exploration and evaluation
assets to mine development properties.
Amortisation is first charged to new mine development ventures
from the date of first commercial production. Amortisation of
mine properties is on a unit of production basis resulting in an
amortisation charge proportional to the depletion of the proved
and probable ore reserves. The unit of production can be on a
tonnes or an ounce depleted basis.
Capitalised underground development costs incurred to enable
access to specific ore blocks or areas of the underground mine, and
which only provide an economic benefit over the period of mining
that ore block or area, are depreciated on a units of production
basis, whereby the denominator is estimated ounces of gold in
proven and probable reserves within that ore block or area where
it is considered probable that those resources will be extracted
economically.
Stripping activity assets
The Group defers stripping costs incurred (removal of mine waste
materials which provide improved access to further quantities of
material that will be mined in future periods). This waste removal
activity is known as “stripping”. There can be two benefits accruing
to the entity from the stripping activity:
• usable ore that can be used to produce inventory; and
•
improved access to further quantities of material that will be
mined in future periods.
The costs of stripping activity to be accounted for in accordance
with the principles of IAS 2 ‘Inventories’ to the extent that the
benefit from the stripping activity is realised in the form of inventory
produced. The costs of stripping activity which provides a benefit in
the form of improved access to ore is recognised as a non‑current
“stripping activity asset” where the following criteria are met:
When the costs of the stripping activity asset and the inventory
produced are not separately identifiable, production stripping costs
are allocated between the inventory produced and the stripping
activity asset by using an allocation basis that is based on a relevant
production measure. A stripping activity asset is accounted for
as an addition to, or as an enhancement of, an existing asset and
classified as tangible or intangible according to the nature of the
existing asset of which it forms part. A stripping activity asset is
initially measured at cost and subsequently carried at cost or its
revalued amount less depreciation or amortisation and impairment
losses. A stripping activity asset is depreciated or amortised on
a systematic basis, over the expected useful life of the identified
component of the ore body that becomes more accessible as
a result of the stripping activity. The stripping activity asset is
depreciated using a units of production method based on the
total ounces to be produced over the life of the component of the
ore body.
Deferred stripping costs are included in “stripping assets”, within
tangible assets. These form part of the total investment in the
relevant cash‑generating unit, which is reviewed for impairment if
events or a change in circumstances indicate that the carrying value
may not be recoverable. Amortisation of deferred stripping costs is
included in operating costs.
Impairment of assets (other than exploration
and evaluation and financial assets)
At each reporting date, the Group reviews the carrying amounts
of its tangible and intangible assets to determine whether there
is any indication that those assets have suffered an impairment
loss. If any such indication exists, the recoverable amount of
the asset is estimated in order to determine the extent of the
impairment loss (if any). For the purposes of assessing impairment,
assets are grouped at the lowest levels for which there are largely
independent cash inflows (cash‑generating units).
Recoverable amount is the higher of fair value loss costs to sell and
value in use. In assessing value in use, the estimated future cash
flows are discounted to their present value using a pre‑tax discount
rate that reflects current market assessment of the time value of
money and the risks specific to the asset for which the estimates of
future flows have not been adjusted.
If the recoverable amount of a cash‑generating unit is estimated
to be less than its carrying amount, the carrying amount of the
cash‑generating unit is reduced to its recoverable amount. Where
an impairment loss subsequently reverses, the carrying amount
of the cash‑generating unit is increased to the revised estimate of
its recoverable amount, but only to the extent that the increased
carrying amount does not exceed the carrying amount that would
have been determined had no impairment loss been recognised for
the cash‑generating unit in prior years.
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A reversal of an impairment loss is recognised immediately in profit
or loss, unless the relevant asset is carried at a revalued amount,
in which case the reversal of an impairment loss is treated as a
revaluation increase.
Revenue
Revenue is measured at the fair value of the consideration received
or receivable for goods and services in the normal course of
business, net of discounts, VAT and other sales‑related taxes.
Sale of goods
Revenue from the sale of mineral production is recognised when
the Group has passed the significant risks and rewards of ownership
of the mineral production to the buyer, it is probable that economic
benefits associated with the transaction will flow to the Group,
the sales price can be measured reliably, and the Group has no
significant continuing involvement and the costs incurred or to be
incurred in respect of the transaction can be measured reliably.
This is when insurance risk has passed to the buyer and the goods
have been collected at the agreed location.
Where the terms of the executed sales agreement allow for
an adjustment to the sales price based on a survey of the
mineral production by the buyer (for instance an assay for gold
content), recognition of the revenue from the sale of mineral
production is based on the most recently determined estimate
of product specifications.
Pre‑production revenues
Income derived by the entity prior to the date of commercial
production is offset against the expenditure capitalised and carried
in the consolidated statement of financial position. All revenues
recognised after commencement of commercial production are
recognised in accordance with the revenue policy stated above.
The commencement date of commercial production is determined
when stable and sustained production capacity has been achieved.
Production royalty
The Arab Republic of Egypt (“ARE”) is entitled to a royalty of 3%
of net sales revenue (revenue net of freight and refining costs)
as defined from the sale of gold and associated minerals from
the Sukari Project. This royalty is calculated and recognised on
receipt of the final certificate of analysis document received from
the refinery. Due to its nature, this royalty is not recognised in cost
of sales but rather in other operating costs.
Other income
Interest income
Interest income is recognised when it is probable that the economic
benefits will flow to the Group and the amount of income can
be measured reliably. Interest income is accrued on a time basis,
by reference to the principal outstanding and at the effective
interest rate applicable, which is the rate that exactly discounts
estimated future cash receipts through the expected life of the
financial asset to that asset’s net carrying amount.
Business combinations
Acquisitions of businesses as defined by IFRS 3 are accounted
for using the acquisition method. The consideration for each
acquisition is measured at the aggregate of the fair values (at the
date of exchange) of assets given, liabilities incurred or assumed,
and equity instruments issued by the Group in exchange for control
of the acquiree. Acquisition‑related costs are recognised in profit or
loss as incurred.
Where applicable, the consideration for the acquisition includes
any asset or liability resulting from a contingent consideration
arrangement, measured at its acquisition‑date fair value.
Subsequent changes in such fair values are adjusted against the
cost of acquisition where they qualify as measurement period
adjustments (see below). All other subsequent changes in the fair
value of contingent consideration classified as an asset or liability
are accounted for in accordance with IFRS 3 either in profit or
loss or as a change to other comprehensive income. Changes in
the fair value of contingent consideration classified as equity are
not re‑measured, and its subsequent settlement is accounted for
within equity.
Where a business combination is achieved in stages, the Group’s
previously‑held interests in the acquired entity are remeasured to
fair value at the acquisition date (i.e. the date the Group attains
control) and the resulting gain or loss, if any, is recognised in profit
or loss. Amounts arising from interests in the acquiree prior to the
acquisition date that have previously been recognised in other
comprehensive income are reclassified to profit or loss, where such
treatment would be appropriate if that interest were disposed of.
The acquiree’s identifiable assets, liabilities and contingent liabilities
that meet the conditions for recognition under IFRS 3 (2008) are
recognised at their fair value at the acquisition date, except that:
• deferred tax assets or liabilities and liabilities or assets related to
employee benefit arrangements are recognised and measured
in accordance with IAS 12 ‘Income taxes’ and IAS 19 ‘Employee
benefits’ respectively;
•
liabilities or equity instruments related to the replacement by
the Group of an acquiree’s share‑based payment awards are
measured in accordance with IFRS 2 ‘Share‑based payment’;
and
• assets (or disposal groups) that are classified as held for sale in
accordance with IFRS 5 ‘Non‑current assets held for sale’.
Assets held for sale and discontinued operations are measured
in accordance with that Standard. If the initial accounting for a
business combination is incomplete by the end of the reporting
period in which the combination occurs, the Group reports
provisional amounts for the items for which the accounting is
incomplete. Those provisional amounts are adjusted during the
measurement period (see below), or additional assets or liabilities
are recognised, to reflect new information obtained about facts and
circumstances that existed as of the acquisition date that, if known,
would have affected the amounts recognised as of that date.
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Financial statements
Notes to the consolidated financial statements continued
for the year ended 31 December 2014
3. Summary of significant accounting policies continued
Share‑based payments
Accounting policies continued
Business combinations continued
The measurement period is the period from the date of acquisition
to the date the Group obtains complete information about facts
and circumstances that existed as of the acquisition date, and is
subject to a maximum of one year.
Investments in associates
An associate is an entity over which the Group has significant
influence and that is neither a subsidiary nor an interest in a joint
venture. Significant influence is the power to participate in the
financial and operating policy decisions of the investee but is not
control or joint control over those policies.
The results, assets and liabilities of associates are incorporated in
these financial statements using the equity method of accounting,
except when the investment is classified as held for sale, in which
case it is accounted for in accordance with IFRS 5 ‘Non‑current
assets held for sale and discontinued operations’.
Under the equity method, investments in associates are carried
in the consolidated balance sheet at cost as adjusted for
post‑acquisition changes in the Group’s share of the net assets
of the associate, less any impairment in the value of individual
investments. Losses of an associate in excess of the Group’s interest
in that associate (which includes any long‑term interests that, in
substance, form part of the Group’s net investment in the associate)
are recognised only to the extent that the Group has incurred
legal or constructive obligations or made payments on behalf of
the associate.
Any excess of the cost of acquisition over the Group’s share of the
net fair value of the identifiable assets, liabilities and contingent
liabilities of the associate recognised at the date of acquisition is
recognised as goodwill. The goodwill is included within the carrying
amount of the investment and is assessed for impairment as part of
that investment.
Any excess of the Group’s share of the net fair value of the
identifiable assets, liabilities and contingent liabilities over the cost
of acquisition, after reassessment, is recognised immediately in
profit or loss.
Where a Group entity transacts with an associate of the Group,
profits and losses are eliminated to the extent of the Group’s
interest in the relevant associate.
The Group determines at each reporting date whether there is any
objective evidence that the investment in the associate is impaired.
If this is the case, the Group calculates the amount of impairment
as the difference between the recoverable amount of the associate
and its carrying value and recognises the amount adjacent to share
of profit/(loss) of associates in the income statement.
Dilution gains and losses arising in investments in associates are
recognised in the income statement.
Equity settled share‑based payments with employees and others
providing similar services are measured at the fair value of the
equity instrument at grant date. Fair value is measured by the use
of the Black Scholes model. Where share‑based payments are
subject to market conditions, fair value was measured by the use of
a Monte‑Carlo simulation. The fair value determined at the grant
date of the equity settled share‑based payments is expensed over
the vesting period, based on the consolidated entity’s estimate of
shares that will eventually vest.
Equity settled share‑based transactions with other parties are
measured at the fair value of the goods or services received,
except where the fair value cannot be estimated reliably, in which
case they are measured at the fair value of the equity instruments
granted, measured at the date the entity obtains the goods or the
counterparty renders the service. The fair value of the employee
services received in exchange for the grant of the options is
recognised as an expense. The total amount to be expensed is
determined by reference to the fair value of the options granted:
•
including any market performance conditions (for example,
an entity’s share price);
• excluding the impact of any service and non‑market
performance vesting conditions (for example, profitability and
remaining an employee of the entity over a specified time
period); and
•
including the impact of any non‑vesting conditions (for example,
the requirement for employees to save or holding shares for a
specific period of time).
When the options are exercised, the Company issues new
shares. The proceeds received net of any directly attributable
transaction costs are credited to share capital (nominal value)
and share premium.
The expected life used in the model has been adjusted, based on
management’s best estimate, for the effects of non‑transferability,
exercise restrictions, and behavioural considerations. Further details
on how the fair value of equity settled share‑based transactions has
been determined can be found in Note 27. At each reporting date,
the Group revises its estimate of the number of equity instruments
expected to vest. The impact of the revision of the original
estimates, if any, is recognised in profit or loss over the remaining
vesting period, with corresponding adjustment to the equity settled
employee benefits reserve.
Issued capital
Ordinary shares are classified as equity. Incremental costs directly
attributable to the issue of new shares or options are shown in
equity as a deduction, net of tax, from the proceeds.
Where the Company or other members of the consolidated Group
purchases the Company’s equity share capital, the consideration
paid is deducted from the total shareholders’ equity of the
Group and/or of the Company as treasury shares until they are
cancelled. Where such shares are subsequently sold or reissued,
any consideration received is included in shareholders’ equity of the
Group and/or the Company.
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Deferred tax assets and liabilities are offset when there is a legally
enforceable right to set off current tax assets against current tax
liabilities and when they relate to income taxes levied by the same
taxation authority and the Group intends to settle its current tax
assets and liabilities on a net basis.
Restoration and rehabilitation
A provision for restoration and rehabilitation is recognised when
there is a present legal or constructive obligation as a result of
exploration, development and production activities undertaken,
it is probable that an outflow of economic benefits will be required
to settle the obligation, and the amount of the provision can be
measured reliably. The estimated future obligations include the
costs of dismantling and removal of facilities, restoration and
monitoring of the affected areas. The provision for future restoration
costs is the best estimate of the present value of the expenditure
required to settle the restoration obligation at the reporting date.
Future restoration costs are reviewed annually and any changes in
the estimate are reflected in the present value of the restoration
provision at each reporting date.
The initial estimate of the restoration and rehabilitation provision
relating to exploration, development and mining production
activities is capitalised into the cost of the related asset and
amortised on the same basis as the related asset, unless the present
obligation arises from the production of the inventory in the period,
in which case the amount is included in the cost of production for
the period. Changes in the estimate of the provision of restoration
and rehabilitation are treated in the same manner, except that
the unwinding of the effect of discounting on the provision is
recognised as a finance cost rather than being capitalised into
the cost of the related asset.
4. Critical accounting judgments
Critical judgments in applying the entity’s accounting policies
The following are the critical judgments that management has
made in the process of applying the Group’s accounting policies
and that have the most significant effect on the amounts recognised
in the financial statements:
Management has discussed its critical accounting judgments
and associated disclosures with the Company’s Audit and
Risk Committee.
Taxation
Income tax expense represents the sum of the tax currently payable
and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the period.
Taxable profit differs from profit as reported in the consolidated
statement of comprehensive income because of items of income
or expense that are taxable or deductible in other periods and
items that are never taxable or deductible. The Group’s liability for
current tax is calculated using tax rates that have been enacted or
substantively enacted by the end of the reporting period.
Deferred tax
Deferred tax is recognised on temporary differences between the
carrying amounts of assets and liabilities in the financial statements
and the corresponding tax bases used in the computation of
taxable profit. Deferred tax liabilities are generally recognised
for all taxable temporary differences. Deferred tax assets are
generally recognised for all deductible temporary differences to
the extent that it is probable that taxable profits will be available
against which those deductible temporary differences can be
utilised. Such deferred tax assets and liabilities are not recognised
if the temporary difference arises from goodwill or from the initial
recognition (other than in a business combination) of other assets
and liabilities in a transaction that affects neither the taxable profit
nor the accounting profit.
Deferred tax liabilities are recognised for taxable temporary
differences associated with investments in subsidiaries and
associates, and interests in joint ventures, except where the Group
is able to control the reversal of the temporary difference and it
is probable that the temporary difference will not reverse in the
foreseeable future. Deferred tax assets arising from deductible
temporary differences associated with such investments and
interests are only recognised to the extent that it is probable that
there will be sufficient taxable profits against which to utilise the
benefits of the temporary differences and they are expected to
reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at the end of
each reporting period and reduced to the extent that it is no longer
probable that sufficient taxable profits will be available to allow all
or part of the asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that
are expected to apply in the period in which the liability is settled
or the asset realised, based on tax rates (and tax laws) that have
been enacted or substantively enacted by the end of the reporting
period. The measurement of deferred tax liabilities and assets
reflects the tax consequences that would follow from the manner
in which the Group expects, at the end of the reporting period, to
recover or settle the carrying amount of its assets and liabilities.
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Financial statements
Notes to the consolidated financial statements continued
for the year ended 31 December 2014
4. Critical accounting judgments continued
Impairment of assets (other than exploration and evaluation
and financial assets)
IFRS requires management to test for impairment if events or
changes in circumstances indicate that the carrying amount of
a finite lived asset may not be recoverable. Management have
concluded that there is no indication that an impairment exists,
nor have any indicators arisen after the reporting period and are
therefore not required to perform a full impairment review under
IAS 36.
In making its assessment as to the possibility of whether
impairments losses having arisen, Management considered the
following indications:
•
internal sources of information;
• external sources of information;
•
litigation;
• the key assumptions applied in the 31 December 2013
impairment review;
•
forecast gold prices;
• discount rate;
• production volumes;
• reserves and resources report; and
• costs and recovery rates.
Litigation
The Group exercises judgment in measuring and recognising
provisions and the exposures to contingent liabilities related
to pending litigation, as well as other contingent liabilities
(see Note 20 to the financial statements). Judgment is necessary
in assessing the likelihood that a pending claim will succeed,
or a liability will arise, and to quantify the possible range of the
financial settlement.
The Group is currently a party to two legal actions both of which
could affect its ability to operate the mine at Sukari in the manner
in which it is currently operated and adversely affect its profitability.
The details of this litigation, which relate to the loss of the Egyptian
national subsidy for diesel fuel oil and the ability of the Group to
operate outside the area of 3km2 determined by the Administrative
Court of first instance to be the area of the Sukari exploitation lease,
are given in Note 20 to the financial statements and in the most
recently filed Annual Information Form (“AIF”) which is available
on SEDAR at www.sedar.com. Although it is possible to quantify
the effects of the loss the national fuel subsidy, it is not currently
possible to quantify with sufficient precision the effect of restricting
operations to an area of 3km2.
Every action is being taken to contest these decisions, including
the making of formal legal appeals and, although their resolution
may take some time, management remain confident that a
satisfactory outcome will ultimately be achieved. In the meantime,
however, the Group is continuing to pay international prices for
diesel fuel oil. With respect to the Administrative Court ruling,
on 20 March 2013 the Supreme Administrative Court upheld the
Company’s application to suspend this decision until the merits of
the Company’s appeal are considered and ruled on, thus providing
assurance that normal operations would be able to continue during
this process.
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In the unlikely event that the Group is unsuccessful in either or both
of its legal actions, and that the operating activities are restricted
to a reduced area, it is management’s belief that the Group will be
able to continue as going concern.
Recovery of capitalised exploration evaluation
and development expenditure
The Group’s accounting policy for exploration and evaluation
expenditure results in exploration and evaluation expenditure being
capitalised for those projects where such expenditure is considered
likely to be recoverable through future extraction activity or sale
or where the exploration activities have not reached a stage which
permits a reasonable assessment of the existence of reserves.
This policy requires management to make certain estimates and
assumptions as to future events and circumstances, in particular
whether the Group will proceed with development based on
existence of reserves or whether an economically viable extraction
operation can be established. Such estimates and assumptions
may change from period to period as new information becomes
available. If, subsequent to the exploration and evaluation
expenditure being capitalised, a judgment is made that recovery
of the expenditure is unlikely or the project is to be abandoned,
the relevant capitalised amount will be written off to the
income statement.
As described in Note 13 to the financial statements, in February
2015, the Company gave formal notice to Alecto Minerals plc
(”Alecto”) terminating the joint venture agreement entered into
between the Company and Centamin in September 2013 with
regards to the development of Alecto’s licences in Ethiopia.
Centamin’s rights in the Wayu Boda and Aysid Metekel licences
have reverted back to Alecto, such that Alecto will hold 100%
of the licences and will assume responsibility for the ongoing
commitments in respect of the licences on termination of the
joint venture and have thus written off all expenditure incurred to
date including the acquisition costs in relation to those licences,
amounting to US$2,327,778.
Going concern
Under guidelines set out by the UK Financial Reporting Council
(“FRC”) the directors of UK listed companies are required to
consider whether the going concern basis is the appropriate basis
of preparation of financial statements.
Based on a detailed cash flow forecast prepared by management,
in which any reasonably possible change in the key assumptions on
which cash flow forecast is based, the directors have a reasonable
expectation that the Group will have adequate resources to
continue in operational existence for the foreseeable future. Key
assumptions under‑pinning this forecast include:
•
•
litigation as discussed in Note 20 to the financial statements;
forecast gold price;
• production volumes; and
• costs and recovery rates.
These financial statements for the year ended 31 December
2014 have therefore been prepared on a going concern basis,
which contemplate the realisation of assets and liquidation of
liabilities during the normal course of operations, in preparing
the financial statements.
Accounting treatment of Sukari Gold Mines (“SGM”)
SGM is consolidated within the Centamin Group of companies,
reflecting the substance and economic reality of the Concession
Agreement (see Note 21 to the financial statements).
Key sources of estimation uncertainty
The following are the key assumptions concerning the future,
and other key sources of estimation uncertainty at the reporting
date, that have a significant risk of causing a material adjustment
to the carrying amounts of assets and liabilities within the next
financial year:
Provision for restoration and rehabilitation costs
The Group is required to decommission, rehabilitate and restore
mines and processing sites at the end of their producing lives to
a condition acceptable to the relevant authorities. The provision
has been calculated taking into account the estimated future
obligations including the costs of dismantling and removal
of facilities, restoration and monitoring of the affected areas.
The provision for future restoration costs is the best estimate of the
present value of the expenditure required to settle the restoration
obligation at the reporting date.
Ore reserve estimates
Estimates of recoverable quantities of reserves include assumptions
on commodity prices, exchange rates, discount rates and
production costs for future cash flows. It also involves assessment
and judgment of complex geological models. The economic,
geological and technical factors used to estimate ore reserves may
change from period to period. Changes in ore reserves affect the
carrying values of mine properties, property, plant and equipment,
provision for rehabilitation assets and deferred taxes. Ore reserves
are integral to the amount of depreciation and amortisation
charged to the statement of comprehensive income and the
calculation of inventory.
Production forecasts from the underground mine at Sukari are partly
based on estimates regarding future resource and reserve growth.
It is the opinion of management and directors that these estimates
are both realistic and conservative, based on current information.
However, as the mine relies on continued deeper development and
exploration drilling for further reserve definition, the life of this part
of the mine remains limited and there is a risk that some or all of
this growth will not materialise with a consequent negative impact
on current production forecasts which affect the unit of production
used in depreciation calculations.
Depreciation of capitalised underground mine development costs
Depreciation of capitalised underground mine development costs
at the Sukari mine is based on reserve estimates. Management
and directors believe that these estimates are both realistic and
conservative, based on current information. However, as the mine
relies on continued deeper development and exploration drilling
for further reserve definition, the estimated reserves may change
with a consequent negative impact on the carrying value of
capitalised underground mine development.
5. Revenue
An analysis of the Group’s revenue for the year, from continuing operations, is as follows:
Gold sales
Silver sales
All gold and silver sales during the year were made to a single customer in North America.
31 December 31 December
2013
US$’000
2014
US$’000
471,776
503,128
805
697
472,581
503,825
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Financial statements
Notes to the consolidated financial statements continued
for the year ended 31 December 2014
6. Profit before tax
Profit for the year has been arrived at after crediting/(charging) the following gains/(losses) and expenses:
31 December 2014
31 December 2013
Before
exceptional
items
US$’000
Exceptional
items
US$’000
Before
exceptional
items
US$’000
Exceptional
items
US$’000
Total
US$’000
Total
US$’000
(214,370)
(61,564)
(275,934)
(184,608)
(53,130)
(237,738)
2,839
(84,232)
(970)
1,869
8,973
2,126
11,099
—
(84,232)
(50,798)
—
(50,798)
(295,763)
(62,534)
(358,297)
(226,433)
(51,004)
(277,437)
Cost of sales
Mine production costs
Movement in inventory
Depreciation and amortisation
Finance income
Interest received
Other operating costs
Corporate compliance
Corporate consultants
Employee entitlements
Salary and wages
Travel and accommodation
Other administration expenses
Employee equity settled share‑based payments
Fixed royalty – attributable to the Egyptian government
Foreign exchange (loss)/gain, net
Provision for restoration and rehabilitation – unwinding of discount
Share of loss in associate(1)
Loss on disposal of property, plant and equipment
Lease payments
31 December 31 December
2013
US$’000
2014
US$’000
410
690
(1,339)
(381)
(116)
(6,135)
(899)
(243)
(2,493)
(3,188)
(793)
(118)
(5,854)
(1,205)
(278)
(2,284)
(14,144)
(15,074)
(2,900)
(538)
—
(1,093)
(87)
9,621
(563)
(1,664)
(121)
(206)
(30,368)
(21,727)
(1) In the prior year, the share of loss in associate included a US$1,414,000 impairment of exploration and evaluation assets. Refer to Note 14 for further details.
31 December 31 December
2013
US$’000
2014
US$’000
(436)
(12,911)
(2,328)
(2,764)
(6,503)
(19,414)
Impairment of assets
Impairment of available‑for‑sale financial assets(1)
Impairment of exploration and evaluation assets(2)
(1) Refer to Note 14 for further details.
(2) Refer to Note 13 for further details.
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Employee benefit expense(1) (2)
Short‑term employee benefits
Long‑term employee benefits
Post‑employee benefits
Share‑based payments
31 December 31 December
2013
US$’000
2014
US$’000
48,481
50,285
2
9
2,493
50,985
2
10
2,284
52,581
(1) Included in employee benefit expense is an amount of US$3,067,856 (2013: US$7,713,163) capitalised to property, plant and equipment and
US$1,288,211 (2013: US$2,616,573) capitalised to exploration and evaluation assets during the year.
(2) The average number of people (including executive directors) employed was 1,395 (2013: 1,281).
Exceptional items
The directors consider that items of income or expense which are material by virtue of their unusual, irregular or non‑recurring nature
should be disclosed separately if the consolidated financial statements are to fairly present the financial position and underlying business
performance. In order to allow a better understanding of the financial information presented within the consolidated financial statements,
and specifically the Group’s underlying business performance, the effect of exceptional items are shown below.
Included in cost of sales
Mine production costs
Movement in inventory
31 December 31 December
2013
US$’000
2014
US$’000
(61,564)
(53,130)
(970)
(62,534)
2,126
(51,004)
In January 2012 the Company received a letter from Chevron to the effect that Chevron would not be able to continue supplying Diesel
Fuel Oil (“DFO”) to the mine at Sukari at local subsidised prices. It is understood that the reason that this letter was issued was that
Chevron had received a letter instructing it to do so from the Egyptian General Petroleum Corporation (“EGPC”). It is understood that
EGPC itself took the decision to issue this instruction because it had received legal advice from the Legal Advice Department of the
Council of State (an internal government advisory department) that the companies operating in the gold mining sector in Egypt were not
entitled to such subsidies. In addition, the Company during the year received a demand from Chevron for the repayment of fuel subsidies
received in the period from late 2009 through to January 2012, amounting to some US$60 million (EGP403 million).
The Group has taken detailed legal advice on this matter (and, in particular, on the opinion given by Legal Advice Department of the
Council of State) and in consequence in June 2012 lodged an appeal against EGPC’s decision in the Administrative Courts. Again,
the Group believes that its grounds for appeal are strong and that there is every prospect of success. However, as a practical matter, and
in order to ensure the continuation of supply, the Group has since January 2012 advanced funds to its fuel supplier, Chevron, based on the
international price for diesel.
As at the date of the financial statements, no final decision had been taken by the courts regarding this matter.
Furthermore, the Group remains of the view that an instant move to international fuel prices is not a reasonable outcome and will look to
recover funds advanced thus far should the court proceeding be concluded in its favour. However, management recognises the practical
difficulties associated with reclaiming funds from the government and for this reason has, fully provided against the prepayment of
US$165.7 million, as an exceptional item, of which US$68.7 million was provided for during 2014 as follows:
a) a US$62.5 million increase in cost of sales (2013: US$51.0 million increase);
b) a US$0.2 million increase in stores inventories (2013: US$1.7 million increase);
c) a US$1.0 million decrease in mining stockpiles and ore in circuit (2013: US$2.1 million increase); and
d) a US$7.0 million increase in property, plant and equipment (capital WIP) (2013: US$0.8 million increase).
This has resulted in a net charge of US$62.5 million in the profit and loss.
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Financial statements
Notes to the consolidated financial statements continued
for the year ended 31 December 2014
7. Tax
Tax recognised in profit is summarised as follows:
Tax expense
Current tax
Current tax expense in respect of the current year
Deferred tax
Total tax expense
31 December 31 December
2013
US$’000
2014
US$’000
—
—
—
10
10
10
In Australia, Centamin Egypt Limited and Pharaoh Gold Mines NL have elected to form a tax‑consolidated group and therefore are treated
as a single entity for Australian income tax purposes. Pharaoh Gold Mines NL has elected into the “Branch Profits Exemption” whereby
foreign branch income will generally not be subject to Australian income tax.
In Egypt, Centamin has entered into a concession agreement that provides that the income generated by Sukari Gold Mining Company’s
activities is granted a long‑term tax exemption from all taxes imposed in Egypt.
The tax expense for the year can be reconciled to the profit per the consolidated statement of comprehensive income as follows:
Profit before income tax
Add: share of loss in associate
Tax expense calculated at 0% (2013: 0%)(1) of profit before tax
Tax effect of amounts which are not deductible/taxable in calculating taxable income:
Effect of tax different tax rates of subsidiaries operating in other jurisdictions
Tax expense for the year
31 December 31 December
2013
US$’000
2014
US$’000
81,562
183,969
—
1,664
81,562
185,633
—
—
—
—
10
10
(1) The tax rate used in the above reconciliation is the corporate tax rate of 0% payable by Jersey corporate entities under the Jersey tax law (2013: 0%).
There has been no change in the underlying corporate tax rates when compared to the previous financial period.
Current tax liabilities
Current tax payable
Tax consolidation
31 December 31 December
2013
US$’000
2014
US$’000
—
—
—
—
Relevance of tax consolidation to the consolidated entity
Companies within the Group’s wholly‑owned Australian resident entities formed a tax‑consolidated group with effect from 1 July 2003.
The head entity within the tax‑consolidated group is Centamin Egypt Limited. The members of the tax‑consolidated group are identified in
Note 21.
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Nature of tax funding arrangements and tax sharing agreements
Entities within the tax‑consolidated group have entered into a tax funding arrangement and a tax‑sharing agreement with the head
entity. Under the terms of the tax‑funding agreement, Centamin Egypt Limited and each of the entities in the tax‑consolidated group
has agreed to pay a tax‑equivalent payment to or from the head entity, based on the current tax liability or current tax asset of the entity.
Such amounts are reflected in amounts receivable from or payable to other entities in the tax‑consolidated group.
The tax‑sharing agreement entered into between members of the tax‑consolidated group provides for the determination of the allocation
of income tax liabilities between the entities should the head entity default on its tax payment obligations. No amounts have been
recognised in the financial statements in respect of this agreement as payment of any amounts under the tax‑sharing agreement is
considered remote.
8. Segment reporting
The Group is engaged in the business of exploration and mining of precious metals only, which represents a single operating segment.
The Board is the Group’s chief operating decision maker within the meaning of IFRS 8.
Non‑current assets other than financial instruments by country:
Egypt
Ethiopia
Burkina Faso
Côte d’Ivoire
Australia
United Kingdom
9. Trade and other receivables
Non‑current
Deposits
Value added taxation refund
Current
Gold sales debtors
Other receivables
31 December 31 December
2013
US$’000
2014
US$’000
999,745
1,007,161
3,835
48,893
977
2
156
3,067
—
—
1
206
1,053,608
1,010,435
31 December 31 December
2013
US$’000
2014
US$’000
24
621
645
—
—
—
31 December 31 December
2013
US$’000
2014
US$’000
24,057
24,657
916
770
24,973
25,427
Trade and other receivables are classified as loans and receivables and are therefore measured at amortised cost.
The average age of the receivables is 21 days (2013: 18 days). No interest is charged on the receivables. There are no trade receivables
past due and impaired at the reporting date, and thus no allowance for doubtful debts has been recognised. Of the trade receivables
balance, the gold sales debtor is all receivable from Johnson Matthey of Canada. The amount due has been received subsequent to year
end and was considered to be fully recoverable.
The directors consider that the carrying amount of trade and other receivables is approximately equal to their fair value.
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Financial statements
Notes to the consolidated financial statements continued
for the year ended 31 December 2014
10. Inventories
Mining stockpiles and ore in circuit
Stores
Inventory write‑offs of US$16,174 (2013: US$372,045) were recognised during the year.
11. Prepayments
Current
Prepayments
Fuel prepayments
Movement in fuel prepayments(1)
Balance at the beginning of the year
Fuel prepayment recognised
Less: provision charged to:(2)
Mine production costs (see Note 6)
Property, plant and equipment (see Note 6)
Inventories (see Note 6)
Balance at the end of the year
(1) Refer to Note 6, Exceptional Items, for further details.
(2) The cumulative fuel prepayment recognised and provision charged as at 31 December 2014 is as follows:
Fuel prepayment recognised (US$’000)
Provision charged to:
Mine production costs (US$’000)
Property, plant and equipment (US$’000)
Inventories (US$’000)
165,732
(151,348)
(11,852)
(2,532)
Non‑current
EMRA(3)
31 December 31 December
2013
US$’000
2014
US$’000
35,768
104,860
140,628
33,899
101,370
135,269
31 December 31 December
2013
US$’000
2014
US$’000
1,710
—
1,710
1,678
—
1,678
—
—
68,737
55,578
(61,564)
(53,130)
(6,953)
(220)
—
(742)
(1,706)
—
31 December 31 December
2013
US$’000
2014
US$’000
23,750
23,750
18,950
18,950
(3) With a view to demonstrating goodwill toward the Egyptian government, PGM made advance payments to EMRA which will be netted off against future
profit share that becomes payable to EMRA.
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12. Property, plant and equipment
Office
equipment
US$’000
Buildings
US$’000
Plant and
equipment
US$’000
Mine
Mining development
properties
US$’000
equipment
US$’000
Stripping
asset
US$’000
Capital
WIP
US$’000
Total
US$’000
Cost
Balance at
31 December 2013
Additions
Decrease in
rehabilitation asset
Acquisition of
subsidiary
Disposals
Transfers
4,625
17
—
1,080
(571)
232
Balance at
31 December 2014 5,383
Accumulated depreciation
171
—
—
1,131
(160)
—
284,902
178,374
182,974
8
—
814
(724)
—
—
1,224
(391)
6,979
(5,161)
—
—
280,811
41,447
43,400
—
—
—
—
—
—
426,461
1,077,507
61,252
68,256
—
3
(574)
(365,890)
(5,161)
4,252
(2,420)
—
1,142
565,811
220,654
228,192
—
121,252
1,142,434
Balance at
31 December 2013
Acquisition
of subsidiary
Depreciation
and amortisation
Disposals
Balance at
31 December 2014
Cost
Balance at
31 December 2012
Additions
Disposals
Transfers
Balance at
31 December 2013
(3,051)
(23)
(42,747)
(46,326)
(34,774)
—
(765)
(730)
292
(146)
(649)
(1,224)
—
(8)
—
(24,456)
(24,373)
(34,723)
108
125
—
(4,254)
(177)
(67,744)
(71,798)
(69,497)
3,595
54
(188)
1,164
171
278,366
105,276
176,407
—
—
—
55
—
—
—
6,481
73,098
1,742
—
4,825
—
—
—
—
—
—
—
—
—
—
—
—
—
(126,921)
(2,784)
(84,290)
525
(213,470)
259,856
252,173
—
(85,568)
823,671
254,024
(188)
—
4,625
171
284,902
178,374
182,974
—
426,461
1,077,507
Accumulated depreciation
Balance at
31 December 2012
Depreciation
and amortisation
Disposals
Balance at
31 December 2013
Net book value
As at
31 December 2013
(2,516)
(16)
(28,252)
(29,707)
(15,609)
(602)
67
(7)
—
(14,495)
(16,619)
(19,165)
—
—
—
(3,051)
(23)
(42,747)
(46,326)
(34,774)
—
—
—
—
—
(76,100)
—
—
(50,888)
67
—
(126,921)
1,574
148
242,155
132,048
148,200
—
426,461
950,586
As at
31 December 2014 1,129
965
498,067
148,856
158,695
—
121,252
928,964
During the prior year, as a result of the decline in the gold price, the Group carried out a review of the recoverable amount of the property,
plant and equipment. The review did not lead to a recognition of an impairment loss. The discount rate used in measuring value in use
was 12% per annum and the assumed average gold price was US$1,342 per ounce. No impairment review was performed in 2014 as no
indicators of impairment were identified.
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Financial statements
Notes to the consolidated financial statements continued
for the year ended 31 December 2014
13. Exploration and evaluation asset
Balance at the beginning of the period
Expenditure for the period
Acquisition of Ampella Mining Limited
Impairment of exploration and evaluation asset
Balance at the end of the period
31 December 31 December
2013
US$’000
2014
US$’000
59,849
28,841
37,637
(2,328)
123,999
45,669
20,683
—
(6,503)
59,849
The exploration and evaluation asset relates to the drilling, geological exploration and sampling of potential ore reserves. During the first
half of the year the Group acquired a 100% interest in Ampella Mining Limited for a total consideration (through the issue of shares in
Centamin plc) of US$48.5 million including a cash component of US$9.3 million and additional assets of US$1.6 million. The transaction
has been accounted for as an asset acquisition, using fair value measurement principles, with exploration rights covering an area of
2,350km2, recorded as an addition to mineral properties in the period. The tenements collectively known as the Batie West permits are
Danhal, Donko, Dounkou, Gbingbina, Mabera, Tiopolo, Niorka, Bottara, Kaldera, Kpere Batie, Timboura and Kpere.
In February 2015 the Company gave formal notice to Alecto Minerals plc (the AIM quoted mineral exploration company) terminating the
joint venture agreement dated September 2013, with regards to the development of Alecto’s licences in Ethiopia.
Centamin’s rights in the Wayu Boda and Aysid Metekel licences have reverted back to Alecto, such that Alecto will hold 100% of the
licences and will assume responsibility for the ongoing commitments in respect of the licences on termination of the joint venture and have
thus written off all expenditure incurred to date including the acquisition costs in relation to those licences.
14. Available‑for‑sale financial assets and interests in associates
14.1 Available‑for‑sale financial assets
Balance at the beginning of the period
Acquisitions
Disposals
Loss on foreign exchange movement
Loss on fair value of investment – other comprehensive income
Impairment loss
Balance at the end of the period
31 December 31 December
2013
US$’000
2014
US$’000
989
379
(91)
(352)
(80)
(436)
409
5,613
2,456
(822)
(108)
(6,150)
—
989
The available‑for‑sale financial asset at period end relates to a 11.34% (2013: 12.62%) equity interest in Nyota Minerals Limited (“Nyota”),
a listed public company. During the year, management made the decision to sell its interest in Nyota and the financial asset has now been
classed as a current asset.
In 2013, as a result of the prolonged decline in the fair value of the investment in Nyota, an impairment loss has been recognised and
the cumulative investments revaluation reserve balance within the accumulated profit reserve has been transferred to the statement of
comprehensive income as follows:
Impairment loss – being the transfer of unrealised loss – from other comprehensive income
—
12,911
31 December 31 December
2013
US$’000
2014
US$’000
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14.2 Interests in associates
Balance at the beginning of the period
Acquisitions
Share of loss in associate (see Note 6)
Impairment in interest in associate
Balance at the end of the period
31 December 31 December
2013
US$’000
2014
US$’000
—
—
—
—
—
3,132
500
(1,664)
(1,968)
—
In the prior year the interest in associate related to the Group’s 39.64% equity interest in Sahar Minerals Limited (“Sahar”), of which 33%
was acquired in July 2011, 3% acquired in December 2012, and a further 4% acquired in September 2013. The associate holds exploration
rights and continues to explore, however, management took the decision to write off the costs associated with the interest held in Sahar
due to Sahar’s intention to put all assets into care and maintenance as a result of funding requirements.
15. Trade and other payables
Trade payables
Other creditors and accruals
31 December 31 December
2013
US$’000
2014
US$’000
17,067
16,975
34,042
59,996
18,106
78,102
Trade payables principally comprise the amounts outstanding for trade purchases and ongoing costs. The average credit period taken for
trade purchases is 16 days (2013: 69 days). Trade payables are interest free for periods ranging from 30 to 180 days. Thereafter interest
is charged at commercial rates. The Group has financial risk management policies in place to ensure that all payables are paid within the
credit timeframe.
The directors consider that the carrying amount of trade payables approximate their fair value.
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16. Provisions
Current
Employee benefits(1)
Non‑current
Restoration and rehabilitation(2)
Movement in restoration and rehabilitation provision
Balance at beginning of the year
(Provision derecognised)/additional provision recognised
Interest expense – unwinding of discount
Balance at end of the year
31 December 31 December
2013
US$’000
2014
US$’000
307
307
3,015
3,015
7,638
(5,161)
538
3,015
139
139
7,638
7,638
5,544
1,531
563
7,638
(1) Employee benefits relate to annual, sick and long service leave entitlements. The current provision for employee benefits as at 31 December 2014 includes
US$150,493 (31 December 2013: US$139,111) of annual leave entitlements.
(2) The provision for restoration and rehabilitation represents the present value of the directors’ best estimate of the future outflow of economic benefits that
will be required to remove the facilities and restore the affected areas at the Group’s sites discounted by 12% (2013: 7%). This estimate has been made on
the basis of benchmark assessments of restoration works required following mine closure and after taking into account the projected area to be disturbed
over the life of the mine, being 20 years. A detailed review was undertaken as at 31 December 2014 as a result of the commissioning of Stage 4 which has
resulted in the US$4,623,470 decrease in the provision.
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Financial statements
Notes to the consolidated financial statements continued
for the year ended 31 December 2014
17. Issued capital
Fully paid ordinary shares
Balance at beginning of the period
Issue of shares
Own shares acquired during the period
Transfer to share option reserve
Balance at end of the period
31 December 2014
31 December 2013
Number
US$’000
Number
US$’000
1,101,397,381
612,463 1,101,397,381
612,463
50,710,603
48,218
—
—
(1,743)
2,635
—
—
—
—
—
—
1,152,107,984
661,573 1,101,397,381
612,463
The authorised share capital is an unlimited number of no par value shares.
At 31 December 2014 the Company held 9,821,383 ordinary shares in treasury(1) (2013: 11,013,888 ordinary shares).
Fully paid ordinary shares carry one vote per share and carry the right to dividends. See Note 27 for more details of the share options.
(1) Refers to shares held by the trustee pursuant to the Deferred Bonus Share Plan.
18. Reserves
Share option reserve
Share option reserve
Balance at beginning of the period
Share‑based payments expense
Transfer to accumulated profits
Transfer to issued capital
Balance at the end of the period
31 December 31 December
2013
US$’000
2014
US$’000
4,098
4,098
5,761
5,761
31 December 31 December
2013
US$’000
2014
US$’000
5,761
2,493
(1,521)
(2,635)
4,098
3,477
2,284
—
—
5,761
The share option reserve arises on the grant of share options to employees under the employee share option plan. Amounts are
transferred out of the reserve and into issued capital when the options and warrants are exercised/vested. Amounts are transferred
out of the reserve into accumulated profits when the options and warrants are forfeited.
19. Commitments for expenditure
(a) Capital expenditure commitments
Plant and equipment(1)
Not longer than one year
Longer than one year and not longer than five years
Longer than five years
31 December 31 December
2013
US$’000
2014
US$’000
—
—
—
—
3,474
—
—
3,474
(1) As a result of the completion of Stage 4, the Group had no commitments for capital expenditure as at 31 December 2014.
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(b) Operating lease commitments
The future aggregate minimum lease payments under non‑cancellable operating leases are as follows:
Office premises
Not longer than one year
Longer than one year and not longer than five years
Longer than five years
Operating lease commitments are limited to office premises in Jersey.
20. Contingent liabilities and contingent assets
Contingent liabilities
Fuel supply
31 December 31 December
2013
US$’000
2014
US$’000
63
195
—
258
73
244
—
317
In January 2012, the Group received a letter from Chevron to the effect that Chevron would only be able to supply Diesel Fuel Oil
(“DFO”) to the mine at Sukari at international prices rather than at local subsidised prices, which had the effect of adding approximately
US$150 per ounce to the cost of production. It is understood that the reason that this letter was issued was that Chevron had received a
letter instructing it to do so from the Egyptian General Petroleum Corporation (“EGPC”). It is further understood that EGPC itself issued
this instruction because it had received legal advice from the Legal Advice Department of the Council of State (an internal government
advisory department) that the companies operating in the gold mining sector in Egypt were not entitled to such subsidies. In November,
the Group received a further demand from Chevron for the repayment of fuel subsidies received during the period from late 2009 through
to January 2012, amounting to EGP403 million (approximately US$60.5 million at current exchange rates).
The Group has taken detailed legal advice on this matter (and, in particular, on the opinion given by the Legal Advice Department of the
Council of State) and in June 2012 lodged an appeal against EGPC’s decision in the Administrative Courts. Again, the Group believes that
its grounds for appeal are strong and that there is a good prospect of success. However, as a practical matter, and in order to ensure the
continuation of supply whilst the matter is resolved, the Group has since January 2012 advanced funds to its fuel supplier, Chevron, based
on the international price for fuel.
As at the date of this document, no decision had been taken by the courts regarding this matter. The Group remains of the view that an
instant move to international fuel prices is not a reasonable outcome and will look to recover funds advanced thus far should the court
proceeding be successfully concluded. However, management recognises the practical difficulties associated with reclaiming funds from
the government and for this reason has fully provided against the prepayment of US$97.0 million, as an exceptional item. Refer to Note 6
of the accompanying financial statements for further details on the impact of this exceptional provision on the Group’s results for 2014.
No provision has been made in respect of the historic subsidies prior to January 2012 as, based on legal advice, the Company believes
that the prospects of a court finding in its favour in relation to this matter remain very strong.
Concession Agreement court case
On 30 October 2012, the Administrative Court in Egypt handed down a judgment in relation to a claim brought by, amongst others,
an independent member of the previous parliament, in which he argued for the nullification of the agreement that confers on the
Group rights to operate in Egypt. This agreement, the Concession Agreement, was entered into between the Arab Republic of Egypt,
the Egyptian Mineral Resources Authority (“EMRA”) and Centamin’s wholly‑owned subsidiary Pharaoh Gold Mines (“PGM”), and was
approved by the People’s Assembly as Law 222 of 1994.
In summary that judgment states that, although the Concession Agreement itself remains valid and in force, insufficient evidence had
been submitted to court in order to demonstrate that the 160km2 “exploitation lease” between PGM and EMRA had received approval
from the relevant minister as required by the terms of the Concession Agreement. Accordingly, the court found that the exploitation lease
in respect of the area of 160km2 was not valid although it stated that there was in existence such a lease in respect of an area of 3km2.
Centamin, however, is in possession of the executed original lease documentation which clearly shows that the 160km2 exploitation lease
was approved by the Minister of Petroleum and Mineral Resources. It appears that an executed original document was not supplied to
the court.
Upon notification of the judgment the Group took various steps to protect its ability to continue to operate the mine at Sukari. These
included lodging a formal appeal before the Supreme Administrative Court on 26 November 2012. In addition, in conjunction with the
formal appeal the Group applied to the Supreme Administrative Court to suspend the initial decision until such time as the court was able
to consider and rule on the merits of the appeal. On 20 March 2013 the court upheld this application thus suspending the initial decision
and providing assurance that normal operations would be able to continue whilst the appeal process is under way.
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Financial statements
Notes to the consolidated financial statements continued
for the year ended 31 December 2014
20. Contingent liabilities and contingent assets continued
Contingent liabilities continued
Concession Agreement court case continued
EMRA lodged its own appeal in relation to this matter on 27 November 2012, the day after the Company’s appeal was lodged, supporting
the Group’s view in this matter. Furthermore, in late December 2012, the Minister of Petroleum lodged a supporting appeal and shortly
thereafter publicly indicated that, in his view, the terms of the Concession Agreement were fair and that the “exploitation” lease was valid.
The Minister of Petroleum also expressed support for the investment and expertise that Centamin brings to the country. The Company
believes this demonstrates the government’s commitment to our investment at Sukari and the desire to stimulate further investment in
the Egyptian mining industry.
The Company does not yet know when the appeal will conclude, although it is aware of the potential for the process in Egypt to be
lengthy. The Company has taken extensive legal advice on the merits of its appeal from a number of leading Egyptian law firms who have
confirmed that the proper steps were followed with regard to the grant of the 160km² lease. It therefore remains of the view that the
appeal is based on strong legal grounds and will ultimately be successful. In the event that the appellate court fails to be persuaded of the
merits of the case put forward by the Group, the operations at Sukari may be adversely effected to the extent that the Group’s operation
exceeds the exploitation lease area of 3km² referred to in the original court decision.
The Company remains confident that normal operations at Sukari will be maintained whilst the appeal case is heard.
Contingent assets
There were no contingent assets at year end (31 December 2013: nil).
21. Subsidiaries
The parent entity of the Group is Centamin plc, incorporated in Jersey, and the details of its subsidiaries are as follows:
Ownership interest
Country of
incorporation
31 December 31 December
2013
%
2014
%
Australia
Australia
Australia
Australia
Egypt
Egypt
United Kingdom
United Kingdom
Jersey
Jersey
Ethiopia
Bermuda
United Kingdom
Australia
Australia
Australia
Australia
Burkina Faso
Burkina Faso
Côte d’Ivoire
100
100
100
100
50
50
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
50
50
100
100
100
100
100
100
100
—
—
—
—
—
—
—
Centamin Egypt Limited
Viking Resources Limited
North African Resources NL
Pharaoh Gold Mines NL
Egyptian Pharaoh Investments(1)
Sukari Gold Mining Co
Centamin UK Limited (voluntarily struck off)
Sheba Exploration Holdings Limited(2)
Centamin Group Services Limited
Centamin Holdings Limited
Sheba Exploration Limited
Centamin Limited
Centamin West Africa Holdings Limited
Ampella Mining Limited
Ampella Share Plan Ltd
Ampella Mining Gold Pty Ltd
West African Gold Reserve Pty Ltd
Ampella Mining Gold SARL
Ampella Mining SARL
Ampella Mining Côte d’Ivoire
(1) Dormant company.
(2) Previously Sheba Exploration (UK) Plc.
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Through its wholly owned subsidiary, PGM, the Company entered into the Concession Agreement with EMRA and the Arab Republic of
Egypt granting PGM and EMRA the right to explore, develop, mine and sell gold and associated minerals in specific concession areas
located in the Eastern Desert of Egypt. The Concession Agreement came into effect under Egyptian law on 13 June 1995.
In 2005 PGM, together with EMRA, were granted an exploitation lease over 160km2 surrounding the Sukari Project site. The exploitation
lease was signed by PGM, EMRA and the Egyptian Minister of Petroleum and gives tenure for a period of 30 years, commencing 24 May
2005 and extendable by PGM for an additional 30 years upon PGM providing reasonable commercial justification.
In 2006 SGM was incorporated under the laws of Egypt. SGM was formed to conduct exploration, development, exploitation and
marketing operations in accordance with the Concession Agreement. Responsibility for the day‑to‑day management of the project
rests with the general manager, who is appointed by PGM.
The fiscal terms of the Concession Agreement require that PGM solely funds SGM. PGM is however entitled to recover from sales revenue
recoverable costs, as defined in the Concession Agreement. EMRA is entitled to a share of SGM’s net production surplus or profit share
(defined as revenue less payment of the fixed royalty to ARE and recoverable costs). As at 31 December 2014, PGM has not recovered
its cost and accordingly, no EMRA entitlement has been recognised to date, It is anticipated that the first payment to EMRA will become
payable during 2017. Any payment made to EMRA pursuant to these provisions of the Concession Agreement will be recognised as a
variable charge in the income statement.
The Concession Agreement grants certain tax exemptions, including the following:
•
from 1 April 2010, being the date of commercial production, the Sukari Project is entitled to a 15 year exemption from any taxes
imposed by the Egyptian government on the revenues generated from the Sukari Project. PGM and EMRA intend that SGM will in due
course file an application to extend the tax‑free period for a further 15 years. The extension of the tax‑free period requires that there
has been no tax problems or disputes in the initial period and that certain activities in new remote areas have been planned and agreed
by all parties;
• PGM and SGM are exempt from custom taxes and duties with respect to the importation of machinery, equipment and consumable
items required for the purpose of exploration and mining activities at the Sukari Project. The exemption shall only apply if there is no
local substitution with the same or similar quality to the imported machinery, equipment or consumables. Such exemption will also be
granted if the local substitution is more than 10% more expensive than the imported machinery, equipment or consumables after the
additional of the insurance and transportation costs;
• PGM, EMRA and SGM and their respective buyers will be exempt from any duties or taxes on the export of gold and associated
minerals produced from the Sukari Project;
• PGM at all times is free to transfer in US$ or other freely convertible foreign currency any cash of PGM representing its share of net
proceeds and recovery of costs, without any Egyptian government limitation, tax or duty;
• PGM’s contractors and sub‑contractors are entitled to import machinery. Equipment and consumable items under the “Temporary
Release System” which provided exemption from Egyptian customs duty; and
•
legal title of all operating assets of PGM will pass to EMRA when cost recovery is completed. The right of use of all fixed and movable
assets remains with PGM and SGM.
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Financial statements
Notes to the consolidated financial statements continued
for the year ended 31 December 2014
22. Auditor’s remuneration
The analysis of the auditor’s remuneration is as follows:
31 December 31 December
2013
US$’000
2014
US$’000
Fees payable to the Company’s auditor and its associates for the audit of the Company’s annual accounts
Additional fees relating to the prior year
Fees payable to the Company’s auditor and its associates for other services to the Group
– the audit of the Company’s subsidiaries
Total audit fees
Non‑audit fees:
Audit related assurance services – interim review
Other assurance services
Tax compliance services
Tax advisory services
Other expenses
Total non‑audit fees
300
—
100
400
100
125
—
—
—
225
301
67
50
418
140
49
56
60
—
305
The Audit and Risk Committee and the external auditor have safeguards in place to avoid the possibility that the auditor’s objectivity
and independence could be compromised. These safeguards include the implementation of a policy on the use of the external auditor
for non‑audit related services.
Where it is deemed that the work to be undertaken is of a nature that is generally considered reasonable to be completed by the auditor
of the Company for sound commercial and practical reasons, the conduct of such work will be permissible provided that it has been
pre‑approved. All these services are also subject to a predefined fee limit. Any work performed in excess of this limit must be approved
by the Audit and Risk Committee.
The amounts paid in 2014 were paid to our current external auditors and the amounts paid in 2013 were paid to our previous
external auditors.
23. Joint arrangements
The consolidated entity has an interest in the following joint arrangement:
Name of joint operation
Egyptian Pharaoh Investments(1) exploration
(1) Dormant company.
Percentage interest
31 December 31 December
2013
%
2014
%
50
50
The Group has a US$1 (cash) interest in the above joint operation. The amount is included in the consolidated financial statements of the
Group. Capital commitments arising from the Group’s interests in joint operation are disclosed in Note 19.
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24. Earnings per share
Basic earnings per share
Diluted earnings per share
Basic earnings per share
31 December 31 December
2013
Cents per share Cents per share
2014
7.208
7.113
16.873
16.767
The earnings and weighted average number of ordinary shares used in the calculation of basic earnings per share arenas follows:
Earnings used in the calculation of basic EPS
Weighted average number of ordinary shares for the purpose of basic EPS
Diluted earnings per share
31 December 31 December
2013
US$’000
2014
US$’000
81,562
183,959
31 December 31 December
2013
Number
2014
Number
1,131,521,652 1,090,242,853
The earnings and weighted average number of ordinary shares used in the calculation of diluted earnings per share are as follows:
Earnings used in the calculation of diluted EPS
Weighted average number of ordinary shares for the purpose of basic EPS
Shares deemed to be issued for no consideration in respect of employee options
Weighted average number of ordinary shares used in the calculation of diluted EPS
31 December 31 December
2013
US$’000
2014
US$’000
81,562
183,959
31 December 31 December
2013
Number
2014
Number
1,131,521,652 1,090,242,853
15,098,842
6,902,032
1,146,620,494 1,097,144,885
No potential ordinary shares were excluded from the calculation of weighted average number of ordinary shares for the purpose of diluted
earnings per share.
25. Notes to the statements of cash flows
(a) Reconciliation of cash and cash equivalents
For the purpose of the statement of cash flows, cash and cash equivalents includes cash on hand and at bank and deposits.
Cash and cash equivalents
31 December 31 December
2013
US$’000
2014
US$’000
125,659
105,979
Centamin plc Annual report 2014 | 131
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Financial statements
Notes to the consolidated financial statements continued
for the year ended 31 December 2014
25. Notes to the statements of cash flows continued
(b) Reconciliation of profit for the year to cash flows from operating activities
Profit for the year
Add/(less) non‑cash items:
Depreciation/amortisation of property, plant and equipment
Stock write‑off
Decrease in provisions
Foreign exchange rate gain/(loss), net
Impairment of available‑for‑sale financial assets
Share of loss in associate
Loss on disposal of property, plant and equipment
Impairment of associate
Impairment of exploration and evaluation assets
Share‑based payments expense
Changes in working capital during the period:
Decrease in trade and other receivables
Increase in inventories
Increase in prepayments
(Decrease)/increase in trade and other payables
Cash flows generated from operating activities
(c) Non‑cash financing and investing activities
31 December 31 December
2013
US$’000
2014
US$’000
81,562
183,959
84,290
11
(5,234)
4,455
436
—
1,093
—
2,328
2,493
454
(5,359)
(4,832)
(49,685)
50,888
372
(2,729)
(7,788)
12,911
1,664
—
1,968
6,503
2,284
15,309
(40,633)
(20,162)
41,287
112,012
245,833
During the year there have been no non‑cash financing and investing activities other than the Ampella asset acquisition as disclosed in
Note 13.
26. Financial instruments
(a) Group risk management
The Group manages its capital to ensure that entities within the Group will be able to continue as a going concern while maximising the
return to stakeholders through the optimisation of the cash and equity balance. The Group’s overall strategy remains unchanged from the
previous financial period.
The Group has no debt and thus is not geared at year end or in the prior year. The capital structure consists of cash and cash equivalents
and equity attributable to equity holders of the parent, comprising issued capital and reserves as disclosed in Notes 17 and 18. The Group
operates in Australia, Jersey, Egypt, Burkina Faso, Côte d’Ivoire and Ethiopia. None of the Group’s entities are subject to externally
imposed capital requirements.
The Group utilises inflows of funds toward the ongoing exploration and development of the Sukari Gold Project in Egypt, and the
exploration projects in Ethiopia, Burkina Faso and Côte d’Ivoire.
Categories of financial assets and liabilities:
Financial assets
Available‑for‑sale assets
Cash and cash equivalents
Trade and other receivables
Financial liabilities
Trade and other payables
132
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31 December 31 December
2013
US$’000
2014
US$’000
409
989
125,659
105,979
25,618
25,427
151,686
132,395
34,042
34,042
78,102
78,102
(b) Financial risk management and objectives
The Group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential risk
adverse effects and ensure that net cash flows are sufficient to support the delivery of the Group’s financial targets whilst protecting future
financial security. The Group continually monitors and tests its forecast financial position against these objectives.
The Group’s activities expose it to a variety of financial risks: market; commodity; credit; liquidity; foreign exchange; and interest rate.
These risks are managed under Board approved directives through the Audit and Risk Committee. The Group’s principal financial
instruments comprise interest bearing cash and cash equivalents. Other financial instruments include trade receivables and trade payables,
which arise directly from operations.
It is, and has been throughout the period under review, Group policy that no speculative trading in financial instruments be undertaken.
(c) Market risk
The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect
to the Australian dollar, Great British pound and Egyptian pound. Foreign exchange risk arises from future commercial transactions
and recognised assets and liabilities that are denominated in a currency that is not the entity’s functional currency. Revenue is received
in United States dollars. The risk is measured by regularly monitoring, forecasting and performing sensitivity analyses on the Group’s
financial position.
Financial instruments denominated in Great British pound, Australian dollar and Egyptian pound are as follows:
Great British pound
Australian dollar
Egyptian pound
31 December 31 December 31 December 31 December 31 December 31 December
2013
US$’000
2014
US$’000
2014
US$’000
2014
US$’000
2013
US$’000
2013
US$’000
Financial assets
Cash and cash equivalents
Available‑for‑sale assets
Financial liabilities
Trade and other payables
Net exposure
127
390
517
1,492
1,492
(975)
535
580
1,115
549
549
566
7,405
19
7,424
18
18
17,430
1,246
409
—
17,839
1,246
898
—
898
4,923
4,923
3,339
3,339
35,980
35,980
7,406
12,916
(2,093)
(35,082)
The following table summarises the sensitivity of financial instruments held at the reporting date to movements in the exchange rate of the
Great British and Egyptian pounds and Australian dollar to the United States dollar, with all other variables held constant. The sensitivities
are based on reasonably possible changes over a financial period, using the observed range of actual historical rates.
Impact on profit
Impact on equity
31 December 31 December 31 December 31 December
2013
US$’000
2014
US$’000
2014
US$’000
2013
US$’000
US$/GBP increase by 10%
US$/GBP decrease by 10%
US$/A$ increase by 10%
US$/A$ decrease by 10%
US$/EGP increase by 10%
US$/EGP decrease by 10%
4
(4)
1
(1)
(583)
(1,144)
583
102
102
1,144
3,003
(3,003)
(35)
35
(2)
2
—
—
(53)
53
(29)
29
—
—
The Group’s sensitivity to foreign currency has decreased at the end of the current period mainly due to the decrease in foreign currency
cash holdings in Australian dollars and a corresponding increase in US dollar cash holdings.
The Group has not entered into forward foreign exchange contracts. Natural hedges are utilised wherever possible to offset foreign
currency liabilities. The Company maintains a policy of not hedging its currency positions and maintains currency holdings in line with
underlying requirements and commitments.
(d) Commodity price risk
The Group’s future revenue forecasts are exposed to commodity price fluctuations, in particular gold prices. The Group has not entered
into forward gold hedging contracts.
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Financial statements
Notes to the consolidated financial statements continued
for the year ended 31 December 2014
26. Financial instruments continued
(e) Interest rate risk
The Group’s main interest rate risk arises from cash and short‑term deposits and is not considered to be a material risk due to the
short‑term nature of these financial instruments. Cash deposits are placed on term period of no more than 30 days at a time.
The financial instruments exposed to interest rate risk and the Group’s exposure to interest rate risk as at balance date were as follows:
Weighted
average
effective
interest rate
%
Less than
one month
US$’000
One to
twelve
months
US$’000
More than
twelve
months
US$’000
Total
US$’000
31 December 2014
Financial assets
Variable interest rate instruments
Non‑interest bearing
Financial liabilities
Variable interest rate instruments
Non‑interest bearing
31 December 2013
Financial assets
Variable interest rate instruments
Non‑interest bearing
Financial liabilities
Variable interest rate instruments
Non‑interest bearing
(f) Liquidity risk
0.23
—
—
—
0.49
—
—
—
26,863
25,325
52,188
—
34,042
34,042
6,228
27,081
33,309
—
78,102
78,102
98,770
—
98,770
—
125,633
23,750
23,750
49,075
174,708
—
—
—
—
—
—
—
34,042
34,042
99,086
—
99,086
—
105,314
18,950
18,950
46,031
151,345
—
—
—
—
—
—
—
78,102
78,102
The Group’s liquidity position is managed to ensure that sufficient funds are available to meet its financial commitments in a timely and
cost effective manner.
Ultimate responsibility or liquidity risk management rests with the Board of Directors, who has established an appropriate management
framework for the management of the Group’s funding requirements. The Group manages liquidity risk by maintaining adequate cash
reserves and management monitors rolling forecasts of the Group’s liquidity on the basis of expected cash flow. The tables above reflect a
balanced view of cash inflows and outflows and shows the implied risk based on those values. Trade payables and other financial liabilities
originate from the financing of assets used in the Group’s ongoing operations. These assets are considered in the Group’s overall liquidity
risk. Management continually reviews the Group liquidity position including cash flow forecasts to determine the forecast liquidity position
and maintain appropriate liquidity levels.
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31 December 2014
Financial assets
Variable interest rate instruments
Non‑interest bearing
Financial liabilities
Variable interest rate instruments
Non‑interest bearing
31 December 2013
Financial assets
Variable interest rate instruments
Non‑interest bearing
Financial liabilities
Variable interest rate instruments
Non‑interest bearing
(g) Credit risk
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Less than
one month
US$’000
One to
twelve
months
US$’000
More than
twelve
months
US$’000
Total
US$’000
26,863
25,325
52,188
—
34,042
34,042
6,228
27,081
33,309
—
78,102
78,102
98,770
—
125,633
—
23,750
49,075
98,770
23,750
174,708
—
—
—
—
—
—
—
34,042
34,042
99,086
—
99,086
—
105,314
18,950
18,950
46,031
151,345
—
—
—
—
—
—
—
78,102
78,102
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group.
The Group has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral or other security
where appropriate, as a means of mitigating the risk of financial loss from defaults. The Group measures credit risk on a fair value
basis. The Group’s credit risk is concentrated on one entity, but the Group has good credit checks on customers and none of the trade
receivables from the customer has been past due, nor have they been impaired. Also, the cash balances held in Australian dollars are
held with a financial institution with a high credit rating. The gross carrying amount of financial assets recorded in the financial statements
represents the Group’s maximum exposure to credit risk without taking account of the value of collateral or other security obtained.
(h) Fair value
The carrying amount of financial assets and financial liabilities recorded in the financial statements represents their respective fair values,
principally as a consequence of the short‑term maturity thereof.
(i) Fair value measurements recognised in the statement of financial position
The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value, grouped
into Levels 1 to 3 based on the degree to which the fair value is observable:
• Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities;
• Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for
the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and
• Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not
based on observable market data (unobservable inputs).
Available‑for‑sale financial assets
Available‑for‑sale financial assets
2014
Level 1
Level 2
Level 3
409
—
—
2013
Level 1
Level 2
Level 3
989
—
—
Total
409
Total
989
There were no financial assets or liabilities subsequently measured at fair value on Level 3 fair value measurement bases.
Centamin plc Annual report 2014 | 135
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Financial statements
Notes to the consolidated financial statements continued
for the year ended 31 December 2014
27. Share‑based payments
Executive Directors Loan Funded Share Plan (“EDLFSP”) and Employee Loan Funded Share Plan (“ELFSP”)
Shares were issued to executive directors under the EDLFSP 2011 and employees under the ELFSP as part of their remuneration package.
Under the terms of the EDLFSP and ELFSP, the Company has provided a limited recourse and interest free loan to certain employees of
the Company for the purpose of acquiring the New Shares (the “Loan”). The purchase of the shares has been funded by the Loan and
the shares will not vest until certain performance conditions are met. In the event the performance conditions are not met, or the shares
are forfeited by the participant, the Company can either re‑acquire the shares or direct the trustee to sell them on, offsetting the proceeds
against the outstanding loan amount and waiving the remainder of the Loan. Subject to performance conditions and time‑based hurdles
being met, the Loan will be repayable by the relevant employee in full on the earlier of the termination date of the Loan (three years from
the date of issue) or the date on which the shares are disposed of. No options have been offered under the EDLFSP and ELFSP in 2012,
2013 or 2014.
2011 Employee Option Scheme (“2011 EOS”)
Options were issued under the 2011 EOS made in accordance with thresholds set in plans approved by shareholders at the Extraordinary
General Meeting of Shareholders on 14 December 2011. All employees of the Group other than directors are able to participate in the
2011 EOS. The Committee shall select from time to time from such group the actual participants in the 2011 EOS. There are no current
plans for options to be granted under the 2011 EOS.
The 2011 EOS provides for employees (other than directors) to receive up to an annual aggregate of options over ordinary shares, with an
exercise price calculated by either the volume weighted average closing price of ordinary shares sold on an exchange for the five trading
days most recently preceding the day as at which the market value is calculated or if market value is required to be determined in another
manner or another amount for the purposes of tax legislation in another jurisdiction, then the value is so determined at the date of issue.
The ability to exercise the options is conditional on the Group achieving its performance hurdles. For the initial grants to be made under
the 2011 EOS it is the current intention that the performance criteria will be the TSR performance criteria as detailed in the 2011 Executive
LFSP. Further details of the performance conditions can be found in the remuneration report. There are no outstanding awards under this
plan and there is no current intention to use the plan.
Under the 2011 EOS the exercise price of the options is denominated in Great British pounds. All options expire on the earlier of their
expiry date or termination of the individual’s employment.
Deferred Bonus Share Plan (“DBSP”)
During the year the Company implemented a DBSP which is a long‑term share incentive arrangement for senior management (but not
executive directors) and other employees (participants).
Under the DBSP, the Board shall, at its absolute discretion, require such eligible participants to defer up to one hundred per cent (100%)
of their bonus opportunity and such eligible participants shall not be paid their deferred bonus in cash but shall instead be granted a
Deferred Bonus Award over such number of shares provided that the eligible participant remains in employment on the date of grant
(effectively the vesting date). The award of the deferred shares will not have any performance criteria attached. They will however be
subject to a service period.
136
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On 4 June 2013, the Group offered to both the beneficiaries of the shares awarded under the ELFSP and to the majority of the
beneficiaries of the options granted under the EOS the choice to replace their awards and options with awards under the DBSP.
The Group has accounted for this change as modifications to the share‑based payment plans and will be recognising the incremental fair
value granted, measured in accordance with IFRS 2, by this replacement over the vesting period of the new DBSP awards.
Under this offer, each participant has been granted a number of awards under the DBSP equivalent to the number of shares or options
held under the ELFSP and EOS respectively. Such DBSP awards shall be subject to the terms and conditions of the DBSP and shall
ordinarily vest in three equal tranches on the anniversary of the grant date, conditional upon the continued employment with the Group.
All offers made to participants were accepted.
The total share‑based payment charge relating to Centamin plc shares for the year is split as follows:
2011 EOS
LFSP
DBSP
31 December 31 December
2013
US$’000
2014
US$’000
68
(15)
2,440
2,493
74
596
1,614
2,284
No LFSP awards or EOS options were granted during the year.
The fair value of share‑based payments awarded under the LFSP and granted under the 2011 EOS were measured by the use of the Black
Scholes model where share‑based payments have non‑market based performance conditions. Where share‑based payments are subject to
market conditions, fair value was measured by the use of a Monte‑Carlo simulation. The Monte‑Carlo simulation has been used to model
the Company’s share prices against the performance of the chosen comparator group and the FTSE 250 at the relevant vesting dates.
The assumptions used in these are set out below:
Date of grant
Series number
LFSP 2012
5 April
EOS 2012(1)
5 April
EOS 2012(1)
15 August
LFSP 2011
21 March
LFSP 2011
LFSP 2011
21 June 30 September
31‑34
35‑40
41‑46
21‑25
26‑29
30
Number of instruments
5,100,000
750,000
800,000
8,742,500
825,000
400,000
Share price at date of grant (GBP)
Exercise price (GBP)
Vesting conditions(2)
Expected volatility(3)
Risk‑free interest rate(4)
Expected departures
0.6380
0.6754
1‑3
0.6380
0.6754
1‑3
0.6950
0.6823
1‑3
1.2590
1.2590
1‑3
1.1710
1.1710
1‑3
51.67%
51.67%
51.48%
50.08%
47.05%
0.41%‑0.52% 0.41%‑0.52% 0.18%‑0.25% 0.78%‑1.65% 0.56%‑1.13%
0%
0%
0%
0%
0%
Expected outcomes of meeting
performance targets at grant date
FV at grant date (weighted average) (GBP)
100%
0.2022
100%
0.1300
100%
0.1939
100%
0.4364
100%
0.3134
1.1710
1.1710
1‑3
47.05%
1.13%
0%
100%
0.3842
(1) There were no options granted under the 2011 EOS during 2011.
(2) Variable vesting dependent on one to three years of continuous employment and, for certain series, market‑based performance conditions being achieved.
(3) The expected volatility of Centamin and each company in the chosen comparator group and the FTSE 250 Index Companies (“FTSE 250”) has been
calculated using approximately two years of historical price data.
(4) The expected rate of return used in the valuations for Centamin and other UK comparator companies was set to equal the UK government bond rate
with a yield‑to‑maturity that is equivalent to the tenor of the options. When modelling the share price of Canadian comparator companies, the Canadian
government bond rate was used.
Centamin plc Annual report 2014 | 137
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Financial statements
Notes to the consolidated financial statements continued
for the year ended 31 December 2014
27. Share‑based payments continued
Deferred share awards granted during the current and prior year:
Grant date
Number of instruments
Share price at grant date (GBP)
Share price at grant date (US$)
Vesting period (years)(2)
Expected dividend yield (%)
Fair value (GBP)(3)
Fair value (US$)(2)
Incremental fair value at grant date (weighted average) (GBP)(4)
Incremental fair value at grant date (weighted average) (US$)(4)
DBSP 2014(1) DBSP 2013
4 June 2014 4 June 2013
4,360,836
9,075,000
0.6285
1.0526
1‑3
n/a
0.6285
1.0526
0.6285
1.0526
0.3857
0.5886
1‑3
n/a
0.3857
0.5886
0.3277
0.5000
(1) Awards granted on 4 June 2014.
(2) Variable vesting dependent on one to three years of continuous employment.
(3) The fair value of shares in the DBSP was calculated by using the closing share price on grant date, converted at the closing GBP:US$ foreign exchange rate
on that day, no other factors were taken into account in determining the fair value.
(4) The incremental fair value of the shares awarded on 4 June 2013 under the DBSP was calculated by using the closing share price on grant date, converted
at the closing GBP:US$ foreign exchange rate on that day less the fair value of the share‑based payments awarded under the ELFSP and EOS immediately
prior to the grant under the DBSP. No other factors were taken into account in determining the fair value of the shares awarded under the DBSP.
The fair value of the share‑based payments awarded under the LFSP and granted under the 2011 EOS was measured by the use of the Black Scholes
model where share‑based payments have non‑market based performance conditions. Where share‑based payments are subject to market conditions, fair
value was measured by the use of a Monte‑Carlo simulation. The Monte‑Carlo simulation has been used to model the Company’s share prices against the
performance of the chosen comparator group and the FTSE 250 at the relevant vesting dates. The incremental fair value of the shares awarded on 4 June
2014 under the DBSP were calculated by using the closing share price on grant date, converted at the closing GBP:US$ foreign exchange rate on that day.
No other factors were taken into account in determining the fair value of the shares awarded under the DBSP.
The following table reconciles the outstanding share options granted under the Employee Share Option Plan at the beginning and end of
the reporting period:
31 December 2014
31 December 2013
US$
Weighted
average
exercise
price
Number
of options
US$
Weighted
average
exercise
price
Number
of options
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
Balance at beginning of the period
Granted during the period
Expired/lapsed during the period
Exercised during the period
Balance at the end of the period
Exercisable at the end of the period
138
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The following table reconciles the outstanding share options granted under 2011 Employee Option Scheme, at the beginning and end of
the reporting period:
Balance at beginning of the period
Granted during the period
Expired/lapsed during the period
Replaced with DBSP awards
Cancelled and to be replaced with DBSP awards
Exercised during the period
Balance at the end of the period
Exercisable at the end of the period
31 December 2014
31 December 2013
US$
Weighted
average
exercise
price
Number
of options
US$
Weighted
average
exercise
price
Number
of options
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
1,400,000
1.0716
—
—
(600,000)
1.1136
(300,000)
(500,000)
1.1250
1.1250
—
—
—
—
—
—
The following reconciles the outstanding share options granted under the EDLFSP and ELFSP at the beginning and end of the
reporting period:
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31 December 2014
31 December 2013
US$
Weighted
average
exercise
price
Number
of options
US$
Weighted
average
exercise
price
Number
of options
1,222,222
2.0758
10,137,222
1.5808
—
—
—
Balance at beginning of the period
Granted during the period
Expired/lapsed/forfeited during the period
(1,222,222)
2.0758
(167,500)
Replaced with DBSP awards
Exercised during the period
Balance at the end of the period
Exercisable at the end of the period
—
—
—
—
—
—
—
—
(8,747,500)
—
1,222,222
2.0758
—
—
—
1.5014
1.5228
—
The following reconciles the outstanding share awards granted under the DBSP at the beginning and end of the reporting period:
Balance at beginning of the period
Granted during the period
Expired/lapsed during the period
Exercised during the period
Balance at the end of the period
Exercisable at the end of the period
31 December 31 December
2013
Number of
awards
2014
Number of
awards
9,287,500
1,000,000
4,360,836
9,075,000
(754,171)
(787,500)
(3,225,834)
—
9,668,331
9,287,500
—
333,333
Centamin plc Annual report 2014 | 139
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Financial statements
Notes to the consolidated financial statements continued
for the year ended 31 December 2014
28. Key management personnel compensation
Key management personnel are persons having authority and responsibility for planning, directing and controlling the activities of the
Group, directly or indirectly, including any director (executive or otherwise) of the Group.
The aggregate compensation made to key management personnel of the consolidated entity and the Company is set out below:
Short‑term employee benefits
Long‑term employee benefits
Post‑employment benefits
Share‑based payments
Total
29. Related party transactions
(a) Equity interests in related parties
Equity interests in subsidiaries
31 December 31 December
2013
US$
2014
US$
7,567,732
8,079,116
1,642
59,285
1,635
31,153
2,106,223
1,826,452
9,734,882
9,938,356
Details of the percentage of ordinary shares held in subsidiaries are disclosed in Note 21.
Equity interests in associates and jointly controlled arrangements
Details of interests in joint ventures are disclosed in Note 23.
(b) Key management personnel compensation
Details of key management personnel compensation are disclosed above.
(c) Key management personnel equity holdings
The details of the movement in key management personnel equity holdings of fully paid ordinary shares in Centamin plc during the
financial period are as follows:
31 December 2014
Balance at
1 January
2014(2)
Granted as
remuneration
(DBSP)
Received
on exercise
of options
Balance at
Net other 31 December
2014
change(1)
Balance
held
nominally
J El‑Raghy
T Schultz
G Haslam
M Arnesen
M Bankes
K Tomlinson
P Louw
A Pardey
R Osman
H Brown
D Le Masurier
L Gregory
Y El‑Raghy
T Smith
L Sobey
A Davidson
71,445,086
1,030,000
102,056
15,000
120,000
—
—
—
—
—
—
—
1,737,500
400,000
1,785,000
400,000
600,000
200,000
475,000
75,000
—
—
300,000
300,000
510,000
170,000
—
300,000
300,000
100,000
—
450,000
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
71,445,086
(1,000,000)
30,000
—
—
30,000
24,400
—
—
—
—
—
—
102,056
15,000
150,000
24,400
2,137,500
2,185,000
800,000
550,000
300,000
300,000
(42,586)
637,414
—
300,000
(10,000)
390,000
—
450,000
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
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| Centamin plc Annual report 2014
31 December 2013
J El‑Raghy
T Schultz
G Haslam
M Arnesen
M Bankes
K Tomlinson
P Louw
A Pardey
R Osman
H Brown
D Le Masurier
L Gregory
Y El‑Raghy
T Smith
L Sobey
A Davidson
Balance at
1 January
2013(2)
Granted as
remuneration
(DBSP)
Received
on exercise
of options
Balance at
Net other 31 December
2013
change(1)
Balance
held
nominally
70,945,086
1,030,000
102,056
15,000
90,000
—
—
—
—
—
—
—
1,737,500
1,200,000
1,785,000
510,000
—
600,000
475,000
—
—
510,000
—
—
—
—
—
—
—
—
300,000
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
500,000
71,445,086
—
—
—
1,030,000
102,056
15,000
30,000
120,000
—
—
(1,200,000)
1,737,500
(510,000)
1,785,000
—
—
—
—
—
—
—
—
600,000
475,000
—
—
510,000
—
300,000
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
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(1) “Net other change” relates to the on market acquisition or disposal of fully paid ordinary share, including the forfeiture of shares awarded under the LFSP
and DBSP and the replacement of awards under the ELFSP with shares awarded under the DBSP.
(2) Includes shares held under LFSP/DBSP.
d) Key management personnel share option holdings
The details of the movement in key management personnel options to acquire ordinary shares in Centamin plc are as follows:
31 December 2014
Balance at
1 January
2014
Granted as
remuneration
Exercised
Balance at
Other 31 December
2014
changes
Balance
vested
Balance –
vested and
during the exercisable at
financial 31 December
2014
period
J El‑Raghy
T Schultz
G Haslam
M Arnesen
M Bankes
K Tomlinson
P Louw
A Pardey
R Osman
H Brown
D Le Masurier
L Gregory
Y El‑Raghy
T Smith
L Sobey
A Davidson
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
There were no options held, granted or exercised during the year by directors or senior management in respect of ordinary shares in
Centamin plc.
Centamin plc Annual report 2014 | 141
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Financial statements
Notes to the consolidated financial statements continued
for the year ended 31 December 2014
29. Related party transactions continued
d) Key management personnel share option holdings continued
31 December 2013
Balance at
1 January
2013
Granted as
remuneration
Exercised
Balance at
Other 31 December
2013
changes
Balance
vested
Balance –
vested and
during the exercisable at
financial 31 December
2013
period
J El‑Raghy
T Schultz
G Haslam
M Arnesen
M Bankes
K Tomlinson
P Louw
A Pardey
R Osman
H Brown
D Le Masurier
L Gregory
Y El‑Raghy
T Smith
L Sobey
A Davidson
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
500,000
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(500,000)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
Apart from the details disclosed in this note, no key management personnel has entered into a material contract with the Company or the
economic entity since the end of the previous financial year and there were no material contracts involving key management personnel
interests at year end.
e) Other transactions with key management personnel
The related party transactions for the year ended 31 December 2014 are summarised below:
Josef El‑Raghy is a director and shareholder of El‑Raghy Kriewaldt Pty Ltd (“El‑Raghy Kriewaldt”). El‑Raghy Kriewaldt provides office
premises to the Company. All dealings with El‑Raghy Kriewaldt are in the ordinary course of business and on normal terms and conditions.
Rent and office outgoings paid to El‑Raghy Kriewaldt during the period were A$57,898 or US$51,920 (31 December 2013: A$48,278 or
US$45,600).
f) Transactions with the government of Egypt
Royalty costs attributable to the government of Egypt of US$14,143,710 (2013: US$15,074,098) were incurred in 2014.
With a view to demonstrating goodwill toward the Egyptian government, PGM has made advance payments to EMRA of US$4,800,000
(2013: US$18,950,000) which will be netted off against any future profit share that becomes payable to EMRA.
g) During the year two generators were donated to Marsa Alam. These generators had a carrying value of US$1,093,129.
h) Transactions with other related parties
Other related parties include the parent entity, subsidiaries, and other related parties.
During the financial period, the Company recognised tax payable in respect of the tax liabilities of its wholly owned subsidiaries.
Payments to/from the Company are made in accordance with terms of the tax funding arrangement.
During the financial period the Company provided funds to and received funding from subsidiaries.
All amounts advanced to related parties are unsecured. No expense has been recognised in the period for bad or doubtful debts in
respect of amounts owed by related parties.
Transactions and balances between the Company and its subsidiaries were eliminated in the preparation of consolidated financial
statements of the Group.
142
| Centamin plc Annual report 2014
30. Dividends per share
The dividends paid in 2014 were US$9,923,308 (0.87 US cents per share) (2013: nil).
A dividend in respect of the year ended 31 December 2014 of 1.99 US cents per share, totalling circa US$23 million has been approved by
the Board of Directors and is subject to shareholder approval at the annual general meeting on 18 May 2015. These financial statements
do not reflect this dividend payable.
31. Subsequent events
As referred to in Note 13, In February 2015 the Company gave formal notice to Alecto Minerals plc (the AIM quoted mineral exploration
company) terminating the joint venture agreement entered into between the company and Centamin in September 2013 with regards to
the development of Alecto’s licences in Ethiopia.
As referred to in Note 20, subsequent to the year end the Group is involved in ongoing litigation in respect of both the price at which
diesel fuel oil is supplied to the mine at Sukari and the validity of the 160km2 exploitation lease.
As referred to in Note 30, subsequent to the year end the Board of Directors announced the approval of a final dividend for 2014 of
1.99 US cents per share. Subject to shareholder approval at the annual general meeting on 18 May 2015, the final dividend will be paid on
29 May 2015 to shareholders on the register as of 24 April 2015.
There were no other significant events occurring after the reporting date requiring disclosure in the financial statements.
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Centamin plc Annual report 2014 | 143
Shareholder information
Company legal form and structure
Centamin plc, number 109180 (the “Company”) is a mineral exploration, development and mining company dual listed on the London
Stock Exchange (LSE: CEY) and the Toronto Stock Exchange (TSX: CEE).
The Company is incorporated in the island of Jersey with the company number 109180. The Company conducts limited activity in its own
right, with certain of the subsidiary and jointly controlled entities carrying out exploration, development and mining activity. Details of all
subsidiaries are listed in Note 21 to the financial statements.
The Company’s principal asset, the Sukari Gold Project, is operated by the Sukari Gold Mining Company, a joint stock company
established under the laws of Egypt, which is owned 50% by Pharaoh Gold Mines NL, a wholly owned subsidiary of the Company, and
50% held by the Egyptian Mineral Resource Authority.
Articles of Association
The Articles of Association govern many aspects of the management of the Company. The Articles may only be amended by a special
resolution at a general meeting of the shareholders. The Articles of Association were adopted on 15 December 2011 and, together with
the Memorandum of Association, are available for inspection at the Company’s registered office during normal office opening hours.
The liability of each member arising from the members respective holding of a share in the Company is limited to the amount (if any)
unpaid on it. The Company has unrestricted corporate capacity.
Directors
Directors may be appointed by ordinary resolution. The Board may appoint a director but such a director may hold office only until the
dissolution of the next annual general meeting after his appointment unless he is reappointed during that meeting. Each appointed
director shall retire from office at each annual general meeting and may, if willing to act, be reappointed.
All directors must notify the Company of any shares held, acquired or disposed of in the Company. A register of director shareholdings is
held at the registered office which is open to inspection by the members. The directors are also required to disclose shares held by their
connected parties. Details of the interests of directors and their connected persons in the Company’s shares are outlined in the directors’
remuneration report.
Directors’ indemnity insurance
In accordance with Company’s Articles of Association and to the extent permitted by law, the Company may indemnify its directors out of
its own funds to cover liabilities incurred as a result of their office.
The Company has entered into indemnity agreements with each director to indemnify each director to the extent permitted by applicable
law and excluding any matters involving fraud, dishonesty, wilful default or bad faith on the part of a director.
During the year, the Company paid a premium in respect of a contract insuring the directors and officers of the Company and any related
body corporate against a liability incurred as a director or officer to the extent permitted by law. This provides insurance cover for any
claim brought against directors or officers for wrongful acts in connection with their positions. The insurance provided does not extend to
claims arising from fraud or dishonesty and it does not provide cover for civil or criminal fines or penalties imposed by law.
Capital structure
The capital structure of the Company is detailed in the schedule below, which reflects the total issued shares in the Company at
31 December 2014 and those held by trustees pursuant to the Company’s share plans.
Issued capital (including shares issued and held under the Deferred Bonus Share Plan)
Total shares in issue under the Deferred Bonus Share Plan
As at
31 December
2014
1,152,107,984
9,821,383
During the year 50,710,603 ordinary no par value shares were issued as fully paid in relation to the acquisition of Ampella Mining Ltd.
The issued capital of the Company at the date of this report is 1,152,107,984 ordinary shares.
The Company may from time to time pass an ordinary resolution (by a simple majority) authorising the Board to allot relevant securities
up to the amount specified in the resolution. The authority shall expire on the day specified in the resolution, not being more than
five years after the date on which the resolution is passed. Details of the share capital and reserves are set out in Note 17 to the
financial statements.
144
| Centamin plc Annual report 2014
Substantial shareholders
Based on shareholder disclosure and register analysis(1), the following shareholders had holdings of more than 3% (being the applicable
threshold adopted by Centamin in its Articles of Association, as though it were a UK issuer under the Disclosure and Transparency Rules
of the UK Financial Conduct Authority) in the issued share capital of Centamin:
Rank
1
2
3
4
5
Shareholder
Centamin
shares
% of
issued capital
Van Eck Global 183,887,526
Blackrock Inc 119,074,265
Josef El‑Raghy(2) 71,445,086(2)
Norges Bank Investment Mgt
42,780,087
Franklin Resources
39,054,132
15.96
10.34
6.20
3.71
3.39
(1) Information at 26 February 2015.
(2) Includes the El‑Raghy family.
The substantial shareholders do not have any different voting rights to other shareholders.
To the extent known to the Company:
a) no person other than the substantial shareholders detailed above has an interest of 3% or more in the Company’s capital.
The Company is not aware of any persons who, directly or indirectly, jointly or severally, exercise or could exercise control over
the Company; and
b) there are no arrangements, the operation of which may at a subsequent date result in a change of control of the Company.
Dividend policy
Centamin announced its dividend policy on 16 May 2014 which is based on the financial condition of, and outlook for, the Company
and its cash flow and financing needs. When determining the amount to be paid the Board will take into consideration the underlying
profitability of the Company. Specifically, the Board aims to approve an annual dividend within the range of 15‑30% of the Company’s
net cash flow after sustaining capital costs and following the payment of profit share due to the government of Egypt. The following
dividends have been declared in respect to the financial year ended 31 December 2014:
Interim dividend
An interim dividend of 0.87 US cents per share (US$0.0087) on Centamin plc ordinary shares (totalling approximately US$9.9 million)
was declared on 14 August 2014. The interim dividend for the half year period ending 30 June 2014 was paid on 3 October 2014 to
shareholders on the register on the Record Date of 5 September 2014.
Final dividend
A final dividend of 1.99 US cents per share (US$0.0199) on Centamin plc ordinary shares (totalling approximately US$23 million)
was declared on 23 March 2015. The final dividend for the financial year ended 31 December 2014 will be paid on 29 May 2015 to
shareholders on the register on the Record Date of 24 April 2015. The ex‑dividend date is 23 April 2015 for LSE listed shareholders and
22 April 2015 for TSX listed shareholders.
AGM
All shareholders are encouraged to attend our AGM on 18 May 2015, which will be held in London. This will be an excellent opportunity
to meet Board members and our senior management team.
Financial calendar
9 April 2015
13 May 2015
29 May 2015
9 July 2015
12 August 2015
8 October 2015
Q1 2015 Preliminary Production Results
Results for the quarter ended 31 March 2015
Dividend payment date
Q2 2015 Preliminary Production Results
Results for the quarter ended 30 June 2015
Q3 2015 Preliminary Production Results
11 November 2015
Results for the quarter ended 30 September 2015
Centamin plc Annual report 2014 | 145
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Shareholder information
Glossary
AIF
Annual Information Form
DBSP
Deferred Bonus Share Plan
ASIC
Australian Securities Investments Commission
DFO
diesel fuel oil
AN
ammonium nitrate
ARE
Arab Republic of Egypt
assay
qualitative analysis of ore to determine its
components
Au
chemical symbol for the element gold
Board
the Board of Directors of the Group
CA
Concession Agreement
cash cost per ounce
cash costs per ounce is a non‑GAAP
financial measure. Cash cost per ounce is a
measure of the average cost of producing
an ounce of gold, calculated by dividing
the operating costs in a period by the total
gold production over the same period.
Operating costs represent total operating
costs less administrative expenses,
royalties, depreciation and amortisation.
Management uses this measure internally
to better assess performance trends for
the Company as a whole. The Company
believes that, in addition to conventional
measures prepared in accordance with
GAAP, certain investors use such non‑GAAP
information to evaluate the Company’s
performance and ability to generate cash
flow. The Company believes that these
measures provide an alternative reflection
of the Group’s performance for the current
period and are an alternative indication
of its expected performance in future
periods. Cash costs is intended to provide
additional information, does not have
any standardised meaning prescribed by
GAAP and should not be considered in
isolation or as a substitute for measures
of performance prepared in accordance
with GAAP. This measure is not necessarily
indicative of operating profit or cash flow
from operations as determined under
GAAP. Other companies may calculate
these measures differently
cash and cash equivalents, bullion
on hand, gold sales receivable and
available‑for‑sale financial assets
cash and cash equivalents, bullion on hand,
gold sales receivables and available‑for‑sale
financial assets is a non‑GAAP financial
measure any other companies may calculate
these measures differently. Bullion on hand
is valued at the year‑end spot price
directors
the directors of the Board of Centamin plc
dump leach
a process used for the recovery of metal
ore from typically weathered low‑grade ore.
Blasted material is laid on a slightly sloping,
impervious pad and uniformly leached by
the percolation of the leach liquor trickling
through the beds by gravity to ponds.
The metals are recovered by conventional
methods from the solution
EBITDA
EBITDA is a non‑GAAP financial measure,
which excludes the following from profit
before tax:
i) finance costs;
ii) finance income; and
iii) depreciation and amortisation.
Management believes that EBITDA is a
valuable indicator of the Group’s ability to
generate liquidity by producing operating
cash flow to fund working capital needs and
fund capital expenditures. EBITDA is also
frequently used by investors and analysts
for valuation purposes whereby EBITDA is
multiplied by a factor or “EBITDA multiple”
that is based on an observed or inferred
relationship between EBITDA and market
values to determine the approximate total
enterprise value of a company. EBITDA is
intended to provide additional information
to investors and analysts and does not
have any standardised definition under
IFRS and should not be considered in
isolation or as a substitute for measures of
performance prepared in accordance with
IFRS. EBITDA excludes the impact of cash
costs and income of financing activities
and taxes, and therefore is not necessarily
indicative of operating profit or cash flow
from operations as determined under IFRS.
Other companies may calculate EBITDA
differently. The following table provides a
reconciliation of EBITDA to profit for the
year attributable to the Company
EDLFSP
Executive Director Loan Funded Share Plan
ELFSP
Employee Loan Funded Share Plan
EMRA
Egyptian Mineral Resource Authority
EOS
Employee Option Scheme
ESOP
Employee Share Option Plan
EGPC
the Egyptian General
Petroleum Corporation
EMRA
Egyptian Resource Mineral Authority
EU IFRS
International Financial Reporting Standards
as adopted by the European Union
FA
fatality
feasibility study
extensive technical and financial study to
assess the commercial viability of a project
flotation
mineral processing technique used to
separate mineral particles in a slurry, by
causing them to selectively adhere to a froth
and float to the surface
FRC
Financial Reporting Council
grade
relative quantity or the percentage of ore
mineral or metal content in an ore body
g/t
gram per metric tonne
indicated resource
as defined in the JORC Code, is that part
of a mineral resource which has been
sampled by drill holes, underground
openings or other sampling procedures
at locations that are too widely spaced
to ensure continuity but close enough to
give a reasonable indication of continuity
and where geoscientific data is known
with a reasonable degree of reliability. An
indicated mineral resource will be based
on more data and therefore will be more
reliable than an inferred resource estimate
inferred resource
as defined in the JORC Code, is that
part of a mineral resource for which the
tonnage and grade and mineral content
can be estimated with a low level of
confidence. It is inferred from the geological
evidence and has assumed but not verified
geological and/or grade continuity. It is
based on information gathered through
the appropriate techniques from locations
such as outcrops, trenches, pits, workings
and drill holes which may be limited or of
uncertain quality and reliability
IFRS
International Financial Reporting Standards
IOD
Institute of Directors
146
| Centamin plc Annual report 2014
JORC
Joint Ore Reserves Committee of
the Australasian Institute of Mining
and Metallurgy, Australian Institute of
Geoscientists and the Minerals Council
of Australia
LFSP
Loan Funded Share Plan
LTI
lost time due to injury
LTIFR
lost time injury frequency rate
material tailings
material that remains after all metals/
minerals considered economic have been
removed from the ore
MD&A
Management’s Discussion and Analysis
of the Financial Condition and Results of
Operations
mill
equipment used to grind crushed rocks to
the desired size for mineral extraction
mineralisation
process of formation and concentration of
elements and their chemical compounds
within a mass or body of rock
Moz
million ounces
Mt
million tonnes
MTIF
medical treatment injury frequency
ounce or oz
troy ounce (= 31.1035 grams)
Mtpa
million tonnes per annum
PGM
Pharaoh Gold Mines NL
probable
measured and/or indicated mineral
resources which are not yet proven, but
where technical economic studies show
that extraction is justifiable at the time
of the determination and under specific
economic conditions
SGM
Sukari Gold Mining Co.
net production surplus or profit share
revenue less payment of the 3% royalty
to Arab Republic of Egypt (“ARE”) and
recoverable costs
open pit
large scale hard rock surface mine
ore
mineral deposit that can be extracted
and marketed profitably
ore body
mining term to define a solid mass of
mineralised rock that can be mined
profitably under current or immediately
foreseeable economic conditions
ore reserve
the economically mineable part of a
Measured or Indicated mineral resource.
It includes diluting materials and allowances
for losses which may occur when the
material is mined. Appropriate assessments,
which may include feasibility studies, have
been carried out, and include consideration
of and modification by realistically
assumed mining, metallurgical, economic,
marketing, legal, environmental, social and
governmental factors. These assessments
demonstrate at the time of reporting that
extraction could be reasonably justified.
Ore reserves are sub‑divided in order
of increasing confidence into Probable
and Proven
Centamin plc Annual report 2014 | 147
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Shareholder information
Advisers
Registrar services
Jersey, Channel Islands
Computershare Investor Services (Jersey) Plc
Queensway House
Hilgrove Street
St Helier
Jersey JE1 1ES
Canada
Computershare
100 University Avenue
8th Floor
Toronto ON M5J 2Y1
Brokers
GMP Securities Europe LLP
5 Stratton Street
London W1J 8LA
Telephone: +44 (0)20 7647 2800
Public relations
Buchanan
107 Cheapside
London EC2V 6DN
Telephone: +44 (0)20 7466 5000
Auditors
PricewaterhouseCoopers LLP
1 Embankment Place
London WC2N 6RH
Telephone: +44 (0)20 7583 5000
148
| Centamin plc Annual report 2014
Forward‑looking statements
The report contains certain forward‑looking statements.
These statements are made by the directors in good faith
based on the information available to them up to the time
of their approval of this report and such statements should
be treated with caution due to the inherent uncertainties,
including both economic and business risk factors,
underlying any such forward‑looking information.
cautionary note regarding forward looking statements
This document contains “forward‑looking information” which
may include, but is not limited to, statements with respect to
the future financial or operating performance of Centamin plc
(“Centamin” or “the Company”), its subsidiaries (together “the
Group”), affiliated companies, its projects, the future price of
gold, the estimation of mineral reserves and mineral resources,
the realisation of mineral reserve and resource estimates, the
timing and amount of estimated future production, revenues,
margins, costs of production, estimates of initial capital, sustaining
capital, operating and exploration expenditures, costs and timing
of the development of new deposits, costs and timing of future
exploration, requirements for additional capital, foreign exchange
risks, governmental regulation of mining operations and exploration
operations, timing and receipt of approvals, consents and permits
under applicable mineral legislation, environmental risks, title
disputes or claims, limitations of insurance coverage and regulatory
matters. Often, but not always, forward‑looking statements can
be identified by the use of words such as “plans”, “expects”, “is
expected”, “budget”, “scheduled”, “estimates”, “forecasts”,
“intends”, “targets”, “aims”, “anticipates” or “believes” or
variations (including negative variations) of such words and phrases,
or may be identified by statements to the effect that certain actions,
events or results “may”, “could”, “would”, “should”, “might” or
“will” be taken, occur or be achieved.
Forward‑looking statements involve known and unknown risks,
uncertainties and a variety of material factors, many of which are
beyond the Company’s control which may cause the actual results,
performance or achievements of Centamin, its subsidiaries and
affiliated companies to be materially different from any future
results, performance or achievements expressed or implied by
the forward‑looking statements. Readers are cautioned that
forward‑looking statements may not be appropriate for other
purposes than outlined in this document. Such factors include,
among others, future price of gold; general business, economic,
competitive, political and social uncertainties; the actual results
of current exploration and development activities; conclusions
of economic evaluations and studies; fluctuations in the value of
the US dollar relative to the local currencies in the jurisdictions
of the Company’s key projects; changes in project parameters as
plans continue to be refined; possible variations of ore grade or
projected recovery rates; accidents, labour disputes or slow‑downs
and other risks of the mining industry; climatic conditions; political
instability, insurrection or war, civil unrest or armed assault; labour
force availability and turnover; delays in obtaining financing or
governmental approvals or in the completion of exploration and
development activities; as well as those factors referred to in the
“principal risks” section of the strategic report. The reader is also
cautioned that the foregoing list of factors is not exhausted of the
factors that may affect the Company’s forward‑looking statements.
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 statements, there may
be other factors that cause actions, events or results to differ
from those anticipated, estimated or intended. Forward‑looking
statements contained herein are made as of the date of this
document and, except as required by applicable law, the Company
disclaims any obligation to update any forward‑looking statements,
whether as a result of new information, future events or results
or otherwise. There can be no assurance that forward‑looking
statements will prove to be accurate, as actual results and future
events could differ materially from those anticipated in such
statements. Accordingly, readers should not place undue reliance
on forward‑looking statements.
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cEntAmin.com
Registered office
2 Mulcaster Street
St Helier
Jersey JE2 3NJ
T: +44 (0)1534 828 700
Egypt
361 EI‑Horreya Road
Sedi Gaber
Alexandria
Egypt
F: +44 (0)1534 731 946
T: +20 (0)3541 1259
Australia
57 Kishorn Road
Mount Pleasant
Western Australia 6153
T: +61 (0)8 9316 2640
F: +61 (0)8 9316 2650
E: info@centamin.com
F: +20 (0)3522 6350
E: centamin@centamin.com.au
E: pgm@centamin.com