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Annual Report 2019
INVESTING
FOR THE
FUTURE
CLEAR STRATEGY
MATERIAL UPSIDE
STAKEHOLDER RETURNS
FROM
DISCOVERY
TO LEADING
SHAREHOLDER
RETURNS
CENTAMIN’S AMBITION IS
TO BE THE PREMIUM LONDON
LISTED GOLD COMPANY,
MAXIMISING SHAREHOLDER
VALUE THROUGH RESPONSIBLE
MINING MULTIPLE HIGH-
QUALITY, LONG-LIFE ASSETS.
Jim Rutherford
Deputy Chairman
In order to prosper, it is important for a company to
work hand-in-hand with the community, returning value
to society as well as its owners and partners. This is the
tenet by which Centamin has operated for the past 25
years, building a responsible culture that values and
supports people; creating jobs, infrastructure and
opportunity, as well as developing our assets and
delivering strong shareholder returns.
2019 marked the tenth year of commercial production
at our principal asset, the Sukari Gold Mine, and what
we believe will be the first of many years to come for
Centamin and modern mining in Egypt’s mineral-rich
Eastern Desert.
OVERVIEW
HIGHLIGHTS
Centamin has strengthened its leadership,
delivering on an ambitious succession
programme reshaping the Board and
senior management teams
OPERATIONAL
GOLD PRODUCTION
(ounces)
2018: 472,418oz
480,528oz
CASH COSTS OF PRODUCTION(2)
(per ounces produced)
2018: US$624/oz
US$699/oz
US$943/oz
GROUP MINERAL RESOURCE
(Moz)
2018: 15.7Moz
15.3Moz
ALL-IN SUSTAINING COSTS
(“AISC”)(2)
(per ounces sold)
2018: US$884/oz
SUSTAINABILITY
GROUP LOST TIME
INJURY FREQUENCY RATE
(per 200,000 working hours) 2018: 0.06 0.29
ENVIRONMENTAL INCIDENTS
(major incidents)
2018: Zero
Zero
WATER RECYCLED
(% of seawater reused in closed circuit)
2018: 39%
76%
TOTAL DIRECT WORKFORCE
(persons; (% employed locally
to country of operation))
2018: 1,497 (95%)
1,542
(95%)
OVERVIEW
At a Glance
Where we Operate
Our Investment Case
Chairman’s Statement
STRATEGIC REPORT
Management Review
Market Review
Coronavirus (“COVID-19”)
Our Business Model
Our Stakeholders
Our Strategy
Strategy in Action
Key Performance Indicators
Sustainability Highlights
Operational Review
Exploration Review
Chief Financial Officer’s Review
Financial Review
Risk Management and Principal Risks
Viability Statement
CORPORATE GOVERNANCE
Governance Overview
Governance Statement
Our Board of Directors
Our Management Team
Our Governance Structure
Skills and Succession
Key Activities in the Year
Board Evaluation and Training
Relationship with Stakeholders
Compliance and Governance
Committee Report
Nomination Committee Report
Audit and Risk Committee Report
Remuneration Committee Report
FINANCIAL STATEMENTS
Independent Auditor’s Report
Consolidated Statement of
Comprehensive Income
Consolidated Statement of
Financial Position
Consolidated Statement of
Changes in Equity
Consolidated Statement of Cash Flows
Notes to the Consolidated
Financial Statements
02
04
06
08
14
18
20
22
24
26
28
34
38
42
46
52
56
66
82
86
88
92
96
98
104
107
110
114
117
124
131
140
167
172
173
174
175
176
FINANCIAL
REVENUE
(US$m)
2018: US$603m
EBITDA(2)
(US$m)
2018: US$258m
US$652m
CASH AND LIQUID ASSETS(2)
(US$m)
2018: US$322m
US$349M
US$284M
FREE CASH FLOW(2)
(US$m)
2018: US$63m
PROFIT AFTER TAX
(US$m)
2018: US$153m
US$173M
TOTAL DIVIDEND
(US$m)
2018: US$64m
US$74m
US$116M(1)
SHAREHOLDER INFORMATION
Mineral Reserve and Resource Statement 222
226
Company Legal Form and Structure
229
Advisers
230
Glossary
(1) On 21 April 2020, the 2019 proposed final dividend was replaced with the declared 2020 first interim dividend of
the same amount.
(2) Cash cost of production, AISC, EBITDA, Cash, bullion on hand, gold sales receivables, financial assets at fair
value through profit and loss (also known as Cash and liquid assets) and Adjusted free cash flow are non-GAAP
measures and are defined in the Financial Review non-GAAP measures section.
Centamin Annual Report 2019
01
> Strategic Report> Overview> Financial Statements> Corporate Governance> Shareholder Information
OVERVIEW
AT A GLANCE
OUR STRATEGIC
FRAMEWORK
OUR VISION
OUR VALUES
To create opportunity through gold mining.
OUR PURPOSE
To create lasting, mutual benefits for all our stakeholders,
including contributing to the economic development of
our host countries and driving an improved standard
of living.
Our values guide our day-to-day
workplace conduct and help us
to effectively deliver on our strategy.
Combined with our operational
standards this provides the
foundation of our culture.
Read more about our values on page 86
PROTECT
INVEST
LEARN
GROW
EDUCATE
CONTRIBUTING
TO THE DEVELOPMENT
OF OUR HOST
COUNTRIES
+
IMPROVED LIVING
AND WELLBEING
IN COMMUNITIES
=
MUTUAL
BENEFITS
OUR STAKEHOLDERS
Strong long-term relationships are paramount to the
success of the business. We seek to create lasting value
for our stakeholders throughout the business and
commodity cycle.
Employees
Communities
Governments
Shareholders
Suppliers, Contractors & Refiner
OUR BUSINESS MODEL
We seek to create long-term value through safe, innovative
and responsible gold exploration, development and
production. The Group’s business model – centred around
our high-quality, cost-advantaged asset base and sustainable
reinvestment in growth through exploration – gives us
confidence in continuing to deliver superior shareholder
returns as well as generate value for all our stakeholders.
Read more about how we create value on page 22
OUR PROCESSES & CONTROLS
Strong governance and effective risk management
underpin everything we do. Decision-making begins
with responsible conduct.
Read more about how we manage stakeholder
relationships on page 24
Read more about our risk management process on page 68
Read more about our Board and governance procedures on page 98
We feel an enormous responsibility to our stakeholders,
to create lasting mutual benefits for our stakeholders
through good corporate citizenship and operational
performance.
02
Centamin Annual Report 2019
AT CENTAMIN, EVERYONE IS A SAFETY LEADER
WITH THE GOAL TO COLLECTIVELY CREATE AN
ENVIRONMENT WHERE ALL EMPLOYEES ARE
EMPOWERED TO MAKE CHANGES, FIX PROBLEMS
AND RESPOND TO SAFETY ISSUES AS THEY ARISE.
OUR STRATEGY
Maximise free cash flow generation from responsible
mining, delivering long-term stakeholder returns.
• Maximise the value of our asset base
• Value over volume by focusing on improving margins and ounce profitability
• Stringent cost management and disciplined capital allocation, providing
financial flexibility
• Promote further growth both organically and through value-accretive
opportunities
• Maintain strong social and environmental license to operate
ASSET
QUALITY
FINANCIAL
FLEXIBILITY
SUSTAINABILITY
STAKEHOLDER
RETURNS
ACTIVE GROWTH
PIPELINE
Read more about our strategic progress on page 28
OUR OPERATIONAL STANDARDS
Honesty
Innovation
Dependability
Courage
Respect
Teamwork
Read how we are instilling and monitoring our culture on pages 90 and 91
Centamin Annual Report 2019
03
> Strategic Report> Overview> Financial Statements> Corporate Governance> Shareholder Information OVERVIEW
WHERE WE OPERATE
WORLD CLASS
MINE WITH VALUE
DRIVEN GROWTH
PIPELINE
Jersey (Head Office)
BATIE WEST PROJECT
BURKINA FASO
Located on the southeast border of Burkina Faso
Key Facts
• Total 593km2 licence holding; including exploitation
permit over 64km2
• 1.92Moz Measured & Indicated Resource
• Internal scoping study under review
• Limited fieldwork in 2019
Abidjan
DOROPO PROJECT
CÔTE D’IVOIRE
ABC PROJECT
CÔTE D’IVOIRE
Located on the northeast border of Côte d’Ivoire.
Exploration has delivered year-on-year Resource expansion,
while improving the geological blueprint across this highly
prospective land package.
Key Facts
• 2.44Moz Measured & Indicated Resource with significant
resource upside potential from the Kilosegui discovery
• 1,930km2 licence holding
• Mining: current resource suitable for open pit
• Processing: undergoing viability studies for CIL
processing plant
• Economic feasibility studies progressing in line with
resource growth
Located in western Côte d’Ivoire, along the underexplored
Archean-Birimian Contact zone (“ABC”), lending the acronym
to its namesake.
Systematic drilling and ground exploration have returned excellent
results on investment.
Key Facts
• 650koz Indicated Resource
• Significant resource upside within resource area and along the
Lolosso Gold Corridor mineralised signature
• 750Km2 licence holding
04
Centamin Annual Report 2019
Alexandria
Cairo
SUKARI GOLD MINE
EGYPT
Celebrating ten years of commercial production, Sukari has
produced 4.0 million ounces, generating US$730 million in
free cash flow and returned in excess of US$570 million to
shareholders to date
Key Facts
• Open pit and underground mine
• 12.5Mtpa processing plant and two auxiliary dump leach pads
• 15.1.0Moz Group Measured & Indicated Resource
(incl. reserves)
• 7.0Moz total Mineral Reserve, underpinning at least a 15-year
life of mine at Sukari
• 188Mt at a grade of 1.1g/t in Sukari Reserves
• 160km2 tenement with substantial resource upside
SUKARI REGIONAL DEVELOPMENT
EGYPT
IMPRESSIVE LOGISTICS. SCIENTIFIC EXPERTISE.
INNOVATIVE TECHNOLOGY. GOLD MAY HAVE AN
ANCIENT HISTORY HERE. BUT THIS IS 21ST
CENTURY MINING AT WORK.
Visitor,
Sukari Gold Mine November 2019
Operating
mine
Development
Exploration
Advanced
Exploration
Head
Office
Regional
Office
Centamin Annual Report 2019
05
> Strategic Report> Overview> Financial Statements> Corporate Governance> Shareholder Information OVERVIEW
OUR INVESTMENT CASE
MAXIMISING
FUTURE
VALUE
THE SUKARI MINE HAS PROVIDED
SUPPORT TO THE MARSA ALAM CITY
COUNCIL, HEALTH AND EDUCATIONAL
SECTOR AND OUR YOUTH CENTRE.
THIS HAS NOT BEEN LIMITED TO LOGISTICAL
AND FINANCIAL CONTRIBUTION BUT
INTERACTION AND GUIDANCE FROM
PERSONNEL AT MANY LEVELS OF THE MINE,
INCLUDING THE COUNTRY MANAGER,
MR YOUSEF EL-RAGHY AND INDIVIDUALS
FROM THE SUSTAINABILITY, PROJECTS
AND MAINTENANCE DEPARTMENTS,
AND SEVERAL OTHERS, IMPROVING AND
ENABLING THE DEVELOPMENT OF OUR CITY.
Mr Said Hassanein,
Chairman of the Marsa Alam Youth Centre
We are well positioned amongst intermediate gold producers to generate
significant capital returns for shareholders, by nurturing our resources and
relationships, optimising our existing operations and investing in the future.
• Centamin is an established intermediate
gold producer, with premium listings
on both the London Stock Exchange
and Toronto Stock Exchange. We are a
FTSE 250 and FTSE4Good constituent.
100% of our shares are freely traded at
an average daily turnover in excess of
US$10 million in 2019.
• We discovered, developed and operate
the world class Sukari Gold Mine, which
has a current Life Of Mine (“LOM”) of
15 years and with significant resource
upside potential from within the 160km2
tenement, including the Horus Deeps
discovery in 2019.
• Our focus is on maximising free cash
flow(1) through responsible mining of
profitable ounces. Comprehensive life
of asset review is underway, including
independent optimisation studies across
all sections of the operation.
• Our robust financial strategy and
operational performance supports our
industry leading sustainable dividend
stream, with 2019 being the sixth
consecutive year returning surplus
cash to shareholders.
• We have recently transformed the
leadership team, expanding the
expertise, to optimally position the
Company for the next decade, or
“Sukari Phase 2”.
• Unique amongst its peers, Centamin
has no debt, no hedging, no streaming
and cash and liquid assets(1) of
US$379.2 million, as at 31 March
2020(2).
• Strong license to operate with
environmental, social and governance
at the core of our decision-making.
Near-term plans to construct the largest
solar solution of its kind to power a gold
processing plant, providing a partial
power solution, reducing demand
for fossil fuels. Substantial social and
economic contribution, including
US$474 million returned to the Egyptian
government in profit share and royalty
payments to date.
06
Centamin Annual Report 2019
RELIABLE
DIVIDEND
STREAM
ESTABLISHED
FOUNDATION
ROBUST
FINANCIAL
STRATEGY
RESPONSIBLE
CORPORATE
CITIZEN
Industry leading
dividend (by yield
and per ounce
produced)
Low-cost, long-life
asset supports a
sustainable long-term
shareholder and
stakeholder dividend
stream
US$570m distributed
to Centamin
shareholders
US$474m distributed
in profit share and
royalties to Egyptian
government
Sukari is a Top Ten
Tier 1 asset(3)
Strong, flexible
balance sheet
Industry leading
safety record
Ten year operational
track record
25 year exploration
driven growth
Life of mine >
15 years
Costs in the lower
half of the cost curve
Strong political
risk management
No debt; no hedging
Self-funded
organic growth
Re-investment to
sustain and grow
the core asset for
the future
Stringent cost
management
Significant direct
investment in
operating country
Strong emphasis on
workplace training
and development
Core ESG(4)
initiatives in motion
Committed to
achieving ESG
best practices
GROWTH
THROUGHOUT
THE VALUE
CHAIN
Resource upside
across the whole
asset base
Low-capital intensive
development
Maximising
operational
efficiencies
Improving free cash
flow(1) generation
through responsible
operation
>
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A STRONG TRACK RECORD(5)
Production (KOZ) & COST PROFILE (US$/OZ)
600
500
400
300
200
100
0
$1,500/oz
$1,200/oz
$900/oz
$600/oz
$300/oz
–
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020F
Production
Range
Cash Cost
AISC
(1)
(2)
Cash cost of production, AISC, EBITDA, Cash, bullion on hand, gold sales receivables, financial assets at fair value through profit and loss (also known as
Cash and liquid assets) and Adjusted free cash flow are non-GAAP measures and are defined in the Financial Review non-GAAP measures section.
Unaudited, as per Q1 2020 Report, published 21 April 2020. Audited cash and liquid assets of US$348.9 million
as at 31 December 2019
(3) Source: SP Global, based on 500koz pa and greater than ten-year Life Of Mine (“LOM”)
(4) ESG is an abbreviation for environmental, social and governance
(5)
2020 guidance as per Q1 2020 Report, published 21 April 2020.
Centamin Annual Report 2019
07
> Overview
OVERVIEW
CHAIRMAN’S STATEMENT
CHAIRMAN’S
STATEMENT
We continue to maintain focus on cost
discipline and achieving greater operational
efficiency, as the key margin drivers.
JOSEF EL-RAGHY
CHAIRMAN
08
Centamin Annual Report 2019
CENTAMIN HAS DEMONSTRATED
WHAT A CLEAR PLAN, PASSION
AND HARD WORK CAN ACHIEVE
AS WE HAVE DISCOVERED,
DEVELOPED, OPERATED AND
GROWN SUKARI INTO A WORLD
CLASS OPERATION AND A FIRST
OF ITS KIND IN EGYPT. WE DO
NOT TAKE FOR GRANTED OUR
ABILITY TO KEEP OPERATING
AND WE TAKE A RESPONSIVE
AND RESPONSIBLE APPROACH
TO OUR BUSINESS WHILST
PRIORITISING THE HEALTH
AND SAFETY OF WORKERS,
FAMILIES AND COMMUNITIES.
Dear Shareholders,
On behalf of the Centamin Board,
I would like to present to you the
2019 Annual Report.
In the past few months, the world has
come together to try to safely navigate
the threats presented by the coronavirus
(“COVID-19”) pandemic. We hope that
you and your loved ones are safe and
well as we all adapt to living in these
unprecedented times.
People
Centamin’s strategy is to maximise free
cash flow generation through responsible
mining, delivering long-term stakeholder
returns. Successful execution of our
strategy starts with our people. The
Company has undergone a tremendous
step-change in leadership, reflected in
the strong performance at the end of
2019 and the solid start to 2020. In the
past two years, investing in people has
been a priority for the Company, including
attracting high-calibre individuals and
ongoing development of our existing
workforce, to further improve our
technical expertise.
Though such transformational change
has occasionally brought some periods
of inconsistency as individuals and
ideas bed into our structure and culture,
Centamin is pleased that the workforce
recruitment is largely complete and now
the emphasis is on embracing innovation
and adopting technologies suitable for
our business.
Our number one priority is the health,
safety and wellbeing of our direct and
indirect workforce, followed by our host
communities. Whilst we are pleased to
report there are no cases of COVID-19
on-site and operations have been largely
uninterrupted, there remains much
uncertainty around true impacts and
duration. Centamin is committed to
operating in line with our strict corporate
response plans and heightened measures
for as long as required to keep our people
safe and operations secure.
Governance
Centamin has a strong and diverse
Board. As the Company positions itself
for the next decade of growth, we have
delivered against the ambitious Board
succession programme announced
in 2018, ensuring we have the right
composition of individuals. This has
been transformational, including seven
Board appointments and five Board
retirements. In 2019, we were delighted
to appoint Dr Sally Eyre (10 April 2019),
Dr Catharine Farrow (2 September 2019),
Marna Cloete (2 September 2019) and in
2020, James “Jim” Rutherford (effective
1 January 2020) as independent Non-
Executive Directors.
Targeted succession remains at the
forefront in 2020 and on 6 April 2020 it
was a great pleasure to welcome Martin
Horgan as your new Chief Executive
Officer (“CEO”), concluding a competitive
six-month recruitment process. Martin
brings not only excellent technical,
commercial and financial experience but
also strong operational and leadership
skills. Combined with his deep knowledge
and understanding of gold mining across
Africa, I believe that he will make an
invaluable contribution to the Company.
BOARD SKILLS
BALANCE OF THE BOARD
Capital Markets
Legal & Finance
M&A Experience
Mining Industry
3
5
3
6
Non-Executive Director
Executive Directors
Independent Non-Executive Directors
1
2
8
BOARD MEMBERS BY GENDER
BOARD MEMBERS BY NATIONALITY
Female
Male
3
7
Australian
British
Canadian
Egyptian
South African
2
5
1
1
2
At the upcoming 2020 AGM on 29 June,
completing their nine-year tenures,
Non-Executive Directors Gordon “Ed”
Haslam and Mark Arnesen will not stand
for re-election. Their devoted service has
been of significant value to Centamin
and to me personally as there have been
many challenges on both a corporate and
personal level that they have guided me
through. Ed brought a wealth of crucial
Board experience, making him a truly
dependable Deputy Chairman, providing
wise counsel and support when required.
Mark’s vast experience in the resource
industry has been invaluable in shaping
and mentoring the finance team as we
transformed from a small explorer to a
sizeable gold producer. He has committed
his time and energy well in excess of what
is traditionally required of a non-executive
director. I sincerely thank them both for
their contributions.
Furthermore, I would like to announce
that I, Josef El-Raghy, will not be standing
for re-election at the 2020 AGM. It has
been an honour and pleasure to serve as
a director of your Company for the last
18 years. Centamin is well placed for the
next phase of growth, and I have all the
confidence in Jim Rutherford, who will
step into the role of Chairman following the
2020 AGM, to guide this Company to even
greater success.
Jim and I have worked closely together
during the last few months, completing
a comprehensive handover process.
Jim comes with over 25 years’
experience in investment management,
investment banking and a multitude of
other capital market skills, along with
a deep understanding of the global
mining industry. His independent views
will provide additional value to the
evolved Board.
Centamin Annual Report 2019
09
> Strategic Report> Overview> Financial Statements> Corporate Governance> Shareholder Information OVERVIEW
CHAIRMAN’S STATEMENT
CONTINUED
There were some key Executive changes
in 2019. Our longstanding colleague,
Andrew Pardey, stepped down as CEO
in October. His eleven-year tenure was
instrumental in placing Centamin where
it is today. Andrew joined us as Sukari
General Manager, working under Trevor
Schultz in building Egypt’s first modern
gold mine. Present at the first gold pour,
Andrew led his team through growth and
expansion to the Tier 1 gold operation it is
today. Along his journey he progressed to
Chief Operating Officer (“COO”) and finally
CEO. Thank you, Andrew for all your hard
work and dedication.
Following Andrew’s retirement, Ross
Jerrard, Chief Financial Officer (“CFO”),
was appointed interim CEO. Ross
provided excellent leadership, keeping
Centamin focused during challenging
circumstances, as we navigated an
unsolicited corporate approach and the
ongoing global pandemic. Ross’s calm
and measured management is a valued
asset to the Company. Following Martin’s
appointment, Ross is focused on his role
and responsibilities as CFO and Executive
Director on the Board.
Prioritising Stakeholders
Collectively we have developed, operated
and grown Sukari into a world class
operation and a first of its kind in Egypt.
This success underpins Centamin’s
industry leading shareholder returns and is
the foundation of local employment, direct
financial and infrastructure investment in
Egypt, as well as to our developing hubs in
Côte d’Ivoire and Burkina Faso.
Our performance in 2019 has seen
the Company mature and consolidate
its position as one devoted to creating
opportunity through gold mining. Gold
production was 480,528 ounces,
broadly in line with the lower end of
guidance (490,000 ounces). Strong cost
management and disciplined capital
allocation delivered AISC of US$943
per ounce sold, comfortably within our
guidance range. The Group generated
strong free cash flow of US$74.3 million,
a 17% improvement on 2018.
On 14 January, announced in the Q4 2019
Results, the Board proposed a final 6 US
cent per share dividend, bringing the 2019
total dividend to 10 US cents per share
which equates to returning US$115.8
million to shareholders of surplus cash.
This is an 82% increase on the 2018 total
dividend. Our ability to make such strong
returns for our shareholders lies in the
core strategy of putting our stakeholders
first, a strong balance sheet and an
effective robust financial strategy.
Given the unprecedented global situation
with COVID-19, regulators, governments
and public health authorities have
issued varying directives which have
impacted the timing and structure of
2020 AGMs. As such the opportunity for
shareholders to approve the proposed
2019 final dividend could not go ahead
with the previously announced timetable.
After much consideration, and in order
to ensure the dividend payment was
made to shareholders in May 2020, the
Board resolved to declare a 2020 first
interim dividend to replace the 2019
final dividend. The 2020 first interim was
paid on 15 May 2020, for 6 US cents
per share (US$69.4 million), the same
quantum as the previously proposed 2019
final dividend and will not be subject to
shareholder approval.
Our ability to generate superior returns
for our owners and partners is only made
possible by the fundamental strength of
the relationships with all of our stakeholder
groups. On behalf of the Board, I would
like to thank the Egyptian Mineral
Resource Authority (“EMRA”), not only for
their support during 2019, but also for the
last ten years in particular, which with their
guidance has seen Egypt placed firmly
on the map as a country with immense
opportunity to become a leading gold
producer. We believe that Sukari is the
first of several Tier 1 gold assets which will
benefit Egypt for generations to come. In
addition to employing and training 2,249
Egyptians, cash flow generated from gold
production in 2019 resulted in US$107
million being distributed to Egypt in profit
share and royalties.
Positioned For Growth
Given the current volatility in world stock
markets, brought on in large part by the
COVID-19 outbreak, Centamin is well
positioned having no debt, unhedged
and US$379.2million(1) (2) in cash and
liquid assets(3), providing full exposure to
the gold price. I have frequently stated
a strong balance sheet and stringent
cost management as key to sustaining
a robust business throughout the cycle.
10
Centamin Annual Report 2019
Thank You
I would like to take this opportunity to
personally thank my Centamin colleagues,
friends and family. I am grateful to have
worked with you and achieved what we
have together. We have demonstrated
what a clear plan, passion, and hard work
can achieve. The future opportunities for
Centamin, and all its stakeholders, are
endless. You have the skills, assets and
leadership and I look forward to following
and supporting your future successes.
Nothing would have been possible without
our stakeholders. Together, our shared
vision is only the beginning for Centamin
and Egypt’s growing presence in the gold
industry. Thank you.
By order of the Board, for and on behalf
of Centamin plc.
Josef El-Raghy
Chairman
18 May 2020
The Company is constantly looking at
ways to further identify cost-savings,
improve key operating metrics and social
improvements to those that work with
and around us.
The Board is acutely aware of the quality
and opportunity within the Company
portfolio of assets, which has attracted
the attention of other corporate entities,
including the unsolicited approach by
Endeavour Mining in late 2019. Your
Board is in favour of risk diversification,
but as disciplined capital allocators,
we believe it is important to be value
investors first. As a shareholder myself, I
recognise the past two years have been
frustrating as our market valuation has
at times been impacted by short term
performance inconsistencies during a
period of change, as well as being in an
outperforming gold market. Regardless
of short-term performance setbacks we
have always adhered to our core principle
of paying cash dividends to shareholders
bi-annually which we have now done
for six consecutive years. The Board is
aligned that the best way to generate
substantial sustainable returns for
shareholders is through long-term organic
investing and the acquisition of value-
accretive assets.
OUR ABILITY TO CREATE
LONG-TERM VALUE IS
UNDERPINNED BY THE
QUALITY OF OUR ASSETS.
DISCIPLINED CAPITAL
ALLOCATION,
ENVIRONMENTAL,SOCIAL
AND GOVERNANCE IS
ROOTED AT THE CENTRE
OF OUR DECISION
MAKING FRAMEWORK.
Martin Horgan
Chief Executive Officer
(1) Unaudited, as per Q1 2020 Report, published 21 April 2020. Audited cash and liquid assets of US$348.9 million as at 31 December 2019
(2) Before 2020 first interim dividend distribution of US$69.4 million on 15 May 2020
(3)
Cash cost of production, AISC, EBITDA, Cash, bullion on hand, gold sales receivables, financial assets at fair value through profit and loss (also known
as Cash and liquid assets) and Adjusted free cash flow are non-GAAP measures and are defined in the Financial Review non-GAAP measures section.
Centamin Annual Report 2019
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> Strategic Report> Overview> Financial Statements> Corporate Governance> Shareholder Information STRATEGIC REPORT
A CLEAR
STRATEGY
FOR FUTURE
GROWTH
STRATEGIC REPORT
Management Review
Market Review
Coronavirus (“COVID-19”)
Our Business Model
Our Stakeholders
Our Strategy
Strategy in Action
Key Performance Indicators
Sustainability Highlights
Operational Review
Exploration Review
Chief Financial Officer’s Review
Financial Review
Risk Management and
Principal Risks
Viability Statement
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20
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24
26
28
34
38
42
46
52
56
66
82
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Centamin Annual Report 2019
SUKARI IS HOME TO EGYPT’S ONLY MODERN
GOLD MINE, WHICH INCLUDES AN EXTENSIVE
UNDERGROUND OPERATION. A SUBTERRANEAN
WORLD WHERE TALENTED PEOPLE WORK
WITH SKILL, FOCUS AND DETERMINATION.
>
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UNCOMPROMISED
COMMITMENT TO DRIVE
OPERATIONAL EFFICIENCIES
In 2019, Centamin commenced independent optimisation
studies across all sections of the Sukari Gold Mine as
part of a wider holistic life of asset review, reflecting
on the knowledge and experience from ten years of
operation and ensuring the mine is positioned and
operated with excellence for the future.
Centamin Annual Report 2019
13
> Overview> Financial Statements> Corporate Governance> Shareholder Information
STRATEGIC REPORT
MANAGEMENT REVIEW
MANAGEMENT
REVIEW
14
14
Centamin Annual Report 2019
Centamin Annual Report 2019
WE HAVE MADE A GOOD START TO 2020
WITH PRODUCTION ON TRACK. THE GLOBAL
UNCERTAINTY AROUND THE IMPACT OF COVID-19
HAS CREATED A LOT OF VOLATILITY IN THE
MARKETS, RESULTING IN INCREASED SAFE-
HAVEN INVESTING. OUR CLEAN BALANCE SHEET
WITH NO DEBT NOR HEDGING OFFERS PURE
EXPOSURE TO THE GOLD PRICE.
ROSS JERRARD
CHIEF FINANCIAL OFFICER AND EXECUTIVE DIRECTOR
Centamin’s clear strategic focus
is on the production of profitable
ounces, improving margins and
maximising free cash flow.
Acting as interim CEO and managing the
Company during a transformational time
has been an honour and a privilege. It
is a great pleasure to welcome Martin
Horgan as Centamin’s new CEO and I look
forward to working with Martin to deliver
value to all our stakeholders through the
implementation of our consistent and long-
term strategy.
Good Business
For the past 25 years, Centamin has been
building a responsible culture that values
and supports environmental, social and
governance (“ESG”) matters. From ethical
code of conduct to decision-making,
ESG is critical to the sustainability of our
business. The key ESG improvement in
2019 has been effectively communicating
this culture, framework and progress.
To Centamin ESG is simply, good
business. Testament to this, Centamin
was recognised by the UK FTSE Series
and qualified to be a constituent of
the FTSE4Good Index. Our second
Sustainability Report will be published
on 8 June 2020 and will provide the
framework and detail of our commitment
to good corporate citizenship.
The safety, health and wellbeing of our
workforce and local communities are our
top priority every day. We instil a strong
safety culture and continue to strive for a
zero-harm workplace environment and I
was disappointed that our safety record
suffered a setback in 2019 with ten Lost
Time Injuries (“LTIs”) and the tragic loss
of a contractor in Côte d’Ivoire due to a
swarm of killer bees in February 2019.
Lost Time Injury Frequency Rate (“LTIFR”)
was 0.29 per 200,000 workplace hours in
2019. With each safety incident we learn
and adapt our conduct accordingly so as
to mitigate it from happening again.
In 2019, there were no major
environmental incidents recorded.
Improving on site water management
is an ongoing key focus, including
developing and implementing a new
Water Management Plan. In 2019 we set
the target to exit the year with a 50:50
salt water draw vs recycled circuit water
balance. I am pleased to report we beat
our target and achieved an average of 76%
circuit water recycled throughout the year.
Consequently, this meant more tailings
water was drawn from the tailings dam,
which increased the available capacity of
our active tailings storage facility (“TSF1”)
to the end of 2020. Construction of our
second tailings storage facility (“TSF2”) is
underway and on schedule.
Centamin is committed to leaving a strong
legacy for the benefit of our local, regional
and national hosts – it is with excitement
that we embark on significantly lowering
our carbon footprint through increased
operational efficiencies as well as the
construction of the Sukari hybrid solar
power plant. The Stage 1 30MW solar
plant is expected to replace 18-20 million
litres of diesel consumption per annum
through operation during daylight hours.
Over time it is expected this capacity
will be expanded and, importantly, it will
continue to operate for decades to come,
delivering sustainable energy beyond the
life of mine. The plant electrical upgrades
and earth clearing works are underway
in preparation for construction of the
solar plant, which has been temporarily
postponed due to health and safety
measures around COVID-19.
2019 Performance
Centamin matured as a business in 2019.
I am very pleased with the teams’ efforts
and focus, in particular delivering a near
record quarter in Q4 2019. A weaker Q3
2019, due to slower mining rates from a
section of the open pit, impacted annual
production performance of 480,528
ounces, which was a 2% improvement on
2018. Notwithstanding, all other guidance
metrics were delivered within range.
In 2019, we significantly strengthened
our operational teams across all of our
assets, particularly with senior technical
managers. Through our workplace
development programmes, 2019
concluded with 57% of Group leadership
positions held by nationals, as we look to
nurture and promote indigenous talent.
I am confident we have the right team,
mine plan and culture in place to deliver
future performance.
We delivered another strong financial
performance in 2019, which further
benefited from improved gold prices.
Revenues increased by 8% to US$652
million and underlying EBITDA(1) increased
10% to US$284 million with a 43%
margin. Profit after tax increased 13%
to US$173 million. Operating cash flow
increased 11% to US$249 million and
Group free cash flow(1), after a 14%
increase in profit share paid to EMRA,
improved 17% to US$74.3 million.
Through strong cash management and
disciplined capital allocation, we have
built a stronger financial position, with
US$379.2 million(2) in cash and liquid
assets(2) (4) at 31 March 2020, after
distributing in excess of total US$570
million to shareholders in cash dividends,
and US$474 million in profit share and
royalty payments to Egypt, to date.
Unique amongst our peers, Centamin has
never had debt, hedging nor streaming
in place, maximising the strength and
flexibility of the balance sheet today and
offering shareholders pure gold exposure
throughout the cycle.
With our disciplined approach to capital
allocation and responsibility as custodians
of shareholder invested capital, we are
proud of our established track record of
returning surplus cash to shareholders
– as well as investing in both sustaining
the business and self-funding investment
opportunities. Our commitment to
shareholder returns is core to our
strategy, as demonstrated with our
six-year dividend stream.
Investing For The Future
Our strong balance sheet and future
cash flow potential enables significant
capital to be re-invested in the business
for sustainability and future growth, as
well as maintaining industry leading
shareholder returns. This year and 2021
will see Centamin invest further in value
driven projects, transforming Centamin
for the future – including substantial
upgrades to the underground, increased
brownfield exploration and integrating
solar power at Sukari.
In the second half of the year, a series
of optimisation studies, across all facets
of the mine, commenced, with a focus
on long-term planning and identifying
cost-saving, operational efficiency and
improved productivity opportunities. These
studies are underway and have already
begun to identify potential cost-saving,
performance enhancing opportunities
and social improvements, including
improvements to open pit operations,
process plant productivity and on site
camp facilities, which are budgeted for
implementation in 2020. We expect
the review to be completed during the
second half of 2020 and look forward to
updating stakeholders on any material
developments in due course.
Exploration
During 2019 the discovery of Horus
Deeps was made at Sukari, an exciting
target which is located 300 metres below
the current underground infrastructure
of two high-grade shallow dipping
structures. Mineralisation was similarly
intersected below the Ptah and Amun
zones, indicating that the structure
extends to both the north and south.
A surface step-out drill programme is
underway in 2020, at 250 metre spacing
which will tie into the current seismic
programme, increasing the resource
potential and geological understanding
across the tenement.
Centamin Annual Report 2019
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> Strategic Report> Overview> Financial Statements> Corporate Governance> Shareholder Information STRATEGIC REPORT
MANAGEMENT REVIEW
CONTINUED
FOR THE PAST 25 YEARS
CENTAMIN HAS BEEN
BUILDING A RESPONSIBLE
CULTURE THAT VALUES AND
SUPPORTS ENVIRONMENTAL,
SOCIAL AND GOVERNANCE
(“ESG”) MATTERS.
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Centamin Annual Report 2019
In 2019 we commenced a small-scale
regional exploration programme outside
the mine gate, though within the larger
Sukari tenement. There are several
underexplored known deposits, all
within trucking distance to our process
plant. A 2D geoseismic programme
was completed during 2019. Initial
data interpretation is very encouraging,
identifying multiple potential gold systems
and exploration targets for further
investigation during 2020 and beyond.
We have over 3,000km2 of exploration
ground across some of West Africa’s
most prolific producing gold belts. Our
combined West African resource has
grown to over five million Measured and
Indicated ounces, all located within 250
metres from surface. After nine months
of drilling, the exploration team increased
the Doropo Project resource by greater
than 20% and made the significant
Kilosegui discovery. We believe this could
be the source of significant resource
growth and is a priority exploration target
for 2020, ahead of progressing feasibility
infrastructure conceptual layouts.
Outlook
The world is ever-changing and it is
important we continue to evolve with it.
As people, and as an organisation, globally
we find ourselves working together more
than ever to navigate the challenges that
have and will continue to affect us all with
the global spread of COVID-19.
Our purpose and strategy remain clear
and consistent – create opportunities
for our stakeholders through value-
focused gold mining over volume –
and starting with 2020, we expect to
deliver year-on-year operational, financial,
exploration, environmental, social and
governance progress, and look forward
to communicating these developments to
you as the year progresses.
Our near-term focus is on driving margins
through value over volume decision
making. The forecast for 2020(3) is gold
production of 510,000–540,000 ounces
at an AISC(1) range of US$870–US$920
per ounce sold. Production is weighted
to the second half of the year, due to
the open pit mining sequence, with an
approximate split of 45:55. The open pit
will do most of the heavy lifting in 2020,
contributing 80% of the ounces we expect
to produce, as we are mining deeper into
the pit in Stage 4 and accessing higher
grade ore than in previous years, while the
underground focus is on infrastructure
upgrades to enhance future production.
Centamin has a very active growth pipeline
of opportunities. Today we find ourselves
in a strong position, looking back and
learning from our ten-year production
track record, in which to optimally position
ourselves to deliver sustainable returns for
at least the next 15 years, as underpinned
by our current gold reserve and resource.
At present, as caretakers and custodians,
our immediate focus is to navigate the
current risks associated with the COVID-19
pandemic and delivering our strategy
in 2020. We will update shareholders
with detailed medium-term forecasts for
2021 and beyond later in the year, in
conjunction with the completion of the
life of asset review.
Centamin is a resilient and responsibly run
business with zero debt and US$379.2
million in cash and liquid assets(1) (2), as
at 31 March 2020. I am confident in
our long-term strategy and our ability
to respond quickly in this difficult
environment. We continue to operate
diligently and invest prudently, and I
believe Centamin is both well equipped
to navigate these challenges and remains
well positioned for the future.
Ross Jerrard
Chief Financial Officer and Executive Director
18 May 2020
Sukari is an exceptional asset and as our
sole operating mine, currently dominates
our asset portfolio. In the near-term, the
best return on capital comes from our
ESG initiatives including the hybrid solar
power farm, employee training and targeted
reductions in reagent consumption. Results
driven exploration programmes aimed
at significant resource growth and target
generation across the portfolio and in
line with our development criteria drives
medium term value accretion.
We continue to look at strategic
opportunities that can add value to
shareholders. The Board is extremely
encouraged by Centamin’s Egyptian
government partner, EMRA’s launch of
a gold licence bid round for exploration
ground across Egypt. This is the first bid
round to be launched under the new tax,
rent, and royalty mining code. Whilst in its
infancy, we view this to be very positive for
the country and believe that Centamin is
strategically positioned with an unrivalled
operating track record, developed
workforce and established supply chain in
modern gold mining operations in Egypt.
Today
The first quarter of 2020 was a strong
start to the year with operational and
financial performance delivered ahead of
budget. The commitment and response by
our workforce to the COVID-19 pandemic
has been exceptional, and we would also
like to acknowledge the assistance and
support of the Egyptian government.
Our top priority is to safeguard the health
and wellbeing of our people, while taking
necessary action to protect our business.
Centamin has and will continue to
implement proactive measures to minimise
the impact to our people, business,
community and wider stakeholders.
We are closely monitoring the development
of COVID-19, including the potential
impact of any disruption to our supply
chain and gold exports. Our workforce,
partners’ and community safety and
well-being remain our very top priorities,
and our Board and Leadership team
are actively engaged to respond to any
developments as quickly as we can. To
date there has been no material impact
to our operations and there have been no
reported cases of COVID-19 on site.
THIS YEAR AND 2021 WILL BE BUSY AND EXCITING
YEARS AS WE INVEST IN VALUE DRIVING PROJECTS,
TRANSFORMING CENTAMIN FOR THE FUTURE.
(1) Cash cost of production, AISC, EBITDA, Cash, bullion on hand, gold sales receivables, financial assets at fair value through profit and loss (Cash and liquid assets)
and Adjusted free cash flow are non-GAAP measures and are defined in the Financial Review non-GAAP measures section.
(2) Unaudited, as per Q1 2020 Report, published 21 April 2020. Audited cash and liquid assets of US$348.9 million as at 31 December 2019.
(3) Centamin is closely monitoring the global COVID-19 pandemic and the Company guidance may be impacted if the workforce, operation or projects are disrupted
due to the virus or efforts to slow the spread of the virus.
(4) Before 2020 first interim dividend distribution of US$69.4 million on 15 May 2020.
Centamin Annual Report 2019
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> Strategic Report> Overview> Financial Statements> Corporate Governance> Shareholder Information STRATEGIC REPORT
MARKET REVIEW
MARKET REVIEW
As a gold miner, Centamin is impacted by the dynamics of the
gold market. Centamin maintains a no hedging policy and remains
firmly focused on extracting, processing and producing gold as
cost effectively as possible, in which to maximise margins.
2019 GOLD PERFORMANCE(1)
In 2019, the gold price performed
well, finishing the year up 18% - the
best performance since 2010. A
six-year trading high of US$1,557/
oz was in reached in September. The
average spot gold price for the year
was US$1,393/oz, comparable to the
Company’s average realised gold price
of US$1,399/oz, outperforming major
global bond and emerging market
stock benchmarks. The key drivers to
the 2019 gold price performance were
declining interest rates across developed
countries, mounting global economic
and geopolitical concerns (US-China
trade war, Brexit, US-Iranian tensions)
supported by increased investor
demand for gold-backed ETFs and
growing reserves from central banks.
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Centamin Annual Report 2019
UNIQUE AMONGST OUR PEERS,
CENTAMIN HAS NEVER HAD
DEBT, HEDGING NOR STREAMING
IN PLACE, MAXIMISING THE
STRENGTH AND FLEXIBILITY OF THE
BALANCE TODAY AND OFFERING
SHAREHOLDERS PURE GOLD
EXPOSURE THROUGHOUT THE CYCLE.
2020 OUTLOOK
HOW WE RESPOND
We find ourselves in unprecedented times
understanding and navigating the challenges
presented by the outbreak of COVID-19. Governments
are using substantial quantitative easing measures to
help stimulate economies, including lowering interests
rates close to zero in some developed countries.
Historically, when real rates have been negative,
gold’s average monthly returns have been twice as
high as the long-term average. Gold has historically
performed well for up to a two-year period following
policy transitions from tightening to easing.
Market consensus indicates a re-rating of the gold
sector, backed by macroeconomic conditions, vast
monetary stimulus, potential declining physical
demand, good investment demand as a safe-haven
investment class and diversification present strong
fundamentals for a rising gold price. Forecast are for a
weaker USD, further reductions in interest rates in the
first half of the year, higher inflation in the second half.
Persisting uncertainty-driven market volatility could
result in bouts of downward pressure on the gold
price as investors panic rush to cash.
We believe the best defence against market
fluctuations is by keeping a close focus on cash
management and stringent cost controls.
Centamin maintains a no hedging policy and
remains firmly focused on extracting, processing and
producing gold as responsibly and cost effectively as
possible. The Company has achieved an impressive
track record of positive free cash flow generation
against a rapidly changing domestic and global
economic environment, foreign exchange volatility and
commodity cycles, specifically gold and fuel price.
• Maintain strong balance sheet: US$379.2 million in
cash and liquid assets(2) (3), as at 31 March 2020,
and no debt or hedging
• Disciplined alignment of spend to cash flow
• Ongoing cost saving initiatives
• Maximise margins through stringent cost control
• US$456/oz AISC(3) margin, a 19% improvement
year-on-year
(1) Source: SP Global Market Intelligence, World Gold Council , Bloomberg.
(2) Unaudited, as per Q1 2020 Report, published 21 April 2020. Audited cash and liquid assets of US$348.9 million as at 31 December 2019.
(3) Cash cost of production, AISC, EBITDA, Cash, bullion on hand, gold sales receivables, financial assets at fair value through profit and loss (also known as
Cash and liquid assets) and Adjusted free cash flow are non-GAAP measures and are defined in the Financial Review non-GAAP measures section.
Centamin Annual Report 2019
19
> Strategic Report> Overview> Financial Statements> Corporate Governance> Shareholder Information STRATEGIC REPORT
CORONAVIRUS (“COVID-19”)
CORONAVIRUS
(“COVID-19”)
CENTAMIN TOOK EARLY ACTION TO PROTECT THE HEALTH,
SAFETY AND WELLBEING OF OUR EMPLOYEES AND COMMUNITIES
IN RESPONSE TO THE GLOBAL THREAT OF COVID-19 AND, IN
WHAT REMAINS AN UNCERTAIN ENVIRONMENT, WE BELIEVE WE
HAVE TAKEN STEPS TO MANAGE THE ISSUES THAT ARE WITHIN
THE COMPANY’S CONTROL.
Thus far in 2020, COVID-19 has
significantly impacted the world, presenting
an unprecedented medical, economic
and social challenge. Centamin has been
proactive in how it manages and mitigates
the impacts within its control. As of 18 May
2020, Centamin has no recorded cases of
COVID-19 on site and has experienced no
material disruption to operations, supply
chain or gold shipments. The Company has,
however, put in place contingency plans to
deal with various possible disruption in the
coming months.
At the centre of any decision is the health,
safety and wellbeing of our employees
and communities. We have stringent
safety protocols across all sites, including
clear operating standards on workplace
conduct. In response to COVID-19, early
action was taken at Sukari, in line with our
Severe Communicable Disease Outbreak
Management Plan and in accordance with
the advice of governments and health
authorities. These include the following
actions taken:
• Established social distancing distancing
and strict hygiene measures
• Established a robust multi-functional
response framework with a clear chain
of command
• Proactively engaged with the Egyptian
government, Health Authorities and the
City of Marsa Alam
• Ceased non-essential travel
• Extended on-site roster cycles supported
by clear fatigue management protocols
• Enabled employees to work from home
where possible
• Continue to educate the workforce on
the virus (symptoms and preventative
measures)
• Ceased non-essential visits and stringent
controls in place for essential visitors
• Established multiple mandatory
checkpoints (Marsa Alam airport,
community centre and mine gate) for
possible symptoms and travel history
screening for all visitors
• Quarantine requirements for any
individuals accessing site with rigid
hospital isolation protocols in place for
any suspected infected persons
• Ongoing supply chain assessment and
reviews to ensure the site can operate for
an extended period of time
Safely managing the mobility of our
workforce, in line with government and
public health advice, has been paramount
in mitigating the risk of spreading the virus.
Government imposed travel restrictions
on the movement of people are expected
to ease in the coming months. Until
the timing of those changes are fully
understood and global mobility stabilises
the Company has identified alternative
measures for varying scenarios.
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Centamin Annual Report 2019
Whilst the impact and potential duration of
the COVID-19 pandemic remains uncertain,
the Company has carried out scenario risk
analysis on the Group and the Company
believes it is well positioned to continue to
manage through these difficult times. As
the pandemic progresses we will continue
to monitor the global situation – closely
within our host countries Egypt, Côte
d’Ivoire, Burkina Faso, Jersey and the
United Kingdom – adapting our policies,
procedures and controls to minimise the
impacts that are within our control.
A COVID-19 Executive Committee has been
established to provide oversight during the
pandemic, supported by multifunctional
teams and a framework led by Risk and
Operations. At a minimum, the Board is
updated weekly, the Executive Committee
meets three times a week and the support
team meet daily, providing workforce
updates and supply chain assessment.
Supply Chain
We are supportive of the action being
taken by governments globally to address
the threat of COVID-19. As with many
countries globally, Egypt has temporarily
closed the national borders to commercial
air travel until further notice. The ports
and air freight borders remain open
for importing and exporting goods.
Understandably, supply chain logistics
have been impacted by the global
government imposed travel restrictions
on the movement of goods. Increased
logistical planning and flexibility has been
crucial in mitigating these impacts.
The domestic supply chain has not
been materially impacted, allowing
for transportation of domestic goods
in compliance with State curfews.
International essential supplies are
sufficiently stocked in to Q3 2020. As a
precautionary measure, successful efforts
have been made to further identify and
increase the stores of essential supplies.
However, if travel restrictions are extended
into H2 and/or critical supply disruptions
arise, operations could be affected.
Daily supply chain assessment is
conducted, monitoring stock and usage
levels, maintaining a risk schedule of
our current and prospective suppliers,
and supported by continuous open
dialogue with our key international and
domestic suppliers. Where a potential
risk to a supplier has been flagged, and
with all essential supplies, precautionary
measures have been taken to identify
alternative potential supply channels.
Gold Sales
There have been no material disruptions
related to gold shipments to our
longstanding refiner, Asahi Refining
Canada. Regular dialogue is maintained
with both Asahi and Brinks, our security
company whom take responsibility for the
gold at the mine gate.
Comprehensive scenario assessment
continues, with precautionary measures
in place, including utilising alternative
refiners, Brinks stockpiling gold shipments
and Centamin stockpiling gold produced.
Each scenario involves variable short term
but limited cost implications.
Further information on COVID-19 was
provided in our Q1 2020 report published
on 21 April 2020. We have also ensured
that where relevant in the document we
have referred to the potential impact of
COVID-19, which is recognised as a new
and emerging risk.
Craig Murray
Head of Risk
Key Areas Under COVID-19 Review
We have taken the below actions in response to the threats posed by the COVID-19 outbreak to minimise the potential risks which
arise through the pandemic and manage any wider implications where possible. Effective risk management supported by strong
reporting lines, maximises response time and more informed decision-making. Our collective crisis approach, maintaining close
dialogue with our workforce, community and suppliers has instilled a strong sense of teamwork and accountability to ensure
greater workplace wellbeing and minimal business disruption. Scenario risk analysis has been completed to identify potential
contingency plans to deal with possible disruption in the coming months.
POTENTIAL IMPACTS TO THE BUSINESS
OUR RESPONSE
Communication
Restricted or delayed communication during the
pandemic could negatively impact the effectiveness of
our response and response time, affecting our people
and the business
Established clear response reporting lines, including a COVID-19 Executive Committee
and COVID-19 support teams, liaising with local governments, communities, health authorities,
customers, contractors, suppliers and workforce
Structured communication on a daily, bi-weekly and weekly basis, accessing all levels
of the Group
Our People
At the centre of any decision is the health, safety
and wellbeing of our employees and communities
We educate and promote awareness of the virus with daily clear and transparent workforce
communication to alleviate uncertainty
Risks include:
Increased safety and hygiene protocols across all locations
1. Outbreak of the virus on site or within our local
communities, affecting the health and lives of our
people and the need to reduce or suspend operations
Implemented an optimised staffing plan, supported by enhanced fatigue management
processes focusing on physical and mental health. Includes extended roster cycles, revised
daily shift patterns, where required, and established on site rest camps
2. Government imposed restrictions to travel, affecting
Established work-from-home measures where possible
Our suppliers
and contractors
the mobility of our people on or off site which
can affect their and their families mental health,
workplace fatigue, and operational performance
Third party disruptions present a risk to the
business in the event of restricted goods and
services required to operate, including consumables,
food, water and health supplies
Domestic and international supply chain
logistics have been impacted by the global government
imposed travel restrictions on the movement of goods
Commitment of LE10 million to the Egyptian COVID-19 relief efforts and logistical support
to local communities
Dedicated team conducting daily supply chain assessment, monitoring stock and usage levels,
maintaining a risk schedule of our current and prospective suppliers, and supported
by continuous open dialogue with our key international and domestic suppliers
Increasing stores of essential international supplies, with sufficient stock in to Q3 2020 and
where possible further stockpiling, due to uncertainty around the duration of COVID-19 and
impacts on our suppliers
Where a potential risk to a supplier has been flagged, and with all essential supplies,
precautionary measures have been taken to identify alternative potential supply channels
Work closely with essential contractors to established agreed crisis planning and risk analysis
Non-essential contracts have been temporarily deferred as a safety precaution
Gold Sales
Disruptions to gold exporting and subsequent sales
would have an impact on cash flow
Disciplined cash management and capital allocation, including temporary deferral of
non-essential capital projects
Centamin has a strong financial position, making
this a low risk for six to twelve months
Close dialogue with refiner and security company
Monitoring of any impact on our liquidity and solvency considering increasing costs offset
by higher gold prices and other savings
Increased provisions to stockpile gold in the event of absolute border closure
Identified alternative routes to export gold and alternative refiners
In excess of 200,000 insitu ounces of low-grade stockpiles in the event mining has to cease
Centamin Annual Report 2019
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> Strategic Report> Overview> Financial Statements> Corporate Governance> Shareholder Information STRATEGIC REPORT
OUR BUSINESS MODEL
CREATING LONG-TERM VALUE
Centamin has been
creating long-term
value within Egypt for
three decades, working
in partnership with the
Egyptian government
and many local
businesses throughout
our supply chain to
develop Egypt’s modern
gold mining industry.
OUR ABILITY TO CREATE LONG-TERM
VALUE IS UNDERPINNED BY THE
QUALITY OF OUR ASSETS. DISCIPLINED
CAPITAL ALLOCATION, ENVIRONMENTAL,
SOCIAL AND GOVERNANCE IS ROOTED
AT THE CENTRE OF OUR DECISION-
MAKING FRAMEWORK.
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Centamin Annual Report 2019
WHAT WE RELY ON
WHAT WE DO
NATURAL RESOURCES
We use water and fuel to
operate and continue to identify
opportunities to minimise our
environmental footprint.
PROPERTY AND EQUIPMENT
Both the processing plant and open
pit mine involve a large equipment
fleet, plant and site infrastructure.
SKILLED WORKFORCE
AND EXPERIENCED
MANAGEMENT TEAM
We operate in jurisdictions
which provide good access
to educated workforce.
LICENCE TO OPERATE
We maintain active partnerships
with countries and communities
in which we operate.
STRONG FINANCIAL
MANAGEMENT
Disciplined cost controls and
efficient capital allocation enable
us to continuously invest in
longevity and growth of the
business, balanced with strong
shareholder returns.
EXPLORE
Our geologists, with the
support of technology,
systematically and
methodically explore
our highly prospective
landholdings.
15.3Moz
Measured and Indicated
Mineral Resource
WHAT SETS US APART
First mover advantage
We have extensive
understanding of the
economy, culture and
communities in Egypt
and a reputation as a
safe, ethical employer
– which we replicate
in other operating
jurisdictions.
OUR BUSINESS STARTS AND ENDS
WITH GEOLOGY. EXPLORATION IS AT
THE HEART OF EVERYTHING WE DO.
Pierrick Courderc,
Chief Geologist, West Africa
DEVELOP
MINE
PROCESS
Sukari is a large-scale,
low-cost open pit and
underground mine.
We take a modular
approach to maximising
cash flow and returns.
Sukari was built over
four stages to minimise
execution risk and
ensure more effective,
responsible capital
allocation.
12.9Mt
Processing throughput
at Sukari in 2019
94%
Open pit truck
availability
Strong talent
development programme
We have an established
training platform for
continuous on-the-job
training, development
of skills and career
progression.
Optimised capital
allocation
The underground mine
is contractor operated
by Barminco, whom
are responsible for
their own equipment,
optimising our use of
physical capital.
Our end product
is gold doré bars,
produced from a CIL
plant and small dump
leach operation.
All gold production
is sent on a weekly
basis to a refinery for
smelting into bullion.
470koz
Gold sold in 2019
Exploration upside
There is untapped
resource potential
across the portfolio.
Excellent geologists
and a result-driven
exploration model,
maintains an active
pipeline of priority
exploration targets. In
2019, three significant
discoveries were made.
VALUE CREATED
Through our operations, we
unlock value from our asset
portfolio, whilst maximising
free cash flow. With a mine
life in excess of 15 years
at Sukari, Centamin looks
forward to creating further
value for all stakeholders.
EMPLOYEES
1,542 People – US$39.6m
paid in benefits and salaries
COMMUNITIES
c.US$588k investment in
community development projects
SUPPLIERS AND CONTRACTORS
61% Sukari goods and
services from Egyptian suppliers
GOVERNMENTS
US$109.9m Group
direct payments to governments
ENVIRONMENT
Improved water use efficiency and
extended tailings storage capacity
SHAREHOLDERS
US$115.8 total dividend
Centamin Annual Report 2019
23
WHAT SETS US APART
> Strategic Report> Overview> Financial Statements> Corporate Governance> Shareholder Information STRATEGIC REPORT
OUR STAKEHOLDERS
UNDERSTANDING OUR STAKEHOLDERS
EMPLOYEES
GOVERNMENTS
Our purpose is to
create opportunities
for all our stakeholders
through gold mining.
To do this, we must understand
our stakeholder interests and needs,
while communicating our purpose.
Communication creates community
and with regular engagement with
our stakeholders we are able to create
mutual long-term value and success.
HOW WE ENGAGE
HOW WE ENGAGE
• Daily pre-start and toolbox meetings
• Personal development. Including
professional and managerial skills
• Code of conduct, improvement in
standards, welfare and human rights
• Grievance mechanisms and
whistleblowing platform
• Annual appraisals and ad hoc
performance reviews
• Voice of Sukari (launched in 2019), an
Employee Engagement Committee
• Regular visits to operational hubs
and operational leadership team visit
corporate head office in Jersey
• Regular formal and informal
engagement with respective ministries,
including Egyptian General Assembly
• Routine on-site representation from
EMRA representatives and audits under
the Concession Agreement terms
• Materiality assessment to ensure
objectives are aligned
• Transparent profit sharing, royalty,
permit, tax payments
• Direct job creation and indirectly
through the supply chain
• Meetings with counsel ministers in
Côte d’Ivoire
GOALS
GOALS
To better understand our employees’
changing needs and expectations, with
which to nurture a skilled and motivated
workforce
Create a safe and healthy workplace
Develop a highly skilled local workforce
Maintain a strong license to operate
in all our countries of operation
To share our vision and create mutual
benefits.
Meaningful economic contribution remains
a key benefit for our host countries
of operation
At Centamin, our first priority is
ensuring our workforce has a safe and
healthy workplace. This year our lost
time injury frequency rate was 0.29 per
200,000 hours.
Employees are competitively
remunerated and offered personal and
professional development training.
The creation of value has been
instrumental in Centamin’s operations
and will continue to be, as this
ultimately aligns with our strategic
objective of creating value for our
shareholders and the wider stakeholder
group. Maintaining good relations
allowed us to meet legal and regulatory
commitments. This maximised an
opportunity for operating permits to
continue as well as capital growth.
FOCUS ON MAKING CENTAMIN
A GOOD PLACE TO WORK
FOCUS ON JOB CREATION –
PAYING COMPETITIVE SALARIES
Find out more about our Board
engagement with stakeholders on
page 114 of the Governance Report
24
Centamin Annual Report 2019
COURAGE IS WHAT IT TAKES TO STAND UP AND SPEAK;
COURAGE IS ALSO WHAT IT TAKES TO SIT DOWN AND LISTEN.
Winston Churchill
COMMUNITIES
SHAREHOLDERS
SUPPLIERS,
CONTRACTORS
& REFINER
HOW WE ENGAGE
HOW WE ENGAGE
HOW WE ENGAGE
• Open dialogue with the Sustainability,
Security and Public Relations
departments
• Site tours of the operations
• Grievance mechanisms
• Third party community
perception studies
• Sustainability performance
• Local community and the local
government meetings with senior
management
• Financial contributions and
charitable donations
• Direct and indirect job creation
• Human rights, health and climate
change education
• Regular regulatory announcements and
press releases on material performance,
including quarterly operational and
sustainability reporting and biannual
financial reporting
• Established public market corporate
governance best practises
• Regular market presentations and
interactive conference calls
• Site visits
• One-on-one meetings, investor
conferences and open market dialogue
• Annual Report and Sustainability Report
• AGM attended by key Directors
• Engagement with proxy advisory groups
and shareholder stewardship teams
• Tendering and procurement procedures
• Grievance mechanisms and
whistleblowing platform
• Contractor induction and ongoing
training on Centamin code of conduct,
health and safety and operational
standards
• Contractor management protocols
• Routine education on Modern Slavery
Act, Anti-bribery and corruption polices
and the prevention of Modern Slavery
• Compliance audits
• Open dialogue and regular meetings
with on-site management and senior
management
GOALS
GOALS
GOALS
To work in partnership with our local
communities
To continuously improve lines of
communication
To make a lasting positive impact on the
communities in which we operate through
financial, logistical and educational support
To ensure our partners understand our
values and expectations, adhering to the
high standards we set for ourselves and the
code of conduct with which we operate
To better understand our partners
perspectives and businesses to evolve a
strong working relationship
Key to our communities is economic
development and at Centamin we strive
to support local communities with
education and welfare initiatives. Over
the year we have delivered new projects
focused on development of sanitary and
unpolluted water systems and aiding in
the construction of local facilities such
as schools and athletics grounds.
Sustainability related expectations and
climate change is at the heart of our
shareholders and ours. Continuous
dialogue has helped us set clear
corporate strategy, objectives, capital
allocation, operations and stakeholder
relations that have high standards of
ESG practices to benefit all parties.
A key issue for suppliers and contractors
is the use of locally procured goods and
services. To address this, Centamin
conducts regular competitive tender
processes to ensure mutually fair
and reasonable supply contracts. The
long life of the Sukari mine increases
the likelihood of negotiating mutually
beneficial contracts.
FOCUS ON COMMUNITY
SUSTAINABILITY THROUGH
INVESTMENT, EDUCATION
AND EMPLOYMENT
FOCUS ON CREATING LONG-TERM
SUSTAINABLE VALUE
FOCUS ON MAINTAINING
A TRUSTED TRACK RECORD
WITH SUPPLIERS, CONTRACTORS
AND REFINERS
Centamin Annual Report 2019
25
> Strategic Report> Overview> Financial Statements> Corporate Governance> Shareholder Information STRATEGIC REPORT
OUR STRATEGY
THE BOARD IS HIGHLY CONFIDENT IN CENTAMIN’S STRATEGY OF
MAXIMISING THE VALUE OF ITS ASSET BASE AND PROMOTING
FURTHER GROWTH BOTH ORGANICALLY AND THROUGH ACCRETIVE
OPPORTUNITIES WHICH CREATE VALUE FOR SHAREHOLDERS.
STRATEGIC PRIORITIES
ASSET
QUALITY
FINANCIAL
FLEXIBILITY
PERFORMANCE IN 2019
• Increased production (2% below
• Achieved lower end of cost guidance
guidance): 481koz
range: US$699/oz
• Significant Sukari brownfield discovery:
Horus Deeps, located 300m below
existing infrastructure
• Record plant throughput: 12.9Mt
• Open pit truck availability: 94%
• Processing plant utilisation: 95.2%
• Plant recoveries: 88.1%
• Improved free cash flow(1) generation:
US$74.3m
• Strengthened balance sheet, cash and
liquid assets(1) as at 31 December 2019:
US$348.9m
• Zero debt or hedging
• Capital expenditure of US$97.6m, in line
with budget
• Exploration investment of US$16.9m, in
line with budget
PRIORITIES GOING FORWARD
• Forecast increased production:
• Drive improved free cash flow
generation through stringent cost
controls and cost saving initiatives
510-540koz
• Reduce plant throughput: 12.3Mt
• Improve plant residence time
• Plant recovery of 88.1% on
12Mtpa minimum
• Reduce processing costs
• Centamin’s target is to manage and
spend the sustaining capital budget
as appropriate to mitigate the impact
of COVID-19 and in accordance with
achieving its forecasted production
targets and extending the life of its assets
PRINCIPAL RISKS
• Production estimates
• Political risk – Egypt
• Single project dependency
• Relationship with EMRA
• Reserve and resource estimates
• Tax exposure
• Political risk – Egypt
• Litigation
• Production estimates
• Gold price
26
Centamin Annual Report 2019
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SUSTAINABILITY IS A VITAL
CONSIDERATION AT ALL STAGES OF
THE MINE CYCLE AND A STRATEGIC
IMPERATIVE FOR THE COMPANY.
STAKEHOLDER
RETURNS
SUSTAINABILITY
ACTIVE GROWTH
PIPELINE
• Total shareholder dividend US$115.8m,
in excess of dividend policy
• Group direct payments to government
US$109.9 million
• Profit share US$87.1m to EMRA
• Royalties US$19.7m to the
Egyptian government
• Distribute a minimum 30% of Group free
cash flow(1) to shareholders in dividends,
paid bi-annually.
• The Board continues to review organic
and inorganic strategic opportunities in
line with the Company’s growth and cost
objectives
• Single project dependency
• Relationship with EMRA
• Tax exposure
• Political risk – Egypt
• Litigation
• Production estimates
• Gold price
• Reduced reliance on fossil fuels
• Reduced CO2 emissions
Employees:
• LTIFR of 0.29
• Applied new grievance mechanism
Environment:
• No major environmental incidents
• Completed 36MW(AC) hybrid solar farm
study, US$32m in capital allocated to
construction
• Improved water usage efficiency: 76%
recycled water, exceeding target of 50:50
Community:
• Awarded three geological scholarships
through established grants in the UK
and Egypt
• Community investment US$600,000
• LE10 million donation (US$635,000)
COVID-19 Egyptian relief(3)
• 15.3Moz Group resource, including
10.3Moz at Sukari
• 7.0Moz Group reserves (Sukari only)
• Completed 2D seismic survey, generating
significant exploration targets
• Significant Sukari near-mine discovery:
Horus Deeps high-grade structures
• 15% increase in resource(2) at
Doropo, including improved resource
categorisation
• Significant Doropo discovery, rapidly
developed to resource estimate
• Completed 16,000 metres drilling
at Cleopatra, confirming optimal for
open pit extraction
• Reduce LTIFR below 0.2, targeting
zero-harm workplace
• Evaluate potential for additional sources
of high-grade underground ore at Sukari
• Reduce reliance on fossil fuels through
• Target underground reserve growth in
solar farm project
excess of mining depletion
• Reduce CO2 emissions by improving
operational energy efficiencies
• Complete immediate term on-site and
• Target Inferred Resource conversion
through effective utilisation of exploration
budgets
Board succession planning
• Regional exploration programmes over the
• Training to improve equipment productivity
Sukari tenement
• 25% improvement in water usage
efficiency by targeting a TWR(4) of
15 million litres per day
• Improve employee work conditions:
building new accommodation and facilities
• Resource expansion and project
evaluation across West Africa
• Evaluate selective M&A opportunities with
the potential to develop low-cost projects
• Relationship with EMRA
• Exploration development success
• Political risk Egypt and West Africa
• Political risk – Egypt
• Reserve and resource estimates
• Political risk – West Africa
(1) Cash cost of production, AISC, EBITDA, Cash, bullion on hand, gold sales receivables, financial assets at fair value through profit and loss (also known as
Cash and liquid assets) and Adjusted free cash flow are non-GAAP measures and are defined in the Financial Review non-GAAP measures section.
(2) Measured and Indicated category.
(3) Announced commitment on 6 April 2020 and paid on 23 April 2020.
(4) In line with industry water efficiency standards and we have changed our water conservation targets to focus on total reused water to task (“TRW”).
Centamin Annual Report 2019
27
STRATEGIC REPORT
STRATEGY IN ACTION
We always strive to improve operational
efficiencies to ensure we preserve the
integrity of our assets – orebody,
equipment, human capital.
OUR
STRATEGY
IN ACTION
28
Centamin Annual Report 2019
S T A K E H O L D E R
R E T U R N S
S U S T A I N A B I L I T Y
F I N A N C I A L
F L E X I B I L I T Y
A S S E T
Q U A L I T Y
A C T I V E G R O W T H
P I P E L I N E
STAKEHOLDER
RETURNS
US$87.1m
Profit share payments to EMRA
As per the 55:45 split in the
Concession Agreement; this
changes to 50:50 on 1 July 2020
US$19.7m
Royalties to Egypt
3% net smelter return (NSR)
US$115.8m(1)
Total attributable dividend to
shareholders 82% increase on 2018
US$39.6m
Total employee benefits and salaries
900
Participants in the Sukari internship
programmes Including 244 three-
month advanced internships
(1) On 21 April 2020, the proposed 2019 final
dividend was replaced by a declared 2020
first interim dividend
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R E T U R N S
“ BEING THE FIRST EGYPTIAN GOLD MINE, WE BENEFIT
FROM WORKPLACE TRAINING AND INSTILLING STRONG
CORPORATE VALUES. WE TRAIN OUR WORKFORCE TO
SUSTAIN A CULTURE OF SAFETY AS A CORE PRIORITY.”
Centamin Annual Report 2019
29
> Overview> Financial Statements> Corporate Governance> Shareholder Information
STRATEGIC REPORT
STRATEGY IN ACTION
CONTINUED
SUSTAINABILITY
0.29
LTIFR, per 200,000 workplace hours
33.9CO2-e
per ton milled
Zero
Major environmental incidents
1,542
Total direct workforce
Total workforce including
contractors: 2,556
95%Total workforce is national
to the country of operation
US$126m
Value of goods and services
procured from local suppliers
76%Total plant recycled water usage
30
Centamin Annual Report 2019
S U S T A I N A B I L I T Y
“ WE AIM TO PREVENT, CONTROL AND MITIGATE
OUR IMPACT ON THE ENVIRONMENT AND HELP TO
EDUCATE OUR WORKFORCE AND LOCAL COMMUNITY
ON WAYS TO IMPROVE RESOURCE USAGE.”
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F L E X I B I L I T Y
“ EFFECTIVE CAPITAL ALLOCATION STARTS WITH
PORTFOLIO MANAGEMENT TO MAINTAIN A BALANCED
GROWTH PIPELINE. SUKARI IS OUR CAPITAL FOCUS,
WHILE STEADILY UNLOCKING VALUE FROM OUR HIGHLY
PROSPECTIVE WEST AFRICAN LAND PACKAGE.”
Centamin Annual Report 2019
31
FINANCIAL
FLEXIBILITY
US$284m
EBITDA(1)
43%
EBITDA(1) margin
US$173m
Profit after tax
US$249m
Operational cash flow
US$74m
Group free cash flow(1)
US$349m
Cash and liquid assets(1),
as at 31 December
(1) Cash cost of production, AISC, EBITDA, Cash,
bullion on hand, gold sales receivables, financial
assets at fair value through profit and loss (also
known as Cash and liquid assets) and Adjusted
free cash flow are non-GAAP measures and
are defined in the Financial Review non-GAAP
measures section.
> Overview> Financial Statements> Corporate Governance> Shareholder Information
STRATEGIC REPORT
STRATEGY IN ACTION
CONTINUED
ASSET QUALITY
15.3Moz
Group gold resource,
including 7.0Moz
gold reserve at Sukari
94%
Open pit truck availability
exceeding 90% target
95%
Processing plant utilisation
88.1%
Metallurgical recoveries
32
Centamin Annual Report 2019
A S S E T
Q U A L I T Y
“ UNIQUE TO OUR PEERS, CENTAMIN OFFERS
PURE GOLD EXPOSURE WITH INDUSTRY LEADING
DIVIDEND YIELDS, TESTAMENT TO THE QUALITY
OF THE LONG-TERM ASSET PORTFOLIO AND
EFFECTIVE FINANCIAL STRATEGY.”
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ACTIVE GROWTH
PIPIELINE
1
Brownfield
discovery,
Horus Deeps 300m below the
underground infrastructure
2
Greenfield
discoveries,
Kilosegui deposit at Doropo and
FarankaNana anomalies at ABC
20%
Mineral Resource upgrade at Doropo
To 2.44Moz M&I within the 7km
radius Main Resource Cluster
(“MRC”)
A C T I V E G R O W T H
P I P E L I N E
“ WE CONTINUE TO SUCCESSFULLY ADVANCE
OUR SELF-FUNDED EXPLORATION PROJECTS
LOCATED IN WEST AFRICA’S MOST GEOLOGICALLY
PROLIFIC GOLD BELTS, WHILST ACTIVELY ASSESSING
INORGANIC STRATEGIC OPPORTUNITIES.”
Centamin Annual Report 2019
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> Overview> Financial Statements> Corporate Governance> Shareholder Information
STRATEGIC REPORT
KEY PERFORMANCE INDICATORS
KEY
PERFORMANCE
INDICATORS
Centamin sets
Key Performance
Indicators (“KPI”)
each year and assesses
performance against
these benchmarks
on a regular basis.
Centamin is closely
monitoring the global
COVID-19 pandemic
and the Company
guidance may be
impacted if the
workforce, operation or
projects are disrupted
due to the virus or
efforts to slow the
spread of the virus.
GOLD PRODUCTION
(Ounces)
2019
2018
2017
2%
CASH COSTS OF
PRODUCTION(1)
(US$ per ounce produced)
480,528
472,418
544,658
2019
2018
2017
699
624
554
12%
Links to strategy:
Links to strategy:
Definition
Gold production is our primary output.
It is the cumulative number of gold ounces
produced from our operating asset, the
Sukari Gold Mine.
Definition
Cash cost of production(1) per ounce is a
non-GAAP 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.
Performance
Gold production for 2019 was 481k
ounces, a 2% improvement on the prior
year (2018: 472koz), driven by improved
feed grade delivered to the mill, and 2%
below guidance forecast.
Performance
Cash costs of production(1) were US$699
per ounce, which was at the mid-point of
the guidance range.
Outlook
Forecast gold production for 2020 of
510,000 to 540,000 ounces.
Outlook
Forecast cash costs in 2020 of US$630
to US$680 per ounce produced(1).
34
Centamin Annual Report 2019
ALL-IN SUSTAINING COST(1)
(US$ per ounce sold)
GROUP MINERAL
RESOURCES
(Ounces)
GLOBAL LTIFR
(per 200,000 hours worked)
2019
2018
2017
7%
943
884
790
2019
2018
2017
-3%
15.3
15.7
15.0
2019
2018
2017
0.06
380%
0.29
0.26
Links to strategy:
Links to strategy:
Links to strategy:
Definition
AISC(1), a non-GAAP measure, is an
extension of the existing ‘cash cost’
metric and incorporates all costs related
to sustaining production and in particular
recognising the sustaining capital
expenditure associated with developing
and maintaining the operation.
Definition
Extending mine life through brownfield
exploration and new discoveries from
greenfield exploration contribute to the
Company’s long-term growth prospects.
Definition
Global lost time injury frequency rate
(“LTIFR”), across Sukari, Burkina Faso
and Côte d’Ivoire, is the measure of any
employee workplace injury resulting in
time off, calculated per 200,000
hours worked.
Performance
AISC(1) were US$943 per ounce sold,
which was at the top end of the
guidance range.
Performance
Targeted exploration delivered increased
resource confidence and open pit grade
at Sukari and a 15% resource upgrade at
Doropo.
Performance
Group LTIFR was 0.29 per 200,000 hours
worked (2018: 0.06), due to seven Lost
Time Injuries at Sukari and a contractor
fatality at Doropo due to a killer bee attack.
Total of 7,014,484 hours worked (2018:
6,459,939).
Outlook
Forecast AISC(1) in 2020 of US$870
to US$920 per ounce sold, including
targeted savings of US$50 million in
mine production costs.
Outlook
Target underground reserve replacement
and resource growth through effective
utilisation of exploration budgets.
Outlook
Centamin remains committed to further
improving health and safety procedures,
practise and culture towards our zero-
harm target.
Centamin Annual Report 2019
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> Strategic Report> Overview> Financial Statements> Corporate Governance> Shareholder Information STRATEGIC REPORT
KEY PERFORMANCE INDICATORS CONTINUED
REVENUE
(US$ million)
2019
2018
2017
8%
MINE PRODUCTION
COSTS
(US$ million)
ADJUSTED EBITDA(1)
(US$ million)
652.3
603.2
675.5
2019
2018
2017
7%
351.7
328.1
307.6
2019
2018
2017
8%
280.1
258.8
309.8
Links to strategy:
Links to strategy:
Links to strategy:
Definition
Revenue is the total gold sales made
at the average realised gold price.
This is the top-line indicator. Performance
is driven by delivery of production
volumes and heavily depends on
commodity prices.
Definition
The costs associated with the day to
day operation of the mine, including the
open pit, underground, processing and
maintenance cost to produce and sell gold.
Performance is driven by compliance
to plan, operational productivity and
efficiency, as well as market fluctuations of
consumables and fuel.
Definition
Adjusted EBITDA is a non-GAAP
financial measure calculating earnings
before interest, taxes, depreciation and
amortisation, adjusted for non-current
assets non-current assets and profit on
financial assets at fair value through profit
or loss
Performance
Revenues of US$652.3 million
were up 8% on the prior year
(2018: US$603.2 million) with a 10%
increase in realised gold prices offset
by a 3% decrease in gold ounces sold,
due to timing of shipments.
Performance
Total mine production costs of US$351.7
million (2018:US$328.1m) beat budget
due to improved operational efficiencies,
and were up 7% on the prior year due
increased volumes mined and processed
and increased fuel and reagent costs.
Performance
Adjusted EBITDA increased by 8%
to US$280.1 million, as a result of a
2% increase in gold production and a
10% increase in average realised gold
price offset by a 7% increase in mine
production costs.
Outlook
Centamin’s target is to generate
revenue in accordance with forecasted
production targets.
Outlook
Centamin’s target is to control costs in
accordance with budgets and forecasted
production targets.
Outlook
Centamin’s target is to generate EBITDA in
accordance with budgets and forecasted
production targets.
Links to the shareholder approved Remuneration Policy and through the short term and long-term incentives
(1) Cash cost of production, AISC, EBITDA, Cash, bullion on hand, gold sales receivables, financial assets at fair value through profit and loss (also known as Cash and liquid assets)
and Adjusted free cash flow are non-GAAP measures and are defined in the Financial Review non-GAAP measures section.
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Centamin Annual Report 2019
(ADJUSTED)
FREE CASH FLOW(1)
(US$ million)
SUSTAINING CAPITAL
EXPENDITURE
(US$ million)
EXPLORATION
EXPENDITURE
(US$ million)
2019
2018
2017
17%
74.3
63.4
145.6
2019
2018
2017
-5%
85.1
89.2
82.5
2019
2018
2017
-4%
Links to strategy:
Links to strategy:
Links to strategy:
33.4
34.6
30.9
Definition
Group free cash flow is after Sukari profit
share payments and Group investing
activities, including exploration expenses
in West Africa.
Definition
The annual capital reinvested in the
business to maintain operations at existing
levels, including ongoing development of
the underground operations.
Definition
Non-sustaining expenditure to generate
growth through existing and future projects
in Burkina Faso, Côte d’Ivoire and Egypt,
in most instances through exploration
activities
Performance
Free cash flow of US$74.3 million
generated in 2019, up 17% on the
prior year (2018: US$63.4 million) due
to increased production volumes and
stronger gold price.
Performance
US$85.1 million spent in 2019 (2018:
US$89.2 million) of which US$8 million
was spent on underground exploration,
US$36.9 million on underground mine
development and US$40.5 million on
other sustaining capital expenditure, of
which US$26.6 million relates to rebuilds.
Outlook
2020 free cash flow generation is
forecast to be higher than 2019,
driven by stringent cost control, higher
production volumes and forecast
higher gold price environment.
Outlook
Forecast sustaining capital expenditure
for 2020 of US$95 million.
Performance
US$16.9 million was spent on West
African exploration (US$2.7 million at
Batie West Project, Burkina Faso and
US$14.2 million in Côte d’Ivoire (Doropo
and ABC Projects)), delivering significant
target generation, 20% increase in Doropo
resource and two significant discoveries.
US$16.5 million was spent at Sukari,
Egypt, making the Horus Deeps discovery,
adding Cleopatra underground resources,
regional prospect surface drilling and
completed 2D geoseismic programme.
Outlook
Forecast non-sustaining expenditure (inc
West Africa exploration expenses) for 2020 of
c.US$90 million, including US$23 million to
construct TSF2, US$7 million on underground
upgrades and US$19 million in West Africa.
Centamin Annual Report 2019
37
> Strategic Report> Overview> Financial Statements> Corporate Governance> Shareholder Information STRATEGIC REPORT
SUSTAINABILITY HIGHLIGHTS
2019 SUSTAINABILITY
HIGHLIGHTS
From exploration to extraction, construction to
closure, sustainability is a vital consideration at
all stages of the mine cycle and a key strategic
pillar for the Company. Our corporate objective
is one in the same as our sustainability objective,
to create opportunities through gold mining.
Centamin’s mining operations,
including exploration projects, generate
economic benefit for the countries and
communities where we operate through
payments to government, employee and
contractor wages, payments to suppliers
and contractors, vocational training,
community investment and academic
investment.
Responsible decision-making is at the
centre of our ability to deliver long-term
stakeholder value, starting with the
health and wellbeing of our workforce,
communities and environment.
Health and Safety
There was a notable improvement in safety
awareness and reporting in 2019. Both
leading and lagging indicators have been
introduced across the entire workforce
ensuring all employees are equipped with
the knowledge and responsibility to reduce
injuries and incidents through education,
awareness and responsibility to mitigate
risks and respond to instances where
the controls have been compromised.
Regular reviews of the site risk registers
to ensure all controls for known risks are
relevant, effective and new identified risks
are included. The site’s safety culture is
38
Centamin Annual Report 2019
structured to encourage improvement.
Most recently we introduced a ‘visible
safety leadership programme’ designed to
share experiences and knowledge among
the workforce which has helped reinforce
our commitment to safety.
In 2019, the Group LTIFR was 0.29 (Sukari
0.22) per 200,000 hours worked (2018:
0.06), with a total 7,014,484 of hours
worked (2018: 6,459,939). This included
10 LTIs and, as previously announced,
the sad loss of a drilling contractor due to
injuries sustained from a bee attack in Côte
d’Ivoire in February 2019.
The collective workforce at Centamin are
committed to further improving health
and safety, specifically targeting zero lost
time injuries in 2020. Further details of the
safety initiatives and employee welfare are
set out in the Sustainability Report.
Social Responsibility
Economic Contribution
The Egyptian government earned
US$19.7 million in royalty payments in
2019. As per the terms of the Concession
Agreement, Sukari cash flow generation
resulted in profit share payments of
approximately US$87.1 million made to
the Egyptian government.
For more detailed breakdown of Group
payments to government please refer
to the independent publication on our
website www.centamin.com.
LOOK BEYOND THE SCALE OF
SUKARI AND A VERY HUMAN
STORY EMERGES. THIS IS A
CLOSE-KNIT COMMUNITY WITH
A TRUE SENSE OF BELONGING.
Amr Hassouna
Commercial Manager
Workplace Development
Egypt has a highly educated population,
however, developing Egypt’s first modern
gold mine meant the access to mining
skilled workforce was limited and Centamin
would need to develop that training
platform to develop a skilled workforce.
Centamin employs a total of 2,556 people,
including contractors, of which 93% are
employed locally to their place of work.
Sukari is the Group’s largest operation,
employing 1,424 people, excluding
contractors, of which 95% are Egyptian
nationals and a total of 2,464 people,
including contractors, of which 93% are
Egyptian nationals.
Total paid salaries and benefits for 2019
were US$39.6 million.
Professional development programmes
are in place to develop and prepare
national employees for more senior and
leadership roles. Each expatriate position
has a succession plan attached to it with
national employees named as potential
replacements once they have completed
their respective development programmes.
Currently at Sukari there is an equal
number of expatriates and nationals
filling the Head of Department positions
and longer-term targets to establish
50% of the leadership group (managers,
superintendents and supervisors) being
Nationals as of the end of 2021 and an
overall expatriate reduction programme of
25% year-on-year.
Environmental
Water Management
The Company is committed to improving
water management. During 2019, Centamin
transitioned to align with the definitions in
the International Council for Metals and
Mining (“ICMM”) Guide for Water Report,
which aims to standardise water reporting
metrics definitions. Consequently, the water
efficiency values cannot be compared
with the metrics disclosed in previous
reporting years, however Sukari Gold Mine’s
previous performance was retrospectively
calculated to determine trends from 2019
onwards. In 2019, nearly 44% of all water
to task (i.e. used in processing) was reused
water; the reused water is predominantly
from the tailing storage facility. This was an
improvement of 56% in comparison to the
reuse efficiency in 2018.
Centamin is currently reviewing and
updating its site wide water balance at
Sukari. The updated water balance will
allow robust and defensible targets to
be established for water use and water
efficiency. A 2020 reuse target of
15 000 m3 per day was established.
Solar Power Plant
The planned 36Mw DC / 30Mw AC
peak power solar hybrid power plant
will significantly reduce Sukari’s carbon
footprint and is expected to reduce diesel
consumption for power by approximately
18–20 million litres per annum.
The new facility is expected to deliver
significant cost savings over the life of
operations at Sukari based on a capital
cost of approximately US$37 million, of
which approximately US$6 million was
committed in Q4 to upgrade the high
voltage reticulation on site. Centamin will
recover its initial capital outlay under the
cost recovery mechanism set out in the
Concession Agreement.
Engineering and earth-clearing works
have commenced in 2020 in preparation
for construction to commence when
COVID-19 travel restrictions have been
lifted and it is safe to have increased third
party traffic on and off site.
Centamin Annual Report 2019
39
> Strategic Report> Overview> Financial Statements> Corporate Governance> Shareholder Information STRATEGIC REPORT
SUSTAINABILITY HIGHLIGHTS CONTINUED
Tailings Storage Facility (“TSF”)
Centamin is committed to the highest
standards of tailings management. The
Company’s current downstream TSF at
Sukari (TSF1) will reach capacity in 2021.
TSF1 is regularly reviewed according to
regulatory and internal requirements, and
water samples taken from adjacent wells
and boreholes to monitor for seepage.
Centamin’s Geotechnical department
conducts internal and external technical
reviews of the TSF on a regular basis, as
well as being inspected by independent
consultants. The engineering and design
studies for TSF2, were completed
by Knight Piesold in Q4 2019 and
construction has commenced in 2020,
on schedule. This will extend tailings
deposition to beyond 2030.
Find out more on page 123,
in the Governance Report
Air quality
Occupational health and hygiene risks
are formally recognised in each area and
the necessary controls implemented to
mitigate these risks to our employees.
These areas are routinely reassessed
internally, on site, on a monthly basis and
by an external authority twice yearly to
ensure that the controls remain relevant
and effective.
Resultant of day-to-day operations on
the mine site, including underground,
is generation of dust, noise, minor spills
and odour, as well as high temperatures.
These measures are regularly monitored
and assessed in the context of employee
wellbeing, community impact and
environmental impact. Safety personal
protection equipment is required for
the workforce and visitors, including
high visibility clothing, protective
glasses, earplugs, masks, hardhats and
gloves. Additional mitigating measures
include regular dust suppression
and infrastructure upgrades(1) where
appropriate. In 2020, US$7 million of
growth capital has been committed to
substantial upgrades to the underground
ventilation system and infrastructure. This
will improve underground air quality and
temperatures, as the mine prepares to
expand at depth.
Steve Fuhri
Group Health & Safety Manager
(1) Updated as at 21 April 2020 with the Q1 2020 Report
40
Centamin Annual Report 2019
Governance
Annual General Meeting
The 2020 AGM will be held at 11.00
AM BST on Monday, 29 June 2020 at
2 Mulcaster Street, St Helier, Jersey,
Channel Islands.
To protect the health and wellbeing
on our employees, communities and
shareholders, and in accordance with
the UK and Jersey Government and
public health guidance on COVID-19,
the Centamin Board of Directors asks
shareholders not to physically attend
the AGM this year. Shareholders are
encouraged to complete and submit their
votes on-line and to submit any questions
to the registrar in advance of the AGM.
Details of the AGM are set out in the
Governance Report.
The 2019 Annual Report and Accounts
and Notice of AGM will be mailed to
shareholders in May. Details will also be
available on the Company’s website,
www.centamin.com.
Board and management changes
The Board evolution throughout
2019 reflect the Company’s ongoing
commitment to achieving the highest
standards of corporate governance:
• On 13 December 2019, Ross Jerrard,
CFO, was appointed as interim CEO
following the retirement of Andrew
Pardey
• On 6 April 2020, Martin Horgan
was appointed as CEO and Director,
following a thorough international search
process; Ross Jerrard resumed his sole
responsibilities as CFO
• During 2019, Dr Sally Eyre, Dr
Catharine Farrow, Marna Cloete and
Jim Rutherford were appointed as
independent Non-Executive Directors,
and Alison Baker retired
• Josef El-Raghy, Chairman, will not
stand for re-election at the upcoming
2020 AGM
• Completing a comprehensive handover,
Jim Rutherford will assume the
independent Non-Executive Chairman
position from 29 June 2020, following
the 2020 AGM
• Gordon Edward Haslam, Senior Non-
Executive Director, will not stand for
re-election at the upcoming 2020 AGM
• Mark Arnesen, Non-Executive Director,
will not stand for re-election at the
upcoming 2020 AGM
• Ongoing committee rotation and
refreshment, including the introduction
of new committees (Technical and
Sustainability)
The Company continues to strengthen
operational competencies across
the Group through development and
recruitment as the Company positions
itself for the next stage of growth:
• Extensive recruitment at site, including
General Manager, Operations Director,
Supply Chain Manager, Projects
Manager and Underground Manager
• Continued organisational restructuring
including the General Manager(s) to
report directly to the CEO
• Jeremy Langford, COO resigned to
pursue other interests
• Group Head of Risk appointed
Darren Lemasurier
Company Secretary
Find out more on page 130,
in the Governance Report
Centamin Annual Report 2019
41
> Strategic Report> Overview> Financial Statements> Corporate Governance> Shareholder Information
STRATEGIC REPORT
OPERATIONAL REVIEW
OPERATIONAL
REVIEW
WE PROACTIVELY WORK TO ENSURE HEALTH AND
SAFETY IS A MINDSET, NOT JUST A PROCEDURE.
JEREMY LANGFORD
CHIEF OPERATING OFFICER
Sukari Gold Mine, Egypt
2019 vs 2018
Our operational track record is one of the
key measures that marks our progress.
This is underpinned by an innovative
culture, striving to find improvements
across all sections of the mine in what
was a transitional year, encompassing
recruitment, innovation, operational
assessment, stakeholder engagement
and improving operational efficiencies.
Mineral Resources and Reserves
(effective 18 July 2019)
The Sukari updated Measured & Indicated
Mineral Resource estimate is 10.3Moz
at 1.01g/t gold(1). This represents an 6%
reduction in contained metal and a 5%
increase in grade. Exploration success,
mining depletion (including production, ore
to the dump leach pads and stockpiles)
and a change in the reporting assumptions
in respect of the use of a US$1,900/oz
pit shell to partially constrain the Mineral
Reserve Estimate were the predominant
drivers of the 0.7Moz net reduction from
the prior year (“year-on-year”).
The Sukari updated Proven and Probable
Mineral Reserves were estimated at 7.0Moz
at 1.1g/t gold, a reduction of 250koz of
gold year-on-year, or 3%, and the grade
is unchanged. The change in Mineral
Reserves was driven by mining depletion,
partially offset by ounce additions from
exploration. Furthermore, the updated
estimates reflect a movement of a part
of the underground Mineral Reserves to
open pit Mineral Reserves, resulting from
a change in reporting going forward.
42
Centamin Annual Report 2019
Exploration additions were predominately
from the lower levels of Amun, into the
Osiris flats and Horus Deeps. The Horus
porphyry setting provides significant
underground resource growth potential.
The 2020 underground exploration
programme is underway and is targeting a
minimum of reserve replacement.
Costs
Costs were delivered in line with 2019
guidance. Absolute cash costs of
production(3) for 2019 were US$333.0
million, a 15% increase year-on-year.
Absolute AISC(3) for gold sold was
US$439.3 million, a 5% increase
year-on-year.
Find more detail on the Mineral
Resource and Reserve Statements within
Supplementary Information, on page 222
Production
In 2019, operations comprised of open
pit, underground and dump leach. Gold
production was 480,528 ounces, a 2%
improvement compared to prior twelve
months in 2018 (“year-on-year”). This
was 2% below the annual guidance of
490,000 ounces, due to a weaker than
scheduled third quarter, reflecting reduced
ore mining in the open pit.
In 2020, annual production guidance is
within the range of 510,000–540,000
ounces, with approximately 55%(2) of
production weighted to the second
half of 2020. Optimisation studies
across the respective sections of the
Sukari operation are well underway,
identifying potential cost reduction and
performance enhancing opportunities
in relation to reducing operational costs,
increasing free cash flow margins, as
well as technical direction for medium
and long-term planning and capital
expenditure derivation. Ongoing focus on
improving operational efficiencies and
productivity metrics.
Unit cash costs of production(3) were
US$699 per ounce produced, a 12%
increase year-on-year, due to increased
tonnes mined and processed, and
increasing cost input pressures in fuel and
reagents. Unit AISC(3) were US$943 per
ounce sold, a 7% increase year-on-year.
In 2020, cash cost of production(3) is
expected to be between US$630–US$680
per ounce produced and AISC(3) between
US$870-US$920 per ounce sold.
Open Pit Mining
Total material mined was 78.4Mt, a 1%
increase year-on-year. Total ore mined
was 14.4Mt at an average grade of 0.8g/t,
this was a 38% reduction in tonnes year-
on-year and a 34% improvement in grade
year-on-year, predominantly driven by
mining in the higher-grade Stage 4 West.
The strip ratio was 4.5.
The open pit delivered 11.7Mt to the plant,
at an average milled grade of 0.9g/t. A
total 1.0Mt, at an average grade of 0.37g/t,
was delivered to the dump leach pads.
Stockpiles increased from 12.2Mt at
0.47g/t to 13.85Mt at an average grade
of 0.46g/t in 2019.
OUR OPERATIONAL STANDARDS
Honesty
• Say it as it is
• Proactive feedback yields
the best results
Innovation
• Strive for positive improvement
• Thinking outside the box
• Propose solutions to problems
Dependability
• Do what we say we will do
• Trust is built with consistency
• Deliver the plan
Courage
• Do what we know is right
• Accept mistakes, learn
and grow from these
Respect
• Accept new ideas even
if they appear different
• Treat others as we want
o be treated
• Respect the workplace;
respect the assets
Teamwork
• Engage and share
achievements
• Look out for each other
• Support decisions and advice
In 2020, the Stage 4 pit is the primary
source of ore, with increased Stage 5 pit
contribution in H2. Total open pit ore is
expected to contribute 80% of production.
Stage 5 stripping will continue throughout
2020, ahead of transitioning into Stage 5
ore mining in 2021.
The open pit is performing in line with
expectations and the focus is on resolving
the factors contributing to increased
dilution, along with improving overall
equipment effectiveness and managing
the geotechnical risk on both the western
and eastern walls, respectively. In 2020 a
Reutech MSR250 survey radar system will
be commissioned. The radar is mounted
on a mobile vehicle and measures pit wall
movement to monitor pit stability.
Underground Mining
Total ore mined was 1.1Mt at an average
total grade of 5.3g/t. This represented
a 12% decrease in tonnes year-on-year
and a 6% decrease in grade year-on-
year, predominantly a function reduced
equipment utilisation, which was due to
ventilation and access way constraints.
Underground infrastructure upgrades
commenced in early Q4 in the primary
decline and access ways, including
ventilation rehabilitation and improvements
to the emergency escapeway system, and
will continue throughout 2020.
Ore mined from stoping was 615kt at
7.0 g/t, a 17% decrease in tonnes year-
on-year and a 7% increase in grade
year-on-year. Approximately 7,660 metres
of development was completed in Amun
and Ptah, a 4% increase year-on-year,
with a focus on decline development,
in conjunction with ore drive and cross-
cut development. Ore mined from
development was 472kt at an average
grade of 3.2g/t. This was a 6% reduction
in tonnes and a 29% reduction in grade
year-on-year.
A total of 1,980 metres of development
was completed within Cleopatra, a 12%
reduction year-on-year, with a focus on
decline development and preparing drill
platforms. Development in mineralisation
delivered 93kt of ore at an average grade of
1.64g/t to the mill, producing a total 4,333
ounces and generating revenues of US$5.8
million offset against capital spend.
In 2020, approximately US$7 million(4)
of growth capital will be invested in
the underground operations, including
a material upgrade to the mine
infrastructure and ventilation system.
These upgrades are scheduled for
completion by the end of 2020. To
minimise the disruption to operations
and allow for a safe and time efficient
build, ore mining in the Amun will be
reduced by up to 300kt in 2020, with
Ptah providing the primary source of
underground ore.
(1) Using an economic cut-off grade of 0.3g/t gold for the open pit and 2.0 g/t gold for the underground operations
(2) Updated as at 21 April 2020 with the Q1 2020 Report
(3) Cash costs of production, AISC, Adjusted EBITDA, Cash, bullion on hand, gold and silver sales debtor, financial
assets at fair value through profit and loss (also known as Cash and liquid assets) and Adjusted free cash flow are
Non-GAAP Financial Measures as defined at the end of the Financial Review section.
(4) Updated as at 21 April 2020 with the Q1 2020 Report
Backfilling will continue during 2020,
using cemented rock fill, which will
allow the gradual introduction of a
bottom-up mining method. This is
expected to reduce overall dilution
and good waste management in the
underground operations.
Processing
The plant processed 12.9Mt of ore, a
2% increase year-on-year, at an average
feed grade of 1.28 g/t, 2% higher year-
on-year. Recovery rates of 88.1%, a
1% reduction year-on-year. The plant
utilisation was 95.2%.
The Company has completed a series
of engineering and optimisation studies
with Lycopodium Minerals, which have
identified a number of processing cost
and control opportunities. Design and
procurement will commence in early 2020.
Dump leach operations contributed 8,641
ounces, a 31% reduction year-on-year in
line with the mine plan.
The focus in 2020 continues to be on
maximising operational margins on plant
throughput. In line with cost optimisation
and performance studies, 2020
throughput is expected to be reduced
to between 12.25–12.5Mtpa, targeting
improved residence time, improved
recoveries and optimal use of reagents
and consumables. Stable feed grade
delivered to the mill along with tighter
operational controls and improved process
plant stability should ensure recoveries
reach target rate of 88% in 2020.
Centamin Annual Report 2019
43
> Strategic Report> Overview> Financial Statements> Corporate Governance> Shareholder Information STRATEGIC REPORT
OPERATIONAL REVIEW CONTINUED
Table 2. Operational Summary
units
FY 2019
Q4 2019
Q3 2019
Q2 2019
Q1 2019
FY 2018
Q4 2018
Open pit
Total material mined
Ore mined
Ore grade mined
Ore grade milled
Underground
Ore mined
Ore grade mined
Processing
Ore processed
Feed grade
Gold recovery
Gold production
Gold sold
kt
kt
g/t Au
g/t Au
kt
g/t Au
kt
g/t Au
%
oz
oz
Avg realised gold price
US$/oz
Cash costs(1)
AISC(1)
Unit cash costs(1)
Unit AISC(1)
US$’000 produced
US$’000 sold
US$/oz produced
US$/oz sold
78,391
14,372
0.80
0.90
1,087
5.32
12,859
1.28
88.1
480,528
470,020
1,399
333,037
439,317
699
943
17,385
4,006
0.98
1.19
232
6.45
3,044
1.60
89.5
148,387
137,065
1,487
89,676
108,333
605
792
19,762
3,625
0.75
0.83
275
3.94
3,207
1.10
85.6
98,045
108,826
1,478
83,917
123,624
860
1,141
20,256
3,615
0.7
0.76
310
4.83
3,359
1.16
88.0
117,913
112,764
1,307
87,553
109,319
752
982
20,987
3,126
0.72
0.83
270
6.34
3,248
1.28
88.8
116,183
111,365
1,303
71,892
98,041
631
898
77,877
23,131
0.6
0.76
1,242
5.69
12,568
1.26
88.7
472,418
484,322
1,267
289,394
420,116
624
884
21,075
4,990
0.75
0.92
314
6.21
3,198
1.45
89.1
137,600
148,851
1,235
82,579
118,911
609
809
Capital Expenditure
In 2019, the Group invested US$97.6
million (before pre-production net revenue
of US$4.3 million from non-sustaining
development), a 1% increase year-on year.
site, while restrictions related to COVID-19
remain in place. As a result, 2020 capital
expenditure is expected to be in the range
of US$150–US$170 million(2) (previously
US$190 million).
Sukari sustaining capital expenditure was
US$85.1 million, in line with guidance
and a 5% reduction year-on-year.
Key investments were attributed to
underground exploration and development
and scheduled fleet rebuild programme.
Sukari non-sustaining capital expenditure
was US$12.5 million, in line with guidance
and a 65% increase year-on-year. Key
investments were attributed to advancing
exploration and decline development at
the north of the hill, along the Cleopatra
structures, and commencing regional
exploration on the Sukari tenement.
For 2020, as a precautionary move
to protect the health and wellbeing of
the workforce, non-essential capital
expenditure has been temporarily
deferred, including the Sukari solar plant.
This is in order to minimise contractors
and other non-operating traffic on and off
Project optimisations have been identified
in areas such as mill relining and upgrades
to the underground ventilation circuit,
utilising existing on-site equipment and
our highly skilled workforce as opposed to
using third parties. Changes to the non-
essential capital expenditure programmes
are measures taken to protect our
workforce and secure the operations, and
not expected to impact guidance for 2020.
The Company has reduced the forecast
capital expenditure for 2020 to between
US$150-US$170 million (previously
US$190million), through short term
deferral of non-essential growth capital,
optimisation of capital projects and
reductions in discretionary spend.
Investment in technology, people and
training are additional critical areas the
Company continues to invest in as a way of
driving improved operational performance.
Exploration
In addition to the usual production drilling
to support mining operations across the
open pit and underground, a programme
of resource extensional exploration was
completed. Programmes included both
drilling and a 2D seismic programme that
is seeking to extend the current known
limits of the Sukari deposit or identify new
targets that have the potential to support
economic mining.
Sukari underground exploration has
been completed in each of the main
mining areas; Amun, Horus, Ptah and
Cleo. Results during the year confirmed
the major gold shoots remain open on
plunge and at depth, with the discovery
of Horus Deeps mineralisation extending
beyond 300m below the current Amun
underground infrastructure. Exploration
is driving resource growth in the south
chasing Horus Porphyry and the Osiris
Thrust, in the central sections of the Sukari
porphyry diving down plunge on the Ptah
Lodes developing the Sukari Porphyry Keel
and Ptah Deeps and in the north of the
UG we are stepping down plunge on the
extension of the Top of Horus Porphyry
and Osiris thrust.
(1) Cash costs of production, AISC, Adjusted EBITDA, Cash, bullion on hand, gold and silver sales debtor, financial assets at fair value through profit and loss (also known as
Cash and liquid assets) and Adjusted free cash flow are Non-GAAP Financial Measures as defined at the end of the Financial Review section.
(2) Updated as at 21 April 2020 with the Q1 2020 Report
44
Centamin Annual Report 2019
In 2019, the four underground drill rigs
completed in excess of 52,000 metres of
underground diamond drilling focused on
resource conversion, resource extension
within the main underground assets
and successfully targeting longer-term
opportunity at depth and along strike
from existing underground infrastructure
with the Horus Deeps discovery. A total
of 2.8 million metres have been drilled to
date UG with a further 1.3 million metres
planned to be drilled over the next five
years to facilitate new LOM resource and
reserve growth.
Amun / Ptah Production Decline
Exploration within the existing
underground operations was
predominantly focused on resource
category infill and conversion to Measured
and Indicated providing the foundation for
robust short-medium term mine planning
and development design.
A total of 11,500 metres was drilled from
within Amun, testing strike extensions and
mineralisation below the Sukari porphyry.
Results confirmed high-grade continuity
of mineralisation along the Osiris thrust
north-south strike extension, proximal to
the current decline development drives
and outside the existing Mineral Resource.
Top of Horus infill drilling showed an
increase in the gold content by targeting
higher-grades brecciating along the
contact zone.
Ptah is likely to be a key growth driver for
the underground mine and in 2019 a total
of 24,675 metres were drilled, including
infill drilling of the Eastern and Western
Ptah stockwork zones ahead of near-term
scheduled development. Drilling provided
medium-term pre-development definition
along the east and west porphyry
contacts, and within the undeveloped
Porphyry-Keel target zone.
Results confirmed grade continuity with
high grades concentrated along strike, on
both the Eastern and Western contacts of
the Sukari porphyry, where breccia and/or
stockwork zones form internally within the
porphyry. The Porphyry Keel drill results
confirm resource potential extension at
depth plunging towards the North. Drill
highlights include:
• 2.7m at 207.0g/t Au (Amun) TW = 1.4m
• 0.6m at 289.0g/t Au (Amun) TW =
0.6m
• 0.6m at 1,187g/t Au (Ptah) TW = 0.6m
• 3.8m at 450.7g/t Au (Ptah) TW = 3.6m
• 6.6m at 198.1g/t Au (Ptah) TW = 5.2m
In 2020, 21,000 metres of drilling
are planned focused on Top of Horus
resource category upgrade and growth to
the south where the zone remains open.
Concurrently 25,400 m is planned from
the Ptah decline for resource extension
and upgrade to Measured and Indicated
Mineral Resources for Ptah Eastern
stockworks, Western stockworks and
Ptah Keel.
Horus Porphyry: Horus Deeps
In 2019, 7,800 metres was budgeted for
step-down drilling to the west and 200m
below the Sukari porphyry level targeting
the Horus porphyry. In H1 drilling from the
base of the Amun confirmed high-grade
gold mineralisation, indicating three flat
shallow south dipping structures. In Q3
2019, the Horus drill campaign continued,
testing the northern extensions and the
new shallow structural plunge concept of
the Horus Deeps/Osiris stack geological
model. Drilling intersected a thin, flat-
lying sulphide-bearing shear zone (0.3m
@ 140g/t), confirming concept and a
breakthrough on the Horus Deeps lodes to
the north down-plunge.
As a result of drilling throughout 2019, the
Horus Deeps zone is represented by two
styles of mineralisation:
• A stockwork/breccia proximal to both
the eastern and western contact of the
Horus porphyry, hosted by permeability
created during the brittle deformation of
the Horus Porphyry
• A high-grade quartz vein proximal to the
eastern contact of the porphyry.
The 2019 structural framework indicates
a repetition of the shallow dipping Osiris
thrust deformation zone at depth, affecting
the Horus porphyry, creating a fracture
system proximal to the sediment contact.
There is potential for significant medium-
grade (with a subsection of higher-grade
intersections) resource expansion
within the Horus Deeps. In 2020, a
comprehensive 6,000m drill programme
has been budgeted to better define the
structural controls on mineralisation.
This will include a surface-based 250m
step out drill programme designed to test
the southern up-plunge extension of the
Horus Porphyry to surface. Drill highlights
include:
• 0.3m at 140.0g/t Au TW = 0.3m
• 29m at 6.4g/t Au TW = 7.5m
• 2m at 43.6g/t Au TW = 1.3m
Cleopatra (“North”) Decline
The 2019 drill programme from the
Cleopatra decline confirmed the presence
and continuity of narrow high-grade gold
veins within each of the three stacked
orebodies (from top to bottom: Cleopatra,
Antoni and Julius).
Cleopatra drilling was designed to improve
geological confidence and near-term
Mineral Resource growth potential by
systematically drilling the host structures,
with the focus the intersection between
the shallowest Cleopatra zone and the
Eastern contact shear. A total of 15,927
metres were drilled to expand known
Mineral Resources and to provide
definition for the interface between Stage
7 open pit and underground infrastructure
design along the deeper Antoni structure.
A total of 1,934 metres of decline
development was completed, pushing
the North decline deeper into Antoni
allowing new long-term drill platforms
to be constructed to target the northern
extensions of the deeper Julius, Ptah
Deeps and Ptah Keel lodes. A total of 93k
tonnes of development ore was delivered
to the mill at an average grade of 1.71
g/t, resulting in 5,108 ounces produced
in 2019.
Jeremy Langford
Chief Operating Officer
Centamin Annual Report 2019
45
> Strategic Report> Overview> Financial Statements> Corporate Governance> Shareholder Information STRATEGIC REPORT
EXPLORATION REVIEW
EXPLORATION
REVIEW
WE BELIEVE EXPLORATION IS CRITICAL
TO THE SUSTAINABILITY OF A SUCCESSFUL
BUSINESS. EXPLORATION IS CORE TO OUR
BUSINESS MODEL, DEVELOPING AND MAINTAINING
AN ACTIVE PIPELINE OF PROSPECTIVE TARGETS
THROUGHOUT THE EVALUATION STAGES.
NORMAN BAILIE
GROUP EXPLORATION MANAGER
Centamin strives to make new discoveries,
growth and value-creation opportunities
through exploration within the portfolio.
Our efforts are primarily focused on
Sukari, in Egypt and developing our
organic projects at Doropo, in Côte d’Ivoire
and Batie West, in Burkina Faso.
The ongoing objective of the exploration
and geoscience research is the
identification of new resources which
sustain near-term mine production,
grow near-mine reserves, discover new
generative settings and extend project
lifespans. We actively explore our
brownfields and greenfield terranes to
develop production-viable deposit clusters
with proximal feeder target pipelines.
The 2019 programme successfully
delivered:
• Doropo Project Mineral Resource
update, on nine months of drilling
was declared, 23 October 2019:
M&I resource of 61.3Mt at1.24g/t for
2.44Moz, and Inferred Resource of
30.1Mt at 1.1g/t for 1.04Moz; 15%
increase in contained metal 23%
increase in M&I resource tonnes,
including maiden resource in the
Measured category.
• A new, significant, 10km long gold-
mineralised anomaly at the Doropo
Project, the Kilosegui deposit located
within 30km of the main resource area.
A new Mineral Resource estimate based
on resource drilling on the previously
delineated 1.8km strike length yielded
an Indicated Mineral Resource of 3.6Mt
at 1.0g/t for 0.12Moz contained, and
10.5Mt at 1.0g/t for 0.33Moz (included
within the Mineral Resource update).
Kilosegui should have a positive impact
on the 2021 feasibility study.
The 2020 exploration programme focusing
on the following work streams:
• Batie West Project in Burkina Faso is
under project review and an updated
study is targeted for Q4 2020
• Doropo Project studies are targeted for
H1 2021, following a further resource
update by the end of 2020 including the
new Kilosegui discovery
• ABC Project resource update is targeted
for the end of 2020
Centamin is closely monitoring the
global COVID-19 pandemic and the
Company guidance may be impacted if
the workforce, operation or projects are
disrupted due to the virus or efforts to
slow the spread of the virus.
Sukari Gold Mine, Egypt
Regional Exploration
The Sukari Concession Agreement
applies across the 160km2 tenement.
During 2019, surface exploration
activities focused on the completion of
2D seismic geophysical surveys on the
Sukari license area. The seismic survey
lines were oriented to cross the Sukari
domain ophiolite shear zone. Processing
and interpretation of the seismic data
will facilitate the construction of 3D
geo-seismic models with resolution of
structural elements to depths of 1.5km.
The surveys comprising 35km long lines
along three independent sections, was
completed in Q4 2019. Data processing
was completed in February 2020. Initial
data interpretation is encouraging and has
yielded multiple potential gold-bearing
structures within the shear framework.
46
Centamin Annual Report 2019
The interpretations support the hypothesis
that the Osiris thrust is an important
district-scale shear zone and confirms
its extension both up and down plunge.
Results of the seismic survey and updated
3D geological model will be incorporated
in the 2020 exploration plan.
Good surface gold channel sample
anomalies were found at V-Shear South,
North and East prospects which will
be followed up by section drilling and
geological modelling.
In 2019 a targeted reverse circulation
drill programme was carried out on the
V-Shear South prospect, 3km northeast
of the Sukari processing plant. At V-Shear
South, gold mineralisation is hosted by
a porphyry unit that has characteristics
similar to the Sukari porphyry. Exploration
at V-Shear South is at an early stage but
the interpretation of gravity inversion
modelling shows linkages to Sukari Hill
that extend beyond V-Shear North. The
system is open and H1 drilling will target
extensions and resource-quality of this
mine-style gold mineralisation.
Five holes were drilled at the Quartz
Ridge prospect, located 4.5km from
the Sukari processing plant to provide
material for metallurgical testwork. This
is a key regional target for potential
production development in 2020. Infill
resource and grade control drilling,
in addition to metallurgical testing is
budgeted for completion of a production
schedule in H2.
West Africa
Centamin’s West Africa exploration has
been focused on mine-quality project
acquisition, dynamic mineral resource
and reserve growth, and the development
of production-viable districts from cost-
efficient exploration since inception in
January 2015. On all our projects, we
apply continuous critical review of our
results and aim to:
• Develop accurate geological deposit
models and understand the regional
setting
• Create new scalable targets from our
reconnaissance phase exploration
• Continually review our drill results and
block models to ensure drill planning is
directed towards the delivery of mine-
ready Mineral Resources and Reserves
• Introduce downstream study test work
early in our development workflow to
insure fatal flaws and valid optimisation
criteria are determined at the earliest
possible stage
Centamin West Africa are actively
exploring across 16 permits, covering
some 3,675.86km2 in Burkina Faso and
Côte d‘Ivoire, with a further 3.349.24km2
under application.
A total of US$16.9 million was expensed in
exploration at the Company’s West African
assets, predominantly at the Doropo
Project in Côte d’Ivoire. This represented
a 20% decrease year-on-year as drilling
continued at Doropo with the Kilosegui
discovery and feasibility studies were held.
In 2020, c.US$20 million of exploration
costs to be incurred outside of Egypt, at
Doropo, Batie West and ABC projects.
Centamin Annual Report 2019
47
> Strategic Report> Overview> Financial Statements> Corporate Governance> Shareholder Information STRATEGIC REPORT
EXPLORATION REVIEW CONTINUED
Doropo Project, Côte d’Ivoire
The Doropo project is the most advanced
exploration project within the Company’s
portfolio outside Egypt. Doropo is located
in northeast Côte d’Ivoire, adjacent across
the frontier with Batie West project.
Doropo is a CEY organic discovery and
wholly owned by the Company, consisting
of seven permits, over a 1,930km2, highly
prospective landholding. It is hosted
entirely within a granitic domain, bounded
on the eastern side by the Boromo-Batie
greenstone belt, in Burkina Faso, and on
the western side by the Hounde-Tehini
greenstone belt which stretches +800km
from northern Burkina Faso to the Atlantic
coast west of Abidjan.
A total 75,000 metres were drilled
at Doropo, including 49,025 metres
of reverse circulation drilling focused
on mineral resource definition and
exploration targeting; 25,437 metres
of aircore and auger drilling defining
new strong surface anomalies and
follow up targets; and 557 metres of
diamond drilling to provide material for
metallurgical test work. A total 55,000
metres of drilling is budgeted for 2020.
A Doropo Project Mineral Resource update
on nine months of drilling was declared
23 October 2019 within the Q3 2019
Report: Measured and Indicated Resource
of 61.3Mt at 1.24g/t for 2.44Moz, and
Inferred Resource of 30.1Mt at 1.1g/t
for 1.04Moz; 15% increase in contained
metal 23% increase in M&I resource
tonnes, including maiden resource in the
Measured category.
Kilosegui Discovery
The Doropo highlight for 2019 was the
Kilosegui discovery, located approximately
30km southwest of the Main Resource
Cluster. Kilosegui is a 10km long WNW-
ESE anastomosing low-angle (22° to 28°),
SW dipping shear network in granodiorite,
hosting Doropo-style mineralisation in
multiple stacked zones, with widths
varying from six to 16 metres true width.
Four months drilling before resource
cut-off date led to a Kilosegui maiden
mineral resource of 3.6Mt at 1.0 g/t for
0.12Moz indicated plus 10.5Mt at 1.0 g/t
for 0.33Moz inferred. The maiden mineral
estimate on the structure is based on the
first pass drilling up to about 100m vertical
depth and along the 1.8km of initial strike
tested. The Kilosegui deposit is the main
resource growth target at Doropo in 2020,
with two RC rigs drilling on first pass
200m and 400m sections.
A GAIP (“Gradient Array Induced
Polarisation”) survey was completed
across the Kilosegui deposit to decipher
the sub-surface structural architecture
which hosts the mineralisation. The GAIP
identified the main axial shear zone as
a major low-angle thrust which in detail
has been compartmentalised and jogged
by regional orthogonal faults, previously
undetected, which seem to control
higher grade plunging shoots along the
deposit and open up splays and parallel
lodes. The GAIP uncovered the local 3D
plumbing system and enhanced the 3D
prospectivity modelling and drill targeting
along the entire shear corridor.
The discovery of Kilosegui, which has
regolith complexity and a subdued
surface geochemical signature, lead
to a reappraisal of surrounding district
exploration results (from soils, auger and
aircore programmes) within the context
of 3D structural model developed over
time from the GAIP and regional magnetic
imagery. A number of new mineralised
systems have been identified, several
untested by drilling, which form the
next generation of 2020 pre-resource
exploration drill targets.
In 2020, the focus will be on resource
drilling and better understanding the
resource growth potential from Kilosegui
deposit. The results will influence the
feasibility study and likely plant site
location scenarios.
Regional exploration
The Vako Shear Zone (VSZ), located
halfway (15km) between Kilosegui and
the MRC, was positively tested by large
scale first pass RC drilling in December.
VSZ is a 7km long shear zone which has a
very similar geophysical and geochemical
signature to Kilosegui. It has been
currently tested on 500m to 1km shallow
drill section spacing, from which the best
results returned are of 12m at 0.8 g/t Au
and 14m at 1.1 g/t Au. 2020 drilling will
focus on infilling iteratively the resource-
quality mineralisation to 100 and 50m
section spacing towards defining Inferred
and Indicated Resource for inclusion in
2020 reporting.
ABC Project, Côte d’Ivoire
The ABC Project is located in northwest
Côte d’Ivoire, approximately 600km west
of Doropo. ABC is a greenfields exploration
project, consisting of two permits, Kona
and FarakoNafana, covering a 750km2
highly prospective landholding along the
underexplored contact zone between the
Archean and Birimian cratons. The current
Indicated Mineral Resource is 650koz Au
contained at a grade of 1.0g/t Au, and an
Inferred Mineral Resource of 450koz Au
contained at a grade of 0.87g/t Au. The
Company has an additional four permits
under application at the ABC project.
The Kona permit includes the main
Lolosso Gold Corridor (“LGC”), host to
the Kona South Mineral Resource and
the Kona Central and Kona North drilled
prospects. The LGC is a 60km in strike
length, gold mineralised structure, which
varies in width between 300m and
1000m. It is interpreted as a greenschist
to lower amphibolite grade, Birimian
volcano-sedimentary greenstone keel
that has been thrusted between an
older Archean granitoid. The eastern,
west-dipping footwall contact is a major
structural and metamorphic feature
that is interpreted as a major control
of the regional emplacement of gold
mineralisation along the corridor.
48
Centamin Annual Report 2019
STRATEGIC REPORT
EXPLORATION REVIEW CONTINUED
DOROPO PROJECT STUDIES
Environmental, social and community
Digby Wells UK Ltd. and PAH (CDI) SARL Ltd completed a
preliminary environmental, social and community screening
assessment review (EIES-RAP).
Hydrogeology
GCS Water Consultants PTY Ltd completed a water resources
and management assessment including feasibility for local raw
water feed options for the future processing plant and associated
infrastructure.
Geotechnical
SRK (UK) Ltd is scheduled to update the geotechnical review
of the open pit(s) on the updated resource model. The original
work completed in Q4 2018, included open pit geotechnical
slope stability analysis. Geotechnical assessments of caveability,
fragmentation, subsidence and ground support requirements
were carried out based on geotechnical characterisations
developed from geological assessments and core logging data.
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Engineering studies initiated with the appointment of AMDAD
PTY Ltd mining engineering consultants, in conjunction with H&S
PTY Ltd resource consultants, have been progressing the project
engineering studies. AMDAD are updating the open pit mining
preliminary optimisations and efficiency analysis, with a focus on
mining cost optimisations and sensitivity analysis.
Metallurgy and processing
Metallurgical test work was conducted by ALS-AMMTEC PTY
(Perth), whilst Lycopodium Minerals are providing the processing
flowsheet, and the preliminary development and operating
expenditure estimates.
Knight Piesold completed the preliminary acid rock drainage and
tailings dam conceptual studies and layout analysis.
THE DOROPO PROJECT IS
THE MOST ADVANCED
EXPLORATION PROJECT WITHIN
THE COMPANY’S PORTFOLIO
OUTSIDE EGYPT.
Centamin Annual Report 2019
49
> Overview> Financial Statements> Corporate Governance> Shareholder Information
STRATEGIC REPORT
EXPLORATION REVIEW CONTINUED
The paragneiss is interpreted to be
the stratigraphic continuity of detrital
sedimentary rocks but at granulite facies.
The footwall contact would seem to
have originated and be traced along a
metamorphic facies boundary which made
it more favourable to gold deposition by
virtue of rheology, calcareous chemical
layering and greenschist incubation
conditions. Kona South shows many
characteristics of skarn type genesis.
The gold arsenic surface geochemistry
clearly maps the core of the LGC along
a 23km strike which runs axially through
the Kona permit and along a further 18km
strike across the FarakoNafana permit.
The two main prospects, identified on
the Kona permit by the initial mapping
and rock chip sampling, were prominent
silicified ledges in the topography. These
anomalous ridges developed into the Kona
South and Kona Central Prospects.
On a regional scale, mapping and remote
sensing of the LGC defines a+ 60km
structural inlier, inboard to the west from
the main cratonic suture, expressed
now at surface as the N-S Sassandra
drainage basin.
In 2019, 25,000 metres of RC drilling
was completed on the Kona permit to test
the surface geochemical anomalies along
and linking the boundary contacts of the
LGC keel. A first pass drill programme
started at Kona South and worked
systematically out from Kona South at
200m to 400m sections toward, and
along the Kona Central and Kona North
prospects. As a result of the significance
of the Kilosegui discovery at Doropo in H1
2019 all further drilling in H2 was diverted
to Kilosegui for Centamin’s West African
exploration. Exploration activities reverted
to auger drilling for a total of 2,529
metres by year end.
The infill drilling results at the Central zone
of the LGC has facilitated the development
of updated interpretations of the ore
controls on gold mineralisation. The 200m
wide, low-grade corridor is bounded
by two structural/ lithological contacts,
interpreted to be fold limbs, that host
the high-grade gold mineralisation. Two
exploration targets on the fold limbs are
planned for drill testing in Q1 2020.
50
Centamin Annual Report 2019
Kona South gold mineralisation was
extended along strike to the north by
2019 drilling. Drilling in 2020 will focus
on completing the Kona Central resource
infill, developing the Kona North lodes
along strike and down dip, and follow-up
on exploration targets interpreted from the
H1 2019 and is scheduled to complete an
aeromagnetics geophysical survey of the
land package in H2 2020.
Surface work completed on the northern
FarakoNafana permit, including soils,
termite mound sampling and geological
mapping, lead to the identification of the
LGC along approximately 18km of strike
length, as part of ground-truthing of the
geophysical imagery. Further work to be
conducted in Q1 2020 will include auger
sampling and possibly aircore or reverse
circulation drilling results-dependent.
Batie West Project, Burkina Faso
The Batie West project, located in
southwest Burkina Faso, is wholly owned
by Centamin. The 593km2 landholding,
includes one exploitation (mining) licence
and six exploration permits. The 64km2
Konkera exploitation license hosts the
1.9Moz gold Indicated Mineral Resource,
at a grade of 1.7g/t gold and a 1.3Moz
gold Inferred Mineral Resource, at a grade
of 1.7g/t gold.
The Konkera gold zones are 10km north-
east of the Doropo Main Cluster, across
the border in south-western Burkina
Faso. They are hosted along the south-
western margin of the Birimian Boromo
greenstone belt, on the Batie West Shear
Zone (BWSZ). The BWSZ is a major
crustal scale shear zone which traverses
the western margin of the greenstone belt.
The deformation associated with the shear
zone is locally up to 3km wide and can
be traced over 110km of strike length.
The host stratigraphic sequence is
dominated by mafic and ultramafic
rocks in the basal stratigraphy with felsic
and andesitic pyroclastic rocks grading
upwards into immature clastic sedimentary
rocks in the upper parts of the succession.
Strain is most intense in the south-western
portion of the belt, where the stratigraphy
is folded into a series of upright tight folds
that plunge gently towards the NNW-SSE
and host the main Konkera-Kouglaga
resources. Fold hinges are typically faulted
and sheared into a corridor of interpreted
dextral-transpression.
Konkera gold mineralisation is locally
controlled by both lithology and structural
features, with the main vectors being:
• Receptive lithologies: in the case of
Konkera this is basaltic volcanic rocks
where titanomagnetite is replaced
by sulphides. Mineralisation is also
found as pre- or early-folding pyrite
mineralisation in pyroclastic breccias,
conglomerates and sandstones at
Kouglaga.
• Isoclinal folds: complex systems of
isoclinal folds localise mineralisation
along their fold axial planes at Konkera.
The folds verge towards the NE and
appear to have curvilinear fold hinge
lines, consistent with very high strain
within this part of the belt.
• NNW-SSE trending shear zones:
a network of shears have been
interpreted from GAIP and aeromagnetic
geophysical datasets to cut the West
Batie Shear Zone. Where they do, they
are associated with elevated Au in soil
and auger samples (>10 ppb) and the
occurrence of orpaillage sites (artisanal
mine workings).
The Batie West Project EIES (the
environmental and social impact study,
named in French: “Etudes d’Impact
Environmental et Social”) and RAP were
renewed in Q3 which extends the definitive
feasibility study a further three years from
11 November 2019. Field exploration
activities were limited, whilst an internal
review of the project is concluded. The
Company is currently assessing the results
of this review and has commenced building
an internal project team at the corporate
and West African regional centres.
Norm Bailie
Group Exploration Manager
Centamin Annual Report 2019
51
> Strategic Report> Overview> Financial Statements> Corporate Governance> Shareholder Information STRATEGIC REPORT
CHIEF FINANCIAL OFFICER’S REVIEW
CHIEF FINANCIAL
OFFICER’S REVIEW
CENTAMIN HAS UNDERTAKEN A NUMBER OF
INITIATIVES IN 2019 TO IMPROVE THE CONSISTENCY
AT, AND INCREASE CASH FLOW FROM, THE SUKARI MINE.
CONSISTENT OPERATIONAL DELIVERY AGAINST THE MINE
PLAN REMAINS THE KEY OBJECTIVE AND WILL DRIVE
FINANCIAL PERFORMANCE.
ROSS JERRARD
CHIEF FINANCIAL OFFICER
Centamin is a financially robust, highly
cash generative business, committed
to responsible mining and balanced
stakeholder returns. This is reflected in
the Group’s financial results for the year
ended 31 December 2019.
Strong focus on operational improvement
driving positive financial performance – Q4
2019 production figures represent one of
the strongest quarterly results from Sukari.
Gross revenues(1) improved by 7% to
US$658.1 million, from annual gold sales
of 470,020 ounces, down 3%, at an
average realised price of US$1,399 per
ounce, up 10% year-on-year. A total of
19,410 ounces of unsold gold bullion was
held on site at year end, due to timing of
gold shipments. This has been realised
and reflected in the first quarter 2020
gold sold numbers, as released on 21
April 2020.
Stringent Cost Control
Our business model is focused on value
over volume, through improving operational
and cost efficiencies. Whilst the average
realised gold price on sales was improved
10% year-on-year, our AISC margin
improved 19% to US$456/oz sold.
Annual costs were comfortably within
annual guidance. Optimisation studies
underway throughout the respective
sections of the mine have identified
numerous potential costs savings and
performance initiatives, with some
beginning to bear fruit in the fourth quarter.
Cash costs of production(2) (3) was US$699
per ounce produced, up 12%, reflecting a
1% increase in mined and 2% increase in
processed tonnes offset predominantly by
a 3% increase in gold ounces produced
(excluding Cleopatra). AISC(3) was
US$943 per ounce sold, up 7%, mainly
due to a 2% decrease in gold ounces
sold (excluding Cleopatra), increased
production costs offset by lower sustaining
capital costs.
Growing Free Cash Flow Generation
Centamin’s cash flows and earnings
showed further growth in 2019.
Operational cash flow improved by
11% to US$249.0 million, after gross
capital expenditure of US$97.6 million
predominantly invested in the long-term
sustainability of the business. Adjusted
Group free cash flow(4) improved by
17% to US$74.3 million, after profit
share distribution of US$87.1 million
to our partner, the Egyptian state.
Group underlying EBITDA improved by
10% to US$284.0 million, at a 43%
EBITDA margin(5).
52
Centamin Annual Report 2019
FOCUSSING ON LONG-TERM PRODUCTION OF PROFITABLE
OUNCES, MAXIMISING FREE CASH FLOW GENERATION.
8 %
Increase in
Revenue (US$ million)
8 %
Increase in Adjusted EBITDA
(US$ million)
2019
2018
2017
652.3
603.2
675.5
2019
2018
2017
280.1
258.8
309.8
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43%
EBITDA margin
17%
Increase in
Free cash flow generation
Profit after tax increased by 13% to
US$172.9 million, offering competitive
profit margins, due to:
• an 8% increase in revenue;
• an 8% increase in cost of sales;
• a 13% increase in other operating costs;
offset by
• an increase in gains on financial assets
at fair value through profit or loss;
• a 9% decrease in other income; and
• a 20% decrease in exploration and
evaluation expenditure.
Basic earnings per share (“EPS”)
increased by 17% to 7.59 US cents.
Strong, Flexible Balance Sheet
Centamin continues to maintain a robust
financial strategy, with cash and liquid
assets(2) of US$348.9 million as at
31 December 2019. As the Company
cautiously navigates the unprecedented
circumstance due to the COVID-19
outbreak, we have further strengthened
the balance sheet to US$379.2 million in
cash and liquid assets(2), as at 31 March
2020(6) (7), reflecting the profitability of
the business.
This strong financial discipline provides
the flexibility to drive self-funded long-
term organic growth and pursue strategic
inorganic opportunities that meet our
corporate strategy and investment criteria.
The Company liquidity and strength of
the balance sheet, with no debt, hedging
or streaming in place, is fundamental
to the longevity of the business and
seriously considered when assessing
capital allocation. Centamin has an active
growth pipeline through results-driven
exploration. These self-funded projects
are ranked based on results against our
development criteria and prospective
returns, before capital is allocated.
(1) Gross revenue from gold sales includes US$5.8 million in pre-production gold sales from Cleopatra development ore.
(2) Basic EPS, Adjusted EBITDA, cash costs of production and AISC reflect a provision against prepayments following the removal of fuel subsidies in January 2012
(refer to note 2.8 of the financial statements for further details).
(3) Cash costs of production, AISC, Adjusted EBITDA, Cash, bullion on hand, gold and silver sales debtor, financial assets at fair value through profit and loss
(also known as Cash and liquid assets) and Adjusted free cash flow are Non-GAAP Financial Measures as defined at the end of the Financial Review section.
(4) Adjustments made to free cash flow, for example acquisitions or disposals of financial assets at fair value through profit and loss, which are completed through
or add to specific allocated available cash reserves.
(5) EBITDA margin is EBITDA as a percentage of gross revenue.
(6) Unaudited, as per Q1 2020 Report, published 21 April 2020. Audited cash and liquid assets of US$348.9 million as at 31 December 2019
(7) Before 2020 first interim dividend distribution of US$69.4 million on 15 May 2020
Centamin Annual Report 2019
53
STRATEGIC REPORT
CHIEF FINANCIAL OFFICER’S REVIEW CONTINUED
Increased Shareholder Dividend
Maintaining a sustainable dividend policy is
central to our strategy. We have a six year
track record of returning surplus cash to
shareholders, based on our policy linked to
free cash flow generation.
Reflecting improved operating
performance, and in line with the dividend
policy, on 15 January 2020, the Board
proposed a 2019 final dividend, for the
year ended 31 December 2019, of 6.0
US cents per share (c.US$69.4 million),
bringing the proposed total dividend
for 2019 to 10.0 US cents per share
(c.US$115.8 million), an 82% increase
year-on-year or equivalent to distributing
US$241 per ounce produced in 2019.
This 2019 final dividend was subject
to shareholder approval at the 2020
AGM. Due to government, regulator and
public health guidance around COVID-19
the timing and structure of the 2020
AGM became uncertain. After much
consideration the Board resolved to
declare a 2020 first interim dividend of 6
US cents per share to exactly replace the
proposed 2019 final dividend, in which to
provide shareholders with greater certainty
and expedite payment, which was paid on
the 15 May 2020. The details of the 2020
first interim dividend can be found on the
Company’s website: www.centamin.com
and within the Q1 2020 Report, published
21 April 2020.
The cumulative shareholder returns by
way of cash dividends since 2014 is
c.US$570 million.
Capital Allocation
Capital allocation continues to be
disciplined and closely qualified against
value creation. The Company continues
to exercise a balanced approach to
responsibly maximising operating cash
flow generation, reinvesting for future
growth and prioritising sustainable
shareholder returns.
In 2019 the focus was on improving
operational efficiencies to achieve
consistent operational performance, over
growth and the capital investment was
largely sustainable capital expenditure
(US$85 million) and results driven
exploration (US$33 million).
Outlook
Centamin’s financial strategy remains
consistent – maintain financial flexibility
by maximising free cash flow generation
through stringent cost management and
disciplined capital allocation. Shareholder
returns are prioritised before growth
capital. In line with the dividend policy,
a minimum of 30% of free cash flow is
allocated to shareholders.
As part of the 2020 budget, US$50 million
was identified for removal from the cost
base through specific initiatives ranging
from training and equipment optimisation,
improvements in the supply chain and
contractor management. Since the
outbreak of COVID-19 the priority is the
safety of the workforce and security of the
operations. Whilst the Company forecasts
potential additional costs and cash outflow
associated with COVID-19, including
a build-up in working capital through
increasing stockpiles and consumables,
temporarily increased payroll costs and
support costs resulting from logistics
planning with government curfews, we do
not expect them to affect 2020 guidance.
For the years 2020 and 2021, there
is a stronger focus on growth capital
investment in the business, in particular
at Sukari. Growth projects include
construction of the hybrid solar plant,
reducing the reliance on fossil fuels and
improving operating costs, construction
of TSF2 to extend the tailings storage
capacity beyond 2030, substantial
infrastructure upgrades within the
underground, supporting current
operations and preparing for future mining
at depth, and camp and workplace facility
upgrades, improving the wellbeing and
standard of living on site.
54
Centamin Annual Report 2019
As a precautionary move to protect the
health and wellbeing of the workforce,
non-essential capital expenditure has
been temporarily deferred, including the
construction of the Sukari solar plant.
This is in order to minimise contractors
and other non-operating traffic on and off
site, while restrictions related to COVID-19
remain in place. As a result, 2020 capital
expenditure is expected to be in the range
of US$150–US$170 million (previously
US$190 million).
The impact and potential duration of the
COVID-19 pandemic remains uncertain.
The Company has undertaken risk
analysis scenarios and has put in place
contingency plans for the business
and believes it has taken prudent steps
to continue to navigate these difficult
times. Centamin is closely monitoring
the situation, with an active response
framework in place to manage and
mitigate future impacts within its control.
Ross Jerrard
Chief Financial Officer
Table 1. Group Financial Summary(1)
Gold produced
Gold sold
Units
oz
oz
Cash cost of production
US$’000
Unit cash cost of production
US$/oz produced
AISC
Unit AISC
Average realised gold price
Gross revenue
EBITDA
Profit before tax
Basic EPS
Capital expenditure
Operating cash flow
Adjusted free cash flow
US$’000
US$/oz sold
US$/oz
US$’000
US$’000
US$’000
US cents
US$’000
US$’000
US$'000
FY
2019
FY
2018
H2
2019
H1
2019
480,528
470,020
333,037
699
439,317
943
1,399
658,111
283,968
173,029
7.59
97,580
249,004
74,341
472,418
484,322
289,394
624
420,116
884
1,267
614,771
258,804
152,702
6.5
96,778
223,404
63,429
2%
-3%
15%
12%
5%
7%
10%
7%
10%
13%
17%
1%
11%
17%
246,432
245,891
173,592
706
231,956
946
1,482
365,266
166,654
113,402
5.87
49,593
132,706
38,711
234,096
224,129
159,445
692
207,361
940
1,305
292,845
117,314
59,627
1.71
47,987
116,298
35,630
(1) Cash costs of production, AISC, Adjusted EBITDA, Cash, bullion on hand, gold and silver sales debtor, financial assets at fair value through profit and loss (also known as Cash and
liquid assets) and Adjusted free cash flow are Non-GAAP Financial Measures as defined at the end of the Financial Review section.
Centamin Annual Report 2019
55
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FINANCIAL REVIEW
Consolidated statement of comprehensive income
Revenue
Year ended
31 December 2019
US$’000
Year ended
31 December 2018
US$’000
652,344
603,248
Revenue from gold and silver sales for the period increased by 8% YoY to US$652.3 million (2018: US$603.2 million), with a 10%
increase in the average realised gold sales price to US$1,399 per ounce (2018: US$1,267 per ounce) offset by a 2% decrease in gold
sold to 465,687 ounces net of Cleopatra (2018: 475,362 ounces net of Cleopatra).
Cost of sales
Year ended
31 December 2019
US$’000
Year ended
31 December 2018
US$’000
(439,285)
(406,538)
Cost of sales represents the cost of mining, processing, refining, transport, site administration, depreciation, amortisation and
movement in production inventories. Cost of sales is inclusive of US$28.0 million expensed as fuel prepayments (refer to Note 2.8 of
the financial statements for further information) and is up 8% YoY to US$439.3 million, mainly as a result of:
• 7% increase in total mine production costs from US$328.1 million to US$351.7 million, due to a 7% increase in open pit mining
costs, a 25% increase in underground mining costs, a 4% increase in processing costs and a 18% increase in finance and
administration costs offset by a 6% decrease in refinery and transport costs;
• 6% increase in depreciation and amortisation charges YoY from US$109.7 million to US$115.8 million due to higher production
affecting amortisation rates and US$79.9 million increase in the cost of Property, plant and equipment (excl. capital work in
progress) which increased the associated amortisation charges; and
• A positive movement in inventory adjustment of US$28.3 million compared to positive movement in inventory adjustment of
US$31.3 million in 2018 reflecting the movement in mining inventory over the year.
Other operating costs
Year ended
31 December 2019
US$’000
Year ended
31 December 2018
US$’000
(38,709)
(34,238)
Other operating costs comprise 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 losses and the 3% production royalty payable to the Arabic Republic of Egypt (“ARE”). Other operating
costs increased by US$4.5 million or 13% from US$34.2 million in 2018 to US$38.7 million in 2019, mainly as a result of:
• US$3.0 million increase in corporate costs (+ve) mainly due to advisor fees related to the Endeavour takeover bid;
• US$1.3 million increase in royalty paid to the government of the ARE (in line with the increase in gold sales revenue) (+ve);
• US$0.2 million increase in other expenses (+ve).
Exploration and evaluation expenditure
Year ended
31 December 2019
US$’000
Year ended
31 December 2018
US$’000
(16,883)
(21,006)
Exploration and evaluation expenditure comprise expenditure incurred for exploration activities in Côte d’Ivoire and Burkina Faso.
Exploration and evaluation costs decreased by US$4.1 million or 20% from US$21.0 million in 2018 to US$16.9 million in 2019 due to
reduced spending in both jurisdictions.
56
Centamin Annual Report 2019
Finance income
Year ended
31 December 2019
US$’000
Year ended
31 December 2018
US$’000
5,817
4,815
Finance income comprises interest income applicable on the Group’s available cash and term deposit amounts. The movements in
finance income are in line with the movements in the Group’s available cash and term deposit amounts.
Profit for the year before tax
Year ended
31 December 2019
US$’000
Year ended
31 December 2018
US$’000
173,029
152,702
As a result of the factors outlined above, Centamin recorded a profit before tax for the year ended 31 December 2019 of US$173.0
million (2018: US$152.7 million).
Tax
Year ended
31 December 2019
US$’000
Year ended
31 December 2018
US$’000
(112)
(53)
The Group operates in several countries and, accordingly, it is subject to the various tax regimes in the countries in which it operates.
The tax expense of US$0.1 million for 2019 was associated with timings in income taxes provisions and charges.
Dividend paid – non-controlling interest in SGM
Year ended
31 December 2019
US$’000
Year ended
31 December 2018
US$’000
(87,075)
(76,391)
During 2019, US$87.1 million was paid (2018: US$76.4 million) as dividends to the non-controlling interest in SGM, being EMRA.
Dividends paid to the non-controlling interest in SGM being EMRA, pursuant to the provisions of the Concession Agreement, are
recognised as a non-controlling interest attributable to SGM at the base of the income statement of Centamin. EMRA does not own
shares in Centamin, therefore Group earnings per share is calculated on the profit attributable to the owners of the parent.
The profit share payments during the year will be reconciled against SGM’s audited financial statements. Any variation between
payments made during the year (which are based on the Company’s estimates) and the audited financial statements, may result in
a balance due and payable to EMRA or advances to be offset against future distributions. SGM’s June 2019 financial statements are
currently being audited.
Earnings per share attributable to owners of the parent:
Basic (US cents per share)
Year ended
31 December 2019
US cents per share
Year ended
31 December 2018
US cents per share
7.588
6.497
Basic earnings per share attributable to owners of the parent of 7.59 US cents for 2019 increased when compared with 2018 of 6.50
US cents. The increase was driven by the factors outlined above.
Centamin Annual Report 2019
57
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FINANCIAL REVIEW CONTINUED
Consolidated statement of financial position
Centamin has a strong and flexible financial position with no debt, no hedging and cash, bullion on hand, gold and silver sales debtor and
financial assets at fair value through profit or loss of US$348.9 million at 31 December 2019 (31 December 2018: US$322.3 million).
Cash and cash equivalents (note 2.16(a))
Bullion on hand (valued at the year end spot price)
Gold and silver sales debtor (note 2.7)
Financial assets at fair value through profit or loss (note 2.6)
Cash and cash equivalents, bullion on hand, gold and silver sales debtor
and financial assets at fair value through profit or loss
31 December 2019
US$’000
31 December 2018
US$’000
278,229
29,562
34,695
6,454
282,627
11,431
28,234
–
348,940
322,292
The majority of funds have been invested in international rolling short term interest money market deposits.
Current assets
Inventories
Financial assets at fair value through profit or loss
Trade and other receivables
Prepayments
Cash and cash equivalents
Total current assets
31 December 2019
US$’000
31 December 2018
US$’000
108,957
6,454
47,061
6,132
278,229
446,833
97,550
–
33,443
6,696
282,627
420,316
Current assets have increased by US$26.5 million or 6% from US$420.3 million at 31 December 2018 to US$446.8 million at 31
December 2019 as a result of:
• US$11.4 million increase (+ve) in inventory driven by:
• US$1.9 million increase in stores inventory (+ve);
• US$8.0 million increase in mining inventory (+ve); and
• US$1.5 million decrease in the provision for obsolete stores inventory (+ve).
• US$6.5 million increase in the financial assets at fair value through profit or loss which relates to an equity interest in a listed public
company (+ve);
• US$13.6 million increase in trade and other receivables (including gold and silver sales debtor) (+ve);
• US$0.6 million decrease in prepayments (-ve); and
• US$4.4 million decrease in net cash (net of foreign exchange movements) (-ve) driven by the profit for the period less the payment
of the 2018 final dividend of US$34.7 million, 2019 interim dividend of US$46.4 million and a US$87.1 million payment to EMRA as
distributions to the NCI.
58
Centamin Annual Report 2019
Non current assets
Property, plant and equipment
Exploration and evaluation asset
Inventories – mining stockpiles
Other receivables
Total non current assets
31 December 2019
US$’000
31 December 2018
US$’000
804,717
68,138
52,658
93
925,606
835,987
59,154
32,424
88
927,653
Non current assets have decreased by US$2.1 million or 0.2% from US$927.7 million at 31 December 2018 to US$925.6 million at
31 December 2019, as a result of:
• US$84.9 million increase in the cost of property, plant and equipment (+ve);
• US$116.2 million charge for depreciation and amortisation (-ve);
• US$9.0 million increase in exploration and evaluation assets, as a result of the drilling programmes in Sukari Hill (+ve); and
• US$20.2 million increase in inventory related to mine Run of Mine (“ROM”) stockpiles (+ve).
Current liabilities
Trade and other payables
Tax liabilities
Provisions
Total current liabilities
31 December 2019
US$’000
31 December 2018
US$’000
57,411
227
8,589
66,227
39,246
3
8,155
47,404
Current liabilities have increased by US$18.8 million or 40% from US$47.4 million at 31 December 2018 to US$66.2 million at 31
December 2019, as a result of:
• US$3.8 million increase in trade payables (+ve);
• US$14.4 million increase in accruals (+ve) mainly at a corporate level related to advisor fees regarding the Endeavour bid;
• US$0.2 million increase in tax provisions (+ve); and
• US$0.4 million increase in current provisions (+ve).
Non current liabilities
Provisions
Total non current liabilities
31 December 2019
US$’000
31 December 2018
US$’000
14,575
14,575
13,748
13,748
Non current liabilities have increased by US$0.9 million from US$13.7 million at 31 December 2018 to US$14.6 million at 31
December 2019, as a result of an increase in the rehabilitation provision.
Centamin Annual Report 2019
59
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FINANCIAL REVIEW CONTINUED
Equity
Issued capital
Share option reserve
Accumulated profits
Total equity
31 December 2019
US$’000
31 December 2018
US$’000
672,105
4,179
615,353
1,291,637
670,589
5,688
610,540
1,286,817
There has been a 1,232,400 increase in the number of issued shares over the period due to share-based payment awards vesting.
Share option reserves reported have decreased by US$1.5 million to US$4.2 million as result of:
• US$1.7 million due to the reversal of a 2016 RSP awards that didn’t meet the vesting conditions (-ve);
• US$1.3 million due to the vesting of the remaining 2016 RSP awards on 4 June 2019 (-ve);
• US$1.0 million due to forfeiture of share-based payment awards on resignation (-ve); offset by
• US$2.5 million for the recognition of the share based payment expenses for the year and new share-based payment awards granted
in 2019 (+ve).
Accumulated profits increased by US$4.8 million from US$610.5 million at 31 December 2018 to US$615.4 million at 31 December
2019, as a result of:
• US$173.0 million profit for the year after tax (+ve); offset by
• US$87.1 million profit share paid to EMRA in the year (-ve); and
• US$34.7 million 2018 shareholder approved final dividend and US$46.4 million 2019 interim dividend paid (-ve).
Consolidated statement of cash flows
Cash flows from operating activities
Cash generated from operating activities
Income tax refund received
Income tax paid
Net cash generated by operating activities
31 December 2019
US$’000
31 December 2018
US$’000
249,048
170
(214)
249,004
223,791
–
(387)
223,404
Net cash flows generated by operating activities comprise receipts from gold and silver sales and interest income, offset by operating
and corporate administration costs.
Cash flows from investing activities
Acquisition of financial assets at fair value through profit or loss
Disposal of financial assets at fair value through profit or loss
Acquisition of property, plant and equipment
Brownfield exploration and evaluation expenditure
Finance income
Net cash used in investing activities
31 December 2019
US$’000
31 December 2018
US$’000
(9,364)
6,799
(81,207)
(12,198)
5,817
(90,153)
–
–
(83,454)
(4,946)
4,815
(83,585)
Net cash flows used in investing activities comprise exploration expenditure and capital development expenditures including the
acquisition of financial assets. The primary use of the funds in the period was for purchase and disposal of an equity interest in a listed
public company, purchase of property, plant and equipment and investment in underground development at the Sukari site in Egypt.
60
Centamin Annual Report 2019
Cash flows from financing activities
Dividend paid – non-controlling interest in SGM
Dividend paid – owners of the parent
Net cash used in financing activities
31 December 2019
US$’000
31 December 2018
US$’000
(87,075)
(81,029)
(168,104)
(76,391)
(144,567)
(220,958)
Net cash flows used in financing activities comprise dividend payments to the non-controlling interest in SGM, being EMRA and
dividend payments to the owners of the parent, being shareholders of the Group.
Effect of foreign exchange rate changes
31 December 2019
US$’000
31 December 2018
US$’000
4,855
4,086
Effects of exchange rate changes are as a result of movements of the currencies used across the operations in the year.
Capital expenditure
The following table provides a breakdown of the total capital expenditure of the Group:
Underground exploration
Underground mine development
Other sustaining capital expenditure
Total sustaining capital expenditure
Non-sustaining exploration expenditure (1)
Other non-sustaining capital expenditure
Year ended
31 December 2019
US$’000
Year Ended
31 December 2018
US$’000
7,769
36,852
40,471
85,092
8,709
3,779
6,048
37,161
45,982
89,191
7,587
–
(1) Includes US$7.8 million of Sukari expenditure relating to Cleopatra in non-sustaining capital expenditure before the offset of net pre-production gold sales.
Cumulative exploration expenditure capitalised for Cleopatra at Sukari is US$23.0 million (project to date) offset by pre-production
net revenues of US$17.8 million (refer to notes 2.2 and 2.3 to the financial statements for further details) resulting in US$5.2 million
remaining on the statement of financial position at 31 December 2019.
Exploration expenditure
The following table provides a breakdown of the total exploration expenditure of the Group:
Greenfield exploration
Burkina Faso
Côte d’Ivoire
Total greenfield exploration expenditure
Brownfield exploration
Sukari Tenement
Cleopatra(1)
Total brownfield exploration expenditure
Total exploration expenditure
(1) Cleopatra expenditure before the offset of net pre-production gold sales.
Year ended
31 December 2019
US$’000
Year Ended
31 December 2018
US$’000
2,715
14,168
16,883
8,685
7,793
16,478
33,361
5,223
15,783
21,006
6,048
7,587
13,635
34,641
Centamin Annual Report 2019
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FINANCIAL REVIEW CONTINUED
Exploration and evaluation assets – impairment considerations
In consideration of the requirements of the International Financial Reporting Standards (“IFRS”) 6 an impairment test has been
performed. On review, no impairment was required.
Foreign exchange gain, net
Year ended
31 December 2019
US$’000
Year ended
31 December 2018
US$’000
5,806
6,372
Foreign exchange gains have decreased from a US$6.4 million gain to a US$5.8 million gain, resulting in a US$0.6 million decrease on 2018.
Subsequent events
As referred to in note 5.2, subsequent to the year end, the Board resolved to declare a 2020 first interim dividend to replace the
2019 final dividend. The 2020 first interim dividend of 6 US cents per share (US$69.4 million), the same quantum as the previously
proposed 2019 final dividend (announced on 14 January 2020), was not subject to shareholder approval and was paid on 15 May
2020 to shareholders.
The outbreak of the coronavirus COVID-19 will likely have an impact on the Group as well as on supply chain and production.
Considering that the spread of the virus accelerated during the first quarter of 2020 and its impact as at 31 December 2019 was
minimal, this event was classified as a non-adjusting event for accounting purposes. Given the uncertainties on scope and length as
well as the ongoing developments, the Group cannot give any accurate or reliable estimates on potential quantitative impacts currently.
This may result in an overall challenged and volatile market environment. The assessment on the ability of the Group to operate as
going concern is disclosed under note 1.3.7.
There were no other significant events occurring after the reporting date requiring disclosure in the financial statements.
Non-gaap financial measures
Four non-GAAP financial measures are used in this report:
1) EBITDA and adjusted EBITDA
EBITDA is a non-GAAP financial measure, which excludes the following from profit before tax:
• Finance costs;
• Finance income; and
• Depreciation and amortisation.
Management considers EBITDA 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
cost of production 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 period before tax.
Reconciliation of profit before tax to EBITDA and adjusted EBITDA:
Profit for the year before tax
Finance income
Interest expense
Depreciation and amortisation
EBITDA
Add back/less: (2)
Profit on financial assets at fair value through profit or loss
Impairments of non-current assets
Adjusted EBITDA
31 December 2019(1)
US$’000
31 December 2018(1)
US$’000
173,029
(5,817)
569
116,187
283,968
(3,889)
–
280,079
152,702
(4,815)
870
110,047
258,804
–
–
258,804
(1) Profit before tax, depreciation and amortisation and EBITDA includes a charge to reflect the removal of fuel subsidies (refer to note 2.8 to the financial statements for further details).
(2) Adjustments made to normalise earnings, for example profit on financial assets at fair value through profit or loss, impairments of property, plant and equipment, non-current mining
stockpiles and exploration and evaluation assets.
62
Centamin Annual Report 2019
2) Cash cost of production per ounce produced and sold and all-in sustaining costs per ounce sold calculation
Cash cost of production and AISC are non-GAAP financial measures. Cash cost of production 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 sustaining administrative expenses, royalties, depreciation
and amortisation. Management uses this measure internally to better assess performance trends for the Company as a whole.
Management considers 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. Management considers 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 cost of production 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.
During June 2013 the World Gold Council (“WGC”), an industry body, published a Guidance Note on the ‘all in sustaining costs’ metric,
which gold mining companies can use to supplement their overall non-GAAP disclosure. AISC is an extension of the existing ‘cash
cost’ metric and incorporates all costs related to sustaining production and in particular recognising the sustaining capital expenditure
associated with developing and maintaining gold mines. In addition, this metric includes the cost associated with developing and
maintaining gold mines. In addition, this metric includes the cost associated with corporate office structures that support these
operations, the community and rehabilitation costs attendant with responsible mining and any exploration and evaluation costs
associated with sustaining current operations. AISC US$/oz is arrived at by dividing the dollar value of the sum of these cost metrics,
by the ounces of gold sold (as compared to using ounces produced which is used in the cash cost of production calculation).
On 14 November 2018 the World Gold Council published an updated Guidance Note on ‘all-in sustaining costs’ and ‘all-in costs’
metrics. Per their press release it was expected that companies have chosen to use the updated guidance from 1 January 2019 or on
commencement of their financial year if later. The Group have applied the updated guidance from 1 January 2019 with no impact on
our results or comparatives.
Reconciliation of cash cost of production per ounce produced:
Mine production costs (note 2.3)
Less: Refinery and transport
Movement of inventory(2)
Cash cost of production – gold produced
Gold produced – total (oz.) (excluding Cleopatra)
Cash cost of production per ounce produced
31 December 2019(1)
31 December 2018(1)
351,745
(1,415)
(17,293)
333,037
476,195
699
328,090
(1,508)
(37,188)
289,394
463,459
624
US$’000
US$’000
US$’000
US$’000
oz
US$/oz
(1) Mine production costs, cash cost of production, cash cost of production per ounce, AISC and AISC per ounce sold includes prepayments recorded since Q4 2012 to reflect the
removal of fuel subsidies (refer to note 2.8 to the financial statements for further details).
(2) The movement in inventory on ounces produced is only the movement in mining stockpiles and ore in circuit while the movement in ounces sold is the net movement in mining
stockpiles, ore in circuit and gold in safe inventory.
Centamin Annual Report 2019
63
> Strategic Report> Overview> Financial Statements> Corporate Governance> Shareholder Information STRATEGIC REPORT
FINANCIAL REVIEW CONTINUED
A reconciliation has been included below to show the cash cost of production metric should gold sold ounces be used as a denominator.
Reconciliation of cash cost of production per ounce sold:
Mine production costs (note 2.3)
Royalties
Movement of inventory(2)
Cash cost of production – gold sold
Gold sold – total (oz.) (excluding Cleopatra)
Cash cost of production per ounce sold
31 December 2019(1)
31 December 2018(1)
351,745
19,701
(28,254)
343,192
465,687
737
328,090
18,396
(31,296)
315,190
475,362
663
US$’000
US$’000
US$’000
US$’000
oz
US$/oz
(1) Mine production costs, cash cost of production, cash cost of production per ounce, AISC and AISC per ounce sold includes prepayments recorded since Q4 2012 to reflect the
removal of fuel subsidies (refer to note 2.8 to the financial statements for further details).
(2) The movement in inventory on ounces produced is only the movement in mining stockpiles and ore in circuit while the movement in ounces sold is the net movement in mining
stockpiles, ore in circuit and gold in safe inventory.
Reconciliation of AISC per ounce sold:
Mine production costs (note 2.3)
Movement in inventory
Royalties
Sustaining corporate administration costs
Rehabilitation costs
Sustaining underground development and exploration
Other sustaining capital expenditure
By-product credit
All-in sustaining costs(2)
Gold sold – total (oz.) (excluding Cleopatra)
AISC per ounce sold
31 December 2019(1)
31 December 2018(1)
351,745
(28,254)
19,701
11,610
410
44,621
40,471
(987)
439,317
465,687
943
328,090
(31,296)
18,396
15,909
870
43,209
45,982
(1,044)
420,116
475,362
884
US$’000
US$’000
US$’000
US$’000
US$’000
US$’000
US$’000
US$’000
US$’000
oz
US$/oz
(1) Mine production costs, cash cost of production, cash cost of production per ounce, AISC and AISC per ounce sold includes prepayments recorded since Q4 2012 to reflect the
removal of fuel subsidies (refer to note 2.8 to the financial statements for further details).
(2) Includes refinery and transport.
Corporate costs
Sustaining corporate costs
Non-sustaining corporate costs(1)
Corporate costs (sub-total) (note 2.3)
31 December 2019
US$’000
31 December 2018
US$’000
11,610
7,318
18,928
15,909
–
15,909
(1) Please note that non-sustaining corporate costs relate to accruals recognised for work performed by the Group’s advisors on the successful defence of the Endeavour all-share
acquisition attempt of Centamin plc. This is not a normal cost incurred in the day-to-day operations of running the Group and as such has been excluded from our Non-GAAP
reporting measures.
64
Centamin Annual Report 2019
3) Cash and cash equivalents, bullion on hand, gold and silver sales debtor and financial assets at fair value through profit or loss
Cash and cash equivalents, bullion on hand, gold and silver sales debtor and financial assets at fair value through profit or loss is a
non-GAAP financial measure. Cash and cash equivalents, bullion on hand, gold and silver sales debtor and financial assets at fair
value through profit or loss is a measure of the available cash and liquid assets at a point in time. Management uses this measure
internally to better assess performance trends for the Company as a whole. Management considers 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. Management considers 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 and
cash equivalents, bullion on hand, gold and silver sales debtor and financial assets at fair value through profit or loss 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 cash
and cash equivalents as determined under GAAP. This is a non-GAAP financial measure and other companies may calculate these
measures differently.
Reconciliation to cash and cash equivalents, bullion on hand, gold and silver sales debtor and financial assets at fair value through profit or loss:
Cash and cash equivalents (note 2.16(a))
Bullion on hand (valued at the year end spot price)
Gold and silver sales debtor (note 2.7)
Financial assets at fair value through profit or loss (note 2.6)
Cash and cash equivalents, bullion on hand, gold and silver sales debtor
and financial assets at fair value through profit or loss
31 December 2019
US$’000
31 December 2018
US$’000
278,229
29,562
34,695
6,454
282,627
11,431
28,234
–
348,940
322,292
4) Free cash flow and adjusted free cash flow
Free cash flow is a non-GAAP financial measure. Free cash flow is a measure of the available cash after distributions to the non-
controlling interest (“NCI”) in SGM, being EMRA, that the Group has at its disposal to use for capital reinvestment and to distribute to
shareholders of the parent as dividends in accordance with the Company’s dividend policy. Management uses this measure internally
to better assess performance trends for the Company as a whole. Management considers 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. Management considers 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. Free cash flow 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. This is a non-GAAP financial measure and other companies
may calculate these measures differently.
Net cash generated by operating activities
Less:
Net cash used in investing activities
Dividend paid – non-controlling interest in SGM
Free cash flow
Add back:
Net acquisitions of financial assets at fair value through profit or loss(1)
Adjusted free cash flow
31 December 2019
US$’000
31 December 2018
US$’000
249,004
223,404
(90,153)
(87,075)
71,776
2,565
74,341
(83,585)
(76,391)
63,428
–
63,428
(1) Adjustments made to free cash flow, for example acquisitions and disposals of financial assets at fair value through profit or loss, which are completed through specific allocated
available cash reserves.
Centamin Annual Report 2019
65
> Strategic Report> Overview> Financial Statements> Corporate Governance> Shareholder Information
STRATEGIC REPORT
RISK MANAGEMENT AND PRINCIPAL RISKS
RISK MANAGEMENT
AND PRINCIPAL RISKS
Risk management allows the Board to make
informed, timely and accurate decisions,
allowing delivery of its objectives.
MARK ARNESEN
CHAIRMAN OF THE
AUDIT AND RISK
COMMITTEE
A COVID-19 EXECUTIVE
COMMITTEE HAS BEEN
ESTABLISHED TO PROVIDE
OPERATIONAL OVERSIGHT
DURING THE PANDEMIC,
FURTHERMORE AN ESTABLISHED
SITE SUPPORT FRAMEWORK
IS IN PLACE WHICH INCLUDES
DAILY WORKFORCE AND
SUPPLY CHAIN RISK REVIEWS.
Dear Shareholder,
I am pleased to present the Group’s
principal risks and uncertainties report for
the year ended 31 December. As you will
be aware the recent COVID-19 pandemic
has impacted businesses globally, we
provide more detail on COVID-19 in
the Strategic Report on page 20. We
recognise the severity of the potential
risks which have arisen from COVID-19 so
have reflected this as a new and emerging
risk at this stage, as the potential impacts
arising from this are still developing due to
the dynamic nature of this pandemic.
Centamin recognises that nothing is
without risk. A successful and sustainable
business needs an effective risk
management framework as its foundation,
to allow for a strong understanding of
the risks and opportunities that will allow
for more informed decision making.
The framework should be supported
by a strong culture of risk awareness,
that encourages openness and integrity,
alongside a clearly defined appetite to
risk. This empowers the Board to make
informed, timely and accurate decisions,
allowing for the successful delivery of
its objectives.
66
Centamin Annual Report 2019
Building on the progress made in 2018,
we have continued to develop our
approach to risk throughout the Group.
Acknowledging how quickly the world is
changing, the Board refreshed the risk
management framework to ensure it
effectively supports the identification and
assessment of the risks we face as
a business.
Across our operations in Egypt and West
Africa, we have taken steps to build a
fuller picture of our emerging risks at an
operational and corporate level. Whilst the
Board, Executive and senior management
review, challenge and monitor risk on a
day-to-day basis, the Group has continued
to develop a risk aware culture across its
operations in Sukari and West Africa.
Ultimately, our risk management
framework as shown below in Risk
oversight and accountability ensures
we robustly assess our principal risks,
that new and emerging risks are
discussed and aids our overall assessment
of whether the Group is adequately
prepared for the potential opportunities
and threats they present.
Risk Management Progress in 2019
• The key focus of 2019 was to refresh
our approach to risk management.
Management had support from PwC
to roll out and embed our updated
framework, across our operations
and support functions. More details
can be found in the following case
study. ‘A refreshed approach to risk
management’
• Within our framework, we formalised
the risk reporting process through
to management, the Audit and Risk
Committee and the Board. We also
established risk ownership and
designated roles and responsibilities
throughout the Group
• We developed the ‘bottom-up’ view of
risk across the Group. This included
a refresh of our operational and central
function risk information and the
appointment of risk owners within
Egypt and West Africa
We achieved the above through extensive
engagement and time on site with senior
management and personnel in Egypt and
West Africa.
Case Study
A REFRESHED APPROACH TO RISK MANAGEMENT
It was a priority of both the Board and senior management to refresh our approach
to risk management throughout 2019.
We recognise that effective risk management, internal control and governance are
becoming increasingly elevated on the agenda of our stakeholders. To this end, we
support recent changes in standards and have fully adopted the provisions of the
2018 UK Corporate Governance Code (“2018 Code”).
Supported by the new leadership team, we set the following objectives for the year:
1. The ‘bottom-up’ view of risk – Establish ‘bottom-up’ risk structures and processes
to better understand the risk profile of our operations and developments
2. New and emerging risks – Embed a methodology for the assessment and
evaluation of new and emerging risks facing the business, and
3. Risk awareness, culture and communication – Develop a culture of risk awareness
and understanding throughout our operations in Egypt, West Africa and at a
Corporate level.
Each of these objectives were achieved through extensive engagement, and time
on site, with senior management and personnel in Egypt and West Africa. We also
continued our relationship with the Risk Assurance team at PwC, who supported us
with guidance and ensured alignment to recognised good practice. Below, we have
outlined our approach to this delivery:
1) ‘Bottom-up’ view of risk
The primary objective was to embed our risk management framework throughout
our operations. This included establishing a risk-reporting process and structures to
ensure risks are escalated appropriately through to management, the Audit & Risk
Committee and the Board.
We also completed a refresh of our operational and central function risk information
including establishing clear risk ownership, roles and responsibilities across Egypt and
West Africa. We achieved this through the completion of a series of risk awareness
sessions on site, facilitated by management and supported by PwC.
2) New and emerging risks
Aligned to recent changes in the 2018 Code we looked to better understand and
refine our methodology for assessing new and emerging risks facing the Group.
This included the introduction of monthly risk-focused meetings for all operational
activities and the introduction of the IsoMetrix Risk Management System for use in
the operations which we are rolling out through 2020.
Each of these activities support the Group in making more effective strategic and
operational decisions as well as better preparing us for any opportunities or threats
we may encounter.
3) Risk awareness, culture and communication
As well as embedding our risk reporting and escalation process, we aimed to further
develop our risk awareness culture and ways of working throughout the business.
Improving our culture and communication helps us to ensure the strategic aims of the
business are understood, we are capable of embracing innovation at a site level and
understand where areas of risk need to be managed effectively.
An example of this initiative, in action, is where we have introduced daily ‘safety-
shares’ across the operations, appointed the Head of Risk in 2019 who then started
in March 2020, as well as improved reporting systems to enable more relevant and
timely information sharing through the heads of department, senior management and
the executives.
Craig Murray
Head of Risk
Centamin Annual Report 2019
67
> Strategic Report> Overview> Financial Statements> Corporate Governance> Shareholder Information STRATEGIC REPORT
RISK MANAGEMENT AND PRINCIPAL RISKS CONTINUED
RISK MANAGEMENT IN 2020:
Throughout 2020 the Board will take the following steps:
• Ensure that we continue to drive our response to the
COVID-19 pandemic including the potential risks and
impacts this may bring to the Group
• Continue enhancing our existing governance and oversight
structures including the appointment of a Head of Risk who
started in March 2020
• Support the Head of Risk in the execution of our strategy and
the management of any risks that may adversely impact, or
those opportunities which could improve our performance.
They will work closely with the head office team, reporting
directly to the CEO in order to provide assurance and
implement Board and Audit and Risk Committee led
recommendations over the businesses systems of risk
and internal control
• Introduce the IsoMetrix risk software across our operations.
IsoMetrix will support the integration of our governance, risk
and compliance activities. This will allow for greater analysis
and insight into our risk profile and allow for more informed
decision-making
• Continue to hold awareness workshops with our workforce
to embed our values and cultural identity as a leading
operator, dedicated to improving health, safety and wellbeing
• Further evolve our approach to risk including the
introduction of quarterly reporting by each operating unit.
This will increase understanding of risk across the operations
and improve our ability to manage any areas of concern
as required
• Continue to assign oversight and review to the Audit and
Risk Committee over all operational and corporate risks,
providing recommendations and seeking assurance as
deemed appropriate
• Complete its periodic assessment of new and emerging risks
facing the Group
• Continue to, at least annually, hold a session on strategy with
risks and opportunities at the heart of the discussion. This
will also act as an opportunity to further develop the Board’s
collective and individual risk appetite.
68
Centamin Annual Report 2019
The management of risk through
identification, monitoring and mitigation
allows the Group to improve its decision-
making process, deliver on its objectives
and improve its performance as a
mining company.
The Board has overall responsibility for
establishing a robust risk management
framework that allows for the assessment
and management of material corporate
and operational risks. In addition, the
Board is responsible for articulating
the Group’s risk appetite against the
principal risks.
The Board reviews existing, new and
emerging risks in the context of both
opportunities and potential threats. This
is then applied when challenging the
strategic objectives of the Company that
underpin the business model.
The Group’s risk management framework
(the “Framework”) outlines the business
approach and process for management
of risk.
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Risk oversight and accountability
As shown in the table and diagram
below, ultimate accountability for risk
management lies with the Board,
supported by the Audit and Risk
Committee. We have acknowledged
the importance of developing our
approach to risk management through
the appointment of the Head of Risk
with a remit for further development of
the framework allowing identification,
assessment, mitigation and monitoring
of risks throughout the business.
Our Framework ensures we have in place
the three clear lines of defence, whilst
ensuring the information that flows from
the reporting lines is relevant with timely
and can genuinely support the Board’s
strategic decisions.
BOARD
AUDIT AND RISK COMMITTEE
OPERATIONS
EXECUTIVE & SENIOR
MANAGEMENT
SUKARI GOLD MINE
HEAD OF RISK
WEST AFRICA
CENTRAL FUNCTIONS
FIRST LINE OF DEFENCE
• Responsible for implementing framework
and providing assurance to the Executive
• Monitoring of management controls
• ‘Bottom-up’ risk identification,
assessment and monitoring
SECOND LINE OF DEFENCE
• The Board is ultimately responsible
for risk management supported by the
Executive & Senior Management and the
Head of Risk
• Executive ensure the Framework is
implemented across Centamin
• Central functions provide assurance to
the Executive and Head of Risk, plus
provide oversight across key functions
INTERNAL AUDIT
THIRD LINE OF DEFENCE
• ARC independently reviews the adequacy
and effectiveness of risk, has oversight
of the policies setting the Framework
and oversees the implementation of risk
management
• IA provides assurance to senior
management and the Audit and Risk
Committee on the effectiveness of the
Framework
Centamin Annual Report 2019
69
STRATEGIC REPORT
RISK MANAGEMENT AND PRINCIPAL RISKS CONTINUED
Risk Reporting
Further details of the work of the Audit
and Risk Committee are set out in the
Audit and Risk Report along with details
of the internal risk reporting on page
135. Importantly, a key area of focus
will be in developing a fresh reporting
platform, developed from an operational
level up through the reporting channels, to
enhance the information provided to the
Board and to aid decision making.
The Executive and senior management
review, challenge and monitor ongoing
risks on a day-to-day basis. The
consolidation and analysis of this
information is assessed on a quarterly
basis and reported to the Board through
the Audit and Risk Committee.
New and emerging risks
Due in part to the nature of the business
as an operating mining company,
the headline principal risks, whilst
fundamental to the ongoing operation,
remain constant. The Audit & Risk
Committee and Board regularly review
the principal risks as well as the wider
operational, corporate and general
business risks including a discussion on
new and emerging risks.
Management consider the business
reports and risk registers as well as full
details and corrective actions of all high
level incidents, leading indicators, hazard
identification and any resulting procedural
changes. During 2019, management have
also introduced a monthly risk-focused
meeting covering all operational activities
as well as the IsoMetrix Risk Management
system. This tool allows the business
to better analyse and aggregate its risk
information and to identify risk trends.
Periodic incident and other operational
reports, updates to the operational risk
registers and regular communication with
the site General Manager (“GM”) allow
management to assess emerging risks
or secondary risks that may elevate to
principal risks. By identifying emerging
risks or changes in the secondary or
tertiary risk registers early, management
are able to consider policy or procedural
changes to mitigate the risk. Additional
resources or training needs may be
identified. At an operational level,
opportunities may exist to improve the
safety environment and efficiency of the
operations. Opportunities may also exist
at a strategic or corporate level and will
be discussed in the context of wider
strategy setting. The use of insurance,
consultants and specialists to help
mitigate risks may also be an option.
Below we have outlined a non-exhaustive
list of emerging risks assessed during
the year. These risks are reflected within
our principal risks where possible but
the Company recognises the need to
summarise those new and emerging
risks which have been considered.
We also recognise the global pandemic
of COVID-19 as a threat which brings
a number of potential risks to our
people and business. Management
have completed a risk assessment of
the potential risks, their impacts to our
people and business and have taken
steps to develop a dynamic action plan
at a corporate and site level supported by
resources focusing on our response day to
day. We have covered this in greater detail
in the Strategic Report on page 20.
70
Centamin Annual Report 2019
Coronavirus (COVID-19)
Thus far in 2020, COVID-19 has
significantly impacted the world,
presenting an unprecedented medical,
economic and social challenge. Centamin
has been proactive in how it manages
and mitigates the impacts within its
control. As of 18 May 2020, Centamin
has no recorded cases of COVID-19
on-site and has experienced no material
disruption to operations, supply chain
or gold shipments. The Company has,
however, put in place contingency plans
to deal with various possible disruption
in the coming months. Furthermore,
we recognise the macro-economic
uncertainty this has created including
volatility in the markets. The scale and
duration remains uncertain but we
recognise this could impact our financial
condition which we continue to monitor
and are prepared to manage accordingly.
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Centamin Annual Report 2019
71
STRATEGIC REPORT
RISK MANAGEMENT AND PRINCIPAL RISKS CONTINUED
Environment and Sustainability
In an ever-changing world, we acknowledge
that we have a responsibility to meet
our environmental and sustainability
commitments and obligations.
Climate Change
At Centamin, we recognise that climate
change is a growing global risk. We also
acknowledge that it is directly influenced
by human and business activity that
requires decisive global action. Failure to
act could have significant impacts for our
business including regulatory, transition
and physical risks.
Further details on our approach to ESG
activities can be found in our standalone
2019 Sustainability Report which will be
published in June 2020.
Tailings Storage Facility
Across the industry there is increased
focus on the risks associated with mining
companies’ tailings facility. We continue
to monitor this risk, completing regular
internal and external technical reviews of
the facility. We are also developing a new
facility for 2021.
Corporate Action
In light of recent events, management
must be ready to evaluate approaches
and opportunities to ensure value for
shareholders is maintained and enhanced.
The Board will continue to review any
approaches to ensure the interests of its
shareholders are protected.
Retention of Personnel
Any future changes in senior positions
across the business must be managed
carefully, to ensure consistent delivery
of the Company’s values and that the
workforce remains well supported.
Governance and Regulation
Non-compliance with the regulatory and
legal environment has the potential for
significant negative publicity as well as
fines and penalties. The management
team ensures it has access to legal,
regulatory and compliance support
across all of its jurisdictions.
Business Development
Egypt continues to represent a significant
opportunity for exploration and future
development for the Company which we
are well placed strategically to consider.
The opportunity has been enhanced as
the government makes progress towards
a new mining law and new commercial
terms for exploration in the region. All new
or potential land holdings for exploration
will need to be carefully considered and
appropriately risk assessed.
Capital Projects
Ensuring capital projects are managed
within time and budget is an emerging
risk under review due to the ongoing
situation with COVID-19. These include
the potential Solar plant at Sukari, the
development of the new TSF2 and
feasibility studies to assess the viability of
an operation in Côte d’Ivoire.
Local Security – West Africa
Increased militant activity in West Africa
has caused concern for safety in-country.
This will be monitored closely and local
Gendarmes and Centamin security
personnel are being consulted.
72
Centamin Annual Report 2019
Risk Appetite
The Board accepts that 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. The Group
therefore takes an informed approach to these risks, accepting their inherent
nature whilst looking to ensure we recognise and maximise any opportunities
that they create. In considering risk appetite, the Board considered the level of
acceptable risk (tolerance), the attitude and culture towards risk and the ways
in which the Board can influence risk appetite throughout the Group.
We will consider
opportunities with
higher levels of risk in
exchange for potential greater
reward, as long as they
do not conflict with
our core pillars.
We will have an
approach that could
deliver reasonable rewards,
economic or otherwise,
by managing risk in an
informed way.
Risk Appetite defined
HIGH
INFORMED
BALANCED
LOW
We will not take
any unnecessary risk
within our control, however,
we have an understanding that
inherently we have limited
control over a number
of external risk
factors.
We will ensure
that we have sufficient
controls and mitigations in
place to allow for a low level
of risk whilst recognising
there may be a limited
reward potential.
In considering risk appetite, the Board
is clear that the Group has:
• A low appetite to breaches in our
policies and controls to health, safety
and environment (HSE). The Board
invests heavily in a programme of
continuous improvement in HSE
practices and has an expectation to
meet the highest standards
• A balanced risk appetite towards
meeting our regulatory and legal
obligations, whilst considering the
potential impact of external risks such as
commodity prices, geopolitical change
and achieving production estimates
• An informed risk appetite towards
the achievement of its strategic
objectives, where risks are reduced
to reasonably practicable levels, such
as gold production or reserves and
resources, and
• Opportunistic view demonstrating a high
appetite in pursuit of mineral exploration
and development
The Board agreed that due to the nature
and inherent risks associated with an
operating mining company, the Board
overall accepts a higher risk appetite,
however this needs to be managed within
acceptable limits by having appropriate
safeguards in place.
The principal risks identified by the Board
and disclosed below, evidence the extent
of potential consequences inherent in
operating a large-scale mining operation
and we have included our view on the
appetite to these risks at a point in time
at the end of 2019, however it should
be noted that these risks are discussed
regularly, and our appetite could change
based on a number of factors. The
Board assesses regularly the measures
to mitigate these risks and limit the
likelihood of incidents.
Centamin Annual Report 2019
73
> Strategic Report> Overview> Financial Statements> Corporate Governance> Shareholder Information STRATEGIC REPORT
RISK MANAGEMENT AND PRINCIPAL RISKS CONTINUED
THE DIRECTORS CONFIRM THAT A ROBUST
ASSESSMENT OF THE PRINCIPAL RISKS IMPACTING
THE COMPANY HAS BEEN UNDERTAKEN.
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. Due to the nature of these
inherent risks, it is not possible to give
absolute assurance that mitigating actions
will be wholly effective.
During the year there have been
substantial changes to the senior
management team on site. The
personnel changes sought to address
the production issues experienced
in 2018 and whilst there was a small
shortfall against guidance in 2019, the
production profile and predictability of
delivery was much improved.
Of particular note is the susceptibility
of a change in the estimated average
grade delivered from the underground
operation at Sukari and reliability of
low-grade ore from the open pit. A
reduction in grade, or mining efficiency,
can significantly affect production levels,
which could have a material impact of
annual production guidance. The quality
of personnel, management and oversight
in preparing and delivering the mine plan
can all significantly impact the reliability
and successful extraction of high-grade
material and efficient extraction of low-
grade material.
Resourcing of the technical services area
in the underground operation, exploration
team and open pit have been crucial in
understanding this complex yet high-grade
ore body at Sukari. At a financial level, an
impairment review was carried out, details
of which are set out in page 163.
The Directors confirm that a robust
assessment of the principal, new and
emerging risks impacting the Company
has been undertaken which identified
principal, strategic and operational risks
at a corporate level through to those
impacting our operations in Egypt and
West Africa.
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Centamin Annual Report 2019
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Risk Likelihood and Impact
The Board considers the principal risks
both in terms of their relative ‘likelihood’ to
occur, given the mitigating factors in place,
and their relative ‘impact’, should an event
materially impact on the business.
The graph depicts management’s priorities
and of particular note is the greater
emphasis on delivering our production
estimates. This elevated risk relates to
the reliability of the underground mining
operation at Sukari to deliver both tonnes
and high-grade material.
Our social license to operate remains
a high priority and whilst appropriate
mitigation is in place, relations with our
partner, EMRA, remain of significant
importance and a priority of management.
We recognise with the recent COVID-19
pandemic that a number of these
risks could be further impacted, we
are considering this impact and have
mitigations in place to minimise the
likelihood and impact this may have.
However, due to the changing nature of
the pandemic we are keeping the risk
disclosure consistent with the discussion
held to date and have addressed the key
points on page 20.
The current status of the principal risks
affecting Centamin and its operational and
exploration activities, together with the
measures to mitigate risk, are detailed
in the section ‘Principal risks’.
a
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Low likelihood
High likelihood
Priority
Management Priority
Prior Years Position
Strategic
a
Single Project
Dependency
b
c
JV Risk and Relationship
with EMRA
Jurisdictional Taxation
Exposure
External
d Gold price
e Political Risk – Sukari
f
Political Risk – West
Africa
g Litigation
Operational
h Exploration Development
i
j
Reserve and Resource
Estimate
Failure to Achieve
Rroduction Estimates
Centamin Annual Report 2019
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> Strategic Report> Overview> Financial Statements> Corporate Governance> Shareholder Information
STRATEGIC REPORT
RISK MANAGEMENT AND PRINCIPAL RISKS CONTINUED
PRINCIPAL RISK
TREND
NATURE OF RISK
Trend Key
W
Slightly worse
C
I
Consistent
Slightly improved
Strategic Risk
Loss of revenue due
to single project
dependency
Link to strategy
Strategic Risk
Sukari Gold Mine
relationship with our
partners EMRA
Link to strategy
Strategic Risk
Jurisdictional
taxation exposure
Link to strategy
I
I
I
W
The Sukari Gold Mine currently constitutes Centamin’s main mineral
resource and sole mineral reserve, near-term production and revenue.
Whilst the resource base in West Africa is growing, the regional
exploration is not sufficient to support the development of a mining
operation at the time of reporting.
C
We recognise the COVID-19 pandemic may impact this risk but have
covered this further on page 20.
Until further production growth beyond Sukari is identified, the
potential impact remains high and safeguarding the project is
paramount to the Company.
The identification of significant resources in Côte d’Ivoire and timeline
to build an operation in the region has resulted in an improving trend.
W
Whilst Centamin retains control over the project, the holding company,
SGM, is jointly owned by the Company’s wholly owned subsidiary, PGM
and EMRA with equal board representation from both parties. The
board of SGM operates by way of simple majority. Should a dispute
arise which cannot otherwise be amicably resolved, arbitration or other
proceedings may need to be employed.
C
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.
W
The Group’s corporate structure includes operational activity in Egypt
and West Africa held through holding companies in Australia and
the United Kingdom. Exposure to changing cross jurisdictional tax
legislation could have an adverse effect on the Company’s ability to
repatriate revenues.
C
A key milestone under the terms of the Sukari Concession Agreement
is the entitlement to a further 15-year exemption from any taxes
imposed by the Egyptian government on the revenues generated from
the Sukari Gold Mine. The application by PGM and EMRA to extend
the tax free period for a further 15 years is due in April 2025, and a
condition to the renewal is that there are no tax disputes outstanding
from the initial period as well as certain planned exploration activities
on the concession as agreed between the parties.
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Centamin Annual Report 2019
RISK APPETITE
Level: Informed
Risk appetite is at an acceptable level, with
appropriate levels of mitigation in place to
reduce the likelihood of significant loss of
revenue due to single project dependency.
COMPANY
OBJECTIVE/STRATEGY
At Sukari, the process plant has been
designed with sufficient resilience and
redundancies within the operating cycle.
The exploration projects across the
business provide a well-balanced project
pipeline, with potential to add incremental
shareholder value by increasing production
across the Group.
The regional exploration on the licence
portfolio in West Africa continues.
A maiden reserve is targeted for 2021
at the Doropo Project, with potential
revenue generation in the future.
A key objective of the Company is to
maintain our social license to operate. This
is achieved through co-operation, regular
meetings and correspondence with EMRA,
as well as making sure that the terms and
conditions of the Concession Agreement
governing the mine are fully complied with.
Level: Balanced
Risk appetite is at an acceptable level, with
appropriate levels of mitigation in place.
To minimise the complexity of the corporate
structures ensuring tax neutrality within the
holding group entities.
Level: Balanced
Simplification of the structure is ongoing;
however, the mitigation in place is at an
acceptable level and therefore operating
within the parameters of our current risk
appetite.
MITIGATION
Sukari Gold Mine: the project at Sukari
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. The second
circuit of the process plant has been fully
operational for over two years, which shows
the resilience of the project. In addition,
the plant is fed by both the open pit and
underground operation, providing higher
and lower-grade ore to the processing
plant. Operational activity and production
is expected to continue at above nameplate
capacity. Other mitigating factors, outside
the single project at Sukari, include the
continued focus on longer term growth
and expansion through exploration and
acquisition targets both inside and outside
of Egypt.
Maintaining relations: with the onset
of profit sharing with EMRA last year,
managing timing and quantum of
payments, as well as applying and
interpreting certain provisions of the
Concession Agreement, is important
in maintaining a good relationship with
EMRA. Future expenditure and recovery of
qualifying capital expenditure will also need
to be managed, to be appropriately cost
recovered by the Company.
Tax exposure: the Group engages tax
advisers to provide local advice at an
operational level as well as corporate and
structuring advice at a corporate level.
The Company has developed a global tax
strategy to take account of the required
regulations relevant to Centamin. The
Company’s strategy is to ensure taxes are
paid at an operational level and tax leakage
is reduced through the holding structure.
In respect to extending the tax exemption,
the Board do not foresee any issues in the
granting of this approval in line with the
conditions summarised in the adjacent
paragraph and continue to monitor
compliance to allow the extension to be
granted in the near future.
Centamin Annual Report 2019
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> Strategic Report> Overview> Financial Statements> Corporate Governance> Shareholder Information STRATEGIC REPORT
RISK MANAGEMENT AND PRINCIPAL RISKS CONTINUED
PRINCIPAL RISK
TREND
NATURE OF RISK
Trend Key
W
Slightly worse
C
I
Consistent
Slightly improved
External Risk
Gold price
Link to strategy
External Risk
Political risk – Egypt
Link to strategy
C
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The extent of the Company’s financial performance is due in part to
the price of gold, which the Company has no influence over. Revenues
from gold sales are in US dollars and Centamin has exposure to costs
in other currencies including Egyptian pounds, Australian dollars and
sterling.
Centamin manages its exposure to gold price by keeping operating
costs as low as possible.
W
The Company’s operational activities are primarily in Egypt, a country
that has been subject to civil and military disturbance. Future political
and economic conditions in Egypt could change with future governments
adopting different policies that may impact the development and
ownership of mineral resources. Policy changes and licensing may also
impact the use of explosives, tenure of mineral concessions, taxation,
royalties, exchange rates, environmental protection, labour relations,
repatriation of income and capital. Changes may also impact the ability
to import key supplies and export gold.
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.
New laws have been introduced to protect and therefore encourage
foreign investment, which is a positive step for the country. Law no.
32 has been confirmed by Parliament, although it remains subject to a
challenge in the Supreme Court.
The issuing of the new mining regulations in January 2020 provides
further optimism for a healthy mining industry to prosper in Egypt.
External Risk
Political risk –
West Africa
Link to strategy
Burkina Faso
W
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Côte d’Ivoire
W
The Company operates in Burkina Faso and Côte d’Ivoire. There are
no assurances 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.
The worsening political and security situation in Burkina Faso denotes
a downward trend on the Company’s exposure to political risk. In Côte
d’Ivoire, the relative stable government and strong exploration results
provide a consistent trend.
C
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Centamin’s finances, and its ability to operate in Egypt, may be
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.
External Risk
Litigation
Link to strategy
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Centamin Annual Report 2019
MITIGATION
COMPANY
OBJECTIVE/STRATEGY
RISK APPETITE
The Group is 100% exposed to the gold price; however, the cash
costs of the Sukari Gold Mine remain low compared with the
industry norm.
The Company does not currently
hedge against the price of gold or
exposure to currencies.
Level: Balanced
The strategy is aligned with the
risk appetite of the Company.
The Board does not take any
unnecessary risks in relation
to the price of gold recognising
that this risk is outside the
Board’s control influenced by
external factors.
The Concession Agreement with EMRA and the Egyptian
government was ratified into Egyptian Law no. 222 of 1994,
which further protects the Company’s licence rights and sets the
applicable tax regime for a number of years. This law received full
parliamentary approval as required by Egyptian law.
Maintain a detailed understanding
of the political environment in which
we operate as well as a constructive
relationship with government. The
Company undertakes to abide by the
spirit and letter of the Concession
Agreement as well as local laws and
regulations.
Level: Balanced
The Company operates within
acceptable limits and the
operation has continued to be
unaffected despite a number of
major political events occurring
in Egypt. The Company
supports Egypt’s development
of a modern mining code.
Policies have 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.
Centamin actively monitors legal and political developments,
engaging in dialogue with relevant government and legal
policymakers to discuss all key legal and regulatory developments.
Maintain relationships with all key
stakeholders, including regional
governments, landowners and
local chiefs. The Company meets
its environmental and operational
commitments set out in the permits/
grants and local laws/regulations.
Level: Balanced
The Company operates within
acceptable limits.
In order to mitigate this risk Centamin has (a) taken appropriate
legal advice and continues actively to pursue its legal rights
with respect to its existing cases (its legal advisers believe that
Centamin will ultimately be successful in both of these cases); and
(b) actively monitors activity in both court and local media for signs
of any legislative or similar developments 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; the Egyptian government’s support of Centamin’s
investment; Law no. 32 of 2014 that should protect Centamin
against litigation by third parties; and the fact that Egypt and
Australia (PGM’s place of incorporation) have in place a bilateral
investment treaty.
To minimise exposure to litigation
and reduce the impact of actions
by complying with all relevant laws
and regulations and to defend and/
or bring any actions necessary to
protect the Company’s assets, rights
and reputation.
Level: Balanced
The Company is operating
within its risk appetite
parameters and the mitigation
in place is at an acceptable
level.
Centamin Annual Report 2019
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> Strategic Report> Overview> Financial Statements> Corporate Governance> Shareholder Information STRATEGIC REPORT
RISK MANAGEMENT AND PRINCIPAL RISKS CONTINUED
PRINCIPAL RISK
TREND
NATURE OF RISK
Trend Key
W
Slightly worse
C
I
Consistent
Slightly improved
Operational Risk
Failure to achieve
exploration
development success
Link to strategy
Operational Risk
Reserve and
resource estimate
Link to strategy
Operational Risk
Failure to achieve
production estimates
Link to strategy
I
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W
Time and costs of brownfields exploration activity are recognised as
exploration and evaluation assets (“E&E assets”) on the statement of
financial position. E&E assets continue to be carried on the balance
sheet where there is ongoing planned activity and the right of tenure
is current.
C
There can be no guarantee that an exploration project progresses to
an economic resource and therefore there remains a risk that E&E
assets are partially or fully impaired during a financial period where
either a decision is made to discontinue a project or no further activity
is scheduled.
W
C
Mineral resource and reserve figures are prepared by Centamin
personnel and reviewed by externally appointed independent
geologists. By their nature, mineral resources and reserves are
estimates based on a range of assumptions, including geological,
metallurgical, technical and economic factors. Other variables include
expected costs, inflation rates, gold price, grade downgrades and
production outputs. There can be no guarantee that the anticipated
tonnages or grades expected by Centamin will be achieved both from
the underground operation or open pit.
W
C
Centamin prepares annual estimates for future gold production from
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. It should
be specifically noted that the potential quantity and grade from the
Sukari underground mine is conceptual in nature, that there has been
insufficient exploration to define a mineral resource and that it is
uncertain if further exploration will result in the target being delineated
as a mineral resource.
The Board recognises that whilst operational performance stabilised
in 2019, the period in Q3 2019 was challenging, with an improving
production profile across Q4 2019 that helped ensure delivery of
production at slightly below the lower end of guidance in 2019.
Further we recognise the potential impact of COVID-19 which we
have addressed on page 20 as of the time of publishing there was
no additional concerns.
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Centamin Annual Report 2019
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MITIGATION
The exploration for precious metal may not
be successful and is highly speculative in
nature. Before undertaking any exploration
projects, a full risk assessment in
undertaken covering country risk, industry
risks as well as a detailed technical review
of the underlying geological data available.
Management implements systematic drilling
programmes across its exploration projects,
with costs aggregated appropriately to
licence areas and prospects.
Commitments associated with licence
renewals may require further negotiation
with governments to either renew or
extend existing permits that may be
subject to expiry.
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 report was completed in
Form 43-101 dated 23 October 2015 and
is available at www.sedar.com. The latest
updated reserve and resource statement
for Sukari was announced on 18 May 2020
with an effective date of 18 July 2019.
Preliminary resource statements have been
provided for Doropo and the ABC Project
in Côte d’Ivoire as well as Konkera in
Burkina Faso.
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; the ore tonnes and grade
mined from the underground operation
which are outside the current reserve base;
ground conditions; skilled and motivated
labour force; processing capacity and
maintenance policies; and logistics for
consumables and parts.
COMPANY
OBJECTIVE/STRATEGY
To ensure a progressive pipeline of
greenfield and advance-stage exploration
projects to serve the next stage of growth
for the Company.
Ensure systematic exploration programmes
are carried out with costs attributed to
licence areas and prospects so that they
can be assessed for impairment.
RISK APPETITE
Level: High
The Company operates its exploration
programmes within acceptable risk appetite
parameters, with a results-driven approach
to future exploration and an opportunistic
mind set when evaluating new ground or
projects.
To achieve reliable and consistent
production, whilst optimising the potential
of the operation. The Company provides
timely and accurate information to the
market on production levels and forecasts.
Level: Informed
The Company operates within acceptable
risk appetite parameters.
Details of the Reserve and Resource
estimates as at 18 July 2019 are set out
in the supplementary information to the
Annual Report and explained further in
the Operational Review.
To achieve reliable and consistent
production, whilst optimising the potential
of the operation. The Company provides
timely and accurate information to the
market on production levels and forecasts.
Level: Informed
The Company operates within acceptable
risk appetite parameters.
.
Centamin Annual Report 2019
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> Strategic Report> Overview> Financial Statements> Corporate Governance> Shareholder Information
STRATEGIC REPORT
VIABILITY STATEMENT
VIABILITY
STATEMENT
To address the requirements of provision
31 of the 2018 UK Corporate Governance Code
(“the Code”) the Directors have assessed the
prospects of the Group over a period of five years.
Period of Assessment
Mining is a long-term business and
timescales can run into decades. The
Group maintains a life of mine plan
covering the full remaining mine life of
its sole operation, the Sukari Gold Mine.
However, the Company’s planning process
includes a detailed one-year financial
budget and medium-term five-year outlook
in line with the strategy. Accordingly, a
period of five years has been selected
as the appropriate period over which to
assess the viable prospects of the Group.
Viability Assessment
The Board assessed the current position
and prospects of the Group, taking
account of the potential impact of the
principal risks to the Group’s business
model and ability to deliver its strategy,
including solvency and liquidity risks
during the five-year assessment period.
The Board considered the key strategic
drivers, which are based around the
Company’s five strategic priorities:
sustainability, asset quality, financial
flexibility, stakeholder returns and an
active growth pipeline, as set out on
pages 26 to 27.
Sukari updated Mineral Resource and
Reserves statement (“R&R”) (ref to the
Supplementary Information section)
underpins the long-term sustainability
of the operation with a life of mine of
16 years based on 12 million tonne
per annum nameplate throughput.
Further to this, exploration at Sukari
has demonstrated the potential for
significant resource growth with a five-year
exploration programme in place.
The Directors have assessed the principal
risks which could impact the prospects of
the Group over this period and consider
the most relevant to be risks to the gold
price outlook and impacts of COVID-19.
COVID-19 has raised the inherent
likelihood of multiple principal risks to the
Group so we have considered this during
the assessment below.
Key assumptions
The key assumptions underpinning the
Board’s assessment of the business
viability include gold prices, production
volumes, fuel prices , social license to
operate and financial position.
• Gold price: Management time and
focus are applied to ensure a low-cost
operation, which helps Sukari remain
profitable, even in a relatively low gold
price environment. Sukari has a low
cost per ounce of production compared
with other operating mines, which
contributes to the Group’s longer-term
viability. The strategic decision to remain
unhedged means the Company benefits
fully in a strong gold price environment.
In a weaker gold price environment,
the commitment to cost control helps
ensure business continuity.
• Fuel price: At the Company’s flagship
asset, fuel is purchased domestically
from the Egyptian government. The
price is set quarterly. Based on forecast
prices, fuel represents approximately
20% of our operational costs and is
therefore a significant input assumption
in both the budget process and
development of the R&R. This can
therefore materially affect the cost
base of the business.
• Production volumes: Sukari operates
24-hour-a-day, 365 days of the year,
with an estimated plant throughput
capacity of 12Mtpa, a level which
Sukari often exceeds. The process
plant recovery rates are targeting 88%
in 2020. Maintaining and improving
productivity is fundamental to our
business and long-term strategy. Sukari
has built up 14.8 million tonnes (at 31
March 2020) of low-grade (0.48g/t)
stockpiles, available for processing.
Sukari has a low cost per ounce of
production compared with other
operating mines, which contributes to
the Company’s longer term viability.
• Social license to operate: Centamin’s
local partner in Egypt is the government
department EMRA. This relationship
remains strong and equitable with the
profit-sharing arrangement as per the
Concession Agreement over the 160km2
Sukari Gold Mine tenement (for more
information please refer to page 38).
Government relations in West Africa
will also be prioritised as we undertake
more detailed feasibility studies.
• Financial position: The Company
maintains a net cash balance of greater
than US$200 million, with no debt,
hedging, gold loans or streaming
commitments or other financial
arrangements.
Process of Assessment
When assessing the prospects of the
Group, the Directors have considered
a series of scenarios using internal and
external factors, including macroeconomic
impacts. This analysis has focused on
the existing asset base of the Group,
without factoring in potential development
projects, which is considered appropriate
for an assessment of the Group’s ability
to manage the impact of a depressed
economic environment.
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Centamin Annual Report 2019
Robust downside sensitivity analysis
and stress testing has been applied to
the financial planning process, including
the severe scenarios, or combination
of, those below:
• A significant deterioration in the gold
price to below consensus levels and
sustained over the five-year period
• Production stoppages due to labour or
supply factors for a sustained period
over the review period
• No borrowing facilities being available to
the Group over the review period
• Cease to be able to export gold for a
sustained period over the review period
• No borrowing facilities being available to
the Group over the review period
The analysis indicated results which
could be managed in the normal
course of business. Further information
on uncertainties is given within the
financial statements.
COVID-19
Further when considering the potential
impact of COVID-19 the Company
applied sensitivities which were informed
by internal and external data sources,
including a review of current mining
and production levels. This data was
aggregated to model a range of severe
downside scenarios modelled for 12
months from the date of signing the
financial statements. The scenarios tested
include material reductions in production
and changes to working capital:
• Underground shutdown: No
underground mining activities for 12
months from the date of signing the
financial statements, with underground
operations continuing after the
shutdown period. The consequential
financial effects, such as the under-
absorption of fixed costs and risk
of increased working capital were
also considered.
• Reduced processing – Plant 2
shutdown: a reduction of processing
volumes due to plant 2 activities being
shut down for 12 months from the date
of signing the financial statements, with
plant 2 activities continuing after the
shutdown period. The consequential
financial effects, such as the under-
absorption of fixed costs and risk of
increased working capital were also
considered.
• Processing plant shutdown – Plant 1
& 2: a reduction of processing volumes
to nil due to the entire processing plant
being shut down for 12 months from the
date of signing the financial statements,
with the processing plant activities
continuing after the shutdown period.
The consequential financial effects,
such as the under-absorption of fixed
costs and risk of increased working
capital were also considered.
• All activities suspension: All open pit and
underground mining activities cease, a
reduction of processing volumes to nil
due to the entire processing plant being
shut down for 12 months from the date
of signing the financial statements, with
the open pit and underground mining
activities and processing plant activities
continuing after the shutdown period.
The consequential financial effects,
such as the under-absorption of fixed
costs were also considered.
Liquidity and Solvency
Whilst there is a potential that all of the
scenarios could materialise the Company
recognises there are some which are more
likely than others. In all of the scenarios the
Group maintained the necessary liquidity
levels for the 12 month period. The
impact of each of the scenarios showed
declining earnings and cash outflows.
The Company believes it can sufficiently
mitigate these impacts through the
introduction of broad-based cost savings
initiatives, savings in capital and operating
expenditure programmes and working
capital reduction measures. In the event of
further deterioration of market conditions
as a result of the COVID 19 outbreak,
after mitigation measures have been
implemented the Group will have sufficient
liquidity to meet obligations when they
fall due. In the perceived unlikely event
that funding should be required by Sukari
then under the terms of the Concession
Agreement, Centamin is solely responsible
for such funding but will be able to recover
the cost in later periods.
Centamin is a resilient business with a
strong financial position of US$379.2
million in cash and liquid assets(1), as of
31 March 2020(2), and no debt, hedging or
financial instruments on its balance sheet.
Conclusion
Therefore, taking into account the Group’s
current position and robust assessment
of principal, new and emerging risks, the
Directors confirm they have a reasonable
expectation that the Group will be able
to continue in operation and meet its
liabilities as they fall due for the next five
years (until 31 December 2024).
(1) Cash costs of production, AISC, Adjusted EBITDA, Cash, bullion on hand, gold and silver sales debtor, financial assets at fair value through profit and loss (also known as Cash and
liquid assets) and Adjusted free cash flow are Non-GAAP Financial Measures as defined at the end of the Financial Review section.
(2) Unaudited, as per Q1 2020 Report, published 21 April 2020. Audited cash and liquid assets of US$348.9 million as at 31 December 2019
Centamin Annual Report 2019
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> Strategic Report> Overview> Financial Statements> Corporate Governance> Shareholder Information CORPORATE GOVERNANCE
A RESILIENT AND
RESPONSIBLY
RUN BUSINESS
CORPORATE GOVERNANCE
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107
110
114
Governance Overview
Governance Statement
Our Board of Directors
Our Management Team
Our Governance Structure
Skills and Succession
Key activities in the Year
Board Evaluation and Training
Relationship with Stakeholders
Compliance and Governance
117
Committee Report
Nomination Committee Report
124
Audit and Risk Committee Report 131
Remuneration Committee Report 140
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Centamin Annual Report 2019
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G
o
v
e
r
n
a
n
c
e
COMMITTED TO THE
HIGHEST STANDARDS
Effective corporate governance begins with a strong
Board, led by the Chairman, with the appropriate skills
and experience to challenge and support the Executive
team in delivering the corporate strategy. The Board
transformation throughout 2019 reflects the Company’s
ongoing commitment to achieving the highest standards
of corporate governance.
Centamin Annual Report 2019
Centamin Annual Report 2019
85
85
> Shareholder Information> Financial Statements> Overview> Strategic Report
CORPORATE GOVERNANCE
EMPLOYEE STATISTICS, DIVERSITY HEADLINES
GOVERNANCE
OVERVIEW
ENSURING THE COMPANY’S PURPOSE,
VALUES AND STRATEGY ARE ALIGNED
WITH THE COMPANY’S CULTURE AND
COMMUNICATED TO THE WORKFORCE.
EDWARD HASLAM
HSES COMMITTEE
PURPOSE – THE COMPANY’S OVERRIDING
EXISTENCE (TO GUIDE STRATEGY)
OUR PURPOSE – To create lasting, mutual benefits for all our stakeholders
by contributing to the development of our host countries and driving
an improved standard of living and wellbeing in the communities we
operate within.
VALUES – HOW THE COMPANY IS RUN
AND THE BEHAVIOURS IT BELIEVES IN
(TO DELIVER STRATEGY)
VISION – WHAT WE WANT OUR
COMPANY TO BE IN THE FUTURE
CULTURE – WHAT IS OUR COMPANY’S
DNA, THE PERSONALITY OF OUR
COMPANY AND THE ENVIRONMENT WE
WISH OUR EMPLOYEES TO WORK IN
OUR VALUES – In order to prosper, it is important for us to work hand-
in-hand with the community, returning value to society as well as to
shareholders. This is the tenet by which Centamin has operated for the past
25 years, building a responsible culture that values and supports people
by creating jobs, infrastructure and opportunity, as well as developing
our assets and delivering strong returns. These attributes are some of the
elements that help develop and uphold our core values described in both
the Strategic and Governance Report.
OUR VISION – To create opportunity, now and for future generations,
through gold exploration, development and mining.
OUR CULTURE – The health, safety and wellbeing of our workforce is central
to our corporate culture. Our culture guides our behaviour and helps us to
deliver our strategy.
See pages 90 and 91 for more details on our corporate culture and our operational standards.
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Centamin Annual Report 2019
EMPLOYEE STATISTICS AT A GLANCE
TOTAL WORKFORCE (INCLUDING CONTRACTORS)
2,556
PERCENTAGE OF EMPLOYEES AT SUKARI
MINE WHO ARE EGYPTIAN NATIONALS
NATIONALS IN LEADERSHIP POSITIONS
95%
59%
BOARD AND SENIOR
MANAGEMENT DIVERSITY
ACHIEVED A LEVEL OF 30% FEMALE DIRECTORS ON THE
BOARD WHICH WILL BE MAINTAINED FOLLOWING THE AGM
DIRECT REPORTS MAINTAINED AT ABOVE 20%
FEMALE REPRESENTATION AND INITIATIVES FOR:
– WORKPLACE SUCCESSION AND TALENT MANAGEMENT
–
IDENTIFYING NON-SPECIFIC GENDER ROLES
DIVERSITY POLICY ENSURING NON-DISCRIMINATION AND
DIVERSITY OF AGE, GENDER AND EDUCATIONAL AND
PROFESSIONAL BACKGROUNDS
SEARCH FIRMS CHOSEN WITH ETHICAL AND BEST PRACTICE
PROCEDURES TO ENSURE DIVERSITY AND BEST PRACTICE
GUIDELINES
Centamin Annual Report 2019
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> Strategic Report> Overview> Financial Statements> Corporate Governance> Shareholder Information CORPORATE GOVERNANCE
GOVERNANCE STATEMENT
GOVERNANCE
STATEMENT
AS A BOARD WE RECOGNISE THAT AT THE HEART OF
GOOD GOVERNANCE IS ACCOUNTABILITY AND RECOGNISE
WE ARE ACCOUNTABLE TO ALL OUR STAKEHOLDERS
FOR OUR BEHAVIOURS AND ACTIONS. OUR APPROACH
TO BOARD APPOINTMENTS, ROTATION AND SUCCESSION
ENSURES A GOVERNANCE STRUCTURE THAT IS
INDEPENDENT AND ABLE TO UPHOLD OUR STANDARDS
AS A BOARD OF INTEGRITY, ACCOUNTABILITY AND
HONESTY. SUCH STANDARDS GUIDE OUR BEHAVIOUR
AS DIRECTORS SERVING ON THE BOARD AND ALIGN
WITH OUR GROUP CORE VALUES OF PROTECT,
INVEST, LEARN, GROW AND EDUCATE.
MARK BANKES
CHAIR OF THE COMPLIANCE AND CORPORATE GOVERNANCE COMMITTEE
Dear shareholders
As Chairman of the Compliance and
Corporate Governance Committee I am
addressing the shareholders in this year’s
Governance Report. The Board has
played a major role in the success of the
Company, through strong leadership and
a robust governance framework. It is a real
privilege and exciting prospect to take this
dynamic and successful Company to its
next phase of growth.
Over the last two years, the Company
has embarked on a programme of
Board refreshment and succession. This
continued through 2019 and into 2020
with key Board appointments ensuring
refreshment, rotation and succession. This
has resulted in a diverse and balanced
Board, with renewed skills and experience
to take the Company forward.
The key new non-executive appointments
in 2019 included Catharine Farrow, Marna
Cloete and Sally Eyre and these individuals
will be instrumental in shaping our
independent committees going forward.
On 1 January 2020, we welcomed Jim
Rutherford to the Board to take on the role
of Deputy Chair. Jim has over 25 years’
experience in investment management
and investment banking specialising in
the global mining and metals sector. His
excellent knowledge and experience
in Mergers & Acquisitions (“M&A”) will
benefit the Board immensely as the
Company continues to create and develop
investments in the area of M&A for the
benefit of all our stakeholders.
Edward Haslam and Mark Arnesen will be
retiring at the forthcoming 2020 AGM and
I would like to thank them personally for
their significant contribution to the success
of the Company over the last nine years.
During 2019, Alison Baker resigned to
pursue other interests.
I would also like to take this opportunity
to thank Josef El-Raghy for his dedication
and commitment having worked for
Centamin for over 20 years, 15 of which
leading the Company as either Chief
Executive Officer or Executive Chairman.
Josef has built a remarkable gold company
and leaves a strong management team
and Board who will continue his legacy.
After working with Josef for the last few
months, Jim Rutherford will move into the
role of Chair after the 2020 AGM.
On 2 April, we announced the
appointment of our new CEO, Martin
Horgan, which followed an intensive
international search process. Martin
brings excellent technical, commercial
experience as well as strong operational
leadership skills combined with a deep
knowledge and understanding of gold
mining across Africa.
At the recommendation of the Nomination
Committee, the Board are also actively
engaged in recruiting a new Non-
Executive Director with operational and
technical experience. The recruitment
process is well underway and shortlisted
candidates are undergoing interview.
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Centamin Annual Report 2019
Below is a summary of the governance actions undertaken by the Board in 2019
AWARENESS OF THE BOARD’S
DUTIES UNDER SECTION 172
OF THE UK COMPANIES
ACT AS REQUIRED BY THE
2018 CODE
• The Board’s understanding of our
stakeholders and impact on our
decisions
• Engagement with stakeholders at a
shareholder, community, government
and workforce level
• Responsibility to community and
maintenance of our license to
operate – ‘see Board in action’
RISK ASSESSMENT
AND ASSURANCE
• Wholescale strategic risk review to ensure
opportunities and threats are understood and
acted upon at an operational level and accurate
and timely information is assessed at a corporate
and Board level
• Maintaining a respectful working relationship
with our assurance teams with regular and robust
independent oversight of our Board committees
REVIEW AND ARTICULATION
OF THE COMPANY’S CULTURE
AND VALUES
• Board workshops to understand the purpose,
values and behaviours of the Board, management
and employees and how these impact upon our
ability to deliver our strategy
• Communication of Board led behaviours, culture
and values and how these can help us achieve
our strategic objectives
• Monitoring of cultural behaviours, through
improvements in the recruitment, training
and assessment of employee related leading
indicators
• Embracing a culture of learning, growth within
the national workforce and expatriate positions
to ensure training and mentoring of our national
workforce
The Executive team, with support of the
Board, will continue to focus on consistent
production at Sukari and success across
our exploration sites in West Africa. The
priorities in 2020 will be to continue
developing our senior management
team, through talent management and
training, and ensure a strong future
for our workforce. This will need to be
carefully navigated during the current
global pandemic in which the health
and wellbeing of our workforce remains
our primary focus – further details on
COVID-19 are set out on page 20.
Centamin continues its next phase of
growth, with a refreshed board, strong
governance framework and clear cultural
values and therefore are well placed to
deliver on our strategic objectives:
S T A K E H O L D E R
R E T U R N S
S U S T A I N A B I L I T Y
F I N A N C I A L
F L E X I B I L I T Y
A S S E T
Q U A L I T Y
A C T I V E G R O W T H
P I P E L I N E
Looking forward
Our focus on governance has been to
deliver our succession plan to reflect the
importance we place on accountability.
We have been successful in appointing
skilled individuals to the Board and senior
management team who will help take
Centamin to the next phase of growth. We
are very positive as we move through this
transitional phase and welcome our new
Board members and also thank the hard
work of those Directors who have served
for many years on the Board.
Mark Bankes
Non-Executive Director
18 May 2020
Centamin Annual Report 2019
89
> Strategic Report> Overview> Financial Statements> Corporate Governance> Shareholder Information CORPORATE GOVERNANCE
CULTURE CASE STUDY
CULTURE
CASE STUDY
Case Study: The Board’s journey in understanding its
behaviours, defining culture and influencing our employees.
OUR CULTURE – LED FROM THE TOP
OUR CULTURE – SAFETY IS A PRIORITY
Our safety culture stems from our fundamental
commitment to ensure our workforce return home
safely after every shift. Centamin has believed
from the beginning that safety is all encompassing,
requiring the same conscious awareness in every
aspect of daily life. Instilling a safety culture at
the home, work and in every day interactions has
been the ethos of our training and development
programmes. See link to Sustainability Report.
The health, safety and wellbeing of our workforce is
central to our corporate culture. It is our standard to
provide relevant training to all our employees at site
and/or head office to ensure that their health, safety
and wellbeing is promoted and maintained. Relevant
training also includes induction which is completed
by all staff including the Board. Our Board and
senior management recruitment decisions are key
drivers in promoting our corporate culture as we aim
to have an array of views which promote diversity
and in turn improve the wellbeing of our workforce.
Our culture guides our behaviour and helps us to
deliver our strategy.
The culture, values and ethics of Centamin are
set and led by the Board through its actions and
behaviours. Our culture is shaped by our organisation
through clear communication channels, training
and stakeholder engagement platforms. The Board
recognises this is a journey which involves evaluating
behaviours to understand and adapt to the changing
needs of our workforce and wider stakeholders.
The Board sets the tone from the top, defining the
Company’s vision, purpose and values which shape
and guide Centamin’s strategy. The governance
framework at Centamin provides the Board with the
structure to make considered decisions and set the
highest standards for the organisation.
Our culture stems from an entrepreneurial beginning,
exploring, building and operating the first modern
mine in Egypt. Our workforce has grown and adapted
along our journey, with many of the national workforce
occupying senior roles within the organisation. The
pride of Sukari runs deep within the organisation. Our
national workforce, contractors and suppliers display
a huge sense of honour to be associated with the
operation. As a Board, this can be truly humbling, and
it is our job to understand how to nurture this pride,
through active engagement and setting challenging
and rewarding goals for our employees.
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Centamin Annual Report 2019
OUR CULTURE – PROMOTING OUR CULTURE FOR SUCCESS
The Board recognises the need to lead by example, in and out of the boardroom. At least annually
the Board visits the site’s major operation in Egypt, meeting with the general manger, heads of
departments, site personnel and safety personnel. More frequent interactions with the workforce
occur through the Executive Management and in-country general managers. The site’s location in
Egypt has also enabled regular interaction between senior management at the Company’s head
office and the site personnel.
Understanding the needs of our employees and the wider community has meant the Board needed
to take a step forward and embrace a new way of communicating. The Voice of Sukari, an initiative
developed with the employees, is a forum for sharing concerns, ideas and opportunities. To truly
listen to the employees is an important step, helping our understanding of what motivates and
inspires our workforce as well as finding out what concerns employees have and what might be
stifling innovation. Hard questions are asked, and this requires honest, open and regular dialogue.
Our workforce show passion for the operation, as a landmark success for Egypt, and we as a Board
need to channel that enthusiasm, empowering our employees and giving them opportunities.
Recognising talent from within the organisation has been a key aim of the Board. As Egypt’s only
modern mine and with no other mining operations, it is often necessary to allow some of our most
valued employees to leave, gain new experiences abroad and return to their home country bringing
new ideas to the mine. We also need to give our employees the chance to see a future in more
senior roles through active succession and talent management programmes.
We understand the importance of bringing all stakeholders along our journey, from major
shareholders, government partners, to all employees. This requires regular communication and
meetings at which we listen to our stakeholders and take their comments back to the Board to help
shape our governance structure and our strategy.
The motivation and performance of each and every employee will impact the business and
ultimately the success of Centamin. The policies which support and help the Board and
management to shape the Company’s values are as follows:
• Raising of concerns through the internal grievance mechanism
• Whistleblowing hotline
• Voice of Sukari providing direct feedback to the Board’s HSES Committee
• External grievance mechanism to understand stakeholder concerns, awareness and initiatives
Further operationalisation of the grievance mechanism and training across the workforce as well as
monitoring of data and feedback, will be needed throughout 2020 to help understand and develop
the needs of the workforce.
Centamin Annual Report 2019
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> Strategic Report> Overview> Financial Statements> Corporate Governance> Shareholder Information CORPORATE GOVERNANCE
OUR BOARD OF DIRECTORS
BOARD OF DIRECTORS
JOSEF EL-RAGHY (48)
CHAIRMAN
MARTIN HORGAN (45)
CHIEF EXECUTIVE OFFICER
ROSS JERRARD (44)
CHIEF FINANCIAL OFFICER
QUALIFICATIONS
BComm (University of WA)
APPOINTED
BEng (Hons) (Leeds University)
Institute of Chartered Accountants Australia
and New Zealand (ICAANZ) and Institute of
Chartered Accountants in Zimbabwe (ICAZ)
Director since 2002
Appointed Chairman from January 2019
6 April 2020
SKILLS AND EXPERIENCE
Josef brings to the Board strong leadership
and a wealth of knowledge in mining and
international capital markets. He was a director
of CIBC Wood Gundy and Paterson Ord Minnett.
His stock broking experience has greatly
assisted the Company in its fundraising and
development activities.
Josef has been responsible for overseeing the
transition of the Company from small explorer
through construction and into production.
Martin is a qualified mining engineer with
25 years in multiple areas of the mining
industry. In his career he has shown a strong
strategic and operating acumen as well as
demonstrating a longstanding commitment
to environmental and social responsibility
within mining, which is central to Centamin’s
decision-making and corporate strategy.
From 2009 to 2019 Martin was the Co-Founder
and CEO of Toro Gold Ltd (“Toro”), where
he oversaw the discovery, development and
operation of the Mako Gold Mine in Senegal. Toro
was acquired by LSE and ASX listed Resolute
Mining in August 2019. Prior to founding Toro,
Martin was Executive Director of BDI Mining, an
AIM listed diamond producer, and from 2000 to
2006 he worked in mining finance at Barclays
Capital in London, where his responsibilities
included technical appraisal and advisory
services across Africa and the Middle East.
He also held consulting engineer roles with
SRK Ltd and started his career as a mining
engineer with Gold Fields of South Africa.
Chief Financial Officer since April 2016
Appointed Director February 2018
Interim Chief Executive Officer from December
2019 to April 6, 2020
Ross has over 20 years’ experience in senior
finance roles in Australia, Africa and the Middle
East. Before joining Centamin, Ross was lead
Audit Partner with Deloitte Perth, Australia. His
experience in leading teams providing audit
and related final advisory services to public
companies, national and international groups
continues to be of benefit to Centamin.
Also, of particular relevance is his experience of
Egypt having been based in Cairo for a number
of years. He has established strong relations
within Egypt specifically with officials at all
levels. Ross continues to demonstrate excellent
leadership skills, assembling and managing
multijurisdictional teams.
CURRENT EXTERNAL APPOINTMENTS
Josef is Chairman of AIC Resources
Limited effective 1 December 2017
None
None
92
Centamin Annual Report 2019
Committee Memberships
Audit and Risk Committee
Remuneration Committee
Nomination Committee
Group Risk Committee
Environmental, Social and Governance Committee
Health, Safety, Environment Security Committee
Compliance and Corporate Governance Committee
Committee Chair
New Committees post 2020 AGM
Sustainability Committee
Technical Committee
* Committee membership post 2020 AGM
GORDON EDWARD HASLAM (74)
SENIOR INDEPENDENT DIRECTOR
JAMES (JIM) RUTHERFORD (60)
DEPUTY NON-EXECUTIVE CHAIRMAN
*
*
DR. SALLY EYRE (48)
INDEPENDENT
NON-EXECUTIVE DIRECTOR
*
*
*
Institute of Directors (UK)
BSc (Econ), MA (Econ)
BSc., PhD, DIC
March 2011
January 2020
April 2019
Edward is an experienced leader and director.
He has over 20 years of leadership experience
in various companies having taken on roles
such as Chief Executive Officer and Chairman.
As well as performing his duties as a SID, he
played an instrumental Corporate Governance
function in overseeing the transitioning of the
role of Chair and CEO into separate roles.
After serving on the Board for nine years,
Edward will be retiring at the forthcoming
2020 AGM.
Dr Eyre was President and Chief Executive
Officer of TSX Venture Exchange listed
Copper North Mining. She previously was an
executive of Endeavour Financial which then
became Endeavour Mining. Whilst working
for Endeavour, she also served as Senior Vice
President Operations as well as Chief Executive
Officer of Etruscan Resources.
Dr Eyre brings an extensive experience in
global resource capital markets and mining
operations. As a geologist, she brings strong
technical balance to the Board. Dr Eyre will
be taking on the role of Senior Independent
Director in place of Edward Haslam who will be
retiring at the 2020 AGM.
Jim has over 25 years’ experience in
investment management and investment
banking, specialising in the global mining
and metals sector. He has held senior
appointments with various companies
including Senior Vice President with Capital
International Investors (a division of Capital
Group) and Vice President of Equity Research
at the investment bank HSBC James Capel in
New York. He has also held investment analyst
roles with Credit Lyonnais, covering diversified
industrials, and with CRU International,
covering the copper industry.
Jim brings to the Board considerable financial and
capital markets insight and a deep understanding
of the mining industry. He will succeed Josef
El-Raghy, who will be stepping down as Chairman
at the forthcoming 2020 AGM.
Since his appointment to the Board on
1 January 2020, Jim Rutherford has attended
committee meetings to understand the
activities that are undertaken.
• Partner and Head of Mining at
Strategia Worldwide
•
•
Independent Non-Executive Director of
Anglo American plc since November 2013
Independent Non-Executive Director of
Anglo Pacific Group plc since November
2019
•
Independent Non-Executive Director of GT
Gold Corp since October 2019
• Non-Executive Director of Adventus Mining
(a TSX Venture Exchange Listed company)
since 2017
• Non-Executive Director of Japan Gold
(a TSX Venture Exchange Listed company)
since 2016
• Non-Executive Director of Ero Copper Corp
since 2019
Centamin Annual Report 2019
93
> Strategic Report> Overview> Financial Statements> Corporate Governance> Shareholder Information CORPORATE GOVERNANCE
OUR BOARD OF DIRECTORS CONTINUED
PROFESSOR IBRAHIM FAWZY (79)
INDEPENDENT
NON-EXECUTIVE DIRECTOR
MARK BANKES (58)
INDEPENDENT
NON-EXECUTIVE DIRECTOR
*
*
*1
*
*
MARK ARNESEN (60)
INDEPENDENT
NON-EXECUTIVE DIRECTOR
QUALIFICATIONS
BSc, PhD
APPOINTED
August 2018
SKILLS AND EXPERIENCE
Dr Fawzy has over 50 years of experience
working with industrial and investment
companies in Egypt and abroad. He has held
the position of Minister of Industry of Egypt as
well as the President and CEO of the General
Authority for Investment and Free Zones in
Egypt. He is also an emeritus professor at the
Faculty of Engineering at Cairo University.
He continues to bring valuable experience and
insight in governmental relations, banking,
investment and development.
MA
BA (ACC) and BA (Commerce)
February 2011
February 2011
Mark is an international corporate finance lawyer
specialising in mining policy and agreements,
mergers and acquisitions and international
restructurings for the resource sector.
Mark joined Norton Rose Fulbright in 1984. He
worked in both London and Hong Kong and was
a partner at Norton Rose Fulbright from 1994 to
2007 before starting his own business, Bankes
Consulting EURL, in October 2007 through which
he continues to consult to the mining sector and
to Norton Rose Fulbright.
Mark has extensive experience in structuring
and negotiation of finance for major resource
projects. With over 20 years’ experience as a
chartered accountant in the resources industry.
After serving on the Board for nine years,
Mark will be retiring at the 2020 AGM.
CURRENT EXTERNAL APPOINTMENTS
Chairman of a Cairo Stock Exchange listed
Company, Egyptians Abroad Company for
Investment and Development as well as director
of its subsidiaries
Director of Bankes Consulting
EURL since 2007
• CEO of Nzuri Copper Ltd (formerly
known as Regal Resources Ltd)
from 2016 to March 2020.
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Centamin Annual Report 2019
Committee Memberships
Audit and Risk Committee
Remuneration Committee
Nomination Committee
Group Risk Committee
Environmental, Social and Governance Committee
Health, Safety, Environment Security Committee
Compliance and Corporate Governance Committee
Committee Chair
New Committees post 2020 AGM
Sustainability Committee
Technical Committee
* Committee membership post 2020 AGM
CATHARINE FARROW (55)
INDEPENDENT
NON-EXECUTIVE DIRECTOR2
*
*
*
MARNA CLOETE (42)
INDEPENDENT
NON-EXECUTIVE DIRECTOR
*
*
*
PhD, PGeo, ICD.D.
MA
September 2019
September 2019
Marna has over 15 years of experience in the
mining industry for the emerging markets with
particular emphasis in Africa. Her substantial
management experience within finance,
community and government relations align
well with Centamin’s existing Board.
Dr Farrow has more than 25 years’ experience
in the mining industry. She was Chief Executive
Officer and co-founder of TMAC Resources Inc.
until 2017. Prior to this Dr Farrow held multiple
senior executive roles with KGHM International
Ltd. Her expertise ranges from operations,
technical services, corporate development and
exploration.
As a professional geoscientist, she is a member
of the Association of Professional Geoscientists
of Ontario, the Canadian Institute of Mining,
Metallurgy & Petroleum, and a Fellow of the
Society of Economic Geologists.
• Non-Executive Director of Franco-Nevada
Corporation which is a leading TSX listed global
royalty and streaming company since 2015
• Non-Executive Director of Eldorado Gold Corporation,
a TSX-listed mid-tier gold and based metals
producer since 2020 (Member – Compensation
Committee, Member – Sustainability Committee,
Member – Reserve and Resource Review Panel)
• Chair of Exiro Minerals a private mineral exploration
technology company since 2018; and
• President of FarExGeoMine Ltd a private mining
consultancy business.
• President (appointed in March 2020) and
Chief Financial Officer of Ivanhoe Mines
Ltd – a TSX listed mineral exploration and
development company - held since 2009.
Marna also holds various Board positions
in companies throughout the Ivanhoe Mines
group of companies.
1
2
Member until the appointment of a new
technical non-executive director
A review of the future committee structure
and membership has been carried out which
took account of the skills and experience of
the Board members.
Centamin Annual Report 2019
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> Strategic Report> Overview> Financial Statements> Corporate Governance> Shareholder Information CORPORATE GOVERNANCE
OUR MANAGEMENT TEAM
OUR MANAGEMENT TEAM
SENIOR MANAGEMENT – OPERATIONS
YOUSSEF EL-RAGHY
GENERAL MANAGER – EGYPT
Since January 2010
JEREMY LANGFORD
CHIEF OPERATING OFFICER
From April 2019 (serving notice)
TIM DONNELLY
GENERAL MANAGER – SUKARI
Since September 2019
Youssef has more than ten years of senior management
experience. His background has immensely assisted the
Company in maintaining good working relations within
the government, mining industry as well as the overall
company stakeholders within Egypt.
Jeremy is a highly skilled engineer with an impressive
record of developing and building mines. His knowledge in
operations and development, particularly in West Africa,
has proved to be an asset to the management team.
Tim brings over 26 years of experience in mining across
the globe having worked in locations such as Indonesia,
Malaysia, Mongolia, Nigeria, Burkina Faso, Côte d’Ivoire,
Mali and Australia. He has held various management
positions throughout his career including being a general
manager amongst many other roles. Tim’s key skills are
commercial, financial and operational management,
strategic planning and continuous improvement. As a
Certified Practising Accountant, he also holds a Bachelor
of Business degree and has a Graduate Diploma of Mining.
RAITT MARSHALL
GENERAL MANAGER – SUKARI
(From July 2018 to September 2019)
NORMAN BAILIE
GROUP EXPLORATION MANAGER
Since October 2016 (serving notice)
IBRAHIMA DANSO
MANAGER – WEST AFRICA
Since June 2016
With over 20 years’ experience in the mining industry
specialising in predominantly aluminium and gold mines,
Raitt joined Centamin as General Manager. He holds
a BSc Mechanical Engineering degree. He decided to
pursue other interests and resigned in September.
Norman has over 25 years’ experience in industry
providing exploration and resource consultancy to all
levels of exploration and mining companies in West,
East and Central Africa as well as South America. A
chartered professional geologist and manager through
the Geological Society UK and AusIMM, he is also a fellow
of IOPM3 UK and SEG USA as well as a competent person
under JORC/43-101 criteria.
Ibrahima joined Centamin in June 2016 and brings to the
role over 20 years’ professional experience, notably with
AngloGold Ashanti in Guinea and Democratic Republic
of Congo (DRC), Alcoa in Ghana, Guinea and Jamaica,
and Newcrest Mining in Côte d’Ivoire. Ibrahima is highly
knowledgeable in dealing with African governments to
secure exploration and mining permits, conceptualising
and executing strategic community investment
programmes in host country. He holds a Master’s degree
in electrical engineering and Economics from ParisTech
and Paris School of Economics (France) and MBA degree
from Michigan State University (USA).
DOAA ABOU ELAILAH
GROUP SUSTAINABILITY AND BUSINESS
DEVELOPMENT MANAGER
Since May 2013
Doaa brings more than 18 years of experience as a
consultant in health and safety, environment and
community affairs. A holder of an MSc and BSc honours
degree in Chemical Engineering, Doaa has provided
technical support to numerous industries and facilities
in Egypt and the Middle East across a broad range of
sectors in mining, oil and gas, industrial production,
infrastructure and tourism.
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Centamin Annual Report 2019
SENIOR MANAGEMENT – FINANCE
MARK SMITH
GROUP FINANCIAL CONTROLLER
Since August 2015
RIAAN NEL
GROUP ACCOUNTANT
Since February 2017
Mark brings to the role a wealth of experience in
site based commercial and corporate finance across
exploration, feasibility, construction and operations in
both open pit and underground mining environments. His
prior experience of working for listed companies in the
resource sector has proved valuable to the Company.
Prior to joining Centamin, Riaan worked for a hedge
fund and PwC in Jersey. He holds a B. Com Accounting
Sciences and a B. Com Honours Accounting Sciences
degree from the University of Pretoria. Specialising in the
manufacturing and mining industry, he completed his
chartered accounting training at Grant Thornton South
Africa. Riaan is a member of the South African Institute
of Chartered Accountants and the Institute of Chartered
Accountants in England and Wales.
AMR HASSOUNA
COMMERCIAL MANAGER (SUKARI)
Since March 2012
Amr brings to the role a wealth of experience and
understanding of the operating and commercial
environment in Egypt. Prior to joining Centamin, Amr
worked for eight years in the oil and gas field in Egypt.
He holds a Bachelor’s degree in Finance and Accounting
from Alexandria University and is a member of the
Institute of Management Accountants.
CORPORATE AND COMMERCIAL
ALEXANDRA CARSE
HEAD OF INVESTOR RELATIONS
Since December 2017
JOHN SINGLETON
HEAD OF CORPORATE DEVELOPMENT
Since June 2019
CRAIG MURRAY
HEAD OF RISK
Since March 2020
Alexandra has over twelve years’ experience as a sell
side corporate broker, specialising within the natural
resource sector. She worked closely with Centamin as a
client, specifically raising pre-production capital with
equity financing and listing on the main market London
Stock Exchange. Prior to joining Centamin, Alexandra
was Head of Investor relations at Petropavlovsk
plc. Alexandra holds a BA (Hons) in Economics and
Statistics. Alexandra continues to facilitate long-term
relationships with all our investors.
With a career of more than 19 years working in the
mining industry, John has been involved with copper,
iron ore, aluminium, uranium, platinum, gold, diamonds
and other industrial minerals. John has held senior
corporate roles in Business Evaluation and Corporate
Development. Having worked for Rio Tinto for 13 years,
John gained extensive commercial, operational and
technical experience across multiple product groups.
With his international and diverse business experience
in mining, John brings value to the senior management
team at Centamin focusing on future growth prospects
and continuing to unlock the full potential worth of its
asset portfolio.
Craig brings more than 17 years’ experience in strategy,
governance, risk management, internal control and
compliance. Craig holds a BA (Hons) in Risk Management
and prior to joining Centamin, Craig was a director at
PwC leading solution delivery across a range of industries
and sectors, although he had a focus on mining and
energy. Craig brings value to the senior management
team by supporting our commitment to the effective
management of risk, taking advantage of opportunities
and ensuring we make more informed decisions for our
future growth.
DARREN LE MASURIER
GROUP COMPANY SECRETARY
Since July 2013
CAROLINE KASHIRI
ASSISTANT COMPANY SECRETARY
Since September 2019
A fellow of the Association of Chartered Certified
Accountants, Darren has over 20 years’ experience in
corporate administration, governance and offshore
regulation in Jersey. Prior to joining Centamin, Darren
worked for a Fiduciary and Law firm Ogier in Jersey
for over 10 years, providing professional company
secretarial, accounting, administration and director
services for a diverse range of corporate clients
and structures.
Caroline is an Associate member of the Institute of
Chartered Secretaries and Administrators (ACIS). She
holds an MSc in Corporate Governance and Leadership
as well as a BA (Hons) in Accounting and Business.
Prior to joining Centamin, Caroline worked for Link Asset
Services (now Apex) for four years where she got involved
in projects for Corporate Services, Business Operations
and Governance with particular emphasis on reporting for
Automatic Exchange of Information (FATCA and CRS). She
reports to the Group Company Secretary.
HEIDI BROWN
SUBSIDIARY DIRECTOR AND
SUBSIDIARY COMPANY SECRETARY
Since January 2003
Heidi is a Fellow Chartered Secretary (FCIS, FGIA) and
GAICD. A holder of a graduate certificate of Applied
Finance and Investment as well as a Diploma of
Financial Advising. Heidi was the former Company
secretary of the listed parent until 2012 and continues
to act as Company Secretary and Director of Centamin’s
Australian subsidiaries.
Centamin Annual Report 2019
97
> Strategic Report> Overview> Financial Statements> Corporate Governance> Shareholder Information CORPORATE GOVERNANCE
OUR GOVERNANCE STRUCTURE
OUR GOVERNANCE
STRUCTURE
The Board is collectively
responsible for the long-term
success of the Company.
The Board values the views of all stakeholders and
provides direction and leadership which reinforce the
Company’s culture, values and ethics. This provides
the framework for setting the Company’s strategy and
overseeing its implementation as well as ensuring
acceptable risks are taken in compliance with
regulatory and governance requirements.
Set out below is the Board, committee and
management structure of Centamin plc:
CENTAMIN PLC
BOARD OF
DIRECTORS
EXECUTIVE
DIRECTORS
NON-EXEC
DIRECTORS
CORPORATE
OPERATIONAL
MANAGEMENT
MANAGEMENT
OPERATIONAL
HEADS OF
DEPARTMENT
AUDIT AND RISK
REMUNERATION
NOMINATION
COMMITTEE
COMMITTEE
COMMITTEE
HSES
COMMITTEE
CORPORATE
GOVERNANCE
COMMITTEE
CONTINUOUS
DISCLOSURE
98
Centamin Annual Report 2019
Leadership
This report sets out the key areas the Board
has focused on during the year, together with
details of the roles of the key Board members
and an assessment of the effectiveness of the
Board. The Board sets and implements the
strategic aims and values of the Company,
providing strategic direction to management.
See further details in the Strategic Report.
The Chairman, Josef El-Raghy, is
responsible for ensuring the business is run
in accordance with the Board’s strategy.
During 2019, the CEO, Andrew Pardey, was
responsible for the implementation of strategy
and overseeing the day-to-day running
of the business. The CFO, Ross Jerrard
is responsible for delivering the financial
reporting, reviewing the strategy for risks and
opportunities and representing the Company
with key stakeholders (including government
officials). From 13 December 2019, Ross
Jerrard became interim CEO following the
retirement of Andrew Pardey. On 6 April
2020, Martin Horgan was appointed CEO
and Ross Jerrard resumed his role as CFO.
The Board and senior management have
an active involvement in all major activities
in the Group as we are a relatively small
management team. The Board is well placed
to ensure the Company’s actions are aligned
with the strategic aims of the Group. The
responsibilities of the Board and key roles
within the organisation are set out under the
Board Committees section. Details of the
senior management team are set out
on pages 96 and 97.
• See our purpose, values and
culture on page 24 and related
case study on pages 90 and 91
• See our duty under section 172
and case study on page 122
• See alignment of the culture with
the strategy as summarised in our
strategic framework
• See Succession planning (see the
Nomination Committee Report)
• Understanding resource needs to
meet strategic objectives (see the
Strategic Report)
• See our risk management
framework (see the risk
management report)
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. The Board is in receipt
of detailed financial and operational
monthly reports as well as the quarterly
and annual financial disclosures. The
terms of reference for each Board
committee are available on the Company’s
website www.centamin.com.
The Board has delegated certain
matters to its committees and their
reports are presented within the
strategic or Governance Reports as
summarised below:
Audit and Risk Committee
Reviews and is responsible for oversight
of the Company’s financial and narrative
reporting processes and the integrity of
the financial statements and supports
the Board by providing oversight of the
effectiveness of risk management and
internal control. See page 131 for more
details on the activities of the Audit and
Risk Committee.
Remuneration Committee
Reviews and recommends to the Board
the Executive remuneration packages for
the Executives and Non-Executives as well
as senior management and consideration
of the pay scales and remuneration
package for employees. See page 140
for more details on the activities of the
Remuneration Committee.
Nomination Committee
Reviews the structure, size and
composition of the Board and its
committees, oversees the succession
planning of Directors and leads
appointment processes that arise, and
accordingly makes recommendations
to the Board. See page 124 for
more details on the activities of the
Nomination Committee.
Health, Safety, Environmental and
Sustainability Committee
Develops and implements the Company’s
HSES strategy as integrated with the
overall strategy. This covers all aspects of
health and safety policy and energy issues
affecting the business and the impact of
these issues on our operations.
Compliance and Corporate
Governance Committee
Makes recommendations on the
formulation or re-formulation of, and
implementation, maintenance and
monitoring of the Centamin’s Corporate
Compliance Programme and Code
of Conduct as may be modified,
supplemented or replaced from time to
time, designed to ensure compliance
with corporate policies and legal rules
and regulations.
Board Composition and roles
The Nomination Committee regularly
reviews the balance and composition
of the Board and its committees. Non-
Executive Director independence, skills
and tenure also remain key elements for
continuous review by the Committee.
The Committee oversees the succession
planning of the management team and
is encouraged by the roll out of a more
comprehensive talent management
programme.
The below reflects the primary skills
of the Board members:
BOARD SKILLS
Capital Markets
Legal & Finance
M&A Experience
Mining Industry
3
5
3
6
Full details of the skills and experience
of each Director are set out in each
Director’s biography on pages 92 to 95.
BALANCE OF THE BOARD
Non-Executive Director
Executive Directors
Independent Non-Executive Directors
1
2
8
Centamin Annual Report 2019
99
> Strategic Report> Overview> Financial Statements> Corporate Governance> Shareholder Information CORPORATE GOVERNANCE
OUR GOVERNANCE STRUCTURE CONTINUED
At the date of this report, the Board is made up of the Chair and his Deputy, Senior Independent Director plus six Non-Executive
Directors and two Executive Directors with the following responsibilities:
Chairman
Chief Executive Officer
Chief Financial Officer
Martin Hogan
Responsible for leading the Company
through the implementation of strategy,
management of the overall business
performance and leading of the executive
team. Responsibilities are as follows:
• develops and implements short,
medium and long-term corporate
strategies;
• is responsible for day-to-day
management of the business and the
implementation of the Board’s strategic
aims; and
• promotes the highest standards of
safety, corporate compliance and
adherence to codes of conduct and
communicating to the workforce the
Company’s culture and values.
Josef El-Raghy
Leads the Board with overall governance,
major shareholder and other stakeholder
engagement responsibilities. He
undertakes the following:
• leads the Board to ensure it operates
effectively;
• sets the agenda and ensures all
matters are given due consideration
and that directors have the opportunity
to contribute to Board discussions; and
• communicates with shareholders in
relation to the Company’s strategic aims
and policies.
Deputy Chair
Jim Rutherford
Assisting the Chairman in the effective
running of the Board in accordance with
the Board’s strategy. The Deputy Chair
will take on the role of Chair when Josef
El–Raghy steps down at the forthcoming
2020 AGM.
Ross Jerrard
As CFO the role is to implement the
strategy and the Company’s financial
performance and has the following
responsibilities:
• delivering external financial reporting
in compliance with the required
regulations;
• overseeing the preparation of strategic
and financial budgets for the Group to
ensure financial commitments are met;
• developing and maintains a sound
system of financial controls and
adherence to the Group’s policies
and procedures;
• identifying and implementing risk
management practices;
• representing the Group before key
stakeholders including government
officials (including EMRA); and
• monitoring external contracts and
supplier relationships to ensure
they are operating effectively.
BOARD AND COMMITTEE ATTENDANCE SCHEDULE IN 2019
Date of appointment /
Resignation
Board
Audit and Risk
Committee
Health, Safety, Environmental
and Sustainability Committee
Compliance and Corporate
Remuneration
Governance Committee
Committee
Nomination
Committee
Executive
Andrew Pardey
Resigned 13 Dec 2019
Ross Jerrard
Appointed 5 Feb 2018
Non-executive
Josef El-Raghy
Appointed 4 April 2007
Jim Rutherford
Appointed 1 Jan 2020
–
Edward Haslam
Appointed 22 March 2011
Dr Ibrahim Fawzy
Appointed 14 Aug 2018
Mark Bankes
Mark Arnesen
Dr Sally Eyre
Appointed 24 February 2011
Appointed 24 February 2011
Appointed 10 Apr 2019
Catharine Farrow
Appointed 2 Sept 2019
Marna Cloete
Alison Baker
Appointed 2 Sept 2019
Resigned 2 Sept 2019
100
Centamin Annual Report 2019
*
*
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Senior Independent Director
Independent Non-Executive Directors
Group Company Secretary
Darren Le Masurier
Provides advice and assistance to the
Board, the Chairman and other directors
by ensuring Board procedures are
adhered to and corporate governance
complied with.
Gordon E. Haslam
A trusted intermediary between other
directors and the Chair. Also, a sounding
board for the Chairman and his deputy
and available to resolve any concerns
which may arise and fail to be resolved via
the normal channels of communication.
Edward will not be standing for re-election
at the forthcoming 2020 AGM after a nine
year tenure, having served as Deputy
Chair and Senior Independent Director.
Dr Sally Eyre will take on the role of Senior
Independent Director upon the retirement
of Edward Haslam at the forthcoming AGM.
Mark Arnesen, Mark Bankes, Dr Ibrahim
Fawzy, Dr Sally Eyre, Dr Catharine Farrow
and Marna Cloete
The Non-Executive Directors are responsible
for bringing in an external perspective,
sound judgment and objectivity to Board
debates. Constructively challenging the
Executive whilst monitoring the delivery of
agreed strategy. Together with the Senior
Independent Director, the Non-Executive
Directors are responsible for the following:
• to challenge and help develop the
Group’s strategy;
• to participate as members of the Board
and on their respective committees;
• to monitor the performance of
management;
• to be satisfied as to the adequacy and
integrity of financial and other reporting;
• to determine appropriate levels of
remuneration for Executive Directors;
• to raise any concerns with the Board or
with management; and
• to monitor corporate culture and
stakeholder engagement.
Date of appointment /
Board
Resignation
Audit and Risk
Committee
Health, Safety, Environmental
and Sustainability Committee
Compliance and Corporate
Governance Committee
Remuneration
Committee
Nomination
Committee
Executive
Andrew Pardey
Resigned 13 Dec 2019
Ross Jerrard
Appointed 5 Feb 2018
Non-executive
Josef El-Raghy
Appointed 4 April 2007
Jim Rutherford
Appointed 1 Jan 2020
–
Edward Haslam
Appointed 22 March 2011
Dr Ibrahim Fawzy
Appointed 14 Aug 2018
Mark Bankes
Mark Arnesen
Dr Sally Eyre
Marna Cloete
Alison Baker
Appointed 24 February 2011
Appointed 24 February 2011
Appointed 10 Apr 2019
Appointed 2 Sept 2019
Resigned 2 Sept 2019
Catharine Farrow
Appointed 2 Sept 2019
*
*
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
The table excludes meetings held by written
resolutions or sub-committees and reflects
membership during 2019. The Board met eleven
times during the year, with two further meetings
held by way of written resolution.
Meetings attended
Meetings not attended
*
Josef El-Raghy and Dr Fawzy did not attend one Board meeting each due to
personal circumstances beyond their control. Due apologies were received
prior to the scheduled meeting. Edward Haslam took the role of Chair in the
absence of Josef El-Raghy.
Centamin Annual Report 2019
101
> Strategic Report> Overview> Financial Statements> Corporate Governance> Shareholder Information CORPORATE GOVERNANCE
OUR GOVERNANCE STRUCTURE CONTINUED
BOARD DIVERSITY
The Company’s Diversity Policy is set out in the Nomination Committee Report, which
sets out the considerations for the Board composition and pipeline of talent coming
through the organisation, having regard to gender, ethnicity, age and educational and
professional backgrounds.
During the year, the Nomination Committee considered the external reviews on
diversity namely the Hampton-Alexander Review and the Parker Review. Due to
the successful appointments recommended by the Nomination Committee to the
Board, the Company is in line with the target for female representation in leadership
positions. As at 1 January 2020, the Board had 30% female representation and two
individuals who identify as people of colour, in line with the Parker Review.
SIZE OF THE BOARD
NON-EXECUTIVE TENURE
0–2
Years
2–4
Years
4–9
Years
9+
Years
2 Executive
9 Non-Executive
Josef El-Raghy
Jim Rutherford
Edward Haslam
Dr Ibrahim Fawzy
Mark Bankes
Mark Arnesen
Dr Sally Eyre
Catharine Farrow
Marna Cloete
Ross Jerrard
It is our belief that a board’s effectiveness requires diversity of perspectives that combines
director experience and a deeper understanding of the industry gained in various ways
as well as over several years – see below the breadth of experience of our Board:
11SIZE OF THE BOARD
30%(1)
FEMALE BOARD MEMBERS
Hampton Alexander Review
target of 33%
2ETHNICITY
Parker review recommendations
on BAME
5NATIONALITIES REPRESENTED
ON THE BOARD
(1) As at 1 January 2020.
BOARD EXPERIENCE BY SECTOR
Mining and Resource Industry
Capital Markets
Legal
Finance, Accounting and Audit services
M&A
Government relations, public service and development
Investment banking and investment management
102
Centamin Annual Report 2019
BOARD MEMBERS
BY GENDER
DIRECT REPORTS TO
EXECUTIVE BY GENDER
BOARD MEMBERS
BY NATIONALITY
Female
Male
3
7
Female
Male
3
7
Australian
British
Canadian
Egyptian
South African
2
5
1
1
2
Chairman
(JEL)
Deputy
Chair (JR)
Executive
Director
(RJ)
Executive
Director
(MH)
Senior
Independent
Director
(GEH)
Non-
executive
Director
(MB)
Non-
executive
Director
(MA)
Non-
executive
Director
(IF)
Non-
executive
Director
(SE)
Non-
executive
Director
(CF)
Non-
executive
Director
(MC)
BOARD SKILLS MATRIX
Skills set
Skill
Governance
Skills
Investor relations
Listed Company
Corporate Governance
Recent and relevant financial experience
Industry
Skills
Risk Management
Mining industry
Corporate Finance
Legal and tax
Government and public sector
Investment management and banking
Mergers and Acquisition
Geology and geoscience
>
O
v
e
r
v
i
e
w
>
S
t
r
a
t
e
g
i
c
R
e
p
o
r
t
>
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
n
c
e
>
F
i
n
a
n
c
i
a
l
S
t
a
t
e
m
e
n
t
s
>
S
h
a
r
e
h
o
l
d
e
r
I
n
f
o
r
m
a
t
i
o
n
Diversity
in aspects
Nationality
Gender
Age
AUS
Male
48
UK
Male
60
AUS
Male
44
UK
Male
45
UK
Male
74
UK
Male
58
RSA
Male
60
EGY
Male
79
UK
CAN
RSA
Female
Female
Female
48
55
42
Board Training
The Board receive regular
training on key topics
covering legal, regulatory
and compliance matters.
Induction training and
one-to-one sessions are
tailored depending on the
requirements of new directors
to the Board.
Board Site Visits
Detailed knowledge of the
Group’s activities is essential
and each year the Board
visits Sukari where they are
shown all major areas of the
operation.
Board Re-election
At the date of this Annual
Report Josef El-Raghy,
Edward Haslam and Mark
Arnesen will be retiring at
the 2020 AGM and will
therefore not be standing
for re-election. All other
directors will be put forward
for re-election at the 2020
AGM and election in the case
of Catharine Farrow, Marna
Cloete and Jim Rutherford. All
directors are subject to annual
re-election.
Board independence
When determining whether
a director is independent,
the Board adheres to
the Directors’ Test of
Independence Policy, which
is based on the 2018
Code and the definitions of
independence in the Canadian
Securities Administrators’
National Instrument 52-110
– Audit Committees. The
Company remains compliant
with the provisions of the
2018 Code, whereby at least
half the Board comprises
non-executive directors who
are determined by the Board
to be independent.
Centamin Annual Report 2019
103
CORPORATE GOVERNANCE
SKILLS AND SUCCESSION
SKILLS AND
SUCCESSION
The Board mandated the Nomination Committee
to ensure that the composition of the Board and
its committees are balanced with the required
skills, knowledge and experience.
APPROACH TO BOARD RECRUITMENT
EVALUATE THE BALANCE OF SKILLS,
KNOWLEDGE, EXPERIENCE AND DIVERSITY
OF THE BOARD
SKILLS GAP ANALYSIS OF THE BOARD
REVIEW STRATEGIC AIMS OF THE COMPANY
AND INDUSTRY BENCHMARKING
SEARCH METHODS
TO BE AGREED
NOMINATION
COMMITTEE TO TENDER
FOR EXTERNAL
RECRUITMENT AGENTS
PREPARE AND
DEFINE ROLE DESCRIPTION AND
CAPABILITIES REQUIRED FOR SUITABLE
CANDIDATES INCLUDING METHODOLOGY
FOR PSYCHOMETRIC ANALYSIS
PREPARE DRAFT CONTRACTS
AND REMUNERATION
PARAMETERS
AGREE RECRUITMENT
STRATEGY
REVIEW LONG LIST OF
CANDIDATES AND INVOLVEMENT
OF BOARD IN SHORT LIST
AGREEMENT OF SHORT
LISTED CANDIDATES
FOR INTERVIEW
NOMINATION COMMITTEE
RECOMMENDATION, APPROVAL
AND ANNOUNCEMENT
INDUCTION, TRAINING
AND MENTORING
104
Centamin Annual Report 2019
Case Study
ILLUSTRATING OUR APPROACH TO BOARD APPOINTMENT
Stage
Objective
Search and recruitment process for the roles of Deputy Chairman, Independent Non-Executive Directors and Chief Executive Officer
Chief Executive Officer
Deputy Chairman
Non-Executive Directors
To find an established mining industry
leader with a strong track record of
performance improvement and business
transformation. The right person will inspire
confidence both internally and externally
and will have the leadership capability
to drive performance day-to-day, whilst
simultaneously steering it through a
step-change in growth and organisational
maturity
To find a candidate with the skills,
experience, values and capability to assist
the Chairman and ultimately transition
into leading the Board and the delivery of
Centamin’s strategy and long-term value for
all our stakeholders
To find candidates with the skills, experience,
values and capabilities to challenge the
executive and provide constructive solutions,
in order that the Board can achieve its vision
and long-term plans
External search consultancy
appointed to assist committee
Korn Ferry
Egon Zehnder
Egon Zehnder and Korn Ferry
Key elements of
candidate profile
• Proven transformational impact on
• Ability to lead and manage the
business of the Board and ensure Board
contribution to strategy creation and
development
• Facilitator of Board relationships,
development and effectiveness
their business /businesses with a track
record of setting the direction for an
organisation and/or business unit that
has realised long-term shareholder value
• An individual seen to have the
reputation, experience, expertise to
unlock shareholder value for Centamin.
• Extensive experience of successfully
leading and directing multidisciplinary
teams and executing capital projects
involving multiple stakeholders
• Proven and credible track record of
driving and delivering results
• Experience of working in a listed
company
• Knowledge and technical experience in
the mining sector or resource sector
• Strong business ethics and values and
experience of leadership and people
development
Search process led by
Nomination Committee
Nomination Committee
Nomination Committee
Selection
• Korn Ferry identified potential candidate
universe of: 243 profiles (segmented into
A list and B list)
• Agree candidate list with advisor
and the Nomination Committee
• Agree candidate list with advisor
and the Nomination Committee
• Circa 70 candidates prioritised for more
in depth review against acid test criteria
candidate’s characteristics were set
against the candidate brief
• A comparison of each short listed
• Comparator of candidates’ profiles was
carried out against the candidate brief
Interviews
Appointment
• Shortlisted candidates presented to the
Board
Candidates interviewed by the Nomination
Committee, Board members as well as
detailed due diligence, psychometric
analysis and site visit
Martin Hogan was identified as the
preferred candidate. The due process
was duly followed and an announcement
published to confirm his appointment.
Induction
Induction and training tailored to Martin’s
experience and knowledge is underway.
Candidates interviewed by the Nomination
Committee with shortlisted candidates
meeting all other Board members
Candidates interviewed by the Nomination
Committee with shortlisted candidates
meeting all other Board members
Jim Rutherford was identified as the
preferred candidate, Nomination Committee
recommendation, Board approval,
agreement of letter of appointment and
announcement
Dr Sally Eyre, Dr Catharine Farrow and
Ms Marna Cloete were identified as pre-
ferred candidates, Nomination Committee
recommendation, Board approval,
agree-ment of letters of appointment and
an-nouncements
Dr Sally Eyre, Dr Catharine Farrow and Ms
Marna Cloete were identified as preferred
candidates, Nomination Committee
recommendation, Board approval,
agreement of letters of appointment and
announcements
Egon Zehnder and Korn Ferry have no connection with the Company except in the context of searching for senior executive as per
mandates issued to the two executive search companies. The Committee believes that executive searches should be conducted using
such consultants as their search methods target individuals with the skills and experience required rather than open advertisement.
Centamin Annual Report 2019
105
> Strategic Report> Overview> Financial Statements> Corporate Governance> Shareholder Information CORPORATE GOVERNANCE
SKILLS AND SUCCESSION CONTINUED
Case Study
ILLUSTRATING OUR APPROACH TO BOARD APPOINTMENT continued
Board Refreshment
The appointments during 2019 reflect the second year of an
active programme of board refreshment and rotation. In addition
to the changes to the composition of the Board over 2018
and 2019 regular refreshment to the committees are also a
recognised instrument within the culture of Centamin to provide
fresh insight balanced with continuity and previous experience.
Non-Executive Director Appointments
2
1
2018
2
1
2019
3
1
1
2
2020
Appointments
Appointments in process
Retirements
Retirements proposed
Board and Senior Management Pipeline
The Board composition also reflects the ongoing work in
developing a diverse board and ensuring a diverse pipeline of
talented individuals within the organisation and a mechanism
for progression. The Board continue to develop skills through
empowering senior management and employees across Egypt,
Burkina Faso and Côte d’Ivoire and the head office in Jersey, as
a way to safeguard our talent pipeline and succession plan. The
Company’s Sustainability Report for publication in June 2020
provides more information on talent management programmes.
The key skills and experience we consider most relevant to the board and committees are set out on page 103
on the Skills Matrix table.
106
Centamin Annual Report 2019
KEY ACTIVITIES
IN THE YEAR
Key Activities of the Board in 2019
TOPIC
KEY ACTIVITIES DURING 2019
PROGRESS AND OUTCOME
Board Strategy Day
• Defining our Vision
• Defining our Purpose, Values and Culture
• Stakeholder mapping
• Stakeholder engagement
• Strategic planning taking account of:
– Growth options
– Capital allocation
– Sensitivity analysis
– Peer review
• Risk review, risk appetite and application to the Strategic Plan
giving consideration to new and emerging risks
• ESG considerations on strategic planning and initiatives:
• Workforce
• Health and Safety
• Environment
• Stakeholders
The Board evaluated the Company’s purpose, values and culture to
ensure they aligned with the longer term plan and were consistent with
the Board’s behaviours and to set clear direction to the business. This
resulted in the need to set and communicate clear KPIs to drive the
business and behaviours
The Board considered the requirements of the 2018 Code and section
172 and its application across all major decisions, including budget and
capital allocation and the stakeholder mapping in early stage projects.
A detailed section in the Strategic Report illustrates ‘who’ and ‘how’ we
have engaged with stakeholder groups
The risk review, articulation of the risk appetite and new and emerging
risks are set out in the Risk Report within the Strategic Report
The Board reviewed the ESG strategy and the structure of internal
resourcing in order to meet the external reporting requirements. The
Board considered the ESG targets and sustainability reporting.
Routine Activities
• Annual Budget preparations
Review and approval of the annual budget and periodic financial reports
• Periodic financial reports
• Site visits
• Life of Asset Review
• Capital allocation project considerations
• Senior personnel management and training
Nomination Committee
Recommendations
• Board succession, appointment and rotation
Management hosted site tour of the site’s operations at Sukari
Review of the business model, life of asset review and defence strategy -
See Strategic Report for more information on the life of asset review
Review of the HR capability, resourcing needs of the business and key
roles within the senior management team. High level considerations of
the current talent management and training capability across the
Company’s operations
See Nomination Committee Report on the committees activities –
key highlights below:
Executive and Chair appointments:
• Martin Hogan (CEO)
• Ross Jerrard (Interim CEO from December 2019 to April 2020)
• Jim Rutherford (Deputy Chair)
Recommendation and approval of the following Non-Executive Director
appointments:
• Dr Sally Eyre
• Dr Catharine Farrow
• Marna Cloete
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KEY ACTIVITIES IN THE YEAR CONTINUED
Key Activities of the Board in 2019 CONTINUED
TOPIC
KEY ACTIVITIES DURING 2019
Remuneration Committee
Recommendations
Review of the recommended:
• 2019 Remuneration Policy
PROGRESS AND OUTCOME
Shareholder approved:
• 2019 Remuneration Policy, report and Share Plan
• Stakeholder engagement of the Remuneration Policy,
• Delivery of revised executive and senior management
Remuneration Report and Share Plans
remuneration package
• Review of Executive and senior management remuneration
• Oversight of the remuneration package for newly appointed members
packages, contracts and awards
of the senior management team
Corporate Governance,
Audit and Risk and Internal
Control environment
Implementation of 2018 Code including a review of the corporate
policies and Diversity Policy taking account of industry and
shareholder trends on governance reforms
Litigation update on the Company’s ongoing court hearings and
developments in the Mining Law in Egypt
Review the Company’s procurement and contract management,
key financial processes and inventory management
Refresh of the Risk Management Framework. (Details are set
out in the Risk report within the Strategic Report)
Corporate Action
Consideration of the possible offer by Endeavour Mining Corporation
("Endeavour")
Development of Human Rights, Supplier Code of Conduct and Diversity
Policy for the Board and senior management team
Review of litigation strategy and opportunities on the changes to the
Mining Law regulations in Egypt
Assessment undertaken by external consultant to review internal
controls and existing platforms in Jersey and Egypt
Management led a refresh activity across Jersey, Egypt and West Africa
with the support of PwC. This included the appointment of a Head of
Risk who will ensure we continue to embed the refreshed framework
alongside a programme of key activities in 2020
Following a comprehensive and reciprocal due diligence process, the
Board of Centamin unanimously concluded that the possible offer
from Endeavour materially undervalued Centamin and its prospects.
Endeavour withdrew the possible offer in January 2020
2020 Focus Areas
The Strategic Report sets out the areas of focus for the Board for 2020. From a governance perspective, the Board is looking to
achieve the following for the remainder of the year:
• Board and Management personnel
Strengthening our leadership team which will be led by our newly appointed CEO. Taking into account the Board and senior
management changes, a review of the committee composition and structure has been carried out, details of which can be found
in the Nomination Committee Report. The establishment of a Sustainability Committee and a Technical Committee of the Board
are among the initiatives to be implemented effective post 2020 AGM. The Sustainability Committee will replace the Compliance
and Corporate Governance Committee and Health, Safety, Environmental and Sustainability Committee as part of the committee
structure reviews undertaken by the Nomination Committee.
• Reporting and communication
Building on the channels of communication between Board and management and information flows to the senior management
team and the Board to enable informed decision-making. The communication of the strategic goals of the Group will continue
to be a priority, using the foundations set in 2019.
• Governance, risk and internal control environment
Building on the existing governance and risk framework, supported by effective internal control, to better understand both
opportunities and threats to the successful delivery of strategic growth for our business. This will be supported by the appointment
of senior positions at a management level.
Recognising the importance of maintaining a sound system of risk and internal control during the COVID-19 pandemic we are
ensuring that we monitor any changes carefully, and can introduce any alternative mitigating controls where necessary and
practicable to support the operation of an effective control environment. Due to the nature of the business we have a structure in
place that separates the lines of defence in different locations with the ability to work remotely and utilise technology, key individuals
to risk management and internal control have ensured that they have taken precautions where possible, followed government
guidance and keep any relevant documentation in shared folders.
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Centamin Annual Report 2019
• ESG capability
Ensuring Environmental, Social, Governance forms an integral part of all our decisions starting with a review of the capabilities on
the Board, senior management and our site’s operations. Further development of the policies and procedures that feed into ESG
will continue as we meet the disclosures required. Monitoring, under the guidance of the management team aided by external
consultants, the following key reports on climate related disclosures are set out as follows:
UNDERWAY
UNDER
CONSTRUCTION
Global Reporting Initiative led Sustainability Report
Task force report on climate related financial disclosures
Carbon Data Project reports on climate change and water usage
EU Commission Guidelines on NFR Directive
FRC Lab report on climate related corporate reporting
FCA feedback statement on climate change and green finance
The Group’s standalone 2019 Sustainability Report will be published in June 2020 and a summary Sustainability Report is set out on
pages 38 to 41.
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CORPORATE GOVERNANCE
BOARD EVALUATION AND TRAINING
BOARD EVALUATION
The Centamin Board carries out an evaluation of its own effectiveness and
performance as well as that of its committees and individual directors each
year. An independent company externally facilitates board evaluation every three
years and the most recent evaluation was undertaken at the end of 2019.
Centamin appointed Charlotte Valeur –
Managing Director of Global Governance
Group Limited (GGG Limited) a company
with no other connections with Centamin
to carry out this exercise in order to
have contact with directors and obtain
their views of the overall effectiveness of
the Board. The Nomination Committee
together with the Chair oversaw the
process of selecting a board evaluator,
how the evaluation would be conducted as
well as turning the analysis to meaningful
information to assist the Board in
understanding the way forward.
Process
GGG Limited, the Nomination Committee
and Chairman agreed and initial phase
of a survey based questionnaire within
agreed parameters. The areas covered
by the survey are highlighted in the
graph above under 2019 External
Board Evaluation.
Once the survey was completed, the
results were automatically forwarded
anonymously to GGG Limited to encourage
honesty and transparency. A report was
then prepared setting out the results of the
survey and recommendations were given
to the Senior Independent Director for
further discussion with the Board.
Key highlights
The review confirmed that the Board
appears to be effective and well-
functioning and the new independent
Non-Executive Directors have adjusted
in a positive way.
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Centamin Annual Report 2019
Key topics covered in the Board review
• Board Composition/skills
• Strategic review
• Workings of the Board
• Risk Oversight
• Performance oversight
• Stakeholder Management
2019
2016
EXTERNAL
BOARD EVALUATION
EXTERNAL
BOARD EVALUATION
2017–2018
INTERNAL BOARD
EVALUATION
Key topics considered from the survey
• Succession planning
• Induction and Training
• Roles and Responsibilities
Strengths of the Board
DIVERSE
GENDER, NATIONALITY,
TENURE AND SKILLS
QUALIFIED
EXPERIENCED IN
KEY AREAS
ROBUST
GOVERNANCE
FRAMEWORK
• The Board is well diversified within gender, nationality, generations, tenure and skills
• Members of the Board are well qualified and experienced in key areas
• The Board’s governance framework is considerably robust
Areas identified with scope for improvement are summarised under recommendations.
Recommendations
Following the 2019 evaluation, the Board identified the following areas as key contributors to the effectiveness of the Board for 2020:
Area of consideration
Topic
Actions in 2020
Training on specific areas to be delivered during board
meetings during the year. Clarify matters reserved for the
Board as a training opportunity for new and old members
Director Development –
Continuous Professional Development
(“CPD”)
Continual development of structured board training programme
together with the induction programme in order to clarify
director roles and responsibilities
Level of involvement by directors in long-term planning,
business planning including the investment and dis-
vestment process to be given more time in meetings
Strategy
Directors to determine level of engagement with key
stakeholders
Stakeholders
Directors to agree an effective way of assessing the
operational and overall performance of the Company
Performance
Development of a CPD policy
The Chair, Deputy Chair, Senior Independent Director and
Company Secretary to continue working together in deciding
on the items that go on the Board’s agenda for discussion in
meetings
Clear structure on the responsibilities of the directors to
develop continually in accordance with the skills held by each
director to ensure assurance that stakeholder engagement is
appropriately conducted
Continue to improve communication structures between the
Executive and Non-Executive for clarity on the performance of
the company and overall alignment to strategy
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BOARD EVALUATION AND TRAINING CONTINUED
Board Effectiveness
Review process
The Board, with the help of the Nomination Committee, has
developed a formal review process to assess how well the Board,
its committees, the Chair and the directors are performing
collectively and individually and how performance could be
improved. In accordance with the 2018 Code, the Board
undertakes self-review and commissions externally
facilitated reviews.
Board Effectiveness Cycle
YEAR 1
EXTERNAL BOARD
EVALUATION
YEAR 2
Outcome
Overall, the externally facilitated evaluation report recognised
that this has been a time of significant change and challenge for
the Board. Considering that a new CEO has just been appointed,
the review was a good opportunity for the Board members
to gain clarity of areas needing further work. It was quite
clear from the review that the directors are well qualified and
experienced and demonstrate strong and challenging views.
These are positive attributes that have been effectively managed
by the Chair whose deep knowledge and understanding of the
business is well respected.
INTERNAL BOARD
AND COMMITTEE
EVALUATION
YEAR 3
INTERNAL BOARD
AND COMMITTEE
EVALUATION
BOARD EFFECTIVENESS TO BE EXTERNALLY EVALUATED EVERY THREE YEARS
Managing risks and internal controls
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 principal risks,
including any new and emerging risks for consideration, and the
extent to which it believes these risks are being appropriately
managed and mitigated.
Throughout the year, the Board, with assistance of its committees
have assessed the risk management framework and internal
control environment, with a view to improving visibility over the
following areas:
• Review of the operational risks and linkages to the strategic
aims and corporate risk register see Principal Risks and
Uncertainties on pages 76 to 81
At the time of publication of this report, COVID-19 has
significantly impacted the world, presenting an unprecedented
medical, economic and social challenge, recognising this we
have included further detail in the Strategic Report Page 20
and recognised this as a new & emerging risk.
• Mine planning and monitoring
• Development of budget and forecasts
• Reporting and information flows
• Reporting to the Board (concise information)
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Centamin Annual Report 2019
The Board is pleased to confirm that the Company remains in
compliance with best practice guidelines, with the 2018 Code,
save where noted in the compliance statement on page 117, and
relevant Canadian requirements, and the systems in place to
manage risk and the internal control environment have been in
place for the year under review, up to the date of approval of the
Annual Report and financial statements.
During the year, the Company carried out a continuous
improvement programme to assess the control environment
of the Group, through the work of the finance team, operations
team as well as the assurance services of the internal and
external auditors.
At the recommendation of the committees, the Board continued
the programme to ensure further development to the existing
control environment. This work is set within a year which has
seen a significant change in senior personnel at an operational
level and further changes at a corporate level. The importance
of ensuring existing work streams and reporting flows continue,
whilst developing new and improved systems represent a
challenge, but this is one which the Board acknowledges and
continues to provide support, guidance and resources.
It was noted that the review and subsequent recommendations to
improve the internal control environment are part of a continuing
process of improvement.
Risk Management Framework
OVERSIGHT OF THE POLICIES SETTING
THE FRAMEWORK AND OVERSEES THE
IMPLEMENTATION OF RISK MANAGEMENT
BOARD
COMMITTEES
AUDIT AND RISK
COMMITTEE
OVERALL RESPONSIBILITY FOR ASSESSING
THE EFFECTIVENESS OF THE COMPANY’S
SYSTEMS FOR RISK MANAGEMENT
EXECUTIVE/SENIOR
MANAGEMENT
INTERNAL
AUDIT
OPERATIONS
CENTRAL
FUNCTIONS
Implementation of the framework,
provision of assurance on the
effectiveness of the framework
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RELATIONSHIP WITH STAKEHOLDERS
RELATIONSHIP
WITH STAKEHOLDERS
HOW THE BOARD HAS ENGAGED WITH KEY STAKEHOLDERS
Stakeholder
Board Activity
How We Have Engaged
One-on-one meetings – with key institutional shareholders over the phone, email
and meetings.
Investor relations meetings and conferences – regular conversations with key
shareholders by the head of investor relations and directors.
Annual General Meeting – attendance of AGM in 2019 by shareholders and
engagement with proxy advisors and stewardship and governance teams.
Annual Reports and Accounts – Online access of the report and accounts in
simple language for all shareholders to understand the essence of the business.
Presentations, Disclosures and Public announcement – Quarterly updates
presented by the CEO, CFO and COO delivering key results including interactive calls.
Employee Engagement Committees – Development of the Voice of Sukari, a
forum by which employees are able to raise concerns and ideas that will receive the
attention of the HSES Committee. A number of meetings have been held with two
formal meetings to present initiatives for consideration by the HSES Committee and
management team. Responses to the initiatives were considered further by the forum
in early 2020.
Regular Updates and reports from the executive and senior management team to
the General Manager through periodic mailouts to daily pre-start and toolbox site
meetings.
Policies and Procedures – Whistleblowing platform with both internal and external
grievance procedures.
Training and Development – Train the Trainer programmes being developed for roll
out in the coming year. The Board also started developing programmes that identify
high performing Egyptian nationals and future leaders to aid succession.
Through the HSES Committee the Board set up the following:
Community Committee: A forum of three community leaders from within Marsa
Alam provide feedback to SGM from the local community. In West Africa, the
exploration sites remain low impact, however consultation with the local chiefs and
heads of security to assess the needs of the community and relevance of projects.
Full details of the community projects are set out in the Sustainability Report.
Supplier engagement – Opportunity to complete the materiality assessment,
details of which are set out in the Sustainability Report.
Policies and Procedures – Review of the Code of Conduct, Human Rights
Policy and Supplier code of conduct and Whistleblowing policy to ensure suppliers
comply with the relevant laws, regulations and standards of the countries in
which they operate.
Formal meetings and correspondence – with Government officials including
Egyptian General Assembly.
On-site visits at Sukari – EMRA representatives and audits under the concession
agreement terms
Materiality assessment – to receive feedback from authorities, the results of
which are set out in the Sustainability Report.
SHAREHOLDERS
In 2019, all decisions made regarding shareholder engagement
were with the intent to ensure the long-term success of Centamin
for the benefit of our shareholders.
Key engagement activity related to:
• The preparations for the Remuneration Report and policy
• The approach made by Endeavour Mining Limited
• Key appointments to the Board and senior management
EMPLOYEES
Consideration of the 2018 Code and the Board’s ongoing
commitment to employee engagement to include:
• Ensuring adequate process exists to allow for employee
engagement and sufficient training is available at the sites
operations.
• Ensuring talent is developed through the organisation and
opportunities exist for nationals.
COMMUNITY
Details of the Company’s materiality assessment processes are
set out in the Sustainability Report. The Board, through the HSES
Committee identified the community leaders and key individuals
to provide feedback, suggestions and ideas.
The Board established a framework for evaluating proposed
community initiatives and projects.
SUPPLIERS
The Board, through the Audit and Risk Committee, carried out a
review of the procurement and tendering processes as well as the
application of Anti-Bribery and Corruption procedures
GOVERNMENT
The Board established a methodology for identifying and assessing
suppliers consistent with the Modern Slavery Act.
The Board continues to develop ways of undertaking due diligence
and/or risk assessments to verify compliance with the code of
conduct principles.
The Centamin Board approved the payment of royalties and taxes
to host governments, which ultimately contributed to the economy
of Egypt and West Africa to benefit the community.
The Board ensured that the necessary payments were made
in the following areas:
• Profit share
• Corporate taxes
• Royalties
• Exploration licence fees
• Mining and other licence fees
• Infrastructure improvements
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Centamin Annual Report 2019
Continuous engagement and effective communication is facilitated across the chain of stakeholders:
STAKEHOLDER EVALUATION
SHAREHOLDERS
EMPLOYEES
ANNUAL GENERAL
MEETING
ANNUAL REPORTS
AND ACCOUNTS
PROXY ADVISORS
VOICE OF SUKARI
TRAINING AND
DEVELOPMENT
WHISTLEBLOWING
PLATFROM
COMMUNICATION
ENGAGEMENT
CODE OF CONDUCT
GENERAL ASSEMBLY
CONTRACTOR
MANAGEMENT
WHISTLEBLOWING
PLATFORM
EMRA REPS ON SITE
APPOINTED
COMMUNITY REPS
CONTRACTORS
AND SUPPLIERS
GOVERNMENT
COMMUNITY
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RELATIONSHIP WITH STAKEHOLDERS CONTINUED
The 2019 Annual Report and accounts
and Notice of AGM will be mailed to
shareholders in May. Details will also be
available on the Company’s website,
www.centamin.com.
The Chairman, CEO, Senior Independent
Non-Executive Director and Deputy
Chairman, as well as 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
certain of the proxy advisory companies,
which provide guidance and voting
recommendations to shareholders, is
discussed by the Board.
Shareholder communication is
maintained through the following
key information channels.
The Board is aware of the importance of
dialogue with all shareholder groups by
consistently keeping the market aware
of the Group’s activities, key decisions
and any key changes. As part of our
communication strategy, we recognise the
need to continuously be in dialogue with
our shareholders, maintain good corporate
governance and most importantly listen to
you when you express your views through
the channels available. All our policies
and procedures can be found on the
Company’s website.
A large proportion of the Company’s
shareholders are guided by proxy advisers
and their voting recommendations, which
can significantly impact voting outcomes
at the Company’s AGM.
Taking account of shareholders and wider
stakeholders interests is an integral part
of our strategic planning and decision-
making processes.
PRESENTATIONS, INTERACTIVE CALLS,
ONE-ON-ONE MEETINGS
PUBLIC ANNOUNCEMENT
QUARTERLY REPORTING
MANAGEMENT HOSTED
SITE TOURS
AGM
Shareholder communication
Governance
Annual General Meeting
The 2020 Annual General Meeting (“2020
AGM”) will be held at 11.00 AM BST on
Monday, 29 June 2020 at 2 Mulcaster
Street, St Helier, Jersey, Channel Islands.
To protect the health and wellbeing
on our employees, communities and
shareholders, and in accordance with
the UK and Jersey Government and
public health guidance on COVID-19,
the Centamin Board of Directors asks
shareholders not to physically attend the
2020 AGM. Shareholders are encouraged
to complete and submit their votes online
and to submit any questions to the
registrar in advance of the 2020 AGM.
To fulfil the statutory obligation, a quorum
of two members will be physically present
at the meeting, whilst adhering to social
distancing measures, one of whom will
chair the meeting and cast the proxy
votes of the members. Unless restrictions
have been lifted by then, shareholders
will not be able to attend in person but
will be offered the opportunity to listen
to formal business of the AGM through
remote communications. Please note
the following:
(i) We ask that you promptly return your
proxy voting form, nominating the chair
of the meeting to act as your proxy. All
voting instructions and proxy materials
will be included in the Notice of AGM
(ii) We expect that the official business
of the meeting will last no more than
15 minutes, subject to answering
questions which will have been
submitted by shareholders in advance
of the meeting
(iii) There will be no investor presentation
following the official business of the
2020 AGM
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COMPLIANCE AND GOVERNANCE COMMITTEE REPORT
COMPLIANCE AND GOVERNANCE
COMMITTEE REPORT
2018 UK Corporate Governance Code
Compliance statement
The Company is incorporated in Jersey,
Channel Islands. The Company, by virtue
of the Listing Rules, is subject to the
2018 Corporate Governance Code (the
“2018 Code”) issued by the UK Financial
Reporting Council (“FRC”) and therefore
the Company needs to confirm how it
has applied the main principles and
complied with all relevant provisions of
the 2018 Code or to explain areas of non-
compliance. The 2018 Code can be found
on the FRC’s website, www.frc.org.uk.
• During the year the Company has
sought to comply with the 2018 Code
and wider governance initiatives. Details
on how the Company applied the main
principles of the 2018 Code are set out
further below.
• The Company has complied with all
relevant provisions of the 2018 Code
except for full compliance with the
following:
– Although less formal measures were
in place from 1 January 2019 for
employee engagement, the formal
introduction of the ‘Voice of Sukari’,
a charted forum for workforce
engagement, came into effect
midway through 2019 which forms
part of the employee engagement
initiative to comply with Provision 5.
– The 2018 Code and best practice
recommendations favour a chairman
to be independent within the
meaning of the 2018 Code and not
to exceed nine years’ tenure on the
Board. Josef El-Raghy is not an
independent non-executive chair
and additional measures were in
place during 2019 such that Edward
Haslam (Deputy Chair and Senior
Independent Director) took an active
role to ensure the Board’s ongoing
effectiveness. On 1 January 2020
Jim Rutherford was appointed, taking
on the role of deputy chair, and as an
independent Non-Executive Director,
will take over as the Board Chair
from the 2020 AGM which will be in
compliance with Provision 19.
– As set out in the Directors
Remuneration Report, the
Remuneration Committee will,
during the year, consider its
approach to the post cessation
shareholding requirements for
directors as recommended by
Provision 36.
The Board understands its responsibilities
and duties to shareholders and
stakeholders which is embedded in the
Company’s values and culture. As a Jersey
registered company, the full requirements
of section 172 of the UK Companies Act
2006 (“section 172”) are additional to the
directors’ current obligations under Jersey
Law. Understanding and, where necessary,
implementing and updating policies to
ensure compliance with section 172 has
been considered throughout 2019, with
support of the CGC and HSES Committees.
National Policy 58-201 –
Toronto Stock Exchange
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).
1. Board Leadership and company purpose (Principles A–E)
The Board is collectively responsible for
the long-term success of the Group by
working effectively and innovatively as
a leadership group. Accountability is at
the heart of our governance framework
and the Board have ensured that
effective controls set up enable the
management and assessment of risk
to be undertaken. More information
reflecting how we have assessed the
impact we have within our sphere of
influence is found in the Chairman’s
statement as well as the key activities
of the Board during 2019 on pages 107
and 108. Safety is the key component
forming the culture of the Company. As
expanded on page 38 where we discuss
the culture of the business, safety
remains top of priority weaving the
purpose and values of the Group. Whilst
the purpose, value and culture is set by
the Board, our people remain the driver
of our culture in attaining the strategic
targets set. The Board continues to
commit itself to championing the safety
culture and embedding it throughout
the organisation.
The Voice of Sukari continues to be
developed so it can become one
of the stakeholder voices in Board
decision-making. It continues to be the
sounding board for all our employees
to help the Group move forward in
looking after our people who remain
a great asset for the business. The
Board, through the HSES Committee,
had oversight on the set up of a
Whistleblowing mechanism to allow
all employees to be able to raise any
matters of concern. Previously this
was a matter reserved for the Audit
and Risk Committee however, we have
amended our Board Charter to ensure
that we establish the whistleblowing
mechanism as a matter reserved for
the Board. Going forward in 2020,
reports will be presented to the Board
members concerning the analysis of
concerns raised.
Our Board takes the matter of
stakeholder engagement seriously
– to understand our approach to
engagement of this level, see the
Relationship with Stakeholders section.
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CORPORATE GOVERNANCE
COMPLIANCE AND GOVERNANCE COMMITTEE REPORT CONTINUED
2. Division of responsibilities (Principles F–I)
Page 100 reflects the clear decision
that exists between the Chair and the
Chief Executive Officer to ensure that
no individual has undisputed decision-
making power. The process of recruiting
a Chief Executive Officer has now
completed and Martin Hogan has been
appointment and has taken over from
Ross Jerrard who had taken the CEO role
in the interim concurrent to his CFO role.
Board composition – The Board currently
comprises eleven members with Chair,
Deputy Chairman, Senior Independent
Director, Chief Executive Officer
and Chief Financial Officer plus six
independent Non-Executive Directors.
Following the 2020 AGM, an additional
Non-Executive Director will also be
appointed to the Board with a strong
technical background. The total number
of Board members following the 2020
AGM is expected to be nine members
(including a newly appointment technical
Non-Executive Director).
Independence – At least half the
Board, excluding the Chair, are
independent as per the 2018 Code test
of independence. Edward Haslam, our
Senior Independent Director, will have
served for nine years on the Board and
will not be standing for re-election at
the forthcoming 2020 AGM. Dr Sally
Eyre will be taking on the role of Senior
Independent Director effective from
the 2020 AGM. Mark Arnesen will
also have served for nine years on the
Board and will not be standing for re-
election at the forthcoming 2020 AGM.
Following the intended retirements,
the Board will continue to comply with
the 2018 Code test of independence
with Jim Rutherford, an independent
Non-Executive Director, undertaking the
role of Chair of the Company. It is noted
that the Board considers Mark Bankes
to be independent, notwithstanding
the requirements of the 2018 Code
with Mark Bankes having served on
the Board for nine years. Additional
measures will be put in place, such
that Mark Bankes will not serve on
mandated committees unless required
to do so for continuity purposes during
this short transitional period.
Director overboarding – All the director
service agreements and engagement
letters include a clause confirming that
the directors have sufficient time to meet
their responsibilities. In compliance with
the Financial Conduct Authority’s Listing
Rules, we disclose any new external
appointment approved by the Board for
our existing directors. Approval by the
Board is usually passed should this be
of overall benefit to the business and
with an understanding between the
director and the Board that they would
still be expected to meet their obligations
together with the new appointment.
3. Composition, succession and evaluation (Principles J–L)
The Nomination Committee has been
mandated with the task of ensuring
the Board composition is balanced
and diverse enabling appropriate
succession for all key roles as well
the ability to internally and externally
evaluate the effectiveness of the Board
and its committees.
Tenure of the chair – Major efforts have
gone into ensuring we were successful
in recruiting a Deputy Chair to facilitate
the proposed transition of the newly
appointed individual to take on the role of
Chair of the Company at the 2020 AGM.
Succession planning and diversity – The
Nomination Committee was successful
in recommending the appointment
of three independent Non-Executive
Directors and the Deputy Chair as well as
a new CEO. In compliance with diversity
targets, as at 1 January 2020, our Board
comprises 30% female representation
(in line with the Hampton Alexander
report) and two individuals who identify
themselves as persons of colour (in
line with the BAME). A diverse board
relies on diverse skills, knowledge and
experience in order to navigate our pillars
of strategy to facilitate discussion and
constructive debate in the boardroom.
The Nomination Committee uses this
approach to maintain a well-developed
pipeline of talent and a balanced board.
Disclosure of contributions of individual
Directors – A list of the director
contributions in 2019 is included in
their biographies. Further details will
also be included in the notice of the
2020 AGM with confirmation from the
Chair of the Board effectiveness in
growing the business for the sake of
our wider stakeholders.
Board evaluation – Once every three
years, an external board evaluation is
carried out therefore an evaluation was
undertaken in 2019. The Nomination
Committee, together with the Senior
Independent Director had oversight of
the external board evaluation carried
out by GGG Limited. The evaluation
covered key areas that matter to every
Board and wider stakeholders such as
board composition, strategy, risk and
stakeholder management. Details of the
process, analysis and recommendations
are recorded on page 110.
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Centamin Annual Report 2019
4. Audit, risk and internal control (Principles M–O)
5. Remuneration (Principles P–R)
The Audit and Risk Committee terms of
reference have been updated to meet
the 2018 Code updates. With effect
from the 2020 AGM the current chair of
the Audit and Risk Committee will step
down and hand over duties to Marna
Cloete – an Independent Non-Executive
Director. Mark Arnesen has served as
chair of the Committee and now having
served for nine years on the Board, he
will be retiring as a director.
Dear Shareholders
I am presenting this report as an update
on the various activities undertaken by the
Compliance and Governance Committee
in 2019 in my capacity as Chair. This has
been a year of significant change for the
business as we continue to build a strong
leadership team for the benefit of creating
stronger governance structures. We have
continued to make excellent progress
implementing our succession plans and
reshaping the Board to ensure we have
the right balance of executive and non-
executive skills and experience to support
the business over the long-term.
The Board tasked the Committee to make
recommendations in the following areas:
• Designing and/or redesigning,
implementation, maintenance and
monitoring of the Company’s Corporate
Compliance Programme and Code of
Conduct to ensure compliance with
corporate policies, legal rules and
regulations; and
• The Company’s activities in the area of
corporate compliance that may impact
the Company’s business operations
or public image, in light of applicable
government and industry standards,
legal and business trends and public
policy issues
Internal and External Audit – The
Board mandated the Audit and Risk
Committee to monitor the effectiveness
and independence of the internal audit
function as well as the external auditors.
The Board endorsed the appointment of
PwC as the external auditors for the year-
end 2019 audit. It is the responsibility
of the Audit Committee to review key
decisions and judgment within the Group
concerning the financial statement and
reporting whilst maintaining integrity in
the reporting process.
Risk Management – Further details of
our assessment of new and emerging
risks are in the Principal Risks and
Uncertainties Report on page 70.
Key Responsibilities
• Overseeing corporate compliance in
respect of government and industry
standards
• Monitoring compliance in respect
to listing rules for the London Stock
Exchange and Toronto Stock Exchange
• Assess the Company’s Code of
Conduct and all other written
compliance policies and procedures
• Board education and training needs
• Monitoring the activities and decisions
made by the Disclosure Committee
Key Focus Areas During The Year
• the 2018 Code review as well as the
section 172 on directors statutory and
fiduciary duties
• Consideration of the proposed CGC
Committee composition recommended
by the Nomination Committee
• Policies and procedure updates
impacting the governance of the Group
• Management of inside and material
information regarding proposed
corporate action from Endeavour
We have ensured that in our
preparation for committee
refreshments, we encompass the
requirement for the chair of the
Remuneration Committee to have
served on such a committee for at
least twelve months. Our proposed
committee membership reflects these
considerations. The Board mandated
the Remuneration Committee to
assist with long-term and short term
incentives that facilitate performance
to deliver on Company’s strategy
whilst creating shareholder value.
At the date of writing this report the
following membership is in place for
the committee:
• Mark Bankes
• Edward Haslam
• Dr Ibrahim Fawzy
• Mark Arnesen
All four members attended all the
meetings held in 2019. Their skills
and experience are listed under the
biographies section on pages 92 to 95.
An initiative to redefine the roles and
composition of the Board’s committee
structures, will mean that the CGC
Committee will cease to exist in its
current form following the 2020 AGM.
The Committee’s responsibilities will be
allocated across a new Sustainability
Committee and the Audit and Risk
Committee. The Disclosure Committee
will be constituted under the Company’s
Continuous Disclosure Policy and report to
the Audit and Risk Committee or directly
to the Board.
Centamin Annual Report 2019
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> Strategic Report> Overview> Financial Statements> Corporate Governance> Shareholder Information CORPORATE GOVERNANCE
COMPLIANCE AND GOVERNANCE COMMITTEE REPORT CONTINUED
The activities of the CGC committee in 2019 are set out below:
Activities of the CGC Committee in 2019
Activities
Committee Commentary
Reviewing of the work of the Board and committees to identify
any gaps or areas pertinent to the 2018 Code
Concession Agreement case Law no. 32 – Litigation/dispute update
DFO case progress
Committee continued to monitor the progress for compliance to the 2018 Code.
The case is still before the Constitutional Court and there was no change in the situation
during the year. The State Committee has been requested to submit a complementary report
concerning the validity of Law no.32.
No progress to report however, the Committee continues to monitor the progress in the
Egyptian courts to resolve this dispute until the next hearing which will be scheduled once
normal service resumes.
Continual review of the reporting requirements for complying with
LSE and TSX disclosures
The Committee continues to actively review public disclosures to comply with all the required
disclosures.
Reviewing of culture
Section 172
Strategy Day held for the directors to review the values, behaviours and culture stimulating
discussion to define the said areas.
The Committee has supported where necessary, the implementation and updating of practices to
ensure compliance with section 172.
Workforce and wider stakeholder engagement
The Voice of Sukari has been set up with appointed representatives from the workforce at Sukari
and is a forum for sharing concerns, ideas and opportunities between the employees and the Board.
Cross jurisdictional legal and regulatory compliance
Australia MSA Legislation has been considered with assistance from external legal counsel in
relation to Centamin’s obligations under this legislation.
Regulatory and legal review and advising on related training
requirements for the Board, management and workforce
The Committee receives updates on changes to the regulatory and legal environment. The
Committee continues to consider these changes when reviewing corporate policies.
Monitoring of the proposed Corporate Action by Endeavour via the
Disclosure Committee
The Committee continued to monitor information deemed sensitive and/or inside and/or material
for the purposes of informed decision-making being made for the benefit of the shareholders and
wider stakeholders. In relation to the Endeavour approach, a defence committee was established
which resembled the composition of the Disclosure Committee but with specific terms of
reference agreed by the Board to act in accordance with the Takeover Code.
Modern Slavery Act
Centamin has respect for internationally recognised human rights standards and we continue to improve efforts in monitoring our
operations and business relationships that can be affected by poor human rights practices and ultimately affect our people. Safety,
security and respecting the rights of the environment and the people in it are championed across the business. The Board continue to
embrace human rights due diligence processes to identify, prevent and mitigate negative effects to our operations and relationship with
wider community. We firmly believe that our Human Rights Policy facilitates the positive global ongoing work to fighting poor practices
that contributes to Modern Slavery. Whilst Centamin is not in scope of the UK Modern Slavery Act 2015 (the “2015 Act”) because
of its operations being established outside the UK, the Committee considered it as good practice to respect the 2015 Act. The 2015
Act relates to slavery, servitude, forced compulsory labour and human trafficking which affects global supply chains. Consideration
was also given to the Modern Slavery Act 2018 (Cth) (Commonwealth Act) which came into effect for accounting periods on or after
1 January 2019.
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Centamin Annual Report 2019
HEALTH AND
SAFETY POLICY
SUPPLIER CODE
OF CONDUCT
Modern Slavery
Act 2015
ENVIRONMENT
POLICY
HUMAN
RIGHTS POLICY
The Committee considers the guiding principles of
the 2015 Act and equivalent legislation in Australia
to set against the Company’s positive record of
accomplishment for employee welfare and highest health
and safety standards. During the year, the Committee
made recommendations to review the Human Rights
Policy and Supplier Code of Conduct along with the
Whistleblowing Policy, Code of Conduct and Anti-Bribery
and Corruption policy. This review process involved
a review of local Egyptian laws and regulations and a
review by site to implement the policies.
Human Rights
A specific Human Rights Policy has been developed
and recommended for approval by the CGC and HSES
Committee. The policy covers all human rights-related
aspects of our business and expressly cover modern
slavery and human trafficking. Like all Centamin
policies the Human Rights Policy is global in nature and
applicable to all our operational and exploration sites.
Compliance with this policy will be integrated into all
supplier agreements and introduced to our supplier on-
boarding programme.
Further consideration to the 2015 Act, the equivalent
Australian legislation and related UK guidance on
adherence with the 2015 Act’s principles continue
to be monitored regularly together with supplier risk
assessments. It is our intention to continue focusing on
raising awareness and understanding to the 2015 Act
throughout the business.
Mark Bankes
Chairman of the Compliance and Corporate Governance Committee
18 May 2020
Centamin Annual Report 2019
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COMPLIANCE AND GOVERNANCE COMMITTEE REPORT CONTINUED
CASE STUDY
APPLICATION OF SECTION 172 OF THE
UK COMPANIES ACT (“SECTION 172”)
As a Jersey registered company, the full requirements of
section 172 are additional to the directors’ current obligations
under Jersey Law. This obligation derives from the Company
complying with these additional UK requirements in the 2018
Code (Provision 5), requiring that the matters considered in the
decision-making process, as set out in section 172, are described
in the Annual Report.
The Board considered section 172 and related guidance to
ensure a full understanding of its obligations. When making
decisions at board level, it is important that a full assessment, as
part of the due diligence preparations, consider wider stakeholder
groups, such that the Board is able to make informed decisions
having regard to the following:
• the wider stakeholder groups impacted by a decision
(including e.g. employees, community, new and existing
suppliers)
• the likely consequences of any decision over the long-term
• the impact to the community and environment
• any reputational risks associated with the decision
The fiduciary duty to act in good faith and in compliance with
section 172 is a duty on each and every director involved in
the decision-making process. The Board understand that on
submission of any proposal for approval, the Board must fully
assess and consider the proposal and are responsible for
making the final decision.
The Board concludes that it is sufficiently aware of the Group’s
stakeholders and, within a given project, have the required
mechanism to assess and evaluate the stakeholders that are
impacted, applying judgment and decisions in consideration of
all stakeholders.
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Centamin Annual Report 2019
CASE STUDY
TAILINGS STORAGE FACILITY
STAKEHOLDER CONSIDERATIONS
>
C
o
r
p
o
r
a
t
e
G
o
v
e
r
n
a
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e
Centamin currently operates one active downstream tailings
storage facility (TSF1). In 2019, the Board instructed a
detailed review of TSF1 covering the adequacy of groundwater
monitoring, inspections, embankment stability, technical
reporting, emergency response (and related communication)
and a review of the population at risk, based on given scenarios.
The assessment by the Board, the related remedial and
reporting action plans, considered in detail wider stakeholder
groups in the following context:
• Wider stakeholder groups:
Among the stakeholder groups considered in the
assessment were:
– Our project partners EMRA
– Employees and contractors based on site
–
External community, employees and contractors living in
Marsa Alam (located approximately 35 kilometres away)
–
Contractors (past and present) engaged on all aspects
of TSF1 construction through to monitoring and
management
• Employee engagement forum:
The communication awareness programme was designed
so that information was available to all stakeholder groups
potentially impacted by the TSF or any remedial or
monitoring works. The Sukari Mine has a well-developed
emergency action plan in the event of any potential breach.
The plan is communicated to all employees and contractors
and emergency drills are held regularly.
• Consequences:
Safeguarding our workforce is of paramount importance and
consideration was given on cost, stakeholder impact and risk
mitigation to relocate facilities and the preferable options for
the location of TSF1. Within the review, the consequences
of stakeholder impacts were analysed. Critical path analysis
as undertaken which resulted in the ability to defer the
development of the TSF.
• Community / environmental impact:
The Sukari Gold Mine does not discharge any process
water back into the environment. TSF1 is lined to reduce
the impact of any seepage or contamination of soil and
groundwater. As part of the remedial actions, further
boreholes were drilled at key points surrounding the dam,
to further improve monitoring of water levels.
• Reputation:
A significant dam failure at Sukari would be catastrophic,
resulting in the likely loss of life, significant financial loss,
loss of our license to operate and reputational damage.
The importance of regular and systematic monitoring of
the facility and maintenance of records is essential. The
Board recognises the importance of keeping investors, the
local community, the workforce and the growing number
of interested parties informed of our track record, safety
procedures and monitoring protocols.
Centamin Annual Report 2019
123
> Shareholder Information> Financial Statements> Strategic Report> Overview
GOVERNANCE
NOMINATION COMMITTEE REPORT
NOMINATION
COMMITTEE
REPORT
THE PROFILE OF THE BOARD HAS BEEN
STRENGTHENED BY APPOINTING INDIVIDUALS
WITH SKILLSETS ALIGNED WITH THE COMPANY’S
STRATEGY AND PRESENTING A MUCH STRONGER
SUCCESSION PLAN WITH A SUPPORTIVE POOL OF
TALENT ACROSS THE BUSINESS.
EDWARD HASLAM
CHAIRMAN OF THE NOMINATION COMMITTEE
KEY RESPONSIBILITIES
KEY FOCUS AREAS
DURING THE YEAR
KEY FOCUS
FOR NEXT YEAR
Chair transitional programme
Continual development of the
Board and senior management
succession plan
Induction and on-boarding of
the newly appointed CEO
Board and committees structure,
size and composition
Balance of the Board’s
necessary and desirable
competencies, skills,
knowledge and experience
Board and senior management
succession plans
The appointment, re-election
and retirement of directors to
the Board and committees
Board and committee evaluation
Succession planning for the
Senior Independent Director
or Deputy Chair
Succession planning for
the Chair
Search for Independent
Non-Executive Directors
Search for new Chief
Executive Officer
Leadership and development
pipeline
Ensure effective implementation
of the 2018 Code
Development of a diverse board
124
Centamin Annual Report 2019
Dear Shareholder
It is my pleasure to write to you, our shareholders with an update on the key highlights
and progress on activities embarked in 2019 that have been mandated for the
Nomination Committee. As a committee mandated by the Board, our function is
based on the following four pillars of which our effectiveness is based:
COMPOSITION
SUCCESSION
BOARD
EFFECTIVENESS
LEADERSHIP
EVALUATION
The Nomination Committee led the
process in identifying and recommending
three strong candidates and successfully
nominating for appointment to the Board
as Non-Executive Directors. We are
pleased to have welcomed Dr Sally Eyre
who joined in April 2019, Dr Catharine
Farrow and Ms Marna Cloete in September
2019. This led to a strong, diverse and
multi-disciplined board.
In September 2019 we also announced the
retirement of Alison Baker and expressed
our gratitude for the work that she had
done for the Company and her active
role as chair of the HSES Committee. In
October, we announced Andrew Pardey’s
retirement. Andrew Pardey had served as
CEO since February 2015 and after nearly
twelve years of dedication, decided it was
time to pursue other interests.
We are also pleased to welcome Martin
Horgan who took on the role of Chief
Executive Officer in April 2020. Martin
is a qualified mining engineer with 25
years’ experience in various areas of the
mining industry.
Succession Planning has remained at
the centre of the Board’s main agenda,
which has meant the Committee has
been instrumental in the drafting and
development of the plan to ensure its
relevance in a dynamic environment.
We embarked on and prioritised the
continuation of the recruitment process
and identification of Independent Non-
Executive Directors. Egon Zehnder
and more recently Korn Ferry were
instrumental in the whole process as the
Committee engaged their services to carry
out an external search on our behalf.
We are pleased to announce that
the Committee was successful in
recommending the appointment to the
Board of Jim Rutherford as Deputy Chair
effective 1 January 2020. This and all
other appointments have strengthened
the Board with a wide breadth of skills,
experience and perspectives that are
relevant to Centamin and the environment
in which it operates.
In 2019, as a Committee we met five
times and made progress on the
following activities:
• Recommended the appointment of
three Non-Executive Directors
• Recommended the appointment of
Deputy Chair to transition to Chair
in 2020
• Undertook the requirements to search
and recommend the appointment of a
new Chief Executive Officer
• Reviewed and updated the succession
plan to reflect the successful
recruitment of Board and senior
management roles including the talent
pipeline
• Progressed in making
recommendations on the composition
of the Board and its committees
• The refreshment of the committees
considering changes to the Board
Whilst there will be challenges and targets
to achieve in 2020, we are confident that
the successes of 2019 and strategies
put in place by the Board will spur the
committees in meeting the targets set to
satisfy the needs of all our stakeholders.
The Nomination Committee has been very
active this year as is consistent in previous
years with all the key issues and details
recorded in this report.
2020 marks my ninth anniversary
serving on the Board of Centamin and I
will be retiring at the forthcoming 2020
AGM. I am delighted to advise that Jim
Rutherford will be taking over as chair of
the Committee with effect from the date of
the 2020 AGM.
Edward Haslam
Chairman of the Nomination Committee
18 May 2020
Centamin Annual Report 2019
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> Strategic Report> Overview> Financial Statements> Corporate Governance> Shareholder Information GOVERNANCE
NOMINATION COMMITTEE
REPORT CONTINUED
Committee Purpose
The Nomination Committee continued
to lead the process for nomination to the
Board as appropriate. The composition
of the Board and succession planning
for Directors and senior management
was given its full consideration by the
Committee and ultimately the development
of a diverse pipeline for succession. A
continuous review and refreshing of the
plan were undertaken throughout the
year as is mandated by the Board for
the Committee. For more information on
the Committee's charters please visit the
companies website on www.centamin.com
Membership
During the year, the Committee comprised
of wholly independent Non-Executive
Directors namely Edward Haslam, Mark
Arnesen and Mark Bankes. Alison
Baker was also part of the Committee
until September 2019 when her
retirement was announced. Mark Bankes
stepped down from the Remuneration
Committee to take on membership on the
Nomination Committee.
The Committee membership continues
to reflect the skills and experience
necessary to be a member therein.
However, the biographies on pages 92 to
95 detail the skills of each Board member
and their contributions towards the
success of the Company.
Individual attendance at the meetings
held during the year are set out below:
Meetings held in 2019
Member
Meetings attended in 2019
Edward Haslam
Mark Arnesen
Mark Bankes *
Alison Baker**
BOARD SKILLS
BOARD MEMBERS BY GENDER
Mining and Resource Industry
Capital Markets
Legal
Finance, Accounting and Audit services
M&A
Government relations, public service and development
Investment banking and investment management
8
2
1
3
1
2
1
BALANCE OF THE BOARD
NON-EXECUTIVE TENURE
Female
Male
3
7
Executive
Non-Executive
2
8
0-2 years
2–4 years
4–9 years
9+ years
British
Egyptian
Canadian
South African
Australian
4
1
1
2
4
1
1
2
2
*
Appointed to the Committee on 24 April 2019
**
Resigned from the Board and Committee on
2 September 2019
BOARD MEMBERS BY NATIONALITY
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Centamin Annual Report 2019
Culture – the way we work
The culture of the Committee is determined by
Centamin values and as such are reflected in the
Committee’s Charter. The Nomination Committee
places importance on the way the business works as
it is mandated to reflect a transparent way of working.
The policies that are drafted and recommended to the
Board by the Committee reflect the values below for
the Company to continue to be a success:
Invest
– In our people
– Communities
– Sustainability of
the business
– Future of the business
Grow
– The business
– As individuals
– Grow the stakeholder
returns
Protect
– The environment
– Our workforce
– Communities
– Supply chain
Learn
– From our colleagues
– Owners & partners
– New technologies
– Communities
Educate
– Workplace development
– Our communities
– Our shareholders
& partners
Figure 1.1 Centamin Values reflected in mandate of the Committee
PROTECT
EDUCATE
INVEST
CENTAMIN
VALUES
GROW
LEARN
Diversity at Board and senior management
Diversity continues to be an area of
focus for the Committee as the Board
understands the importance of it within
our workforce with focus on the value
of developing a diverse pipeline for
succession to senior management. The
Committee believes in diversity of minds
as a result of attracting the best people
from all backgrounds regardless of
gender, ethnicity and age.
Our recruitment processes reflect
Centamin as an equal opportunity
employer, prohibiting any form of
discrimination as per the Company Code
of Conduct giving due consideration to
the environment and local regulatory
framework we operate in. In 2018, the
Board committed to promoting diversity
of gender as then it stood on 12.5%.
In 2019, there has been a significant
increase in the number of women on the
Board to 30% (as at 1 January 2020)
which has enabled us to be broadly in
line with meeting the target set by the
Hampton Alexander Review of having
33% of women on FTSE 250 company
boards by 2020. We continue to work to
improve women’s representation at Board
level and in senior leadership positions.
The 2018 Code states that the new
gender balance disclosure requirement
covers “senior managers and their
direct reports” where senior manager is
defined as the executive committee or
first layer of management below board
level inclusive of the company secretary.
Based on this, Centamin has 30% of
women in senior management including
their direct reports as at 1 January 2020.
See summary graph below:
Direct Reports to Executive Committee
7
3
Male
Female
Developing a diverse workforce
As an equal opportunity Company
operating in Egypt, there are
circumstances that may hinder some
of the aspirational goals to attract more
women in the mining sector, however
respect must be given to the law and
customs of operational environment. At
Sukari, it is important to understand that
no female employees are encouraged to
work at remote sites as the local regulation
includes several provisions to restrict the
working hours to be between 7.00 pm and
7.00 am which poses as a challenge for
female employees. This is compounded
by restrictions on the type of work that is
permissible for female employees on an
operational mine site.
Egypt, Burkina Faso and Côte d’Ivoire –
Positive progress
Whilst the mining sector has historically
not been attractive to women for a host
of reasons, at Centamin we encourage
positive progress in terms of female
representation. Recognising the many
complexities that may vary from country
to country, it was identified that many of
the roles that women are taking on are
as follows:
• Human Resources roles
• Finance roles
• Business development
• HSES
• Geologists
The Company’s activities continue to
provide direct and indirect employment
to these regions and the various
projects continue to serve as awareness
programmes for creating and developing
a diverse network. Detailed information
of the workforce is available in a separate
Sustainability Report.
Centamin Annual Report 2019
127
> Strategic Report> Overview> Financial Statements> Corporate Governance> Shareholder Information GOVERNANCE
NOMINATION COMMITTEE REPORT CONTINUED
2018 CORPORATE GOVERNANCE CODE – PROGRESS
Area of focus
Matters considered
Outcome
BOARD
DIVERSITY
• Committee’s role was to review the Hampton-Alexander
targets with the aim to meet the 33% for female
representation on the Board; and
•
It was on the Committee’s agenda to monitor the targets
of the Parker Review which state that each FTSE 250
Board should have at least one director identifying as a
person of colour.
•
Successful appointments of female Non-Executive
Directors recommended to the Board leading the Board
to be broadly in line with meeting the target which stands
at 33%; and
• The Board is currently in line with the Parker review target
with two directors identifying as people of colour.
WORKFORCE
DIVERSITY
• Collaborative working between the Nomination Committee
and HSES Committee to identify opportunities to improve
diversity within the workforce
•
The Company continues to provide employment directly
and indirectly to people from diverse backgrounds in HR,
Finance and geology and administrative jobs
OVERBOARDING
• Actively advise the Board on any new additional
appointments that directors may take on, for approval
by the Board.
• Directors should have sufficient time to meet their
responsibilities
• The Nomination Committee maintains a list of all
directorships that directors have and report on any new
appointments accepted subject to board approval
• During the year (August 2019) Dr Sally Eyre had an
additional external appointment approved to be a NED of
Ero Copper Corp. This was reported in accordance with the
listing rules.
EXTERNAL
EVALUATIONS
•
Engaging an external facilitator to conduct an external
board evaluation in 2019, taking into consideration the
recommendations of the 2018 Code
• GGG Limited facilitated an external evaluation at the
approval of the Board. Further details of the results
and recommendations are available on page 110 of this
Annual report.
TALENT
MANAGEMENT
•
Taking an active interest in how talent at operational
and corporate level is identified, assessed and ensure
there are programmes to ensure identified individuals are
challenged and have a clear career path.
• New senior management appointments made in 2019 and
the continual update and tracking of the succession plan
for senior management
CHAIR
TENURE
•
Recommendation by the Committee, to nominate and
appoint Jim Rutherford for the position of Deputy Chair
with the intention for him to become Josef El-Raghy’s
successor at the 2020 AGM. See looking forward
statement
• The Committee successfully recommended the
appointment of Deputy Chair of which Jim Rutherford was
successfully nominated and appointed.
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Centamin Annual Report 2019
Succession Planning into 2020
BY 2020 YEAR END
Appointment of NED with further
technical and operational experience
BY AGM IN 2020
Retirement of Josef El Raghy as Chair
Retirement of Ed Haslam and Mark Arnesen
LONG-TERM SUCCESSION PLAN
Continue to link succession, board refreshment
and/or rotation to Centamin's strategy
Effective corporate governance begins with a strong Board, led
by the Chairman, with the appropriate skills and experience
to challenge and support the Executive team in delivering the
corporate strategy. The Board transformation throughout 2019
reflects the Company’s ongoing commitment to achieving the
highest standards of corporate governance.
Board Composition(1)
In accordance with the 2018 UK Corporate Governance Code
(“2018 Code”) and Centamin’s ongoing board succession
programme, the Company has made the following changes to its
Board composition:
• Appointment of Dr Sally Eyre, Marna Cloete and Dr Catharine
Farrow as independent Non-Executive Directors in 2019,
and in 2020, appointment of Jim Rutherford as independent
Deputy Non-Executive Chairman
• On 3 October 2019, Andrew Pardey stepped down as CEO
and Executive Director; Ross Jerrard, CFO and Executive
Director stepped in as interim CEO
• On 6 April 2020, Martin Horgan was appointed as CEO and
Executive Director, following a thorough international search
process; Ross Jerrard continued with his responsibilities as CFO
• Josef El-Raghy, Chairman, will not stand for re-election at the
upcoming 2020 AGM
• Completing a comprehensive handover, Jim Rutherford will
become the independent Non-Executive Chairman (“NEC”)
from 29 June 2020
• Following a nine-year tenure, Gordon “Ed” Haslam, Senior
Independent Director (“SID”), will not stand for re-election at
the upcoming 2020 AGM
• Dr Sally Eyre will assume the Senior Independent Director role,
effective 29 June 2020
• Following a nine-year tenure, Mark Arnesen, Non-Executive
Director, will not stand for re-election at the upcoming 2020 AGM
• An active recruitment process is underway to identify and
appoint an independent non-executive director to chair the
new Technical Committee which will be mandated from 29
June 2020
Following the 2020 AGM, as at 29 June 2020, there will be eight
Board Directors, including six Non-Executive Directors and two
Executive Directors. In accordance with the 2018 Code the Board
is greater than 50% independent.
CURRENT
PRIOR TO THE 2020 AGM
EFFECTIVE POST AGM
Non-Independent Chair
Josef El-Raghy
Non-Independent Chair
Josef El-Raghy
JEL handover to JR
Independent Chair
Jim Rutherford
Independent Chair
Jim Rutherford
Executive Director
Martin Horgan – CEO
Ross Jerrard – Interim CEO
Directors reaching nine year service
(per the Code)
Mark Bankes
Mark Arnesen
Ed Haslam
Independent Non-Executive Directors
Jim Rutherford (Deputy Chair/SID)
Dr Ibrahim Fawzy
Dr Catharine Farrow
Dr Sally Eyre
Marna Cloete
Executive Director
Martin Horgan – CEO
Ross Jerrard – Interim CEO
Mark Arnesen ARC duties
to Marna Cloete
Ed Haslam Nomco duties
to Jim Rutherford and Remco
duties to Dr Sally Eyre
Director with nine year service
(per the Code)
Mark Bankes
MB to continue to be independent but
shall retire from ARC during 2020
Independent Non-Executive Directors
Dr Ibrahim Fawzy
Dr Catharine Farrow
Dr Sally Eyre
Marna Cloete
Executive Directors
Martin Horgan
Ross Jerrard –CFO
Director with nine year service
(per the Code)
Mark Bankes
Independent Non-Executive Directors
Dr Sally Eyre (SID)
New Technical NED
Dr Ibrahim Fawzy
Dr Catharine Farrow
Marna Cloete
Recruitment process of a new NED with technical and operational experience
(1) Disclosures in accordance with LR9.6.11
30%
Female
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NOMINATION COMMITTEE REPORT CONTINUED
Committee restructuring and rotation
As part of the Company’s recent Board
transformation, a full effectiveness review
and refreshment was conducted across
the Board committee mandates and
composition. The material changes are
outlined below:
Health, Safety, Environmental and Social
Committee (“HSES”) to be evolved into the
Sustainability Committee
• The new Sustainability Committee will
have focus across the health and safety,
environmental, social (including employee
engagement) and governance. Aspects
of risk associated with the Company’s
license to operate will be considered by
this Committee. A review of the charter
and interaction with the Board Audit and
Risk Committees and other committees,
including a new Technical Committee will
be considered in the review.
Technical Committee to be established
as a new committee
• The new Technical Committee will
support and advise the Board in
reviewing technical and operational
matters. The committee will help in
monitoring decisions and processes
designed to ensure the integrity of
the Group’s reserve and resource
estimations. The committee will also
be responsible for technical reporting,
internal quality control and assurance
over the Group’s mining assets and
exploration, including oversight of the life
of asset, production and exploration.
• The recruitment process for a new non-
executive director, with technical and
operating experience, has been led by
the Nomination Committee and is well
progressed. An appointment is expected
to be announced in Q2 2020 and it is
intended they will chair the Technical
Committee.
Compliance and Corporate Governance
Committee to be discontinued in its
current form
• The Compliance and Corporate
to the Board committee membership,
effective 29 June 2020, following the
2020 AGM:
• Dr Sally Eyre will chair the Remuneration
Committee and become a member of the
Nomination Committee and Technical
Committee
• Jim Rutherford will chair the Nomination
Committee and become a member of the
Remuneration Committee
• Dr Catharine Farrow will chair the new
Sustainability Committee and become a
member of the Technical Committee and
Audit and Risk Committee
Governance Committee responsibilities
have been reassigned to the
Sustainability Committee, the Audit and
Risk Committee and the Board.
• Marna Cloete will chair the Audit and
Risk Committee and become a member
of the Remuneration Committee and
Sustainability Committee
• The Disclosure Committee will continue
in accordance with the Company’s
Continuous Disclosure Policy and will
report directly to the Audit and Risk
Committee and, where necessary, to
the Board.
The Board understands the benefits of
refreshing its composition, committee
structures as well as planning for
future succession. The changes to
the committee structures illustrate the
Company’s commitment to continue to
evolve and strengthen our governance
model in line with the rapidly changing
global environment with which we operate.
Please see the below planned changes
• Dr Ibrahim Fawzy will become a member
of the Nomination Committee and
Sustainability Committee
• Ongoing succession planning including
an active process is underway to appoint
an independent non-executive director
specifically with technical and operating
expertise to Chair the newly established
Technical Committee and planned to
become a member of the Audit and Risk
Committee and Sustainability Committee.
• Mark Bankes will join the Technical
Committee and in the short term will
remain on the Audit and Risk Committee
until the above appointment is made –
expected in H1 2020.
CURRENT COMMITTEE MEMBERSHIP(1), AS AT 18 MAY 2020
Audit and Risk
Remuneration
Nomination
Mark Arnesen NED (Chair)
Edward Haslam SID
Mark Bankes NED
Marna Cloete NED
Edward Haslam SID (Chair)
Mark Arnesen NED
Dr Sally Eyre NED
Edward Haslam SID (Chair)
Mark Arnesen NED
Mark Bankes NED
Structure at the time of publication of report
Health, Safety,
Environmental &
Sustainability
Edward Haslam SID (Chair)
Dr Ibrahim Fawzy NED
Compliance and
Corporate Governance
Mark Bankes NED (Chair)
Edward Haslam SID
Mark Arnesen NED
Dr Ibrahim Fawzy NED
PLANNED COMMITTEE MEMBERSHIP, EFFECTIVE 29 JUNE 2020
At the recommendation of the Nomination Committee, the Centamin Board has approved the following planned Committee membership to take effect following the 2020 AGM:
Audit and Risk
Remuneration
Nomination
Sustainability
Technical
Marna Cloete NED (Chair)
Dr Catharine Farrow NED
New Technical
Director NED
Mark Bankes2 NED
Dr Sally Eyre SID (Chair)
Jim Rutherford NED
Marna Cloete NED
Jim Rutherford NED (Chair)
Dr Sally Eyre SID
Mark Bankes NED
Dr Ibrahim Fawzy NED
Dr Catharine Farrow
NED (Chair)
Marna Cloete NED
Dr Ibrahim Fawzy NED
New Technical
Director NED
New Technical
Director NED (Chair)
Dr Sally Eyre SID
Mark Bankes NED
Dr Catharine Farrow NED
(1) Jim Rutherford has been attending Committee meetings as part of his Chairman handover, to understand the activities that are undertaken
(2) Mark Bankes to step down from the committee following the appointment of a new technical non-executive director
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Centamin Annual Report 2019
Proposed structure post AGM 2020
CORPORATE GOVERNANCE
AUDIT AND RISK COMMITTEE REPORT
AUDIT AND RISK
COMMITTEE
REPORT
I AM PLEASED TO PRESENT THIS REPORT
COVERING THE ACTIVITIES OF THE AUDIT
AND RISK COMMITTEE DURING 2019.
MARK ARNESEN
CHAIRMAN OF THE AUDIT AND RISK COMMITTEE
Dear shareholders
I am pleased to present this report covering the activities of the Audit and Risk Committee during 2019.
During the year, the Audit and Risk Committee carried out an evaluation of its own performance and the effectiveness of the internal
and external auditors. The considerations of the Committee are set out in this report. The Audit and Risk Committee also considered
its composition and the competency, availability and contribution of its members and were pleased to welcome Marna Cloete who has
contributed significantly since her appointment to the Board in 2019.
Significant issues considered during the year by the Audit and Risk Committee
The following significant issues were considered during the year (full details and analysis are set out in note 1 to the financial statements).
TOPIC
SIGNIFICANT ISSUE
SUMMARY OF THE SIGNIFICANT ISSUE
KEY ACTION POINTS
Accounting standards
Accounting for transactions
Adoption of the following new and revised accounting policies:
Accounting standards
Accounting for transactions
IFRS 16 ‘Leases’ has been applied since 1 January 2019, the
impact of which has been disclosed
There were no new standards, amendments and interpretations
not yet adopted
Committee actions
The Audit and Risk Committee considered
the new and revised policies during the
year with no significant impact to the
annual results
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Significant issues considered during the year by the Audit and Risk Committee continued
TOPIC
SIGNIFICANT ISSUE
SUMMARY OF THE SIGNIFICANT ISSUE
KEY ACTION POINTS
Impairment
of assets
(other than
financial
assets)
Accounting for
transactions
In accordance with the requirements of IAS 36 ‘Impairment of assets’ and IFRS
6 ‘Exploration for and evaluation of mineral resources’ performed an impairment
assessment for the Company’s different cash generating units including Sukari and the
exploration and evaluation assets in West Africa for the year ended 31 December 2019
Committee actions
The Audit and Risk Committee reviewed
the papers presented by management in
respect to IAS 36 and IFRS 6 and were in
agreement with management’s conclusion
based on the impairment assessment
that no impairments were required.
The Audit and Risk Committee reviewed
as part of the assessment for potential
impairment at Sukari, the updated mine
plan, latest reserve and resource update
and production profile for 2020
Accounting
basis of
preparation
Going concern and
longer term viability
The Director's performed an assessment of the entity’s ability to continue as a going concern at the
end of each reporting period. The period of the assessment covered at least twelve months from the
date of signing the financial statements.
This assessment included a scenario analysis of potential impacts of COVID-19 on the
Group and whether it has sufficient liquidity to continue to operate in all scenarios. In all
four severe scenarios sufficient liquidity levels were maintained without implementing
significant mitigating factors and cost reduction strategies.
In addition to the twelve month going concern consideration, the Directors assessed the
Company’s prospects over the longer term, specifically addressing a period of five years as
part of the overall viability statement. The period of five years was considered appropriate as
this reflected the preparation period for a detailed budget. Details of the viability statement
and review assessment can be found in the Strategic Report on pages 82 and 83.
Under guidelines set out by the 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 key assumptions on which cash flow forecast is based, the Directors considered
it appropriate to prepare the financial statements on the going concern basis. Key
assumptions underpinning this forecast include:
• the successful outcome of ongoing litigation as discussed in
note 5.1 to the financial statements;
• COVID-19 scenario analysis
• the latest life of mine plans
• reserve and resource update
• 2020 – 2024 forecast gold production
• estimated gold price; and
• variable and fixed cost assumptions
These financial statements for the year ended 31 December 2019 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.
Fair, balanced and understandable
The Audit and Risk Committee is satisfied
that the controls over the accuracy and
consistency of the information in the 2019
Annual Report were sufficiently robust.
The Audit and Risk Committee reviewed
the control environment and is in receipt of
monthly, quarterly and annual financial and
budgetary information. The Audit and Risk
Committee is also involved in the review
of all key accounting policies and matters
requiring judgment and estimation.
The Audit and Risk 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 Audit and Risk
Committee has been involved in reviewing,
at an early stage, the content of (both)
the financial statements and the Strategic
Report (including the business model),
the performance review and governance
reporting throughout the report (including
the Governance Report).
The Audit and Risk Committee was
conscious whilst reviewing all aspects
of the Annual Report of the production
outcome in 2019. It was important to
balance the report to reflect the relatively
lower production rates in 2019 than
that experienced in 2016 and 2017. In
addition, the profile through the year
showed a near record quarter in Q4
2019 but this must be balanced against
a weaker Q3 which was impacted by
slower mining rates. Fair representation
of these matters and how they are
reflected throughout the Annual Report
was important to the members of the
Audit and Risk Committee.
The Audit and Risk Committee was also
mindful of the balance in reporting of
non-financial performance measures such
as exploration and resource and reserve
definition progress across the Group’s
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Centamin Annual Report 2019
operations. The updated resource and
reserve statements set out in the Strategic
Report were also an area of focus,
ensuring that reserve growth, replacement
and depletion were given equal weighting.
The Audit and Risk Committee considered
the relative emphasis on the activity across
West Africa and in Egypt, ensuring that the
success in resource growth was matched
with the relative cost in delivering the
exploration programmes.
The Audit and Risk Committee, in
reviewing the Annual Report, also noted
the need for clear and concise reporting.
The members of the Audit and Risk
Committee have worked with management
to demonstrate, through structured tables,
graphs and images, the linkages between
risk, the Company’s strategic aims and the
structure for rewarding performance.
The Audit and Risk Committee also
recognised the importance to reflect
clearly within the Annual Report the
potential risks associated with the global
outbreak of COVID-19. Further detail
is covered in the Strategic Report on
page 70 and in the Principal Risks and
Uncertainties on page 76.
The Audit and Risk Committee
recommended and, with agreement of the
Board, concluded, that the Annual Report
was ‘fair’, ‘balanced’ and ‘understandable’
having considered the activity of the
Company during the period and that
users of the Annual Report would be
able to understand our position, strategy,
business model and overall performance,
which were presented consistently
throughout the Annual Report.
External auditor
During 2019, the Company’s external
auditor, PricewaterhouseCoopers
LLP (“PwC”) presented their detailed
audit plan and final audit findings and
recommendations to the Audit and Risk
Committee. The Audit and Risk Committee
agreed with the audit approach at the
planning stage and agreed with the
materiality thresholds, identification of the
key risk areas and significant judgments
and estimates.
Annual Report evaluation and benchmarking
The management team met with PwC to
critically assess the 2019 Annual Report,
discuss ways to improve the report for
shareholders. This was the third year that
such a review was performed. The session
provided useful insight into the following:
• Strategic Report
– linkages between the Strategic
Report, the KPIs and principal and
emerging risks
– concise reporting throughout the
Annual Report
– non-financial reporting
– capital projects and stakeholder
engagement in compliance with
section 172 directors’ duties; and
– setting clear sustainable goals and
targets.
• Governance Report
– activities undertaken on employee
engagement
– communication of the Group’s
purpose and mission statement
– governance reform and reporting;
and
– linkages between governance,
business and the strategy.
• Financial statements
– balance across the Annual Report
as a whole
– understanding of the key judgments
and estimates; and
– explanation of key accounting
policies and application to the
Group.
Through benchmarking and reviewing
trends in reporting and industry leading
disclosure the Company hopes to continue
to evolve and develop a high standard of
reporting for its shareholders.
External auditor effectiveness
In accordance with the terms of reference
of the Audit and Risk Committee, a review
of the effectiveness of the external auditor
was undertaken at the half-year and
annual statutory audit. To assess auditor
effectiveness the following factors were
considered using an auditor assessment
tool completed by each member of
the Audit and Risk Committee and the
CFO. The assessment tool included
approximately 24 questions which were
completed by way of questionnaire:
• the relevant law, regulation, the FRC’s
Revised Ethical Standard and other
professional requirements as well as
the Group’s relationship with the auditor
as a whole. This included assessing
for any potential threats to the auditor’s
independence and the safeguards
in place to mitigate potential threats
including the provision of any non-
audit services;
• the committee were satisfied that no
relationships existed between the
Company and the external audit (apart
from the ordinary course of business)
which could adversely affect the
auditors independence and objectivity;
• the committee were satisfied of the
qualifications, expertise and resources
of the auditor including a report of
the auditor’s own internal quality
procedures; and
• the audit process including the quality
of the audit which was assessed by
the committee by looking at how
key judgments were handled as well
as how the auditor responded to
questions raised.
All the above mentioned factors were also
considered together with the feedback
that came from members of the finance
team and senior management. The
Audit and Risk Committee, including
other actions arising from the review,
considered overall feedback from this
process. During the year, the key issue
presented by the auditor were around
areas of estimates such as, impairment
assessment of non-current assets and
going concern, this is an example of
high quality challenge exemplified by
the auditor. Due to a changing reporting
timeline, which was due to many factors
including the unsolicited approach
from Endeavour, the Financial Conduct
Authority (“FCA”) moratorium in the wake
of COVID-19 and changes in personnel,
the auditor remained flexible and worked
with management in a manner considered
appropriate by the committee. Following
the evaluation process, any relevant
findings were relayed to the audit partner
and, where applicable, actions were
incorporated into the audit plan.
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Audit partner
The Audit and Risk Committee is pleased with the performance of the audit partner, Jonathan Lambert. The audit partner provided
appropriate challenge to management and the committee and addressed any technical accounting issues in a professional manner.
AUDIT AREA
Audit planning
OBSERVATIONS BY THE AUDIT AND RISK COMMITTEE
The planning documents had sufficient detail and were presented in a timely manner. The audit plan was adhered to by the auditor
and the audit opinion released on 18 May 2020 based on a revised timetable to take account of the FCA moratorium and related
guidance on publishing financial information.
Leadership and communication
The Committee notes the experience of the team in the mining and extractive sector and worked well with the finance team at a site
and corporate level, providing a good level of challenge as well as guidance, where needed.
Assessment of independence
There were no areas that conflicted PwC’s independence.
Audit costs
The Audit and Risk Committee was encouraged by the way the auditor continued to utilise resources across the jurisdictions by joining
up the audit teams across Jersey, UK and Egypt. The challenges faced following the COVID-19 pandemic and related lock-down were
managed well leveraging off existing IT platforms and online communication tools. The fees year on year have remained in line with
expectations although have increased due to the extended timetable.
There has been open communication
between the Audit and Risk Committee
and the audit partner throughout the
statutory audit and management has also
worked directly with the audit team. PwC
has also had open access to the Board.
The audit team visits Sukari regularly
to carry out inventory testing as well as
assessing controls and substantive testing.
PwC also carry out audit work at our
administrative offices in Egypt and Jersey.
Having carried out the evaluation, the
Audit and Risk Committee is satisfied that
the audit engagement for the financial year
ended 2019 was both effective and added
value to the Group.
Non-audit services
The Committee maintains an
independence policy in respect of the
provision of services by the external
auditor. The Committee regularly reviews
this policy for necessary changes in
response to changes in related standards
and regulatory requirements. Following
the issuance of the new independence
rules for market traded companies
incorporated in the Crown Dependencies,
the committee updated its independence
policy to reflect these new rules.
This policy, designed to safeguard auditor
objectivity and independence, includes
rules relating to the provision of audit
services, audit-related services and other
non-audit services, and stipulates that all
non-audit services now require specific
prior approval by the Committee.
The policy also defines prohibited
services that are not to be provided
by the auditor as these represent a
risk to external auditor independence.
Prohibited services are any that relate to
management decision-taking or any other
service that would compromise auditor
independence or the perception thereof.
These prohibited services include all
services listed as prohibited in the auditor
independence rules.
For certain services that are not
prohibited, because of the knowledge and
experience of the external auditor and/
or for reasons of confidentiality, it can be
more efficient or prudent to engage the
external auditor rather than another party.
This is particularly the case in relation to
audit-related assurance services that are
closely connected to the audit function
where the external auditor has the benefit
of knowledge gained from work already
performed as part of the audit.
Non-audit work carried out by PwC
during the year involved advice regarding
the Group’s risk register and linkages
through to the mining operations and
exploration activities. 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 requires approval
in advance by the Audit Committee of
all non-audit services carried out by the
external auditor.
Fees for audit services incurred during the
year amounted to US$543k; there were
non-audit services carried out by PwC
during the year of US$304k. Full details
are set out in note 6.5 to the financial
statements.
The Company’s policy is to tender the
external audit every ten years. The last
audit tender was undertaken in 2014
when PwC was appointed auditor. PwC
have been auditor of the Company for
six years.
Auditor objectivity and independence
The Audit and Risk Committee continues
to monitor the auditor’s objectivity and
independence and is satisfied that PwC
and the Group have appropriate policies
and procedures in place to ensure that
these requirements are not compromised,
as evidenced by the change in audit
partner in 2018.
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
Audit and Risk Committee has answered
any questions raised by the auditor
allowing the auditor to carry out its duties.
The Audit and Risk Committee
recommends to the Board the re-
appointment of PwC as auditor at the
forthcoming annual general meeting. PwC
has expressed its willingness to continue
in office as auditor.
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Centamin Annual Report 2019
Internal auditor
BDO LLP, the Group’s externally appointed internal auditor, worked with the Audit and Risk Committee to agree an action plan for
2019 and 2020.
As part of the assessment to identify the required actions, the internal audit team spent time with the Audit and Risk Committee and
met with management to identify their needs and carried out work on-site at Sukari. Summary findings of the audit needs assessment
were shared with the Audit and Risk Committee and formed the basis of the action plan for 2019/20.
The audit areas, actions and findings are summarised in the table.
AREA AUDITED
OBJECTIVE
FINDINGS
Anti-bribery and
corruption
The objective of the internal audit is to provide assurance
on the measures Centamin has in place to prevent bribery
and corruption and ensure compliance with the relevant
Group and operational level legislation
The work will consider whether implemented controls have
been adequately designed to mitigate inherent risks and
whether these controls are operating effectively
The initial internal audit was undertaken in late 2018 with key recommendations shared
with the Audit and Risk Committee in Q2 2019:
• Regular review and update of the ABC, Code of Conduct and Whistleblowing
policies to ensure these mitigate the ABC risks to Centamin and are available to
staff in English, Arabic and French languages
• Management review and update the training information and presentations given
to staff so that it contains guidance on ABC and that this training should be given
in the language of the country with which Centamin operates in, and assessing
attendees' understanding after the completion of the training
Payroll
The objective of the internal audit is to assess the
adequacy and effectiveness of the controls that are in
place to mitigate the risks within the area of payroll
The work will assess whether implemented controls have
been adequately designed to mitigate inherent risks and
whether these controls are operating effectively through
testing, using data analytics tools and analysis techniques
The initial audit was undertaken in the last quarter of 2019 with recommendations
provided to the Audit and Risk Committee in early 2020:
• Adequate segregation of duties between employees processing amendments to
the employee master file, submission of departmental timesheets, processing
the payroll and review
• Software systems and access controls are well administered and controlled
Contract Management
The objective of the internal audit is to assess the
adequacy and effectiveness of the controls that are in
place to mitigate the risks within the area of contract
management
The review will consider whether the design of the control
environment, compare it good practice and identify any
gaps of that comparison
The initial audit was undertaken in the last quarter of 2019 with recommendations
provided to the Audit and Risk Committee in early 2020:
• Interaction between procurement and operation staff is high enough to permit a
shared understanding of challenges and a collaborative approach to resolving issues
• The contract register that contains information to support monitoring through the
life of contracts and triggers tender action and review
• Confirmation of receipt of goods and services is required for all contracts, whether
they are covered by a formal contract or a PO. The use of the job completion
form process requiring the end user to confirm receipt of the service provided
strengthens this process
The Committee considers the effectiveness of the internal auditor by reviewing the actions against the original scoping document, any
improvements in controls over systems or policies and the cost effectiveness of the actions and assurance review. As well as providing
assurance over key areas identified in the scoping document, the committee assesses the performance of the internal auditor for areas
of value add.
The Committee noted that whilst a reasonable approach to the existing scope of work had been undertaken during 2019, resourcing
was necessary within the business to maximise the impact of recommendations that were being put forward by the internal auditor.
The Committee will be working with management to review the level of independent assurance which is provided to the Group in 2020.
Firstly, the Committee will assess the resources and range of providers that currently provide third party assurance and determine
where our needs should be met over the longer term.
The Audit and Risk Committee will monitor the internal auditor’s progress this year and ensure they continue to have access to the
required resources and information to complete their scope in 2020. Over the course of 2020 it is expected that BDO will work with the
newly appointed Head of Risk to ensure that their activities align with the refresh of the governance, risk and internal control framework.
The internal auditor will make an assessment each year of any significant changes to the risk profile of the organisation and consider
any areas of focus for the provision of internal audit services. The Audit and Risk Committee will ultimately be seeking an independent
viewpoint and assurance over the internal control environment from BDO LLP.
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REPORT CONTINUED
Control environment
While the Board has overall responsibility
for ensuring the adequacy of internal
controls, the Board has delegated certain
responsibilities to the Committee. These
include responsibility over monitoring the
effectiveness and design of policies and
internal control systems. The key features
of the control environment are to ensure
compliance with laws, regulations and
other requirements relating to external
reporting by the Company of financial
and non-financial information.
During the year, the Committee reviewed
the overall control environment, including
specific financial controls and procedures.
The review was carried out by the finance
team, which assessed the reporting
channels and information flows primarily
between the Company’s head office and
the operating sites. The existing systems
were considered sufficient to capture
the required financial data, however the
Committee felt that enhanced data caption
at an operational level, would provide more
meaningful information to management.
For example, the reporting could predict,
with greater speed and accuracy, potential
changes in mining practices, and the
impact of those changes to the mine
plan or scheduling.
The changes in personnel during the
year also highlighted the reliance on key
individuals who relied upon systems with
manual processes and authorisation of
transactions. Whilst manual intervention
may pose a risk, the level of scrutiny
and controls were considered sufficient
based on the current size and complexity
of the organisation. With the growth
strategy of the Company in mind, further
investment in data caption systems may
be necessary.
The Committee concluded that the
finance team were currently sufficiently
resourced with adequate controls, such
that management and the Board were in
a position to receive timely and accurate
information to make informed decisions.
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 Financial Controller 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.
Risk assessment
The Board has overall responsibility for
establishing a robust risk management
framework and assessing material
strategic and operational risks across the
Group, including consideration of new
and emerging risks alongside the principal
risks. In addition, the Board is responsible
for articulating the Group’s risk appetite
against the principal risks.
Full details of the risk management
and control environment are provided
throughout the Strategic Report. The
Principal Risk and Uncertainties report
includes further information on principal
risks for the Group, new and emerging
risks which were considered, the focus
activities in 2019 and for 2020, the
Group’s statements on risk appetite and
long-term viability. We also recognise
the global outbreak of COVID-19 and the
potential risks this brings to our Group.
Further detail is covered in the Strategic
Report on page 70 and in the Principal
Risks and Uncertainties on page 76.
The purpose of the risk management
framework is to understand the risks and
opportunities which the Group faces to
enhance the Company’s ability to improve
its decision-making process, deliver on its
objectives and subsequently improve our
performance as it aspires to be London’s
premium listed gold company.
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Centamin Annual Report 2019
The Audit and Risk Committee monitors
the risk management and internal control
structure implemented by management.
It advises on significant changes to that
structure so as to obtain reasonable
assurance that the Company’s assets are
safeguarded and that reliable financial
records are maintained. The Audit and
Risk Committee provides oversight in
developing the risk management and
internal control environment, making
suggestions on ways in which the business
can improve its effectiveness.
Risk reporting provided by management
considers the principal risks and wider
strategic, corporate, operational (including
HSE) and external risks. We consider the
reporting to be suitably robust, covering
strategic and operational risks at a
corporate level and risks identified at our
operations in Egypt, Burkina Faso and
Côte d’Ivoire. Having considered the risks
in detail, the principal risks have been
identified and are set out on pages 76
to 81.
During the course of 2019 the following
reports were prepared for the Audit and
Risk Committee’s review:
• Preparation of budgets, stress testing
operational and financial inputs and
variables
• Reporting of actuals versus budget,
variance analysis and changes to the
mine plan or sequencing
• Monthly and quarterly reporting of
operational activity, including enhanced
reporting on any significant operational
and corporate issues
• Refresh of the risk management
framework including the development
of detailed risk information from Egypt,
West Africa and the central functions
• Control environment and systems
review with recommendations for
further improvement
• Review of the operational controls and
reporting framework
• Non-financial reporting indicators
including environmental indicators see
further the sustainability section of this
report
• Scoping of internal audit work, access
to site and key personnel
• External audit work culminating in the
annual and half-yearly audit report
• Quarterly risk reporting to include
analysis of primary and secondary
corporate and operational risks,
mitigation, risk owners, strategic
planning as part of the risk review and
site based leading indicators for health
and safety; and
• Compliance and regulatory updates
and related policy updates and reviews.
The assessment of the risk management
and internal control framework carried out
during the year, which also took note of the
work carried out by the internal auditor,
concluded that there were adequate
procedures, polices and controls in place.
The Audit and Risk Committee noted
that, at an operational level, continued
improvements in resourcing of key
personnel within the senior management
team were beginning to see levels of
improvement in the internal control
environment through budgeting,
forecasting and overall reliability of
information for the Group.
Centamin Annual Report 2019
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AUDIT AND RISK COMMITTEE REPORT CONTINUED
The Audit and Risk Committee and the
Board are pleased to confirm that the
Company remains in compliance with best
practice guidelines and with the 2018
Code and relevant Canadian requirements.
Recognising the importance of maintaining
a sound system of risk and internal control
during the COVID-19 pandemic we are
ensuring that we monitor any changes
carefully, and can introduce any alternative
mitigating controls where necessary and
practicable to support the operation of an
effective control environment. Due to the
nature of the business we have a structure
in place that separates the lines of defence
in different locations with the ability to
work remotely and utilise technology.
Key individuals to risk management
and internal control have ensured that
precautions are taken where possible,
government guidance followed and any
relevant documentation kept as well as
shared folders appropriately monitored
and encoded.
The Audit and Risk Committee are
satisfied that they have undertaken a
robust assessment of the principal and
emerging risks impacting the Company.
The assessment identified strategic and
operational risks at a corporate level and
principal risks impacting our operations
in Egypt and West Africa. Details of the
risk assessment can be found in the risk
management section on pages 66 to 81.
Targets in 2020
The Audit and Risk Committee considered the action plan for 2020 and the key
milestones for the year. The areas of continued focus for 2020 include, but are
not limited to, the following:
Strategic:
• Work on developing the life of asset model to include analysis of the parameters,
inputs and scenarios;
• Build and develop the finance function in West Africa in anticipation of
developing a mine in the region;
• Risk management progress through the enhancement and oversight of
governance which includes the appointment of the Head of Risk;
• Review of economic and regulatory regimes where the Group operates or
may consider operating; and
• Review of the IT infrastructure to ensure efficient collaboration and oversight
between head office and operations.
Finance:
• Continued focus on cost reduction and working capital management through
improved inventory and mine management planning systems; and
• Ensuring appropriate cost allocation across all resources and business units
and cost recovery from operations.
Control environment:
• Detailed finance review of operational inputs into budget, forecasting, life of
mine models and variance analysis;
• Implementing internal audit recommendation on controls over procurement,
tendering and supply chain management;
• Undertake a review of the key financial and operational processes to ensure
efficiency and alignment with good practice;
• Scope the internal audit capability to ensure aligned with the business and
identify areas where further assurance is required; and
• Further developments to ensure reporting processes provide management and
the Board with accurate and timely information to make informed decisions.
Employee engagement:
• Refining the mechanism by which employee engagement is undertaken to
ensure the voices of employees are heard
• Analysis of information through the grievance mechanism and other employee
engagement tools to ensure actions are taken in response to concerns and
ideas from the workforce and wider stakeholders; and
• See Sustainability Report for further information.
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Centamin Annual Report 2019
Going concern and long-term viability
The Directors considered it appropriate
to continue to adopt the going concern
basis of accounting in preparing the
financial statements. The going concern
statement is detailed in full in note 1.37 to
the financial statements. The statements
in relation to the Group’s viability, over
the longer term, are set out in the Risk
Management Report on pages 82 and 83.
Conclusion
As a result of its work during the year,
the Audit and Risk Committee 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 Audit
and Risk Committee will be available at the
2020 AGM along with the CFO to answer
any questions in relation to this report.
As 2020 marks my ninth-year anniversary
of serving on the Board, in accordance
with best practice, I will not be standing for
re-election at the next 2020 AGM. I would
like to thank shareholders for giving me the
opportunity to serve the Company for the
last nine years. I will be handing over my
duties as chair to Marna Cloete and I am
confident that she will take the Committee
forward from strength to strength.
Mark Arnesen
Chairman of the Audit and Risk Committee
18 May 2020
Centamin Annual Report 2019
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> Strategic Report> Overview> Financial Statements> Corporate Governance> Shareholder Information CORPORATE GOVERNANCE
REMUNERATION COMMITTEE REPORT
REMUNERATION
COMMITTEE
REPORT
AS CHAIRMAN OF THE REMUNERATION
COMMITTEE, I AM PLEASED TO PRESENT
THE 2019 REMUNERATION REPORT.
EDWARD HASLAM
CHAIRMAN OF THE REMUNERATION COMMITTEE
Dear shareholders
Introduction
As Chairman of the Remuneration
Committee, I am pleased to present the
2019 Remuneration Report.
This report includes our annual report
on remuneration (pages 150 to 163)
which describes how our Directors’
Remuneration Policy was implemented
for the year ended 31 December 2019
and how it is intended that the policy be
implemented for the forthcoming year.
For convenience, the report also provides
(at pages 140 to 163) a summary of the
current policy approved by shareholders at
the 2019 AGM.
Committee activities during the year
The Committee’s main focus at the
start of the year was to ensure the
smooth passage of our new Directors’
Remuneration Policy at the 2019 AGM.
The Committee was very pleased with
the level of support received from
shareholders for the new policy, with over
98% of votes being cast in favour of the
relevant resolution. As explained at the
time, shareholder approval had previously
been sought for the renewal of our policy
every year. However, to demonstrate the
Committee’s long-term commitment to the
new policy – and to reflect typical practice
– it is intended that the new policy will be
applicable for the three years following the
2019 AGM. As such, we are not seeking
shareholder approval for any changes to
the policy at the 2020 AGM.
The resolution approving last year’s
Directors' Remuneration Report also
passed with a comfortable majority at
the 2019 AGM. However, the Committee
was disappointed that a minority of
shareholders voted against this resolution,
due to some investors’ concerns regarding
the operation of the annual bonus plan
in 2018 (e.g. the portion of the bonus
that was payable for achieving a target
level of performance). The Committee
believes that these issues were addressed
as part of the policy review process and,
consequently, do not feature in the annual
bonus plan going forward.
The Committee’s other activities during the
year included:
• Agreeing the Executive Directors’ 2019
remuneration packages;
• Assessing bonus and Performance
Share Plan outturns;
• Preparing last year’s Remuneration
Report;
• Agreeing the fees for Jim Rutherford as
Deputy Non-Executive Chair;
• Agreeing the remuneration-related terms
of Andrew Pardey’s retirement from the
Board (as announced on 3rd October).
Further details of these arrangements
are set out on page 159, where it is
noted that Andrew stepped down from
the Board on 13 December 2019;
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Centamin Annual Report 2019
• Relating to Andrew Pardey stepping
down from the Board:
– agreeing that Ross Jerrard should
receive (from December 2019) a
salary supplement of £107,600 pa
pro rata to the period of time that
he fulfilled the role of Interim CEO
in 2019 (calculated by reference to
the difference in Ross and Andrew’s
base salaries in 2019 and which
was taken into account when
determining Ross’s 2019 bonus
outturn); and
– Considering the remuneration-
related aspects of the search for
the appointment of a successor to
Andrew, which culminated in the
announcement of the appointment of
Martin Horgan as our new CEO (who
joined the Board on 6th April 2020)
Also, during the year, the Committee’s
membership was refreshed, with Dr Sally
Eyre joining the Committee following her
appointment to the Board in April 2019. Dr
Sally Eyre will be taking on the role of chair
of the committee effective following the
AGM in 2020.
Incentive outcomes for 2019
Centamin grew as a business in 2019 by
seeing an increase in the size of its Board,
personnel numbers as well as gaining
experience, delivering a near record
quarter in Q4 despite a weaker Q3 which
was due to slower mining rates from a
section of the open pit which impacted
headline production performance
of 480,528 ounces. Our weaker Q3
impacted many of our key performance
metrics but our strong Q4 ensured
we delivered full year results having
implemented cost control measures within
our targeted range. Overall production
for the year was however lower than
previously experienced in 2016 and 2017
and therefore the longer term performance
metrics used for the 2017 Performance
Share Plan awards were not met, resulting
in nil vesting of these awards in 2020.
The remuneration outcomes for the year
reflected this context. Andrew Pardey
and Ross Jerrard’s maximum annual
bonus opportunity was 125% of salary
(as explained last year, Josef El-Raghy did
not participate in the annual bonus plan).
Reflecting the new policy, 70% of the
bonus opportunity was based on financial/
objectively measurable targets, namely (i)
production (assessed by reference to both
volume and safety record via LTIFR), (ii)
EBITDA, (iii) sustaining and direct operating
costs and (iv) non-sustaining costs and
capital projects. The remaining 30% was
based on personal/strategic targets which
included targets relating to allocation of
capital, improvements in the governance
and control environment and personal
targets for development of self and team.
As explained further on pages 152 and
153, based on performance against
the various targets (and reflecting his
exemplary performance during a year
of Board transition), Ross Jerrard was
awarded a bonus totalling 63% of
the maximum bonus opportunity of
125% which equates to £333,674 and
represents 79% of base salary. Reflecting
our new policy, which requires that the net
amount of any bonus above 75% of base
salary is used to acquire shares which
must be held for two years, Ross Jerrard
will apply the sum of £15,889 (less tax
and social security) in the acquisition of
shares.
Centamin Annual Report 2019
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REMUNERATION COMMITTEE REPORT CONTINUED
Andrew Pardey’s total bonus based on
a formulaic assessment of performance
against the targets was 50% of his
maximum bonus opportunity (i.e.
£326,359, or 62.5% of salary). However,
following the announcement of Andrew’s
retirement, the Committee exercised its
discretion to reduce Andrew’s bonus
to £195,816 (representing 37.5% of
his salary).
As noted above, the performance share
plan (“PSP”) awards granted to Andrew
Pardey and Ross Jerrard in June 2017
are not capable of vesting in June 2020.
Of the blend of total shareholder return
(“TSR”), reserve replacement, EBITDA
and production targets measured up to
the end of the 2019 financial year, none
of the performance conditions met the
minimum threshold required. Full details
of the vesting criteria and the vesting
outcome are set out on page 154. Josef
El-Raghy does not hold any PSP awards.
No discretions (other than those described
in this report) have been exercised by the
Committee in respect of any executive
remuneration outcome. The Committee is
comfortable that our Remuneration Policy
operated as intended in 2019.
Approach to remuneration in 2020
The Remuneration Committee intends
to adopt the following approach to the
executive directors’ remuneration in 2020,
in compliance with the existing policy:
Base salary
Andrew Pardey will not receive a salary
increase in 2020 and is currently serving
out his notice period in line with his
employment contract. He will also not be
receiving any bonus for 2020.
Ross Jerrard will receive a 3% increase
to his base salary in 2020 in line with
the increase in cost of living. In addition,
to reflect his appointment as Interim
CEO (announced in December), Ross
continued to receive a salary supplement
of £107,600 pa pro rata to the period of
time that he fulfilled this role (as explained
earlier, calculated by reference to the
difference in Ross and Andrew’s base
salaries in 2019). This salary supplement
will be taken into account when
determining Ross’s 2020 bonus outturn
but not his PSP awards.
Martin Horgan’s base salary on
appointment is £485,000. The Committee
notes that this base salary is lower than
Andrew’s and will, at the appropriate
time, consider whether it is necessary to
take advantage of the flexibility provided
in our policy to make above inflationary
salary increases in the event a director is
appointed on a below market salary.
performance targets will be applied to
the award which will be subject to a two
year post-vesting holding period, (iii)
the Committee has taken a considered
approach to the other elements of
Martin’s remuneration (e.g. a base salary
below that of his predecessor) and (iv)
no additional buy-out awards have been
necessary to secure Martin’s recruitment.
Pension
No changes will be made to the approach
adopted in the past i.e. none of Andrew
Pardey, Ross Jerrard or Martin Horgan
will receive a contribution towards or
allowance for a pension.
Annual bonus
Annual bonus opportunity for Ross Jerrard
will remain unchanged at 125% of salary.
Andrew Pardey will not participate in the
2020 bonus. As was the case last year:
• 70% of the bonus opportunity will
be based on financial/objectively
measurable targets, namely production
(assessed by reference to both volume
and safety record via LTIFR), EBITDA,
sustaining and direct operating costs,
non-sustaining costs and capital
projects. The remaining 30% will be
based on personal/strategic targets;
and
• any bonus earned in excess of 75% of
salary will be deferred into shares.
Martin Horgan’s bonus opportunity will
be aligned to Ross’s (i.e. 125% of salary
maximum, with the same target structure
and share deferral provisions).
2020 Performance Share Plan (“PSP”)
2020 PSP awards will vest based upon a
blend of three year relative TSR, cash flow
and production targets. Ross Jerrard will
receive a PSP award over shares worth
150% of salary, reflecting the approach
adopted last year. Martin Horgan will
receive an initial award on joining over
shares worth 200% of salary, with the
intention that his future awards in 2021
and onwards be at the 150% level. The
Committee considers this higher initial
award for Martin (which is allowed under
our existing policy) is entirely appropriate,
noting that (i) the award will provide an
immediate alignment of his interests with
those of shareholders (ii) challenging
Andrew Pardey will not receive an award.
Non-Executive Directors
No changes to the fees of the Non-
Executive Directors will be made for
2020, save to reflect recent changes in
responsibilities and/or committee chair or
membership. Following the appointment
of Jim Rutherford as Chair of the Board
effective from the 2020 AGM, the
Remuneration Committee set a total annual
fee of GB£250,000 which is consistent
with the fee paid to the outgoing chair. An
additional fee of GB£10,000 will be payable
for the role of Senior Independent Director
in addition to the basic fee of GB£65,000.
Membership of a committee carries a fee
of GB£5,000 and chairing a committee is
GB£10,000 per annum.
Summary
I hope that you find the report clear and
informative and are supportive of the
approach we are adopting in connection
with Board remuneration. I am always
happy to hear from the Company’s
shareholders and you can contact me via
the Company Secretary if you have any
questions on this report or more generally
in relation to the Company’s remuneration.
2020 marks the last Remuneration Report
that I will be presenting to shareholders
as I will be retiring from my position on
the Board at the 2020 AGM. I take this
opportunity to thank all shareholders, the
executive and fellow board members as
well as our loyal and trusted Centamin
employees for all their support during my
nine year tenure with Centamin. I also take
great pleasure in welcoming Dr Sally Eyre
who will chair the Committee following my
retirement. The members of the Committee
following the 2020 AGM will be Jim
Rutherford and Marna Cloete.
Edward Haslam
Chairman of the Remuneration Committee
18 May 2020
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Centamin Annual Report 2019
Executive Director remuneration at a glance
Key Component
How Implemented in 2019
Intended Implementation for 2020
Base salary
Previous CEO – £522,175
New CEO – £485,000
CFO – £414,575
CFO – £427,012. In addition, Ross will continue to receive a salary
supplement of £107,600 pa pro rata to the period of time that he
fulfils the role as Interim CEO.
Pension
Benefits
Previous CEO/CFO – 0%
New CEO/CFO – 0%
Previous CEO/CFO – between 5% and 15% of base salary
New CEO/CFO – between 5% and 15% of base salary
Annual bonus
Previous CEO/CFO – 125% of salary maximum
New CEO/CFO – 125% of salary maximum
Targets:
• 70% – financial/quantitative e.g. Production, EBITDA,
Targets:
• 70% – financial/quantitative e.g. Production, EBITDA,
sustaining and direct operating costs, non-sustaining costs
and capital projects
sustaining and direct operating costs, non-sustaining costs
and capital projects
• 30% – personal/strategic
• 30% – personal/strategic
The net of tax amount of any bonus over 75% of salary is to be
used to purchase shares subject to a two year holding period
The net of tax amount of any bonus over 75% of salary is to be
used to purchase shares subject to a two year holding period
PSP
Previous CEO/CFO – 150% of salary
New CEO/CFO – 150% of salary
Targets:
• 50% – relative TSR vs industry peer group
Targets:
• 50% – relative TSR vs industry peer group
• 25% – free cash flow generation
• 25% – free cash flow generation
• 25% – production
Shareholding requirements
200% of salary
• 25% – production
200% of salary
As set out in the business model, Centamin creates value through the process of gold exploration through to production by maximising
production at the lowest possible cost. The gold and silver doré bars produced at Sukari are sold to our appointed refiners who, in
turn, refine the doré bars and sell the near-pure gold at the price determined by the London bullion markets. Performance metrics
used in the annual bonus and PSP reflect the achievement of the Company in meeting its strategic objectives through the actions
and influences of the Executive Directors:
Key Measure
Linkage to Incentive Plans
Asset quality and financial flexibility
Gold production
Cost control
Stable finances
Stakeholder returns
Production targets employed in both the annual bonus and PSP.
EBITDA used in the annual bonus. Cost control is a driver of long-term returns to shareholders, measured via relative TSR in the PSP.
Personal KPIs for formalising and implementing sound policy decisions reflected in the annual bonus.
Consistent dividend policy
Delivering shareholder returns in line with the dividend policy will drive TSR which is measured in the PSP.
Shareholder return relative to peers
50% of PSP based on relative performance against peers.
Active growth pipeline
Optimising production
Self-funded growth and exploration
Identifying high grade from the existing resource and optimising throughput rates, with production targets used in the bonus and PSP.
Reserve replacement, exploration development and growth targets are employed in the strategic element of individual KPIs within the
annual bonus.
Exploration in West Africa
PSP provides a long-term incentive to identify and deliver on projects outside of Egypt.
Sustainability
Safety record and human resources
Government relations and
community initiatives
LTIFR used in production element of bonus structure. Zero level 5 or 4 environmental incidents rewarded through personal KPIs. Ongoing
workforce engagement, implementation of Group policies and imbedding the workplace culture are assessed through personal KPIs.
Maintaining key relationships and delivery of initiatives linked directly to individual bonus KPIs.
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REMUNERATION COMMITTEE REPORT CONTINUED
Remuneration Policy
Shareholder approval for the Directors’ Remuneration Policy was obtained at the AGM held on 8th April 2019. This policy will continue
to apply for the forthcoming year. The main features of the policy are set out below (the full policy can be found on pages 122 to 128
of the 2018 Annual Report found at https://www.centamin.com/investors/reports/2019):
Remuneration Policy for Executive Directors
Operation
Opportunity
Performance conditions
N/A
N/A
N/A
Element of pay and
linkage to strategy
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.
Pay is reviewed annually and any change ordinarily
takes effect from 1 January. When determining
an appropriate level of salary, the Remuneration
Committee considers:
• remuneration practices within the Company;
• the performance of the individual Executive
Director;
• the individual Executive Director’s experience
and responsibilities;
• the general performance of the Company;
• salaries within the ranges paid by the
companies in the comparator group(s) used
for remuneration benchmarking; and
• the economic environment.
Base salaries will be set at an
appropriate level. Any increase
which exceeds that of the general
workforce may only normally be
awarded in cases of a change
in responsibility, complexity and
nature of the role or size of the
organisation, when the pay level
becomes out of line with the market
data or to reflect the fact that a
director has been appointed on
a below market salary with the
intention being that this salary
will be increased if considered
appropriate.
Benefits
Benefits may be provided where
necessary to ensure competitive
remuneration packages are
consistent with the market.
The “normal” benefits that may be provided
include items such as car or car allowance,
life assurance, private medical provision,
subscriptions and phones.
Where necessary (e.g. due to the location of
operations of the business) it may be necessary
to provide “additional” benefits such as (but not
limited to) private security, accommodation and
reasonable travel costs or enhanced provision of
other benefits.
It is not intended that (i) normal
benefits will exceed 5% of base
pay and (ii) additional benefits will
exceed 10% of base pay (to include
tax paid on the benefits). Therefore,
it is not intended that normal
benefits and additional benefits will
exceed 15% of base pay (to include
tax paid on the benefits).
Pension
Positioned to ensure
competitive packages and
provision of appropriate income
for executives in retirement.
The Remuneration Committee maintains the ability
to provide pension funding in the form of a salary
supplement or formal pension allowance, which
does not form part of the salary for the purposes
of determining the extent of participation in the
Company’s incentive arrangements.
It is intended that, if pension
provision is offered to any Executive
Director, the value of such pension
in percentage of salary terms
will be in line with the pension
contributions provided to the
majority of the relevant workforce.
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Centamin Annual Report 2019
Element of pay and
linkage to strategy
Operation
Opportunity
Performance conditions
Annual bonus
To provide a driver and
reward for the delivery of
short term performance
goals, normally over the
course of the financial year.
125% of salary
The Remuneration Committee will determine
the bonus payable after the year end based on
performance against targets.
Annual bonuses up to 75% of salary are paid in cash
after the end of the financial year to which they relate.
The net amount of any bonus earned in excess of 75%
of salary must be applied in the acquisition of shares
that must in normal circumstances be retained for
two years. Dividend equivalents can be paid on shares
acquired for this purpose.
The bonus plan is subject to malus/claw back
provisions described in the notes to this table.
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
personal/strategic objectives. No less than
70% of the bonus opportunity will be linked
to the achievement of financial/objectively
measurable targets.
No more than 25% of the maximum
opportunity is payable for delivering a
threshold level of performance (where such
an approach can be applied given the nature
of the metric/target used). Up to 62.5% of the
maximum opportunity is payable for delivering
a target level of performance (again, where
such an approach can be applied).
The Remuneration Committee may adjust
the formula-based bonus outturn if this does
not reflect underlying performance and/or
shareholders’ experience.
PSP awards vest subject to the achievement
of challenging performance conditions set by
the Remuneration Committee prior to each
grant. These conditions may include a blend
of financial, operational and/or shareholder
return-related metrics. The Remuneration
Committee may adjust the formula-based
vesting outturn if this does not reflect
underlying performance and/or shareholders’
experience.
The aggregate market value
(as at the respective award
dates) of shares in respect
of which awards are made
to an eligible employee in
any year shall not in normal
circumstances be greater
than 150% of the amount
of such eligible employee’s
salary at the award date,
save in circumstances
which are considered by the
Remuneration Committee
to be exceptional, where an
absolute limit of 250% of
salary may be applied.
Long-term incentives
To align the long-term
interests of the executives
with those of shareholders.
Share ownership requirement
To encourage ownership of
shares, thereby creating
alignment of interest
between shareholders and
the executives.
PSP was approved by shareholders at the AGM in
2015 and amendments to the policy approved at
the AGM in 2019. Executive Directors and other
selected employees may participate in the PSP on the
recommendation
of the Remuneration Committee.
Awards to Executive Directors shall in normal
circumstances be satisfied in shares and will vest
no earlier than three years following grant subject
to continued employment and the satisfaction of
performance conditions.
Awards granted from 2019 onwards which vest at
the end of the three year performance period will
be subject to an additional two year holding period.
During this period the shares cannot be sold (other
than as required for tax purposes).
A dividend equivalent provision exists which allows
the Remuneration Committee to pay an amount (in
shares or cash) equivalent to the dividends paid or
payable on vested shares between the date of grant
and the vesting of an award.
Awards are subject to malus/claw back provisions
described in the notes to this table.
Executive Directors are required to build a holding
of shares in the Company equivalent to 200% of
base salary.
N/A
200% of salary. The
Remuneration Committee
will, during the course of the
year, consider its approach to
post cessation shareholding
requirements for directors.
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REMUNERATION COMMITTEE REPORT CONTINUED
Remuneration Policy continued
Remuneration Policy for Non-Executive Directors
Element of pay and linkage to strategy Operation
Performance conditions
Non-Executive Director fees
To attract and retain high calibre
Non-Executive Directors by the
provision of competitive fees.
The independent Non-Executive Chair’s fee has been determined by the Remuneration Committee
and shall be a total annual fee of GBP£250,000 effective from the 2020 AGM when Jim
Rutherford takes on the role as Board Chair.
N/A
The Senior independent Non-Executive Director’s fee has been determined by the Remuneration
Committee and shall carry an additional GB£10,000 per annum in addition to the basic Non-
Executive Director fee of GB£65,000.
The Non-Executive Directors’ fees are determined by the Board. The level of fees takes into
account the time commitment, responsibilities, market levels and the skills and experience
required.
Non-Executive Directors normally receive a basic fee and an additional fee for specific Board
responsibilities, including membership and chairmanship of the Remuneration Committees (or
if materially more time is required to be spent in the course of their duties than envisaged).
The Chairman and Non-Executive Directors are entitled to receive certain benefits in addition
to fees. Expenses incurred in the performance of non-executive duties for the Company may be
reimbursed or paid for directly by the Company, as appropriate, including any tax due on the
expenses. Non-Executive Directors do not participate in any incentive arrangements.
Determination and application of the policy
When determining our Executive Director remuneration policies and practices, the Committee takes account of a number of factors:
Factor
Clarity
Simplicity
Risk
How this is taken into account
We aim to ensure that our remuneration policies and practices are clearly articulated, transparently disclosed and well understood by both our
management team and our shareholders
Overly complex remuneration structures which can be misunderstood and deliver unintended outcomes are avoided. One of the core objectives of
the Committee is to ensure that our executive remuneration policies and practices are as simple to communicate and operate as possible, while
also supporting our strategy.
Inappropriate risk-taking is neither encouraged nor rewarded in our policy and practices. A balanced use of both short and long-term incentive
plans is operated which employ a blend of financial, non-financial and shareholder return targets. Also, equity plays a significant role in our
incentive plans, which work in tandem with shareholding guidelines). Robust malus/clawback provisions also operate to provide the Committee
with the ability to take action in certain circumstances
Predictability
Reflecting typical practice, our incentive plans are subject to individual caps, with our share plans also subject to market standard dilution limits. How
the rewards potentially receivable by our Executive Directors under the incentive plans vary based on performance delivered and share price growth
Proportionality
A clear link between individual awards, delivery of strategy and our long-term performance can be seen and is demonstrated in the table on pages
34 and 35. In addition, incentive/“at-risk” pay comprises a significant portion of Executive Directors’ packages. In addition, the structure of the
Executive Directors’ service contracts ensures “rewards for failure” are avoided.
Alignment to culture We have sustainability at the heart of our culture:
• Workforce: Ensure robust safety standards that protect the workforce every day
• Environment: Responsibly manage and minimise the environmental impact of Centamin’s activities
• Community: Improve socio economic development in countries of operation, and improve the standard of living and wellbeing for host communities
Our executive pay policies are designed and operated with these core values in mind. For example, a significant portion of the annual bonus targets
are either directly or indirectly linked to sustainability. Also, the Committee has the flexibility to adjust the bonus/PSP outturn based on a formulaic
assessment of performance against the targets if it believes that performance has been delivered in a manner that does not reflect the Company’s
focus on sustainability.
The Committee’s overriding objective is to ensure that the Remuneration Policy and practices are aligned to Centamin’s culture and
values and encourage the successful delivery of the Company’s long-term strategy.
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Centamin Annual Report 2019
Malus/clawback
Bonuses and/or PSP awards may be subject to malus/claw back for up to three years after payout/vesting in the following
circumstances: i) termination for cause/gross misconduct; ii) material misstatement of accounts; iii) error in calculation of the extent of
payout/vesting; iv) an event that materially adversely affects the Company’s reputation (which may include a material health and safety
event) and; v) “corporate failure”.
Illustration of application of Remuneration Policy
The following charts illustrate the remuneration opportunity provided to Martin Horgan as our new CEO and Ross Jerrard as CFO.
CEO (£'000)
CFO (£'000)
£2,061k
£1,673k
Maximum
24%
29%
47%
£2,546k
Maximum
30%
32%
38%
£1,993k
On target
35%
27%
38%
£1,397k
On target
42%
28%
30%
£1,185k
Fixed
100%
£485k
Fixed
100%
£499k
£0
£2,500
£500
£1,000
£1,500
£2,000
£3,000
£0
£500
£1,000
£1,500
£2,000
£2,500
£3,000
Fixed pay
Annual bonus
LTIP
LTIP value with 50% share price growth
Three scenarios have been illustrated based on the following assumptions:
1. Minimum performance: comprising the minimum remuneration receivable (i.e. fixed pay only, being base salary effective 1 January
2020 (excluding the Interim CEO allowance payable to the CFO) and (for the CFO only) benefits calculated using the 2019 figure as
set out in the table on page 150 (no benefits number has been provided for the new CEO as he was not in post during 2019).
2. On-target performance: comprising fixed pay, an annual bonus payment of 62.5% of the maximum opportunity and PSP awards
vesting at 25% of maximum opportunity.
3. Maximum performance: comprising fixed pay, 100% of annual bonus and 100% vesting of PSP awards. The maximum performance
scenario also illustrates potential payout under the PSP with a 50% share price growth.
The illustrations do not take into account dividends.
The wider employee context
Our Remuneration Policy for Executive Directors takes due account of our approach to pay 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-based 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 underlying operational performance and cost control measures at the mine. Further details on
employee relations can be found in the Sustainability Report, which is published separately.
Together with the employee engagement explained below, consideration is also given to the base salary increase, relative performance
of the Company and working conditions of the wider workforce. The main differences in determining executive and senior employee
compensation compared to the wider workforce relates to the emphasis on rewarding long-term performance, as well as performance
at an operational, strategic and corporate level. Consideration is also given to the level of responsibility of executives and senior
employees. In addition, in light of the 2018 Code recommending that engagement with the workforce takes place to explain how
executive remuneration aligns with wider Company pay policy, discussions are undertaken through the Voice of Sukari forum, with
formal communication to senior members of the management team and heads of department and more informal discussion groups to
engage on workforce benefits and remuneration.
Centamin Annual Report 2019
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Consideration of shareholder views
Feedback from shareholders and proxy advisers and (where considered appropriate) meetings held with the same are considered as
part of the Company’s annual Remuneration Policy review. Major shareholders are contacted should there be any proposed material
changes to our Remuneration Policy or practices, as was the case in connection with the recent policy review.
Service contracts
Executive Directors have rolling service contracts which are terminable on no more than twelve months’ notice on either side. Executive
Directors are entitled to be paid salary and pension (if any) in respect of the relevant notice period. In the case of notice given in
connection with and shortly following a change of control, Executive Directors are entitled to payment in lieu of an amount equal to
twelve months’ basic salary together with bonus under the short term incentive plan. For this purpose, the amount of bonus (if any)
shall be determined by the Remuneration Committee of Centamin plc; be pro-rated based on the period up to the date of the Change
of Control only; take into account all of the relevant key performance indicators; and be subject to the normal rules on clawback.
The Chairman and Non-Executive Directors have formal letters of appointment which provide for three months’ notice for the Chairman
and ‘reasonable notice’ for the other Non-Executive Directors. These letters of appointment also provide for additional payments to be
made post-termination in the event that they are required to spend material time assisting the Company, for example in connection
with an investigation for which they are entitled to be indemnified by the Company.
There are no other provisions for payment for loss of office. Directors’ service contracts are kept available for inspection at the
Company’s registered office.
Policy if a new Director is appointed
When hiring a new Executive Director, or promoting an individual to the Board, the Remuneration 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 Remuneration Committee may use other elements of remuneration if it considers it 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 buy-out 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) may be offered.
That said, the Remuneration Committee’s policy is not to provide sign-on compensation. In addition, the Remuneration Committee’s
policy is not to provide buy-outs as a matter of course. However, should the Remuneration Committee determine that the individual
circumstances of recruitment justified the provision of a buy-out, an estimate of the equivalent value of any incentives that will be
forfeited on cessation of a Director’s previous employment will be calculated taking into account:
• the proportion of the performance period completed on the date of the Director’s cessation of employment;
• the performance conditions attached to the vesting of these incentives and the likelihood of them being satisfied;
• the timeframe to receipt of shares; and
• any other terms and conditions having a material effect on their value (“lapsed value”).
The Remuneration Committee may then grant up to the equivalent value as the lapsed value, where possible, under the Company’s
incentive plans and any buy-out would typically aim to mirror the form and structure of what is forfeited on joining the Company.
To the extent that it is not possible or practical to provide the buy-out within the terms of the Company’s existing incentive plans the
Remuneration Committee may, in exceptional circumstances consider it appropriate to grant an award under a different structure to
facilitate a buy-out of outstanding awards held by an individual on recruitment. No such buy-out awards were required in connection
with Martin Horgan’s appointment.
Where an existing employee is promoted to the Board, the policy set out above would apply from the date of promotion but there would
be no retrospective application of the policy in relation to subsisting incentive awards or remuneration arrangements. Accordingly,
prevailing elements of the remuneration package for an existing employee would be honoured and form part of the ongoing
remuneration of the person concerned. These would be disclosed to shareholders in the annual report on remuneration for the
relevant financial year.
The Company’s policy when setting fees for the appointment of new Non-Executive Directors is to apply the policy which applies to
current Non-Executive Directors.
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Centamin Annual Report 2019
Policy on payment for loss of office
Directors’ contractual terms and conditions, including notice periods, are reviewed by the Remuneration and Nomination Committees.
The Company’s approach to payment on loss of office will take account of the circumstances of the termination of employment. In
the normal course, 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 (subject to the garden leave provisions which may be applied in certain circumstances).
Subject to the employee’s compliance with the Company’s sickness absence procedures (as amended from time to time), the
employee shall continue to receive his full salary and contractual benefits during any period of absence due to incapacity for up to
an aggregate of ten days in any 52 week period. Such payment shall be inclusive of any statutory sick pay due in accordance with
applicable legislation in force at the time of absence.
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.
Where the Company wishes to terminate the agreement and make a payment in lieu of notice, this payment shall normally be phased
in monthly or quarterly instalments over a period of no longer than twelve months (or the notice period if less) and any payment should
(where appropriate) 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
normally be restricted to the Director’s actual period of service only (i.e. be the subject of a possible reduction).
In the case of notice given in connection with and shortly following a change of control, Executive Directors are entitled to payment in
lieu of an amount equal to twelve months’ basic salary together with bonus under the short term incentive plan. For this purpose, the
amount of bonus (if any) shall be determined by the Remuneration Committee of Centamin plc; be pro-rated based on the period up
to the date of the Change of Control only; take into account all of the relevant key performance indicators; and be subject to the normal
rules on clawback.
The Remuneration Committee reserves the right to make additional payments where such payments are made in good faith
in discharge of an existing legal obligation (or by way of damages for breach of such an obligation); or by way of settlement or
compromise of any claim arising in connection with the termination of an Executive Director’s office or employment; or in relation
to the provision of outplacement or similar services.
With regard to annual bonus, the Remuneration Committee’s approach will be influenced by the circumstances of the cessation. A
departing executive may be entitled to a bonus and, if so, such bonus will normally be pro rated for the period of employment and be
payable at the end of the relevant year based on performance against the relevant targets. Bonuses may be paid in respect of the year
in which a change of control occurs, if the Remuneration Committee considers this appropriate, with the Remuneration Committee
determining the level of bonus taking into account any factors it considers appropriate.
In relation to the PSP, in normal circumstances awards lapse on cessation of employment. However, in certain “good leaver”
circumstances awards will normally vest at the expiry of the performance period subject to performance against the targets and a
pro rata reduction (unless the Remuneration Committee determines otherwise). In the event of a change in control, awards will
normally vest at that point subject to performance against the targets and a pro rata reduction (unless the Remuneration Committee
determines otherwise).
Policy on external Board appointments
The Company will consider requests for Executive Directors to have non-executive external appointments, on the basis 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.
Centamin Annual Report 2019
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ANNUAL REMUNERATION REPORT
Single figure table in US$ (audited)
Salary
Benefits
Bonus
LTIs
Pension
Total
Executives
2019
2018
Josef El-Raghy
0
745,444
Andrew Pardey
670,201
691,691
Ross Jerrard
544,169
542,363
2019
0
91,898
78,966
2018
Nil
2019
0
94,907
258,631
Nil
Nil
57,662
440,711
283,871
2018
2019
Total
1,214,370
1,979,498
170,864
152,569
699,342
283,871
2018
–
342,579
434,430
777,009
2019
2018
2019
2018
0
0
0
0
149,088
0
894,532
Nil
Nil
1,020,730
1,129,177
1,063,847
1,318,326
149,088
2,084,576
3,342,035
0
0
0
0
Non-
executives
Fees
2019
Josef El- Raghy
320,870
2018
0
Edward Haslam
160,442
170,335
Mark Bankes
115,518
122,641
Mark Arnesen
115,518
122,641
Alison Baker
Dr Ibrahim Fawzy
96,410
89,847
97,126
31,737
Catharine Farrow
28,284
Marna Cloete
Sally Eyre
Trevor Shultz
–
–
–
30,459
64,071
0
29,603
Benefits
Bonus
LTIs
Pension
Total
2019
2018
2019
2018
2019
2018
2019
2018
2019
0
0
0
0
0
0
0
0
0
0
0
–
–
–
–
–
–
–
–
–
–
–
0
0
0
0
0
0
0
0
0
0
0
–
–
–
–
–
–
–
–
–
–
–
0
0
0
0
0
0
0
0
0
0
0
–
–
–
–
–
–
–
–
–
–
–
0
0
0
0
0
0
0
0
0
0
0
–
–
–
–
–
–
–
–
–
–
–
2018
0
320,870
160,442
170,335
115,518
122,641
115,518
122,641
96,410
89,847
28,284
30,459
64,071
97,126
31,737
–
–
–
0
29,603
1,021,419
574,083
Total
1,021,419
574,083
Notes to table:
•
The following Board changes occurred over the relevant periods:
– Trevor Schultz retired from the Board in 26th March 2018
– Sally Eyre joined the Board on 10th April 2019
– Alison Barker resigned from the Board on 2nd September 2019
– Catherine Farrow and Marna Cloete joined the Board on 2nd September 2019
– Andrew Pardey left the Board on 13th December 2019
– Josef El-Raghy was appointed Non-Executive Director from 1 January 2019 and was previously an executive director.
– Jim Rutherford joined the Board on 1 January 2020
All salaries and fees are paid in sterling.
The performance conditions relating to PSP awards granted in 2017 have not been met as at 31 December 2019. The vesting figure for the 2016 PSP award has been restated based on the actual share price on the
date of vesting of £0.967. Details of the grants made under the terms of the PSP can be found in page 155.
Benefits are within the limits of the policy and relate primarily to travel related costs to and from the individual’s original place of domicile.
The US$ figure in the table reflects the average exchange rate during the year, which may differ from the amount actually paid as payments to Non-Executive Directors are made quarterly and reflect the exchange rate
at the date of the transaction.
•
•
•
•
•
The executive bonus paid in GB£ is based on the year-end exchange rate of $1.32/£1(2018:$1.28/£1).
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Centamin Annual Report 2019
Non-Executive Director fees (audited)
Non-Executive Directors receive annual fees within an aggregate Directors’ fee pool limited to an amount which is approved by
shareholders. The Remuneration 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
Fee structure in 2020
As at 31 December 2019
As at 31 December 2018
GB£65,000
GB£65,000 (US$85,850)
GB£65,000 (US$83,350)
GB£10,000
GB£10,000 (US$13,206)
GB£10,000 (US$12,823)
GB£5,000
GB£5,000 (US$6,603)
GB£5,000 (US$6,411)
Deputy Chairman and Senior Independent Director
N/A
GB£125,000 (US$165,098)
GB£125,000 (US$160,288)
Senior Independent Director
Notes to table:
GB£10,000
N/A
N/A
•
•
•
•
•
During 2019 and 2020 while Edward Haslam undertook an enhanced role as Deputy Chairman and senior Non-Executive Director. These duties are set out in the Governance Report and are reflected in this fee.
This fee will no longer apply in 2020 with a separate additional fee of £10,000 per annum for the Independent Director who undertakes the role of Senior Independent Director.
It is not intended to fill the role of Deputy Chair post the AGM.
The Company reviewed the Non-Executive Director fees during 2019 and no increases were proposed.
The Non-Executive Directors do not participate in any of the Company’s share plans or incentive plans.
The US$ figure in the table reflects the average exchange rate during the year, (which may differ from the amount shown in the single figure table as payments to Non-Executive Directors are made quarterly and
reflect the exchange rate at the date of the transaction).
2019 annual bonus (audited)
The 2019 bonus plan for the Executive Directors in post during that year (i.e. not Martin Horgan) was structured as follows:
• 70% of the bonus opportunity was based on financial/objectively measurable targets, namely production (assessed by reference to
both volume and safety record via LTIFR), adjusted EBITDA, sustaining and direct operating costs, non-sustaining costs and capital
projects; and
• 30% was based on personal/strategic targets.
As set out in the risk matrix, the Company is exposed to the daily fluctuations in the price of gold, receiving the market rates on the
day of sale. Consequently, revenue cannot be directly linked with the performance of the executive and therefore the Remuneration
Committee used these other measurable and personal targets to assess performance such as controls over costs, production rates,
targeted drilling through exploration as well as encouraging a safety culture and sustainable operations.
Andrew Pardey and Ross Jerrard’s 2019 bonus was split between 70% financial/objectively measurable targets and 30% personal/
strategic targets. The following analysis summarise performance against the financial/objectively measurable targets (audited) resulting
in an outcome of 34% out of a possible 70% bonus outturn as a percentage of maximum bonus opportunity:
Gold Production, LTIFR and Adjusted EBITDA (30% of bonus opportunity)
Performance
Measure
% of bonus
opportunity
‘000 ounces
Range
US$m
10%
10%
10%
Threshold
Target
Maximum
Actual
Outturn as %
of maximum
bonus
opportunity
Outturn
as % of salary
482
0.19
209
508
232
533
0.01
256
480
0.29
280
0%
0%
10%
0%
0%
12.5%
Category
Gold Production
LTIFR (global)
Adjusted EBITDA
Notes to table:
•
Threshold achievement represents 25% of the bonus opportunity for the respective performance measure.
• Maximum achievement represents 100% of the bonus opportunity for the respective performance measure.
•
•
•
Production is based on ounces produced.
LTIFR is based on 200,000 working hours calculated for the Group.
Due to a change in accounting policy (see note 1.2.1 in the financial statements), target EBITDA has been adjusted to deduct E&E expenditure which is now expensed, rather than capitalised,
so the measure is on an equivalent basis to the actual
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Sustaining and direct operating costs/ Non-sustaining costs and capital projects (40% of bonus opportunity)
When assessing performance against the sustaining and direct operating costs and non-sustaining and capital projects targets,
the Committee takes account of the extent to which planned expenditure was actually made and the rationale therefor.
Under the sustaining and direct operating costs element, the Committee determined that 13% of the maximum 20% of bonus
opportunity was payable (equating to 16.25% of salary), using the following performance as the basis for this calculation:
Category
Threshold
Cash cost of production ($,000/ounce)
Rebuilds ($,000)
Open pit mining (($,000)
Open Pit Cost per tonne mined ($/t)
Underground mining ($,000)
Underground cost per tonne mined ($/t)
Processing ($,000)
Cost per tonne milled ($/t)
729
30,678
136,199
2
34,211
41
214,729
15
Target
694
29,217
123,817
1.52
31,101
38.59
195,208
14.69
Maximum
660
27,756
111,435
1
27,991
37
175,687
14
Actual
699
26,633
122,344
1.56
28,484
46.31
176,051
13.69
Performance
Between threshold and target
Above max
Between target and max
Between threshold and target
Between target and max
Below threshold
Between target and max
Above max
Under the non-sustaining costs and capital projects element, the Committee determined that 11% of the maximum 20% of bonus
opportunity was payable (equating to 13.75% of salary), using the following performance as the basis for this calculation:
Category
Threshold
Target
Maximum
Actual
Performance
AISC per ounce sold ($,000/ounce)
Corporate costs per ounce produced
($,000/ounce)
Capital projects – Sukari ($,000)
Capital projects – West Africa ($,000)
953
28
16,192
18,343
930
27
14,720
16,675
883
26
13,248
15,008
943
24
16,478
16,884
Between threshold and target
Above max
Below threshold
Between threshold and target
Personal/strategic targets (30% of bonus opportunity)
Andrew Pardey and Ross Jerrard’s personal/strategic bonus was tested based on their performance in the following areas:
Andrew Pardey
Ross Jerrard
• Strategy setting and business development
• Strategy/budget/planning/capital projects
• Growth in reserves
• Workforce engagement
• Legal/financial/regulatory controls
• Investor/government relations
• ESG
• Safety culture
• Risk assessment
• Internal/external audit
• Financial/operating controls/systems
• Finance/treasury
• Personnel/training/development
• Investor/government relations
In reviewing performance against Andrew Pardey’s personal/strategic targets, the Remuneration Committee considered the key
milestones achieved during the year which he was instrumental in delivering. These included the following:
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Centamin Annual Report 2019
Andrew Pardey
Achieved (Audited)
Topic
Solar
Sukari exploration
TSF 1
Cote d'Ivoire
Target
Prepare the required studies sufficient for board approval to consider the options for the solar
plant at Sukari
Complete regional exploration on the concession to include analysis of seismic results and UG
development
Implementation of the TSF recommendations
Progress pre-feasibility study to be presented to the board for approval
Business Development
Preparation of strategic plans for board review to include growth opportunities
Personnel management/training
Drive training programmes to ensure understanding of new and improved corporate policies
including HR and grievance mechanism across the business
Government relations
Engagement with government officials across all the sites operations
ESG and Sustainability reporting
Progress against 2019 targets set out in the Sustainability Report
Board succession and diversity
Succession planning, NED rotation and appointments to ensure diversity
Reporting
Evidence of communicating the strategy to the workforce
Relative weighting
out of 10
Achieved
8
7
8
10
5
5
6
6
8
7
1.7
1.6
2.8
0.9
1.3
1.2
1.6
1.2
1.2
2.5
16.0
Total provisional outturn: 16% out of a possible 30% of the max bonus opportunity.
Andrew Pardey’s total bonus based on a formulaic assessment of performance against the targets was 50% of his maximum bonus
opportunity (i.e. £326,359, or 62.5% of salary). However, following the announcement of Andrew’s retirement, the Committee
exercised its discretion to reduce Andrew’s bonus to £195,816 (representing 37.5% of his salary).
In reviewing performance against Ross Jerrard’s strategic, corporate and individual targets, the Remuneration Committee considered
the key milestones achieved during the year which he was instrumental in delivering. These included the following:
Ross Jerrard
Achieved (Audited)
Topic
Target
Defence strategy in the event
of a corporate action
Managing the defence strategy and application of the strategy during the Endeavor approach
Life of mine
Preparation of the life of asset planning and financial and strategic contribution
Solar
TSF2
M&A
Control Framework & Risk
assessment/ESG/ Regulatory
framework
Governance & Regulatory
Training
Supply chain
Financial assessment and support to the management and board proposals
Review of proposals with financial and stakeholder analysis
Economic assessment of growth projects and any emerging opportunities and threats
Oversight of data within the operational environment. Managing refreshed risk workshop and
embed our values at an operational and corporate level.
Assessment of the management of the Environmental, Social, Governance and regulatory
framework.
Drive training programmes to ensure understanding of corporate policies including ABC and
MSA across the business
Follow the MSA risk assessment process and identity opportunities to improve operating
practices across the supply chain.
Relative weighting
out of 10
Achieved
10
4
8
10
8
7
6
8
7
4
2.5
3
3
4
3
5.5
1.5
2.5
29.0
Total provisional outturn: 29% out of a possible 30% of the max bonus opportunity.
Based on this performance, and reflecting Ross Jerrard’s exemplary performance during a year of Board transition, the Committee
determined that Ross Jerrard should receive a bonus of 63% of the maximum bonus opportunity of 125% which equates to £333,674,
and represents 79% of base salary.
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REMUNERATION COMMITTEE REPORT CONTINUED
Long-term incentives – shares award table (audited)
Vesting of June 2017 PSP award
The performance conditions for the grants made in June 2017 covered the period from 31 December 2016 to 31 December 2019.
Performance against the targets is set out below, which shows zero vesting of this award:
Performance Conditions
Range
% Achieved
20% – relative total shareholder return
31 December 2016 to 31 December 2019: TSR element of the 2017 award lapses in full
(ranked below the lower quartile out of a 15-strong comparator group)(1)
30% – mineral reserve replacement
100% reserve replacement (level of performance for 100% payout)
75% reserve replacement (level of performance for 25% payout)
Global Sukari reserve replacement was not achieved
20% – compound growth rate in EBITDA
3% CAGR on levels in 2016 (level of performance for 100% payout)
Maintain levels of EBITDA (level of performance for 25% payout)
31 December 2016: EBITDA US$332 million(2)
31 December 2019: EBITDA US$280 million
CAGR in EBITDA was not achieved
30% – compound growth in gold production
3% CAGR on levels in 2016 (level of performance for 100% payout)
Maintain levels of production (level of performance for 25% payout)
31 December 2016: gold production of 551k ounces
31 December 2019: gold production of 480k ounces
CAGR of gold production was not achieved
0%
0%
0%
0%
(1)
TSR against the comparator group was independently verified by Korn Ferry. 25% of award vests at median, full vesting at upper quartile
(2)
Due to a change in accounting policy see note 1.2.1 in the financial statements, published EBITDA in the 2016 financial statements has been adjusted to deduct E&E expenditure which is now expensed, rather than
capitalised, so the measure is on an equivalent basis.
Consequently, awards granted to Andrew Pardey and Ross Jerrard in 2017 will lapse as a result of not achieving the
performance conditions.
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Centamin Annual Report 2019
PSP award table (conditional awards) – Andrew Pardey
Award date and basis (1,2)
PSP 4 June 2017 (150% of salary)
PSP 27 June 2018 (150% of salary)
PSP 14 June 2019 (150% of salary)
Face value
of award at
grant date(3)
US$
952,668
1,021,363
990,411
Fair value of
award at
grant date(4)
in US$
824,560
696,320
778,942
End of
performance
period
31 Dec 2019
31 Dec 2020
31 Dec 2021
(1) There is nil cost for conditional awards which are subject to performance conditions.
Shares
granted
440,000
640,000
777,000
Total
Outcome
Of vest
nil
–
–
Total lapsed
in 2019
440,000
–
–
Awards held on
31 December
2019
0
640,000
777,000
(2)
Following the retirement of Andrew Pardey in October 2019, Andrew will be treated as a “good leaver” pursuant to the rules of the PSP. Therefore, his awards will be tested against the original performance conditions
and at their normal vesting date, with a pro rata reduction for the time of employment.
(3) The face value of the 2019 awards has been determined using the five day average share price up to the grant date (£1.007) and using an FX rate of $1.2658:£1
(4) The values of the awards are based on IFRS 2 valuation methodology set out in note 6.3 of the Financial Statements.
PSP award table (conditional awards) – Ross Jerrard
Award date and basis (1,2)
PSP 4 June 2017 (200% of salary)
PSP 27 June 2018 (150% of salary)
PSP 14 June 2019 (150% of salary)
Face value
of award at
grant date(3)
US$
Fair value of
award at
grant date(4)
in US$
909,365
813,899
786,466
787,080
554,880
618,542
End of
performance
period
31 Dec 2019
31 Dec 2020
31 Dec 2021
Shares granted Outcome Of Vest
420,000
510,000
617,000
Nil
–
–
Total lapsed in
2019
420,000
–
–
Awards held on
31 December
2019
–
510,000
617,000
(1) The performance conditions for the grant made in June 2017 have not been met in full as at 31 December 2019 therefore awards will not vest in June 2020.
(2) The performance conditions of the grant made on 14 June 2019 are set out on page 159 of this Remuneration Report.
(3) The face value of the 2019 awards has been determined using the five day average share price up to the grant date (£1.007) and using an FX rate of $1.2658:£1
(4) The values of the awards are based on IFRS 2 valuation methodology set out in note 6.3 of the Financial Statements.
Service contracts
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 service
contracts and 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 has a formal letter of appointment and there is no provision for payments for loss
of office.
Martin Horgan
Date of agreement
April 2020.
Notice period
Twelve months’ notice from either party.
No fixed expiry date as rolling contract.
Ross Jerrard
February 2019.
Twelve months’ notice from either party.
No fixed expiry date as rolling contract.
Expiry date
Pension
Benefits
Annual bonus
Termination payment
Martin Horgan does not receive a pension or a cash payment in lieu of a
pension and this will remain under review.
Ross Jerrard does not receive a pension or a cash payment in lieu of a
pension and this will remain under review.
Entitlement in accordance with the Remuneration Policy.
Entitlement in accordance with the Remuneration Policy.
Eligible to participate in an annual bonus arrangement as determined by
the Remuneration Committee from time to time.
Eligible to participate in an annual bonus arrangement as determined by
the Remuneration Committee from time to time.
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, Martin Horgan will be entitled to payment in lieu of
an amount equal to twelve months’ 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, Ross Jerrard will be entitled to payment in lieu of an
amount equal to twelve months’ 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.
Long-term incentives
Eligible to participate in the PSP.
Eligible to participate in the PSP.
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CORPORATE GOVERNANCE
REMUNERATION COMMITTEE REPORT CONTINUED
Shareholding guidelines (audited)
To encourage ownership of shares and thereby create a link of interest between shareholders and the executives, the Remuneration
Policy requires Executive Directors to build a holding of shares in the Company equivalent to 200% of base salary. Vested shares
awarded by the Company are included in the calculation.
The following table shows the current shareholding of each of the Directors in post as at 31 December 2019.
Name
Executive Directors(2)
Andrew Pardey(4)
Ross Jerrard
Non-Executive Directors(2)
Josef El-Raghy
Edward Haslam
Mark Arnesen
Mark Bankes
Alison Baker
Dr Ibrahim Fawzy
Sally Eyre
Catharine Farrow
Marna Cloete
As at
31 December 2019
Unvested awards(1)
Balance
Percentage
of base salary(3)
3,712,268
1,477,000
10,500,000
127,056
49,000
190,000
0
0
0
0
15,000
1,417,000
1,127,000
2,295,268
350,000
558%
105%
0
0
0
0
0
0
0
0
0
10,500,000
127,056
49,000
190,000
0
0
0
0
15,000
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
(1) Of the Executive Directors’ unvested shares, all are subject to performance conditions.
(2) For Ross Jerrard, the Balance of shares includes 350,000 shares which are subject to the two year holding period under the terms of the PSP.
(3) For Andrew Pardey, the Balance of shares includes 464,520 shares which are subject to the two year holding period under the terms of the PSP.
(4) No Non-Executive Directors hold shares, share options or awards that are subject to performance measures.
The valuations of the shareholdings are based on the share price at 31 December 2019 of 127p.
As explained above, Andrew will be treated as a “good leaver” pursuant to the rules of the PSP and will remain an employee of Centamin until October 2020. Therefore, his awards will be tested against the targets at their
normal vesting date, with a pro rata reduction in award value applying.
The Company does not currently have a policy on post-cessation holding requirements but continues to monitor the market response
and shareholder views on this topic and will keep its approach under regular review. The Committee also notes that the PSP rules
have a two year deferral period which continues following the departure of an executive. There has been no change to Directors’
shareholdings from 31 December 2019 to the date of this report.
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Centamin Annual Report 2019
Performance graph and CEO remuneration table
The graph below compares the TSR of the Company to the FTSE 250 and the FTSE Gold Mine indices. The graphs show the return
for the last eight years. The indices were chosen to allow shareholders to compare the Company’s performance against other peers
considered relevant for these purposes.
250
200
150
100
50
$
S
U
0
2011
Centamin
FTSE Gold Mine
FTSE 250
2012
2013
2014
2015
2016
2017
2018
2019
The Remuneration Committee considers that these indices are appropriate comparators of the Company for this purpose. We have
reflected details of the CEO pay from 2011, when Centamin plc was incorporated:
Chairman – Josef El-Raghy
2011 (Chairman/CEO)
2012 (Chairman/CEO)
2013 (Chairman/CEO)
2014 (Chairman/CEO)
2015 (Chairman)
CEO – Andrew Pardey
2016
2017
2018
2019
Interim CEO – Ross Jerrard
2019
Single figure
remuneration
US$1,290,742
US$1,920,644
US$2,020,562
US$2,073,192
US$1,862,338
Single figure
remuneration
US$1,205,892
US$3,096,791
US$1,144,053
US$1,020,730
Annual bonus as
% of maximum
Long-term incentives
vesting in year as
% of maximum
65%
80%
75%
80%
70%
n/a
n/a
n/a
n/a
n/a
Annual bonus as
% of maximum
Long-term incentives
vesting in year as
% of maximum
77%
78%
Bonus waived
30%
0%
0%
100%
40%
Single figure remuneration
Annual bonus as
% of maximum
Long-term incentives
vesting in year as
% of maximum
US$57,701
63%
40%
The CEO pay from 2012 to 2014 reflects the total remuneration for Josef El-Raghy while he held the position of CEO and Chairman.
Andrew Pardey was appointed CEO from 1 February 2015 and retired on 13 December 2019. Ross Jerrard was appointed Interim CEO
on 13 December 2019 and held the post of Interim CEO as at the date of this report.
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REMUNERATION COMMITTEE REPORT CONTINUED
Percentage change in remuneration (unaudited)
The Company has chosen the comparator group to be all the employees of the Centamin Group (excluding Non-Executive Directors):
Comparator group(1)
Centamin’s Chief Executive Officer(2)
(1) Based on the average number of employees based in Egypt in 2019: 1,374 (2018: 1,380 employees).
(2) Based on the US$ amount disclosed in the single figure table.
Percentage change
in salary between
2018 and 2019
Percentage change
in benefits between
2018 and 2019
Percentage change
in bonus between
2018 and 2019
20%
-3%
17%
-3%
8%
47%
Relative spend on pay
The following table proves an illustration of the relative spend on pay to place the Directors’ pay in the context of the wider Group
finances:
Between 2018 and 2019
Comparator group(1)
Remuneration of Centamin’s Executive Directors
Remuneration of Centamin’s Non-Executive Directors
Distributions to Centamin shareholders(2)
Percentage change
Spend on pay $’million
19%
-18%
78%
82%
27.9
2.08
1.02
116
(1) Based on the average number of employees based in Egypt in 2019: 1,374 (2018: 1,380 employees).
(2) The percentage change relates to distributions to shareholders based on the amount paid during 2018 and 2019.
Centamin is not required to report under the Equality Act 2010 (Gender Pay Gap Information) Regulations 2017 as only a few members
of staff are either UK tax residents or have a UK nexus. The majority of the workforce is based in Egypt. Similarly, Centamin is not
required to publish the ratio of the CEO’s pay to that of the workforce.
Other than the paid and declared dividends during the year, there have been no other shareholder related returns of capital or share
buy backs by the Company.
Long-term incentive arrangements
Introduction
Centamin introduced a long-term incentive scheme (the “Performance Share Plan”, or “PSP”) which was approved by shareholders
at the AGM on 18 May 2015 and amended at the AGM on 8 April 2019. The PSP provides a suitable recruitment and retention tool
for any new or promoted executives and incentivise Executive Directors and senior management. The PSP takes due account of
best practice guidelines and provides a platform, as part of the Remuneration Policy, to be used to provide a long-term reward tool
for participants. Following the adoption of the PSP, the Company has granted a number of awards, with those granted from 2016
summarised below:
June 2018
4,908,000 conditional awards to employees of the Group. The awards granted on 27 June 2018 will vest in 27 June 2021 (with 50%
of the vested shares deferred for a further two years) and will be subject to satisfaction of the following performance conditions over the
three-year financial period ended 31 December 2020:
• TSR: 40% of the award – vs a bespoke Group of listed mining peers (median vesting 25% of award, upper quartile full vesting);
• EBITDA (adjusted for non-cash impairments and non-recurring items): 20% of the award – if a compound annual growth rate
of 3.5% of EBITDA is achieved by 2020, all 20% of the award tranche shall vest. If EBITDA in 2020 is maintained at the levels
achieved in 2017, 25% of the award tranche shall vest; and
• gold production: 40% of the award – shall be assessed by reference to compound growth in gold production over the three year
period to December 2020. If a compound annual growth rate of 3.5% of gold production is achieved by 2020, all 40% of the award
tranche shall vest. If gold production in 2020 is maintained at the levels achieved in 2017, 25% of the award tranche shall vest.
In total, 40 employees participate in the PSP, including heads of department and senior personnel based on site, as well as members
of the senior management team located at the head office.
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Centamin Annual Report 2019
June 2019 (Audited)
4,845,000 conditional awards to employees of the Group. The awards granted on 14 June 2019 will vest in 14 June 2022 (with all of
the vested shares subject to a two year holding period) and will be subject to satisfaction of the following performance conditions over
the three-year financial period ended 31 December 2021:
• TSR: 50% of the award – vs a bespoke Group of listed mining peers (median vesting 25% of award, upper quartile full vesting);
• Free cash flow (generated over the Sukari Concession Agreement in 2021): 25% of the award – if free cash flow of US$110m is
achieved in 2021, all 20% of the award tranche shall vest. If free cash flow in 2021 is US$65m, 25% of the award tranche shall
vest; and
• Gold production: 25% of the award – shall be assessed by reference to gold production in 2021. If gold production of 590k ounces
is achieved in 2021, all 25% of the award tranche shall vest. If gold production in 2021 is 510k ounces, 25% of the award tranche
shall vest.
June 2020
The awards are intended to be granted in June 2020 will vest in June 2023 (with all of the vested shares subject to a two year holding
period) and will be subject to satisfaction of the following performance conditions over the three-year financial period ended 31
December 2022:
• TSR: 50% of the award – vs a bespoke Group of listed mining peers (median vesting 25% of award, upper quartile full vesting);
• Free cash flow (generated over the Sukari Concession Agreement in 2021): 25% of the award – if free cash flow of US$70m is
achieved in 2022, all 20% of the award tranche shall vest. If free cash flow in 2022 is US$45m, 25% of the award tranche shall
vest; and
• Gold production: 25% of the award – shall be assessed by reference to gold production in 2022. If gold production of 550k ounces
is achieved in 2022, all 25% of the award tranche shall vest. If gold production in 2022 is 500k ounces, 25% of the award tranche
shall vest.
Payment to past Directors (audited)
There were no payments to past Directors of the Company.
Payments for loss of office (audited)
There were no payments to Directors for loss of office. Details of the approach that it is currently envisaged will be taken in relation to
Andrew Pardey’s retirement are as follows:
• Andrew Pardey notified the Board of his intention to retire on 2 October, with his notice period commencing on that date
• Andrew received his base salary and benefits up to the 13 December 2019 when he stepped down from the Board
• At this point Andrew was placed on gardening leave until the expiry of his notice period in October 2020 during which he will
continue to receive his salary and benefits
• As noted above, Andrew will receive a bonus for performance in relation to the full year of his employment in 2019. He will not be
entitled to receive a bonus for 2020
• Following the retirement of Andrew Pardey in October 2019, Andrew will be treated as a “good leaver” pursuant to the rules of
the PSP. Therefore, his awards will be tested against the original performance conditions and at their normal vesting date, with a
pro rata reduction for the time of employment. However, Andrew will not be granted a PSP award in 2020
Centamin Annual Report 2019
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REMUNERATION COMMITTEE REPORT CONTINUED
The Committee
The Remuneration Committee is a committee of the Company represented by three independent Non-Executive Directors, namely
Edward Haslam (Chairman of the Committee), Mark Arnesen and Dr Sally Eyre. No member of the Committee has any financial
interest, other than as shareholder and Non-Executive Director fees for being on the committee, in the matters decided by the
Committee. None of the members of the Committee participate in any bonus scheme, long-term incentive, pension or other form
of remuneration other than the fees disclosed in this report. There is no actual or potential conflict of interest arising from the other
directorships held by members of the Committee. 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, attend meetings when
their own remuneration is under consideration.
Committee members
Edward Haslam (Chairman of the Committee)
Mark Arnesen
Mark Bankes
Sally Eyre
Joined
Attendance in 2019
2011
2011
2017
2019
4 of 4
4 of 4
1 of 1
3 of 3
Activities of the Committee
The Committee met four times during the year and also approved two sets of resolutions by way of written resolution. The business
conducted during the year is set out below:
Date of activity
Summary of activity
January 2019
March 2019
April 2019
June 2019
August 2019
Finalise executive bonus performance outcomes and Directors’ Remuneration Report. Review of governance updates and industry trends as well as
investor and stewardship remuneration policies. Finalise 2019 financial and measurable targets and individual KPIs for the executive. Review executive
contracts ensuring adequacy of malus and clawback provisions, consistency with Remuneration Policy and updates to align with the market.
Review and respond to shareholder, proxy and stewardship feedback ahead of the 2019 AGM.
Approval of the Committee’s actions to address the significant minority votes against the Remuneration Report and welcome the significant
majority of votes in favour of the Remuneration Policy.
Review and approval of grants and application of the updated performance share plan.
Interim review of performance conditions for executive
December 2019
Conducting performance reviews for the executive and management, taking account of the objectives set at the beginning of the year.
• Review of outgoing CEO pay, based on policy;
• Incumbent CEO pay / bonus / share plan options;
• Review pay structure for deputy chair; and
• Consider stakeholder engagement planning.
January/February 2020
Prepare and finalise the Directors’ Remuneration and Report Policy in line with the shareholder consultation and committee and Board
recommendations.
Finalise the 2019 bonus and PSP outcome.
Finalise the 2020 bonus criteria, taking account of the individual’s objectives, the Company’s priorities and workforce targets.
Finalise the 2020 PSP performance conditions.
Agree the remuneration arrangements for Martin Horgan.
Advice provided to the Committee
Korn Ferry was appointed by the Committee in 2018 following a competitive tender process to provide independent advice on
remuneration matters. Representatives from Korn Ferry attend certain Committee meetings and provide advice and briefings to the
Committee Chairman outside of meetings as necessary. Fees are charged on a cost incurred basis and the fees charged by Korn Ferry
in the year ended 31 December 2019 totalled GBP£33,921. Korn Ferry is a member of the Remuneration Consultants Group and
operates voluntarily under the Group’s code which sets out the scope and conduct of the role of executive remuneration consultants
when advising UK listed companies. Korn Ferry is also supporting the Company in connection with the recruitment if a new CEO.
This support is provided by entirely separate team independent from the team advising the Committee. As a result, the Committee is
satisfied that the advice provided on matters of remuneration remains objective and independent.
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Centamin Annual Report 2019
Shareholder voting at the AGM
At the AGM of the Company on 8 April 2019 the following votes for and against the adoption of the Remuneration Report and Policy
were as follows:
Approval of the Remuneration Report
Approval of the Remuneration Policy
For
Against
529,996,129 (66.3%)
269,318,181 (33.7%)
788,094,546 (98.6%)
11,189,768 (1.4%)
Withheld
2,568,087
2,598,083
As explained above, the Committee was disappointed that a minority of shareholders voted against the Remuneration Report
resolution, due to some investors’ concerns regarding the operation of the annual bonus plan in 2018 (e.g. the portion of the bonus
that was payable for achieving a target level of performance). The Committee believes that these issues were addressed as part of the
policy review process and, consequently, do not feature in the annual bonus plan going forward.
Policy implementation in 2020
The Committee intends to adopt the following approach to remuneration in 2020:
Base salary
Martin Horgan’s salary on joining will be £485,000. Ross Jerrard will receive a 3% increase to his base salary in line with the increase
in cost of living, resulting in his base salary increasing to £427,012. In addition, to reflect his appointment as Interim CEO (announced
in December 2019), Ross continued to receive a salary supplement of £107,600 pa pro rata to the period of time that he fulfilled this
role (calculated by reference to the difference in Ross and Andrew’s base salaries in 2019). This salary supplement will be taken into
account when determining Ross’s 2020 bonus outturn but not his PSP awards. Andrew Pardey’s salary will not be increased.
Pension/other benefits
No changes will be made to the approach adopted in the past i.e. no Executive Director will receive a pension.
Annual bonus
Annual bonus opportunity for Ross Jerrard will remain unchanged at 125% of salary. Martin Horgan’s bonus opportunity will also be
125% of salary. Andrew Pardey will not participate in the bonus plan.
As was the case last year:
• 70% of the bonus opportunity will be based on financial/objectively measurable targets, namely production (assessed by reference
to both volume and safety record via LTIFR), adjusted EBITDA, sustaining and direct operating costs, non-sustaining costs and
capital projects;
• the remaining 30% will be based on personal/strategic targets; and
• the net amount of any bonus earned in excess of 75% of salary will be applied in the acquisition of shares which must be retained
for two years.
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REMUNERATION COMMITTEE REPORT CONTINUED
Further detail of the 2020 bonus structure is set out below:
Financial and objectively measurable
Individual KPIs
Notes to table:
Performance measure
Weighting
Production
LTIFR (global)
Adjusted EBITDA
Sustaining and direct operating costs
Non-sustaining and capital projects
Balanced scorecard
10%
10%
10%
22.5%
17.5%
70%
30%
•
•
Threshold achievement represents 25% of the bonus opportunity for the respective performance measure.
Target achievement represents 62.5% of the bonus opportunity for the respective performance measures (as explained in the Remuneration Committee Chairman’s letter).
• Maximum achievement represents 100% of the bonus opportunity for the respective performance measure.
•
Adjusted EBITDA will be per the published Non-GAAP measures.
As explained in last year’s report, 62.5% of maximum is payable for target performance. This approach should be considered in light
of a number of factors such as; i) the bonus maximum of 125% of salary is relatively modest for a company of Centamin’s size and
complexity and, therefore a 62.5% of maximum payout for target performance, when expressed as a percentage of salary, is within
the bandwidth of typical target bonus payouts offered by other similar sized companies that offer a higher bonus maximum; ii) when
considered in the round, the Executive Directors’ total target remuneration in aggregate reflects the appropriate amount when taking
account of the market in which the Company operates and companies of a similar size and complexity, even with the 62.5% target
payout under the bonus; iii) the robust approach that applies to the bonus structure (e.g. bonus deferral, significant weighting on
financial targets, detailed target disclosure etc); and iv) the fact that the target level of performance that, if achieved, would result in
a 62.5% of maximum payout will, across the performance measures, be stretching.
Due to commercial sensitivity, the Committee does not believe it in shareholders’ interests to provide more detailed prospective
disclosure of the bonus targets. It is also important to note that whilst Ross undertook the role of Interim CEO, he carried out additional
duties and responsibilities to his role as CFO. Upon appointment of Martin Horgan as the new CEO, the Remuneration Committee will
prepare a revised balance scorecard for both CEO and CFO roles. Further detail will be provided in next year’s report.
Performance Share Plan ("PSP")
Ross Jerrard will receive a PSP award over shares worth 150% of salary, reflecting the approach adopted last year. Martin Horgan will
receive an initial award on joining over shares worth 200% of salary, with the intention that his future awards in 2021 and onwards be
at the 150% level. The Committee considers this higher initial award for Martin (which is allowed under our existing policy) is entirely
appropriate, noting that (i) the award will provide an immediate alignment of his interests with those of shareholders (ii) challenging
performance targets will be applied to the award which will be subject to a two year post-vesting holding period, (iii) the Committee has
taken a considered approach to the other elements of Martin’s remuneration (e.g. a base salary below that of his predecessor) and (iv)
no additional buy-out awards have been necessary to secure Martin’s recruitment. Andrew Pardey will not receive an award.
Awards will vest based upon a blend of three-year relative TSR, cash flow and production targets. Also, reflecting the new policy, these
awards will be subject to a full two year post vesting holding period.
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Centamin Annual Report 2019
More particularly, the targets applied to this award are as follows:
Metric
Relative TSR vs bespoke mining peer group
Free cash flow
Gold production
Notes:
Unit
Weighting
$’million
’000 ounces
50%
25%
25%
Threshold
(25% vesting)
Stretch
(100% vesting)
Median
Upper quartile
45
500
70
550
•
•
•
•
The bespoke mining peer group will comprise 27 relevant comparator companies.
The Remuneration Committee will assess performance based on gold produced in 2022 over the Sukari concession.
The Remuneration Committee will assess performance based on free cash flow generated over the Sukari Concession Agreement in 2022.
Free cash flow is a Non-GAAP measure and the Remuneration Committee will apply a retrospective adjustment for any non-sustaining capex that has not been considered as part of the estimate. Dividends payable to
CEY shareholders have not been included in this estimate.
Non-Executive Directors
No changes to the fees of the Non-Executive Directors will be made for 2020, except to reflect recent changes in responsibilities
and/or committee chairmanship or membership. The combined fee for a Deputy Chair and Senior Independent Director will no longer
apply in 2020 however, there will be a separate additional fee of £10,000 per annum for the Independent Director who undertakes the
role of Senior Independent Director.
This report was approved by the Board of Directors and signed on its behalf by:
Edward Haslam
Chairman of the Remuneration Committee
18 May 2020
Centamin Annual Report 2019
163
> Strategic Report> Overview> Financial Statements> Corporate Governance> Shareholder Information FINANCIAL STATEMENTS
OFFERING
SHAREHOLDERS
PURE GOLD
EXPOSURE
THROUGHOUT
THE CYCLE
FINANCIAL STATEMENTS
Directors’ Responsibilities
Independent Auditor’s Report
Consolidated Statement of
Comprehensive Income
Consolidated Statement of
Financial Position
Consolidated Statement of
Changes in Equity
Consolidated statement of
Cash Flows
Notes to the Consolidated
Financial Statements
166
167
172
173
174
175
176
164
164
Centamin Annual Report 2019
Centamin Annual Report 2019
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SUSTAINABLE AND
FUTURE GROWTH
Our strong balance sheet and future cash flow potential
enables significant capital to be re-invested in the
business for sustainability and future growth, as well as,
maintaining our industry leading shareholder returns.
Centamin Annual Report 2019
Centamin Annual Report 2019
165
165
FINANCIAL STATEMENTS
DIRECTORS’ RESPONSIBILITIES
for the year ended 31 December 2019
DIRECTORS’ RESPONSIBILITIES IN RESPECT OF THE ANNUAL REPORT
AND FINANCIAL STATEMENTS
The Directors are responsible for preparing the Annual Report
and the financial statements in accordance with applicable law
and regulations.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law the Directors
have prepared the Group financial statements in accordance with
IFRS as adopted by the European Union. Under company law the
Directors must not approve the Group financial statements 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 the financial statements, the Directors are
required to:
• select suitable accounting policies and then apply
them consistently;
• state whether applicable IFRS as adopted by the European Union
have been followed, subject to any material departures disclosed
and explained in the financial statements;
• make judgments and accounting estimates that are reasonable
and prudent; and
• prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Group will continue
in business.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Group’s
transactions and disclose with reasonable accuracy at any time
the financial position of the Group and enable them to ensure that
the financial statements and the Directors’ Remuneration Report
comply with the Companies (Jersey) Law, 1991.
The Directors are also responsible for safeguarding the assets
of the Group and hence 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 Company’s website. Legislation in the United Kingdom and
Jersey governing the preparation and dissemination of financial
statements may differ from legislation in other jurisdictions.
The Directors consider that the Annual Report and financial
statements, taken as a whole, are fair, balanced and
understandable and provides the information necessary for
shareholders to assess the Group’s position and performance,
business model and strategy.
The Directors have undertaken a robust assessment of the
principal risks impacting the Company. The assessment
identified strategic and operational risks at a corporate level
and principal risks impacting our operations in Egypt and West
Africa. Details of the risk assessment can be found in the Audit
and Risk Committee report on pages 136 and 138 and the risk
management and principal risks section of the Strategic Report
on pages 66 to 81.
The Board receives written assurances from the CFO and Senior
Management 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 CFO and
Senior Management 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
PricewaterhouseCoopers LLP, independent auditor, who
was given unrestricted access to all financial records and
related information, including minutes of all shareholder,
Board and committee meetings.
The financial statements were authorised by the Board of
Directors for issue and signed on their behalf by Ross Jerrard
(CFO) and Darren Le Masurier (Company Secretary) on
18 May 2020.
Each of the Directors, whose names and functions are listed
in the Governance Report, confirm that, to the best of their
knowledge:
• the Group financial statements, which have been prepared in
accordance with IFRS as adopted by the European Union, give
a true and fair view of the assets, liabilities, financial position
and profit of the Group; and
• the Strategic and Governance Report includes a fair review
of the development and performance of the business and
the position of the Group, together with a description of the
principal risks and uncertainties that it faces.
In the case of each Director in office at the date the Governance
Report is approved:
• so far as the Director is aware, there is no relevant audit
information of which the Group’s auditor is unaware; and
• they have taken all the steps that they ought to have taken as
a Director in order to make themselves aware of any relevant
audit information and to establish that the Group’s auditor is
aware of that information.
On behalf of the Board:
Ross Jerrard
Chief Financial Officer
Director
Darren Le Masurier
Company Secretary
On behalf of the Board
18 May 2020
18 May 2020
166
Centamin Annual Report 2019
FINANCIAL STATEMENTS
INDEPENDENT AUDITOR’S REPORT
to the members of Centamin plc
REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS
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 2019 and of its profit and cash flows for the year
then ended;
• have been properly prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European
Union; and
• have been prepared in accordance with the requirements of the Companies (Jersey) Law 1991.
We have audited the financial statements, included within the Annual Report, which comprise: the consolidated statement of financial
position as at 31 December 2019; the consolidated statement of comprehensive income, the consolidated statement of cash flows,
and the consolidated statement of changes in equity for the year then ended; and the notes to the financial statements, which include
a description of the significant accounting policies.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our
responsibilities under ISAs (UK) are further described in the Auditors’ responsibilities for the audit of the financial statements section of
our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Independence
We remained independent of the group in accordance with the ethical requirements that are relevant to our audit of the financial
statements in the UK, which includes the FRC’s Ethical Standard, as applicable to listed entities, and we have fulfilled our other ethical
responsibilities in accordance with these requirements.
Our audit approach
Overview
• Overall group materiality: $8.8 million (2018: $10.5 million), based on 5% of three-year average profit before tax.
• We focused our audit procedures on the Sukari Gold Mine, as well as performing audit procedures over the
group’s significant exploration operations and corporate activities. One component was subject to an audit
of its complete financial information whilst a further four were subject to specific audit procedures over
material balances. Audit procedures were performed in Egypt and Jersey.
• All audit work on key audit matters was performed by the group engagement team.
Key audit matters
• Ongoing legal actions which are under appeal before the Supreme Administrative Court in Egypt
concerning the validity of the Sukari Concession Agreement and the claim before the Administrative Court
concerning diesel fuel disputes.
• Amounts due to the government with respect to the Sukari operation.
• Impairment of property, plant and equipment.
• Going concern assessment in light of COVID-19 impact.
The scope of our audit
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements.
In particular, we looked at where the directors made subjective judgements, 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 testing journals and evaluating
whether there was evidence of bias by the directors that represented a risk of material misstatement due to fraud.
Key audit matters
Key audit matters are those matters that, in the auditors’ professional judgment, were of most significance in the audit of the financial
statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud)
identified by the auditors, including those which had the greatest effect on: the overall audit strategy; the allocation of resources in the
audit; and directing the efforts of the engagement team. These matters, and any comments we make on the results of our procedures
thereon, were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we
do not provide a separate opinion on these matters. This is not a complete list of all risks identified by our audit.
Centamin Annual Report 2019
167
> Strategic Report> Overview> Financial Statements> Corporate Governance> Shareholder Information FINANCIAL STATEMENTS
INDEPENDENT AUDITOR’S REPORT CONTINUED
to the members of Centamin plc
Key audit matter
Ongoing legal actions
The appeal before the Supreme Administrative Court in Egypt concerning the
validity of the Sukari Concession Agreement
Refer to page 210 (note 5.1 to the financial statements) and page 78 (Principal risks).
The group 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 may be significantly
reduced and there is, therefore, a risk of material impairment of non-current assets
at Sukari, which has a carrying value of $889 million at 31 December 2019.
The outcome of this matter is subject to significant uncertainty due to the political,
social and economic environment in Egypt.
The claim before the Administrative Court concerning diesel fuel disputes
Refer to page 209 (note 5.1 to the financial statements) and page 78 (Principal risks).
The group is involved in an ongoing legal case relating to historical and current fuel
subsidies in Egypt. The potential amount that could be recouped by the group relating
to the current subsidy case is $362.9 million and the potential amount that the group
could have to pay if they lose the historical case is approximately $25.3 million as at
31 December 2019.
To date, the group has booked a provision with respect to the $362.9 million fuel
payment, but has not provided for the historical $25.3million, based on internal
and external assessments of the merits of the case, but has made disclosure of a
contingent liability.
The group has disclosed the impact of the current subsidy case, being the difference
between international and subsidised diesel prices that has impacted the group’s
results for the year, in note 2.8 to the financial statements. No contingent asset has
been recognised.
Amounts due to the government with respect to the Sukari operation
How our audit addressed the key audit matter
We discussed the cases with the group’s external legal advisors and obtained legal
letters, and read correspondence and related documentation, including the Concession
Agreement, to understand the legal challenge and the basis of the directors’
assessment of the likely outcome of the cases.
We assessed the competence and objectivity of the external legal advisors by
considering factors including professional qualifications and fee arrangements. These
procedures satisfied us that the external legal advisors were competent and objective.
The appeal before the Supreme Administrative Court in Egypt concerning the
validity of the Sukari Concession Agreement
Based on our work summarised above, we determined that the directors had reflected
all available information in their assessment.
The claim before the Administrative Court concerning diesel fuel disputes.
We agreed the current year payments and the corresponding provision to the underlying
accounting records. The results of the procedures we performed support the directors’
accounting treatment, under which no additional liability was recognised in respect of
the $25.3 million historical case and no contingent asset was recognised in respect of
the current subsidy case.
We agreed the disclosures for both of these matters in note 2.8 and 5.1 to the financial
statements and concluded that they are consistent with our understanding.
Refer to page 183 (note 2.1 to the financial statements), page 188 (note 2.4 to the
financial statements) and page 76 (Principal risks).
The nature of the Concession Agreement means that there are items that can be open
to interpretation. As a result, the group is subject to periodic challenges by Egyptian
Mineral Resource Authority (‘EMRA’) on amounts owed under the Agreement.
The amounts owed to EMRA with respect to the profit sharing arrangement under the
Concession Agreement are based on management’s best judgment of the probable
amount of the profit share liability.
As at 31 December 2019 the group has accrued and paid dividends to the non-
controlling interest in SGM of $87.1 million as the result of the profit sharing and cost
recovery mechanisms under the Concession Agreement, which we considered merited
our focus due to its size and nature.
We held discussions with management regarding its calculation of the amount due
to EMRA. We agreed the amounts in the calculation to source documentation and the
underlying accounting records.
We read the minutes of meetings with EMRA and held discussions with the group’s
external legal advisors regarding the current disputed items and obtained a legal letter.
We assessed management’s estimate of the likely outcome of items currently in dispute to
satisfy ourselves that amounts due to EMRA had been appropriately recorded.
We performed procedures to ensure the completeness of amounts due to EMRA, with no
material unrecorded amounts identified.
We agreed the disclosures in notes 2.1 and 2.4 to the financial statements to ensure
they were consistent with the knowledge and understanding of the matter obtained in
the course of the audit.
Impairment of property, plant and equipment
Refer to page 179 (note 1.3.2 to the financial statements) and page 80 (Principal
risks).
The group has material property, plant and equipment of US$804.7 million as at 31
December 2019, primarily contained within the Sukari cash generating unit (“Sukari”).
Management performed an impairment assessment based on the latest reserves and
resources estimate and the life of mine plan as at 31 December 2019. Management
determined that the recoverable amount of Sukari exceeds the carrying value.
The determination of recoverable amount was based on the fair value less costs to
dispose, which was higher than value-in-use. The estimate of the recoverable amount
of Sukari requires significant estimation on the part of management. Management
considered the key assumptions to be long-term gold price, the in-situ resource
multiple and short-term production volumes. Management sensitised the 2020
production volume, gold price forecast and in-situ multiple and concluded that
any reasonably possible changes in these assumptions in isolation do not lead to
impairment of the carrying value.
Management used internal experts to prepare the reserves and resources estimate for
Sukari. We assessed the competence of the internal expert by considering their professional
qualifications. We held discussions with the expert regarding the key judgements and
estimates taken during the preparation of the reserves and resources statements.
We used our valuation experts to assist us in evaluating the appropriateness of the
gold price, discount rate and the in-situ resource multiple.
In assessing the valuation of Sukari as at 31 December 2019, we evaluated
management’s future cash flow forecasts, and the process by which they were
drawn up, including checking the mathematical accuracy of the cash flow models
and agreeing future capital and operating expenditure to the latest Board approved
budgets and the latest approved life of mine plan. We assessed the reasonableness
of management’s future forecasts included in the cash flow forecasts in light of the
historical accuracy of such forecasts and the current operational results. As a result of
this assessment, we performed sensitivity analysis around the key assumptions within
the cash flow forecasts using a lower production profile, lower gold prices and lower
in-situ resource multiple, based on what, in our view, a market participant may apply.
Our sensitivity analysis highlighted that the estimate of the recoverable amount of
Sukari is sensitive to changes in key assumptions, but a reasonable possible change
in these assumptions in isolation did not remove headroom or result in impairment.
We satisfied ourselves that this sensitivity was appropriately highlighted within the
disclosures in note 1.3.2.
168
Centamin Annual Report 2019
Key audit matter
How our audit addressed the key audit matter
We obtained management’s evaluation of the cash flow forecasts for the next 12
months. We tested the integrity of the forecast model, including the mathematical
accuracy, and agreed the assumptions used to the approved budget and mine plan and
checked for consistency with the models used for impairment. We agreed the opening
cash balance per management’s model to the underlying accounting records.
We critically evaluated management’s downside sensitivities and agreed that these
represented severe but plausible scenarios. We considered the impact of the downside
sensitivities on the group and the directors’ disclosures thereon.
Based on the work performed, we consider that management’s conclusion on going
concern to be appropriate. We also assessed the adequacy of the disclosure provided in
note 1.3.7 of the financial statements and considered this to be acceptable.
Going concern assessment in light of COVID-19 impact
Refer to page 181 (note 1.3.7 to the financial statements) and page 76 (Principal
risks).
The monetary effects of the COVID-19 pandemic have stressed financial systems
and significant parts of the world’s major economies are being negatively impacted.
As part of its going concern assessment, management has performed a risk
assessment of the potential impact on the business, focussing on immediate
measures to preserve the health and safety of employees, supply chain and
production and exploration activity at Sukari and West Africa as well as ongoing
trading with a single customer, Asahi Refining Canada Ltd.
As part of this assessment, management has prepared a 12 month cash flow
forecast which includes a number of severe but plausible downside sensitivities, in
order to assess the risk to going concern.
The group’s performance in the year to date has remained substantially unaffected by
the impact of COVID-19, and is currently significantly better than the performances
modelled by management in the downside scenarios. In terms of their assessment,
management believe that reduced processing or reduced mining activities to be the
likely scenario that will occur, with all activities suspension unlikely to occur.
In all of the downside scenarios, the group had positive closing liquidity, and we
note that the group has no debt, therefore no covenants are in place. Management
consider that they can sufficiently mitigate the decline in earnings and cash flows
in their downside scenarios through the introduction of broad-based cost savings
initiatives, Capex and Opex saving programmes and working capital reduction, all of
which are in their control. Accordingly, the financial statements have been prepared
on a going concern basis.
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 structure of the group, the accounting processes and controls, and the industry in which it
operates.
The group’s principal operation is the Sukari Gold mine in Egypt. In addition to the mine the group continues its exploration projects in
Burkina Faso and Côte d’Ivoire.
Our group audit scope focused primarily on the Sukari Gold mine which was subject to a full-scope audit. Specific audit procedures
were performed over material balances for four components relating to the group’s exploration operations and corporate activities. We
visited the Sukari mine and conducted audit fieldwork in Egypt and Jersey. During these visits, we observed and discussed mining and
exploration operations with local management and held discussions with the group’s external in-country legal counsel who are based
in Cairo.
Furthermore, we performed work over the consolidation of the group’s components and the parent company.
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 on the individual financial statement line items and disclosures and in evaluating the effect of misstatements, both
individually and in aggregate 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
$8.8 million (2018: $10.5 million)
5% of three-year average profit before tax.
We chose profit before tax as it is one of the key indicators of the financial performance of the group. We used a three-year
average due to the volatility of annual gold production.
For each component in the scope of our group audit, we allocated a materiality that is less than our overall group materiality. The range
of materiality allocated across components was between $1.0 million and $7.8 million.
We agreed with the Audit and Risk Committee that we would report to them misstatements identified during our audit above $440,000
(2018: $525,000) as well as misstatements below that amount that, in our view, warranted reporting for qualitative reasons.
Centamin Annual Report 2019
169
> Strategic Report> Overview> Financial Statements> Corporate Governance> Shareholder Information FINANCIAL STATEMENTS
INDEPENDENT AUDITOR’S REPORT CONTINUED
to the members of Centamin plc
Going concern
In accordance with ISAs (UK) we report as follows:
Reporting obligation
Outcome
We are required to report if we have anything material to add or draw attention to
in respect of the directors’ statement in the financial statements about whether the
directors considered it appropriate to adopt the going concern basis of accounting in
preparing the financial statements and the directors’ identification of any material
uncertainties to the group’s ability to continue as a going concern over a period of at
least twelve months from the date of approval of the financial statements.
However, because not all future events or conditions can be predicted, this statement
is not a guarantee as to the group’s ability to continue as a going concern. For further
details please refer to the respective key audit matter.
We are required to report if the directors’ statement relating to Going Concern in
accordance with Listing Rule 9.8.6R(3) is materially inconsistent with our knowledge
obtained in the audit.
We have nothing material to add or to draw attention to.
We have nothing to report.
Reporting on other information
The other information comprises all of the information in the Annual Report other than the financial statements and our auditors’ report
thereon. The directors are responsible for the other information. Our opinion on the financial statements does not cover the other
information and, accordingly, we do not express an audit opinion or, except to the extent otherwise explicitly stated in this report, any
form of assurance thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider
whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or
otherwise appears to be materially misstated. If we identify an apparent material inconsistency or material misstatement, we are
required to perform procedures to conclude whether there is a material misstatement of the financial statements or a material
misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of
this other information, we are required to report that fact. We have nothing to report based on these responsibilities.
Based on the responsibilities described above and our work undertaken in the course of the audit, ISAs (UK) and the Listing Rules
of the Financial Conduct Authority (FCA) require us also to report certain opinions and matters as described below (required by ISAs
(UK) unless otherwise stated).
The directors’ assessment of the prospects of the group and of the principal risks that would threaten the solvency or liquidity of the group
We have nothing material to add or draw attention to regarding:
• The directors’ confirmation on page 82 of the Annual Report that they have carried out a robust assessment of the principal risks facing the group, including those that
would threaten its business model, future performance, solvency or liquidity.
• The disclosures in the Annual Report that describe those risks and explain how they are being managed or mitigated.
• The directors’ explanation on page 82 of the Annual Report as to how they have assessed the prospects of the group, over what period they have done so and why they
consider that period to be appropriate, and their statement as to whether they have a reasonable expectation that the group will be able to continue in operation and meet
its liabilities as they fall due over the period of their assessment, including any related disclosures drawing attention to any necessary qualifications or assumptions.
We have nothing to report having performed a review of the directors’ statement that they have carried out a robust assessment of the principal risks facing the group and
statement in relation to the longer-term viability of the group. Our review was substantially less in scope than an audit and only consisted of making inquiries and considering
the directors’ process supporting their statements; checking that the statements are in alignment with the relevant provisions of the UK Corporate Governance Code (the
“Code”); and considering whether the statements are consistent with the knowledge and understanding of the group and its environment obtained in the course of the audit.
(Listing Rules)
Other Code Provisions
We have nothing to report in respect of our responsibility to report when:
• The statement given by the directors, on page 166, that they consider the Annual Report taken as a whole to be fair, balanced and understandable, and provides the
information necessary for the members to assess the group’s position and performance, business model and strategy is materially inconsistent with our knowledge of the
group obtained in the course of performing our audit.
• The section of the Annual Report on page 131 describing the work of the Audit and Risk Committee does not appropriately address matters communicated by us to the Audit
and Risk Committee.
• The directors’ statement relating to the company’s compliance with the Code does not properly disclose a departure from a relevant provision of the Code specified, under
the Listing Rules, for review by the auditors.
170
Centamin Annual Report 2019
Opinions on additional disclosures
Directors’ Remuneration Report
The company voluntarily prepares a Directors’ Remuneration Report in accordance with the provisions of the United Kingdom
Companies Act 2006 (“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 UK 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 88 and 89, as well as page 119, with
respect to internal control and risk management systems and about share capital structures is consistent with the financial statements.
Responsibilities for the financial statements and the audit
Responsibilities of the directors for the financial statements
As explained more fully in the Directors’ Responsibilities Statement set out on page 166, the directors are responsible for the
preparation of the financial statements in accordance with the applicable framework and for being satisfied that they give a true
and fair view. The directors are also responsible for such internal control as they determine is necessary to enable the preparation of
financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the group’s ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either
intend to liquidate the group or to cease operations, or have no realistic alternative but to do so.
Auditors’ responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a
high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at: www.frc.org.uk/
auditorsresponsibilities. This description forms part of our auditors’ report.
Use of this report
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.
OTHER REQUIRED REPORTING
Companies (Jersey) Law 1991 exception reporting
Under the 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.
Jonathan Lambert
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Recognized Auditors
London
18 May 2020
Centamin Annual Report 2019
171
> Strategic Report> Overview> Financial Statements> Corporate Governance> Shareholder Information FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 December 2019
Revenue
Cost of sales
Gross profit
Profit on financial assets at fair value through profit or loss
Other income(1)
Finance income
Other operating costs(1)
Exploration and evaluation expenditure
Profit for the year before tax
Tax
Profit for the year after tax
Profit for the year after tax attributable to:
– the owners of the parent
– non-controlling interest in SGM
Other comprehensive expense
Items that may be reclassified subsequently to profit or loss:
Loss on financial assets at fair value through other comprehensive expense (net of tax)
Other comprehensive expense for the year
Total comprehensive income for the year
Total comprehensive income for the year attributable to:
– the owners of the parent
– non-controlling interest in SGM
Earnings per share attributable to owners of the parent:
Basic (US cents per share)
Diluted (US cents per share)
Note
31 December 2019
US$’000
31 December 2018
US$’000
2.2
2.3
2.6
2.3
2.3
2.3
2.1
2.5
2.4
2.4
6.4
6.4
652,344
(439,285)
213,059
3,889
5,856
5,817
(38,709)
(16,883)
173,029
(112)
172,917
87,463
85,454
–
–
172,917
87,463
85,454
7.588
7.535
603,248
(406,538)
196,710
–
6,421
4,815
(34,238)
(21,006)
152,702
(53)
152,649
74,845
77,804
(125)
(125)
152,524
74,720
77,804
6.497
6.444
(1) The 2018 comparative figures for Other income and Other operating costs have changed due to reclassifications, refer to note 2.3 for further information
The above audited consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.
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FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 31 December 2019
Non-current assets
Property, plant and equipment
Exploration and evaluation asset
Inventories – mining stockpiles
Other receivables
Total non-current assets
Current assets
Inventories
Financial assets at fair value through profit or loss
Trade and other receivables
Prepayments
Cash and cash equivalents
Total current assets
Total assets
Non-current liabilities
Provisions
Total non-current liabilities
Current liabilities
Trade and other payables
Tax liabilities
Provisions
Total current liabilities
Total liabilities
Net assets
Equity
Issued capital
Share option reserve
Accumulated profits
Total equity attributable to:
– owners of the parent
– non-controlling interest in SGM
Total equity
Note
2.9
2.10
2.11
2.7
2.11
2.6
2.7
2.8
2.16
2.13
2.12
2.5
2.13
2.14
2.15
2.4
31 December 2019
US$’000
31 December 2018
US$’000
804,717
68,138
52,658
93
925,606
108,957
6,454
47,061
6,132
278,229
446,833
1,372,439
14,575
14,575
57,411
227
8,589
66,227
80,802
835,987
59,154
32,424
88
927,653
97,550
–
33,443
6,696
282,627
420,316
1,347,969
13,748
13,748
39,246
3
8,155
47,404
61,152
1,291,637
1,286,817
672,105
4,179
615,353
1,293,528
(1,891)
1,291,637
670,589
5,688
610,540
1,287,087
(270)
1,286,817
The above audited consolidated statement of financial position should be read in conjunction with the accompanying notes.
The audited consolidated financial statements on pages 172 to 221 were authorised by the Board of Directors for issue on 18 May
2020 and signed on its behalf by:
Ross Jerrard
Chief Financial Officer
Director
18 May 2020
Darren Le Masurier
Company Secretary
On behalf of the Board
18 May 2020
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> Strategic Report> Overview> Financial Statements> Corporate Governance> Shareholder Information FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2019
Balance as at 1 January 2019
Profit for the year after tax
Total comprehensive income
for the year
Recognition of share-based payments
Transfer of share-based payments
Dividend paid – non-controlling
interest in SGM
Dividend paid – owners of the parent
Note
Issued
capital
US$’000
670,589
Share option
reserve
US$’000
5,688
–
–
–
–
–
7
1,516
(1,516)
2.4
–
–
–
–
Balance as at 31 December 2019
672,105
4,179
Accumulated
profits
US$’000
610,810
87,463
Total
US$’000
1,287,087
87,463
Non-controlling
interests
US$’000
Total
equity
US$’000
(270)
1,286,817
85,454
172,917
87,463
87,463
85,454
172,917
–
–
–
7
–
–
(81,029)
617,244
(81,029)
1,293,528
–
–
7
–
(87,075)
–
(87,075)
(81,029)
(1,891)
1,291,637
Balance as at 1 January 2018
Profit for the year after tax
Other comprehensive expense for the year
Total comprehensive income
for the year
Recognition of share-based payments
Transfer of share-based payments
Dividend paid – non-controlling
interest in SGM
Dividend paid – owners of the parent
Balance as at 31 December 2018
Note
2.4
Issued
capital
US$’000
668,732
Share option
reserve
US$’000
4,323
–
–
–
–
1,857
–
–
–
–
–
3,222
(1,857)
–
–
670,589
5,688
Accumulated
profits
US$’000
680,657
74,845
(125)
74,720
–
–
–
Total
US$’000
1,353,712
74,845
(125)
74,720
3,222
–
–
(144,567)
610,810
(144,567)
1,287,087
Non-controlling
interests
US$’000
(1,683)
77,804
–
77,804
–
–
(76,391)
–
(270)
Total
equity
US$’000
1,352,029
152,649
(125)
152,524
3,222
–
(76,391)
(144,567)
1,286,817
The above audited consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
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Centamin Annual Report 2019
FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 31 December 2019
Cash flows from operating activities
Cash generated from operating activities
Income tax refund received
Income tax paid
Net cash generated by operating activities
Cash flows from investing activities
Acquisition of financial assets at fair value through profit or loss
Disposal of financial assets at fair value through profit or loss
Acquisition of property, plant and equipment
Brownfield exploration and evaluation expenditure
Finance income
Net cash used in investing activities
Cash flows from financing activities
Dividend paid – non-controlling interest in SGM
Dividend paid – owners of the parent
Net cash used in financing activities
Net decrease in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Effect of foreign exchange rate changes
Cash and cash equivalents at the end of the year
Note
31 December 2019
US$’000
31 December 2018
US$’000
2.16(b)
249,048
170
(214)
249,004
(9,364)
6,799
(81,207)
(12,198)
5,817
(90,153)
(87,075)
(81,029)
(168,104)
(9,253)
282,627
4,855
278,229
2.6
2.6
2.3
2.4
2.16(a)
223,791
–
(387)
223,404
–
–
(83,454)
(4,946)
4,815
(83,585)
(76,391)
(144,567)
(220,958)
(81,139)
359,680
4,086
282,627
The above audited consolidated statement of cash flows should be read in conjunction with the accompanying notes.
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175
> Strategic Report> Overview> Financial Statements> Corporate Governance> Shareholder Information FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2019
1. CURRENT REPORTING PERIOD AMENDMENTS
1.1 Changes in critical judgments and estimates
There were no updates and/or changes to critical accounting judgments and estimates that management have made in the year in
applying the Group’s accounting policies, that have the most significant effect on the amounts recognised and the disclosure of such
amounts in the financial statements.
1.2 Changes in policies and estimates
The financial position and performance of the Group was particularly affected by the following events and transactions during the
reporting period:
• adoption of the following new and revised accounting standards:
• IFRS 16 ‘Leases’ has been assessed by management, for further information, see note 1.2.1 below.
• no new standards, amendments and interpretations not yet adopted.
For a detailed discussion about the Group’s performance and financial position, please refer to the financial review.
1.2.1 IFRS 16 Leases
In the current year, this new standard has been adopted and has not had a material impact on the amounts reported in these financial
statements.
Nature of change
IFRS 16 was issued in January 2016. It has resulted in almost all leases being recognised on the balance sheet by lessees, as the
distinction between operating and finance leases is removed. Under the new standard, an asset (the right to use the leased item) and
a financial liability to pay rentals are recognised. The only exceptions are short term and low-value leases.
Impact
In the year ended 31 December 2018 the Group set up a project team which reviewed all the Group’s leasing arrangements in light of
the new lease accounting rules in IFRS 16. The standard affects primarily the accounting for the Group’s operating leases.
Management performed an impact assessment of IFRS 16 on the Group’s contracts and financial statements. All active contracts
were assessed under the requirements of IFRS 16 to determine whether they had arrangements that contained a lease. Under IAS
17 ‘Leases’ and IFRIC 4 ‘Determining whether an arrangement contains a lease’, contracts were initially assessed on the date of their
inception to determine whether or not they should be accounted for under those standards. If, on initial assessment, they didn’t meet
the requirements of IAS 17 or IFRIC 4, but on reassessment do meet the requirements of IFRS 16, they were excluded from this
assessment by application of paragraph C3(b) of IFRS 16. Management elected to apply paragraph C3(b) and therefore paragraph C4
of IFRS 16 as a practical expedient to not apply this standard to all the Group’s existing contracts.
Mandatory application date and date of adoption by Group
The Group has applied the standard from its mandatory adoption date of 1 January 2019. The Group has applied the simplified
transition approach and has not restated comparative amounts for the year or period prior to the current reporting period. Right-of-use
assets for property leases have been measured on transition as if the new rules had always been applied. All other right-of-use assets
will continue to be measured at the amount of the lease liability on adoption (adjusted for any prepaid or accrued lease expenses).
As at 31 December 2018, the Group had non-cancellable operating lease commitments of US$3.2 million, see note 5.2 of the 2018
Annual Report. Of these commitments, approximately US$1.1 million related to low value leases which are and will be recognised on a
straight-line basis as an expense in profit or loss.
For the remaining lease commitments, the Group recognised right-of-use assets of approximately US$1.6 million on 1 January 2019
and lease liabilities of US$1.6 million (after adjustments for prepayments and accrued lease payments recognised as at 31 December
2018). Overall net assets have changed, and net current assets are US$0.3 million lower due to the presentation of a portion of the
liability as a current liability.
Due to these IFRS 16 adjustments at 1 January 2019 and the consequential transactions in the year not being material, the full
disclosure of the impact of the new standard has been excluded from these results.
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Centamin Annual Report 2019
Standards not affecting the reported results or the financial position
In the current year, the following new and revised standards and interpretations that have been adopted have not had a material
impact on the amounts reported in these financial statements:
• IFRIC 23 ‘Uncertainty over Income Tax Treatments’ has been adopted from its effective date of 1 January 2019, its impact has
been assessed by management, with no material impact on these results.
There are no other standards that are not yet effective and that would be expected to have a material impact on the entity in the
current or future reporting periods and on foreseeable future transactions.
1.3 Critical judgments and estimates in applying the entity’s accounting policies
The following are the critical judgments and estimates that management have 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 estimates and associated disclosures with the Company’s Audit and
Risk Committee.
The critical accounting judgments are as follows:
1.3.1 Judgment: Control
1.3.1.1 Accounting treatment of Sukari Gold Mine (“SGM”)
Pharaoh Gold Mines NL (holder of an Egyptian branch) (“PGM”) and EMRA are 50:50 partners in SGM. In prior periods the FRC
questioned management’s judgment of control and resulting full consolidation of SGM as a subsidiary within the Group’s financial
statements.
SGM is consolidated within the Group, reflecting the substance and economic reality of the Concession Agreement (“CA”) (see note
4.1 to the financial statements). The IFRS 10 definition of control encompasses three distinct principles, which, if present, identify the
existence of control by an investor over an investee, hence forming a parent-subsidiary relationship:
• power over the investee;
• exposure, or rights, to variable returns from its involvement with the investee; and
• the ability to use its power over the investee to affect the amount of the investor’s returns.
An investor has power over an investee when the investor has existing rights that give it the current ability to direct the relevant activities
(i.e. the activities that significantly affect the investee’s returns). The following is a list of some of the relevant activities considered
which the Company directs, through PGM, in relation to the operation of the Sukari Gold Mine that most significantly affect the returns
of SGM:
• the following activities are controlled by the Company, through PGM, by having the right to appoint or remove the managing Director
of SGM under the terms of the CA:
• the appointment of the General Manager (“GM”) at SGM;
• the GM makes all day-to-day decisions to allow the mine to operate which involve:
• preparing SGM’s work programmes through determination of the daily and longer term mine plans, the budgets covering the
operations to be carried out throughout the life of the mine and approval of the same;
• capital expenditure, procurement, cost control and treasury;
• conducting exploration, development, production and marketing operations;
• co-ordinating SGM operations and activities, including its dealings with all contractors and subcontractors;
• bearing ultimate responsibility for all costs and expenses required in carrying out any and all operations under the CA;
• funding the operations of SGM and recovering costs and expenses throughout the life of the mine (i.e. exploration,
development and production phases);
• funding additional exploration and expansion programmes within the mine during the production phase;
• custody of SGM’s stock and management of its funds;
• selling and shipping of all gold and associated metals produced; and
• entering into and managing gold sales or hedging contracts and forward sale agreements.
• EMRA must, in terms of the CA, make the required approvals to allow the mine to operate.
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1.3 Critical judgments and estimates in applying the entity’s accounting policies continued
1.3.1 Judgment: Control continued
• Role and function of the board of SGM:
• there are six board members:
• three of which are appointed by the Company, through PGM; and
• three of which are appointed by EMRA:
• the executive chairman, as one of the three EMRA appointed board members, is a representative of EMRA and is
appointed by the Egyptian Ministry of Finance.
• it convenes twice a year to:
• facilitate a forum for sharing information between the owners of SGM;
• provide a mechanism to scrutinise the timing and amounts of expenses; rather than as a decision-making body over SGM’s
most significant relevant activities;
• consider and approve the budget, annual financial statements of SGM, review and approve the cost recovery position and
other compliance matters; and
• is not allowed to unreasonably withhold approval;
• resolving a deadlock position:
• disputed matters are resolved through open discussion at board level;
• the executive chairman does not have a veto or casting vote;
• where matters cannot be agreed upon, an ad-hoc committee is appointed with each party having equal representation.
This committee will then recommend an appropriate course of action to the board with the best interest of all shareholders in
mind; and
• should the board still not agree on a course of action, there is a provision for arbitration and ultimately matters can be
presented to the International Court of Arbitration at The Hague;
• the board of SGM cannot appoint or remove the GM, this right belongs solely to the Company, through PGM, in terms of the CA;
• EMRA and/or the Egyptian government have no downside risk in their share of SGM. If SGM were to become loss making or
insolvent, these costs are absorbed in its entirety by the Company, through PGM, in accordance with the CA.
The Company is therefore exposed to the variable returns, has the ability to affect the amount of those returns, has power over SGM
through its ability to direct its relevant activities and therefore meets all the criteria of control to consolidate SGM’s results within the
Group to reflect the substance and economic reality of the CA.
As the Company, through PGM, is determined to be the controlling party, it should consolidate its subsidiary, SGM, and should
apply consolidation procedures, combining balance sheet and profit and loss items line by line as well as applying the rest of the
consolidation procedures set out in IFRS 10 App B para B86. The Group therefore prepares consolidated financial statements on
this basis.
1.3.1.2 Treatment and disclosure of EMRA profit share
EMRA holds 50% of the shares in the Group subsidiary, SGM, which are not attributable to the Company, and it is entitled to
receive net proceeds from the operations of SGM on a residual basis in accordance with their specified shareholding per the CA
(this distribution is in accordance with the profit share mechanism and not as a consequence of accumulated profits as defined by
accounting standards). Therefore, the Group recognises a non-controlling interest in SGM (“NCI”) to represent EMRA’s participation.
In terms of the CA, the NCI’s rights to any profit share payments (dividend distributions) is only triggered after the cost recovery of all
amounts invested (or spent during operations) during the exploration, construction and development stages have been repaid to PGM.
The profit share mechanism was only triggered in November 2016 (after all amounts due to be cost recovered were complete). Until
that time the NCI had no rights to claim any distribution of accumulated profits or profit share.
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Centamin Annual Report 2019
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDfor the year ended 31 December 2019 It is important to note that the availability of cash in SGM for distribution to its shareholders as profit share is under the control of the
Company, through PGM, by the decisions made on SGM’s strategic direction and day-to-day operational requirements of running the
mine. This is regarded as discretionary and exposes the Company to variable returns.
Distributions to shareholders in SGM:
• once all expenditure requirements have been met, excess cash reserves, if any, are distributed to both SGM shareholders:
• distributions are always made simultaneously to both shareholders;
• the split of the distribution is in accordance with the ratchet mechanism (i.e. the standard profit share ratios of 60/40 (first
two years), 55/45 (second two years) and 50/50 to PGM and EMRA respectively through time) as governed by the CA; but:
• distributions are not mandatory, entirely discretionary and there are only distributions if there are excess funds;
• distributions are paid in advance on a weekly or fortnightly basis by mutual agreement between shareholders;
• at end of the SGM reporting period, final profits are determined, externally audited and then approved by the board of SGM:
• final profit distributions become payable within 60 days of the financial year end, SGM is unable to avoid payment at this point
and the amount payable is recorded as equity attributable to the NCI until paid;
• the CA is merely a shareholder agreement specifying how and when profits from SGM will be distributed to shareholders and is
typical of a minority shareholder protection mechanism.
The Group should attribute the profit or loss for the year after tax and each component of other comprehensive income for the year to
the owners of the parent and to the NCI in SGM. The entity shall also attribute total comprehensive income for the year to the owners
of the parent and to NCI even if this results in the NCI having a deficit balance (IFRS 10 App B para B94). The CA only contemplates
the distribution of profit to shareholders. The NCI would only have a deficit balance where advance distributions paid during the year
have exceeded final distributions payable after year end financial statements have been prepared and audited. This deficit would be
entirely funded by the Company, through PGM, and would first be redeemed from future excess cash before regular distributions to
both parties resume. SGM has no claw back provision for advance profits paid to the NCI. We note that annual dividend payments,
after approval of audited financial statements, is a standard feature of transactions with an NCI and that such payments are not
normally treated as non-discretionary payments triggering a liability in the consolidated statement of financial position of the parent.
Any losses generated by SGM will be entirely funded by the Company, through PGM, but attributed to both shareholders. These losses
will first be recovered before further profit share distributions commence.
In the Group statement of financial position, all the accumulated profits of SGM are attributable to the Company as EMRA have
already received their share through the advance profit distribution payments made, therefore NCI is usually disclosed in the financial
statements as nil unless there is an outstanding distribution payable to or deficit from EMRA due to timing differences of the cash
sweep. Please refer to note 2.4 for further information.
The treatment and disclosure of the EMRA profit share as an NCI for 2019 is consistent with the amended disclosure presented for
the first time in the 2018 Annual Report. This amended disclosure was in response to the FRC query finalised in 2018. For further
information on how the disclosures were amended in 2018, please see note 1.1.1.2 of the 2018 Annual Report.
1.3.2 Impairment assessment of Group assets
IFRS requires management to test for impairment if events or changes in circumstances indicate that the carrying amount of a finite
live asset may not be recoverable.
Considering the requirements of IAS36 an impairment test has been performed. On review, no impairment was required.
In making its assessment as to the possibility of whether any impairment losses had arisen, management considered the following as
part of its assessment of the recoverable amount:
• internal sources of information; and
• external sources of information.
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> Strategic Report> Overview> Financial Statements> Corporate Governance> Shareholder Information 1. CURRENT REPORTING PERIOD AMENDMENTS CONTINUED
1.3 Critical judgments and estimates in applying the entity’s accounting policies continued
1.3.2.1 Sukari Gold Mine
The assessment compared the recoverable amount of the Sukari gold mine cash generating unit (“CGU”) with its carrying value
for the year ended 31 December 2019. The recoverable amount of the CGU is assessed by reference to the higher of value in use
(“VIU”), being the net present value (“NPV”) of future cash flows expected to be generated by the asset, and fair value less costs
to dispose (“FVLCD”). The FVLCD is derived using discounted cash flow techniques (NPV of expected future cash flows of a CGU),
which incorporate market participant assumptions. Cost to dispose is based on management’s best estimates of future selling costs at
the time of calculating FVLCD. Costs attributable to the disposal of the CGU are not considered significant. The expected future cash
flows utilised in the FVLCD model are derived from estimates of projected future revenues, future cash costs of production and capital
expenditures contained in the life of mine (“LOM”) plan, and as a result FVLCD is considered to be higher than VIU. The Group’s LOM
plan reflects proven and probable reserves, assumes limited in-situ resource conversion, and is based on detailed research, analysis
and modelling to optimise the internal rate of return.
The discount rate applied to calculate the present value is based upon the real weighted average cost of capital applicable to the CGU.
The discount rate reflects equity risk premiums over the risk-free rate, the impact of the remaining economic life of the CGU and the
risks associated with the relevant cash flows based on the country in which the CGU is located. These risk adjustments are based on
observed equity risk premiums, historical country risk premiums and average credit default swap spreads for the period.
During the impairment assessment management applied the following key assumptions: long-term gold price US$1,350/oz, real
discount rate of 6.5% and an in-situ resource multiple of US$45/oz.
For purposes of testing for impairment of the Sukari CGU, we have assessed whether a reasonably possible change in any of the key
assumptions used to estimate the recoverable value for the CGU would result in an impairment charge. Sensitivity calculations were
performed for the CGU based on:
• a decrease in the gold price of US$100 per ounce for 2020;
• a decrease in the in-situ resource multiple to US$23/oz;
• an increase in the real discount rate to 9%; and
• a reduction in 2020 production to 480,000 ounces.
In isolation, none of the changes set out above would result in an impairment. This sensitivity analysis also does not take into account
any of management’s mitigation factors should these changes occur.
1.3.2.2 Exploration and evaluation assets
In accordance with the requirements of IAS 36 ‘Impairment of assets’ and IFRS 6 ‘Exploration for and evaluation of mineral resources’,
the assessment compared the recoverable amount of the individual Exploration and Evaluation Asset Cash Generating Units (“E&E
CGU”) with their carrying value for the year ended 31 December 2019. The recoverable amount of the E&E CGUs is assessed by
reference to the higher of VIU, being the NPV of future cash flows expected to be generated by the asset, and FVLCD. The FVLCD is
derived using discounted cash flow techniques (NPV of expected future cash flows of a CGU), which incorporate market participant
assumptions. Cost to dispose is based on management’s best estimates of future selling costs at the time of calculating FVLCD. Costs
attributable to the disposal of the E&E CGUs are not considered significant. The expected future cash flows utilised in the FVLCD
model are derived from estimates of resource multiples multiplied by proven and probable reserves of the E&E CGUs and were
considered to be higher than the VIU amount.
For purposes of testing for impairment of the E&E CGUs, we have assessed whether a reasonably possible change in any of the key
assumptions used to estimate the recoverable value would result in an impairment charge. Sensitivity calculations were performed
based on:
• a decrease in the in-situ resource multiple to US$10/oz.
In isolation, none of the changes set out above would result in an impairment. This sensitivity analysis also does not take into account
any of management’s mitigation factors should these changes occur.
1.3.3 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 5.1 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.
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Centamin Annual Report 2019
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDfor the year ended 31 December 2019 The Group is currently a party to two significant 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 Concession Agreement under which Sukari operates, are given in note
5.1 to the financial statements. Although it is possible to quantify the effects of the loss of the national fuel subsidy, it is not currently
possible to quantify with sufficient precision the impact of any restrictions placed on the terms of the Group’s operations under the
Concession Agreement.
Every action is being taken to contest these decisions, including the making of formal legal appeals and, although their resolution may
still take some time, management remains 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 will be able to continue during this process.
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.
The changes to critical accounting estimates and assumptions are disclosed in notes 1.2 and 1.3 above. The other critical estimates
and assumptions are as follows:
1.3.4 Ore reserves
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 consolidated statement of comprehensive income and the
calculation in the valuation of inventory.
Production forecasts from the underground mine at Sukari are partly based on estimates regarding future resource and reserve
growth. It should be specifically noted that the potential quantity and grade from the Sukari underground mine is conceptual in nature
and that it is uncertain if exploration will result in further targets being delineated as a mineral resource.
1.3.5 Mineral reserve and resource statement
The Group mineral reserve and resource statement for the Sukari Gold Mine with an effective date of 18 July 2019 will be published
in the 2019 Annual Report which will be available on 27 May 2020. The mineral reserve estimation has used an assumed gold price
of US$1,300 per ounce as a basis of preparation. The information on the mineral resources and reserves was prepared by Qualified
Persons as defined by the National Instrument 43-101 of the Canadian Securities Administrators.
There are numerous uncertainties inherent in estimating mineral resources and ore reserves. Assumptions that are valid at the time of
estimation may change significantly when new information becomes available.
1.3.6 Recovery of capitalised exploration, evaluation and development expenditure
The Group’s accounting policy for exploration and evaluation expenditure results in brownfield exploration and evaluation expenditure
being capitalised to the balance sheet 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 brownfield 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.
1.3.7 Going concern
Under guidelines set out by the 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.
Centamin Annual Report 2019
181
> Strategic Report> Overview> Financial Statements> Corporate Governance> Shareholder Information 1. CURRENT REPORTING PERIOD AMENDMENTS CONTINUED
1.3 Critical judgments and estimates in applying the entity’s accounting policies continued
1.3.7 Going concern continued
COVID-19
The FRC has released updated guidelines regarding disclosure of “material uncertainties” to going concern in current circumstances.
Material uncertainties refers to uncertainties related to events or conditions that may cast significant doubt upon the entity’s ability to
continue as a going concern. In other words, if boards identify possible events or scenarios (other than those with a remote probability
of occurring) that could lead to corporate failure, then these should be disclosed. When assessing whether material uncertainties exist,
boards should consider both the uncertainty and the likely success of any realistically possible response to mitigate this uncertainty.
The economic impact of the COVID-19 pandemic will have its effect on the Group. Currently there are no material financial implications
to our operations and Sukari continues to operate with no confirmed cases on site. Gold sales are still commencing on a weekly basis
although due to travel restrictions in certain countries the route flown to Canada has changed slightly and resulted in an additional
transport cost of c.US$0.40/oz. Gold sales are continuing and this trend is expected to continue assuming further travel restrictions are
not implemented and there are no operational issues caused by the pandemic. Weekly cash flow forecasts continue to be performed
and distributions to EMRA and PGM are continuing, however these can be halted should cash be locally required. To date there has
been no significant impact to critical stock on site but this is continuously being assessed and backup plans are in place. Due to the
current travel restriction on people in Egypt some expatriates and Egyptian nationals on site will be required to work longer shifts and
will be compensated accordingly, however everything possible is being done to ensure they are operating within the health and safety
guidelines, they are having sufficient time to rest after their shifts and to assist them to meet their rotation schedules.
In order to secure the health and safety of our employees and the production capabilities of Sukari, the Group established a COVID-19
Executive Committee and support team which meets and provides daily updates on COVID-19 globally to site, Production, Supply
Chain and HSE activities. Sukari is operating a very strict three-point check for all people movements to prevent the spread of the
disease and all corporate offices are currently closed with employees working from home. The Group is continuously evaluating further
potential actions to mitigate risk due to the COVID-19 crisis. As a result, and even though globally everyone is confronted with a high
level of uncertainty, it is not expected that the coronavirus COVID-19 will have a material negative impact on the ability of the Group to
operate as going concern.
Management have performed detailed analyses and forecasts to assess the economic impact of COVID-19 from a going concern
and viability perspective. The Group continues to benefit from a strong balance sheet with large cash balances and no debt. At 31
December 2019 the Group had cash and cash equivalents of US$278 million and therefore it is very likely that the Group will have
sufficient liquidity for at least 12 months after the date of approval of these financial statements. As part of assessing the Group’s ability
to continue as a going concern, management performed various stress testing scenarios on the Group’s balance sheet to assess the
potential downturn this pandemic could have on its business, the scenarios addressed were:
• Current state;
• Underground shutdown;
• Reduced processing – Plant 2 shutdown;
• Processing plant shutdown – Plant 1 & 2; and
• All activities suspension.
The sensitivities applied were informed by internal and external data sources, including a review of the Group’s most recent production
levels with reductions in production levels to various stages of slowdown and suspension. Consultations regarding the impact of this
pandemic have also been had both with our critical suppliers and refiners. The Group doesn’t engage in any hedging activities and as
such all gold sales are exposed to movements in market prices.
In each scenario, sufficient liquidity was demonstrated, and we have no information that an All Activities Suspension scenario is likely
to occur. In the event of such further deterioration of market conditions as a result of the COVID-19 outbreak, and implementation of
the mitigating actions identified by the Board, the Group will have sufficient liquidity to meet obligations when they fall due for a period
of at least 12 months after 18 May 2020.
Based on these detailed cash flow forecasts prepared by management, in which it included any reasonably possible change in the key
assumptions on which the cash flow forecasts were based and assessing various scenarios related to COVID-19, the Directors have a
reasonable expectation that the Group will have adequate resources to continue in operational existence for twelve months from
18 May 2020 and that at this point in time there are no material uncertainties regarding going concern. Key assumptions underpinning
the forecasts include:
182
Centamin Annual Report 2019
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDfor the year ended 31 December 2019 • available cash balances;
• favourable litigation outcomes, for current litigation refer to note 5.1 to the financial statements;
• gold price of US$1,500/oz.; and
• production volumes in line with 2019 guidance.
These financial statements for the year ended 31 December 2019 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.
1.3.8 Depreciation of capitalised underground mine development costs
Depreciation of capitalised underground mine development costs at the Sukari Gold Mine is based on reserve estimates. Management
and Directors believe that these estimates are realistic based on current information. Please refer to ore reserves, note 3.1.1(i).
2. HOW NUMBERS ARE CALCULATED
2.1 Segment reporting
The Group is engaged in the business of exploration for and mining of precious metals, which represents three operating segments,
two in the business of exploration and one in mining of precious metals. The Board is the Group’s chief operating decision-maker
within the meaning of IFRS 8 ‘Operating segments’. Management has determined the operating segments based on the information
reviewed by the Board for the purposes of allocating resources and assessing performance.
The Board considers the business from a geographic perspective and a mining of precious metals versus exploration for precious
metals perspective. Geographically, management considers separately the performance in Egypt, Burkina Faso, Côte d’Ivoire and
Corporate (which includes Jersey, United Kingdom and Australia). From a mining of precious metals versus exploration for precious
metals perspective, management separately considers the Egyptian mining of precious metals from the West African exploration for
precious metals in these geographies. The Egyptian mining operations derive its revenue from the sale of gold while the West African
entities are currently only engaged in precious metal exploration and do not produce any revenue.
The Board assesses the performance of the operating segments based on profits and expenditure incurred as well as exploration
expenditure in each region. Egypt is the only operating segment mining precious metals and therefore has revenue and cost of sales
whilst the remaining operating segments do not. All operating segments are reviewed by the Board as presented and are key to the
monitoring of ongoing performance and assessing plans of the Company.
Non-current assets other than financial instruments by country:
Egypt
Burkina Faso
Côte d’Ivoire
Corporate
31 December 2019
US$’000
31 December 2018
US$’000
888,681
35,845
524
556
925,606
891,131
35,959
543
20
927,653
Additions to non-current assets mainly relate to Egypt and are disclosed in note 2.9.
Statement of financial position by operating segment:
31 December 2019
Statement of financial position
Total assets
Total liabilities
Net assets/total equity
Total
US$’000
Egypt
US$’000
Burkina Faso
US$’000
Côte d’Ivoire
US$’000
Corporate
US$’000
1,372,439
1,048,764
(80,802)
1,291,637
(69,002)
979,762
36,904
(426)
36,478
1,282
(704)
578
285,489
(10,670)
274,819
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183
> Strategic Report> Overview> Financial Statements> Corporate Governance> Shareholder Information 2. HOW NUMBERS ARE CALCULATED CONTINUED
2.1 Segment reporting continued
31 December 2018
Statement of financial position
Total assets
Total liabilities
Net assets/total equity
Statement of comprehensive income by operating segment:
31 December 2019
Statement of comprehensive income
Revenue
Cost of sales
Gross profit
Profit on financial assets at fair value through profit or loss (net of tax)
Other income
Finance income
Other operating costs
Exploration and evaluation costs
Profit/(loss) for the year before tax
Tax
Profit/(loss) for the year after tax
Profit/(loss) for the year after tax attributable to:
– the owners of the parent(1)
– non-controlling interest in SGM(1)
Total
US$’000
Egypt
US$’000
Burkina Faso
US$’000
Côte d’Ivoire
US$’000
Corporate
US$’000
1,347,969
1,032,284
(61,152)
1,286,817
(57,843)
974,441
36,876
(477)
36,399
909
(85)
824
277,900
(2,747)
275,153
Total
US$’000
Egypt
US$’000
Burkina Faso
US$’000
Côte d’Ivoire
US$’000
Corporate
US$’000
652,344
(439,285)
213,059
3,889
5,856
5,817
(38,709)
(16,883)
173,029
(112)
172,917
87,463
85,454
652,344
(439,285)
213,059
–
6,105
42
(18,492)
–
200,714
(282)
200,432
114,978
85,454
–
–
–
–
(55)
–
(159)
(2,715)
(2,929)
–
–
–
–
–
(299)
–
(205)
(14,168)
(14,672)
–
(2,929)
(14,672)
(2,929)
(14,672)
–
–
–
–
–
3,889
105
5,775
(19,852)
–
(10,083)
170
(9,913)
(9,913)
–
(1)
Please note that the cost recovery model on which profit share is based under the Concession Agreement is different to the accounting results presented above due to various
adjustments and as such the share of profit disclosed above is not reflective of the 55%:45% split that occurs in practice, refer to the statement of cash flows by operating
segment below for further information.
31 December 2018
Statement of comprehensive income
Revenue
Cost of sales
Gross profit
Other income
Finance income
Other operating costs
Exploration and evaluation costs
Profit/(loss) for the year before tax
Tax
Profit/(loss) for the year after tax
Profit/(loss) for the year after tax attributable to:
– the owners of the parent(1)
– non-controlling interest in SGM(1)
Total
US$’000
Egypt
US$’000
Burkina Faso
US$’000
Côte d’Ivoire
US$’000
Corporate
US$’000
603,248
(406,538)
196,710
6,421
4,815
(34,238)
(21,006)
152,702
(53)
152,649
74,845
77,804
603,248
(406,538)
196,710
6,221
44
(19,605)
–
183,370
(53)
183,317
105,513
77,804
–
–
–
(90)
–
(391)
(5,223)
(5,704)
–
(5,704)
(5,704)
–
–
–
–
(476)
–
(168)
(15,783)
(16,427)
–
(16,427)
(16,427)
–
–
–
–
766
4,771
(14,074)
–
(8,537)
–
(8,537)
(8,537)
–
(1)
Please note that the cost recovery model on which profit share is based under the Concession Agreement is different to the accounting results presented above due to various
adjustments and as such the share of profit disclosed above is not reflective of the 55%:45% split that occurs in practice, refer to the statement of cash flows by operating
segment below for further information.
184
Centamin Annual Report 2019
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDfor the year ended 31 December 2019 Statement of cash flows by operating segment:
31 December 2019
Statement of cash flows
Net cash generated by/(used in) operating activities(1)
Net cash (used in)/generated by investing activities
Net cash (used in)/generated by financing activities
Dividend paid – non-controlling interest in SGM
Dividend paid – controlling interest in SGM
Dividend paid – owners of the parent
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at the beginning of the period
Effect of foreign exchange rate changes
Cash and cash equivalents at the end of the period
Total
US$’000
Egypt
US$’000
Burkina Faso
US$’000
Côte d’Ivoire
US$’000
Corporate
US$’000
249,004
(90,153)
(87,075)
–
(81,029)
(9,253)
282,627
4,855
278,229
285,534
(92,571)
(87,075)
(106,425)
–
(537)
3,714
2,704
5,881
(282)
(4)
–
–
–
(286)
28
274
16
777
(160)
–
–
–
617
241
(296)
562
(37,025)
2,582
–
106,425
(81,029)
(9,047)
278,644
2,173
271,770
(1)
Please note that the cash generated by operating activities for Burkina Faso and Côte d’Ivoire are affected by the movements in working capital, specifically intercompany loans,
with its direct parent entity Centamin West Africa Holdings Limited which is included within the corporate segment.
31 December 2018
Statement of cash flows
Net cash generated by/(used in) operating activities(1)
Net cash (used in)/generated by investing activities
Net cash used in financing activities
Dividend paid – non-controlling interest in SGM
Dividend (paid)/received – controlling interest in SGM
Dividend paid – owners of the parent
Net (decrease)/increase 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
Total
US$’000
Egypt
US$’000
Burkina Faso
US$’000
Côte d’Ivoire
US$’000
Corporate
US$’000
223,404
(83,585)
(76,391)
–
(144,567)
(81,139)
359,680
4,086
282,627
255,488
(88,098)
(76,391)
(93,855)
–
(2,856)
1,614
4,955
3,713
(304)
(2)
–
–
–
(306)
132
202
28
628
(248)
–
–
–
380
335
(474)
241
(32,408)
4,763
–
93,855
(144,567)
(78,357)
357,599
(597)
278,645
(1)
Please note that the cash generated by operating activities for Burkina Faso and Côte d’Ivoire are affected by the movements in working capital, specifically intercompany loans,
with its direct parent entity Centamin West Africa Holdings Limited which is included within the corporate segment.
Exploration expenditure by operating segment:
The following table provides a breakdown of the total exploration expenditure of the Group by operating segment:
Burkina Faso
Côte d’Ivoire
Egypt (Sukari tenement including Cleopatra excluding pre-production gold sales adjustment)
Total exploration expenditure
ACCOUNTING POLICY: SEGMENT REPORTING
31 December 2019
US$’000
31 December 2018
US$’000
2,715
14,168
16,478
33,361
5,223
15,783
13,635
34,641
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker.
The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments,
has been identified as the Board of Directors.
Centamin Annual Report 2019
185
> Strategic Report> Overview> Financial Statements> Corporate Governance> Shareholder Information 2. HOW NUMBERS ARE CALCULATED CONTINUED
2.2 Revenue
An analysis of the Group’s revenue for the year, from continuing operations, is as follows:
Gold sales (Including pre-production gold sales related to Cleopatra)
Less: Pre-production gold sales related to Cleopatra – transferred to exploration and evaluation asset
Gold sales (Excluding pre-production gold sales related to Cleopatra)
Silver sales
31 December 2019
US$’000
31 December 2018
US$’000
657,124
(5,767)
651,357
987
652,344
613,727
(11,523)
602,204
1,044
603,248
All gold and silver sales during the year were made to a single customer in North America, Asahi Refining Canada Ltd.
ACCOUNTING POLICY: REVENUE
Revenue is measured at the fair value of the consideration received or receivable for goods in the normal course of business.
Sale of goods
Under IFRS 15, Revenue from the sale of mineral production is recognised when the Group has passed control 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.
The performance obligation is satisfied when the doré bars are packaged and delivered to the approved carrier with the appropriate
required documentation at the gold room and the approved carrier accepts control of the shipment by signature. 98% of the payable
gold and silver content of the refined gold bars will be priced and paid within one working day after receipt of the shipment at the
refinery with the balance being priced and paid five working days after receipt. There are no significant judgments applied to the
determination of revenue.
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.
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 Gold Mine. 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.
186
Centamin Annual Report 2019
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDfor the year ended 31 December 2019 2.3 Profit before tax
Profit for the year before tax has been arrived at after crediting/(charging) the following gains/(losses) and income/(expenses):
Other income
Net foreign exchange gains
Other income
Finance income
Interest received
Expenses
Cost of sales
31 December 2019
US$’000
31 December 2018
US$’000
5,806
50
5,856
5,817
6,372
49
6,421
4,815
Mine production costs (Including costs related to gold produced from Cleopatra)
(353,232)
(330,924)
Mine production costs related to gold produced from Cleopatra
– transferred to exploration and evaluation asset
Mine production costs
Movement in inventory
Depreciation and amortisation
Other operating costs
Corporate compliance
Fees payable to the external auditors
Corporate consultants
Communications and IT
Salaries and wages
Travel, accommodation and entertainment
Office rents and lease payment
Other administration expenses
Insurances
Other taxes
Employee equity settled share-based payments
Corporate costs (sub-total)
Other provisions
Net movement on provision for stock obsolescence
Inventory written off
Office related depreciation
Royalty – attributable to the ARE government
Bank charges
Finance charges
Gain/(loss) on disposal of asset
1,487
(351,745)
28,254
(115,794)
(439,285)
2,834
(328,090)
31,296
(109,744)
(406,538)
31 December 2019
US$’000
31 December 2018
US$’000
(3,158)
(847)
(7,380)
(295)
(5,004)
(726)
(99)
(933)
(630)
151
(7)
(18,928)
–
1,500
(594)
(393)
(19,701)
(161)
(569)
137
(1,758)
(710)
(652)
(328)
(7,316)
(819)
(148)
(482)
(305)
(169)
(3,222)
(15,909)
58
1,804
(451)
(301)
(18,396)
(142)
(870)
(31)
Net foreign exchange gains have been recognised within Other income disclosures, in prior years these were netted off against Other
operating costs, prior year comparatives have been reclassified accordingly where there have been net foreign exchange gains.
(38,709)
(34,238)
Centamin Annual Report 2019
187
> Strategic Report> Overview> Financial Statements> Corporate Governance> Shareholder Information 2. HOW NUMBERS ARE CALCULATED CONTINUED
2.3 Profit before tax continued
ACCOUNTING POLICY: OTHER INCOME AND FOREIGN CURRENCIES
Finance income
Finance 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. Finance 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.
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 US dollars, which is the functional currency of all companies in the Group and the presentation
currency for the consolidated financial statements.
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.
2.4 Non-controlling interest in SGM
EMRA is a 50% shareholder in SGM and is entitled to a share of 50% of SGM’s net production surplus which can be defined as
‘revenue less payment of the fixed royalty to the ARE and recoverable costs’. However, in accordance with the terms of the CA, in
the first and second years in which there is a profit share, PGM will be entitled to an additional 10% of net production surplus and
an additional 5% in the third and fourth years.
Earnings attributable to the non-controlling interest in SGM (i.e. EMRA) are pursuant to the provisions of the CA and are recognised
as profit attributable to the non-controlling interest in SGM in the attribution of profit section of the statement of comprehensive
income of the Group. The profit share payments during the year will be reconciled against SGM’s audited financial statements.
The SGM financial statements for the year ended 30 June 2019 have not been signed off at the date of this report and are in the
process of being audited.
Certain terms of the CA and amounts in the cost recovery model may also vary depending on interpretation and management and the
Board making various judgments and estimates that can affect the amounts recognised in the financial statements.
(a) Statement of comprehensive income and statement of financial position impact
Statement of comprehensive income
Profit for the year after tax attributable to the non-controlling interest in SGM(1)
85,454
77,804
31 December 2019
US$’000
31 December 2018
US$’000
Statement of financial position
Total equity attributable to non-controlling interest in SGM(1) (opening)
Profit for the year after tax attributable to the non-controlling interest in SGM(1)
Dividend paid – non-controlling interest in SGM
Total equity attributable to non-controlling interest in SGM(1) (closing)
(270)
85,454
(87,075)
(1,891)
(1,683)
77,804
(76,391)
(270)
(1)
Profit share commenced during the third quarter of 2016. The first two years was a 60:40 split of net production surplus to PGM and EMRA respectively. From
1 July 2018 this changed to a 55:45 split for the next two-year period until 30 June 2020, after which all net production surpluses will be split 50:50.
Any variation between payments made during the year (which are based on the Company’s estimates) and the SGM audited financial
statements, may result in a balance due and payable to EMRA or advances to be offset against future distributions. This will be
reflected as an amount attributable to the non-controlling interest in SGM on the statement of financial position and statement of
changes in equity.
188
Centamin Annual Report 2019
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDfor the year ended 31 December 2019 (b) Statement of cash flows impact
Statement of cash flows
Dividend paid – non-controlling interest in SGM(1)
31 December 2019
US$’000
31 December 2018
US$’000
(87,075)
(76,391)
(1)
Profit share commenced during the third quarter of 2016. The first two years was a 60:40 split of net production surplus to PGM and EMRA respectively. From
1 July 2018 this changed to a 55:45 split for the next two-year period until 30 June 2020, after which all net production surpluses will be split 50:50.
EMRA and PGM benefit from advance distributions of profit share which are made on a weekly or fortnightly basis and proportionately
in accordance with the terms of the CA. Future distributions will take into account ongoing cash flows, historical costs that are still to
be recovered and any future capital expenditure. All profit share payments will be reconciled against SGM’s audited June financial
statements for current and future periods.
2.5 Tax
The Group operates in several countries and, accordingly, it is subject to the various tax regimes in the countries in which it operates.
From time to time the Group is subject to a review of its related tax filings and in connection with such reviews, disputes can arise
with the taxing authorities over the interpretation or application of certain rules to the Group’s business conducted within the country
involved. If the Group is unable to resolve any of these matters favourably, there may be an adverse impact on the Group’s financial
performance, cash flows or results of operations. If management’s estimate of the future resolution of these matters’ changes, the
Group will recognise the effects of the changes in its consolidated financial statements in the period that such changes occur.
In Egypt, Pharaoh Gold Mines NL 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, other than the fixed royalty
attributable to the Egyptian government, rental income on property and interest income on cash and cash equivalents.
The Concession Agreement grants certain tax exemptions, including the following:
• from 1 April 2010, being the date of commercial production, the Sukari Gold Mine is entitled to a 15-year exemption from any taxes
imposed by the Egyptian government on the revenues generated from the Sukari Gold Mine. 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 have 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 Gold Mine. 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 addition 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 Gold Mine;
• 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 subcontractors 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.
Relevance of tax consolidation to the consolidated entity
In Australia, Centamin Egypt Limited and Pharaoh Gold Mines NL, both wholly owned Australian resident entities within the Group,
have elected to form a tax-consolidated Group from 1 July 2003 and therefore are treated as a single entity for Australian income
tax purposes. The head entity within the tax-consolidated Group is Centamin Egypt Limited. Pharaoh Gold Mines NL, which has a
registered Egyptian branch, benefits from the ‘branch profits exemption’ whereby foreign branch income will generally not be subject
to Australian income tax. Ampella Mining Limited is a single entity for Australian income tax purposes.
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
have 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.
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2.5 Tax continued
The tax-sharing agreement entered 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.
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 2019
US$’000
31 December 2018
US$’000
(112)
–
(112)
(53)
–
(53)
The tax expense for the year can be reconciled to the profit per the consolidated statement of comprehensive income as follows:
Profit for the year before tax
Tax expense calculated at 0%(1) (2018: 0%)(1) of profit for the year before tax
Tax effect of amounts which are not deductible/taxable in calculating taxable income:
Effect of different tax rates of subsidiaries operating in other jurisdictions
Tax
31 December 2019
US$’000
31 December 2018
US$’000
173,029
–
(112)
(112)
152,702
–
(53)
(53)
(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 (2018: 0%). There has been no change
in the underlying corporate tax rates when compared with the previous financial period.
Tax recognised in the balance sheet is summarised as follows:
Current tax liabilities
Non-current tax liabilities
ACCOUNTING POLICY: TAXATION
31 December 2019
US$’000
31 December 2018
US$’000
227
–
3
155
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
190
Centamin Annual Report 2019
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDfor the year ended 31 December 2019 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.
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.
2.6 Financial assets at fair value through profit or loss
Balance at the beginning of the period
Additions at cost
Disposals at market value
Unrealised gain on fair value of investment – profit or loss
Unrealised loss on foreign exchange movement
31 December 2019
US$’000
31 December 2018
US$’000
–
9,364
(6,799)
4,041
(152)
6,454
–
–
–
–
–
–
The financial assets at fair value through profit or loss at 31 December 2019 relates to an equity interest in a listed public company.
Subsequent to 31 December 2019 and as at the date of approval of these financial statements this equity interest has been disposed
of in full.
ACCOUNTING POLICY: FINANCIAL INSTRUMENTS
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 as defined below. Financial liabilities are recognised in the Group’s balance sheet when the Group becomes a party to the
contractual provisions of the instrument.
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.
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.
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
Classification
The Group classifies its financial assets in the following measurement categories:
• those to be measured subsequently at fair value (either through OCI or through profit or loss), and
• those to be measured at amortised cost.
The classification depends on the entity’s business model for managing the financial assets and the contractual terms of the
cash flows.
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2.6 Financial assets at fair value through profit or loss continued
ACCOUNTING POLICY: FINANCIAL INSTRUMENTS CONTINUED
For assets measured at fair value, gains and losses will either be recorded in profit or loss or OCI. For investments in equity
instruments that are not held for trading, this will depend on whether the Group has made an irrevocable election at the time
of initial recognition to account for the equity investment at fair value through other comprehensive income (“FVOCI”).
Recognition and derecognition
Regular way purchases and sales of financial assets are recognised on trade date, being the date on which the Group commits to
purchase or sell the asset.
Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been
transferred and the Group has transferred substantially all the risks and rewards of ownership. 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.
Measurement
At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through
profit or loss (“FVPL”), transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of
financial assets carried at FVPL are expensed in profit or loss. Financial assets with embedded derivatives are considered in their
entirety when determining whether their cash flows are solely payment of principal and interest.
Subsequent to initial recognition, investments in subsidiaries are measured at cost in the Company’s 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.
Equity instruments
The Group subsequently measures all equity investments at fair value. Where the Group’s management has elected to present fair
value gains and losses on equity investments in OCI, there is no subsequent reclassification of fair value gains and losses to profit or
loss following the derecognition of the investment. Dividends from such investments continue to be recognised in profit or loss as other
income when the Group’s right to receive payments is established.
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.
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.
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Centamin Annual Report 2019
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDfor the year ended 31 December 2019 With the exception of financial assets at fair value through other comprehensive income 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 FVOCI equity instruments, any subsequent increase in fair value after an impairment loss is recognised in other
comprehensive income.
2.7 Trade and other receivables
Non-current
Other receivables – deposits
Current
Gold and silver sales debtors
Other receivables
31 December 2019
US$’000
31 December 2018
US$’000
93
93
88
88
31 December 2019
US$’000
31 December 2018
US$’000
34,695
12,366
47,061
28,234
5,209
33,443
Trade and other receivables are classified as financial assets subsequently measured at amortised cost.
All gold and silver sales during the year were made to a single customer in North America, Asahi Refining Canada Ltd, and are neither
past due nor impaired.
The average age of the receivables is nine days (2018: nine days) and expected credit losses are highly immaterial. 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 and silver sales debtor is all a receivable from Asahi
Refining Canada Ltd. The amount due has been received in full subsequent to year end. Other receivables represent GST and VAT
owing from the various jurisdictions that the Group operates in, inventory returns to vendors where refunds are expected to occur and
amounts receivable from the sale of shares in a listed public company.
The Directors consider that the carrying amount of trade and other receivables is approximately equal to their fair value, therefore no
expected credit loss is recognised within this note, see note 3.1.1 for the risk assessment related to trade receivables.
2.8 Prepayments
Current
Prepayments
Fuel prepayments
31 December 2019
US$’000
31 December 2018
US$’000
4,776
1,356
6,132
5,149
1,547
6,696
Diesel Fuel Oil (“DFO“) dispute
As more fully described in note 5.1, the Group is currently involved in court action concerning the price at which it is supplied
with DFO. Since January 2012, the Group has had to pay for DFO at the international price rather than the subsidised price which
it believes it is entitled to. It is seeking recovery of the funds advanced since 2012 through court action. However, management
recognises the practical difficulties associated with reclaiming funds from the Egyptian government and for this reason has fully
provided against the prepayment of US$362.9 million to 31 December 2019, of which US$35.9 million was provided for during 2019.
In order to allow a better understanding of the financial statements presented within the consolidated financial statements,
and specifically the Group’s underlying business performance, the effect of the Diesel Fuel Oil dispute is shown below.
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2.8 Prepayments continued
Diesel Fuel Oil (“DFO“) dispute continued
Movement in fuel prepayments
Balance at the beginning of the year
Fuel prepayment recognised
Less: Provision charged to:
Mine production costs
Property, plant and equipment
Inventories
Balance at the end of the year
Cumulative fuel prepayment and provision recognised
Fuel prepayment recognised
Less: provision charged to:
Mine production costs
Property, plant and equipment
Inventories
31 December 2019
US$’000
31 December 2018
US$’000
1,547
35,922
(31,058)
(5,712)
657
1,356
2,247
49,711
(45,017)
(5,175)
(219)
1,547
31 December 2019
US$’000
31 December 2018
US$’000
362,885
326,967
(333,104)
(27,766)
(659)
(302,047)
(22,055)
(1,317)
This has resulted in a net charge of US$28.0 million in the profit and loss for the year.
Expenses
Cost of sales
Mine production costs
Movement in inventory
Depreciation and amortisation
31 December 2019
31 December 2018
Before
adjustment
US$’000
Adjustment
US$’000
Total
US$’000
Before
adjustment
US$’000
Adjustment
US$’000
Total
US$’000
(320,687)
25,159
(115,794)
(411,322)
(31,058)
(351,745)
3,095
–
(27,963)
28,254
(115,794)
(439,285)
(283,073)
35,821
(109,744)
(356,996)
(45,017)
(4,525)
–
(49,542)
(328,090)
31,296
(109,744)
(406,538)
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Centamin Annual Report 2019
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDfor the year ended 31 December 2019 2.9 Property, plant and equipment (“PPE”)
Office
equipment
US$’000
Buildings
US$’000
Plant and
equipment
US$’000
Mining
equipment
US$’000
Mine
development
properties
US$’000
Capital
work in
progress
US$’000
Year ended 31 December 2019
Cost
Balance at 1 January 2019
7,307
Additions
Increase in rehabilitation asset
Transfers from capital work
in progress
Transfers from exploration and
evaluation asset
Disposals
73
–
409
–
–
2,347
1,229
–
25
–
(68)
Total
US$’000
1,464,711
81,207
570
604,158
357
–
309,788
10,164
–
517,629
689
570
23,482
68,695
–
9,292
14,189
39,678
(63,593)
–
–
(15)
–
(22)
3,214
–
–
–
3,214
(105)
Balance at 31 December 2019
7,789
3,533
613,792
334,119
561,780
28,584
1,549,597
Accumulated depreciation
and amortisation
Balance at 1 January 2019
Depreciation and amortisation
Disposals
Balance at 31 December 2019
Year ended 31 December 2018
Cost
(6,384)
(590)
–
(6,974)
(695)
(403)
1
(185,075)
(28,613)
7
(205,103)
(45,438)
22
(231,467)
(41,142)
–
(1,097)
(213,681)
(250,519)
(272,609)
–
–
–
–
(628,724)
(116,186)
30
(744,880)
Balance at 1 January 2018
6,796
2,051
591,101
–
–
126
–
274,976
9,496
–
457,113
–
1,854
37,998
73,760
–
1,370,035
83,454
1,854
Additions
Increase in rehabilitation asset
Transfers from capital work
in progress
Transfers from exploration and
evaluation asset
Disposals
72
–
440
–
(1)
296
13,080
25,476
48,984
(88,276)
–
–
–
(149)
–
(160)
9,678
–
–
–
–
9,678
(310)
Balance at 31 December 2018
7,307
2,347
604,158
309,788
517,629
23,482
1,464,711
Accumulated depreciation
Balance at 1 January 2018
Depreciation and amortisation
Disposals
Balance at 31 December 2018
Net book value
As at 31 December 2019
As at 31 December 2018
(5,890)
(495)
1
(6,384)
815
923
(548)
(147)
–
(695)
2,436
1,652
(156,921)
(28,252)
98
(163,902)
(41,361)
160
(191,675)
(39,792)
–
(185,075)
(205,103)
(231,467)
–
–
–
–
400,111
419,083
83,600
104,685
289,171
286,162
28,584
23,482
(518,936)
(110,047)
259
(628,724)
804,717
835,987
Included in various PPE categories within the additions for 2019 the Group recognised right-of-use assets of approximately
US$1.6 million as a result of the application of IFRS 16 Leases.
An impairment review was performed in 2019 on the Sukari cash generating unit (“CGU”), refer to note 1.3.2.1 above, however no
impairment resulted from the review.
Assets that have been cost recovered under the terms of the Concession Agreement in Egypt are included on the statement of
financial position under property, plant and equipment due to the Company having right of use of these assets. These rights will expire
together with the Concession Agreement.
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2.9 Property, plant and equipment (“PPE”) continued
ACCOUNTING POLICY: PROPERTY, PLANT AND EQUIPMENT (“PPE”)
PPE is stated at cost less accumulated depreciation and impairment. PPE 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 PPE
includes the estimated restoration costs associated with the asset.
Depreciation is provided on PPE, except for capital work in progress. 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. Depreciation on capital
work in progress commences on commissioning of the asset and transfer to the relevant PPE category.
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.
Freehold land is not depreciated.
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 other income or operating expenses.
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, net of any pre-production revenues.
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 unit 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.
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 they potentially generate 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.
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.
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Centamin Annual Report 2019
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDfor the year ended 31 December 2019
2.10 Exploration and evaluation asset
Balance at the beginning of the year
Expenditure for the period
Pre-production gold sales net of costs related to Cleopatra
Transfer to property, plant and equipment
Balance at the end of the year
31 December 2019
US$’000
31 December 2018
US$’000
59,154
16,478
(4,280)
(3,214)
68,138
63,885
13,635
(8,688)
(9,678)
59,154
The exploration and evaluation asset relates to the drilling, geological exploration and sampling of potential ore reserves and can be
attributed to Egypt (US$32.9 million) and Burkina Faso (US$35.2 million relating to the acquisition of Ampella Mining Limited).
In accordance with the requirements of IAS 36 ‘Impairment of assets’ and IFRS 6 ‘Exploration for and evaluation of mineral resources’
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.
An impairment review has subsequently been performed on the Sukari cash generating unit (“CGU”) during 2019, refer to note 1.3.2.2
of above for further information, however no impairment resulted from the review.
ACCOUNTING POLICY: EXPLORATION, EVALUATION AND DEVELOPMENT EXPENDITURE
Exploration and evaluation expenditures in relation to each separate area of interest are differentiated between greenfield and
brownfield exploration activities in the year in which they are incurred.
The greenfield and brownfield terms are generally used in the minerals sector and have been adopted to differentiate high risk remote
exploration activity from near-mine exploration activity:
(a) greenfield exploration refers to territory, where mineral deposits are not already developed and has the goal of establishing a
new mine requiring new infrastructure, regardless of it being in an established mining field or in a remote location. Greenfield
exploration projects can be subdivided into grassroots and advanced projects embracing prospecting, geoscientific surveys, drilling,
sample collection and testing, but excludes work of brownfields nature, pit and shaft sinking and bulk sampling; and
(b) brownfield exploration, also known as near-mine exploration, refers to areas where mineral deposits were previously developed.
In brownfield exploration, geologists look for deposits near or adjacent to an already operating mine with the objective of extending
its operating life and taking advantage of the established infrastructure.
Greenfield exploration costs will be expensed as incurred and will not be capitalised to the balance sheet until a decision is
made to pursue a commercially viable project. Brownfield exploration costs will continue to be capitalised to the statement of
financial position.
Brownfield 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:
• the rights to tenure of the area of interest are current; and
• at least one of the following conditions is also met:
• 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
• 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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2.10 Exploration and evaluation asset continued
ACCOUNTING POLICY: EXPLORATION, EVALUATION AND DEVELOPMENT EXPENDITURE CONTINUED
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 based on the commercial and
technical feasibility, 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.
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 in note 2.2. The commencement date of commercial production is determined when stable
and sustained production capacity has been achieved.
2.11 Inventory
The treatment and classification of mining stockpiles within inventory is split between current and non-current assets. Stockpiles which
will not be consumed within the next twelve months based on mining and processing forecasts have been reclassified to non-current
assets. The reason for the classification split is the manner in which the mining stockpiles will be utilised or drawn upon in the future
within the life of mine, with priority being placed on the higher grade ore. The volume of ore extracted from the open pit in the year far
exceeded the volume that could be processed, which has caused a large increase in the volume and value of the mining stockpiles.
The carrying value of the non-current asset portion is assessed at the lower of cost or net realisable value. The cost of the mining
stockpiles was assessed through comparing the current costs and discounting the future processing costs at a US$ applicable rate of
2.4% over the expected life of the asset to the future expected selling price. The net present value was the higher of the two and as
such it is valued at cost.
In line with the mineral reserves estimate for Sukari at 30 June 2018, the mine cut-off grade for the surface stockpiles was changed
from 0.3 to 0.4 grams per tonne (g/t), this is consistent with the updated mineral reserves estimate for Sukari at 30 June 2019. In 2018
amounts under 0.4g/t were expensed which resulted in a US$5.7 million charge in that year.
Non-current
Mining stockpiles
Current
Mining stockpiles and ore in circuit
Stores inventory
Provision for obsolete stores inventory
Stores inventories written off in the year total US$0.6 million as per note 2.3 (2018: US$ nil).
198
Centamin Annual Report 2019
31 December 2019
US$’000
31 December 2018
US$’000
52,658
52,658
32,424
32,424
31 December 2019
US$’000
31 December 2018
US$’000
38,620
72,169
(1,832)
108,957
30,601
70,281
(3,332)
97,550
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDfor the year ended 31 December 2019 ACCOUNTING POLICY: INVENTORIES
Inventories include mining stockpiles, gold in circuit, doré supplies and stores and materials are stated at the lower of cost and net
realisable value. The cost of mining stockpiles and gold produced is determined principally by the weighted average cost method using
related production costs.
Cost of mining stockpiles include costs incurred up to the point of stockpiling, such as mining and grade control costs, but exclude
future costs of production. Ore extracted is allocated to stockpiles based on estimated grade, with grades below defined cut-off levels
treated as waste and expensed. While held in physically separate stockpiles, the Group blends the ore from each stockpile when feeding
the processing plant to achieve the resultant gold content. In such circumstances, lower and higher grade ore stockpiles each represent
a raw material, used in conjunction with each other, to deliver overall gold production, as supported by the relevant feed plan.
The processing of ore in stockpiles occurs in accordance with the LOM processing plan and is currently being optimised based on
the known mineral reserves, current plant capacity and mine design. Ore tonnes contained in the stockpiles which exceed the annual
tonnes to be milled as per the mine plan in the following year, are classified as non-current in the statement of financial position.
Currently at Sukari, low grade low (0.4 to 0.5g/t) open pit stockpile material above the cut-off grade of 0.4g/t has been reclassified to
non-current assets as these ore tonnes are not planned to be processed within the next twelve months.
The net realisable value of mining stockpiles is determined with reference to estimated contained gold and market gold prices
applicable. Mining stockpiles which are blended together with future ore mined when fed to the plant are assessed as an input to the
gold production process to ensure the combined stockpiles are carried at the lower of cost and net realisable value. Mining stockpiles
which are not blended in production are assessed separately to ensure they are carried at the lower of cost and net realisable value,
although no such stockpiles are currently held.
Costs of gold inventories include all costs incurred up until production of an ounce of gold such as milling costs, mining costs and
directly attributable mine general and administration costs but exclude transport costs, refining costs and royalties. Net realisable value
is determined with reference to estimated contained gold and market gold prices.
Stores and materials consist of consumable stores and are valued at weighted average cost after appropriate impairment of redundant
and slow moving items. Consumable stock for which the Group has substantially all the risks and rewards of ownership are brought
onto the statement of financial position as current assets.
2.12 Trade and other payables
Trade payables
Other creditors and accruals
31 December 2019
US$’000
31 December 2018
US$’000
27,249
30,162
57,411
23,510
15,736
39,246
Trade payables principally comprise the amounts outstanding for trade purchases and ongoing costs. The average credit period taken
for trade purchases is 23 days (2018: 21 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.
Other creditors and accruals relate to various accruals that have been recognised due to amounts known to be outstanding for which
invoices have not yet been received. The large increase is partly due to accruals regarding advisor fees related to the Endeavour
takeover bid. Included in other creditors and accruals for 2019 the Group recognised liabilities in relation to right-of-use assets of
approximately US$1.2 million as a result of the application of IFRS 16 Leases.
The Directors consider that the carrying amount of trade payables approximate their fair value.
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> Strategic Report> Overview> Financial Statements> Corporate Governance> Shareholder Information 2. HOW NUMBERS ARE CALCULATED CONTINUED
2.12 Trade and other payables continued
ACCOUNTING POLICY: TRADE AND OTHER PAYABLES
These amounts represent liabilities for goods and services provided to the Group prior to the end of the financial year which are
unpaid. The amounts are unsecured and are usually paid within 30 days of recognition. Trade and other payables are presented as
current liabilities unless payment is not due within 12 months after the reporting period. They are recognised initially at their fair value
and subsequently measured at amortised cost using the effective interest method.
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 at 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.
2.13 Provisions
Current
Employee benefits(1)
Egypt health insurance(2)
Other current provisions(3)
Non-current
Restoration and rehabilitation(4)
Other non-current provisions
Movement in restoration and rehabilitation provision
Balance at beginning of the year
Additional provision recognised
Interest expense – unwinding of discount
Balance at end of the year
31 December 2019
US$’000
31 December 2018
US$’000
701
–
7,888
8,589
14,572
3
14,575
13,591
570
411
14,572
1,855
805
5,495
8,155
13,591
157
13,748
10,868
1,854
869
13,591
(1) Employee benefits relate to annual, sick and long service leave entitlements and bonuses.
(2)
Egypt health insurance relates to Law no. 2 of the 2018 Comprehensive Health Insurance Law that requires 0.25% of revenues and an additional 4% of social insurance
contributions to be paid by the Egyptian company effective from 1 July 2018, this is currently undergoing review and as such has not been provided for in 2019.
(3)
Provision held for in-country disputes including customs, rebates and withholding taxes.
(4)
The provision for restoration and rehabilitation represents the present value of the Directors’ best estimate of the future outflow of economic benefits that will be required to
decommission infrastructure, restore affected areas by ripping and grading of compacted surfaces to blend with the surroundings, closure of project components to ensure
stability and safety at the Group’s sites. This has all been discounted by 2.40% (2018: 3.02%) using a US$ applicable rate and inflation applied at 1.77% (2018: 2.49%). This
restoration and rehabilitation 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 to date. The annual review undertaken as at 31 December 2019 has resulted in a US$0.57 million increase in the provision.
Key management estimates are the unit costs used in calculating the nominal provision amount, for various activities, namely ripping and grading, hauling and application,
regrading slopes, construction of bunds and demolition of buildings, as well as certain fixed costs, including labour and dismantling of equipment. Unit costs range between
$0.33/m2 to $6.62/m2. A 10% change in these unit and fixed costs would have a US$1.6 million impact on the provision and corresponding asset amounts, with a highly
insignificant effect on the consolidated statement of comprehensive income.
200
Centamin Annual Report 2019
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDfor the year ended 31 December 2019
ACCOUNTING POLICY: 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 within other operating costs rather than being capitalised into
the cost of the related asset.
2.14 Issued capital
Fully paid ordinary shares
Balance at beginning of the period
Employee share option scheme – proceeds from shares issued
Transfer from share option reserve
Balance at end of the period
31 December 2019
31 December 2018
Number
US$’000
Number
US$’000
1,154,722,984
1,232,400
–
1,155,955,384
670,589
1,312
204
672,105
1,152,107,984
2,615,000
–
1,154,722,984
668,732
1,406
451
670,589
The authorised share capital is an unlimited number of no par value shares.
At 31 December 2019, the trustee of the deferred bonus share plan held 473,049 ordinary shares (2018: 606,383 ordinary shares)
pursuant to the plan rules.
Fully paid ordinary shares carry one vote per share and carry the right to dividends. See note 6.3 for more details of the share options.
ACCOUNTING POLICY: ISSUED CAPITAL
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in
equity as a deduction, net of tax, from the proceeds.
Where the Company or other members of the consolidated Group purchase the Company’s equity share capital, the consideration paid
is deducted from the total shareholders’ equity of the Group and/or of the Company as treasury shares until they are cancelled. Where
such shares are subsequently sold or reissued, any consideration received is included in shareholders’ equity of the Group and/or the
Company.
2.15 Share option reserve
Share option reserve
Balance at beginning of the period
Share-based payments expense
Transfer to accumulated profits
Transfer to issued capital
Balance at the end of the period
31 December 2019
US$’000
31 December 2018
US$’000
5,688
2,646
(2,639)
(1,516)
4,179
4,323
3,520
(298)
(1,857)
5,688
The share option reserve arises on the grant of share options to employees under the employee share option plan. Amounts are
transferred out of the reserve and into issued capital when the options and warrants are exercised/vested. Amounts are transferred
out of the reserve into accumulated profits when the options and warrants are forfeited.
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> Strategic Report> Overview> Financial Statements> Corporate Governance> Shareholder Information 2. HOW NUMBERS ARE CALCULATED CONTINUED
2.16 Cash flow information
(a) Reconciliation of cash and cash equivalents
For the purpose of the statement of cash flows, cash and cash equivalents includes cash on hand and at bank and deposits.
Cash and cash equivalents
ACCOUNTING POLICY: CASH AND CASH EQUIVALENTS
31 December 2019
US$’000
31 December 2018
US$’000
278,229
282,627
Cash comprises cash on hand and demand deposits. Cash equivalents are short term, highly liquid investments that are readily
convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.
(b) Reconciliation of profit for the year to cash flows from operating activities
Profit for the year before tax
Adjusted for:
Profit on financial assets at fair value through profit or loss
Depreciation/amortisation of property, plant and equipment
Inventory written off
Inventory obsolescence provision
Foreign exchange gains, net
Share-based payments expense
Finance income
(Gain)/loss on disposal of property, plant and equipment
Changes in working capital during the period:
(Increase)/decrease in trade and other receivables
(Increase) in inventories
Decrease in prepayments
Increase/(decrease) in trade and other payables
Increase in provisions
Cash flows generated from operating activities
(c) Non-cash financing and investing activities
During the year there have been no non-cash financing and investing activities.
31 December 2019
US$’000
31 December 2018
US$’000
173,029
152,702
(3,889)
116,187
594
(1,500)
(5,806)
7
(5,817)
(137)
(13,619)
(30,141)
559
18,167
1,414
249,048
–
110,047
451
(1,804)
(6,373)
3,222
(4,815)
31
1,023
(22,959)
3,105
(12,340)
1,501
223,791
202
Centamin Annual Report 2019
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDfor the year ended 31 December 2019 3. GROUP FINANCIAL RISK AND CAPITAL MANAGEMENT
3.1 Group financial risk management
3.1.1 Financial instruments
(a) Group risk management
The Group manages its capital to ensure that entities within the Group will be able to continue as a going concern while maximising the
return to stakeholders through the optimisation of the cash and equity balance. The Group’s overall strategy remains unchanged from
the previous financial period.
The Group has no debt and thus not geared at the year end or in the prior year. The capital structure consists of cash and cash
equivalents and equity attributable to equity holders of the parent, comprising issued capital and reserves as disclosed in notes 2.14
and 2.15. The Group operates in Australia, Jersey, Egypt, Burkina Faso and Côte d’Ivoire. None of the Group’s entities are subject to
externally imposed capital requirements.
The Group utilises inflows of funds toward the ongoing exploration and development of the Sukari Gold Mine in Egypt, and the
exploration projects in Burkina Faso and Côte d’Ivoire.
Categories of financial assets and liabilities
Financial assets
Cash and cash equivalents
Trade and other receivables (excluding VAT)
Financial assets at fair value through profit or loss
Financial liabilities
Trade and other payables
(b) Financial risk management and objectives
31 December 2019
US$’000
31 December 2018
US$’000
278,229
46,320
6,454
331,003
282,627
32,743
–
315,370
57,411
39,246
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.
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> Strategic Report> Overview> Financial Statements> Corporate Governance> Shareholder Information 3. GROUP FINANCIAL RISK AND CAPITAL MANAGEMENT CONTINUED
3.1 Group financial risk management continued
3.1.1 Financial instruments continued
(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.
The risk is measured by regularly monitoring, forecasting and performing sensitivity analyses on the Group’s financial position.
Financial instruments denominated in Great British pounds, Australian dollars and Egyptian pounds are as follows:
Financial assets
Cash and cash equivalents
Financial assets at fair value through profit or loss
Financial liabilities
Trade and other payables
Net exposure
Great British pound
Australian dollar
Egyptian pound
31 December
2019
US$’000
31 December
2018
US$’000
31 December
2019
US$’000
31 December
2018
US$’000
31 December
2019
US$’000
31 December
2018
US$’000
1,999
–
1,999
224
224
1,775
1,631
–
1,631
(833)
(833)
2,464
1,339
6,454
7,793
10,192
10,192
(2,399)
1,379
–
1,379
9,699
9,699
(8,320)
2,141
–
2,141
(858)
(858)
2,999
1,344
–
1,344
5,453
5,453
(4,109)
The following table summarises the sensitivity of financial instruments held at the reporting date to movements in the exchange rate of
the Great British pound, Egyptian pound and Australian dollar to the US dollar, with all other variables held constant. The sensitivities
are based on reasonably possible changes over a financial period, using the observed range of actual historical rates.
US$/GBP increase by 10%
US$/GBP decrease by 10%
US$/AUD increase by 10%
US$/AUD decrease by 10%
US$/EGP increase by 10%
US$/EGP decrease by 10%
Impact on profit
Impact on equity
31 December 2019
US$’000
31 December 2018
US$’000
31 December 2019
US$’000
31 December 2018
US$’000
161
(197)
(805)
984
273
(333)
223
(223)
(756)
756
(374)
374
–
–
(587)
717
–
–
–
–
–
–
–
–
The Group’s sensitivity to foreign currency has increased at the end of the current period mainly due to an increase in GBP and EGP
foreign currency cash holdings offset by a decrease in AUD foreign currency cash holdings as well as an increase in AUD financial
assets at fair value through profit or loss holdings an increase in AUD and GBP trade payables offset by a decrease in EGP trade
payables. There is also a decrease in US dollar cash holdings and offset by an increase in US dollar trade payables.
The amounts shown above are the main currencies which the Group is exposed to. Centamin also has small deposits in euro
(US$257,032) and West African franc (US$578,174), and net payables of US$1,318,055 in euro and US$1,336,279 in West African
franc. A movement of 10% up or down in these currencies would have a negligible effect on the assets/liabilities.
The Group has not entered into forward foreign exchange contracts. Natural hedges are utilised wherever possible to offset foreign
currency liabilities. The Company maintains a policy of not hedging its currency positions and maintains currency holdings in line with
underlying requirements and commitments.
204
Centamin Annual Report 2019
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDfor the year ended 31 December 2019 (d) Commodity price risk
The Group’s future revenue forecasts are exposed to commodity price fluctuations, in particular gold and fuel prices. The Group has
not entered into forward gold hedging contracts.
Gold price
The table below summarises the impact of increases/decreases of the average realised gold price on the Group’s profit after tax for the
year. The analysis assumes that the average realised gold price per ounce had increased/decreased by 10% with all other variables
held constant.
Average realised gold price
Profit after tax
Fuel price
Decrease by 10%
US$/oz
31 December 2019
US$/oz
Increase by 10%
US$/oz
1,259
1,399
1,539
US$’000
114,069
US$’000
172,917
US$’000
241,609
Any variation in the fuel price has an impact on the mine production costs. The analysis assumes that the average fuel price had
increased/decreased by a few US cents per litre with all other variables held constant.
Fuel price
Mine production costs
(e) Interest rate risk and liquidity risk
Decrease by 10%
US$/litre
31 December 2019
US$/litre
Increase by 10%
US$/litre
0.53
0.59
0.65
US$’000
(342,248)
US$’000
(351,745)
US$’000
(361,242)
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 the balance sheet date were
as per the table below.
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 for liquidity risk management rests with the Board, which 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 in section
(a) to (c) of this note above reflect a balanced view of cash inflows and outflows and show 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’s liquidity position including cash
flow forecasts to determine the forecast liquidity position and maintain appropriate liquidity levels.
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3. GROUP FINANCIAL RISK AND CAPITAL MANAGEMENT CONTINUED
3.1 Group financial risk management continued
3.1.1 Financial instruments continued
(e) Interest rate risk and liquidity risk continued
31 December 2019
Financial assets
Variable interest rate instruments
Non-interest bearing
Financial liabilities
Non-interest bearing
31 December 2018
Financial assets
Variable interest rate instruments
Non-interest bearing
Financial liabilities
Non-interest bearing
(f) Credit risk
Weighted average
effective interest rate
%
Less than one month
US$’000
One to twelve months
US$’000
Total
US$’000
1.32
–
–
2.13
–
–
162,360
57,853
220,213
57,567
57,567
25,654
41,421
67,075
39,220
39,220
110,790
–
110,790
–
–
248,296
–
248,296
–
–
273,149
57,853
331,003
57,567
57,567
273,950
41,421
315,371
39,220
39,220
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, the refiner Asahi Refining Canada Ltd, but the Group has a good credit
check on its customer and none of the trade receivables from the customer has been past due. Also, the cash balances held in all
currencies are held with financial institutions 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.
(g) 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.
(h) 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).
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Centamin Annual Report 2019
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDfor the year ended 31 December 2019 Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss
Level 1
US$’000
6,454
Level 1
US$’000
–
2019
Level 2
US$’000
–
2018
Level 2
US$’000
–
Level 3
US$’000
–
Level 3
US$’000
–
Total
US$’000
6,454
Total
US$’000
–
There were no financial assets or liabilities subsequently measured at fair value on Level 3 fair value measurement bases.
(i) Ore reserves
The following disclosure provides information to help users of the financial statements understand the judgments made about the
future and other sources of estimation uncertainty. The key sources of estimation uncertainty described in note 1.3.4 above and the
range of possible outcomes are described more fully below.
Depreciation of capitalised underground mine development costs
Depreciation of capitalised underground mine development costs at the Sukari Gold Mine is based on reserve estimates. Management
and Directors believe that these estimates are both realistic and conservative, based on current information. The analysis is based on
the assumption that the reserve estimate has increased/decreased by 10% with all other variables held constant.
Amortisation of rehabilitation asset (within mine development properties)
Amortisation of mine development properties (remainder)
Mine development properties – net book value
Property, plant and equipment – net book value
3.2 Capital management
3.2.1 Risk management
The Group’s objectives when managing capital are to:
Decrease by 10%
US$’000
31 December 2019
US$’000
Increase by 10%
US$’000
(910)
(44,804)
284,600
800,146
(819)
(40,323)
289,171
804,717
(737)
(36,291)
293,285
808,831
• safeguard their ability to continue as a going concern, so that they can continue to provide returns for shareholders and benefits for
other stakeholders; and
• maintain an optimal capital structure to reduce the cost of capital.
In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to owners of the parent,
return capital to owners of the parent or issue new shares.
3.2.2 Dividends to owners of the parent
Ordinary shares
Final dividend for the year ended 31 December 2018 of 3.0 US cents per share
(2017: 10 US cents per share)
Interim dividend for the year ended 31 December 2019 of 4.0 US cents per share
(2018: 2.5 US cents per share)
Total dividends provided for or paid
Dividends to owners of the parent:
Paid in cash
31 December 2019
US$’000
31 December 2018
US$’000
34,672
46,357
81,029
81,029
115,629
28,938
144,567
144,567
Centamin Annual Report 2019
207
> Strategic Report> Overview> Financial Statements> Corporate Governance> Shareholder Information 4. GROUP STRUCTURE
4.1 Subsidiaries
The parent entity of the Group is Centamin plc, incorporated in Jersey, and the details of its subsidiaries are as follows:
Centamin Egypt Limited
Pharaoh Gold Mines NL (holder of an Egyptian branch)
Sukari Gold Mining Company
Centamin West Africa Holdings Limited
Sheba Exploration Limited (holder of an Ethiopia branch)
Sheba Exploration Holdings Limited(1)
Centamin Group Services Limited
Centamin Holdings Limited
MHA Limited
Centamin Limited
Ampella Mining Limited
Ampella Mining Gold SARL
Ampella Mining SARL
Ampella Mining Côte d’Ivoire
Centamin Côte d’Ivoire
Ampella Mining Exploration CDI
Centamin Exploration CI
Ampella Resources Burkina Faso
Konkera SA
Ownership interest
Country of
incorporation
31 December 2019
%
31 December 2018
%
Australia(2)
Australia(2)
Egypt(4)
UK(3)
UK(3)
UK(3)
Jersey(8)
Jersey(8)
Jersey(8)
Bermuda(7)
Australia(2)
Burkina Faso(5)
Burkina Faso(5)
Côte d’Ivoire(6)
Côte d’Ivoire(6)
Côte d’Ivoire(6)
Côte d’Ivoire(6)
Burkina Faso(5)
Burkina Faso(5)
100
100
50
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
90
100
100
50
100
100
100
100
100
–
100
100
100
100
100
100
100
100
100
90
(1) Previously Sheba Exploration (UK) plc.
(2) Address of all Australian entities: Suite 8, 7 The Esplanade, Mount Pleasant, WA 6153.
(3) Address of all UK entities: Hill House, 1 Little New Street, London, EC4A 3TR.
(4) Address of all Egypt entities: 361 El-Horreya Road, Sedi Gaber, Alexandria, Egypt.
(5)
Address of all Burkina Faso entities: Ampella Resources Burkina Faso: 11 BP 1974 Ouaga 11. Ampella Mining SARL: 01 BP 1621 Ouaga 01. Ampella Mining Gold SARL: 11 BP
1974 CMS 11 Ouaga 11. Konkera SA: 11 BP 1974 Ouaga CM11.
(6) Address of all Côte d’Ivoire entities: 20 BP 945 Abidjan 20.
(7) Address of Bermuda entity: Appleby Corporate Services (Bermuda) Ltd, Canon’s Court, 22 Victoria Street, Hamilton HM EX, Bermuda.
(8) Address of all Jersey entities: 2 Mulcaster Street, St Helier, Jersey JE2 3NJ.
Through its wholly owned subsidiary, PGM, the Company entered into the Concession Agreement with EMRA and the ARE 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 Gold Mine 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.
208
Centamin Annual Report 2019
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDfor the year ended 31 December 2019
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 2015, PGM had
not recovered its cost and, accordingly, no EMRA entitlement had been recognised at that date. During 2016, payments to EMRA
commenced as advance profit share distributions. Any payment made to EMRA pursuant to these provisions of the Concession
Agreement are recognised as dividend paid to the non-controlling interest in SGM.
4.2 Joint arrangements
The consolidated entity has an interest in the following joint arrangement:
Name of joint operation
Egyptian Pharaoh Investments(1)
(1) Dormant company.
Percentage interest
31 December 2019
%
31 December 2018
%
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. There are no capital commitments arising from the Group’s interests in this joint operation.
ACCOUNTING POLICY: INTERESTS IN JOINT ARRANGEMENTS
The Group applies IFRS 11 ‘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 1.3.1).
5. UNRECOGNISED ITEMS
5.1 Contingent liabilities and contingent assets
Contingent liabilities
Fuel supply
As set out in note 2.8, in January 2012, the Group received a letter from Chevron to the effect that Chevron would only be able to
supply DFO (Diesel Fuel Oil) to the mine at Sukari at international prices rather than 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 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 companies operating in the gold
mining sector in Egypt were not entitled to such subsidies. In November 2012, 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, for EGP403 million (approximately
US$25.3 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. 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, 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 has received an
unfavourable State Commissioner’s report in the case; however, the report is non-binding and the Group’s legal advisers remain of
the view that the Group has a strong case. 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 action 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$362.9 million. Refer to note 2.8 of these financial statements for further details on the impact
of this provision on the Group’s results for 31 December 2019.
No provision has been made in respect of the historical subsidies prior to January 2012 as, based on legal advice, the Company
believes that, notwithstanding the unfavourable State Commissioner’s report, the prospects of a court finding in its favour in relation to
this matter remain very strong.
Centamin Annual Report 2019
209
> Strategic Report> Overview> Financial Statements> Corporate Governance> Shareholder Information 5. UNRECOGNISED ITEMS CONTINUED
5.1 Contingent liabilities and contingent assets continued
Contingent liabilities continued
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 a 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 and Centamin’s wholly owned subsidiary Pharaoh Gold Mines NL, 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 in the first instance.
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 was underway.
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 the Group’s investment at Sukari and the government’s
desire to stimulate further investment in the Egyptian mining industry.
The Supreme Administrative Court has stayed the Concession Agreement appeal until the Supreme Constitutional Court has ruled
on the validity of Law no. 32 of 2014. Law no. 32 of 2014 restricts the capacity for third parties to challenge contractual agreements
between the Egyptian government and an investor. This law, whilst in force and ratified by the new parliament, is currently under
review by the Supreme Constitutional Court (“SCC”). During Q2 2017, the SCC re-referred the case to the State Commissioner to
prepare a complementary report to an initial report provided by the State Commissioner in Q1 2017 which found Law no. 32 to be
unconstitutional. The State Commissioner’s report and complementary report are advisory and non-binding on the SCC. The Company
continues to believe that it has a strong legal position and that in the event that the SCC rules that Law no. 32 is invalid, the Group
remains confident that its own appeal will be successful on the merits.
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.
Other contingent assets
There were no other contingent assets at year end (31 December 2018: nil).
210
Centamin Annual Report 2019
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDfor the year ended 31 December 2019 5.2 Dividends per share
The dividends paid in 2019 were US$81,029,238 and are reflected in the consolidated statement of changes in equity for the year
(2018: US$144,567,233).
Given the unprecedented global situation with COVID-19, regulators, governments and public health authorities have issued varying
directives which have impacted the timing and structure of annual general meetings (“AGM”). As such the opportunity for shareholders
to approve the proposed 2019 final dividend cannot go ahead with the previously announced timetable.
After much consideration, and in order to ensure the dividend payment could be made to shareholders on 15 May 2020, the Board
resolved on 21 April 2020 to declare a 2020 first interim dividend to replace the 2019 final dividend. The 2020 first interim dividend
was for 6 US cents per share (US$69.4 million), the same quantum as the previously proposed 2019 final dividend (announced on
14 January 2020), and was not subject to shareholder approval.
The Board acknowledge the importance of the governance framework, which allows shareholders to exercise their voting right to
approve a final dividend. And since introducing the Centamin dividend policy, the final dividend has received in excess of 99% of
votes in favour.
The Company’s obligations as a dual listed company on the London Stock Exchange (LSE) and Toronto Stock Exchange (TSX) were
thoroughly considered and declaring a 2020 first interim to replace the previously proposed 2019 final dividend was considered the
best option for shareholders. This is an exceptional circumstance and will not impact future dividend distributions, in line with the
Company’s dividend policy. These financial statements do not reflect this dividend payable.
As announced on 9 January 2017, the update to the Company’s dividend policy sets a minimum payout level relative to cash flow while
considering the financial condition of, and outlook for, the Company. When determining the amount to be paid, the Board will take
into consideration the underlying profitability of the Company and significant known or expected funding commitments. Specifically,
the Board will aim to approve an annual dividend of at least 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.
5.3 Subsequent events
As referred to in note 5.2, subsequent to the year end, the Board have resolved to declare a 2020 first interim dividend to replace
the 2019 final dividend. The 2020 first interim dividend for 6 US cents per share (US$69.4 million), the same quantum as the
previously proposed 2019 final dividend (announced on 14 January 2020), was not subject to shareholder approval and was paid
on 15 May 2020 to shareholders.
The outbreak of the coronavirus COVID-19 will likely have an impact on the Group as well as on supply chain and production.
Considering that the spread of the virus accelerated during the first quarter of 2020 and its impact as at 31 December 2019 was
minimal, this event was classified as a non-adjusting event for accounting purposes. Given the uncertainties on scope and length as
well as the ongoing developments, the Group cannot give any accurate or reliable estimates on potential quantitative impacts currently.
This may result in an overall challenged and volatile market environment. The assessment on the ability of the Group to operate as
going concern is disclosed under note 1.3.7.
There were no other significant events occurring after the reporting date requiring disclosure in the financial statements.
6. OTHER INFORMATION
6.1 Related party transactions
(a) Equity interests in related parties
Equity interests in subsidiaries
Details of the percentage of ordinary shares held in subsidiaries are disclosed in note 4.1.
Equity interest in associates and jointly controlled arrangements
Details of interests in joint ventures are disclosed in note 4.2.
Centamin Annual Report 2019
211
> Strategic Report> Overview> Financial Statements> Corporate Governance> Shareholder Information 6. OTHER INFORMATION CONTINUED
6.1 Related party transactions continued
(b) 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 is set out below:
Short term employee benefits
Post-employment benefits
Share-based payments
31 December 2019
US$
31 December 2018
US$
5,906,929
7,311
1,919,602
7,833,841
5,731,721
7,969
2,398,039
8,137,729
(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 ended 31 December 2019 are as follows:
31 December 2019
Balance at
1 January 2019
Granted as
remuneration
(“DBSP”)
Granted as
remuneration
(“PSP”)
Net other
change – share
plan lapse(1)
Net other
change(2)
Balance at
31 December 2019
J El-Raghy(3)
A Pardey
R Jerrard
G Haslam
M Arnesen
M Bankes
S Eyre
M Cloete
C Farrow
A Baker
I Fawzy
Y El-Raghy
J Langford
M Morcombe
J Singleton
N Bailie
M Smith
A Carse
D Le Masurier
H Brown
R Nel
10,500,000
3,789,268
1,805,000
127,056
49,000
190,000
–
–
–
–
–
763,662
–
880,000
–
316,000
799,334
216,336
576,000
142,500
120,000
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
777,000
617,000
–
(414,000)
(525,000)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
114,000
905,000
(84,000)
–
–
(880,000)
546,000
197,000
190,000
169,000
127,000
–
110,000
–
–
(162,000)
–
(96,000)
(36,000)
–
–
–
–
–
–
–
–
15,000
–
–
–
–
–
–
–
–
–
–
–
(24,000)
–
10,500,000
4,152,268(4)
1,897,000(4)
127,056
49,000
190,000
–
15,000
–
–
–
793,662(4)
905,000(4)
–
546,000(4)
513,000(4)
827,334(4)
385,336(4)
607,000(4)
82,500(4)
230,000(4)
(1) “Net other change – share plan lapse” relates to awards that have lapsed due to the full performance conditions not being met on the 2016 grant.
(2) “Net other change” relates to the on-market acquisition or disposal of fully paid ordinary shares.
(3)
Includes shareholdings attributable to the El-Raghy family.
(4) Balance includes unvested grants under the Company’s performance share plan.
Since 31 December 2019 to the date of this report there have been no transactions notified to the Company under DTR 3.1.2.R.
212
Centamin Annual Report 2019
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDfor the year ended 31 December 2019 The details of the movement in key management personnel equity holdings of fully paid ordinary shares in Centamin plc during the
financial period ended 31 December 2018 are as follows:
31 December 2018
J El-Raghy(2)
A Pardey
R Jerrard
G Haslam
M Arnesen
M Bankes
A Baker
I Fawzy
Y El-Raghy
M Morcombe
R Marshall
N Bailie
M Smith
A Carse
D Le Masurier
H Brown
R Nel
Balance at
1 January 2018
Granted as
remuneration
(“DBSP”)
Granted as
remuneration
(“PSP”)
Net other
change(1)
Balance at
31 December 2018
10,500,000
3,099,268
1,295,000
102,056
49,000
150,000
–
–
678,753
–
–
166,000
702,667
–
547,000
316,000
–
–
–
–
–
–
–
–
–
–
150,000
–
–
–
–
–
–
–
–
640,000
510,000
–
–
–
–
–
130,000
730,000
–
150,000
230,000
210,000
150,000
–
120,000
–
50,000
–
25,000
–
40,000
–
–
(45,091)
–
–
–
(133,333)
6,336
(121,000)
(173,500)
–
10,500,000
3,789,268
1,805,000
127,056
49,000
190,000
–
–
763,662
880,000
–
316,000
799,334
216,336
576,000
142,500
120,000
(1) “Net other change” relates to the on-market acquisition or disposal of fully paid ordinary shares.
(2)
Includes shareholdings attributable to the El-Raghy family.
(d) Key management personnel share option holdings
There were no options held, granted or exercised during the year by Directors or senior management in respect of ordinary shares in
Centamin plc.
(e) Other transactions with key management personnel
The related party transactions for the year ended 31 December 2019 are summarised below:
• salaries, superannuation contributions, bonuses, LTIs, consulting and Directors’ fees paid to Directors during the year ended 31
December 2019 amounted to US$3,507,050 (31 December 2018: US$3,951,939); and
• Josef El-Raghy is a Director and shareholder of El-Raghy Kriewaldt Pty Ltd (“El-Raghy Kriewaldt”). El-Raghy Kriewaldt provided
office premises to the Company. All dealings with El-Raghy Kriewaldt are in the ordinary course of business and on normal terms
and conditions. Rent and office outgoings paid to El-Raghy Kriewaldt during the period were AUDnil or US$nil (31 December 2018:
AUD26,100 or US$21,013), this lease ended in May 2018.
Centamin Annual Report 2019
213
> Strategic Report> Overview> Financial Statements> Corporate Governance> Shareholder Information 6. OTHER INFORMATION CONTINUED
6.1 Related party transactions continued
(f) Transactions with the government of Egypt
Royalty costs attributable to the government of Egypt of US$19,700,850 (2018: US$18,396,045) were incurred in 2019. Profit share
to EMRA of US$87,075,000 (2018: US$76,390,698) was incurred in 2019.
(g) Transactions with other related parties
Other related parties include the parent entity, subsidiaries, and other related parties.
During the financial period, the Company recognised tax payable in respect of the tax liabilities of its wholly owned subsidiaries.
Payments to/from the Company are made in accordance with terms of the tax funding arrangement.
During the financial period the Company provided funds to and received funding from subsidiaries.
All amounts advanced to related parties are unsecured. No expense has been recognised in the period for bad or doubtful debts in
respect of amounts owed by related parties.
Transactions and balances between the Company and its subsidiaries were eliminated in the preparation of the consolidated financial
statements of the Group.
6.2 Contributions to Egypt
(a) Gold sales agreement
On 20 December 2016, SGM entered into a contract with the Central Bank of Egypt (“CBE”). The agreement provides that the parties
may elect, on a monthly basis, for the CBE to supply SGM with its local Egyptian currency requirements for that month (to a maximum
value of EGP50 million). In return, SGM facilitates the purchase of refined gold bullion for the CBE from SGM’s refiner, Asahi Refining
Canada Ltd. This transaction has been entered into as SGM requires local currency for its operations in Egypt (it receives its revenue
for gold sales in US dollars). Twenty-six transactions have been entered into at the date of this report, twelve of which in the current
year, pursuant to this agreement, and the values related thereto are as follows:
Gold purchased
Refining costs
Freight costs
Gold purchased
31 December 2019
US$’000
31 December 2018
US$’000
35,641
19
53
35,713
33,821
20
48
33,889
31 December 2019
Oz
31 December 2018
Oz
25,721
26,621
At 31 December 2019 the net payable in EGP owing to the Central Bank of Egypt is approximately the equivalent of US$30,893 (2018:
US$40,618 net receivable owing from CBE).
(b) University grant
During the 2018 year, the Group together with Sami El-Raghy and the University of Alexandria Faculty of Science initiated a sponsored
scholarship agreement, the Michael Kriewaldt Scholarships to outstanding geology major students to enrol at the postgraduate
research programme of the geology department of the university for their MSc and/or PhD in mining and mineral resources.
EGP10,000,000, EGP7,330,000 by PGM and EGP2,670,000 by Sami El-Raghy, was deposited in a fixed deposit account of which the
interest earned will be put towards the cost of the scholarships and will be administered by the University on the conditions set out in
the agreement. This amount has been expensed under donations expense in profit and loss.
214
Centamin Annual Report 2019
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDfor the year ended 31 December 2019 6.3 Share-based payments
Performance share plan
The Company’s shareholder approved performance share plan (“PSP”) allows the Company the right to grant awards (as defined
below) to employees of the Group. Awards may take the form of either conditional share awards, where shares are transferred
conditionally upon the satisfaction of performance conditions; or 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.
The awards due to be granted in June 2020 will vest following the passing of three years. Vesting will be subject to the satisfaction
of the performance conditions (and for Executive Directors a full two-year post-vesting holding period). Awards will vest based upon
a blend of three year relative TSR, cash flow and production targets, full details of which are set out in the Directors’ Remuneration
Report. These 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.
To date, the Company has granted the following conditional awards to employees of the Group:
June 2016 awards
Of the 4,999,000 awards granted on 4 June 2016 under the PSP, 1,232,400 awards vested to 20 eligible participants on 4 June 2019,
half of which are subject to a two-year holding period, based on the following performance criteria:
• 20% of the award shall be assessed by reference to a target total shareholder return;
• 30% of the award shall be assessed by reference to mineral reserve replacement and growth;
• 20% of the award shall be assessed by reference to compound growth in EBITDA; and
• 30% of the award shall be assessed by reference to compound growth in gold production.
June 2017 awards
Of the 3,459,000 awards granted on 4 June 2017 under the PSP, 2,511,000 awards remain granted to eligible participants (30 in total)
applying the following performance criteria:
• 20% of the award shall be assessed by reference to a target total shareholder return;
• 30% of the award shall be assessed by reference to mineral reserve replacement and growth;
• 20% of the award shall be assessed by reference to compound growth in Adjusted EBITDA; and
• 30% of the award shall be assessed by reference to compound growth in gold production.
June 2018 awards
Of the 4,908,000 awards granted on 27 June 2018 under the PSP, 3,307,000 awards remain granted to eligible participants (33 in
total) applying the following performance criteria:
• 40% of the award shall be assessed by reference to a target total shareholder return;
• 20% of the award shall be assessed by reference to compound growth in Adjusted EBITDA; and
• 40% of the award shall be assessed by reference to compound growth in gold production.
Centamin Annual Report 2019
215
> Strategic Report> Overview> Financial Statements> Corporate Governance> Shareholder Information 6. OTHER INFORMATION CONTINUED
6.3 Share-based payments continued
Performance share plan continued
June 2019 awards
Of the 4,845,000 awards granted on 14 June 2019 under the PSP, 4,003,000 awards remain granted to eligible participants (17 in
total) applying the following performance criteria:
• 50% of the award shall be assessed by reference to a target total shareholder return;
• 25% of the award shall be assessed by reference to compound growth in adjusted free cash flow; and
• 25% of the award shall be assessed by reference to compound growth in gold production.
Conditional share awards and options together constitute “awards” under the plan and those in receipt of awards are “award holders”.
A detailed summary of the scheme rules is set out in the 2019 AGM proxy materials which are available at www.centamin.com.
In brief, awards will vest following the passing of three years from the date of the award and vesting will be subject to satisfaction
of performance conditions. The above measures are assessed by reference to current market practice and the Remuneration
Committee will have regard to market practice when establishing the precise performance conditions for future awards.
Where the performance conditions have been met, in the case of conditional awards awarded to certain participants, 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.
Performance share plan awards granted during the period:
Grant date
Number of instruments
TSR: fair value at grant date GBP(1)(2)
TSR: fair value at grant date US$(1)(2)
Adjusted free cash flow and gold production: fair value at grant date GBP(1)(2)
Adjusted free cash flow and gold production: fair value at grant date US$(1)(2)
Vesting period (years)
Holding period applicable to 50% of the award (years)(2)
Expected volatility (%)
Expected dividend yield (%)
Number of instruments
TSR: fair value at grant date GBP(1)
TSR: fair value at grant date US$(1)
Adjusted free cash flow and gold production: fair value at grant date GBP(1)
Adjusted free cash flow and gold production: fair value at grant date US$(1)
Vesting period (years)
Holding period applicable to 50% of the award (years)
Expected volatility (%)
Expected dividend yield (%)
PSP 2019
14 June 2019
2,413,000
0.53
0.67
0.94
1.19
3
2
44.85
–
2,432,000
0.61
0.77
1.09
1.38
3
–
44.85
–
(1)
The vesting of 50% of the awards granted under this plan are dependent on a TSR performance condition. As relative TSR is defined as a market condition under IFRS 2 ‘Share-
based payments’, this requires that the valuation model used takes into account the anticipated performance outcome. We have therefore applied a Monte-Carlo simulation
model. The simulation model takes into account the probability of performance based on the expected volatility of Centamin and the peer group companies and the expected
correlation of returns between the companies in the comparator group. The remaining 50% of the awards are subject to adjusted free cash flow and gold production performance
conditions. As these are classified as non-market conditions under IFRS 2 they do not need to be taken into account when determining the fair value. These grants have been
valued using a Black-Scholes model. The fair value calculated was then converted at the closing GBP:US$ foreign exchange rate on that day.
(2) A discount for lack of marketability has been applied to account for the decrease in value of the award by reason of the two year holding period restriction.
216
Centamin Annual Report 2019
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDfor the year ended 31 December 2019 Deferred bonus share plan (“DBSP”)
In 2012, the Company implemented the DBSP, which is a long-term share incentive arrangement for senior management (but not
Executive Directors) and other employees (participants).
On 4 June 2013, the Group offered to both the beneficiaries of the shares awarded under the Employee Loan Funded Share Plan
(“ELFSP”) and to the majority of the beneficiaries of the options granted under the Employee Option Scheme (“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 award of the deferred shares will not have any performance criteria
attached. They will, however, be subject to a service period.
There were no DBSP awards granted during the period.
ACCOUNTING POLICY: SHARE-BASED PAYMENTS
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. A discount for lack of marketability has been
applied to account for the decrease in value of the award by reason of the two year holding period restriction. 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.
Share-based payments
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 above. 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.
Centamin Annual Report 2019
217
> Strategic Report> Overview> Financial Statements> Corporate Governance> Shareholder Information 6. OTHER INFORMATION CONTINUED
6.4 Earnings per share (“EPS“) attributable to owners of the parent
Basic earnings per share
Diluted earnings per share
31 December 2019
US cents per share
31 December 2018
US cents per share
7.588
7.535
6.497
6.444
Basic earnings per share attributable to owners of the parent
The earnings and weighted average number of ordinary shares used in the calculation of basic earnings per share are as follows:
Earnings used in the calculation of basic EPS
Weighted average number of ordinary shares for the purpose of basic EPS
31 December 2019
US$’000
31 December 2018
US$’000
87,463
74,845
31 December 2019
Number
31 December 2018
Number
1,152,715,180
1,151,925,674
Diluted earnings per share attributed to owners of the parent
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 2019
US$’000
31 December 2018
US$’000
87,463
74,845
31 December 2019
Number
31 December 2018
Number
1,152,715,180
1,151,925,674
8,011,425
9,589,301
1,160,726,605
1,161,514,975
No potential ordinary shares were excluded from the calculation of weighted average number of ordinary shares for the purpose of
diluted earnings per share.
218
Centamin Annual Report 2019
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDfor the year ended 31 December 2019 6.5 Auditors’ remuneration
The analysis of the auditors’ remuneration is as follows:
Fees payable to the Company’s auditors and their associates for the audit of the
Company’s annual financial statements
Fees payable to the Company’s auditors and their associates for other services to the Group
– the audit of the Company’s subsidiaries
– regulatory enquiries
Total audit fees
Non-audit fees:
Audit related assurance services – interim review
Other assurance services
Risk management and advisory services
Other services
Total non-audit fees
31 December 2019
US$’000
31 December 2018
US$’000
469
74
–
543
112
–
154
38
304
370
95
78
543
104
9
53
1
167
The Audit and Risk Committee and the external auditors have safeguards in place to avoid the possibility that the auditors’ objectivity
and independence could be compromised. These safeguards include the implementation of a policy on the use of the external
auditors 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
auditors 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.
6.6 General information
Centamin plc (the “Company”) is a listed public company, incorporated and domiciled in Jersey and operating through subsidiaries
and jointly controlled entities operating in Egypt, Burkina Faso, Côte d’Ivoire, United Kingdom and Australia. It is the Parent Company
of the Group, comprising the Company and its subsidiaries and joint arrangements.
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 Governance Report and the Strategic Report of the
Annual Report.
Centamin Annual Report 2019
219
> Strategic Report> Overview> Financial Statements> Corporate Governance> Shareholder Information 6. OTHER INFORMATION CONTINUED
6.7. Summary of significant accounting policies
Basis of preparation
These financial statements are denominated in US dollars (“US$”), which is the presentational currency of Centamin plc. All
companies in the Group use the US$ as their functional currency. All financial statements presented in US$ have been rounded to the
nearest thousand dollars, unless otherwise stated.
These financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as adopted
for use by the European Union and interpretations issued from time to time by the IFRS Interpretations Committee (“IFRS IC”) both
as adopted by the European Union (“EU”) and which are mandatory for EU reporting as at 31 December 2019, the Companies
(Jersey) Law 1991. The Group has not early adopted any other amendments, standards or interpretations that have been issued but
are not yet mandatory.
The consolidated financial statements have been prepared on a going concern basis and under the historical cost convention, as
modified by financial assets at fair value through other comprehensive income, and financial assets and financial liabilities (including
derivative) instruments at fair value through profit or loss.
The consolidated financial statements for the year ended 31 December 2019 were authorised by the Board of Directors of the
Company for issue on 18 May 2020.
Principles of consolidation
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.
SGM is jointly owned by PGM and EMRA on a 50% 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 1.3.1 and 4.1) 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 as profit
attributable to non-controlling interest in SGM and the statement of financial position as Equity attributable to the non-controlling
interest in SGM, 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, the provisions of which are described more fully below, whilst PGM is responsible for funding SGM’s
activities, PGM is also entitled to recover the following costs and expenses payable from sales revenue (excluding the royalty payable to
the 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 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% of SGM’s net production surplus which is defined as ‘revenue less payment of the fixed royalty to
ARE and recoverable costs’. However, in accordance with the terms of the Concession Agreement, in the first and second years in
which there is a profit share, PGM will be entitled to an additional 10% of net production surplus and an additional 5% in the third and
fourth years. Any payment made to EMRA pursuant to these provisions of the Concession Agreement will be recognised as a dividend
paid to non-controlling interest in SGM in the statement of changes in equity of Centamin.
220
Centamin Annual Report 2019
FINANCIAL STATEMENTS NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDfor the year ended 31 December 2019 Going concern
These financial statements for the year ended 31 December 2019 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 5.1, the
operation of the mine has been affected by two legal actions. The first of these followed from a decision taken by Egyptian General
Petroleum Corporation (“EGPC”) to charge international, not local (subsidised) prices for the supply of DFO, and the second arose
as a result of a judgment of the Administrative Court of first instance in relation to, amongst other matters, the Company’s 160km2
exploitation lease. In relation 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
it may take some time. 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 were considered and ruled on, thus providing assurance that normal operations
will be able to continue during this process.
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.
Having assessed the principal risks and the other matters discussed in connection with the long-term viability statement (refer to the
risk management report included within the Annual Report), the Directors considered it appropriate to adopt the going concern basis
of accounting in preparing the 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.
Centamin Annual Report 2019
221
> Strategic Report> Overview> Financial Statements> Corporate Governance> Shareholder Information SHAREHOLDER INFORMATION
SUPPLEMENTARY INFORMATION
MINERAL RESOURCE AND RESERVE STATEMENTS
Please refer to the mineral reserves and resources tables below for details regarding Mineral Reserve and Resource estimation,
including classification, key assumptions, parameters, methods used, data verification procedures and associated risks.
CONSOLIDATED GROUP MINERAL RESOURCE ESTIMATE (“MRE”)
The Mineral Resource data presented in the tables included in this document comprise a summary extract for the Mineral Resource
reports for all the Group’s properties. For comparative purposes, data for 2018 has been included where possible. Numbers have been
rounded and therefore there may be small differences in the totals. Varying cut-off grades have been clearly stated.
The Group Measured and Indicated Resources are 15.3 million ounces of gold with the addition of approximately 3.4 million ounces
of gold in the Inferred category. The Mineral Resources were estimated using a gold price assumption of US$1,900/oz at Sukari Gold
Mine in Egypt and to a maximum vertical depth of 250 metres at both the Doropo Project and ABC Projects in Côte d’Ivoire.
The 2020 exploration programme has budgeted for 170,000 metres of diamond drilling, focusing on reserve replacement, near-term
resource growth, long-term resource definition and new life of mine target generation, including:
• Sukari 2020 exploration programme is underway, targeting a minimum of underground reserve replacement
• Batie West Project in Burkina Faso is under project review and an updated study is targeted for Q4 2020
• Doropo Project studies are targeted for H1 2021, following a further resource update by the end of 2020 including the new
Kilosegui discovery
• ABC Project resource update is targeted for the end of 2020
Centamin is closely monitoring the global COVID-19 pandemic and the Company guidance may be impacted if the workforce,
operation or projects are disrupted due to the virus or efforts to slow the spread of the virus.
The global MRE estimated at the end of June 2018 was unconstrained. The reduction of 0.7Moz is accounted for by a combination of
mineral resource growth from exploration, mining depletion during the year and the use of a pit shell to partially constrain the Mineral
Resource Estimate as follows:
• H&S Consultants PTY Ltd completed the open pit MIK MRE for Sukari as at the end of June 2019. The estimates are reported
below the end of June 2019 mined surface and within a pit shell generated by Cube Consulting using a nominal gold price of
US$1900/oz. A cut-off grade of 0.3 g/t gold is used for reporting the open pit MRE because this is the nominal economic open-pit
cut-off grade used at the Sukari mine.
• Cube Consulting Pty Ltd (Cube) completed the estimation of the Sukari Gold Mines Underground Mineral Resource as at the end
of June 2019. All UG mineral resources defined below the USD $1,900/oz shell are estimated using the economic underground
cut-off grade of 2.0 g/t and are combined with the open pit MRE to provide a global MRE for Sukari. The global mineral resource
estimate includes the underground resource estimate.
The significant figures used in the table are intended to reflect the level of accuracy of the different resource classifications reported;
figures in the table may not add correctly due to rounding.
Sukari Gold Mine
(open pit: 0.3g/t cut-off;
underground 2.0g/t cut-off)
Doropo Project
(0.5g/t cut-off)
Category
Measured
Indicated
M+I
Inferred
Measured
Indicated
M+I
Inferred
2019
2018
Tonnage
(Mt)
Grade
(g/t)
Gold Content
(Moz)
Tonnage
(Mt)
Grade
(g/t)
Gold Content
(Moz)
248
74
321
12
5.2
56.1
61.3
30.1
1.05
0.88
1.01
1.49
1.52
1.21
1.22
1.1
8.21
2.11
10.3
0.59
0.26
2.18
2.4
1.04
254
104
358
34
–
50
50
19
0.99
0.89
0.96
0.8
–
1.31
1.31
1.3
8.02
2.98
11
0.88
–
2.13
2.13
0.8
222
Centamin Annual Report 2019
Category
Measured
Indicated
M+I
Inferred
Measured
Indicated
M+I
Inferred
M+I
Inferred
ABC Prospect
(0.5g/t cut-off)
Batie West Project
(0.5g/t cut-off)
GROUP MINERAL
RESOURCES
Resource Notes
2019
2018
Tonnage
(Mt)
Grade
(g/t)
Gold Content
(Moz)
Tonnage
(Mt)
Grade
(g/t)
Gold Content
(Moz)
–
20
20
16
–
34
34
25
435
81
–
1.03
1.03
0.90
–
1.7
1.7
1.70
1.09
1.3
–
0.65
0.7
0.50
–
1.92
1.9
1.30
15.3
3.4
–
20
20
16
–
34
34
25
462
94
–
1.03
1.03
0.87
–
1.7
1.7
1.7
1.07
1.14
–
0.65
0.65
0.45
–
1.92
1.92
1.33
15.7
3.42
•
•
All open-pit Mineral Resources are estimates of recoverable tonnes and grades using Multiple Indicator Kriging with block support correction produced in the GS3 software.
Sukari Gold Mine:
– 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 estimate extends over a strike length of 2.2 kilometres, a width of 440m and from current surface to a depth of 800m
– All available surface drilling and channel samples were used as at 18 July 2019, and longer underground production holes were included. The resource data set comprised
389,856 two metre down hole composites and surface rock chip samples
– The open pit Mineral Resource Estimates were adjusted to the mining surface and underground mining voids as at end of June 2019, and planned underground mining voids
were excised to avoid double counting of underground Mineral Reserves
•
Doropo Project
– Measured Resources occur in areas drilled at approximately 25 x 25 metre spacing and Indicated Resources occur in areas drilled at approximately 50 x 50 metre spacing.
Inferred Resources exist in areas of broader spaced drilling.
– The reported estimates are limited to blocks with a maximum depth of 250 metres below surface and within 80 metres of drill hole data
– All available data was used as at 18 August 2019
– A cut-off grade of 0.5 g/t gold is used for reporting as it is believed that the majority of the reported resources can be mined at that grade.
•
ABC Project
– Indicated Resources occur in areas drilled at approximately 50 x 50 metre spacing and Inferred Resources exist in areas of broader spaced drilling
– The reported estimates are limited to blocks with a maximum depth of 250 metres below surface and within 100 metres of drill hole data
– All available ABC data was used as at 10 December 2018
– A cut-off grade of 0.5 g/t gold is used for reporting as it is believed that the majority of the reported resources can be mined at that grade
•
The Doropo and ABC resource data set includes RC and Diamond drill data and gold estimates are based on 50 grams Fire Assays completed at Bureau Veritas Mineral
Laboratories, Abidjan.
•
Batie West Project
– 2014 Konkera MRE was a geologically constrained estimate using 10m x 5m x 2.5m blocks with an associated block proportion coded into each block with a precision of +/-1%.
– Semi-variograms were generated for each mineralisation domain ranging from 50-95m along strike and 45-70m down dip. Search ellipses ranged from 70m x 60m x 10m to
60m x 50m x 5m with a maximum of 24 composites and a maximum of 3 composites per hole for any single block estimate.
– The classification methodology involved an unbiased allocation of block mode parameters into a quality of estimate (QLTY) measure for measured, indicated and inferred.
Nominally Measured resources occur in areas drilled at approximately 25 x 25 metre spacing, Indicated Resources occur in areas drilled at approximately 50 x 50 metre
spacing and Inferred Resources exist in areas of broader spaced drilling.
– The reported estimates are reported using a gold cut-off grade of 0.5 g/t
– All available data was used as at 1 February 2014.
Centamin Annual Report 2019
223
> Strategic Report> Overview> Financial Statements> Corporate Governance> Shareholder Information
SHAREHOLDER INFORMATION
SUPPLEMENTARY INFORMATION CONTINUED
MINERAL RESERVE ESTIMATE (SUKARI GOLD MINE ONLY)
The Mineral Reserve data presented in the tables included in this document, comprise a summary extract for the Sukari Gold Mine
Mineral Reserve report. Currently all the Mineral Reserves are contained within the Sukari tenement. For comparative purposes, data
for 2018 has been included. Numbers have been rounded and therefore there may be small differences in the totals.
Included in the Resources, the Mineral Reserves at 18 July 2019 were 7.0 million ounces of gold, all at the Sukari Gold Mine. The
decrease from year-end 2018 is attributable to mining depletion in excess of Mineral Reserve additions, Mineral Resource changes
and stope sterilisation. There was no change to the gold price assumption of US$1,300 per ounce for estimating Mineral Reserves.
Based on the expected throughput rates, the remaining mineral reserve life of Sukari open pit operation is approximately 16 years and
approximately five years for the underground, as of 31 December 2019.
Open pit
(0.4g/t cut-off)
Underground
(3.0g/t cut-off)
Stockpiles
(0.4g/t cut-off)
Category
Proven
Probable
P & P
Proven
Probable
P & P
Proven
Probable
P & P
SUKARI MINERAL RESERVE P & P
Reserve Notes
2019
2018
Tonnage
(Mt)
Grade
(g/t)
Gold Content
(Moz)
Tonnage
(Mt)
Grade
(g/t)
Gold Content
(Moz)
134.6
29.0
163.6
0.8
3.2
4.0
20.9
–
20.9
188.4
1.2
1.0
1.1
5.1
4.6
4.7
0.5
–
0.5
1.1
5.1
0.9
6.0
0.1
0.5
0.6
0.3
–
0.3
7.0
131.1
43.1
174.2
1.3
3.2
4.4
16
–
16
194.6
1.1
1
1.1
6.9
5.2
5.6
0.5
–
0.5
1.2
4.7
1.5
6.2
0.3
0.5
0.8
0.2
–
0.2
7.25
•
Open pit Mineral Reserve Estimate includes 7.5Mt at 0.4g/t for 0.1Moz gold, using a 0.2 g/t gold cut-off, for the dump leach
• Underground cut-offs for reporting are 0.4g/t gold for development with stopes defined within a 3.0g/t gold cut-off
QUALIFIED PERSON AND QUALITY CONTROL
Information of a scientific or technical nature in this document, including but not limited to the mineral reserve and resource estimates,
was prepared by and under the supervision of Group Qualified Person(s) and independent Qualified Person(s) as below:
Sukari Gold Mine, Egypt
• Mineral Reserve (open pit)
Quinton de Klerk of Cube Consulting Pty Ltd
• Mineral Reserve (underground)
Adrian Ralph of Cube Consulting Pty Ltd
• Mineral Resource (open pit)
Arnold van der Heyden of H&S Consultants Pty Ltd
• Mineral Resource (underground)
Mark Zammit of Cube Consulting Pty Ltd
Doropo Project, Côte d’Ivoire
Rupert Osborn of H&S Consultants Pty Ltd
ABC Project, Côte d’Ivoire
Rupert Osborn of H&S Consultants Pty Ltd
Batie West Project, Burkina Faso
Don Maclean of Ravensgate Consultants Pty Ltd
A “Qualified Person” is as defined by the National Instrument 43-101 of the Canadian Securities Administrators. The named Qualified
Person(s) have verified the data disclosed, including sampling, analytical, and test data underlying the information or opinions
contained in this announcement in accordance with standards appropriate to their qualifications. Each Qualified Person consents to
the inclusion of the information in this document in the form and context in which it appears.
224
Centamin Annual Report 2019
Investors should be aware that the figures stated are estimates and no assurances can be given that the stated quantities of
metal will be produced.
Mineral Resource Estimates contained in this document are based on available data as at:
• Sukari Gold Mine
• Doropo Project
• ABC Project
18 July 2019
18 August 2019
10 December 2018
• Batie West Project
26 March 2014
Varying cut-off grades have been used, and clearly marked, for calculating the mineral resource estimates at different Group
properties, depending on the stage of project, maturity and ore type.
Norman Bailie
Group Exploration Manager
Centamin Annual Report 2019
225
> Strategic Report> Overview> Financial Statements> Corporate Governance> Shareholder Information
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 company number 109180. The Company conducts limited activity in its own
right, with certain of the subsidiary entities carrying out exploration, development and mining activity.
Details of all subsidiaries are listed in note 4.1 to the financial statements.
The Company’s principal asset, the Sukari Gold Mine, 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
member’s 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 re-appointed during that meeting. Each appointed
Director shall retire from office at each annual general meeting and may, if willing to act, be re-appointed.
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 the 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 corporate body 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 2019 and those held by trustees pursuant to the Company’s DBSP.
Issued capital (including shares issued and held under the DBSP
Total shares in issue under the DBSP
As at
31 December 2019
1,155,9555,384
473,049
The issued capital of the Company at the date of this report is 1,155,955,384 ordinary shares.
Under the Company’s shareholder approved Performance Share Plan, 1,232,400 ordinary shares of no par value were issued in
31 May 2019 to satisfy awards that vested during the year. The new ordinary shares rank pari passu with the Company’s existing
ordinary shares.
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Centamin Annual Report 2019
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 notes 2.11 and 2.12 to
the financial statements.
The Company was authorised by shareholders at the AGM in 2019 to purchase in the market up to 10% of the Company’s issued
shares, as permitted under the Company’s Articles of Association. No shares were bought back under this authority during the year
ended 31 December 2019. This standard authority is renewable annually and the directors will seek to renew this authority at the 2020
AGM. This current authority will expire on 30 June 2020.
Substantial shareholders
Based on shareholder disclosures and register analysis, 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
Guidance and Transparency Rules of the FCA (“DTRs”), in the issued share capital of Centamin in compliance with LR 9.8.6 (2):
Name
BlackRock Inc.
VanEck Inc.
Dimensional Fund Advisors
The Vanguard Group, Inc
Norges Bank Investment Mgt
Shareholding
% holding
146,786,132
121,559,822
67,358,747
46,092,855
37,194,956
12.87
10.66
5.90
4.04
3.26
Note to table:
Information as at 31 December 2019 based on registry analysis and information received by the Company from holders of notifiable interests and includes details of any notifications
received by the Company pursuant to DTR 5 between the year end and the date of this report.
The substantial shareholders do not have any different voting rights to other shareholders. To the extent known to the Company:
– 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
– there are no arrangements, the operation of which may at a subsequent date result in a change of control of the Company.
Listing rules
UK listed companies must report in accordance with LR 9.8.4 R. There are no other disclosures to report under LR 9.8.4 R.
Dividend policy
Centamin updated its dividend policy in January 2017, as follows:
“The Company’s dividend policy sets a minimum payout level relative to cash flow while considering the financial condition of, and outlook
for, the Company. When determining the amount to be paid, the Board will take into consideration the underlying profitability of the Company
and significant known or expected funding commitments. Specifically, the Board will aim to approve an annual dividend of at least 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 2019:
2019 interim dividend
An interim dividend of 4.0 US cents per share on Centamin plc ordinary shares (totalling approximately US$46.2 million) was declared
on 31 July 2019. The interim dividend for the half-year period ending 30 June 2019 was paid on 27 September 2019 to shareholders
on the register on the record date of 30 August 2019.
2019 final dividend (replaced with an interim dividend in 2020)
A final dividend of 6.0 US cents per share on Centamin plc ordinary shares (totalling approximately US$69.4 million) was proposed by
the directors on 14 January 2020. As announced on 21 April 2020, the Board declared a 2020 first interim dividend of 6 US cents
per share (US$69.4 million) with a payment date of 15 May 2020, directly replacing the previously proposed 2019 final dividend (6 US
cents per share) to provide shareholders with certainty and to expedite the payment.
Centamin Annual Report 2019
227
> Strategic Report> Overview> Financial Statements> Corporate Governance> Shareholder Information SHAREHOLDER INFORMATION
COMPANY LEGAL FORM AND STRUCTURE CONTINUED
Company Legal form and structure
Company details
Centamin plc (LSE: CEY, TSX: CEE)
ISIN: JE00B5TT1872
LEI: 213800PDI9G7OUKLPV84
Company number: 109180
Summary table of dividends declared by Centamin plc
Interim
Declared on:
2020
2019
31 July 2019
2018
2 August 2018
2017
3 August 2017
Amount:
Paid on:
Total
Final
Proposed on:
21 April 2020
(interim in lieu of final dividend)
4.0 US cents per share
2.5 US cents per share
2.5 US cents per share
27 September 2019
28 September 2018
29 September 2017
Approximately US$46.2 million
Approximately US$28.9 million
Approximately US$28.8 million
14 January 2020 (final dividend)
25 February 2019
31 January 2018
Declared on:
21 April 2020
Final dividend replaced by
interim dividend in 2020.
8 April 2019
26 March 2018
Amount:
Paid on:
Total:
6.0 US cents per share
15 May 2020
3 US cents per share
10 US cents per share
13 May 2019
6 April 2018
Approximately US$69.4 million
Approximately US$34.6 million
Approximately US$115 million
ANNUAL GENERAL MEETING
To protect the health and wellbeing on our employees, communities and shareholders, and in accordance with the UK and Jersey
Government and public health guidance on COVID-19, the Centamin Board of Directors asks shareholders not to physically attend the
AGM this year. Shareholders are encouraged to complete and submit their votes on-line and to submit any questions to the registrar in
advance of the AGM which will be held on 29 June 2020, in Jersey. Unless restrictions have been lifted by then, shareholders will not
be able to attend in person but will be offered the opportunity to listen to formal business of the AGM through remote communications.
The 2019 Annual Report and Accounts and Notice of AGM will be mailed to shareholders in May. Details will also be available on the
Company’s website, www.centamin.com
Indicative financial calendar
Event
Annual General Meeting
Date
29 June 2020
Q1 2020 preliminary production results
21 April 2020
Q2 2020 preliminary production results
13 July 2020
Results for the Half year
4 August 2020
Q3 2020 preliminary production results
15 October 2020
228
Centamin Annual Report 2019
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
Public Relations
Buchanan
107 Cheapside
London
EC2V 6DN
Telephone: +44 (0)20 7466 5000
Broker
BMO Capital Markets
95 Queen Victoria Street
London
EC4V 4HG
Telephone: +44 (0)20 7236 1010
Auditor
PricewaterhouseCoopers LLP
1 Embankment Place
London
WC2N 6RH
Telephone: +44 (0)20 7583 5000
Centamin Annual Report 2019
229
> Strategic Report> Overview> Financial Statements> Corporate Governance> Shareholder Information SHAREHOLDER INFORMATION
GLOSSARY
2018 Code
2020 AGM
the 2018 UK Corporate Governance Code published by the FRC
the annual general meeting of the Company held in 2020
AISC
ARC
ARE
assay
Au
Board
CA
CBE
CGU
CGC
DBSP
DFO
Directors
dump leach
E&E
EGPC
EMRA
EOS
EPS
FCA
all-in sustaining costs
the Audit and Risk Committee
Arab Republic of Egypt
qualitative analysis of ore to determine its components
chemical symbol for the element gold
the Board of Directors of the Group
Concession Agreement
Central Bank of Egypt
Cash Generating Unit
the Compliance and Governance Committee
deferred bonus share plan
Diesel Fuel Oil
the Directors of the Board of Centamin plc
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
exploration and evaluation
The Egyptian General Petroleum Corporation
employee loan funded share plan
Egyptian Mineral Resource Authority
employee option scheme
earnings per share
Financial Conduct Authority
feasibility study
extensive technical and financial study to assess the commercial viability of a project
flotation
Framework
FRC
FVLCD
FVOCI
GAIP
grade
g/t
HSES
IFRS
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
Group’s risk management framework
Financial Reporting Council
fair value less costs to dispose
fair value through other comprehensive income
gradient array induced polarisation
relative quantity or the percentage of ore mineral or metal content in an orebody
gram per metric tonne
the Health, Safety, Environmental and Sustainability Committee
International Financial Reporting Standards
Indicated Resource
Inferred 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
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
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Centamin Annual Report 2019
JORC
LOM
LTIs
LTIFR
mill
Joint Ore Reserves Committee of the Australasian Institute of Mining and Metallurgy, Australian Institute of Geoscientists and the Minerals Council
of Australia
Life of Mine
lost time injury
lost time injury frequency rate
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
MRC
Mt
Mtpa
NCI
million ounces
Main Resource Cluster
million tonnes
million tonnes per annum
non-controlling interest
net production surplus
or profit share
revenue less payment of the 3% royalty to ARE and recoverable costs
Nom
open pit
ore
orebody
ore reserve
the Nomination Committee
large scale hard rock surface mine
mineral deposit that can be extracted and marketed profitably
mining term to define a solid mass of mineralised rock that can be mined profitably under current or immediately foreseeable economic conditions
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
ounce or oz
troy ounce (= 31.1035 grams)
PGM
PPE
probable
PSP
R&R
REM
SGM
Pharaoh Gold Mines NL
property, plant and equipment
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
performance share plan (formerly the restricted share plan)
resources and reserves
the Remuneration Committee
Sukari Gold Mine
Section 172
Directors duties per Companies Act 2006
TSF1
TSF2
TSR
existing, active tailings storage facility
under construction, second tailings storage facility
total shareholder return
Centamin Annual Report 2019
231
> Strategic Report> Overview> Financial Statements> Corporate Governance> Shareholder Information SHAREHOLDER INFORMATION
FORWARD-LOOKING STATEMENTS
This report contains certain looking 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.
Qualified Person and Quality Control
Information of a scientific or technical nature in this document, including but not limited to the mineral reserve and resource estimates,
was prepared by and under the supervision of Group Qualified Person(s) and independent Qualified Person(s) as below:
Sukari Gold Mine, Egypt
• Mineral Reserve (open pit)
Quinton de Klerk of Cube Consulting Pty Ltd
• Mineral Reserve (underground)
Adrian Ralph of Cube Consulting Pty Ltd
• Mineral Resource (open pit)
Arnold van der Heyden of H&S Consultants Pty Ltd
• Mineral Resource (underground) Mark Zammit of Cube Consulting Pty Ltd
Doropo Project, Côte d’Ivoire
Rupert Osborn of H&S Consultants Pty Ltd
ABC Project, Côte d’Ivoire
Rupert Osborn of H&S Consultants Pty Ltd
Batie West Project, Burkina Faso
Don Maclean of Ravensgate Consultants Pty Ltd
A “Qualified Person” is as defined by the National Instrument 43-101 of the Canadian Securities Administrators.
The named Qualified Person(s) have verified the data disclosed, including sampling, analytical, and test data underlying the
information or opinions contained in this announcement in accordance with standards appropriate to their qualifications. Each
Qualified Person consents to the inclusion of the information in this document in the form and context in which it appears.
Investors should be aware that the figures stated are estimates and no assurances can be given that the stated quantities of metal
will be produced.
Mineral resource estimates contained in this document are based on available data as at:
• Sukari Gold Mine
• Doropo Project
• ABC Project
18 July 2019
18 August 2019
10 December 2018
• Batie West Project
26 March 2014
Varying cut-off grades have been used, and clearly marked, for calculating the mineral resource estimates at different Group
properties, depending on the stage of project, maturity and ore type.
232
Centamin Annual Report 2019
Cautionary note regarding forward looking statements
There are risks associated with an investment in the shares of Centamin. Recipients of this presentation should review the risk
factors and other disclosures regarding Centamin contained in the preliminary prospectus and subsequent Annual Reports and
Management Discussion and Analysis reports of Centamin that have been filed with Canadian securities regulators and are
available at www.sedar.com.
This report contains “forward-looking information” (or “forward-looking statements”) which may include, but are not limited to,
statements with respect to the future financial or operating performance of the Company, its subsidiaries and its projects (including
the Sukari Gold Mine), the future price of gold, the estimation of mineral reserves and resources, the realisation of mineral reserve
estimates, the timing and amount of estimated future production, revenues, margins, costs of production, capital, operating and
exploration expenditures, costs and timing of the development of new deposits, costs and timing of construction, costs and timing
of future exploration, the timing for delivery of plant and equipment, requirements for additional capital, foreign exchange risk,
government regulation of mining and exploration operations, environmental risks, reclamation expenses, title disputes or claims,
insurance coverage and the timing and possible outcome of pending litigation and regulatory matters. Often, but not always, forward-
looking statements can be identified by the use of words such as “plans”, “hopes”, “expects”, “is expected”, “budget”, “scheduled”,
“estimates”, “forecasts”, “intends”, “anticipates”, or “believes” or variations (including negative variations) of such words and phrases,
or state that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved.
Forward-looking information involves and is subject to known and unknown risks, uncertainties and other factors which may cause
the actual results, performance or achievements of the Company and/or its subsidiaries to be materially different from any future
results, performance or achievements expressed or implied by the forward-looking information. Such factors include, among others,
general business, economic, competitive, political and social uncertainties; the actual results of current exploration activities and
feasibility studies; assumptions in economic evaluations which prove to be inaccurate; fluctuations in the value of the United States
dollar and the Canadian dollar relative to each other, to the Australian dollar and to other local currencies in the jurisdictions in which
the Company operates; changes in project parameters as plans continue to be refined; future prices of gold and other metals; possible
variations of ore grade or recovery rates; failure of plant, equipment or processes to operate as anticipated; accidents, labour disputes
or slow downs and other risks of the mining industry; climatic conditions; political instability, insurrection or war; arbitrary decisions by
governmental authorities; delays in obtaining governmental approvals or financing or in the completion of development or construction
activities. Discovery of archaeological ruins of historical value could lead to uncertain delays in the development of the mine at Sukari.
As set out in the Strategic Report, at the date of this report, COVID-19 has significantly impacted the world, presenting an
unprecedented medical, economic and social challenge. Centamin has been proactive in how it manages and mitigates the impacts
within its control. As of 18 May 2020, Centamin has no recorded cases of COVID-19 on-site and has experienced no material
disruption to operations, supply chain or gold shipments. The Company has, however, put in place contingency plans to deal with
various possible disruption in the coming months.
Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially
from those described in forward-looking information, there may be other factors that cause actions, events or results to differ from
those anticipated, estimated or intended. Forward-looking information contained herein is made as of the date of this announcement
and the Company disclaims any obligation to update any forward-looking information, whether as a result of new information, future
events or results or otherwise. There can be no assurance that forward-looking information or statements will prove to be accurate, as
actual results and future events could differ materially from those anticipated in such information or statements. Accordingly, readers
should not place undue reliance on forward-looking statements.
LEI: 213800PDI9G7OUKLPV84
Company No: 109180
This report is printed on 100% recycled paper made from post-consumer waste.
Both the mill and printer are FSC accredited and follow ISO 14001 environmental procedures.
Our printer is also elemental chlorine free, uses vegetable based inks and is carbon neutral.
The lamination on the cover comes from a sustainable resource and its main component is not derived from fossil fuels.
It has attained the EN13432 and ATM D 6400 standards for biodegradability and compostability and also has
accreditation to the Vincotte OK Compost Home programme
Centamin Annual Report 2019
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Registered office
2 Mulcaster Street
St Helier
Jersey JE2 3NJ
Egypt
361 EI‐Horreya Road
Sedi Gaber
Egypt
T: +44 (0)1534 828 700
F: +44 (0)1534 731 946
E: info@centamin.com
T: +20 (0)3541 1259
F: +20 (0)3522 6350
E: pgm@centamin.com