Centamin Annual Report 2020

Plain-text annual report

Annual Report 2020 UNLOCKING THE POTENTIAL 2020 HIGHLIGHTS OUR PURPOSE IS TO CREATE OPPORTUNITY FOR PEOPLE THROUGH RESPONSIBLE MINING 2020 HIGHLIGHTS OPERATIONAL GOLD PRODUCTION (ounces) 452,320oz 2019: 480,528oz CASH COSTS OF PRODUCTION (per ounces produced) US$719/oz 2019: US$699/oz ALL-IN SUSTAINING COSTS (“AISC”) (per ounces sold) US$1,036/oz 2019: US$943/oz GROUP MINERAL RESOURCE (Moz) 14.3Moz 2019: 15.3Moz Centamin is an established 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$10 million in 2020. We operate the Sukari Gold Mine, Egypt’s largest and first modern gold mine. As a first mover within Egypt, Centamin recognises the business and societal importance in building a responsible culture that values and supports people, creating opportunity through jobs, infrastructure, education, as well as developing our assets and delivering strong shareholder returns. We practise responsible mining activities and take pride in setting the example for our growing industry within Egypt. Centamin Annual Report 2020 2020 HIGHLIGHTS 01 2020 was a defining year for Centamin. Under the leadership and governance of a refreshed board and strengthened management team, the Company refocused its long-term strategy, delivering a three-year reset plan, framing significant cost-saving, productivity and efficiency initiatives, while remaining firmly committed to delivering sustainable shareholder returns. SUSTAINABILITY LOCAL PROCUREMENT (% of total Sukari procurement) 61% 2019: 61% WORKFORCE EMPLOYED LOCALLY TO OPERATION (%) 95% 2019: 95% LOCAL COMMUNITY INVESTMENT (US$m) US$2.0m 2019: US$0.6m SUKARI CO2 EQUIVALENT EMISSIONS (CO2-e Scope 1 & 2) 0.54Mt 2019: 0.44Mt FINANCIAL TOTAL REVENUE (US$m) US$829m 2019: US$652m EBITDA MARGIN (%) 53% 2019: 43% PROFIT AFTER TAX (US$m) US$315m 2019: US$173m FREE CASH FLOW (US$m) US$142m 2019: US$74m BASIC EPS (US cents per share) 13.53CENTS 2019: 7.59 cents TOTAL DIVIDEND (1) (US$m) US$104m 2019: US$116m CASH AND LIQUID ASSETS (US$m) US$310m 2019: US$349m (1) Attributable to the financial year and final dividend is subject to shareholder approval Visit our website at www.centamin.com Centamin Annual Report 2020 > Additional Information> Corporate Governance> Foreword> Financial Statements> Strategic Report02 IN THIS REPORT INVESTMENT CASE P09 BUSINESS MODEL: APPROACH TO GEOLOGY P22 VALUE MAXIMISING: LOA REVIEW P14 EMPLOYEE DEVELOPMENT P90 Centamin Annual Report 2020 03 CAPITAL ALLOCATION FRAMEWORK P55 CENTAMIN’S AMBITION IS TO BE THE PREMIUM LONDON LISTED GOLD COMPANY, MAXIMISING SHAREHOLDER VALUE THROUGH RESPONSIBLE MINING MULTIPLE HIGH- QUALITY, LONG-LIFE ASSETS. A GLANCE AT WHAT’S COVERED IN THIS REPORT FOREWORD At a Glance Chairman's Introduction STRATEGIC REPORT CEO’s Statement Market Review Our Business Model Understanding our Stakeholders Our Strategy Our Strategy in Action Key Performance Indicators Operational Review Exploration Review CFO's Statement Financial Review Risk Review CORPORATE GOVERNANCE Governance Statement Board of Directors Our Management Structure Our Governance Structure Board Attendance Schedule in 2020 Board Diversity Skills and Succession Board Evaluation and Training Key Activities in the Year Technical Committee Report Corporate Governance Compliance Statement Sustainability Committee Report Nomination Committee Report Audit and Risk Committee Report Remuneration Committee Report 04 06 12 16 20 26 32 34 38 44 50 52 56 66 COVID-19 RESPONSE P44 FINANCIAL STATEMENTS Directors' Responsibilities Independent Auditor's Report Consolidated Statements Notes to the Consolidated Financial Statements ADDITIONAL INFORMATION Mineral Resource and Reserve Statements Shareholder Information Advisers Glossary Forward-looking Statements 86 92 95 96 98 100 102 106 108 110 112 114 118 124 132 160 161 168 172 216 220 224 225 228 Centamin Annual Report 2020 > Additional Information> Corporate Governance> Foreword> Financial Statements> Strategic Report04 FOREWORD – AT A GLANCE OUR STRATEGIC FRAMEWORK OUR PURPOSE OUR ASSETS Creating opportunity for people through responsible mining. We recognise we have an important part to play in shaping the future of our stakeholders, particularly operating in developing countries where the local population may not have the same access to resources. Our purpose directs our decisions and actions towards supporting wider society. What ‘Our Purpose’ means for our stakeholders EMPLOYEES & CONTRACTORS Providing a safe and healthy workplace, offering skilled training and career development GOVERNMENTS & COMMUNITIES Further to honouring our contractual commitments to governments, we are committed to leaving a strong legacy for the benefit of our local, regional and national hosts SHAREHOLDERS Rewarding our shareholders through our industry-leading dividend distributions and maintaining a strong social and environmental licence to operate SUPPLIERS & REFINERS Committed to building long-term relationships that deliver mutual benefits to all parties, with a focus on supporting and developing local businesses READ MORE ABOUT UNDERSTANDING OUR STAKEHOLDERS PAGE 26 BURKINA FASO CÔTE D’IVOIRE Operating Mine Exploration LARGE, LONG-LIFE MINE WITH VALUE DRIVEN PIPELINE Centamin is a multijurisdictional business, headquartered in the UK and structured with regional operating and exploration hubs in Egypt and Côte d’Ivoire, creating an exciting, dynamic, entrepreneurial workplace, made up of a talented and ambitious workforce. OUR VALUES Centamin Annual Report 2020 PROTECT WE PROTECT & RESPECT EACH OTHER AND OUR ENVIRONMENT OWNERSHIP WE EMPOWER OUR PEOPLE TO TAKE RESPONSIBILITY AND ACCOUNTABILITY READ HOW WE’VE LIVED UP TO THIS VALUE ON PAGE 44 READ HOW WE’VE LIVED UP TO THIS VALUE ON PAGE 24 > Strategic Report > Corporate Governance > Financial Statements > Additional Information 05 The Sukari Gold Mine is a world class orebody and the largest operating gold mine in Egypt. Combined with approximately 3,000 km2 of highly prospective exploration ground in West Africa, Centamin has 14.3Moz Measured and Indicated gold resources. EGYPT A CLEAR AND CONSISTENT STRATEGY Our strategy is to maximise long-term free cash flow generation, through cost-effective responsible mining, while maintaining an active growth pipeline and delivering sustainable returns for all stakeholders. We fulfil our purpose through our five strategic pillars: Creating a safe and thriving workplace to attract and sustain a fit-for-purpose workforce Focus on long-life, high quality assets, prioritising margin growth over production growth Maintain a robust balance sheet through disciplined capital allocation and cost management The commitment to generate long-term tangible returns Pursuing organic growth and diversification opportunities PEOPLE ASSET QUALITY FINANCIAL FLEXIBILITY STAKEHOLDER RETURNS ACTIVE GROWTH PIPELINE INNOVATE WE ARE ALWAYS LEARNING AND LOOKING FOR WAYS TO IMPROVE THROUGH INNOVATION EDUCATE EDUCATION SHAPES OUR WORKFORCE AND THE BROADER SOCIETY PASSION WE ARE PASSIONATE ABOUT WHAT WE DO READ HOW WE’VE LIVED UP TO THIS VALUE ON PAGE 48 READ HOW WE’VE LIVED UP TO THIS VALUE ON PAGE 24 READ HOW WE’VE LIVED UP TO THIS VALUE ON PAGE 20 Centamin Annual Report 2020 > Foreword06 FOREWORD – CHAIRMAN’S INTRODUCTION CHAIRMAN’S INTRODUCTION FOR CENTAMIN, 2020 WAS A YEAR OF CHANGE, AS WE RESHAPED THE BOARD AND THE SENIOR MANAGEMENT TEAM AND PUT IN PLACE A RIGOROUS MEDIUM TERM PLAN, FOCUSED ON MAXIMISING VALUE AT OUR FLAGSHIP SUKARI MINE. NON-EXECUTIVE CHAIRMAN JAMES RUTHERFORD The declaration on 11 March 2020 by the World Health Organisation that the novel coronavirus (COVID-19) was a global pandemic ushered in the most challenging period that the global economy has faced in over 75 years and has radically affected the way in which we live our day-to-day lives and the way in which we do business. Politicians, regulators and business leaders around the world had to come together and introduce urgent measures to deal with rapidly evolving public health and socio-economic challenges. These restrictive measures introduced to combat the pandemic are set to continue for some time, as the world learns to live with COVID-19. Centamin Annual Report 2020 07 GROUP LOST TIME INJURY FREQUENCY RATE (per 1,000,000 working hours) GROUP TOTAL RECORDED INJURY FREQUENCY RATE (per 1,000,000 working hours) FATALITIES OR CRITICAL HEALTH RISKS DUE TO COVID 0.84 2019: 1.43 5.16 2019: 7.13 0 2019: 1 Response to COVID-19 Centamin’s response to the outbreak of the COVID-19 pandemic was swift and robust. A COVID-19 Executive Committee was established, meeting weekly and supported by daily monitoring, reporting and risk assessment. As part of this effort, we worked actively with the Egyptian government to address the threat of COVID-19, providing logistical and financial support both within our local community and to the Egyptian government’s national response efforts. Our workforce responded quickly, by diligently implementing new workplace safety measures, by working closely with our suppliers and gold refiner, whilst also focusing on the health and wellbeing of the broader communities in which we operate. Thanks to the dedication and commitment of our people and the tremendous support of our partners, the Egyptian government, Centamin was able to maintain operational continuity and was able to cope with the challenges that arose. The virtual world The introduction of strict travel restrictions meant that, like a lot of companies, Centamin had to embrace new means of communication in order to maintain the quality and frequency of engagement with all its stakeholders. Since March 2020, all Board and committee meetings and all investor meetings have been conducted virtually via video conferencing. This created particular challenges for our annual general meeting (“AGM”), which also had to be conducted virtually and where we were thankfully able to incorporate provisions for shareholders to observe the meeting and to submit questions. Board changes Having been initially appointed to the Board as Deputy Chairman in January 2020, I succeeded Josef El-Raghy as Non- Executive Chairman upon his retirement at the AGM in July. At the same time, two long-serving Board members, Gordon E. (“Ed”) Haslam and Mark Arnesen, also retired from the Board and we thank them for their valuable contribution. As Chairman, one of my prime responsibilities is to ensure good governance and that the Board is effective in its work to support and guide the company and the management team. There has been a transformational refresh of the Centamin Board, with seven of the nine Board members having only been appointed in the last couple of years, and I believe that the Board, as currently constituted, possesses the right blend of skills and experience across numerous disciplines, as you can see outlined in the Governance Report. During 2020, I initiated a process to completely reshape the structure of the different Board committees. These are in many respects the engine room of the Board. A new Sustainability Committee was established, chaired by Dr Catharine Farrow, while a new Technical Committee was also set up, chaired by Hendrik (“Hennie”) Faul, who was appointed to the Board in June. Hennie brings more than 30 years of mining industry experience, most recently, from 2013 to 2019, as CEO of Anglo American’s Copper operations, running two of the world’s largest open pit mines. These two committees have already demonstrated their effectiveness and have worked closely with the Audit & Risk Committee, led by Marna Cloete. In addition, Dr Sally Eyre, was appointed as Senior Independent Director and as chair of the Remuneration Committee. Management team Following the unsolicited takeover approach by Endeavour Mining in late 2019, which was withdrawn in early January 2020, the Nomination Committee was able to resume the process to appoint a new CEO. Having conducted an extensive international search, led by a well-regarded recruitment firm, we were pleased to announce the appointment of Martin Horgan in April 2020. Martin is a qualified mining engineer and brings extensive mining industry experience, latterly as the CEO of Toro Gold, which discovered, developed and operated the Mako gold mine in Senegal. Commencing in less than ideal circumstances during the COVID-19 lockdown in the UK, Martin’s performance to date has been outstanding, not least with the delivery of his three-year plan to unlock Centamin’s true potential, a plan that is focused on operational discipline and long term planning. His energy, hard work and excellent people and leadership skills complement his rounded technical and capital markets experience. He has formed a strong working relationship with our CFO Ross Jerrard, who had ably served as Interim CEO prior to Martin’s appointment. Centamin Annual Report 2020 > Additional Information> Corporate Governance> Foreword> Financial Statements> Strategic Report08 FOREWORD – CHAIRMAN’S INTRODUCTION CONTINUED Our purpose A company’s purpose statement should provide a strong and succinct affirmation of its primary reason for being in business and should convey in simple terms a sense of how a company views its relationship more broadly with society. It is important to embed purpose in our corporate DNA and to ensure it is at the forefront of both how we assess decisions and how we act. As a new Board, we worked with the management team in reviewing the expression of our purpose and strategy to improve its connectivity with what matters the most to us, people. This led us to adopt an amended purpose statement, which is “To create opportunity for people through responsible mining”, thereby emphasising that our contribution to our people and to wider society are central to our purpose. Commitment to dividend returns The Board recognises the importance of dividends as an essential component of delivering returns to shareholders. In line with its previously stated intention, the Board is proposing a final dividend for 2020 of 3 US cents (1) per share, subject to shareholder approval at the forthcoming AGM on 11 May 2021. This would represent a proposed full-year dividend of 9 US cents (2) per share and a total pay-out for the full-year of US$104 million, which is equivalent to US$222 per gold ounce sold in 2020. This would mean that, since 2014, the Company would have returned a total of US$673 million to shareholders by way of cash dividends. In addition, over the same time period the Company has paid a total of US$199 million to our partner, the Egyptian government, in the form of profit share and royalties. For the current year 2021, the Board has reiterated its intention to recommend an unchanged minimum dividend of US$105 million, again subject to final Board and shareholder approvals, which will be paid as an interim and final dividend. This reflects our confidence in the outlook for the Company during these next few years of investment and the strength of the Company’s financial position. The long-term dividend policy of paying out a minimum of 30% of free cash flow remains unchanged. Outlook Centamin’s corporate strategy remains clear and consistent. In the first instance, it is focused on maximising the value at Sukari, the engine that generates the free cash flow that supports sustainable returns to stakeholders and that will drive potential growth and diversification opportunities. The delivery and execution of the strategy has changed under Martin’s new leadership, with greater operational stability and consistency, sustainable financial performance and positive contributions to society. The Company’s focus in 2021 is to deliver into the operational reset plan that was outlined in December and to complete the life of mine optimisation studies, identifying further cost-saving and productivity opportunities to ensure Centamin continues to generate meaningful returns throughout the cycle. Reflecting the theme of this year’s annual report, there are three pre-requisites that are essential elements to unlock Centamin’s undoubted potential. These are (i) an effective governance structure; (ii) a talented management team; and (iii) a clear focus on operational discipline. With the changes that were instituted during the course of 2020, I am confident that those three elements are now in place. Thanks On behalf of the Board, I would like to thank all of our stakeholders for their continued support, work and commitment to the Company during a very challenging year. In particular, we would like to acknowledge the tremendous support of our partners, the Egyptian government, with whom we have a shared vision to transform Egypt’s undoubted exploration potential and establish a flourishing gold mining industry in the country. Finally, and above all, I would like to thank the Centamin management and workforce for their resilience and hard work during these unparalleled times. Thank you. James Rutherford Non-Executive Chairman THE BOARD RECOGNISES THE IMPORTANCE OF DIVIDENDS AS AN ESSENTIAL COMPONENT OF DELIVERING RETURNS TO SHAREHOLDERS. (1) Subject to shareholder approval at the 2021 annual general meeting (2) Attributable to financial year 2020, excluding 2020 First Interim dividend which was attributable to financial year 2019 Centamin Annual Report 2020 > Strategic Report > Corporate Governance > Financial Statements > Additional Information 09 OUR INVESTMENT PROPOSITION WHAT SETS US APART CONSISTENT STRATEGY: VALUE MAXIMISATION We aim to maximise free cash flow generation by focusing on improving margins through cost discipline and innovation. BALANCE SHEET STRENGTH: NO DEBT Our strong balance with no debt or hedging enables us to have a long-term perspective on capital allocation and growth opportunities. WORLD CLASS OREBODY: RESET AND REPOSITIONED FOR THE LONG-TERM Our new leadership team is bedded in; our three-year plan is in place, targeting cost savings, improved operating productivities and efficiencies, and transformational investment into environmental and social initiatives. STRENGTHENED BOARD AND MANAGEMENT: REFRESHED CULTURE At Centamin, we are united in the desire to work hard, do better, have fun and make a difference. TRACK RECORD OF SHAREHOLDER RETURNS: INDUSTRY LEADING DIVIDEND Central to our strategy, this is our seventh consecutive year returning surplus cash to our shareholders, demonstrating the sustainability of our dividend policy. FURTHER GROWTH POTENTIAL There is untapped resource potential across the portfolio. Our excellent geologists and a result-driven exploration model maintains an active pipeline of priority exploration targets balanced with a disciplined value-driven approach to capital allocation. Centamin Annual Report 2020 > Foreword10 STRATEGIC REPORT UNLOCKING CENTAMIN’S POTENTIAL Centamin was built on the pioneering exploration success of the Sukari discovery in the Eastern Desert of southwest Egypt during the 1990s. The subsequent development of the Sukari gold mine is a story of tenacity in the modernisation of an ancient gold mining jurisdiction. Sukari is Egypt’s largest and first modern gold mine, which includes a substantial bulk tonnage open pit and extensive higher grade underground operation. Through a focus on skills training, individual development and high levels of local employment and procurement, Centamin’s Sukari mine has also continued to take a lead role in the mission to modernise the wider mining sector in Egypt and make it one of the world’s leading gold producers. CENTAMIN’S VISION IS TO BE THE PREMIUM LONDON LISTED GOLD COMPANY, MAXIMISING VALUE THROUGH RESPONSIBLY MINING MULTIPLE HIGH-QUALITY, LONG-LIFE ASSETS. Centamin Annual Report 2020 > Foreword > Corporate Governance > Financial Statements > Additional Information 11 STRATEGIC REPORT – CONTENTS CEO’s Statement Market Review Our Business Model Understanding our Stakeholders Our Strategy Our Strategy in Action Key Performance Indicators Operational Review Exploration Review CFO's Statement Financial Review Risk Review 12 16 20 26 32 34 38 44 50 52 56 66 Centamin Annual Report 2020 > Strategic Report12 STRATEGIC REPORT – CEO’S STATEMENT CEO’S STATEMENT 2020 WAS A PIVOTAL YEAR FOR CENTAMIN, AS WE SAW THE COMPANY MAKE STRIDES IN DEFINING THE VISION FOR THE COMPANY. WE START 2021 STRONGER, WITH A CLEAR PLAN IN PLACE, AND A COLLECTIVE DESIRE TO DELIVER THE COMPANY’S FULL POTENTIAL. CHIEF EXECUTIVE OFFICER MARTIN HORGAN It is a pleasure to be providing my first CEO Statement since joining Centamin in April 2020. It has been a year that has presented numerous challenges as we faced the global health and economic crisis from the COVID-19 pandemic. I am immensely proud of the resilience and dedication of our workforce whose commitment and proactive response has enabled the Company to successfully navigate this period. Consequently, many of our workforce have been separated from their families and loved ones for extended periods and in some cases facing substantial periods in isolation, with limited physical exercise due to travel protocols. Centamin Annual Report 2020 > Strategic Report 13 The mental and physical health of our people is a vital consideration and in 2020 we implemented several initiatives to help address this situation which included improved rest accommodation, robust fatigue management protocols, increased our health education and exercise programmes, upgraded our workforce health insurance, and introduced a third- party mental health and advice platform for our team. The year also saw the commencement of a comprehensive review of the Company with the intention of building on the successes of the last ten years to map out a strategy for the next decade and beyond which will deliver an optimised Sukari and the realisation of the value in our West African portfolio of exploration assets. I look forward to updating you in due course as we start to deliver into this strategy over 2021 and beyond. COVID-19 Our priority remains the health and safety of our people and local communities. Testament to our proactive response to the virus outbreak, combined with our emergency preparedness framework, Centamin experienced no material disruptions at Sukari or our exploration projects in West Africa. Recognising that the duration of the pandemic and the lasting impacts remain uncertain, we have adapted our operating practices to enable the Company to co-exist with COVID-19 for the longer term, including, but limited to, mandatory employee screening before entering and exiting site, with associated test, trace and isolation protocols in place and increasing our workforce headcount and the integration of appropriate health, safety, and wellbeing measures into our daily operations which allows us to focus on longer horizon planning (rosters, supplies, capital growth projects) with more confidence. The pandemic has also created opportunities for us, accelerating the adoption and implementation of technologies. In 2020, we established and transitioned the entire workforce onto a bespoke cloud-based business environment. With more people working remotely, this became critical, and has allowed for more efficient dissemination of information, collaborative discussion, and more productive working, irrespective of our physical location. Our local communities are an extension of our workforce and we have a clear responsibility to provide support and assistance tackling the vulnerabilities they face. In 2020, we provided financial and logistical support towards our host country’s COVID-19 response efforts to combat the pandemic. This included donating to a Marsa Alam (Egypt) hospital, two state of the art medical machines capable of testing for several life-threatening communicable diseases, including COVID-19. 2020 performance Operational safety remains a primary focus for management, and this year’s safety record is evidence of the continued progress with a 41% improvement in LTIFR to 0.84, and a TRIFR of 5.16, per one million site-based hours worked. While this was an improvement on previous performance this is an area of ongoing focus and work. Our strong operating performance in many areas at Sukari was overshadowed by the safety-related decision in Q4 to temporarily suspend mining in a section of the open pit. Given a lack of operational flexibility in the open pit operations there was limited ability to revise the mining sequence and maintain production. The necessity to mine in the lower-grade Stage 5 north area of the pit therefore unfortunately impacted our guidance for 2020. Improving mine planning to increase confidence in forecasting while increasing operational flexibility is a key focus for the Company, beginning with the commencement of an accelerated waste-stripping programme utilising an independent contractor and our own fleet, to position Sukari for stable long- term production. While the open pit issue dominated the year’s headlines given the impact on production, it should not be allowed to overshadow the performance of the team at site who performed excellently – even more so when considering the COVID-19 environment they operated in: a record amount of material was moved in the open pit, the underground continued its operational improvement across production and implemented key upgrade projects and the projects team delivered the critical TSF2 construction ahead of schedule and under budget, while simultaneously delivering multiple other projects. Despite lower production output, we delivered another strong financial performance in 2020, benefiting from improved commodity pricing, our rapid response to COVID-19 and continuous dedication to improve operating efficiencies and productivity. Centamin reported a 54% increase in EBITDA to US$439 million with an EBITDA margin of 53%. Profit after tax increased 82% to US$315 million. Ultimately, the Group generated significant free cash flow, of US$142 million, a 91% increase, making it possible to pay dividends attributable to 2020 of US$104 million. We continue to maintain a strong and flexible balance sheet, and finished the year with US$310 million in cash and liquid assets at 31 December 2020. Right people, right processes Further to completing the Board succession programme in 2020, and with a clear focus on positioning Centamin for long term success, we completed a ‘root and branch’ review of our management and operating teams. This confirmed what we already knew, Centamin has some great people and the focus has been on upskilling and strengthening the leadership team in a limited number of key areas with the appointments of a Head of Risk, Head of ESG, Group Exploration Manager, Group Mineral Resource Manager and Group Projects Manager. I believe that the addition of these new team members working alongside the existing high-quality team will enable us to deliver into our long-term vision of growing Centamin into a top tier multi-asset gold producer. Recognising talent and ability and providing an environment for individuals to grow and develop is key in motivating and retaining the best people who will deliver this vision. We have allocated US$6 million to workplace development programmes at Sukari in 2021, providing the training and tools needed to perform to the best of their ability, with several additional workforce initiatives and apprenticeship programmes being developed. Centamin Annual Report 2020 > Additional Information> Corporate Governance> Foreword> Financial Statements14 STRATEGIC REPORT – CEO STATEMENT CONTINUED Sustainability Centamin’s mining operations and 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. Managed correctly, the mining sector can be a significant engine of local growth and development providing substantial benefits to the societies in which we operate. In 2020, strides were made in establishing a stronger environmental, social and governance framework, starting with the establishment of the board-level Sustainability Committee and the appointment of Paul Cannon as Group ESG Manager. Centamin is a significant employer and financial economic contributor to both the government and local communities. Over 95% of our total workforce is employed locally and over 60% of our supplies procured within Egypt at Sukari and 94% of our supplies procured locally to our exploration projects in West Africa. In 2020, our employee development training nearly doubled and further progress was made developing talented local employees into positions of management. Our local communities are an extension of our workforce and where many of our contracted workforce live. As we look to 2021 and beyond, we are developing integrated programmes that meet the needs of our local communities and focus on our target areas of training and education, healthcare, gender equality and local economic participation. I look forward to updating you more on these initiatives in the future. Pursuing growth As a team we spent 2020 reviewing the growth potential of Centamin and I am excited by the number of opportunities already in our portfolio before we even consider looking externally for new opportunities. Our operations are hosted in two of the world’s great geological terranes, the under-explored Arabian-Nubian Shield in Egypt and the Birimian terrane of West Africa. Our defined resources at Sukari sit along a 2km surface signature within our 160km2 licence. The Sukari orebody remains open at depth and along strike and I believe there is great potential to further develop the resource base at Sukari. The full potential of the wider Sukari concession area remains untested and there is potential for further discovery within the existing tenement. With a new geological leadership team and a significant budget allocation active exploration programmes are underway to unlock that potential. Furthermore, Centamin is looking to expand its footprint along the Arabian Nubian Shield, and participated in Egypt’s exploration bid round, launched in March. Commercial terms are being negotiated, with the goal to increase the Company’s footprint in Egypt by way of operations, employment and further opportunities. LIFE OF ASSET REVIEW: SUKARI VALUE MAXIMISATION In 2020 we completed the first stage of what we refer to as the Life of Asset review. Having operated Sukari for ten years we wanted to ensure the world class orebody was being operated as a world class mine. In the second half of 2019 we launched a series of comprehensive optimisation studies across every aspect of the asset, looking for innovative opportunities to improve how we operate, reduce costs, drive productivity and efficiency gains, enhance our sustainability performance with the ultimate goal of delivering on our strategy and maximising margins and returns for shareholders. 2020 2021 OCCUPATIONAL HEALTH & WELLBEING GEOLOGY GEOTECHNICAL ENGINEERING MINE SCHEDULING ENVIRONMENTAL & SOCIAL 3 YEAR GUIDANCE ADVANCED OPTIMISATION WORK LIFE OF MINE PLAN Technical optimisation studies Life of Asset Review Stage 1 Life of Asset Review Stage 2 Find out more at www.centamin.com Centamin Annual Report 2020 QUICK FIRE Q&A WITH CENTAMIN’S NEW CEO 15 OPERATIONAL SAFETY REMAINS A PRIMARY FOCUS FOR MANAGEMENT, AND THIS YEAR’S SAFETY RECORD IS EVIDENCE OF THE CONTINUED PROGRESS IN THIS AREA. Q A Why did you join Centamin? “In a nutshell it was too good an opportunity to let go – to be involved with the world class resource at Sukari and to lead a refreshed team, motivated to reshape the operations for the next decade and beyond. On a site visit prior to accepting the position, I recognised there was untapped potential for Sukari to grow, making it a very strong engine with which to drive the development of a diversified growth platform. Add to this picture, a company which has a robust balance sheet and a premium LSE listing – it was apparent to me that opportunities to lead a company like Centamin don’t come along very often. It’s a great challenge and it’s one that I know myself and the team are hugely excited about. We are defining and delivering a new era for Centamin.” Q A What can you expect from the new Centamin going forward? • a safe and sustainable operation • rigour and discipline in our planning • greater efficiency and productivity • these to flow through to free cash flow generation • us to execute on the growth opportunities, and • we will have fun in the process, because we are passionate about what we do. Our exploration portfolio in West Africa made good progress in 2020, and despite initial disruptions caused by COVID-19, all budgeted exploration and drilling programmes were completed. Strategic reviews for each of the projects commenced earlier this year and I look forward to communicating the outcomes of those studies, and a route to value realisation next quarter. Outlook After a challenging 2020, Centamin has emerged with a renewed focus on delivering the full potential of the Company. Centamin is an established Company – ten-year operating track record, seven-year dividend stream, premium dual-listed, FTSE 250 constituent, fully distributed capital structure with a robust balance sheet. This is an excellent platform from which the Centamin team can build from. In December, we presented the conclusions of the Phase 1 Life of Asset review (“LOA”) and three-year outlook, detailing clear cost-saving, exploration, and productivity initiatives, targeting 450–500,000 ounces production at less than US$900/oz all-in sustaining costs from 2024. This was the first step on the journey of our plans to unlock Sukari’s full potential. Phase 2 of the LOA is ongoing to assess and identify further opportunities for exploration, productivity, and efficiency improvements, giving us a fully optimised life of mine plan for Sukari. We look forward to communicating our future progress throughout the year and beyond. Centamin is a company of many strengths with significant opportunities ahead. Combining the business’s asset quality, financial flexibility and active growth pipeline, and quality people to drive long-term value creation, we look forward to generating sustainable returns for our shareholders and broader stakeholders alike. We believe we are in a strong position to navigate future challenges within our control, presented by the continuation of COVID-19. We continue to work closely with our government partners, monitoring the developments and adapt our processes accordingly, to ensure the safety of our people and local communities, and minimise disruption to our operation. Let me end by thanking the leadership team and all our colleagues, contractors and partners for their steadfast support and excellent work. And to the Board for your advice and stewardship. Martin Horgan Chief Executive Officer and Director Centamin Annual Report 2020 > Additional Information> Corporate Governance> Foreword> Financial Statements> Strategic Report16 STRATEGIC REPORT – MARKET REVIEW MARKET REVIEW Our robust balance sheet, underpinned by a resilient business with strong capacity for growth, gives us the flexibility and strength throughout the cycle to deliver sustainable returns to shareholders. GOLD PRODUCTION IN A CHANGING WORLD MACRO OVERVIEW COVID-19, Brexit and the chaotic end to the US administration of President Trump have all changed the world in 2020. In 2020, global GDP contracted as countries mandated restrictions on the movement of goods and people, both internationally and domestically, due to the COVID-19 pandemic. This was also paired with huge stimulus measures aimed at softening the impact to people and business with quantitative easing measures brought in by many central banks. This led to record low yields on ten-year US treasury bonds and many bonds now offering negative yields. Stock markets started the year strong before entering a short-lived bear market that, aided by monetary policy, reversed to leave many valuations at all-time highs. In the commodities sector, oil contracts turned negative as investors tried to circumvent deliveries as demand stagnated, prices recovered modestly as there are concerns over the lasting impacts of the pandemic on oil demand. Meanwhile gold was one of the best performing assets of the year outpacing the S&P 500. Activity and trade in goods saw improvements from mid-2020 whilst the services sector, in particular tourism, is still largely depressed. Predictions for the 2021 global economy remain uncertain. Global GDP is expected to expand in 2021 however this is reliant on effective management of the virus alongside effective vaccination. (1) GOLD REACHES NEW HIGH IN 2020 WITH BEST PERFORMANCE IN A DECADE 2067 1898 25% 6% 11% -27% -2% -10% 9% 13% -2% 19% ) z o / $ ( n o i l l u B d l o G – A M B L 2200 1800 1400 1000 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Data Source: S&P Global Market Intelligence (1) World Bank (2) World Gold Council (3) S&P Global Market Intelligence; Gold Mined Supply Centamin Annual Report 2020 17 COMMODITY CYCLE GOLD MARKET REVIEW (2), (3) In 2020, the gold price had its best performance in ten years, finishing the year up 25% and continuing from the strong performance in 2019. The London Bullion Market Association (“LBMA”) high of US$2,067/oz was achieved in August, surpassing the previous peak of US$1,898/ oz in September 2011. The average LBMA price for the year was US$1,771/ oz. A key driver throughout 2020 was the global economic and healthcare response to COVID-19. Unprecedented stimulus announcements, falling bond yields – both real and nominal – dollar weakness and declining interest rates saw a rise in investor appetite for physical gold and gold equities, as reflected in record gold ETF inflows. Lockdowns in key gold producing nations filtered through to supply with mine production falling 5% in H1, many operations began returning to normal activity in H2 with a production increase from Q3 (3). 2020 WTI INDEX 150% 100% 50% 0% -50% -100% Following its August peak, gold prices fell; geopolitical uncertainty was lowered with a bipartisan outcome in the US election and nearing completion of Brexit negotiations. This was alongside expectations of a future market recovery, meaning investors exited ‘safe havens’ into speculative assets with vaccine news boosting the broader equities market. However, as 2020 closed out, gold reversed its downward trend with the dollar weakening on optimism of a US$900bn stimulus deal alongside mutations of the COVID-19 virus threatening global recovery efforts with mounting concerns around the need for new lockdown restrictions. The outlook for gold is dependent on several factors beyond physical supply and demand: pace of global economic recovery, further government intervention through stimulus or quantitative easing, potential changes to consumer behaviour, business foreclosures, geopolitical trade tensions. How we responded As a gold miner, Centamin is impacted by the dynamics of the gold market. Overall, 2020 was an extraordinary year in terms of global uncertainty and 2021 will not be without challenges. To ensure business strength throughout the commodity cycles, Centamin prioritises operating margins over production volume through stringent cost management, disciplined capital allocation, innovation targeting efficiency and productivity gains and by maintaining a robust balance sheet. Centamin’s average realised gold price for 2020 was up 26% compared to 2019, gold sales were flat and cash costs of production declined 2%. Centamin Annual Report 2020 > Additional Information> Corporate Governance> Foreword> Financial Statements> Strategic Report18 STRATEGIC REPORT – MARKET REVIEW CONTINUED OIL MARKET REVIEW For the oil market, 2020 was a highly volatile year, ending the year 21% down year-on-year, at US$48.52 a barrel. The decline in oil prices translated to lower consumer fuel prices with a drop in realised diesel prices throughout 2020. In Q1 2020, global restrictions on the movement of people and goods created a negative demand-side shock, resulting in a sharp fall in international prices. This was further compounded by supply-side tensions between Saudi Arabia and Russia. In April, the West Texas intermediate contracts turned negative due to fears over demand weakness and a shortage of crude oil storage. By the middle of the year, as global lockdowns eased, demand steadily returned and prices began to rise to approximately US$40 a barrel. Thus far in 2021, the oil price has recovered back to pre-COVID-19 levels, due to increasing demand and recently aided by supply-side shocks because of extremely cold weather conditions in the United States. How we responded Currently, Centamin’s business operations rely on diesel to fuel the mobile mining fleet and for thermal power generation. The Company has significant initiatives in place to reduce the reliance of diesel, including the construction of a 36Mw solar farm to provide partial power to the processing plant and reduce diesel consumption by greater than 20%. Preparatory works are underway, ahead of construction, with commissioning expected in H1 2022. One of the top political priorities within Egypt is expansion of natural gas utilisation How we responded As the country’s largest mining company, and significant local employer, Centamin takes a hub- based approach, with a dedicated in-country manager, supported by the executive and sustainability team, maintaining regular engagement with key government officials at all levels and local stakeholders. In response to the COVID-19 outbreak, early action was taken to protect the on-site workforce, secure operations, and support the local community of Marsa Alam. Centamin provided logistical and financial support federally and within our local community. The Company worked closely with our local partners, the Egyptian government to understand and address their needs in combating COVID-19 and worked collaboratively to sustain operations at Sukari. Centamin has long believed there is significant untapped gold potential within the underexplored Egyptian Arabian Nubian Shield. The proposed structural changes to the mining code and fiscal licensing terms are a positive step towards unlocking that exploration potential. Centamin bid for several blocks of land in the exploration bid round launched in March 2020. The bid round attracted a few other international gold mining companies. Commercial terms are being negotiated, with the goal to increase the Company’s footprint in Egypt by way of operations, employment and further opportunities. (Note. Any agreed terms on new licences in Egypt would be independent from, and therefore not impact, the Sukari Gold Mine Concession Agreement, under Egyptian Law 222 of 1994.) OPERATING ENVIRONMENT EGYPT In 2020, Egypt was faced with the challenges presented by COVID-19 with economic activity slowing with social distancing measures and the temporary suspension of air travel. The government allocated an EGP 100 million emergency response package augmenting health care expenditure and providing financial relief for individuals and businesses. The borders remained open to the trade of goods. Inflation continued to decline to below 6% and rose to approximately 10%. Growth declined to 3.5% from 5.6% in 2019, with tourism and oil sectors hit substantially. A vaccine rollout programme has started in early 2021 and a projected economic rebound is expected in 2022. In 2020, the Egyptian Ministry of Petroleum and Resources announced the new mining code including a tax, rent, royalty framework and launched several new licensing bid-rounds, including one for gold exploration ground. Centamin Annual Report 2020 19 CURRENCIES GAIN AGAINST WEAKENING DOLLAR AUD/USD GBP/USD EGP/USD EUR/USD US Dollar Index (DX-Y .NYB) throughout the country. At Centamin we are investigating the use of liquefied natural gas as a more efficient and environmentally friendly fuel source for both onsite power generation, alongside solar, and for our mobile mining fleet. Centamin consumed 161 million litres of fuel, a 2% increase compared to 2019. Centamin’s average paid fuel price for 2020 was US$0.45 per litre, a 22% reduction year on year. In 2020, fuel represented 15% of the Company’s total cost base. 110.0% 105.0% 100.0% 95.0% 90.0% 85.0% 80.0% 75.0% 01/2020 06/2020 Data Source: S&P Global Market Intelligence 12/2020 WEST AFRICA In 2020, there were presidential elections in both Côte d’Ivoire and Burkina Faso, where Centamin have exploration projects. In Côte d’Ivoire, Alassane Ouattara won the presidential election with a 95% majority. In Burkina Faso, the incumbent president, Roch Marc Christian Kaboré, was re-elected with a 58% majority. Security in Burkina Faso remains an emerging risk for the Company. Organised terrorist attacks and banditry continued to be reported across the country. Presidential campaigning was impacted by regional instability, limiting the candidate’s access to some regional constituents. FOREIGN EXCHANGE The impact of COVID-19 and mobility restrictions in Q1 impacted GBP and AUD negatively causing investors to move to USD with the rest of the world facing uncertainty. That soon reversed and by April, the impact of a delayed response in the United States with a rising death toll saw investors exit the USD. Even though Europe was hit hard by COVID-19 in Q1, the response with strict lockdowns leading to a slowed mortality rate, monetary policy from the European Union and a loss of confidence in USD saw the EUR perform well. Similarly, in Australia, strict lockdown measures and close control over its borders saw many states return to relative normality by the end of the year, allowing the AUD to finish strongly. The pound managed to recover against the dollar with early vaccine news a contributing factor. High death rates, Brexit negotiations, and the rise of a new variant strain all hindered the pound however with it finishing just above 3% ahead of its starting position versus the USD. How we responded Safeguarding our workforce is our number one priority. The Group employs local security forces to protect its people and assets in our areas of operation. Batie West, the Company’s asset in Burkina Faso, is located in the southwest, bordering Côte d’Ivoire. Despite no reported incidents nearby, there was no fieldwork in 2020 at the Company’s Batie West exploration project in southern Burkina Faso. How we responded Centamin is a USD denominated company with 100% of the gold sales and, in 2020, 51% of the Group cost base in USD. Of the balance, 27% of the costs were in EGP with the main components being fuel and labour, which strengthened 2% against the USD. AUD represents 14% which is almost entirely attributed to contractor costs. The 8% balance comprises of GBP, EUR, and ZAR linked to labour, contractor and consumable costs. Centamin does not have any currency hedges or debt in place. Centamin monitors currency risks and believes that the currency exposure from the cost base is sufficiently balanced. Centamin Annual Report 2020 > Additional Information> Corporate Governance> Foreword> Financial Statements> Strategic Report20 STRATEGIC REPORT – OUR BUSINESS MODEL OUR BUSINESS MODEL CREATING LONG-TERM VALUE WHAT WE RELY ON UNLOCKING POTENTIAL AND CREATING LONG-TERM VALUE NATURAL RESOURCES (Natural capital) We use water and fuel to operate and continue to identify opportunities to improve resource efficiency and minimise our environmental footprint. PROPERTY, PLANT AND EQUIPMENT (Physical capital) Both the processing plant and open pit mine involve a large equipment fleet, plant and site infrastructure. SKILLED WORKFORCE AND EXPERIENCED MANAGEMENT TEAM (Human & intellectual capital) Operating in Egypt provides good access to an educated workforce and we invest in the upskilling and professional development of our workforce. LONGSTANDING PARTNERSHIPS WITH GOVERNMENT AND LOCAL COMMUNITIES (Social capital) We maintain a strong licence to operate through trusting partnerships with host countries and communities in which we operate. STRONG FINANCIAL MANAGEMENT (Financial capital) Disciplined cost controls and efficient capital allocation enable us to continuously invest in longevity and growth of the business, balanced with strong shareholder returns. DELIVERING OUR STRATEGY Right people, right processes • Strong governance framework • Strengthened management team • Empowered workforce Process • Rigour & discipline • Robust technical data • Optimised life of mine plan • Three-year operating plan • Confident twelve-month budget and guidance A STRONG SUSTAINABILITY CULTURE Our commitment to responsible mining • Stakeholder engagement – building strong, constructive and responsive relationships based on trust and respect • Health, safety and wellbeing – establish a rigorous workplace health and safety culture that protects our workforce against accidents and occupational disease • Social and economic development – contribute to economic and social progress, and transform people’s lives for the better • Environmental responsibility – stewardship of natural resources, balancing the needs and interests of communities, conservation interests and other stakeholders, and being part of the climate solution Centamin Annual Report 2020 UNDERPINNED BY STRONG CORPORATE GOVERNANCE; ROBUST RISK & OPPORTUNITY MANAGEMENT; DISCIPLINED CAPITAL ALLOCATION > Foreword > Strategic Report > Corporate Governance > Financial Statements > Additional Information 21 Centamin has been creating long-term value within Egypt for three decades, working in partnership with the Egyptian government, local communities and a multitude of local businesses throughout our supply chain to develop Egypt’s modern gold mining industry. We are serious in the application of ethical business practices, supported by robust systems of corporate governance, transparency and accountability. UNLOCKING POTENTIAL AND CREATING LONG-TERM VALUE WHAT WE DO SHARING THE VALUE WE CREATE EXPLORE Maximising our geologic understanding Our geologists, with the support of technology, systematically and methodically explore our prospective landholdings Read more on page 22 DEVELOP A modular approach 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 MINE Long-term planning Sukari is a large-scale, low-cost open pit and underground mine Read more on page 44 PROCESS Quality end product We produce gold doré bars from a 12Mt per annum carbon in leach plant and smaller dump leach operation. All gold production is routinely shipped to a third-party refiner for smelting into gold bullion SUSTAIN Business longevity and corporate integrity We are committed to delivering sustainable value for our people, stakeholders and host communities by protecting the health and wellbeing of our people, environmental stewardship and being a catalyst for socio-economic empowerment in our host communities. UNDERPINNED BY STRONG CORPORATE GOVERNANCE; ROBUST RISK & OPPORTUNITY MANAGEMENT; DISCIPLINED CAPITAL ALLOCATION TALENTED WORKFORCE 1,709 employees US$59.2m wages, salaries and benefits CONTRIBUTIONS TO OUR HOST COMMUNITIES A ROBUST AND RESPONSIBLE SUPPLY CHAIN CONTRACTORS WITH A SHARED VISION US$2.0m invested in our local communities US$181m goods and services are procured locally from Egyptian suppliers 95% of our contracted workforce is employed locally IN PARTNERSHIP WITH THE GOVERNMENT US$199m in profit share payments and royalties in Egypt WORKING TO MINIMISE OUR ENVIRONMENTAL FOOTPRINT Constructing a 36MW solar farm that will reduce the CO2-e emissions from the Sukari power plant by more than 20% Constructed and commissioning a second tailings storage facility REWARDING OUR SHAREHOLDERS US$104m in total dividends paid and proposed Centamin Annual Report 2020 22 STRATEGIC REPORT – OUR BUSINESS MODEL CONTINUED APPROACH TO GEOLOGY STRENGTHEN AND RESTRUCTURED GEOLOGICAL LEADERSHIP Optimising the assets and capital allocation PORTFOLIO MANAGEMENT EXPLORATION IS THE ‘RESEARCH AND DEVELOPMENT’ OF THE MINING INDUSTRY AND THE DISCOVERY OF COMMERCIAL MINERAL DEPOSITS CAN CREATE ENORMOUS VALUE – VALUE THROUGH THE DRILL BIT. Howard Bills, Group Exploration Manager SUKARI GOLD MINE SUKARI UNDERGROUND & OPEN PIT Extension & growth BATIE WEST PROJECT Strategic review underway DOROPO PROJECT Pathway to reserves A D V A N C I N G G R O W T H P I P E L I N E ABC PROJECT & SUKARI REGIONAL Generate high priority targets Centamin Annual Report 2020 > Foreword > Strategic Report > Corporate Governance > Financial Statements > Additional Information 23 Centamin’s foundation was established by creating value through a systematic exploration process and the drill-bit, taking Sukari from discovery to cashflow and a return to shareholders. Successful exploration results from combining nimble and collaborative exploration teams and experienced leadership with large tenement packages in prospective terranes and in jurisdictions with favourable legislative frameworks. Centamin considers all these when assessing the risk and opportunity ahead of exploration investment. Work programmes are framed within a clear strategy on how to unlock value. Smart exploration involves a systematic and structured workflow with each phase of exploration designed to reach project decision points or ‘toll gates’. The overall pattern as exploration proceeds through the discovery and project development stages is risk reduction coupled with increased expenditure. Upskilling the geology team In 2020, the Company restructured its approach to geology by establishing the mineral resource management department, responsible for the Group’s orebodies, to sit alongside the near mine and greenfield exploration department, responsible for delineating and developing early-stage project potential and identify new exploration opportunities. To support the restructure there has been investment in building the teams and strengthening the technical expertise and introducing new technology. Centamin’s exploration strategy is to focus on the discovery of commercially feasible projects which meet the Company’s development profile criteria defined by reserves, grade, annual production and expected life of mine. The Company currently has an active asset pipeline. With the appointment of Howard Bills as Group Exploration Manager and Craig Barker as Group Mineral Resource Manager, a full review of the Company’s portfolio commenced, looking at both the West African assets and the broader potential of the Sukari concession area. The review will assess and rank the potential of the current portfolio, identify gaps in the current exploration approach and start to implement changes to ensure exploration remains a key focus for the Company as a driver of value creation. Please refer to the Exploration Review on page 50 for more information on this year’s activities and our value-driven approach to orebody stewardship. UNDERSTANDING THE OREBODY UNDERSTANDING THE OREBODY MINERAL RESOURCE MANAGEMENT EXPLORATION OREBODY STEWARDSHIP TO MAXIMISE RETURNS FOR STAKEHOLDERS GREENFIELD EXPLORATION TARGETING NEW OREBODIES Re-interpret existing data Maximise resource growth Upgrade resource management processes Build robust resource models based on geology Control ore movement Integrate mine-to-mill planning Target reserve replacement and resource extension Systematic and disciplined exploration Generate new priority targets Evaluate known satellite resource deposits FY21–FY23: FY21: US$20m pa expected spend on drilling and development US$6–7m scheduled capital spend on concession exploration Centamin Annual Report 2020 24 STRATEGIC REPORT – OUR BUSINESS MODEL CONTINUED APPROACH TO SUSTAINABILITY At the centre of our culture is our focus on doing the right thing for our people, local communities and wider society. 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 purpose is one and the same as our sustainability purpose, to create opportunities for people through responsible mining. RIGHT PEOPLE, RIGHT PROCESSES: • Organisation structure, management and accountability defined for sustainability at all levels of the organisation • Appointment of Group Environmental and Social Manager to the senior management team with a direct reporting line to the CEO • Establishment of a corporate sustainability team with deep operational knowledge of Sukari • Renewed engagement with the Sustainability Committee of the Board, meetings scheduled every two months SUSTAINABILITY PERFORMANCE FRAMEWORK: • Policy framework aligned with good industry practice and supplemented with principles and commitments on responsible tailings management and climate-related risk • Development of operational performance standards to address key business risks and impacts, and aligned with good industry practice • Improved management assurance processes of sustainability performance, including annual third-party review • Group and asset-level performance indicators aligned to the Responsible Gold Mining Principles • Annual reporting aligned to the Global Reporting Initiative and Sustainability Accounting Standards Board (“SASB”) CONTROL ON CRITICAL RISKS: • Roll-out of twelve critical risk standards at the Sukari Mine to formalise risk control and reinforce our commitment to zero-harm • Each risk is supported by a dedicated risk owner, a detailed risk profile and a detailed performance standard • Identify ‘critical controls’ and assess any failures • Focus on enabling the workforce to understand risks and manage critical controls effectiveness during everyday work Centamin Annual Report 2020 > Strategic Report 25 WE ARE STEADFAST IN OUR COMMITMENT TO THE PROTECTION OF THE HEALTH AND WELLBEING OF OUR PEOPLE, ENVIRONMENTAL STEWARDSHIP AND BEING A CATALYST FOR ECONOMIC EMPOWERMENT IN OUR HOST COMMUNITIES. Paul Cannon, Head of ESG A PATHWAY FOR PROFESSIONAL DEVELOPMENT: KEEPING OUR COMMUNITIES COVID SAFE: • Develop a shared understanding of the critical behaviours required for successful performance in Centamin • Train, educate and provide the skills necessary for all employees to ensure that pathway initiatives are completed at a proficient level • At the Sukari Mine, bespoke frontline leadership training for leading hands, supervisors, superintendents, and managers • Ensure leadership continuity for all critical positions through succession planning – retain and develop intellectual knowledge capital for the future and encourage individual advancement • Financial support provided to the governments of Egypt, Côte d’Ivoire and Burkina Faso in their efforts to reduce the transmission of COVID-19 • Supply of equipment and suppliers to local medical facilities in our project areas, including masks, disinfectants, thermometers, and sterilisers • In the public hospital of Marsa Alam adjacent to the Sukari Mine, installation of a state-of-the-art PCR machine to perform standard diagnostic COVID-19 test • For the Sukari workforce strict adherence to social distancing and COVID-19 testing in the interest of protecting not only the operation but the health and safety of the community • Financial support to vulnerable families affected by COVID-19 GETTING SOLAR READY: • At Sukari, impact assessment studies were completed and preparatory works commenced for a 36MW DC peak solar plant complete with battery storage system and integration with existing thermal power plant • The plant will generate 23% of the annual power for the site and reduce annual diesel consumption by 22M litres per year, plus reduced traffic and emissions from vehicles transporting fuel to site • Reduction in CO2 emissions by 60,000 tonnes per annum, plus other pollutants CO, S, NOX. This is equivalent to a 13% reduction in overall mine GHG emissions • Onshore construction contractor ensuring high-level of local content and skill development • Commissioning scheduled for H1 2022 Centamin Annual Report 2020 > Additional Information> Corporate Governance> Foreword> Financial Statements26 STRATEGIC REPORT – UNDERSTANDING OUR STAKEHOLDERS UNDERSTANDING OUR STAKEHOLDERS EMPLOYEES GOVERNMENTS HOW WE ENGAGE HOW WE ENGAGE • Daily pre-start and toolbox meetings • Routine safety meetings with management, leadership, committee and HSE representative meetings • Professional development: performance appraisals, objective setting, incentives • Training and skill development, ‘on-the- job’ supervision, technical and soft-skill training, felt leadership • Code of Conduct and employee induction • Grievance mechanism and whistleblowing platform • Bulletins, intranet and notice boards • Corporate visits to operational sites • Regular formal and informal engagement with ministries and local authorities • Routine site visits and regulatory inspections • Routine board meetings with national partner agencies • Routine operational reporting • Transparent profit sharing, royalty, permit, tax payments ISSUES RAISED ISSUES RAISED Occupational Health and Safety (“OHS”) Local communities Training and education Local communities Economic performance Energy OHS Indirect economic impacts Training and education Market presence (i.e. local employment) Environmental compliance OUTCOMES OUTCOMES • Leading indicators reinforced, plan task • Community investment and development observation, felt leadership programme sustained • Professional development pathway • Reinforcement of leading OHS in place • Strict controls on local content in place • Solar project commenced preparatory works, investment in automation of high voltage distribution system to optimise fuel efficiency and light-weight truck trays indicators, plan task observation, felt leadership • Professional development pathway in place • Strict controls on national recruitment and procurement in place • Legal compliance sustained FOCUS ON MAKING CENTAMIN A GOOD PLACE TO WORK FOCUS ON JOB CREATION – PAYING COMPETITIVE SALARIES It is important we work hand- in-hand with our communities, returning value to society as well as its owners and partners. Our purpose is to create opportunities for people through responsible mining. To do this, we must understand our stakeholder interests and needs, while communicating our purpose. Communication creates community and with regular engagement, we are able to create mutual long-term value and success. Find out more about our Board engagement with stakeholders on page 31 of the Governance Report Centamin Annual Report 2020 27 COMMUNITIES SHAREHOLDERS SUPPLIERS, CONTRACTORS & REFINERS HOW WE ENGAGE HOW WE ENGAGE HOW WE ENGAGE • Open dialogue with community leaders • Community investment and development planning, charitable donations • Job creation and skill development • Site tours of the operations • Grievance mechanism • Regulatory announcements and press releases on material performance, including quarterly operational and sustainability reporting and biannual financial reporting • Regular market presentations, investor conferences and open market dialogue • AGM and one-on-one meetings • Annual Report and Sustainability Report • Engagement with proxy advisory groups and shareholder stewardship teams • Open dialogue and regular meetings with onsite management teams • Routine contract review and compliance checks • Code of Conduct and contractor induction • Training, site inspections, felt leadership • Tendering and procurement procedures • Grievance mechanisms and whistleblowing platform ISSUES RAISED Employment Local communities ISSUES RAISED Emissions Diversity and equal opportunity Training and education OHS Market presence (i.e. local employment) Anti-corruption Rights of indigenous people Training and education ISSUES RAISED OHS Training and education Local communities Environmental compliance Indirect economic impacts Tax OUTCOMES • Strict controls on local sourcing in place • Community investment and development programme sustained • Professional development pathway in place • Transparent payment of profits, royalties and taxes to government OUTCOMES OUTCOMES • Solar project commenced preparatory • Leading occupational health and works, investment in automation of high voltage distribution system to optimise fuel efficiency and light-weight truck trays and dynamic gas blending • Leading OHS indicators reinforced, plan task observation, felt leadership • Anti-bribery and corruption training provided to ‘at-risk’ employees • Professional development pathway in place safety indicators reinforced, plan task observation, felt leadership • Training available for onsite contractors • Strict controls on national recruitment and procurement sustained • Community investment and development sustained • ESG criteria reinforced in contracts for major suppliers including local content FOCUS ON COMMUNITY SUSTAINABILITY THROUGH INVESTMENT, EDUCATION AND EMPLOYMENT FOCUS ON TRANSPARENT ENGAGEMENT, DELIVERY ON OUR STRATEGY, REBUILDING SHAREHOLDER CONFIDENCE THUS IMPROVING OUR VALUATION FOCUS ON MAINTAINING A TRUSTED TRACK RECORD WITH SUPPLIERS, CONTRACTORS AND REFINERS Centamin Annual Report 2020 > Additional Information> Corporate Governance> Foreword> Financial Statements> Strategic Report28 STRATEGIC REPORT – UNDERSTANDING OUR STAKEHOLDERS CONTINUED MATERIALITY ASSESSMENT PROCESS FOCUSING ON TOPICS MATERIAL TO CENTAMIN AND OUR STAKEHOLDERS A materiality survey was distributed to internal and external stakeholder groups in which respondents were asked to select the seven most important issues based on potential impact to Centamin’s business from a list of 34 material topics under the categories of ‘Economic’, ‘Environmental’, and ‘Social’. The assessment results are plotted below, indicating those issues of high and medium importance to our external stakeholders and internally to Centamin. Overall, there is a strong alignment between internal and external stakeholder views and priorities – and good alignment between the results of 2019 and 2020. Internal stakeholder groups included: corporate, directors, management, senior and junior personnel. External stakeholder groups included: suppliers, NGOs, government, proxy advisors and community. In total 94 stakeholders responded to the survey. The priority material topics as identified through this assessment have informed the selection of Global Reporting Initiative (“GRI”) and SASB disclosures to be detailed in the Sustainability Report. The Report will provide a narrative explanation of why the topic is material, where the impacts occur, and how these impacts are being managed OUTCOMES 2019 high priority issues: • Occupational health and safety • Environmental incidents • Resource efficiency • Management of hazardous waste (tailings) HIGH S R E D L O H E K A T S O T E C N A T R O P M I 2020 high priority issues: • Occupational health and safety • Training and education • Local communities • Environmental compliance • Indirect economic impacts 2019 medium priority issues: • Revenue transparency • Anti-bribery and corruption • Emergency preparedness • Skills training and staff development • Purchasing from local suppliers • Climate change • Air pollution 2020 medium priority issues: • Market presence • Economic performance • Diversity and equal opportunity • Climate change • Employment • Anti-bribery and corruption • Management of hazardous waste (tailings) HIGH LOW CURRENT OR POTENTIAL IMPACT ON THE BUSINESS HIGH Centamin Annual Report 2020 > Foreword > Strategic Report > Corporate Governance > Financial Statements > Additional Information 29 SECTION 172 Although Centamin is a Jersey registered company and the full requirements of the Section 172 are additional to the Directors’ current obligations under Jersey Law, the Directors believe they have complied with the UK requirements in the 2018 Code – Provision 5 by considering the Company’s stakeholders in their decision-making. Summary of the Board’s approach Through the Board’s governance structure, key decisions give due consideration to all stakeholders in compliance with Section 172. The summary set out below highlights references within the Annual Report that illustrate our approach to decision-making through stakeholder assessment, engagement and promoting the success of the Company. BOARD/COMMITTEE ASSET LEVEL Mine planning and monitoring SENIOR LEADERSHIP Values, Purpose and Strategy As set out throughout the Strategic Report Culture See page 88 to understand our culture and values that define the way we work Our Policies See ways in which we are developing our policy framework in the Sustainability Committee Report to implement our strategy and reinforce our culture and values Board and Governance structure The Governance structure including the roles of the Board, senior leadership and responsibilities can be found on page 96 showing the accountability of the Board Risk and Internal Control framework To understand how the Board assesses risk, operational risks and linkages to strategic aims and monitoring of those in order to deliver the strategy in line with our culture and values Centamin Annual Report 2020 30 STRATEGIC REPORT – SECTION 172 CONTINUED In accordance with the board charter, it is the responsibility of the Board to understand the views of stakeholders and how they are impacted by the activities of the Group. Stakeholder engagement has to be led by the Board in order for the Board to make informed business decisions. Continuous engagement and effective communication is facilitated across the chain of stakeholders. EMPLOYEES SHAREHOLDERS APPRAISALS AGM TEAM MEETINGS ANNUAL REPORTS VOICE OF SUKARI PROXY ADVISORS COMMUNICATION ENGAGEMENT EMRA REPS ON SITE GENERAL ASSEMBLY COMMUNITY REPS CODE OF CONDUCT CONTRACTOR MANAGEMENT MATERIALITY ASSESSMENT GOVERNMENT AND COMMUNITIES SUPPLIERS, CONTRACTORS AND REFINERS Centamin Annual Report 2020 > Foreword > Strategic Report > Corporate Governance > Financial Statements > Additional Information 31 To fully illustrate engagement processes, stakeholders have been grouped into key categories with an overview of their interests and how we have responded or acted to keep them informed of our principal decisions. Engagements with stakeholders Employees There are a number of ways in which we get to understand our people on matters concerning their well-being as well as the matters of the business which are as follows: • Team meetings, regular updates and reports from the Executive and senior management to and from sites operations • Periodic mail outs, daily prestart and toolbox operational site meetings • Employee engagement forums (including the Voice of Surkari) • Stakeholder materiality assessment in line with the global reporting initiative Governments Members of the Board continue to have formal meetings and regular correspondence with Government officials and our partners EMRA. On site visits at Sukari continued for EMRA representatives and audits required in accordance with the Concession Agreement. Materiality assessment – to receive feedback from authorities, the results of which are set out in the Sustainability Report. Shareholders We engaged extensively with our shareholders and investors through numerous channels such as one-on-one meetings, AGM, annual reports and accounts, presentations, disclosures and public announcement. Suppliers, contractors and refiners We rely on our suppliers, contractors and refiners to function efficiently and we continue to build relationships with them that mutually benefit all sides. We continuously check whether their performance is in line with our standards or Code of Conduct. Principal decisions during 2020 Talent management programme The Board continued to support the initiative to create opportunities for development of skills for highly talented Egyptian nationals and future leaders to aid succession. This continues to have the oversight of the Board. Wellbeing and employee assistance Through on-line forums employees can access professional assistance to discuss anything that concerns their physical or mental health. Payments to Governments The Board ensured that the necessary payments were made in the form of profit share, corporate taxes, royalties, exploration licence fees, mining and other licence fees. Payment of Dividends The Board commitment to shareholder returns with the intention to distribute at least US$100 million in total dividends for each of the financial years 2020 and 2021. Policy Review The Board continues to support the development of the supplier due diligence, assessing active human rights policies in our supply chain during tendering, site visits and development of risk assessment tools. Centamin Annual Report 2020 32 STRATEGIC REPORT – OUR STRATEGY OUR STRATEGY OUR DIVIDEND POLICY MAKES FIRM COMMITMENTS ON CAPITAL ALLOCATION. SHAREHOLDER INTERESTS ARE ALWAYS AT THE CENTRE OF EVERYTHING WE DO. Ross Jerrard, CFO VALUE MAXIMISATION AT SUKARI OUR STRATEGIC PILLARS PRIORITIES GOING FORWARD PRINCIPAL RISKS Centamin Annual Report 2020 PEOPLE ASSET QUALITY • Continued roll-out of critical • Complete the Life of Asset Phase 2 risk standards at Sukari work programmes • Human rights due diligence and responsibility within our supply chain • Pilot gender diversity and inclusion initiatives at Sukari • Employee development pathway, leadership development programme & succession plan rolled-out at Sukari • Process plant optimisation • Complete assessment work on the use of dynamic gas blend on trucks • Trial two lightweight truck trays, leading to decision for broader rollout • Commence installation of MineStar Edge Political, Legal & regulatory compliance, Infectious Disease Outbreak, Concession Governance & Management, Licence to Operate, Future of our Workforce, Evolving Environmental Expectations, SHW Operational Performance & Planning, Geological Understanding, SHW, Future of our Workforce, Single Project Dependency, Infectious Disease Outbreak > Strategic Report 33 The Board are confident and committed to the Company’s strategy to create value and returns for stakeholders by maximising the value of its asset base – through disciplined reinvestment, attracting and retaining the right people, executing the right process – and promoting further growth and diversification, both organically and through accretive opportunities. GROWTH AND DIVERSIFICATION COMMITMENT TO STAKEHOLDER RETURNS FINANCIAL FLEXIBILITY STAKEHOLDER RETURNS ACTIVE GROWTH PIPELINE • Progress the 36MW DC Sukari solar • Socio & economic: reinforce project construction • Deliver on cost-savings initiatives • Identify additional cost-savings opportunities opportunities of local economic participation in the supply chain and strengthen governance of community investment • Environmental: alignment with good industry practice including RGMP, TCFD and GISTM Operational Performance & Planning, Exploration, Concession Governance & Management, Single Project Dependency, Gold Price, Infectious Disease Outbreak, Litigation, Political Operational Performance & Planning, Exploration, SHW, Evolving Environmental Expectations, Future of our Workforce, Licence to Operate, Concession Governance & Management, Single Project Dependency, Gold Price, Infectious Disease Outbreak, Litigation, Legal & regulatory compliance, Political • Mineral resource updates for Doropo and ABC projects • Strategic reviews to be completed for Batie, Doropo and ABC projects ahead of further capital allocation • Commence a full Sukari tenement exploration programme • Finalise negotiations on the fiscal terms of new exploration ground in Egypt’s Arabian Nubian Shield, and commence exploration Geological Understanding, Exploration, Legal & Regulatory Compliance, Political Centamin Annual Report 2020 > Additional Information> Corporate Governance> Foreword> Financial Statements34 STRATEGIC REPORT – STRATEGY IN ACTION OUR STRATEGY IN ACTION We operate a long-life asset and as custodians, it is our responsibility to preserve the integrity of our asset base and capital (human, social, physical and financial). At Centamin it is not just a commitment, it’s a mindset that we are guests of our operating countries and it is our responsibility to give back. P E O P L E A S S E T Q U A L I T Y F I N A N C I A L F L E X I B I L I T Y S T A K E H O L D E R S R E T U R N S A C T I V E G R O W T H P I P E L I N E “ 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.” “ 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.” “ 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.” “ WHERE WE DRIVE TO GENERATE LONG-TERM VALUE FOR OUR STAKEHOLDERS, WE ALSO STRIVE TO MINIMISE OUR ENVIRONMENTAL FOOTPRINT THROUGH IMPROVED OPERATING EFFICIENCIES AND TECHNOLOGY.” “ 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.” 37 PERFORMANCE IN 2020 0.84LTIFR a 41% improvement 95% of the direct workforce are local to the country of operation 14.3Moz Group gold resource (M&I) Installed Reutech MSR250 survey radar system to monitor pit stability US$719/oz cash costs of production 53% EBITDA margin 37.6CO2-e milled emissions intensity US$173m in paid and proposed dividends TSF2 completed on time under budget 7,800 metres drilled at ABC Project 5.16TRIFR a 28% improvement 12hours of workplace development training per employee 5.0Moz gold reserve at Sukari (P&P) 95% processing plant utilisation US$44m removed in cost-savings US$142m Group free cash flow 20.1% of waste rock mined and reused US$2.0m in community investments Restructured the approach to geology to focus on maximising the asset and growth opportunities Strategic Reviews underway on our West African portfolio for completion in H1 2021 1,709 total direct workforce (3,133 individuals employed including contractors) Constructing new workforce accommodation and facilities ahead of schedule and on budget 58,307 metres drilled underground 87.8% metallurgical recoveries US$829m record revenue generation US$310m cash and liquid assets, as at 31 December 2020 US$199m in profit share and royalty payments to Egyptian government partners US$181m value of goods and services procured from local suppliers 74,000 metres drilled at Doropo Project Applied new exploration ground in Egypt Centamin Annual Report 2020 Centamin Annual Report 2020 34 STRATEGIC REPORT – STRATEGY IN ACTION OUR STRATEGY IN ACTION We operate a long-life asset and as custodians, it is our responsibility to preserve the integrity of our asset base and capital (human, social, physical and financial). At Centamin it is not just a commitment, it’s a mindset that we are guests of our operating countries and it is our responsibility to give back. P E O P L E A S S E T Q U A L I T Y F I N A N C I A L F L E X I B I L I T Y S T A K E H O L D E R S R E T U R N S A C T I V E G R O W T H P I P E L I N E “ 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.” “ 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.” “ 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.” “ WHERE WE DRIVE TO GENERATE LONG-TERM VALUE FOR OUR STAKEHOLDERS, WE ALSO STRIVE TO MINIMISE OUR ENVIRONMENTAL FOOTPRINT THROUGH IMPROVED OPERATING EFFICIENCIES AND TECHNOLOGY.” “ 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.” 37 PERFORMANCE IN 2020 0.84LTIFR a 41% improvement 95% of the direct workforce are local to the country of operation 14.3Moz Group gold resource (M&I) Installed Reutech MSR250 survey radar system to monitor pit stability US$719/oz cash costs of production 53% EBITDA margin 37.6CO2-e milled emissions intensity US$173m in paid and proposed dividends TSF2 completed on time under budget 7,800 metres drilled at ABC Project 5.16TRIFR a 28% improvement 12hours of workplace development training per employee 5.0Moz gold reserve at Sukari (P&P) 95% processing plant utilisation US$44m removed in cost-savings US$142m Group free cash flow 20.1% of waste rock mined and reused US$2.0m in community investments Restructured the approach to geology to focus on maximising the asset and growth opportunities Strategic Reviews underway on our West African portfolio for completion in H1 2021 1,709 total direct workforce (3,133 individuals employed including contractors) Constructing new workforce accommodation and facilities ahead of schedule and on budget 58,307 metres drilled underground 87.8% metallurgical recoveries US$829m record revenue generation US$310m cash and liquid assets, as at 31 December 2020 US$199m in profit share and royalty payments to Egyptian government partners US$181m value of goods and services procured from local suppliers 74,000 metres drilled at Doropo Project Applied new exploration ground in Egypt Centamin Annual Report 2020 Centamin Annual Report 2020 38 STRATEGIC REPORT – KEY PERFORMANCE INDICATORS KEY PERFORMANCE INDICATORS Centamin sets Key Performance Indicators (“KPI”) each year and assesses performance against these benchmarks on a regular basis. FINANCIAL (1) REVENUE (US$ million) BASIC EARNINGS PER SHARE (“EPS”) (US cents) ADJUSTED EBITDA (1) (US$ million) ADJUSTED FREE CASH FLOW (1) (US$ million) TOTAL CAPITAL INVESTMENT (US$ million) DIVIDEND PER SHARE (“DPS”) (US cents) 2020 2019 2018 2017 2020 2019 2018 2017 2020 2019 2018 2017 2020 2019 2018 2017 2020 2019 2018 2017 2020 2019 2018 2017 828.7 652.3 603.2 675.5 +27% 13.53 +78% 7.59 6.50 8.38 437.6 +56% 280.1 258.8 309.8 141.8 145.6 138.4 +91% +42% 74.3 63.4 97.6 96.8 87.1 9.0 10.0* 5.5 12.5 -10% 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. (2) Dividends attributable to the financial year Centamin Annual Report 2020 39 Why we measure Performance LINKS TO STRATEGY Measuring revenue is key to understanding the profitability of the business. It reflects gold sales and price and can be combined with various metrics to see the percentage of revenue flowing through to the bottom line. We aim to grow EPS consistently, recognising the potential impact of market volatility on results in the short-term. EBITDA gives an indication of the Company’s ability to generate profit from gold sales. Free cash flow allows Centamin to pursue opportunities that return shareholder value. It is vital for the longevity of our assets that we invest sufficient capital in the business to maintain, optimise and grow operations. Alongside growth, value is returned to shareholders through our dividend. Centamin has a strong track record of delivering income to its investors. Revenues of US$828.7 million were up 27% on the prior year (2019: US$652.3 million) with a 26% increase in realised gold prices and less than a 1% change in ounces sold. EPS of 13.53 pence grew by 78% from 2019 with higher revenues and lower production costs contributing factors. Adjusted EBITDA increased by 56% to US$437.6 million, as a result of a 26% increase in average realised gold price alongside a 4% decrease in mine production costs. Free cash flow of US$141.8 million generated in 2020, up 91% on the prior year (2019: US$74.3 million) due to a stronger realised gold price. US$138.4 million spent in 2020 (2019: US$97.6 million) of which US$103 million was sustaining capital and US$35m was non- sustaining capital. Proposed and paid dividend per share in 2020 of 9.0 cents*, including the final proposed dividend of 3.0 cents, subject to shareholder approval. Centamin Annual Report 2020 > Additional Information> Corporate Governance> Foreword> Financial Statements> Strategic Report40 STRATEGIC REPORT – KEY PERFORMANCE INDICATORS CONTINUED Centamin is closely monitoring the global COVID-19 pandemic and the Company guidance may be impacted if the workforce, operation or projects are disrupted due to the virus or efforts to slow the spread of the virus. OPERATIONAL GROUP MINERAL RESOURCES (Million ounces) GOLD PRODUCTION (Ounces) CASH COSTS OF PRODUCTION (1) (US$ per ounce produced) ALL-IN SUSTAINING COST (1) (US$ per ounce sold) TOTAL MATERIAL MOVED (Million tonnes) METALLURGICAL RECOVERY (% of gold recovered per tonne of processed ore) 2020 2019 2018 2017 2020 2019 2018 2017 2020 2019 2018 2017 2020 2019 2018 2017 2020 2019 2018 2017 2020 2019 2018 2017 14.3Moz 15.3Moz 15.7Moz 15.0Moz -7% 452,320 480,528 472,418 544,658 -6% 719 699 624 554 +3% 1,036 943 884 790 +10% 80.8 79.7 79.2 72.2 87.8 88.1 88.7 88.1 +1% -0.4% 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. Centamin Annual Report 2020 41 Why we measure Performance LINKS TO STRATEGY Mineral Resources underpin the Group’s operating sustainability. Extending mine life through brownfield exploration and new discoveries from greenfield exploration contribute to the Company’s long-term growth prospects. Group Measured and Indicated Mineral Resources reduced by 1Moz at Sukari due to 18 months of depletion and updated reporting parameters, including open pit slopes and gold price. Centamin aims to produce the optimal amount of gold based on operational capacity and gold distribution within the orebody. Gold production needs to generate sufficient revenue to cover operating costs and allow Centamin to deliver its strategy. Gold production for 2020 was 452,320 ounces, within the restated guidance range of 445–455,000 ounces. It is vital to ensure our per ounce operating costs are as low as practically possible to maximise profitability when gold prices are high and ensure profitability in a declining gold price environment. Cash costs of production (1) were US$719 per ounce produced, better than the guidance range of US$740–790 per ounce. The AISC aims to capture typical operational and capitalised costs. We aim to maintain a strong position on the cost curve whilst ensuring we are investing sufficiently to sustain operations. AISC (1) were US$1,036 per ounce sold, within the guidance range of US$950–1,050 per ounce sold. Total material movement serves as an indication of operational effectiveness. If the fleet remains constant and material moved increases, it demonstrates better utilisation. Record material movement in 2020, of 80.8 million tonnes of open pit and underground, ore and waste, reflecting the focus on open pit waste stripping and underground development. Recovery is the percentage of gold successfully extracted for sale from the ore. Higher recoveries will improve per ounce unit costs, generate higher revenue and increase free cash flow. The metallurgical recoveries in 2020 were 87.8%. Centamin Annual Report 2020 > Additional Information> Corporate Governance> Foreword> Financial Statements> Strategic Report42 STRATEGIC REPORT – KEY PERFORMANCE INDICATORS CONTINUED ENVIRONMENTAL AND SOCIAL We proactively work to ensure health and safety is a mindset, not just a procedure. GROUP LTIFR (per 1,000,000 hours worked) LOCAL EMPLOYMENT % of Group total workforce LOCAL COMMUNITY INVESTMENT (US$m invested in local community projects) LOCAL PROCUREMENT % of total procurement MAJOR ENVIRONMENTAL INCIDENTS (Reportable Level 4 or 5) GHG EMISSIONS INTENSITY Scope 1&2 kWh/ tonne milled 2020 2019 2018 2017 2020 2019 2018 2017 2020 2019 2018 2017 2020 2019 2018 2017 2020 2019 2018 2017 0 0 0 0 2020 2019 2018 2017 n/a 0.84 1.43 0.31 1.12 -41% SUSTAINED 95 95 96 91 US$0.59m US$0.75m US$0.49m US$1.97m +230% SUSTAINED 61 61 58 45 SUSTAINED 37.6 33.9 33.6 +11% Links to the shareholder approved Remuneration Policy and through the short term and long-term incentives. Centamin Annual Report 2020 43 Why we measure Performance LINKS TO STRATEGY An indicator of safety in the workplace and the effectiveness of our management controls to protect our workforce. An indicator of the socio-economic benefit to our host communities and the effectiveness of our measures to enhance local economic participation. An indicator of commitment to support the development needs and aspirations of our host communities. Group LTIFR improved by 41% on 2019, to 0.84 per 1,000,000 hours worked. There were seven lost time injuries at Sukari from a total of 9,501,207 hours worked in 2020. Consistent with 2019, 95% of Centamin’s workforce are employed locally to the country of operation. US$2.0 million was invested in local community projects in 2020, predominantly financial and logistical support towards COVID-19 response programmes. An indicator of the socio-economic benefit to our host communities and the effectiveness of our measures to enhance local economic participation. Consistent with 2019, 61% of all goods and services are procured from suppliers local to the country of operation. An indicator of environmental impact and the effectiveness of our management controls to protect the bio-physical environment. No major reportable environmental incidents. An indicator for CO2 emissions relative to mine production and the effectiveness of our programmes to reduce our exposure to climate-related risk. Increase of 11% in GHG emissions intensity association with the installation of new fixed plant and increased power demand in the grinding circuit, underground ventilation and seawater abstraction. Centamin Annual Report 2020 > Additional Information> Corporate Governance> Foreword> Financial Statements> Strategic Report44 STRATEGIC REPORT – OPERATIONAL REVIEW OPERATIONAL REVIEW HEALTH & SAFETY Centamin’s priority is to create a safe work environment which supports a healthy and productive workforce. Safety is at the centre of our workplace culture. The site’s safety culture is 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. Both leading and lagging indicators have been reinforced across the workplace ensuring all employees are empowered with the skills and knowledge to operate safely and the awareness and responsibility to mitigate risks and respond to instances where the controls have been compromised. Regular reviews of the site risk register to ensure all controls for known risks are relevant, effective and new risks identified and included. In 2020, improvements in our safety leadership culture were evident by a 41% improvement in the Group Loss time injury frequency rate (“LTIFR”), from 1.43 to 0.84 per one million site-based hours worked. There were seven lost time injuries recorded in 8,335,975 site-based hours worked. Total recordable injury frequency rate (“TRIFR”) was 5.16 per one million site-based hours worked. CO-EXISTING WITH COVID-19 Hazard awareness and emergency preparedness is fundamental to effective safety management. In response to COVID-19, early action was taken to safeguard our workforce and secure our assets in line with our Emergency Response Framework, and the advice of governments and health authorities. A COVID-19 Executive Committee was established to provide oversight during the pandemic, supported by multifunctional teams and a framework led by Risk and Operations, including daily workforce and supply chain risk reviews. Centamin has been proactive in how it manages and mitigates the impacts within its control and to date the Company’s protocols have been successful in managing the process without any material impact on our operations, by enforcing mandatory screening of employees and contractors, isolating suspected personnel, tracking and tracing programme; and the establishment of a managed isolation facility to provide care and treatment to infected workers. Increased fatigue management measures were taken, including shorter shifts and increased headcount to support longer rosters. In collaboration with some of our on-site partners, medical equipment has been donated to the Marsa Alam Hospital, situated in Sukari’s local community. The donation includes diagnostic equipment, which is capable of detecting, amongst other diseases, COVID-19 and identifying the appropriate level of treatment required. Further to this, Sukari has its own dedicated equipment to provide initial testing capability. The impact and potential duration of the COVID-19 pandemic continues to remain uncertain although we recognise the positive steps being taken globally. 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. Further details of the safety initiatives and employee welfare are set out in the Sustainability Report. Corporate social responsibility considerations • Donated US$650,000 to the Egyptian COVID-19 relief efforts nationally • Established local community support in the Marsa Alam area • Procured and donated medical supplies and equipment for distribution in West Africa both nationally and in local communities • Donated medical equipment to a Marsa Alam Hospital, which is capable of detecting, amongst other diseases, COVID-19 Centamin Annual Report 2020 45 IMPROVING FUTURE MINING OPTIONALITY AND FLEXIBILITY IS A KEY FOCUS OF THE OPEN PIT AND UNDERGROUND MINE PLANNING. Centamin took early action to protect the health, safety and wellbeing of our employees and communities In what remains an uncertain environment we believe we have taken the following steps to manage the issues which are within the company’s control. The initial proactive response has been adapted to operating as a new normal. EMERGENCY RESPONSE FRAMEWORK CO-EXISTING WITH COVID-19 Prevent and maintain To safeguard our workforce and the local communities by limiting the spread of infection whilst securing the operations • Engagement with our host governments and local communities • Established clear response reporting lines including a COVID-19 Executive Committee and COVID-19 support teams • Increased safety and hygiene protocols • Supply chain assessment and engagement with key suppliers • Disciplined cash management and capital allocation with temporary deferral of non-essential capital projects Protect and transition To continue with the initial objective whilst preparing for the resumption of key activities where appropriate • Introduced rigorous personnel screening at site supported by specialist providers and on-site capabilities • Test, Track, Trace and Isolate approach established supported by dedicated facilities at site • Ongoing supply chain assessment and reviews regularly held • Introduced additional support for our personnel with enhanced health and wellbeing benefits To continue to adapt the processes and procedures to operate responsibly and sustainably in co-existence with COVID-19 • Introduced ‘new normal’ to a number of areas including rostering, screening, visitors and returning personnel • Adapted protocols for all personnel with regards to increasing support available and encouraging personal accountability • Allocation of capital to the ongoing management of COVID-19 • Appointment of on-site Chief Medical Officer supported by viral and infectious disease specialism WITH NO MATERIAL DISRUPTIONS TO DATE WE CONTINUE TO CLOSELY MONITOR COVID-19 DEVELOPMENTS GLOBALLY SUKARI GOLD MINE, EGYPT 2020 vs 2019 In 2020, Centamin operations comprised of open pit, underground and dump leach. Gold production of 452,320 ounces was in line with the Company’s restated guidance of 445–455,000 (1), and was 6% less than the prior twelve months in 2019 (year-on-year). The Company revised the annual production guidance on 2 October from 510–525,000 ounces to 445–455,000 when slope radar technology detected excessive movement within a localised area of the open pit west wall. Mining was suspended on the west wall, the area was secured and assessed before implementing a mitigation plan. This type of incident is not unusual, and the operating team’s speed and response were exemplary which prevented any failure. This rendered the higher-grade Stage 4 west area of the pit unavailable for ore mining and due to historical open pit scheduling, only the lower grade (0.7–0.9 g/t Au) Stage 5 north was available to be mined, thereby resulting in the revised production guidance. Centamin Annual Report 2020 > Additional Information> Corporate Governance> Foreword> Financial Statements> Strategic Report46 STRATEGIC REPORT – OPERATIONAL REVIEW CONTINUED In order to mitigate against this type of incident in future the open pit mining sequence is being redesigned to introduce greater flexibility into the open pit mining operations which will support increased confidence in meeting our stated production targets in the future. In December, the Company contracted Capital Ltd (“Capital”) to complete a 120Mt waste-stripping programme in the Eastern section of the open pit over the next four years. Capital mobilised their fleet and team ahead of schedule and commenced material movement at the end of February 2021. In 2021, annual production guidance is between 400–430,000 ounces with a focus on waste-stripping to improve flexibility and access higher-grade sections of the open pit. Optimisation studies across the respective sections of the Sukari operation are ongoing, identifying cost reduction and performance enhancing opportunities, to increase free cash flow margins, as well as guide operations for medium and long-term planning and capital expenditure derivation. Ongoing focus remains on improving operational efficiencies and productivity metrics with US$44 million of savings delivered in 2020. Costs Absolute cash costs of production were US$325.2 million, a 2% decrease year-on-year due to reduction in fuel pricing and the movement in inventory (2) including increase in run of mine (“ROM”) stockpiled material. Unit cash costs of production were US$719/oz produced, a 3% increase year-on-year, due to lower volumes produced. Absolute AISC for gold sold was US$485.5 million, an 11% increase year- on-year, reflecting the 21% scheduled increase in sustaining capital expenditure. Unit AISC were US$1,036 per ounce sold, a 10% increase year-on-year. In 2021, cash cost of production is expected to be between US$800–US$900 per ounce produced and AISC between US$1,150–US$1,250 per ounce sold. Open pit mining Total open pit ore mined was 15.7Mt, a 9% increase year-on-year, at an average grade of 0.97g/t, which was a 21% (1) Annual guidance updated as of 2 October 2020 improvement year-on-year, predominantly driven by mining in the higher-grade Stage 4 north and west. Stage 2 of the ventilation upgrades has commenced, preparing the underground for mining to continue at depth. The strip ratio was 4.1 (waste:ore). Total open pit waste material mined was 64.1Mt, a 0.2% increase year-on-year. Utilising the Company’s owner-operator fleet, an accelerated waste-stripping programme commenced in Q4, focusing on: • Stage 5 west wall pushback and Stage 4 west remediation to recommence mining H2 2021 • Eastern area preparation works ahead of commencement of the contractor waste-stripping programme • Pioneering works on the north section of the Sukari hill in preparation to commence open pit mining on the Cleopatra zone The open pit delivered 11.3Mt to the plant, at an average milled grade of 1.15g/t. A total 0.7Mt, at an average grade of 0.39g/t, was delivered to the dump leach pads. Stockpiles increased from 13.9Mt at 0.46g/t to 17.5Mt an average grade of 0.47g/t in 2020. Focus will continue to be on increasing the number of available working areas through an accelerated waste stripping programme. Underground mining During 2020, Total ore mined was 0.6Mt at an average total grade of 5.0g/t. This represented a 42% decrease in tonnes year-on-year and a 6% decrease in grade year-on-year, due to the underground focus on infrastructure upgrades and waste development to improve operating flexibility and longer term mine planning. The underground ore split was: • 375kt of ore mined from stopes, at an average grade of 6.1 g/t, a 39% decrease in tonnes year-on-year and a 12% decrease in grade year-on-year. • 250kt of ore mined from development, at an average grade of 3.3g/t, a 47% reduction in tonnes and a 3% increase in grade year-on-year. In Q4, Stage 1 of the ventilation upgrades was completed, creating two ventilation districts for improved circulation. For the medium term, Ptah will provide the primary source of underground ore. Ptah style of mineralisation is lower-grade, wider stockworks. Mining in the higher-grade but narrower mineralisation, will finish in 2022. At depth, Horus is a key target for growth. Throughout 2021 and beyond, Horus will be drilled and developed to improve the geological understanding and resource and reserve potential. Backfilling will continue during 2021, using cemented rock fill (“CRF”), which allows a bottom-up mining method. This has proven effective at maximising extraction of the orebody, improving geotechnical ground support, and reducing overall dilution and good for waste management in the underground operations. Study and design work is well advanced for the implementation of paste fill plant in 2022, which will replace CRF where possible. Processing The plant processed 11.9Mt of ore, a 7% decrease year-on-year, at an average feed grade of 1.35 g/t, 5% higher year-on-year. The metallurgical gold recovery rate was 87.8%, less than a 1% reduction year-on- year. The plant utilisation was 95.3%. Throughout 2020, routine plant maintenance, including mill relining and mantle changes were successfully carried out by the workforce in lieu of restricted site access to third parties due to COVID-19. Dump leach operations contributed 6,542 ounces, a 24% reduction year-on-year in line with the mine plan. The focus continues to be on maximising operational margins on plant throughput. In line with cost optimisation and performance studies, 2021 throughput is expected to be between 12.0–12.5Mtpa, 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 2021. (2) Movement in inventory on ounces produced is the movement in mining stockpiles and ore in circuit while the movement in inventory on ounces sold is the net movement in mining stockpiles, ore in circuit and gold in safe inventory Centamin Annual Report 2020 47 Table 2. Operational summary units FY 2020 Q4 2020 Q3 2020 Q2 2020 Q1 2020 FY 2019 Q4 2019 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 AISC US$’000 produced US$’000 sold Unit cash costs US$/oz produced Unit AISC US$/oz sold CAPITAL PROJECTS Total capital expenditure in 2020 was US$138 million, including US$103 million of sustaining and US$35 million non-sustaining capex. Due to measures taken to safeguard our workforce and operations, non-essential capex was deferred as to minimise third party access to site. Furthermore, restricted third party access to site resulted in some capital savings through utilising onsite workforce and equipment instead of third party. Tailings storage facility Construction of the second downstream tailings storage facility (“TSF2”) was completed ahead of schedule and under budget. Based on current production rates, TSF2 will extend tailings deposition beyond 2030. Preparation work for TSF1 closure and rehabilitation is scheduled to commence in 2021. 36MW DC solar project Phase 1 development of the Sukari solar project progressed at a reduced rate during 2020, with a focus on front-end engineering and design (“FEED”) work and preparatory site works across the 79,774 15,656 0.97 1.15 625 4.99 11,913 1.35 87.8 452,320 468,681 1,766 325,188 485,478 719 1,036 21,324 3,553 0.74 0.72 165 3.66 2,911 0.86 88.6 67,996 79,535 1,887 73,445 128,286 1,080 1,613 17,682 3,805 1.01 1.28 139 5.38 2,931 1.48 87.4 128,240 118,617 1,933 87,457 113,971 682 961 20,266 4,122 0.98 1.27 168 5.99 2,994 1.52 88.0 130,994 130,745 1,731 81,868 117,135 625 896 20,501 4,176 1.12 1.32 154 4.98 3,077 1.50 87.5 125,090 139,784 1,587 82,417 126,089 659 902 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 Phase 1 was completed, and the findings were communicated to the market as part of a capital markets event in December, outlining the baseline medium-term outlook, opportunities and additional identified workstreams. A focus on the open pit fleet capacity and replacement strategy has been undertaken seeking to provide increase in mining capacity against a capital and operating cost trade off. Consistent with our strategic focus to create value over volume, a key priority of the LOA Phase 2 review is to identify further cost-saving opportunities and operational efficiencies. These workstreams are underway, including programmes to reduce the Group’s carbon emissions, and are expected to be completed by Q4 2021, which will feed into an optimised life of mine plan. 60-hectare site area ahead of construction commencing. The high-voltage switchgear upgrade is 61% complete. New employee camp The new camp infrastructure and workforce facility upgrades continued over the year and are now c.80% complete. The health, wellbeing and safety of our people remain as always, a central focus. Eight new accommodation buildings, a new gym, a communal rest area and a football pitch are amongst many improvements underway and are on track for completion in Q2 2021. Life of Asset review The Company commenced a LOA review at Sukari in 2019, to develop medium to long term plans which seek to optimise the Sukari operations. The review comprises of a series of independent optimisations studies across the various sections of the Sukari operations (open pit, underground, processing), assessing mineral resource management, mine planning, geotechnical evaluation, plant performance, water and waste management, energy usage and exploration. Centamin Annual Report 2020 > Additional Information> Corporate Governance> Foreword> Financial Statements> Strategic Report 48 STRATEGIC REPORT – OPERATIONAL REVIEW CONTINUED MINERAL RESOURCE MANAGEMENT Orebody stewardship In 2020, Centamin made a significant shift in how it approached geology and orebody definition. In Q3, a Group Mineral Resource Manager and Group Exploration Manager were recruited, and mineral resource management was incorporated into Centamin’s operating model as a new function. Mineral resource management is responsible for the Group’s orebodies – orebody stewardship – and managing them effectively to ensure maximum value is extracted, including mine geological data collection, modelling, reconciliation and planning to optimise the mine plan and economic ounce extraction. Throughout H2, substantial progress was made developing our exploration and mineral resource management teams and implementing the systems and processes by which it evaluates and sustainably operates the assets under management. This included restructuring of the open pit and underground geological function ensuring the resource models effectively drive planning, mining, exploration and the near-mine growth strategy at Sukari. An updated approach to the management of the Sukari orebody has been implemented which seeks to maximise the returns for stakeholders through realising the full potential of the concession area. In practice this entails: • The comprehensive exploration of the concession area to identify all potential mineralisation, and • The planning and operation of the mine to maximise the extraction of economic ore reserves The geological leadership team has undertaken a comprehensive review of the current geological dataset and procedures employed at Sukari. Several initiatives are now underway that will deliver a robust geological framework and mineral resource estimates which will support long term plans. Please refer to the Group’s detailed Mineral Resource and Reserve statements on page 216. Mine design and operating strategy Centamin is employing a consistent approach to the estimation of Mineral Reserves using economic cut off grades in both the open pit and underground. The mining operations are focused on the generation of cashflow rather than headline ounce production for the balance of the operating life. This approach is further considered against maintaining the life of the asset given the potential for further discovery in the concession (some of which is described below) and regionally. Open pit design Through the implementation of disciplined economic analysis, the open pit has been redesigned, thereby improving its value while simultaneously reducing operating risk. Updated operating cost assumptions (reflecting previously disclosed cost-saving programmes), and geotechnical drilling assessment (which have confirmed minor reductions in the east and west wall slope angles) have been incorporated into the updated long-term mine planning and open pit design. Whilst enhancing value, there is a reduction of approximately 35Mt of medium-grade ore within the improved open pit representing approximately 0.75–0.8Moz from the estimated reserves. These ounces were originally planned for extraction at the end of mine life according to the previous mine plan, following significant waste-stripping and at the long-term gold price assumption used for planning of US$1,450/oz. The reduction in revenue from the change in reserve ounces is more than offset by the reduced waste stripping costs. Additionally, we believe that there are other targets identified in the resource base, which have the potential to be mined sooner and more profitably. The new modelled pit shell is robust down to an assumed gold prices of US$1,350/oz, resulting in a limited difference in mine life. Underground mine design Through the implementation of disciplined economic analysis, the underground has been redesigned improving its value while reducing operating risk. The economic cut-off grade of 1.6g/t is used for the stope design. Dilution estimation and stope shape design applied are consistent with the stope geometry and mining method throughout. Backfill will continue to be used to maximise extraction, preserve grade and improve geotechnical control. The 2021 underground mineral reserve estimate is focused on the lower grade Ptah zone of the orebody. Sukari exploration programme We are in the process of executing surface and underground exploration campaigns, a 30km relogging programme of existing core and completion of an updated structural model with the aim of identifying potential resource growth targets. It is planned that the results of these programmes will be incorporated into the LOA Phase 2, which is due in Q4 2021. The comprehensive exploration of the Sukari concession to identify all available potential ore sources is a key element of the long-term stewardship philosophy. The geological team has identified numerous opportunities to extend the life of mine at Sukari in both the open pit and underground settings. The 2021 Sukari mine development and exploration is expected to be US$26 million, including approximately 150,000 metres of diamond and reverse circulation drilling to support improved operational delivery and life of mine growth. Open pit opportunities: • Stage 5 & 6 west infill: Mineralisation previously mined above Stage 5 and 6 west has demonstrated better continuity than the resource block model in ore tonnes and grade. A 20km drilling programme is underway to infill this zone, where data is limited, to improve the geological understanding of the area. • Cleopatra: An infill drilling programme is planned for 2021 to improve the dataset and geological understanding of this area. The better delineation of ore and waste in this area has the potential to further improve mine planning. Centamin Annual Report 2020 49 • Northeast zone: The deeper lying mineralisation in the north east of the orebody has the potential to be converted back to reserves with further work. On-going initiatives regarding reduced operating costs and improved productivity will contribute to this initiative, assessment of potential geological upside and the opportunity to convert a portion of the waste in this area to ore reserves by drilling will reduce the strip ratio and improve economic viability of these ounces. underground mining infrastructure in the Amun and Ptah areas of the underground. A programme is underway to upgrade the classification of this material with the aim of supporting an assessment of its potential for mining. Given this material’s proximity to existing underground infrastructure, if ore delineated can be quickly brought into the mine schedule, not only increasing the reserve base, but improving operational flexibility with limited development costs. • Concession surface potential: Surface • Bast: The area linking Ptah and Amun exploration programme is underway with a budget of US$5–6 million. Multiple new targets have been identified within the concession area – target generation and prospectivity ranking will be completed during Q2 2021. Systematic drill testing will be undertaken in the second half of 2021 to identify potential satellite orebodies that can generate mill feed for Sukari. has previous mining in this zone which has delivered excellent grades from narrow vein targets. A refocus on this area’s geological potential is already proving encouraging with some excellent drilling results achieved in early 2021. Given the proximity to existing infrastructure exploration success in this area can be brought quickly into the mine plan. Underground opportunities: • Extensional Model: With underground operations moving to having at least twelve months grade control ahead of production underground drilling will move to the implementation of an extensional resource drilling strategy away from the current replacement / depletion model. • Amun/Ptah: Detailed review of the geological database indicates that there is approximately400koz of inferred material located close to existing • Horus: Represents the main depth extensions of underground resource and underpins the known medium to long term significant growth potential of the orebody. The current drilling campaigns are returning encouraging grades and widths that continue to demonstrate the potential for Horus to support the long-term growth of the underground operations. WE BELIEVE THERE ARE SIGNIFICANT OPPORTUNITIES TO UNLOCK FURTHER ECONOMIC POTENTIAL AT SUKARI BY DEVELOPING A ROBUST GEOLOGICAL MODEL. Craig Barker, Group Mineral Resource Manager Note to Operational Review: 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. Centamin Annual Report 2020 > Additional Information> Corporate Governance> Foreword> Financial Statements> Strategic Report50 STRATEGIC REPORT – EXPLORATION REVIEW EXPLORATION REVIEW Exploration is core to our business model – developing and maintaining an active pipeline of prospective targets throughout the evaluation stages. Egypt The Sukari Concession Agreement applies across the 160km2 tenement. The overall objective is to improve the understanding of the Sukari mineralised system and the geology of the full tenement area to generate new drill targets. Exploration of the Sukari orebody was primarily focused on the underground with a combination of grade control to support mine planning, infill drilling to upgrade resource classification and extensional drilling to support orebody growth to underpin the extension of the underground mining operations. West Africa Centamin’s West African exploration licences in Côte d’Ivoire and Burkina Faso are in the highly prospective Birimian terrane, which is one of the most prolific gold producing areas in Africa. The company has 14 permits, covering some 2,986km² in Burkina Faso and Côte d’Ivoire, with a further 5,310km² under application. In 2020, a total of US$14.6 million was spent on exploration activities at the Doropo and ABC projects Côte d’Ivoire. All scheduled drill programmes were completed and delivered under budget. At Doropo, located in northeast Côte d’Ivoire, approximately 74,000 metres of reverse circulation (“RC”) drilling was completed across the Kilosegui, Vako and Atirre prospects. At ABC, located in western Côte d’Ivoire, approximately 7,800 metres of diamond and reverse circulation drilling was completed on the Kona prospect. In addition to the extensive drilling works carried out at Doropo and ABC during 2020, a hi-resolution airborne geophysical (magnetics and radiometrics) survey was carried out at the ABC project, covering 60km of strike along the Sassandra fault zone which traverses from north to south through Centamin’s FarakoNafana and Kona exploration permits. (1) All ground in the 2020 bid round will come under the new Egyptian mining code following a tax, rent, royalty framework (2) Any agreed terms on new ground would be independent, and therefore not impact, the Sukari Gold Mine Concession Agreement (Egyptian Law 222 of 1994). Centamin Annual Report 2020 51 ARABIAN NUBIAN SHIELD EGYPTIAN BID ROUND AWARDS Mineral Resource Estimate (“MRE”) updates and project strategic reviews are currently underway to define the scope for further exploration and project studies. This work is scheduled for completion in Q2 2021. Until this work is complete, assessing the projects against the Company’s project hurdle rates and exploration decision points, no further exploration capital will be allocated. As we outline opportunities, we understand the inherent risks associated with exploration. For further detail please refer to our Risk Review section and our Principal Risks page 66. The Company’s government partners, The Egyptian Mineral Resources Authority (“EMRA”), launched an exploration bid round process for a series of blocks (1) covering the Eastern Desert in Egypt. Centamin submitted bids for several prospective blocks in September. On 19 November 2020, the Minister of Petroleum & Mineral Resources, Tarek El-Molla gave a press conference, naming Centamin, along with several other international and Egyptian mining groups, as being successful bidders, subject to the agreement of mutually acceptable terms for their award. To this end, Centamin is currently in negotiations with government to agree mutually acceptable terms (2) for the exploration and exploitation phases. Exploration work shall only commence following conclusion of the negotiations and the final award of the bid blocks. The Arabian Nubian Shield is one of the few remaining underexplored geological terranes in Africa, which we believe has excellent potential for further world class discoveries. As the only commercial producer of gold in Egypt, Centamin is uniquely placed to leverage its existing knowledge base, infrastructure, operating experience and robust financial position to assess and develop the geological potential of Egypt and bring any discoveries to account quickly and in a cost-effective manner. Find out more at www.centamin.com Centamin Annual Report 2020 > Additional Information> Corporate Governance> Foreword> Financial Statements> Strategic Report52 STRATEGIC REPORT – CFO’S STATEMENT CFO’S STATEMENT Centamin Annual Report 2020 IN 2020, WE DELIVERED ANOTHER STRONG FINANCIAL PERFORMANCE INCLUDING TARGETED COST REDUCTION AND IMPROVED EFFICIENCIES ACROSS OUR OPERATIONS. CHIEF FINANCIAL OFFICER ROSS JERRARD Centamin is a financially robust, highly cash generative business, committed to responsible mining and balanced stakeholder returns. Our financial strategy remains consistent and while it was tested this past year with the challenges faced from the COVID-19 pandemic, it demonstrated the strength and resilience of our business. > Strategic Report 53 Table 1. Group Financial Summary (1) Gold produced Gold sold Cash cost Unit cash cost AISC Unit AISC Avg gold price Revenue EBITDA Profit before tax Units Oz Oz US$’000 US$/oz produced US$’000 US$/oz sold US$/oz US$’000 US$’000 US$’000 Profit after tax attributable to parent US$’000 Basic EPS Capital expenditure Operating cash flow Adjusted free cash flow US cents US$’000 US$’000 US$'000 (1) Gold produced is gold poured and does not include gold-in-circuit at year end. FY 2020 FY 2019 452,320 468,681 325,188 719 485,478 1,036 1,766 828,737 438,515 314,999 155,979 13.53 138,396 453,305 141,768 480,528 470,020 333,037 699 439,317 943 1,399 652,344 283,968 173,029 87,463 7.59 97,580 249,004 74,341 % -6% -0% -2% 3% 11% 10% 26% 27% 54% 82% 78% 78% 42% 82% 91% H1 2020 H2 2020 256,084 270,529 164,286 642 243,225 899 1,657 448,754 255,731 191,148 74,816 6.49 51,731 254,675 101,955 196,236 198,152 160,902 820 242,253 1,223 1,918 379,983 182,784 123,851 81,163 7.04 86,665 198,630 39,813 Another solid financial performance Revenues increased by 27% to US$829 million, from annual gold sales of 468,681 ounces, down 0.3%, at an average realised price of US$1,766 per ounce, up 26% year-on-year. A total of 3,039 ounces of unsold gold bullion was held on-site at year end, due to timing of gold shipments. As a Group, underlying EBITDA improved by 54% to US$439 million, at a 53% EBITDA margin (2), principally driven by higher gold prices and lower fuel costs. Profit after tax increased by 82% to US$315 million, due to the below, with basic earnings per share (“EPS”) increasing by 78% to 14 US cents. • a 27% increase in revenue • a 19% increase in other income, partially offset by • a 2% increase in cost of sales • a 46% increase in other operating costs, mainly due to a 26% increase in royalties • a 75% decrease in gains on financial assets at fair value through profit or loss, and • a 3% increase in exploration and evaluation expenditure. Centamin’s cash flows and earnings showed further growth in 2020. Operational cash flow improved by 82% to US$453 million, after gross capital expenditure of US$138 million predominantly invested in the long-term sustainability of the business. Adjusted Group free cash flow (3) improved by 91% to US$142 million, after profit share distribution of US$174 million to our partner, the Egyptian state. Strong balance sheet Centamin continues to maintain a robust financial strategy, with cash and liquid assets (4) of US$310 million as at 31 December 2020. Unique amongst our peers, Centamin has never had debt, hedging nor streaming in place, thereby maximising the strength and flexibility of the balance sheet today and offering shareholders gold exposure throughout the cycle. This strong financial discipline provides the flexibility to drive self-funded long-term organic growth and pursue strategic opportunities that meet our corporate strategy and investment criteria. Stringent cost management A key change in 2020, is the way we make decisions. Historically, we have been influenced by the headline ounce production profile but now and going forward, we will always look to prioritise value over production volume, as a means to maximise free cash flow generation. We are optimising our business to deliver the best value – with outcomes based on combination of revenues, operating costs and capital invested. (2) EBITDA margin is EBITDA as a percentage of gross revenue. (3) Adjustments made to free cash flow, for example acquisitions or disposals of financial assets at fair value through profit or loss, which are completed through or add to specific allocated available cash reserves. (4) Cash costs of production, AISC, Adjusted EBITDA, Cash, bullion on hand, gold and silver sales debtor, financial assets at fair value through profit or 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 2020 > Additional Information> Corporate Governance> Foreword> Financial Statements54 STRATEGIC REPORT – CFO’S STATEMENT CONTINUED Annual costs were within the stated annual guidance published on 2 October 2020, and whilst the average realised gold price on sales improved 26% year-on-year, our AISC margin improved 60% to US$730 per ounce sold. Cash costs of production (1) (4) was US$719 per ounce produced, up 3%, reflecting a 2% increase in mined tonnes offset by a 7% decrease in processed tonnes and a 6% decrease in gold ounces produced (excluding Cleopatra from 2019 ounces). AISC was US$1,036 per ounce sold, up 10%, mainly due to a 26% increase in royalty costs, 29% increase in sustaining corporate costs, 14% increase in sustaining underground development costs and a 30% increase in sustaining capital costs complimented by a 0.3% decrease in gold ounces sold, which were anticipated. Excellent progress was made throughout the year against our cost-savings programme, with US$44 million of gross savings delivered, before unscheduled costs of US$14 million due to COVID-19. In our 2021–2023 baseline estimates, a further US$16 million cost savings have been budgeted and as part of the Phase 2 of the Life of Asset Review, we are evaluating opportunities to extract a further US$30–40 million, in addition to the forecasts. Investing in the future 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. The Company liquidity and strength of the balance sheet 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. In 2020, as a precautionary move to protect the health and wellbeing of the workforce, non-essential capital expenditure was deferred, including the construction of the Sukari solar plant and purchase and delivery of new mobile equipment. This resulted in total capital Centamin Annual Report 2020 expenditure of US$138 million, down from US$190 million guided prior to the COVID-19 outbreak. In 2020 the focus was on improving operational efficiencies to achieve consistent operational performance, with a split of US$103 million in sustainable capital and US$35 million in non-sustaining capital expenditure. Significant capital projects included the construction of TSF2, camp upgrades, with early works commencing on the solar plant and continuous process plant optimisation. In addition to capital deferral, we substantially strengthened our project expertise – planning, execution, and leadership. Combined with teamwork and innovation, resulted in significant capital savings from project optimisation, taking some of the challenges faced by COVID-19 from restricted third-party site access, and yielding a positive outcome by utilising our skilled workforce and equipment more efficiently on projects such as the underground ventilation upgrades and plant maintenance. Construction of our second tailings storage facility, which will extend our tailings capacity to 2030, was our largest capital project in the year, which we delivered on time and slightly ahead of budget. Commissioning is currently underway. Preparatory works ahead of the solar project construction, progressed well throughout the year, with site earthworks 60% complete and the civil engineering works for the high-voltage switchgear station nearly complete. Our ongoing focus of creating a positive work environment for our employees saw significant upgrades to the Sukari camp, including new accommodation. The build is 60% complete and remains on track for completion in Q2. On 2 December we announced our three- year capital outlook to put Sukari back on the front foot by improving the long-term sustainability of the operations through increased stripping and underground development to increase mining flexibility. Investment in technology, people and training are additional critical areas as the Company continues to invest to further improve operational performance. For the years 2021 and 2022, 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. Legal We maintain close contact with our Egyptian legal team, keeping us informed of all legal and political developments which may impact on our current and future operations in-country. In addition, we consult regularly with the legal team advising on the current litigation. We are therefore in a position to take swift and decisive action to protect our interests in Egypt, should the need arise. Reliable shareholder returns 1. We have a seven-year track record of returning surplus cash to shareholders, based on our policy linked to free cash flow generation. Maintaining a sustainable dividend policy is central to our strategy. Our dividend policy makes firm commitments on capital allocation, meaning shareholder interests are always at the centre of what we do: The first 30% of free cash flow is ringfenced for dividends 2. After assessing growth capital requirements, any surplus cash is returned to shareholders Consistent with the Company’s commitment to returning surplus cash to shareholders, and in line with the Company’s dividend policy, the Board propose a 2020 final dividend, for the year ended 31 December 2020, of 3 US cents per share (c.US$35 million), bringing the proposed total dividend for 2020 to 15 US cents per share (c.US$173 million), of which US$69 million relates to the 2019 final proposed dividend that was changed to a first interim dividend announced in Q1 2020: • First Interim 2020 dividend: 6 US cents per share, attributable to financial year 2019 • Second Interim 2020 dividend: 6 US cents per share, attributable to financial year 2020 • (Proposed) Final 2020 dividend: 3 US cents per share, attributable to financial year 2020 55 The final 2020 dividend is subject to shareholder approval at the 2021 AGM on 11 May. equipment optimisation, improvements in the supply chain and contractor management. For the current year, 2021, the Board reiterates its intention to recommend a minimum dividend of US$105 million, subject to final Board and shareholder approvals, which will be paid as an interim and final dividend. This reflects our confidence in the outlook for the Company during this year of investment and the strength of the Company’s financial position. The long-term dividend policy of paying out a minimum of 30% of free cash flow remains unchanged. Outlook Our focus on cost control and productivity improvements continues with rigour. As part of the 2021–2023 baseline guidance, US$16 million was identified for removal from the cost base through specific initiatives ranging from training and Since the outbreak of COVID-19 the priority is the safety of the workforce and security of the operations. The Company has budgeted US$25 million for ongoing COVID-19 costs and increased working capital through a build-up in critical supplies. 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. In 2021, Centamin will undertake a structured assessment of the Financial Stability Board’s Task Force on Climate- related Financial Disclosures (“TCFD”) with the aim to put in place a long-term climate change strategy which will identify the risks associated with climate change and the mitigations required to reduce the risks; Understand our contribution to climate change and identify areas where this can be reduced; Establish targets to address the transition to net zero emissions with specific targets and actions; and be a step change in improving our disclosure on climate change. 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 OUR CAPITAL ALLOCATION PRIORITIES CLEAR FRAMEWORK AND BALANCED DISTRIBUTION STAY-IN- BUSINESS (SUSTAINING) CAPEX SHAREHOLDER RETURNS STRONG BALANCE SHEET NON-SUSTAINING GROWTH CAPEX ENVIRONMENTAL & SOCIAL INVESTMENT Find out more at www.centamin.com Underpinning our strategy, we have a risk-weighted approach to capital allocation, with clear prioritisation: sustaining capital to maintain the operating asset; social and environmental investment in local communities and host governments; payment of shareholder dividends; and then the allocation of discretionary capital to growth opportunities and optimisation projects. Our capital allocation framework balances our strategic priorities and our purpose. Centamin Annual Report 2020 > Additional Information> Corporate Governance> Foreword> Financial Statements> Strategic Report 56 STRATEGIC REPORT – FINANCIAL REVIEW FINANCIAL REVIEW CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME Revenue Year ended 31 December 2020 US$’000 Year ended 31 December 2019 US$’000 828,737 652,344 Revenue from gold and silver sales for the year increased by 27% YoY to US$829 million (2019: US$652 million), with a 26% increase in the average realised gold sales price to US$1,766 per ounce (2019: US$1,399 per ounce) and a 1% increase in gold sold to 468,681 ounces (2019: 465,687 ounces net of Cleopatra) with no ounces attributable to Cleopatra in 2020. Cost of sales Year ended 31 December 2020 US$’000 Year ended 31 December 2019 US$’000 (449,441) (439,285) Cost of sales represents the cost of mining, processing, refining, transport, site administration, depreciation, amortisation and movement in production inventories. Cost of sales is up 2% YoY to US$449 million, mainly as a result of: • 4% decrease in total mine production costs from US$352 million to US$339 million (-ve), due to: • a 1% decrease in open pit mining costs (-ve); • a 10% decrease in underground mining costs (-ve); • a 14% decrease in processing costs (-ve); • offset by a 64% increase in finance and administration costs (+ve) related to increased payroll and consumables and catering costs mainly due to CV-19; and • a 64% increase in refinery and transport costs (+ve). • 7% increase in depreciation and amortisation charges YoY from US$116 million to US$124 million (+ve) due to: • US$134 million in additions to property, plant and equipment (excl. capital work in progress) due to increased capital expenditure which increased the associated depreciation and amortisation charges; • slightly offset by lower production. • A positive movement in inventory adjustment of US$14 million compared to positive movement in inventory adjustment of US$28 million in 2019 reflecting the movement in mining inventory over the year (+ve). Exploration and evaluation expenditure Year ended 31 December 2020 US$’000 Year ended 31 December 2019 US$’000 (17,391) (16,883) Exploration and evaluation expenditure comprise expenditure incurred for exploration activities in Côte d’Ivoire and Burkina Faso. Exploration and evaluation costs increased by US$0.5 million or 3%. Centamin Annual Report 2020 57 Adjusted EBITDA was US$438million, an increase of 56% YoY, mostly driven by the 27% increase in revenue, offset by an increase in cash costs per ounce sold in the year. The EBITDA margin increased by 23%, to 53%. Profit after tax was US$315 million, up 82% YoY. Basic earnings per share was 14 US cents, an increase of 78% YoY. Other operating costs Year ended 31 December 2020 US$’000 Year ended 31 December 2019 US$’000 (56,392) (38,709) Other operating costs comprise expenditure incurred for communications, consultants, directors’ fees, stock exchange listing fees, share registry fees, employee entitlements, general office administration expenses, foreign exchange losses and the 3% production royalty payable to the Arabic Republic of Egypt (“ARE”). Other operating costs increased by US$18 million or 46% from US$39 million in 2019 to US$56 million in 2020, mainly as a result of: • US$1 million increase in loss on disposal of assets (+ve); • US$5 million increase in royalty paid to the government of the ARE (in line with the increase in gold sales revenue) (+ve); • US$10 million increase in the provision for settlement of cost recovery items (+ve); • US$3 million increase in the provision for stock obsolescence and inventory written off (+ve) offset by; • US$1 million decrease in corporate costs mainly due to the decrease in advisory costs. Dividend paid – non-controlling interest in SGM (being EMRA) Year ended 31 December 2020 US$’000 Year ended 31 December 2019 US$’000 (174,275) (87,075) 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 are 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 2020 financial statements are currently being audited. Earnings per share attributable to owners of the parent: Basic (US cents per share) Year ended 31 December 2020 US cents per share Year ended 31 December 2019 US cents per share 13.531 7.588 Basic earnings per share attributable to owners of the parent of 14 US cents for 2020 increased when compared with 2019 of 8 US cents. The increase was driven by the factors outlined above. Centamin Annual Report 2020 > Additional Information> Corporate Governance> Foreword> Financial Statements> Strategic Report58 STRATEGIC REPORT – FINANCIAL REVIEW CONTINUED CONSOLIDATED STATEMENT OF FINANCIAL POSITION Centamin has a strong and flexible balance sheet with no debt, no hedging and cash and liquid assets of US$310 million at 31 December 2020 (31 December 2019: US$349 million). Cash and cash equivalents (note 2.16(a)) Bullion on hand (valued at the year-end spot price) Gold and silver sales debtor (note 2.7) Financial assets at fair value through profit or loss (note 2.6) 31 December 2020 US$’000 31 December 2019 US$’000 291,281 5,747 12,492 – 278,229 29,562 34,695 6,454 Cash and cash equivalents, bullion on hand, gold and silver sales debtor and financial assets at fair value through profit or loss 309,520 348,940 The majority of funds have been invested in international rolling short-term interest money market deposits. 31 December 2020 US$’000 31 December 2019 US$’000 118,705 – 18,424 8,908 291,281 437,318 108,957 6,454 47,061 6,132 278,229 446,833 Current assets Inventories – mining stockpiles and consumables Financial assets at fair value through profit or loss Trade and other receivables Prepayments Cash and cash equivalents Total current assets Current assets have decreased by US$10 million or 2% as a result of: • US$10 million increase (+ve) in inventory driven by: • US$9 million increase in stores inventory (+ve); • US$2 million increase in mining stockpiles (+ve); and • US$1 million increase in the provision for obsolete stores inventory (-ve). • US$6 million decrease in the financial assets at fair value through profit or loss which relates to an equity interest in a listed public company that has been fully disposed of (-ve); • US$29 million decrease in trade and other receivables (including gold and silver sales debtor) (-ve); • US$3 million increase in prepayments (+ve); and • US$13 million increase in net cash (net of foreign exchange movements) (+ve) driven by the profit for the year less the payment of the 2020 Q1 and Q2 interim dividends of US$69 million each and a US$174 million payment to EMRA as distributions to the NCI. 31 December 2020 US$’000 31 December 2019 US$’000 829,884 63,701 64,870 103 958,558 804,717 68,138 52,658 93 925,606 Non-current assets Property, plant and equipment Exploration and evaluation asset Inventories – mining stockpiles Other receivables Total non-current assets Centamin Annual Report 2020 59 Non-current assets have increased by US$33 million or 4% as a result of: • US$148 million increase in the cost of property, plant and equipment, this included significant capital projects namely the construction of TSF2, camp upgrades, work commencing on the solar plant and continuous process plant optimisation (+ve); • US$125 million charge for depreciation and amortisation (-ve); • US$4 million decrease in exploration and evaluation assets, as a result of the drilling programmes in Sukari Hill offset by transfers to property, plant and equipment(-ve); and • US$12 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 Current liabilities have increased by US$6 million or 9% as a result of: • US$4 million increase in trade payables (+ve); • US$3 million increase in accruals (-ve); offset by • US$1 million decrease in current provisions (-ve). Non-current liabilities Provisions Other payables Total non-current liabilities 31 December 2020 US$’000 31 December 2019 US$’000 64,488 267 7,480 72,235 57,411 227 8,589 66,227 31 December 2020 US$’000 31 December 2019 US$’000 32,752 1,437 34,189 14,575 – 14,575 Non-current liabilities have increased by US$19 million from US$15 million at 31 December 2019 to US$34 million at 31 December 2020, mainly as a result of an increase in the rehabilitation provision and the provision for the settlement of cost recovery items. The increase in the rehabilitation provision is driven by an increase in the mining area over the year mainly due to the construction of TSF2 resulting in a greater affected area requiring rehabilitation. Equity Issued capital Share option reserve Accumulated profits Total equity Accumulated profits increased by US$2 million as a result of: • US$315 million profit for the year after tax (+ve); offset by • US$174 million profit share paid to EMRA in the year (-ve); and • US$139 million interim dividends paid (-ve). 31 December 2020 US$’000 31 December 2019 US$’000 668,807 3,343 617,302 1,289,452 672,105 4,179 615,353 1,291,637 Centamin Annual Report 2020 > Additional Information> Corporate Governance> Foreword> Financial Statements> Strategic Report60 STRATEGIC REPORT – FINANCIAL REVIEW CONTINUED CONSOLIDATED STATEMENT OF CASH FLOWS Cash flows from operating activities Cash generated from operating activities Income tax refund received Income tax paid Net cash generated by operating activities 31 December 2020 US$’000 31 December 2019 US$’000 453,315 – (10) 453,305 249,048 170 (214) 249,004 Net cash flows generated by operating activities comprise receipts from gold and silver sales and interest income, offset by operating and corporate administration costs. Group cash costs of production were US$719 per ounce produced, up 3% YoY, predominantly due to a 6% decrease in gold ounces produced. Group AISC were US$1,036 per ounce sold, up 10% YoY due to increased costs and increased sustaining capital expenditure offset by increased gold ounces sold. Both cash cost of production and AISC are within our amended guidance range of US$740–790 per ounce produced and US$950–1,050 per ounce sold for 2020. A stronger gold price combined with cost and capital allocation management has almost doubled net cash generated by operating activities YoY (82%) to US$453 million. Group capital expenditure, including sustaining and non-sustaining capital, was US$138 million. This was lower than budgeted due to short-term deferral of non-essential capital projects, in response to COVID-19. Cash flows from investing activities Acquisition of financial assets at fair value through profit or loss Disposal of financial assets at fair value through profit or loss Acquisition of property, plant and equipment Brownfield exploration and evaluation expenditure Finance income Net cash used in investing activities 31 December 2020 US$’000 31 December 2019 US$’000 – 7,414 (127,099) (11,717) 1,554 (129,848) (9,364) 6,799 (81,207) (12,198) 5,817 (90,153) Net cash flows used in investing activities comprise exploration expenditure and capital development expenditure including the acquisition of financial assets. The primary use of the funds in the year was for purchase of property, plant and equipment and investment in underground development at the Sukari site in Egypt offset by the disposal of an equity interest in a listed public company. Cash flows from financing activities Own shares acquired Dividend paid – non-controlling interest in SGM Dividend paid – owners of the parent Net cash used in financing activities 31 December 2020 US$’000 31 December 2019 US$’000 (3,298) (174,275) (138,725) (316,298) – (87,075) (81,029) (168,104) After distribution of profit share payments to Company’s partner, the Egyptian government (1), the Group generated adjusted free cash flow of US$142 million, up 91% YoY. Profit share payments of US$174 million and royalty payments of US$25 million were made in the year. Under the terms of the Concession Agreement with our Egyptian partners, EMRA, on 1 July 2020, the profit share mechanism changed to 50:50, from 55:45 in favour of Centamin, and will remain at this level for the remainder of the tenure. (1) All profit share payments are made to Egyptian Mineral Resources Authority (“EMRA”), a department of the Ministry of Petroleum. Centamin Annual Report 2020 CAPITAL EXPENDITURE The following table provides a breakdown of the total capital expenditure of the Group: Underground exploration Underground mine development Other sustaining capital expenditure Total sustaining capital expenditure Non-sustaining exploration expenditure (1) Other non-sustaining capital expenditure (2) Total gross capital expenditure 61 Year ended 31 December 2020 US$’000 Year ended 31 December 2019 US$’000 11,599 39,197 52,433 103,229 118 35,049 138,396 7,769 36,852 40,471 85,092 8,709 3,779 97,580 (1) Includes Sukari expenditure relating to Cleopatra in non-sustaining capital expenditure before the offset of net pre-production gold sales. (2) Non-sustaining capital expenditure included the construction of TSF2, camp upgrades and work commencing on the solar plant. 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$5.2 million remaining on the statement of financial position at 31 December 2020. EXPLORATION EXPENDITURE The following table provides a breakdown of the total exploration expenditure of the Group: Greenfield exploration Burkina Faso Côte d’Ivoire Total greenfield exploration expenditure Brownfield exploration Sukari Tenement Cleopatra (1) Total brownfield exploration expenditure Total exploration expenditure Year ended 31 December 2020 US$’000 Year ended 31 December 2019 US$’000 2,803 14,588 17,391 11,709 8 11,717 29,108 2,715 14,168 16,883 8,685 7,793 16,478 33,361 (1) Cleopatra expenditure before the offset of net pre-production gold sales. Exploration and evaluation assets – impairment considerations In consideration of the requirements of the International Financial Reporting Standards (“IFRS”) 6 an impairment trigger assessment has been performed. On review, no impairment triggers were identified. SUBSEQUENT EVENTS As referred to in note 5.2, subsequent to the year end, the Board proposed a final dividend for 2020 of 3 US cents per share. Subject to shareholder approval at the annual general meeting on 11 May 2021, the final dividend will be paid on 15 June 2021 to shareholders on record date of 21 May 2021. As referred to in note 1.3.5, the Group mineral reserve and resource statement for SGM has been published with an effective date of 31 December 2020. The changes from the previous statement published with an effective date of 30 June 2019 will have a prospective effect on the amortisation of the rehabilitation asset and mine development properties. Please refer to ore reserves, note 3.1.1(i) where these sensitivities to the change has been disclosed. There were no other significant events occurring after the reporting date requiring disclosure in the financial statements. Centamin Annual Report 2020 > Additional Information> Corporate Governance> Foreword> Financial Statements> Strategic Report62 STRATEGIC REPORT – FINANCIAL REVIEW CONTINUED 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 year before tax. Adjusted EBITDA removes the effect of transactions that are not core to the Group’s main operations. 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 2020 (1) US$’000 31 December 2019 (1) US$’000 314,999 (1,554) 558 124,512 438,515 (960) – 437,555 173,029 (5,817) 569 116,187 283,968 (3,889) – 280,079 (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. 2) Cash cost of production per ounce produced and sold and all-in sustaining costs (“AISC”) 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 year 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. Centamin Annual Report 2020 63 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. This metric also 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 2020 (1) 31 December 2019 (1) 339,012 (2,322) (11,502) 325,188 452,320 719 351,745 (1,415) (17,293) 333,037 476,195 699 US$’000 US$’000 US$’000 US$’000 oz US$/oz (1) Mine production costs, cash cost of production, cash cost of production per ounce, AISC and AISC per ounce sold includes prepayments recorded since Q4 2012 to reflect the removal of fuel subsidies (refer to note 2.8 to the financial statements for further details). (2) The movement in inventory on ounces produced is only the movement in mining stockpiles and ore in circuit while the movement in ounces sold is the net movement in mining stockpiles, ore in circuit and gold in safe inventory. A reconciliation has been included below to show the cash cost of production metric should gold sold ounces be used as a denominator. Reconciliation of cash cost of production per ounce sold: Mine production costs (note 2.3) Royalties Movement of inventory (2) Cash cost of production – gold sold Gold sold – total (oz.) (excluding Cleopatra) Cash cost of production per ounce sold 31 December 2020 (1) 31 December 2019 (1) 339,012 24,792 4,181 367,985 468,681 785 351,745 19,701 (28,254) 343,192 465,687 737 US$’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. Movement in inventory Movement in inventory – cash (above) Effect of depreciation and amortisation – non-cash Movement in inventory – cash & non-cash (note 2.3) 31 December 2020 (1) 31 December 2019 (1) US$’000 US$’000 US$’000 4,181 9,523 13,704 (28,254) – (28,254) (1) In 2020 the movement of inventory on cash costs of production per ounce produced and sold has been amended to exclude the effect of amortisation and depreciation (non-cash items) on those movements. This change is only being applied prospectively from 2020 onwards. Centamin Annual Report 2020 > Additional Information> Corporate Governance> Foreword> Financial Statements> Strategic Report64 STRATEGIC REPORT – FINANCIAL REVIEW CONTINUED Reconciliation of AISC per ounce sold: Mine production costs (note 2.3) Movement in inventory Royalties Sustaining corporate administration costs Rehabilitation costs Sustaining underground development and exploration Other sustaining capital expenditure By-product credit All-in sustaining costs (2) Gold sold – total (oz.) (excluding Cleopatra) AISC per ounce sold 31 December 2020 (1) 31 December 2019 (1) 339,012 4,181 24,792 15,029 350 50,796 52,433 (1,115) 485,478 468,681 1,036 351,745 (28,254) 19,701 11,610 410 44,621 40,471 (987) 439,317 465,687 943 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 oz US$/oz (1) Mine production costs, cash cost of production, cash cost of production per ounce, AISC and AISC per ounce sold includes prepayments recorded since Q4 2012 to reflect the removal of fuel subsidies (refer to note 2.8 to the financial statements for further details). (2) Includes refinery and transport. Corporate costs Sustaining corporate costs Non-sustaining corporate costs (1) Corporate costs (sub-total) (note 2.3) 31 December 2020 US$’000 31 December 2019 US$’000 15,029 2,550 17,579 11,610 7,318 18,928 (1) Non-sustaining corporate costs relate to expenses and/or accruals recognised for work performed by the Group’s advisors on the successful defence of the third party all-share acquisition attempt of Centamin plc. This is not a normal cost incurred in the day-to-day operations of running the Group and as such has been excluded from our Non-GAAP reporting measures. 3) Cash and cash equivalents, bullion on hand, gold and silver sales debtor and financial assets at fair value through profit or loss Cash and cash equivalents, bullion on hand, gold and silver sales debtor and financial assets at fair value through profit or loss is a non-GAAP financial measure and is a measure of the available cash and liquid assets at a point in time. Management uses this measure internally to better assess performance trends for the Company as a whole. Management considers that, in addition to conventional measures prepared in accordance with GAAP, certain investors use such non-GAAP information to evaluate the Company’s performance and ability to generate cash flow and the measure is intended to provide additional information, does not have any standardised meaning prescribed by GAAP and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. This measure is not necessarily indicative of cash and cash equivalents as determined under GAAP and other companies may calculate this measure differently. Reconciliation to cash and cash equivalents, bullion on hand, gold and silver sales debtor and financial assets at fair value through profit or loss: Cash and cash equivalents (note 2.16(a)) Bullion on hand (valued at the year-end spot price) Gold and silver sales debtor (note 2.7) Financial assets at fair value through profit or loss (note 2.6) 31 December 2020 US$’000 31 December 2019 US$’000 291,281 5,747 12,492 – 278,229 29,562 34,695 6,454 Cash and cash equivalents, bullion on hand, gold and silver sales debtor and financial assets at fair value through profit or loss 309,520 348,940 Centamin Annual Report 2020 65 4) Free cash flow and adjusted free cash flow Free cash flow is a non-GAAP financial measure. Free cash flow is a measure of the available cash after distributions to the Non- Controlling Interest (“NCI”) in SGM, being EMRA, that the Group has at its disposal to use for capital reinvestment and to distribute to shareholders of the parent. Free cash flow is intended to provide additional information, does not have any standardised meaning prescribed by GAAP and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. This measure is not necessarily indicative of operating profit or cash flow from operations as determined under GAAP and other companies may calculate this measure differently. Net cash generated by operating activities Less: Net cash used in investing activities Dividend paid – non-controlling interest in SGM Free cash flow Add back: Net (disposals)/acquisitions of financial assets at fair value through profit or loss (1) Adjusted free cash flow 31 December 2020 US$’000 31 December 2019 US$’000 453,305 249,004 (129,848) (174,275) 149,182 (7,414) 141,768 (90,153) (87,075) 71,776 2,565 74,341 (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 2020 > Additional Information> Corporate Governance> Foreword> Financial Statements> Strategic Report 66 STRATEGIC REPORT – RISK REVIEW RISK REVIEW WE TAKE RISK SERIOUSLY, WITH RISK ASSESSMENT INTEGRATED THROUGHOUT OUR BUSINESS MODEL. EFFECTIVE RISK ASSESSMENT IS CRITICAL TO NOT JUST UNDERSTAND THE POTENTIAL DOWNSIDE BUT IN IDENTIFYING OPPORTUNITIES. Craig Murray, Head of Risk RISK MANAGEMENT Centamin recognises that nothing is without risk. A successful and sustainable business needs an effective risk management framework as its foundation, which outlines the Company approach and process for management of risk. The framework should be supported by a strong culture of risk awareness, that encourages openness and integrity, alongside a clearly defined appetite for risk. This enables the Board to consider risks and opportunities to improve our decision-making process, deliver on our objectives and improve our performance as a responsible mining company. The Board has overall responsibility for establishing a framework that allows for the review of existing and emerging risks in the context of both opportunities and potential threats that informs the principal risks and uncertainties. These risks inform the assessment of the future prospects and long-term viability of the Group, further details of the approach are shown on page 80. These risks are also considered when challenging the strategic pillars of the Company that underpin the strategy as shown on page 32. A variety of activities to further embed risk management took place during 2020, these included: • Ensuring our response to the COVID-19 pandemic considered the potential risks and impacts with effective response and planning in place. Further information is shown in the Operational Review on page 44 under Co-Existing with COVID-19. • Enhanced risk governance and oversight through updates to our Board and committee structures and the appointment of senior management including the Head of Risk • Reinforcement of the risk-aware culture throughout the Group through initiatives in our operations such as the development of critical risk standards and a continued focus on the safety and health of our people • Completed periodic review of the key risks across the business including the principal and emerging risks facing the Group. Risk oversight and accountability As shown in the diagram on page 67, ultimate accountability for risk management lies with the Board, supported by the Audit and Risk Committee. We continuously monitor and refine our risk management and wider internal controls to meet the changing requirements of the business. They incorporate international good practice, reflect the UK 2018 Code and ISO 31000 Risk Management Guidelines. The framework adopts a top-down and bottom-up approach, enabling thorough identification, assessment, mitigation and monitoring of risks throughout the business. There are three lines of defence to provide review and oversight whilst ensuring the information that flows from the reporting lines is relevant, timely and can genuinely support the Board’s strategic decisions. Risk monitoring and reporting The risk management framework and the system of internal controls are designed to operate effectively together and report through to the Audit and Risk Committee on a regular basis. Further detail of the work of the Audit and Risk Committee is set out in the Audit and Risk Committee Report on page 130 of the Governance report. Our approach to corporate governance has been developed to ensure that the Board understand the level of risk we are willing to take supported by a level of assurance that risk is appropriately managed and the system of internal controls are effective. 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. Centamin Annual Report 2020 > Foreword > Corporate Governance > Financial Statements > Additional Information 67 BOARD Set the risk culture, determine appetite and assessment of the principle risks TOP DOWN Oversight and consideration of key opportunities & risks and areas of concern EXECUTIVE AND SENIOR MANAGEMENT Implementation of the risk framework, review and challenge of the key business risks AUDIT AND RISK COMMITTEE Independently reviews the adequacy and effectiveness of risk management and internal controls BOTTOM UP Risk identification, assessment, mitigation and monitoring Encourage risk awareness and a safety culture RISK MANAGEMENT Consolidation and challenge of risk whilst providing support and guidance on risk management INTERNAL CONTROLS Provides assurance to ARC on the effectiveness of risk management and internal controls implemented across the business OPERATIONS Risk identification, assessment, mitigation and monitoring CORPORATE FUNCTIONS Risk identification, assessment, mitigation and monitoring Encourage risk awareness and a safety culture Oversight and review of business risk themes across groups and operations INDEPENDENT ASSURANCE Provision of Assurance activities at operations and corporate by independent experts and advisors 1st Line 2nd Line 3rd Line Front line ownership of the risk management process and reporting Oversight and challenge on risks and risk management effectiveness Independent assurance of risk management and internal controls Centamin Annual Report 2020 > Strategic Report68 STRATEGIC REPORT – RISK REVIEW CONTINUED Risk appetite The Board accepts that the mining industry is a high-risk sector. The Group is cognisant of the risks which it faces, accepting their inherent nature whilst looking to ensure we recognise and maximise any opportunities that they create. When considering risk, the Board reviews the level of acceptable risk (tolerance), the attitude and culture towards risk and the ways in which it can influence risk appetite throughout the Group. Risk Appetite defined OPPORTUNISTIC Opportunistic demonstrates a high appetite in pursuit of potential greater rewards such as exploration INFORMED Informed is an appetite where risks are reduced to reasonably practicable levels, such as operational performance or geological understanding, whilst delivering reasonable rewards BALANCED Balanced recognises an appetite towards meeting our regulatory, legal obligations, managing external risks such as commodity prices, geopolitical change and achieving production estimates whilst recognising external factors over which we have limited control CONTROLLED Controlled considers where we have limited appetite for risk such as potential breaches in our policies and controls to health, safety and the environment (HSE). The Board invests heavily in a programme of continuous improvement in these areas and has an expectation to meet the highest standards 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. 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. Due to the nature and inherent risks associated with an operating mining company, the Board accepts a higher risk appetite, but acknowledges this needs to be managed within acceptable limits by having appropriate safeguards in place. The principal risks assessed 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 2020. 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 2020 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. 69 A RISK REFRESH 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. Elevated 2020 Principal Risks Licence to Operate Future of our Workforce Evolving Environmental Expectations Safety, Health and Wellbeing 2019 Principal Risks Refreshed 2020 Principal Risks Political Risk – Egypt Infectious Disease Outbreak Political Risk – West Africa Political Litigation Gold Price Loss of Revenue due to single project dependency Legal and Regulatory Compliance Litigation Gold Price JV Risk and Relationship with EMRA Single Project Dependency Jurisdictional Taxation Exposure Concession Governance and Management Failure to achieve exploration development success Reserve and Resource Estimate Exploration Geological Understanding Failure to achieve production estimates Operational Performance and Planning New 2020 Emerging Risks Financial Risk Cyber Security Since the 2019 Annual Report there have been a number of updates in the principal risks driven by the changes in our governance structure and senior management, the revised strategy for the business and external factors such as COVID-19. Any ‘new’ principal risks have been elevated from the emerging risks disclosed in the 2019 Annual Report or the 2020 Interims. The remaining principal risks which have been refreshed, not removed, to reflect the broader considerations of the business moving forward and the emerging risks have also been refreshed. The following diagram shows the flow from 2019 to 2020. Of particular note through 2020 was the global impact of the COVID-19 pandemic, as highlighted throughout the report and shown in the Operational Review on page 44 under Co-Existing with COVID-19. We recognise the potential risks which could have arisen from COVID-19 and this has been captured in the new principal risk of infectious disease outbreak which has been escalated from an Emerging Risk in the 2019 Annual Report. The current status of the principal risks affecting Centamin and its operational activities, together with the measures to mitigate risk, are detailed in the Principal Risks section. When considering risk the Group splits these under external, strategic and operational risks on a sliding scale depending on the level of influence over which the Group may have on the factors which can impact the risk. Centamin Annual Report 2020 > Additional Information> Corporate Governance> Foreword> Financial Statements> Strategic Reportxternal E 1 2 7 6 8 S t r a t e g i c 3 4 5 12 13 14 Operationa l External 1 Political 2 Legal and Regulatory Compliance 3 Litigation 4 Infectious Disease Outbreak 5 Gold Price Strategic 6 Single Project Dependency 7 Concession Governance and Management Risks 8 Licence to Operate 9 Future of our Workforce 10 Evolving environmental expectations Operational 11 Safety, Health and Wellbeing 12 Exploration 13 Geological Understanding 14 Operational Performance and Planning 9 11 10 Risk Appetite Opportunistic Informed Balanced Controlled Refreshed Risk Elevated Risk 70 STRATEGIC REPORT – RISK REVIEW CONTINUED Risk radar The Board considers risks both in terms of potential severity based on the ‘likelihood’ of the risk occurring, given the mitigating factors in place, and relative ‘impact’, should an event materially impact on the business to form a residual position. The risks are then considered against Centamin’s risk appetite to provide ‘themes’, which are those areas of concern that are discussed and debated. The radar diagram shows the key information on the principal risks including the appetite of the Company to the particular risk, whether this is an external, strategic or operational risk, in addition to whether this is a refreshed or elevated principal risk for 2020. For the current reporting period we have identified, 14 principal risks and six emerging risks. Further detail on the principal risks which could affect Centamin are shown below with a description of the nature of the risk, risk trend, link to the strategic pillars, mitigation measures, ongoing strategy to manage the risk and the Group appetite. Centamin Annual Report 2020 71 UNDERSTANDING OF OUR PRINCIPAL RISKS ALONGSIDE OUR EMERGING RISKS IS A KEY COMPONENT OF A ROBUST ASSESSMENT. 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, in previous years have remained fairly constant as shown within the previous Annual Reports. 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 emerging risks. Emerging risks are defined as circumstances or trends that could significantly impact the Company’s financial strength, competitive position or reputation within the next three years or over a longer term. Emerging risks may prove difficult to quantify as they are often influenced by external factors and difficult to predict. For example in 2019, would anyone have envisaged the far reaching and global implications of the COVID-19 pandemic? Emerging risks are considered as part of the Company’s strategic discussions through all levels of the Group and a number of these risks from the 2019 Annual Report have now been elevated to principal risks highlighting the importance of this process. Emerging risks We have outlined a non-exhaustive list of emerging risks assessed during the year, some are ‘new’ and others are risks which are inherent to the nature of our business and where we operate. We monitor these as part of the risk management framework. Climate related risk We recognise that climate change has recognition as a growing global risk. Even though stakeholder attention in 2020 was directed towards the COVID-19 pandemic in 2020 there is an understanding that climate-related risk will rebound and a shift towards greener economies cannot be delayed until the shocks of the pandemic subside. Climate action failure is a risk we need to consider in 2021 as we move towards meeting the requirements of the Task Force on Climate-related Financial Disclosures with the commitment to doing this highlighted in the Outlook of the CFO’s Statement on page 55. Financial Cyber security Corporate development Security – West Africa Ensuring that we effectively manage our exposure to risks such as jurisdictional taxation exposure, currency fluctuations, interest rate and liquidity is an ongoing process as highlighted in the financial statements under 3.1 Group financial risk management. The Company has developed the necessary procedures to minimise the potential impact of these risks and further information is provided in the viability statement on page 80 and going concern in Note 1.3.5 of the financial statements. The Company recognises the importance of risks associated with cyber security and data governance but has assessed they do not currently represent a principal risk given the current position of the Company’s operations. Increasing investment in this area is, however, a priority for the Company to ensure we can maintain our resilience alongside planned enhancements to our technology. The Company continues to acknowledge the risks and opportunities associated with our ability to realise value by successfully executing mergers, acquisitions and divestments. Management must be ready to evaluate approaches and opportunities to ensure value for shareholders is maintained and enhanced. Increased militant activity in West Africa could raise potential concerns for our personnel safety in-country. We continue to closely monitor the situation through our own security, local government and external advisors. Capital allocation and project execution Ensuring capital is allocated effectively and projects are well executed is a risk and opportunity which the Company recognises as highlighted on page 55 in the CFO’s Statement. Examples of key capital projects delivered in 2020 include the new tailings storage facility and moving forward the solar plant and paste fill plant at Sukari. Centamin Annual Report 2020 > Additional Information> Corporate Governance> Foreword> Financial Statements> Strategic Report72 STRATEGIC REPORT – RISK REVIEW CONTINUED PRINCIPAL RISKS PRINCIPAL RISK External Risk Political Link to strategy External Risk Legal and regulatory compliance Link to strategy Trend Key W C I N Slightly worse Consistent Slightly improved New RISK TREND NATURE OF RISK West Africa W Future political, social or economic changes in the countries in which we operate may impact on the Group. C C C W W I N Consistent in Egypt I I N N The future investment framework and business conditions in our operating locations could change with governments adopting different laws, regulations and policies that may impact on the ownership, development and operation of our mineral resources projects. The Group’s structure includes operational activity in Egypt and West Africa, summarised in the Operating Environment on page 18, held through companies in Australia and the United Kingdom. This means we are subject to various legal and regulatory requirements across all jurisdictions, relating to issues such as cross jurisdictional taxation, related party transactions, anti-bribery and corruption. Ongoing legal, fiscal and regulatory changes may impact project permitting, tenure, taxation, exchange rates, environmental protection, labour relations, and the ability to repatriate income and capital. These measures may also impact the ability to import key supplies, export gold production and repatriate revenues. W C Centamin’s ability to operate and conduct business in host countries, may be adversely affected by current and any future dispute resolution and/or litigation proceedings. The Group is currently party to two significant legal actions in Egypt. These could affect its ability to operate the mine at Sukari in the manner in which it is currently operated (in the case of the challenge to the Concession Agreement under which Sukari operates) and adversely affect its profitability. I N The details of this litigation, which relates to the loss of the Egyptian national subsidy for Diesel Fuel Oil and the Concession Agreement, are given in note 5.1 of the financial statements External Risk Litigation Link to strategy Centamin Annual Report 2020 73 MITIGATION MEASURES ONGOING STRATEGY RISK APPETITE Government policies have developed over the past years in host countries to incentivise foreign direct investment and the development of local mining industries. Centamin deploys a proactive government and stakeholder liaison policy and actively monitors – on an ongoing basis – legal, fiscal, regulatory and political developments in its host countries. The terms of the Sukari Concession Agreement, (including the applicable tax regime and rights of tenure), were issued and ratified under special Law No. 222 of 1994 and can, therefore, only be amended by the passing of a further law. To maintain a detailed and up to date understanding of the investment framework and climate in which we operate as well as a constructive relationship with our host governments and local partners, such as EMRA. The Company undertakes to abide by the spirit and letter of the Concession Agreement as well as local laws/regulations in Egypt and our other host countries. Level: Balanced We will not take any unnecessary risk within our control. However, we understand that inherently we have limited control over a number of external risk factors. Centamin deploys a proactive government and stakeholder liaison policy and actively monitors – on an ongoing basis – legal, fiscal, regulatory and political developments in its host countries. The Company aims to comply with all relevant regulation and legislation including its environmental and operational commitments set out in the relevant permits/authorisations and local laws/regulations. Level: Balanced We will not take any unnecessary risk within our control. However, we understand that inherently we have limited control over a number of external risk factors. In Egypt we have the Sukari Concession Agreement which can only be changed by means of another law, so we have the right to export gold, repatriation of funds, existing tax exemptions (subject to the provisions of the Concession Agreement). In addition, the Group engages with the relevant regulatory authorities and seeks appropriate advice to ensure compliance with all relevant regulation and legislation. An example would be the global tax strategy in place which ensures all taxes are paid at an operational level and further tax requirements are met through the holding structure. Appropriate monitoring procedures are in place and we ensure that we manage legal and regulatory compliance. In order to mitigate this risk Centamin has (a) taken appropriate legal advice from reputable legal advisors and continues actively to pursue its legal rights with respect to its existing cases; and (b) maintains regular contact with its Egyptian legal advisors and actively monitors developments in both court and local media for signs of any legislative or similar developments that relate to its ongoing litigation or which may otherwise threaten its operations, finances or prospects. The potential for serious impact can be further mitigated by Centamin’s strict adherence to local laws and agreements; the Egyptian government’s continuing opposition to the legal challenge to Law no. 32 of 2014, which restricts the ability of third parties to challenge contractual agreements between the Egyptian government and investors such as Centamin; the investment protections and dispute resolution provisions set out in the Sukari Concession Agreement and the bilateral investment treaty between Australia (PGM’s place of incorporation) and the Arab Republic of Egypt. 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 We will not take any unnecessary risk within our control. However, we understand that inherently we have limited control over a number of external risk factors. Centamin Annual Report 2020 > Additional Information> Corporate Governance> Foreword> Financial Statements> Strategic Report74 STRATEGIC REPORT – RISK REVIEW CONTINUED PRINCIPAL RISK RISK TREND NATURE OF RISK Trend Key W C I N Slightly worse Consistent Slightly improved New External Risk Infectious disease outbreak Link to strategy C I N W In 2020, COVID-19 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. We have 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 disruptions. Furthermore, we recognise the macro-economic uncertainty this has created including volatility in the markets. The scale and duration remain uncertain but we recognise this could impact our financial condition which we continue to monitor and are prepared to manage accordingly. I I N N W C The extent of the Company’s financial performance is due in part to the price of gold, over which the Company has no influence, with further detail provided under the Gold Market Review on page 17. 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 and continues to consider other options where these would be viewed as beneficial by the Board. W C The Sukari Gold Mine is Centamin’s operating asset accounting for all the Group’s reserves. Whilst the resource base in West Africa is growing, the regional exploration is at the scoping study and feasibility stage to assess viability of a potential development project. We recognise the COVID-19 pandemic may impact this risk but have provided an update on the impact to date and our position moving forward as shown in the Operational Review on page 44 under Co- Existing with COVID-19. Until further production growth beyond Sukari is identified, the potential impact remains high and safeguarding the project is paramount to the Company. External Risk Gold price Link to strategy Strategic Risk Single project dependency Link to strategy Centamin Annual Report 2020 75 MITIGATION MEASURES ONGOING STRATEGY RISK APPETITE We recognise the global pandemic of COVID-19 as a threat bringing potential risks to our people and business. Management 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. Level: Balanced We will not take any unnecessary risk within our control. However, we understand that inherently we have limited control over a number of external risk factors. Safely managing the health and wellbeing of our workforce, in line with government and public health advice we have introduced COVID-19 secure working conditions which have been paramount in mitigating the risk. Ensuring a local and global proactive approach to our response during the pandemic has been key. Whilst the impact and potential duration remains uncertain, the Company has carried out scenario risk analysis on the Group and 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, adapting our policies, procedures and controls to minimise the impacts within our control. A COVID-19 Executive Committee provides oversight during the pandemic, supported by multifunctional teams within a framework led by risk and operations. Further information is shown in the Operational Review on page [34] under Co-Existing with COVID-19. The Group is 100% exposed to the gold price; however, the cash costs of the Sukari Gold Mine remain within our budget and we were able to benefit from the increase in the gold price through 2020. The Company does not currently hedge against the price of gold or exposure to currencies. We will continue to allow for financial flexibility when budgeting and forecasting using a measured approach to the potential fluctuations in gold price. 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. At Sukari, the process plant has been designed with sufficient resilience and redundancies within the operating cycle. The Sukari Gold Mine is Centamin’s operating asset accounting for all the Group’s reserves. Whilst the resource base in West Africa is growing, the regional exploration is at the scoping study and feasibility stage to assess viability of a potential development project. We recognise the COVID-19 pandemic may impact this risk but have provided an update on the impact to date and our position moving forward as shown in the Operational Review on page 44 under Co-Existing with COVID-19. The exploration projects across the business provide a well-balanced project pipeline, with potential to add incremental value by increasing production across the Group as highlighted in the Approach to Geology, on page 22 within the Business Model. The Company could potentially be awarded additional exploration areas, under the recent Egyptian bid round, subject to agreement of mutually acceptable terms with the government. Further detail is shown in the Exploration Review. Level: Balanced We will not take any unnecessary risk within our control. However, we understand that inherently we have limited control over a number of external risk factors. Level: Informed We will have an approach that could deliver reasonable rewards, economic or otherwise, by managing risk in an informed way. Centamin Annual Report 2020 > Additional Information> Corporate Governance> Foreword> Financial Statements> Strategic Report76 STRATEGIC REPORT – RISK REVIEW CONTINUED PRINCIPAL RISK RISK TREND NATURE OF RISK Trend Key W C I N Slightly worse Consistent Slightly improved New Strategic Risk Concession governance and management Link to strategy Strategic Risk Licence to operate Link to strategy Strategic Risk Future of our workforce Link to strategy Strategic Risk Evolving environmental expectations Link to strategy I I I I N N N N W C SGM, is 50:50 jointly owned by PGM (the Company’s wholly owned subsidiary) and EMRA, with equal board representation from both parties. The board of SGM operates by way of simple majority Should a dispute arise or decision-making become deadlocked and cannot otherwise be amicably resolved by way of commercial negotiations or mediation then time-consuming and costly arbitration or other dispute resolution proceedings may need to be initiated. W C Centamin is committed to building and operating our mines in a safe and responsible manner. To do this, we seek to build trust-based partnerships with host governments and local communities to drive shared long-term value while working to minimise the social and environmental impacts of our activities. True consideration needs to be given to the investment in sustainable projects, whilst delivering on our stated ESG objectives. W C The way we work is changing. Embedding a clear approach to the development of nationals supported by an understanding of the required cultural values is pivotal to the strategy. Failure to do this increases the risk of churn and the loss of key personnel and knowledge so retention is critical. We also need to consider where possible the ability to attract adequately experienced personnel to meet the future growth aspirations of the business. W C Past environmental incidents in the extractive industry highlight the hazards (e.g. water management, tailings storage facilities, cyanide management) and the potential consequences to the environment, community, safety and health. Due to the location in particular of the Sukari mine in a desert, we are aware of the importance of water management alongside our reliance on fossil fuel. We recognise that climate-related risk is likely to have an increasing impact on our operations as identified by a specific emerging risk. Centamin Annual Report 2020 77 MITIGATION MEASURES ONGOING STRATEGY RISK APPETITE It is of key importance for Centamin to maintain a solid and transparent working relationship with its 50% partner, EMRA, through a strict adherence to the Sukari Concession Agreement. With the onset of profit sharing in 2019, the proper application of the cost recovery and net profit share payment provisions under the Concession Agreement, have become a key priority. To ensure successful management of the Sukari Gold Mine maintaining a good working relationship with EMRA, other relevant ministries and wider government is a key focus. The Group has regular meetings with officials from EMRA and invests time in liaising with relevant ministry and other governmental representatives. A key objective of the Company is to maintain its licence to operate in its host countries. In Egypt, this is achieved through active and ongoing co-operation, regular meetings and correspondence with EMRA, as well as making sure that the terms and conditions of the Concession Agreement and applicable laws are fully complied with. Ongoing monitoring and review of this is key and is an activity which we will continue to give the required focus to. As we develop our West African portfolio we need to consider how we manage the requirements of the permitting and licensing considerations. Level: Balanced We will not take any unnecessary risk within our control. However, we understand that inherently we have limited control over a number of external risk factors. Host governments and local communities expect our involvement to bring benefits socially and economically whilst eventually leaving them better off than when we arrived. Centamin aims to bring enduring socio-economic prosperity within our area of influence and to protect the bio-physical environment. The Company aims to meet its ESG commitments set out in our corporate governance framework, the permits/ grants/licences and local laws/regulations in our jurisdictions. We aim to foster a high performance, inclusive culture, through an organisational structure that is fit for purpose, resourcing this structure with the right capabilities and empowering leadership to deliver the desired outcomes. Initiatives which have been introduced include the introduction of an employee pathway for professional development, supervisory development programme ex- pat reduction scheme alongside ongoing training needs analysis, an annual performance review process and succession planning. Our ability to maintain compliance with regulatory obligations and alignment with emerging industry standards in order to protect the environment and our host communities alike remains one of our top priorities. We are in the process of strengthening our governance and management controls and assurance processes to meet the requirements of new industry standards, including the Responsible Gold Mining Principles, Global Industry Standard Tailings Management and Taskforce on Climate- related Financial Disclosures. We are committed to resource efficiency and pollution control. Preparatory works have commenced on a solar plant that will reduce our GHG emissions by approximately 14% at Sukari and further investment is committed to optimise fuel efficiency are ongoing to fit of light-weight trays to our haul fleet and dynamic gas blending. Acting in an ethical, responsible and transparent manner is fundamental to realising the significant business benefits gained from building trusted and constructive relationships with all our business stakeholders, and to maintaining our socio-political licence to operate. Strengthen our sustainability governance and management framework at all levels of the organisation, including reinforcement of our performance standards to support growth. Level: Balanced We will not take any unnecessary risk within our control. However, we understand that inherently we have limited control over a number of external risk factors. To deliver on our strategy, we rely on a capable and engaged workforce that behaves ethically and responsibly, consistent with Centamin’s values and Code of Conduct; these are also essential for us to maintain our licence to operate. Level: Balanced We will not take any unnecessary risk within our control. However, we understand that inherently we have limited control over a number of external risk factors. Not only comply with regulatory obligations but anticipate broader societal expectations as it relates to responsible environmental management, on aspects including resource efficiency and pollution control, the monitoring and management of tailings storage facilities and management of water consumption and discharge, biodiversity conservation and natural resource management legal compliance, but broader societal expectations. Understanding the effects of climate-related risk on our business is important as we strive to optimise opportunities associated with the transition to a low-carbon future, further information will be provided in the 2021 Sustainability Report. Level: Controlled Controlled considers potential breaches in our policies and controls to meeting our environmental expectations. The Board invests heavily in a programme of continuous improvement in relevant practices and has an expectation to meet the highest standards. Centamin Annual Report 2020 > Additional Information> Corporate Governance> Foreword> Financial Statements> Strategic Report78 STRATEGIC REPORT – RISK REVIEW CONTINUED PRINCIPAL RISK RISK TREND NATURE OF RISK Trend Key W C I N Slightly worse Consistent Slightly improved New Operational Risk Safety, health and wellbeing Link to strategy Operational Risk Exploration Link to strategy Operational Risk Geological understanding Link to strategy Operational Risk Operational performance and planning Link to strategy Centamin Annual Report 2020 I N I I I N N N W C It is an inherent risk in our industry that incidents due to unsafe acts or conditions could lead to injuries or fatalities. This has been heightened by the ongoing COVID-19 pandemic which highlights the importance of workforce wellbeing. Our workforce faces risks such as travel/transport, fire, explosion, and electrocution, as well as risks specific to the mine site and development project. These include potential slope failures or collapse in the underground, heavy or light equipment collisions involving machinery or personnel or environmental incidents such as cyanide contamination. Across the industry there is increased focus on the risks associated with mining companies’ tailings facilities. We continue to monitor this risk, completing regular internal and external technical reviews. W C Exploration activities by their very nature are highly speculative with an inherent degree of risk. Centamin strives to make new discoveries, growth and value-creation opportunities through our exploration programme. Whilst Egypt continues to represent a significant opportunity, we also recognise our potential organic growth projects in West Africa as covered further in the Exploration Review on page 50. W Geological uncertainty is an inherent risk which any mining company faces. C Understanding of the ore body can be influenced by a number of factors which can impact on the ability to estimate the location of the ore and the potential grade expected by the mining operations. As these estimations are used to inform the approach to our operations and the wider business strategy we need to ensure that we can make this process as accurate as possible. W C Unplanned operational stoppages can impact our production. An inability to shift the volumes of waste required, drops in our operational capacity in mining, contractor management, supply chain disruption or ground stability are examples of potential risks. Accurate and complete planning is pivotal to informing production estimates, grade quality and provide greater clarity to corporate/ operational decision-making. We then need to deliver supported by informed data analysis. Further, we recognise the potential impact of COVID-19 which we have summarised on page 44 and highlighted key considerations throughout. As of the time of publishing there were no additional concerns. 79 MITIGATION MEASURES ONGOING STRATEGY RISK APPETITE Protecting the safety, health and wellbeing of employees, contractors, local communities and other stakeholders is a fundamental responsibility for Centamin. We seek continuous improvement of our safety and health risk management procedures, with particular focus on the early identification of risks and the prevention of incidents. Examples of key mitigations initiatives in 2020 and beyond include critical risk and control standards supported by visible safety leadership reinforced at our operations, proactive COVID-19 management and enhanced employee medical benefits to recognise the health and wellbeing of our people and delivery of our new tailing’s storage facility (“TSF2”) extending our tailings capacity to 2030. We continuously seek to incorporate technology and innovation to reduce workers’ exposure to safety and health risks alongside introducing a variety of initiatives to improve their wellbeing. Ensuring the safety, health and wellbeing of our workforce is a moral imperative and our priority value of protect. This requires a focus on zero-harm whilst constituting a direct investment in the productivity of the business and the physical integrity of our operations. A safe and healthy workforce translates into an engaged, motivated and productive workforce that mitigates operational stoppages, and reduces potential incidents or harm. Level: Controlled Controlled considers potential breaches in our policies and controls to safety, health and wellbeing. The Board invests heavily in a programme of continuous improvement in relevant practices and has an expectation to meet the highest standards. Before undertaking any exploration activities a risk-based approach is undertaken to filter projects considering a number of factors. This approach has been further enhanced in 2020, and beyond, by with an overhaul of the geological leadership team and a restructured approach. This will be supported by independent advice and an investment in technology. During 2020 we invested a total of US$17m in exploration activities, with an initial US$5m budgeted for exploration expenditure in West Africa in 2021. See ‘Exploration Review’ page 50 for more on our exploration programme within Egypt. Ensuring we have an effective and efficient exploration programme to meet our strategic targets, long-term production and reserves goals. Further information will be provided through 2021 in updates on the exploration activities. Level: Opportunistic We will consider opportunities with higher levels of risk in exchange for potentially greater reward, as long as they do not conflict with our core values. The overhaul of the geological leadership team in 2020 and a restructured approach has led to a number of changes to the stewardship of the orebody. To achieve an accurate estimation based on geology, that informs improved mine planning and operations to deliver results. Upgrades to the resource management processes and the development of more robust resource models have driven a review of the existing data alongside future analysis. Further information will be provided in the optimised life of mine plan for Sukari, which will be released in Q4 2021. These changes will contribute to an integrated approach to the mining methods which are applied and inform the mine-to-mill planning. An increased geotechnical engineering programme with a focus on improving operating confidence has also been introduced. Further information on the improvements which have been made are shown in our Approach to Geology on page 22. Level: Informed We will have an approach that could deliver reasonable rewards, economic or otherwise, by managing risk in an informed way. The business is refreshing the life of mine plan for Sukari. The plan should provide clarity as to the strategic direction of the mine and the desired production levels for the short, medium and long-term to give focus to the operational elements of the mine and allow for operational flexibility. Alongside the overhauled geological leadership team and restructured approach to geology and orebody stewardship we are developing a comprehensive mining engineering model, increasing our mining flexibility and have identified multiple initiatives to improve operating efficiency and productivity. An example is a dedicated contract-mining solution on the east of the open pit and the owner-operator fleet utilised for ore and waste mining on the north and west. The mining sector continues to face operating cost inflation, including labour costs, energy costs and the natural impact of ore-grade deterioration over time. In order to deliver our disciplined growth strategy and to maintain and improve our competitive position, the Group must deliver its financial improvement targets and minimise the number of unplanned operational stoppages. Further information will be provided in the optimised life of mine plan for Sukari. Level: Informed We will have an approach that could deliver reasonable rewards, economic or otherwise, by managing risk in an informed way. Centamin Annual Report 2020 > Additional Information> Corporate Governance> Foreword> Financial Statements> Strategic Report80 STRATEGIC REPORT – RISK REVIEW CONTINUED VIABILITY STATEMENT To address the requirements of Provision 31, and contributing to Provision 1 of the 2018 Code, the Directors have assessed the prospects of the Group over a longer period than the twelve months required for the going concern assessment within the financial statements. Period of assessment In preparing the assessment of viability the Board has considered the principal risks and opportunities faced by the Group in relation to the Business Model as set out on pages 20 to 23, relevant financial forecasts and sensitivities and the financial position of the business. 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 three- year outlook in line with the strategy. Accordingly, a period of three 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 three-year assessment period. The Board considered the key strategic drivers, which are based around the Company’s five strategic pillars: people, asset quality, financial flexibility, stakeholder returns and an active growth pipeline, as set out on pages 32 to 33. The updated Sukari Mineral Resource and Reserves statement (“R&R”) (ref page 216) underpins the long-term sustainability of the operation with a life of mine of twelve years based on a twelve 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 risks to be risks to the gold price, operational performance and planning, concession governance and management, licence to operate and infectious disease outbreak. 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, licence 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 Company’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 16% 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 twelve Mtpa, a level which Sukari often exceeds. The process plant recovery rates are targeting 87.2% in 2021. Maintaining and improving productivity is fundamental to our business and long-term strategy. Sukari has built up 17.4 million tonnes of low grade (0.47g/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. • Licence 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 175). Centamin Annual Report 2020 81 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 between US$150 to 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. 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 three-year review period • Production stoppages due to labour or supply • No borrowing facilities being available to the Group • Cease to be able to export gold 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, but plausible downside scenarios out to December 2023. The scenarios tested include material reductions in production and changes to working capital: • 30% open pit ore and waste reduction: A reduction in open pit mining activities for the period, with open pit operations continuing in full after the reduction period. The consequential financial effects, such as the under-absorption of fixed costs and risk of increased working capital were also considered • 30% underground stoping and development reduction: A reduction in underground mining activities for the period, with underground operations continuing in full after the reduction period • 20% processing plant reduction: A reduction in processing activities for the period, with processing activities continuing in full after the reduction period • 50% processing plant reduction: A reduction in processing activities for the period, with processing activities continuing in full after the reduction period • A combination of the above: A combination of the first three reductions above for the period, with processing activities continuing in full after the reduction period Liquidity and solvency Whilst there is a potential that all the above scenarios could materialise the Company recognises there are some which are more likely to occur than others. In all of the scenarios envisaged, the Group would maintain the necessary liquidity levels. 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 perceived unlikely event, under the terms of the Concession Agreement, Centamin would be solely responsible if funding should be required. Centamin is a resilient business with a strong financial position of US$310 million in cash and liquid assets as at 31 December 2020, and no debt, hedging or financial instruments on its balance sheet. Conclusion Taking into account the Group’s current position and robust assessment of principal 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 three years (until 31 December 2023). Centamin Annual Report 2020 > Additional Information> Corporate Governance> Foreword> Financial Statements> Strategic Report82 CORPORATE GOVERNANCE A ROBUST SYSTEM OF CORPORATE GOVERNANCE Our business model is to explore, develop, operate and sustain high quality gold mines throughout the commodity cycle, thereby creating long-term value for our stakeholders. Engagement with our stakeholders is vital and underpins that value creation, aiding an awareness of our operating environment, the material issues and associated risks. Together with disciplined capital allocation and strong corporate governance, this is the foundation of our decision-making framework. Centamin Annual Report 2020 > Corporate Governance 83 CORPORATE GOVERNANCE – CONTENTS Governance Statement Board of Directors Our Management Structure Our Governance Structure Board Attendance Schedule in 2020 Board Diversity Skills and Succession Board Evaluation and Training Key Activities in the Year Technical Committee Report Corporate Governance Compliance Statement Sustainability Committee Report Nomination Committee Report Audit and Risk Committee Report Remuneration Committee Report 86 92 95 96 98 100 102 106 108 110 112 114 118 124 132 Centamin Annual Report 2020 > Additional Information> Foreword> Financial Statements> Strategic Report84 CORPORATE GOVERNANCE – GOVERNANCE OVERVIEW GOVERNANCE OVERVIEW Centamin Annual Report 2020 2020 HIGHLIGHTS EMPLOYEE STATISTICS TOTAL WORKFORCE (including contractors) 3,128 2019: 2,556 EMPLOYEES AT SUKARI MINE WHO ARE EGYPTIAN NATIONALS 95% 2019: 95% NATIONALS IN LEADERSHIP POSITIONS 65% 2019: 59% 2020 HIGHLIGHTS > Foreword > Strategic Report > Corporate Governance > Financial Statements > Additional Information 85 DIVERSITY FEMALE DIRECTORS ACCOUNT for 33% of the Board 33% 3 OF THE 5 BOARD COMMITTEES are chaired by female directors 3 OF 5 FEMALE REPRESENTATION AMONG THE SENIOR MANAGEMENT TEAM (1) 9% PERCENTAGE OF FEMALE DIRECT REPORTS TO THE SENIOR MANAGEMENT TEAM 22% (1) see the Governance structure on page 95 for a list of the roles that make up the senior management team. CLIMATE CHANGE NEWLY ESTABLISHED SUSTAINABILITY COMMITTEE APPOINTMENT OF HEAD OF ESG NEWLY ESTABLISHED TECHNICAL COMMITTEE PROGRESS OF A 36MW PEAK CAPACITY SOLAR PLANT TO REDUCE FUEL CONSUMPTION ENSURING THE COMPANY’S PURPOSE, VALUES AND STRATEGY ARE ALIGNED WITH THE COMPANY’S CULTURE AS COMMUNICATED TO THE WORKFORCE. Centamin Annual Report 2020 86 CORPORATE GOVERNANCE – GOVERNANCE STATEMENT GOVERNANCE STATEMENT THE BOARD UNDERSTANDS THE IMPORTANCE OF BEING ADAPTABLE WHILST UPHOLDING THE PILLARS OF GOOD GOVERNANCE. AS THE EFFECTS OF COVID-19 IMPOSED RESTRICTIONS GLOBALLY, THE BOARD REMAINED DISCIPLINED AND DECISIVE, PROVIDING DIRECTION AND LEADERSHIP TO THE EXECUTIVE AND WORKFORCE. NON-EXECUTIVE CHAIRMAN JAMES RUTHERFORD Dear Shareholders Despite the effects of the global pandemic, technical and operational issues that arose during the year, the Board played a pivotal role in steering the Company in the right direction by being an ambassador for change, discipline and potential. The Board had to adapt quickly in the way it communicated, conducting regular virtual on-line meetings, as a Board and with senior management, whilst travel restrictions were in place. To protect the health of our workforce, we introduced measures to keep everyone safe both on site and in the corporate offices. Operationally, through a difficult year of transition and change, we delivered a clear strategy which culminated in publishing Phase 1 of our Life of Asset review. Full year 2020 results were delivered in-line with the revised guidance allowing the Board to recommend total dividend payments of US$104 million for 2020. On change The two-year programme of board refreshment and succession completed in 2020 and because of this a new Centamin, with an overhauled governance structure was established. The Board function was restructured with the creation of a new Technical Committee and the evolution of the Health, Safety, Environmental and Social Committee into a Sustainability Committee. Following the AGM in 2020 and at the recommendation of the Nomination Committee, the Board appointed Hennie Faul as an independent non-executive director who chairs the newly established Technical Committee. Since Martin Horgan’s appointment as CEO in April 2020, the senior management team has been significantly strengthened, with key appointments, in areas of sustainability, exploration and geology. On discipline Led by the Technical Committee, the Board had a clear intention to structure the Company’s long-term plan by focusing on rigor and accountability. This structured plan was reflected in the principal decision by the Board to embark on a two-phase LOA review at Sukari of which Phase 1 is now complete. Led by the Sustainability Committee, the emphasis has been on economic participation at an asset level and work programmes to understand the opportunities for wider local representation. In addition, there has been increased focus on training, development and succession planning as well as the talent pipeline to increase local participation at Sukari. Centamin Annual Report 2020 87 On potential The Board is confident that an effective governance structure, with a talented management team in place, will result in unlocking Centamin’s undoubted potential. The Company’s objective, is to continue to deliver a reliable and consistent operating performance whilst identifying opportunities and managing potential challenges over the mine life at Sukari. Focus will continue to be on moving from a short-term planning cycle to a long term, life of mine plan. Below is a summary of the governance actions undertaken by the Board in 2020: ON CHANGE • Board refreshment • Establishing a new committee structure • Upholding the guidelines on overboarding* • Senior governance appointments in ESG and risk • Reviewing and monitoring of workforce development and talent management ON DISCIPLINE • Technical Committee established to review, approve and monitor the technical aspects of our operations • Increased frequency of ad hoc meetings by the Board and development of board authority procedures • Adopted a collaborative working environment amongst the Board, senior management and wider workforce ON POTENTIAL • Clear strategic direction supported by the Board and committee structure • Senior technical appointments in exploration and geology • Development of local talent through employment and diversity * See individual biographies of Board members for more details on external appointments held on page 92 and the Nomination Committee Report on page 118. Centamin Annual Report 2020 > Additional Information> Corporate Governance> Foreword> Financial Statements> Strategic Report88 CORPORATE GOVERNANCE – GOVERNANCE STATEMENT CONTINUED OUR CULTURE LEADING FROM THE TOP THE PANDEMIC HAS RESTRICTED PHYSICAL ACCESS REQUIRING CORPORATE AND SITE TO ADAPT IN THE WAY THEY WORK. THE SOLUTION OVER THE LAST TWELVE MONTHS HAS BEEN TO UTILISE MICROSOFT 365 TO COMMUNICATE, COLLABORATE ON SHARED PROJECTS AND SHARE KNOWLEDGE AND INITIATIVES ON-LINE. I’M PROUD OF THE WAY OUR EMPLOYEES HAVE RESPONDED THIS YEAR AND ENCOURAGED BY THE ADAPTABILITY TO A CHANGING ENVIRONMENT. CHIEF EXECUTIVE OFFICER MARTIN HORGAN possible. This has enabled the business to continue collaborating and sharing knowledge whilst working from different locations. Virtual platforms have allowed the Board to interact with each other and allowed management to continue communicating with the operational sites. In addition, this has facilitated important communication flow from corporate to site and vice versa such as collation of information on COVID-19 including latest developments on testing and vaccine developments, local cases and the potential impacts on corporate and site. The Board believe that strong governance underpins a healthy culture and this starts with the Board demonstrating the correct behaviours. In recognising our key stakeholders, we can ensure sufficient resources are dedicated to maintaining and enhancing these relationships. Through open dialogue and transparency the Board can also help mitigate potential risks associated with key stakeholders. Honesty and integrity also foster well- established long-term relationships which the Board continues to work hard to preserve. These relationships help to safeguard the interests of the Company, as well as local jobs and the local economy. The following shows how the Board connects its purpose and strategy in order to define guide and promote corporate culture. As the Board is responsible for owning, assessing and overseeing Centamin’s culture, it also believes that one of the key drivers in influencing and shaping culture throughout the business is the senior management team, led by the Chief Executive Officer. The Chief Executive Officer’s tone sets expectations throughout the organisation and influences the behaviour of both internal and external stakeholders. Because of the restrictions across the globe due to the COVID-19 pandemic, Board and management meetings, corporate and site training as well as day-to-day corporate business has been carried out through Microsoft 365 where Centamin Annual Report 2020 > Foreword > Strategic Report > Corporate Governance > Financial Statements > Additional Information 89 CENTAMIN TEAMS CALL Corporate management team communicating via an Office365 Teams Call. Our Purpose Our Strategy Values Our culture Attitudes Behaviours Strengthening our stakeholder relationships Improving risk management and mitigation Centamin Annual Report 2020 90 CORPORATE GOVERNANCE – GOVERNANCE STATEMENT CONTINUED PROFESSIONAL DEVELOPMENT PATHWAY PROFESSIONAL DEVELOPMENT PATHWAY LINKED TO THE BUSINESS GOALS AND OBJECTIVES Paul joined Centamin in October 2020 and has over 20 years’ experience supporting companies with the integration of sustainability into systems of corporate governance, management assurance and operational practice. Paul Cannon, BSc (Hons) Chemical Engineering, MSc Environmental Science Role: Head of Environmental and Social Governance Since joining the senior management team, Paul has been leading the development of the sustainability strategy, which underpins the business model of Centamin see page 24. Working together with site senior managers has been important for Paul in understanding, assessing and assisting in the development of existing. Collaborative working on these initiatives has been instrumental in maintaining a healthy culture amongst senior managers and employees. Initiative: Employee development pathway The Employee development Pathway (“EDP”) is an internal career pathway for employees who wish to progress within certain departments on site. The pathway sets the Group’s values and ensures adequate awareness of the critical behavioural standards that are required for successful performance. By implementing this pathway, employees are trained using best practice standards for employee development, and benefits both the Company and individual as those trained display, employ and train others on the core values that lead to individual and Company success. progress through self-management and ownership. The opportunity to participate and process for training is transparent with clear reward and progression targets. The training and development process is divided into four levels, which an employee goes through with the aim of ensuring that they complete the pathway initiatives at a proficient level: 1. Training : At this level, the relevant employee acquires knowledge, skills and competencies 2. Competent: This level is about developing those requisite abilities or qualities 3. Productive: Demonstrating quality work or ability to produce high standards of work 4. Proficient: A demonstration of advancement in an occupation or area of knowledge This framework has been rolled out to the main departments at Sukari. The benefits of the pathway include providing a clear road map, encouraging employees to Initiative: Employee engagement and the Voice of Sukari Established in 2019, the Voice of Sukari was set up as an employee forum to identify opportunities for workplace improvement. Meetings were held in Q1 2020 and responses provided to the forum with involvement of the HSES Committee. Initiatives are ongoing to improve the forum such as developing the terms of reference, reporting lines, and understanding the forum’s role and purpose. PLANNED ACTION/RESPONSE: In 2021, consultation will be held with site management and employee representatives to review the operational modalities of the forum, and employee engagement more broadly including grievance management. Recommendations will be reported to the Board through the Sustainability Committee. Find out more at www.centamin.com Centamin Annual Report 2020 > Foreword > Strategic Report > Financial Statements > Additional Information 91 MONITORING OUR CULTURE Culture The Board understands its role in ensuring that the business is sustainable over the longer term and has embedded the corporate culture through the Board’s values, behaviours and actions. A key initiative in 2021 will be to continue clearly communicating the culture of Centamin to all stakeholders. The following diagram illustrates how Centamin displays, monitors and communicates its desired culture: • Community investment • Employee training • Donation of relief funds to assist with the COVID-19 pandemic • Regular dialogue with investors Monitoring • Safety statistics • Management meetings • Investor relations • Internal reports Actions Aims • Protect our environment • Invest in our employees • Maintain our social licence to operate • Safeguard our industry • Care for our communities Protect Ownership Innovate Educate Passion Communication • Engagement forums • Management meetings • Investor relations • Published reports Policy • Performance framework • Setting operating standards • Management planning • Budget and resource allocation Centamin Annual Report 2020 > Corporate Governance92 CORPORATE GOVERNANCE – BOARD OF DIRECTORS BOARD OF DIRECTORS JAMES (JIM) RUTHERFORD NON-EXECUTIVE CHAIRMAN MARTIN HORGAN CHIEF EXECUTIVE OFFICER ROSS JERRARD CHIEF FINANCIAL OFFICER APPOINTED January 2020 NATIONALITY British QUALIFICATIONS BSc (Econ), MA (Econ) SKILLS AND EXPERIENCE Jim has over 25 years’ experience in investment management and investment banking, specialising in the global mining and metals sector. Jim brings to the Board considerable financial and capital markets insight and a deep understanding of the mining industry. 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 was a non-executive director of Anglo American plc from 2013 to 2020. April 2020 Chief Financial Officer since April 2016; Director since February 2018 (served as Interim CEO from December 2019 to April 2020) British Australian BEng (Hons) BCompt (Hons) 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, 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 that, 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. 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 financial 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. As a qualified accountant, Ross is a member of the Institute of Chartered Accountants in Australia (ICAA), the Institute of Chartered Accountants in Zimbabwe (ICAZ) and the Australian Institute of Company Directors (AICD). CURRENT EXTERNAL APPOINTMENTS Senior independent director of Anglo Pacific Group and a non-executive director of GT Gold Corp. None Centamin Annual Report 2020 None 93 Committee Memberships Audit and Risk Committee Remuneration Committee Nomination Committee Group Risk Committee New Committees post 2020 AGM Sustainability Committee Technical Committee Committee chair DR. SALLY EYRE SENIOR INDEPENDENT NON-EXECUTIVE DIRECTOR MARK BANKES* INDEPENDENT NON-EXECUTIVE DIRECTOR MARNA CLOETE INDEPENDENT NON-EXECUTIVE DIRECTOR April 2019 February 2011 September 2019 British British South African BSc (Geo), PhD, DIC BA (Law) and MA MA (Comm) Taxation and chartered accountant Sally was formerly the president and chief executive officer of TSX Venture Exchange listed Copper North Mining, and an executive of Endeavour Financial which became Endeavour Mining. Whilst working for Endeavour, she served as senior vice president operations, overseeing the exploration, development and production of a portfolio of gold mining projects in West Africa. She was the former chief executive officer of Etruscan Resources (acquired by Endeavour Financial). Sally brings extensive experience in global resource capital markets and mining operations. As a geologist, she brings strong technical balance to the Board. Sally will be taking on the role of senior independent director in place of Edward Haslam who retired at the 2020 AGM. 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 brings legal expertise drawn from years of experience and is knowledgeable in the area of mergers and acquisition. * Mark Bankes is considered by the Board to be independent although as his tenure has reached nine years, as a matter of good governance, the Board agreed that Mark Bankes would not serve on the Audit and Risk Committee or Remuneration Committee. Marna has over 15 years of mining industry experience in emerging markets with particular emphasis in Africa. Her substantial management experience within finance, community and government relations align well with Centamin’s existing Board and business model. In 2006, Marna joined Ivanhoe Mines, and in 2009 she was promoted to chief financial officer and to president in 2020. Marna played an instrumental role as part of the Ivanhoe leadership team achieving a number of strategic milestones, as well as listing the company on the TSX and concluding multiple strategic partnerships and financings with inter alia a Japanese consortium led by Itochu, Zijin Mining and CITIC Metal. Prior to joining Ivanhoe, Marna forged her career at PwC in 2002, in the metals and mining division, subsequently moving on to Group Five Construction. Non-executive director of Adventus Mining, Ero Copper Corp and Equinox Gold. Founding director of Bankes Consulting EURL (private). President and CFO of Ivanhoe Mines Ltd. Centamin Annual Report 2020 > Additional Information> Corporate Governance> Foreword> Financial Statements> Strategic Report94 CORPORATE GOVERNANCE – BOARD OF DIRECTORS CONTINUED Committee Memberships Audit and Risk Committee Remuneration Committee Nomination Committee Group Risk Committee New Committees post 2020 AGM Sustainability Committee Technical Committee Committee Chair * Remuneration (effective 31 March 2021) DR. CATHARINE FARROW INDEPENDENT NON-EXECUTIVE DIRECTOR PROFESSOR IBRAHIM FAWZY INDEPENDENT NON-EXECUTIVE DIRECTOR HENDRIK (HENNIE) FAUL INDEPENDENT NON-EXECUTIVE DIRECTOR APPOINTED September 2019 NATIONALITY Canadian QUALIFICATIONS PhD, PGeo, ICD.D. SKILLS AND EXPERIENCE * August 2018 July 2020 Egyptian BSc, PhD South African BEng Catharine is a professional geoscientist with more than 25 years of mining industry experience. She is active in the mining industry with public, private and academia. Her expertise ranges from operations, technical services, corporate development and exploration. From 2012 to 2017 she was co-founder and CEO of TMAC Resources Inc. 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. Hennie has over 30 years of mining industry experience across a range of commodities and jurisdictions. As a qualified mining engineer, he brings highly relevant engineering expertise that will complement the existing technical skills on the Board, further strengthening the Company’s operational governance. 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. Catharine brings valuable operational and technical mining experience to the Board. He brings valuable experience and insight in governmental relations, banking, investment and development, specifically within Egypt. Hennie joined Anglo American in 2004, initially holding a number of senior engineering positions within its technical and base metals divisions. From 2013 to 2019 Hennie was CEO of Anglo American’s copper business, including the Los Bronces and Collahuasi mines in Chile together with the Quellaveco greenfield project in Perú. Prior to that, he was Anglo American’s group head of mining from 2011 to 2013, where he was responsible for improving governance and best practices across its diverse global mining portfolio. Between 2009 and 2010, Hennie was CEO of Anglo American’s Zinc business. CURRENT EXTERNAL APPOINTMENTS Non-executive director of Franco-Nevada Corporation and Eldorado Gold Corporation. Chair of Exiro Minerals (private) and president of FarExGeoMine Ltd (private). Chairman of Egyptians Abroad company for investment and development and director of its subsidiary companies. Non-executive director of Master Drilling Ltd. Centamin Annual Report 2020 > Corporate Governance 95 OUR MANAGEMENT STRUCTURE The Executive Directors and senior management team provide collaborative and creative leadership to the Group to ensure the strategy is executed effectively and Company’s purpose is fulfilled. Centamin’s senior management comprise of highly motivated, dynamic, experienced individuals, whom are all team players and yet thrive in an entrepreneurial workplace, with the shared objective of creating value. Executive Directors HEADS OF DEPARTMENT Head of Corporate Development Head of Corporate Communications Head of Environmental and Social Governance Head of Exploration Head of Risk Financial Controller Company Secretary GROUP MANAGEMENT – TECHNICAL Group Exploration Manager Group Projects Manager Group Health and Safety Manager Group Sustainability Manager Group Projects SUKARI Country Manager – Egypt General Manager – Sukari WEST AFRICA Regional Manager – West Africa The management structure has been strengthened through the addition of technical managers in the areas of geology, projects and environmental & social. These appointments add further depth to our management and operational capability with the right complementary skills and experience to help the Company deliver on strategic business objectives. Centamin Annual Report 2020 > Additional Information> Foreword> Financial Statements> Strategic Report96 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 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 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 structure are set out on page 95. Executive Directors Non-Exec Directors CORPORATE MANAGEMENT OPERATIONAL MANAGEMENT TECHNICAL MANAGEMENT AUDIT AND RISK COMMITTEE REMUNERATION COMMITTEE NOMINATION COMMITTEE CONTINUOUS DISCLOSURE SUSTAINABILITY COMMITTEE TECHNICAL COMMITTEE Centamin Annual Report 2020 97 The below reflects the primary skills of the Board members: BOARD SKILLS Capital Markets Legal & Finance M&A Experience Mining Industry All Directors have experience in mining 2 5 3 9 Full details of the skills and experience of each Director are set out in each Director’s biography on pages 92 to 94. BALANCE OF THE BOARD Executive Directors Independent Non-Executive Directors 2 7 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 125 for more details on the activities of the Audit and Risk Committee. Remuneration Committee Reviews and recommends to the Board the remuneration packages for the Executives and Non-Executive Directors as well as senior management and consideration of the pay scales and remuneration package for employees. See page 154 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 118 for more details on the activities of the Nomination Committee. Sustainability Committee Reviews the health and safety, environmental, social (including employee engagement), governance and risk associated with the Company’s licence to operate. See page 116 for more details on the summary of activities. Technical Committee Reviews the technical reports, internal quality control and assurance over the Group’s, mining assets and exploration, including oversight of the life of asset, production and exploration. See page 111 for more details on the summary of activities. Board composition and roles The Nomination Committee regularly reviews the balance and composition of the Board and its committees. Non- Executive Director independence, skills, experience and tenure also remain key elements for continuous review by the Nomination Committee. The Nomination Committee oversees the succession planning of the management team and is encouraged by the roll out of a more comprehensive talent management programme. Centamin Annual Report 2020 > Additional Information> Corporate Governance> Foreword> Financial Statements> Strategic Report98 CORPORATE GOVERNANCE – OUR GOVERNANCE STRUCTURE CONTINUED At the date of this report, the Board is made up of the Chair, Senior Independent Director plus five Non-Executive Directors and two Executive Directors with the following responsibilities: BOARD ROLES Chairman Jim Rutherford 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 • Communicates with shareholders in relation to the Company’s strategic aims and policies Chief Executive Officer Chief Financial Officer Martin Horgan 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 approved 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 • 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 Ross Jerrard Assisting the Chief Executive Officer with the implementation of the corporate strategy and is responsible for the Company’s financial performance including: • 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) • Monitoring external contracts and supplier relationships to ensure they are operating effectively The table excludes meetings held by written resolutions or sub-committees and reflects the membership during 2020. For committee attendance records please see each committee report for further details. Meetings attended Meetings not attended BOARD ATTENDANCE SCHEDULE IN 2020 Date of appointment/resignation Board attendance Executive Martin Horgan Appointed 6 April 2020 Ross Jerrard Appointed 5 Feb 2018 Non-executive Jim Rutherford Appointed 1 Jan 2020 Dr Ibrahim Fawzy Appointed 14 Aug 2018 Mark Bankes Dr Sally Eyre Appointed 24 February 2011 Appointed 10 Apr 2019 Catharine Farrow Appointed 2 Sept 2019 Marna Cloete Hennie Faul Appointed 2 Sept 2019 Appointed 1 July 2020 Josef El-Raghy Resigned 29 June 2020 Edward Haslam Resigned 29 June 2020 Mark Arnesen Resigned 29 June 2020 Centamin Annual Report 2020 99 Senior Independent Director Independent Non-Executive Directors Dr Sally Eyre A trusted intermediary between other Directors and the Chairman. Also, a sounding board for the Chairman and is available to resolve any concerns which may arise and fail to be resolved via the normal channels of communication. Dr Sally Eyre took on the role of Senior Independent Director upon the retirement of Edward Haslam at 2020 AGM. Mark Bankes*, Dr Ibrahim Fawzy, Dr Catharine Farrow, Marna Cloete and Hennie Faul The Non-Executive Directors are responsible for bringing in an external perspective, sound judgment and objectivity to Board debates. Constructively challenging the Executive Directors 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 • To monitor corporate culture and stakeholder engagement * See further in this report, Board Independence and the Code Compliance Statement. 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. Centamin Annual Report 2020 > Additional Information> Corporate Governance> Foreword> Financial Statements> Strategic ReportThe awareness of diversity and the various forms it takes in the boardroom are illustrated in the Company’s Diversity Policy. Further details of the policy are set out in the Nomination Committee Report, which considers the following aspects: 1. Skills, expertise and experience The Nomination Committee continued to focus on the guidance of the Hampton- Alexander Review and the Parker Review in monitoring board diversity. The board appointments made in 2019 and 2020 as per the recommendation of the Nomination Committee have steered the Company in the right direction by meeting the target set of 33% female representation as well as one individual identifying themselves as a person of colour. For further details, please see the Nomination Committee Report. 9 BOARD MEMBERS 5 NATIONALITIES SIZE OF THE BOARD 0 – 2 Years 2 – 4 Years 4 – 6 Years 6 – 9 Years 9+ Years 100 CORPORATE GOVERNANCE – BOARD DIVERSITY BOARD DIVERSITY 2. Gender 3. Ethnicity 4. Age 5. Independence 6. Geography NON-EXECUTIVE TENURE Jim Rutherford Dr Sally Eyre Mark Bankes Professor Ibrahim Fawzy Dr Catharine Farrow Marna Cloete Hennie Faul 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 Centamin Annual Report 2020 2 Executive 7 Non-Executive (1) BOARD MEMBERS BY GENDER (2) Female Male 3 6 EXECUTIVE COMMITTEE (3) Female Male 1 10 > Corporate Governance 101 Chair Chief Executive Officer Chief Financial Officer Senior Independent Director Director Director Director Director Director Non-Executive Executive Executive Non-Executive Non-Executive Non-Executive Non-Executive Non-Executive Non-Executive 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 UK Corporate Governance Code (“2018 Code”) and the definitions of independence in the Canadian Securities Administrators’ National Instrument 52-110 – Audit Committees. The review carried out in 2020 confirms that the Company remains compliant with the provisions of the 2018 Code, whereby at least half the Board comprises of non-executive directors who are determined by the Board to be independent. Each of the Non-Executive Directors are considered by the Board to be independent and free from any issues that may impair their ability to present their opinions and or mar their judgement. All the Non-Executive Directors have served on the Board for less than four years with the exception of Mark Bankes who reached a nine- year anniversary in 2020. Mark Bankes was re-elected at the 2020 AGM as a Non-Executive Director and continues to be regarded as independent as the Nomination Committee were satisfied that he continued to demonstrate objective judgement and independence of thought by providing constructive challenge to the executive management. However, as a matter of good governance, the Board agreed that Mark Bankes would not serve on the Audit and Risk Committee or Remuneration Committee given his tenure. The Nomination Committee also assessed the material changes (retirement of the Chairman, Senior Independent Director, Non-Executive Director and changes in the executive management) which took place in 2020 and were satisfied that retaining Mark Bankes would be beneficial to the Board for continuity and retaining of business knowledge. Board re-election All Directors are subject to annual re- election. All Directors will be put forward for re-elections at the next annual general meeting (“2021 AGM”) and election in the case of Hennie Faul who was appointed to the Board on 1 of July 2020. Board training Regular training is provided to the Board to enhance their digital skills, which has been particularly useful in the wake of the Covid-19 pandemic and the necessity of online meetings as well as accessing key information relevant to the Board. Board members also receive regular training on key topics covering legal, regulatory and compliance matters. Induction training and one-to-one sessions tend to be tailored to the requirements of the new Directors to the Board. Refresher training is also made available to the Directors as and when the need for specific training is identified. Also see the Board evaluation section on page 106 for the 2020 training list relating to Directors. Board site visits Given the difficulties in travelling and observation of the government rules against unnecessary travel due to Covid-19, the scheduled site visits have been difficult to organise. However, the Executive Directors have undertaken necessary site visits whenever a window of opportunity to travel arose. Once unrestricted travel is allowed in different jurisdictions, the usual Board visits will resume, as this is an opportunity for the Directors to see the major developments on site at Sukari. (1) 7 Independent within the meaning of the 2018 Code (2) Hampton-Alexander Review – Target 33% (3) This is defined as the most senior individuals below Board level in accordance with guidance issued by the Hampton-Alexander Review Centamin Annual Report 2020 DIRECT REPORTS TO THE EXECUTIVE BY GENDER Female Male NATIONALITIES British Australian Egyptian Canadian South African 5 17 4 1 1 1 2 BOARD SKILLS, EXPERTISE AND EXPERIENCE Mining and Resource Industry Capital Markets Legal Finance, Accounting and Audit services Mergers & Acquisition Government relations, public service and development Investment banking and investment management 9 2 1 4 3 4 2 > Additional Information> Foreword> Financial Statements> Strategic Report102 CORPORATE GOVERNANCE – SKILLS AND SUCCESSION SKILLS AND SUCCESSION The Nomination Committee is mandated by the Board to continuously monitor the composition of the Board and its committees to ensure that they are balanced in relevant skills, knowledge and experience. A refreshed board The year 2020 saw the completion of a two-year Board succession and refreshment plan. A key focus during the year has been on transitioning, on boarding and induction of new directors. In particular, with a focus on training and continuity of knowledge on the Board committees. The transitional journey 1. James Rutherford Jim Rutherford was appointed Deputy Chairman on 1 January 2020 with the intention of transitioning to Chairman upon the retirement of Josef El-Raghy. Jim and Josef worked closely together through H1 2020, completing a comprehensive handover process of duties and responsibilities. The Board recognised that Jim’s 25 years’ experience of leading listed companies would be of benefit. Appointing an independent Chairman has been an important step in the overhaul of our governance structure. At the 2020 AGM Jim became Chairman of the Board and at the recommendation of the Nomination Committee, became a member of the Remuneration Committee and chair the Nomination Committee. 2. Dr Sally Eyre At the recommendation of the Nomination Committee, Dr Sally Eyre was appointed Senior Independent Director following the retirement of Edward Haslam at the 2020 AGM. A comprehensive hand over had been carried out to ensure continuity of the role and responsibilities and the hand over period allowed for key aspects of the historical knowledge to be shared. Dr Eyre had been a member of the Remuneration Committee for over a year and effective from the 2020 AGM is chair of the Remuneration Committee. Dr Eyre is also a valued member of the Nomination and Technical Committee. The Board and committee structures are considered by the Nomination Committee to have the required breadth of knowledge and expertise. Periodic evaluations are undertaken to assess any areas requiring additional training or new skills. Board appointment processes The Board’s approach to recruitment remains as follows: Evaluation of the balance of skills, knowledge, experience and diversity of the Board Nomination Committee to review the long list of candidates and involvement of Board in interviewing the short-listed candidates Prepare and define role description and capabilities required for suitable candidates including methodology for psychometric analysis Prepare draft contracts in line with the remuneration policy Agree the recruitment strategy, to include the Nomination Committee tendering for external recruitment agents and recruitment search methods Periodic skills gap analysis of the Board to meet the strategic aims of the Company Nomination Committee recommendation of appointments to the Board Induction, training and mentoring Korn Ferry were successfully engaged by the Nomination Committee to assist with the process of searching for a non-executive director with a technical background, see the following case study for the process of recruitment and appointment. Centamin Annual Report 2020 CASE STUDY 103 ILLUSTRATING OUR APPROACH TO BOARD APPOINTMENT SEARCH AND RECRUITMENT PROCESS FOR THE ROLE OF A NON-EXECUTIVE DIRECTOR WITH A TECHNICAL BACKGROUND. Role Objective Non-executive director To find a candidate with technical and operating experience who will challenge the Board on technical and operational matters. The individual would also chair the newly established Technical Committee. External search consultancy appointed to assist Nomination Committee Korn Ferry Key elements of candidate profile • A mining engineer with an engineering qualification or an individual experienced in production operations and development projects • Exposure to open pit and underground mining operations • Track record of successful operation performance at the bigger end of the market • High technical credibility • Board level experience with ability to advise the Board on technical/operational matters Search process led by Nomination Committee Selection • Korn Ferry identified 44 potential candidates Interviews Appointment Induction • Following a more in-depth review against the brief, 25 candidates discounted and 19 remained for further screening and assessment (long list) • Shortlisted candidates were presented to the Board Interviews were conducted by the Nomination Committee and wider Board Hennie Faul was identified as the preferred candidate supported by the Nomination Committee recommendation and Board approval. A letter of appointment was agreed and the announcement of his appointment published. The Company Secretary put ‘tailor-made’ training and induction together with dates for a site visit. However due to COVID-19 restrictions, planned site visits were not possible due to government guidelines. Korn Ferry has no connection with the Company in accordance with Provision 20 except in the context of searching for senior executives in accordance with the mandate issued to the executive search company. The Nomination Committee believes that methods used by the external search consultants target individuals with the right skills and experience required by the Board rather than open advertisement. Korn Ferry also provides independent advice on remuneration matters to the Remuneration Committee. The Remuneration Committee is satisfied that the advice provided on matters of remuneration remains objective and independent. Find out more at www.centamin.com Centamin Annual Report 2020 > Additional Information> Corporate Governance> Foreword> Financial Statements> Strategic Report104 CORPORATE GOVERNANCE – DEVELOPING THE TALENT PIPELINE CASE STUDY DEVELOPING THE TALENT PIPELINE THE BOARD CONTINUE TO WORK ON DEVELOPING A DIVERSE PIPELINE OF TALENTED INDIVIDUALS FROM WITHIN THE ORGANISATION. The opportunities for employees to develop the required skills and experience are being managed through a leadership development programme. National Employees The majority of our workforce are based in Egypt, giving Centamin access to an educated population and talented individuals willing to undertake development programmes to prepare for leadership roles. The site’s operations have an established professional development programme to ensure national employees of exceptional talent and ability can be trained to take on more senior roles within the organisation. The Board are in full support and continue to encourage initiatives such as these as they strengthen the pipeline of talent in the Group. The key activities surrounding the professional development and leadership programmes are as follows: Challenges Whilst there are clear merits to development programmes, it is important to navigate the opportunities for career progression with the opportunity to attract new talent from other areas of the business and from outside the business. Identification of individuals with the appetite to progress and the strength of character to undertake leadership and managerial positions is also a key consideration, requiring care and attention to ensure the individuals are ready to undertake senior roles. The Sustainability Committee and Remuneration Committee have set and regularly monitor targets for training and development with the ultimate goal of developing proficiency for all positions and increasing local participation at senior levels. Succession • Mapping potential candidates to opportunities of senior level • For every critical position, a dynamic succession plan exists. Positions held by expatriates have been given priority with named national employees as potential replacements for these roles The Process • Broadening of candidates’ skills and experience through: • Exposure • Mentoring • Shadowing Target • Increase the number of Egyptian nationals in leadership roles • Reduction in expatriates year- on-year • Development pathway defined for all positions and training programmes in place (See Key Performance Indicators on page 38) Find out more at www.centamin.com Centamin Annual Report 2020 105 Fire safety training: Emergency preparedness starts with regular training. Sukari has a dedicated, trained Emergency Response team in addition to trained individuals in each department, in fire-fighting, first-aid and emergency rescue to provide first response cover and assistance until the emergency response team arrives. Centamin Annual Report 2020 > Additional Information> Corporate Governance> Foreword> Financial Statements> Strategic Report106 CORPORATE GOVERNANCE – BOARD EVALUATION AND TRAINING BOARD EVALUATION AND TRAINING Board and committee evaluation Annually, the Board undertakes a formal and rigorous annual evaluation of its own performance, its committees and that of its individual Directors. An externally facilitated board evaluation is conducted at least every three years. In 2019, the Board appointed Global Governance Group Limited (GGG Limited) to facilitate the evaluation and the following were highlighted as some of the strengths of the Board: Progress report on 2019 evaluation Strengths of the Board Diverse Qualified and Experienced Robust Gender, Nationality, Tenure, Skills Technical, Mining experience and knowledge Governance Framework British, Australian, Egyptian, Canadian, South African 3 Females, 6 Males Continuous professional development Strategy Stakeholders Performance 2019 recommendations Training on specific areas of importance to be delivered during Board meetings. Clarity on matters reserved for the Board Director involvement in long term planning including the investment and divestment processes Director to determine levels of engagement with key stakeholders Directors to agree on the best way to assess the operational and overall performance of the Company 2020 actions Structured board training programme Progress update In 2020, all new Board members received training on the following: • UK Corporate Governance Framework • Listing rules (LSE / TSX) • On-line communications platform (M365) Committee induction programme for new members and comprehensive hand-over of duties. Development of standing agenda items, refreshment of the Board charter to ensure clarity of the matters reserved for the Board. In 2021, the Nomination Committee will focus on developing a continuous professional development policy and structure training framework for the Board. Centamin Annual Report 2020 Collaborative working on Board agenda items (Chairman, Senior Independent Director and Company Secretary) Board consider the Group discount rates, forward pricing, economic assumptions and country risk and agreed the economic assumptions and discount rates for use in the Company’s investment appraisals and budget processes. A clear 2021 timetable, with key focus areas for meetings, time allocations and follow up actions were also put in place. Focused meetings scheduled during the year to develop the longer-term Board strategy. Board level discussion on identification of all key stakeholders Clarity on communication structures between Executive and Non-Executive Directors The Board were updated throughout 2020 on feedback from the engagement with key stakeholders. More information is available in Section 172 and Relationship with Stakeholders sections To further progress this, the Board will review and monitor the implementation of the stakeholder engagement plan in 2021 which forms part of the remit of the Sustainability Committee The Board held more ad hoc meetings to maintain the communication flow throughout 2020 as physical meetings were not possible due to the COVID-19 pandemic. The establishment of a new Technical Committee in 2020 provided, in part, the much-needed solution to review and assess the technical and operational matters which feed into the overall performance of the Company. The Board will, in 2021, continue to develop plans which elevate the technical knowhow across the business and collaboration with other sectors within the Group to maximise value over the long term 107 The purpose of the training programme INDUCTION awareness of regulatory environmental and corporate policies SYSTEMS accessibility to Board information, data and records ONGOING updates to changes in legal, regulatory and technical standards Board effectiveness In accordance with the 2018 Code, a formal review process is conducted at least every three years by an external facilitator to assess how well the Board, its committees, the Chair and the Directors are performing as a collective and as individuals. The next externally facilitated evaluation is due to take place at the end of 2022. Annually the Board and each committee has the opportunity to evaluate and assess their performance. The evaluation considers the following: • Composition of the Board and each committee • Diversity of skills, gender, experience and professional background • Personal contributions and strengths and commitment of each individual Director • Working as a collective in achieving the objectives of the Board and each committee Internal evaluation process The Chairman, Senior Independent Director and Company Secretary collaborated on the questionnaires circulated to the members of each committee. Once the format and content of questionnaire was agreed, individual members received the survey for completion. The Chairman, Senior Independent Director and each respective committee chair reviewed the results. The questionnaire helped in understanding how Board members work together and how effective meetings are in the boardroom. The results will be used to help improve or change the way in which information is shared, meetings coordinated and any necessary amendments to the Board or committee terms of reference. An additional perception study was also undertaken in 2020, inviting our institutional stakeholders to assess the following: • Investment proposition • Strategy and capital deployment • ESG and messaging • Investor relations The perception study was conducted using data led feedback, open discussion based on responses and comparative analysis. The purpose of this assessment was to understand the way Centamin, as a brand, is perceived by its stakeholders. The results guided the Board in understanding how well the markets received the changes that took place in 2020 including governance structure and operational capabilities. Key findings were worked through with the Company’s brokers and senior management team to help shape the strategic direction of the Company. YEAR 1 Internal evaluation YEAR 2 Internal evaluation YEAR 3 Externally facilitated evaluation Board Effectiveness Centamin Annual Report 2020 > Additional Information> Corporate Governance> Foreword> Financial Statements> Strategic Report108 CORPORATE GOVERNANCE – KEY ACTIVITIES IN THE YEAR KEY ACTIVITIES IN THE YEAR Key activities of the Board in 2020 TOPIC KEY ACTIVITIES DURING 2020 PROGRESS AND OUTCOME Board market event (virtual investor presentation) Committee recommendations • Updated mine plan and guidance • Completion of Phase 1 of the two-phase LOA Review at Sukari • LOA review • Approval of a four-year term contract awarded to Capital Drilling • Tender process for open pit waste stripping contract • Board appointment and succession • Details of Board appointments are set out in the Nomination Report • A comprehensive geotechnical risk assessment was undertaken to identify the cause of movement in the Sukari open pit Stage 4 west wall • Technical Committee instrumental in overseeing Phase 1 LOA review, Capital Drilling waste stripping contract tender and open pit Stage 4 west wall instability • Sustainability Committee (previously within remit of the HSES committee) review and approval of community activities • Sustainability Committee is responsible for developing internal and external ESG reporting frameworks and takes responsibility for recommending donations to support the COVID-19 response • Application of the Company’s remuneration policy for the Executive Directors and senior management team • Clear remuneration targets set to align the Group’s strategic goals whilst incentivising the right behaviours Routine activities • Periodic financial reporting and monitoring of the • Publication of financial results and ongoing regulatory compliance internal control environment • Annual budget preparations • Corporate and Board training • M&A opportunity assessment • Delivery of comprehensive budget (including site level) • Corporate policies training rolled out across the business • Assessment of opportunities and development of a data room Centamin Annual Report 2020 109 2021 focus areas The Strategic Report sets out the areas of focus for the Board for 2021 and through the work of the Board and its committees, the governance framework will focus on guiding, monitoring, challenging and advising on these key activities: • Delivering the optimised underground life of mine plan • Delivering on cost reduction initiatives and related capital projects • Assessment of growth opportunities: • Exploration across the Sukari concession • Exploration projects in West Africa (Batie, Doropo and ABC) • EMRA Bid round and work programmes • M&A opportunities • Sustainability performance • Construction of a hybrid solar plant to reduce demand for fossil fuel • Reinforce environmental and social governance and management assurance frameworks • Develop sustainability performance standards in line with industry good practice • In accordance with the Task Force on Climate-related Financial Disclosures, develop a long-term strategy and accompanying road-map to address the transition to net zero GHG emissions with specific targets and actions • Complete review of tailings management system and governance framework against the requirements of the Global Industry Standard for Tailings Management Centamin Annual Report 2020 > Additional Information> Corporate Governance> Foreword> Financial Statements> Strategic Report110 CORPORATE GOVERNANCE – TECHNICAL COMMITTEE REPORT TECHNICAL COMMITTEE REPORT THE ESTABLISHMENT OF A TECHNICAL COMMITTEE HAS BEEN A POSITIVE STEP FOR THE COMPANY AND WILL BRING ABOUT RIGOUR IN PROJECT ASSESSMENT AND ACCOUNTABILITY TO THE COMPLIANCE TO PLAN THAT HAS BEEN AGREED BY THE BOARD. CHAIR OF THE TECHNICAL COMMITTEE HENNIE FAUL • Understanding and assessing the resources and reserves on Centamin’s mineral resource properties and the annual process of reviewing the reserve & resource statement • Understanding the potential of the assets within Centamin’s portfolio; reviewing plans to improve efficiencies; and monitoring and making recommendations as to Centamin’s asset development and exploration practices • Planning, preparation and review of technical reports and related disclosures whilst giving due consideration to wider stakeholders For more information on the committee’s charters please visit the Company’s website on www.centamin.com Membership The committee comprises four Non- Executive Directors, a majority of whom are independent within the meaning of the 2018 Code. The Chief Executive Officer, along with members of the senior operations team are invited to attend meetings where appropriate. Since its inception in June 2020, the Technical Committee met four times to discuss and consider its role and work in accordance with the committee charter. Regular informal meetings were held during this period with the Chief Executive Officer to bring the committee up to speed on all related technical matters. Ordinarily, meetings would be held four times a year. Introduction The newly established Technical Committee supports and advises the Board in reviewing technical and operational matters. The committee helps in monitoring decisions and processes designed to ensure the internal quality control and assurance over the Group’s mining assets. Committee purpose The Technical Committee operates within the governance structure of the Group and the committee’s primary functions are set out in the charter and are summarised below which include: • Reviewing technical matters relating to exploration, development, permitting, construction, operation, decommissioning and rehabilitation of Centamin’s mining activities and operations Centamin Annual Report 2020 111 Number of meetings attended Maximum possible meetings 4 4 4 4 4 4 4 4 Below are the details of the members and their attendance during the year: Meetings held in 2020 Member Hennie Faul Membership details From establishment on 29 June 2020 Dr Catharine Farrow From establishment on 29 June 2020 Dr Sally Eyre Mark Bankes From establishment on 29 June 2020 From establishment on 29 June 2020 Key activities in 2020 Q3 2020 Through the Technical Committee: • Preliminary review of the LOA (Phase 1) and related operational planning and capital project proposals • Review and evaluation of the tender process culminating in the appointment of Capital Drilling to carry out the waste mining contract • Review and evaluation of the tender process for the appointment of the solar EPC contract Q4 2020 Through the Technical Committee: • Assessment of the geotechnical instability on the Stage 4 west wall within the open pit and associated revised mine planning • Review of the three-year physicals forecast and mine planning • Review the preparations for the Sukari Reserve and Resource statement Focus areas for 2021 • Review of the underlying operational data for the optimised life of mine plan • Review of the technical reports across the sites operations to include: • Batie, Doropo and ABC and proposals for development • Sukari concession work programme • EMRA bid negotiations and any resulting land work programmes • Review of the significant capital project implementation programmes to include: • Solar project • Paste fill plant project • Review of contract tendering for the open pit stripping programme and underground mining and development contracts • Operational assessment of cost initiatives For further information on the Company’s Reserve and Resources statement please see page [216] to [219] of the Annual Report. Centamin Annual Report 2020 > Additional Information> Corporate Governance> Foreword> Financial Statements> Strategic Report112 CORPORATE GOVERNANCE – CORPORATE GOVERNANCE COMPLIANCE STATEMENT CORPORATE GOVERNANCE COMPLIANCE STATEMENT 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. The Company has complied with all relevant provisions of the 2018 Code except for full compliance with the following: Tenure of the Chair (Provision 9 and 19) Effective from the AGM on 29 June 2020, the Board appointed Jim Rutherford as Chairman of the Board (an Independent Director on appointment). Prior to this appointment Josef El-Raghy chaired the Board and was not an Independent Non-Executive Director on appointment to the Board in 2002. During this period, Jim Rutherford, who had been appointed effective January 2020 as Deputy Chairman took an active role working alongside Josef El-Raghy before succeeding him as Chairman after the 2020 AGM. Director Independence (Provision 10) The Board agreed that it was important for continuity and the retention of corporate history and knowledge that Mark Bankes be retained as a Non-Executive Director, notwithstanding his tenure whereby Mark Bankes reached his ninth anniversary on the Board in 2020. Remuneration Committee membership (Provision 32) Mark Bankes is considered independent as he continues to demonstrate objective judgement and independence of thought by providing constructive challenge to management where necessary. Although length of tenure is used in determining independence in accordance with Provision 10 of the 2018 Code, the Board are satisfied that Mark remains independent in both thought and action. However, as a matter of good governance, the Board agreed that Mark Bankes would not serve on the Audit and Risk Committee or Remuneration Committee. As such, Mark retired from the Audit and Risk Committee at the AGM in 2020, following an orderly hand over. Mark continues to serve on the Board and is a valued member on the Nomination Committee and Technical Committee. In respect to the Remuneration Committee, the membership changed at the AGM in 2020 with two members retiring, replaced by two new appointments. Effective from the AGM in 2020, the Remuneration Committee comprised of three members, two of whom are independent non-executive directors and one being the Board Chairman who was independent on appointment. The Code recommends that the Remuneration Committee comprise of at least three members who are independent non-executive directors, and the chair may serve as an additional member providing he is independent on appointment. At the recommendation of the Nomination Committee, the Board approved the appointment of Dr Fawzy as a member of the Remuneration Committee effective from 31 March 2021. The Remuneration Committee membership will then consist of Dr Sally Eyre (Chair), Marna Cloete, Jim Rutherford and Dr Fawzy in compliance with the Code. Employee engagement (Provision 6) Following the appointment of an ESG lead in 2020, plans to develop the existing employee engagement arranges are being progressed. The existing employee engagement forum called the ‘Voice of Sukari’ was in place during the year but had reduced activity due in part to change in senior management. Further details are available on the culture section on page 91 regarding the plans in progress for Voice of Sukari as well as how we have engaged with the workforce on page 90. Post cessation shareholding (Provision 36) As set out in the Directors Remuneration Report, the Remuneration Committee will be considering further their approach to the post cessation shareholding requirements for Directors as recommended by Provision 36. Centamin Annual Report 2020 113 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 and 2020, with support of the Sustainability Committee and Technical Committee when reviewing strategic decisions and the impact and consequences on wider stakeholders. 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). Board leadership & purpose Promoting the long-term sustainable success of the Company Alignment of purpose, values and strategy with our culture Effective controls framework Stakeholder engagement Workforce policies and practices Division of responsibilities The role of the Chair Non-executive directors Information and support Composition, succession and evaluation Succession planning Skills and experience Board diversity Board evaluation Audit, risk and internal control Internal and external audit functions Fair, balanced and understandable Risk management Remuneration See page 24 in the Strategic Report See page 91 on the Culture case study See page 30 on Risk management and internal controls See page 31 on Relationship with stakeholders See page 122 on Diversity Policy – Nomination Committee Report See page 98 under the Governance structure See page 99 under the Governance structure See page 220 under Shareholder information See page 102 under Skills and succession See page 92 under Directors biographies See page 100 under Board diversity See page 106 under Board evaluation and training See page 128 under the Audit and Risk Committee Report See page 127 under the Audit and Risk Committee Report See page 130 under the Audit and Risk Committee Report Remuneration policies and practices supporting strategy and promoting long-term sustainable success See page 137 under Remuneration Committee Report Procedure for developing policy on executive remuneration See page 132 under Remuneration Committee Report Shareholder engagement Workforce engagement and policy alignment See page 141 under Shareholder information See page 140 under Remuneration Committee Report Centamin Annual Report 2020 > Additional Information> Corporate Governance> Foreword> Financial Statements> Strategic Report114 CORPORATE GOVERNANCE – SUSTAINABILITY COMMITTEE REPORT SUSTAINABILITY COMMITTEE REPORT DURING 2021 THE COMMITTEE WILL BE REINFORCING ENVIRONMENTAL AND SOCIAL GOVERNANCE AT ALL LEVELS OF THE ORGANISATION AND ENHANCING THE GROUP’S SUSTAINABILITY PERFORMANCE STANDARDS IN LINE WITH GOOD INDUSTRY PRACTICE. CHAIR OF THE SUSTAINABILITY COMMITTEE DR. CATHARINE FARROW • Establish and monitor the Group’s activities in legal and corporate compliance with the Group’s business operations and public image, in light of applicable government and industry standards • Assists the Technical Committee with respect to wider stakeholder considerations and any related health, safety, environmental matters in connection with any exploration, development, permitting, construction, operation, decommissioning and rehabilitation of Centamin’s mining activities and operations For more information on the committee’s charters please visit the Company’s website on www.centamin.com. Membership The committee comprises of four Non-Executive Directors. The Chief Executive Officer, along with members of the corporate sustainability team are invited to attend meetings where appropriate Since its inception in June 2020, the Sustainability Committee met twice to discuss and consider its role and work in accordance with the committee charter. Regular informal meetings were held during this period with the Head of ESG to bring the committee up to speed with all related ESG matters. During 2021, formal meetings are to be held every two months to give the committee sufficient time to develop the initiatives for 2021. Ordinarily, meetings would be held four times a year. Introduction The newly established Sustainability Committee focuses on health, safety, environmental and social responsibility (including employee engagement), governance and risks associated with the Company’s licence to operate Committee purpose The Sustainability Committee is a committee of the Centamin plc Board and operates within the governance structure of the Group. The committee’s primary functions are set out in the charter and are summarised below: • Develop the Company’s approach to environmental, workplace health and safety, workforce engagement and the development of sustainable business and industrial activities with communities and wider stakeholders Centamin Annual Report 2020 115 SITE BASED CLINIC AT SUKARI GOLD MINE Below are the details of the members and their attendance during the year: Meetings held in 2020 Member Membership details Dr Catharine Farrow From establishment on 29 June 2020 Marna Cloete Dr Ibrahim Fawzy Hennie Faul From establishment on 29 June 2020 From establishment on 29 June 2020 From establishment on 29 June 2020 Number of meetings attended Maximum possible meetings 2 2 2 2 2 2 2 2 Prior to the establishment of the Sustainability Committee, Mr Edward Haslam and Dr Ibrahim Fawzy were chair and member, respectively, of the Health, Safety, Environmental and Sustainability (HSES) Committee. Member Edward Haslam Dr Ibrahim Fawzy Membership details Member until June 2020 Member until June 2020 Number of meetings attended Maximum possible meetings 2 2 2 2 Centamin Annual Report 2020 > Additional Information> Corporate Governance> Foreword> Financial Statements> Strategic Report116 CORPORATE GOVERNANCE – SUSTAINABILITY COMMITTEE REPORT CONTINUED Key activities in 2020 Q1 2020 Through the HSES Committee: • Review of site-based protocols including roster rotation, quarantine procedures, testing procedures and results and country risk assessments • Review of the health and safety reporting across all operations for 2019 • Preparation of the 2019 Sustainability Report • Publication of the updated Modern Slavery Statement • Tailings storage facility management review • Workforce engagement and response to the ‘Voice of Sukari’ • Financial support to the COVID-19 response in Egypt and West Africa Q2 2020 Through the HSES Committee: • Policy review of the Health and Safety, Whistleblower and Diversity Policy for publication • Review of the Human Rights and Supplier Code of Conduct policies • Review of community activities in Egypt and West Africa Q3 2020 Through the Sustainability Committee: • Review of H1 health and safety statistics, social and environmental performance • Publication of the whistleblower hotline and review of the internal protocol and escalation procedures • Review of government relations across the operation • Appointment and induction of the Group Health and Safety Manager • Informal committee discussions to establish a clear action plan for the committee Q4 2020 Through the Sustainability Committee: • Review of the H2 sustainability performance across the operation • Overview of Group sustainability performance framework and preparations • Permit and licence considerations in West Africa • Distribution of the GRI (“Global Reporting Initiative”) compliant materiality assessment • Emerging ESG themes and 2021 environmental social and governance action plan • Recommendation and approval of internal sustainability budgetary commitments Centamin Annual Report 2020 117 Focus areas for 2021 GOVERNANCE Reinforce environmental and social governance and management assurance at all levels of the organisation through clarification and promotion of structures, role-relationships and accountability. Put in place sustainability performance standards aligned to good industry practice Responsible Gold Mining Principles (“RGMPs”), Global Industry Standards on Tailings Management (“GISTM”), Task Force on Climate-related Financial Disclosures (“TCFD”) and UN Guiding Principles on Business and Human Rights. OUR PEOPLE • Pilot initiatives to enhance gender diversity at an operational level SAFETY AND WELLBEING • Reinforce critical risk standards for ENVIRONMENTAL • Water and climate-related risk action SOCIO-ECONOMIC • Stakeholder engagement plan in the Group plan in place and aligned with the TCFD place for all assets • Roll-out of structured professional development framework at Sukari • Health and safety management plans in place and current for all assets • Environmental management plans in • Community investment and place and current for all assets development plan in place for Sukari • Employee engagement strategy in place and measures to reinforce grievance mechanism for Sukari • Life of mine rehabilitation and closure • Human rights due diligence complete plan for the Sukari Mine • Action plan in place for conformance with the global industry standard on tailings management MEASUREMENT AND REPORTING • Remuneration linked to sustainability performance including leading indicators • Sustainability Performance Indicators aligned to RGMPs and targets in place • Annual sustainability reporting alignment to GRI and SASB standards • Third-party review of HSES performance • Group statements in support of GISTMs, TCFDs, conflict-free gold and modern slavery For further information on the committee’s activities and wider environmental, social and governance initiatives please see 24 to 28 of the Annual Report. The Sustainability Report is due to be published in May 2021. Centamin Annual Report 2020 > Additional Information> Corporate Governance> Foreword> Financial Statements> Strategic Report118 CORPORATE GOVERNANCE – NOMINATION COMMITTEE NOMINATION COMMITTEE REPORT AN EFFECTIVE BOARD IS ONE WHICH IS DIVERSE, IN ALL ITS FORMS, WITH THE REQUIRED EXPERIENCE AND LEADERSHIP TO ACHIEVE ITS LONG-TERM STRATEGY. CENTAMIN HAS SUCH A BOARD AND HAS THE RIGHT GOVERNANCE STRUCTURE IN PLACE. CHAIR OF THE NOMINATION COMMITTEE JAMES RUTHERFORD Introduction This year saw a strengthening of the Board in terms of both membership and effective governance from which we have begun to build the business on the premise of discipline and potential. The Nomination Committee remained pivotal in reviewing the Board composition and making recommendations to the Board to appoint the right people with the right skills and experience. In the wake of COVID-19 and the associated restrictions that came with it, it has never been as critical to ensure that members of the Board and senior management remain well connected. Moreover, it is through strong leadership, collaborative thinking and resilience of our workforce that the Group has withstood the challenges faced in 2020 and are in a healthy position moving into 2021. In this report, I highlight some of the key focus areas of the committee throughout the year including some of the processes that were undertaken to establish new committees and transitioning following the retirement of long-standing Board members. KEY FOCUS AREAS DURING THE YEAR Completion of the Board succession and refreshment programme Continual development of the Board and senior management Induction and on boarding of new Board members KEY FOCUS FOR 2021 Talent management and professional development programmes Annual Board and committee evaluation Progress on diversity reporting and succession planning Centamin Annual Report 2020 119 SENIOR LEADERSHIP MEETING (PRE-COVID-19 OUTBREAK) Picture taken prior to COVID-19 restrictions Board succession and refreshment After the completion of a comprehensive handover from my predecessor, Josef El-Raghy, I took on the role of Non-Executive Chairman on 29 June 2020. Additionally, key changes included Dr Sally Eyre who became the Senior Independent Director, replacing Edward Haslam who retired at the 2020 AGM. Marna Cloete was appointed chair of the Audit & Risk Committee following the retirement of Mark Arnesen from the Board. Hennie Faul was appointed to the Board in July 2020 and chairs the new Technical Committee which was mandated from 29 June 2020. The Board appointments at a glance: JANUARY APRIL JUNE JULY Martin Horgan appointed as Chief Executive Officer. James Rutherford appointed in January with the intention of transitioning into the role of chair following the 2020 AGM. Hennie Faul appointed to the Board as Non- Executive Director. James Rutherford appointed chair following Josef El-Raghy’s retirement from the Board. Edward Haslam and Mark Arnesen retired from the Board. James Rutherford Chair of the Nomination Committee Centamin Annual Report 2020 > Additional Information> Corporate Governance> Foreword> Financial Statements> Strategic Report120 CORPORATE GOVERNANCE – NOMINATION COMMITTEE CONTINUED Committee purpose The Nomination Committee continued to review the composition of the Board whilst giving due regard to the succession plan for board and senior management. Whilst the Board delegates talent development to the senior management team, the Nomination Committee has continued to promote the importance of a good quality talent pipeline from which future leaders of the Company can emerge. With this in mind, diversity in gender, social background and ethnicity remain a progressive topic for the Board. For more information on the committee’s charters please visit the Company’s website on www.centamin.com Membership The committee comprises four Non-Executive Directors with Jim Rutherford as chair. Members of the senior management team are invited to attend meetings where appropriate. Below are the details of the members and their attendance at meetings held during the year: Meetings held in 2020 Member James Rutherford Dr Sally Eyre Mark Bankes Dr Ibrahim Fawzy Edward Haslam Mark Arnesen Membership details Appointed to the committee on 29 June 2020 Appointed to the committee on 29 June 2020 Appointed to the committee on 24 April 2019 Appointed to the committee on 29 June 2020 Retired on 29 June 2020 Retired on 29 June 2020 Meetings attended 1 1 Written Resolutions 1 1 Total meetings attended 2 2 2 1 1 1 3 1 2 2 5 2 3 3 In addition to the above mentioned formal meetings and written resolutions, the Nomination Committee held a significant number of interviews and informal meetings to discuss the appointment and committee restructure during 2020. Transition and continuity The Board agreed that it was important for continuity and the retention of corporate history and knowledge that Mark Bankes be retained as a Non-Executive Director. Please see the topics in the report on Board Independence as well as the Code Compliance Statement. The Board agreed to retain the services of Mark Arnesen to provide directorship services to the Company’s Australian subsidiaries, providing continuity at a subsidiary level and ensuring ongoing compliance with the required number of locally resident directors. Edward Haslam was also retained in an advisory capacity for six months following the 2020 AGM to provide advice at a committee level on matters relating to ESG and linkages to pay and performance for senior management. Assimilation of former HSES and CGC responsibilities In the 2019 Annual Report and accounts, we reported that following the 2020 AGM the Board and committee structure would be refreshed. One major change for 2020 focused on dissolving the Compliance and Corporate Governance Committee (CGC) as well as the evolution of the Health, Safety, Environmental and Social Committee (HSES). As part of evaluating the Board composition, Board diversity and the effective working of Board members, the Nomination Committee was instrumental in facilitating the process of establishing the Sustainability Committee. It was also recommended that the Disclosure Committee would report directly to the Audit and Risk Committee (as well as to the Board, where necessary) and continue to be operational in accordance with the Company’s Continuous Disclosure Policy. In line with the long-term strategy of the business, which aims to improve operational efficiencies, the Board agreed with the establishment of a new Technical Committee to provide a platform for reviewing technical and operational matters as well as monitor the decisions and processes designed to ensure the integrity of the Group’s Reserve and Resource estimation. Below is a table showing the re-allocation of CGC responsibilities across the Board committees: Matters reserved for the Board Audit and Risk Technical Sustainability Disclosure Previous CGC responsibilities Group legal matters Government relations and significant correspondence Governance – 2018 Code compliance Governance – Jurisdictional/subsidiary/taxation Regulatory matters (inc. related party transactions) Regulatory: LSE/TSX compliance Business development: pre-feasibility Business development: fiscal and financial Centamin Annual Report 2020 121 Technical Committee – Skills, experience and diversity After carefully considering the skills and experience of the Board members, the Nomination Committee recommended that the Technical Committee would have at least three members of whom the majority would be independent Non-Executive Directors. To ensure that the Technical Committee would function effectively, it was recommended that each member would have mining industry experience and that at least one member would have an extensive background in mining operations. The Board agreed that membership would consist of the following skillset and experience: Role Hennie Faul (chair) Dr Sally Eyre (member) Dr Catharine Farrow (member) Relevant skills/ background Mining engineer Experience Experience across a range of commodities in various jurisdictions and highly relevant engineering expertise Diversity Male – South African – Independent Geologist Extensive experience in global resource capital markets and mining operations with strong technical knowledge Female – British – Independent Geoscientist Mining operations, technical services, corporate development and exploration Female – Canadian – Independent Mark Bankes (member) Corporate finance lawyer Specialising in mining policy and agreements, mergers and acquisitions and international restructurings for the resource sector Male – British – Independent (See further in this report, Board Independence and the Code Compliance Statement.) Since its inception after the 2020 AGM, the Technical Committee met four times to discuss and consider its role and work in accordance with the committee charter. For more details on the committee, please see the Technical Committee Charter, which is available on our website. Sustainability Committee – Skills, experience and diversity The Sustainability Committee reflects diversity of gender (50% Female; 50% Male), skills and experience (technical, financial, government relations). Each of the members of this committee also hold positions on other Board committees, which means they have wide ranging views across the business and all the committees to help assess and monitor the Sustainability Committee objectives. Role Dr Catharine Farrow (chair) Relevant skills/ background Geoscientist Marna Cloete (member) Qualified accountant Experience Experience in the mining industry with public, private and academia. Expertise ranges from operations, technical services, corporate development and exploration. Diversity Female – Canadian – Independent Substantial management experience within finance, community and government relations. Female – South African – Independent Dr Ibrahim Fawzy (member) Former industry government official Experience and insight in governmental relations, banking, investment and development, specifically within Egypt Male – Egyptian – Independent Hennie Faul (member) Mining engineer Experience across a range of commodities in various jurisdictions and highly relevant engineering expertise. Male – South African – Independent Since its establishment post AGM 2020, the Sustainability Committee met two times to discuss and consider its role and work in accordance with the committee charter. For more details see the Sustainability Committee Charter, which is available on our Website. Committee memberships since the AGM in 2020 Audit and Risk Committee Marna Cloete Dr Catharine Farrow Hennie Faul Remuneration Committee Dr Sally Eyre Jim Rutherford Marna Cloete *Dr Ibrahim Fawzy Nomination Committee Jim Rutherford Dr Sally Eyre Mark Bankes Dr Ibrahim Fawzy Sustainability Committee Dr Catharine Farrow Marna Cloete Dr Ibrahim Fawzy Hennie Faul Technical Committee Hennie Faul Dr Sally Eyre Mark Bankes Dr Catharine Farrow * At the recommendation of the Nomination Committee, the Board approved in March 2020 the appointment of Dr Fawzy as a member of the Remuneration Committee effective from 31 March 2021. The Remuneration Committee membership will then consist of Dr Sally Eyre (Chair), Marna Cloete, Jim Rutherford and Dr Fawzy in compliance with the 2018 Code. Centamin Annual Report 2020 > Additional Information> Corporate Governance> Foreword> Financial Statements> Strategic Report122 CORPORATE GOVERNANCE – NOMINATION COMMITTEE CONTINUED Diversity – At a holistic level Diversity Policy In recognising the benefits of promoting diversity and inclusion at the level of the Board and in senior management positions, the Diversity Policy of the Company clearly reflects on the importance of the Hampton-Alexander Review, which focuses on female representation, and the Parker Review, which focuses on Black, Asian, and minority ethnic representation. The Board is cognisant of the importance of promoting the strength of the Company by enhancing problem solving skills and encouraging innovative ideas, which can only be achieved by inviting and respecting diverse perspectives. The Diversity Policy aligns with the Company’s values, which are summarised in the Strategic Report on pages 04 and 05. Board and senior management diversity The Nomination Committee has a mandate from the Board to support the Company’s Board diversity objectives when identifying and considering the selection of candidates for election or re-election to the Board. Diversity is also an important consideration in determining the composition of the Company’s senior management. The Nomination Committee promotes and is supportive for individuals from diverse backgrounds to hold senior management positions as this encourages better innovation, performance and effective decision-making but also will feed into a better succession pipeline of talented executives and senior managers. Progress report 1. 33% female representation The Board set out to meet the target and maintain a level of at least 33% female representation in accordance with the Hampton-Alexander Review. The Board’s target was met and maintained throughout the course of 2020 as three Directors, out of the nine members, on the Board are female. At the beginning of 2020, female representation was at 30% as the Board was going through a transitional process, which saw three Directors retire at the 2020 AGM, and brought the percentage to 33% mid 2020. 33% 30% 12% 2020 2019 2018 The Board remains committed to having at least 33% female representation on the Board. The Nomination Committee will continue to make recommendations to the Board for any new appointments to be elected based on merit as well as taking into account diverse qualifications and experience, functional expertise and diverse skills and qualities of the candidates. Following a review in 2020 of the methodology used in determining the composition of the ‘Executive Committee’, the female representation stood at 9% in comparison to 0% in the previous year. The increase to 9% is a result of the change in methodology used to assess those categorised as the most senior individuals below Board level in accordance with guidance issued by the Hampton-Alexander Review. Centamin Annual Report 2020 123 Overboarding The Nomination Committee assesses the time commitment devoted to the role for Centamin and other non-executive positions. It is noted that Jim Rutherford stepped down from the Anglo American Board at the end of December 2020 and holds two other board positions with listed companies. Dr Sally Eyre stepped down from Japan Gold in November 2020 in order to balance the responsibilities of her role with the Company and three other external appointments. The Company’s Diversity Policy principles and objectives also apply to the senior management, consisting of eleven members with one female member. The Board commits to developing a strong pipeline of female executives within the Group over the medium to long-term. The direct reports are employees in a direct reporting line to members of the Executive Committee or nearest equivalent. There are 22 direct reports including five females, which results in 22% female representation at this level. Therefore, the total combined numbers for both the senior management and their direct reports is 18% female representation. The Board commits to develop a healthy talent pipeline diverse in skills, expertise, gender and ethnicity. 2. Ethnic minority background The Parker Review recommendations state that FTSE 250 boards should have one director of colour by 2024. The Board has always been committed to greater transparency on ethnic diversity and has continuously met this target since this review’s inception. 3. Professional development programme As part of managing a dynamic talent pipeline of candidates considered to be of high quality, the Board supports the initiative that has been put into place by the senior management, known as, a professional development programme. This programme aims to develop and prepare national employees for more senior and leadership roles by encouraging senior individuals to take on additional responsibilities and roles to gain valuable experiences. The selected employees have the opportunity to shadow expatriates in various positions until they complete the programme. Plans are underway for the Board to receive reports that detail the following: • The selected national employees mapping them to the senior roles that expatriates currently hold • Identified skills and experience to expand or broaden for each individual through exposure to the role (i.e. shadowing) • Dependant on senior roles available, possible mentoring or buddying opportunities by Board members Centamin Annual Report 2020 > Additional Information> Corporate Governance> Foreword> Financial Statements> Strategic Report124 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 2020. CHAIR OF THE AUDIT AND RISK COMMITTEE MARNA CLOETE Introduction I am pleased to present this report covering the activities of the Audit and Risk Committee during 2020. Audit and Risk Committee reporting in 2020 During the course of 2020 the following reports were prepared for the Audit and Risk Committee’s review: • Discussed the potential approach to assurance mapping and the Group approach to meeting the suggestions from the Brydon Review During the year, the Audit and Risk Committee carried out an evaluation of its own performance, the effectiveness of the external auditors and a self-assessment on the effectiveness of risk management and internal control. 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 Hennie Faul in July 2020. In accordance with the planned succession for this committee, Hennie’s appointment to the Board triggered the rotation of Mark Bankes off the committee. Centamin Annual Report 2020 • 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 • Updated the approach to risk management and internal controls across the Group • Reviewed the Group’s principal and emerging risks informed by the key risks from the business • Reviewed the updated perspective on existing recommendations from historical internal audit reviews and the next steps for 2021 and beyond • Discussed the insurance renewal including the enhanced employee benefits cover and the plans for 2021 renewal • Non-financial reporting indicators including environmental indicators see further the sustainability section of this report • External audit work culminating in the annual and half-yearly audit report • Compliance and regulatory updates and related policy updates and reviews Committee purpose The committee monitors the integrity of the financial statements of the Company, including its annual, half-yearly and quarterly reports and any other formal announcement relating to its financial performance, reviewing and reporting to the Board on significant financial reporting issues and judgments which they contain, 125 Key focus areas during the year Key focus for 2021 Strategic • Life of mine model development including analysis of the parameters, inputs and scenarios • Led by the Committee, the Head of Risk reviewed the risk management framework and internal control structures • Insurance renewal focused on increased cover for our people including enhanced wellbeing provision • IT infrastructure reviewed to ensure efficient collaboration between then head office and operations • Implementation of the revised risk management framework including, defining the taxonomy, development of key risk indicators and linking these to the refreshed risk appetite • Continued evolution of the insurance programme to meet the future needs of the business in a difficult market Finance • Cost reduction and working capital management through mine management planning systems • Appropriate cost allocation across all resources • Continue to drive improved free cash flow generation through stringent cost controls and cost saving initiatives Control Environment • Reviewed the historical internal controls activity to provide latest position and focus for improvement recommendations • Review of the key financial and operational processes to ensure efficiency and alignment with good practice as we work towards recommendations from the Brydon Review • Development of assurance mapping to provide an overview of the effectiveness of the control environment Employee Engagement • Employee development pathway, leadership programme and succession planning • Review of the grievance mechanism and other employee engagement tools • Roll-out of the employee development pathway, leadership programme and succession plans for all critical positions having regard to matters communicated to it by the auditor. The committee assists the Board in discharging its responsibility to exercise due care, diligence and skill in the areas of: • Application of accounting policy and reporting of financial information to shareholders, regulators and the general public • Business risk management and internal control systems, including business policies and practices • Corporate conduct and business ethics, including auditor independence and ongoing compliance with laws and regulations • Monitor and review the effectiveness of the Company’s internal audit function • Determine whether the Annual Report and financial statements taken as a whole are fair, balanced and understandable The committee’s charter is available on ARC Charter on our website. Membership The committee comprises of three independent Non-Executive Directors, two of which chair other committees, which entails the ability to bring different perspectives of the other committees. Members of the executive are invited to attend meetings where appropriate. Below are the relevant skills, experience and diversity that makes up the committee: Relevant Skills/ Background Experience Meetings attended Meetings held Member *Marna Cloete (chair) Chartered accountant and taxation professional Finance expert in emerging markets with particular emphasis in Africa as well as substantial management experience within community and government relations Dr Catharine Farrow Geoscientist Hennie Faul Mining engineer Operational, technical services, corporate development and exploration expertise Qualified mining engineer with over 30 years’ experience with knowledge of various commodities in multiple jurisdictions. * Deemed to have recent and relevant financial experience in accordance with the 2018 Code 6 3 3 6 3 3 Attendance of the former members of the committee: Name Former member of the committee Mark Arnesen (Chair) Retired from the Board on 29 June 2020 Edward Haslam Retired from the Board on 29 June 2020 Mark Bankes Retired from the committee on 29 June 2020 Meetings attended Meetings held 3 3 3 3 3 3 Centamin Annual Report 2020 > Additional Information> Corporate Governance> Foreword> Financial Statements> Strategic Report126 CORPORATE GOVERNANCE – AUDIT AND RISK COMMITTEE REPORT CONTINUED 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 The Group has applied the following standards and amendments for the first time for their annual reporting period commencing 1 January 2020: Definition of Material – Amendments to IAS 1 and IAS 8; The amendments listed above did not have any impact on the amounts recognised in prior periods and are not expected to significantly affect the current or future periods. 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 trigger 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 2020. Mine ROM Stockpiles Accounting for transactions The Group applies IAS 2 ‘Inventory’ to its treatment of mine ROM Stockpiles as explained the accounting policies in the financial statements for the Group since the year ended 31 December 2018 and splits these stockpiles between current and non-current assets depending on the expected usage in the next 12 months. All mining inventory is costed based on the weighted average method and is based on contained ounces within the ore in each stage of the inventory cycle. Management presented a detailed assessment to allow the committee to determine whether low grade stockpiles should be impaired. Provisions – EMRA unrecovered cost recovery items Accounting for transactions Progress has been made with EMRA to address the unrecovered cost recovery items and the correspondence, which outlines PGM’s settlement proposal, remains subject to the conclusion of a final and binding settlement agreement to be presented to the Board for approval. The provision for cost recovery items with EMRA constitutes a possible payment of US$17.6 million over 5.5 years, and this was discounted to present value using a discount rate of 0.63% per annum. A corporate provision of US$17.3m has been raised to cover this exposure of which US$10m was raised in 2020. Centamin Annual Report 2020 Committee actions The committee, together with management, considered and reviewed the impact of the new standards on the disclosures in the financial statements and were in agreement with management’s conclusion that the amendments listed did not have any impact on the amounts recognised in prior periods and are not expected to significantly affect the current or future periods. 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 trigger assessment that no impairment triggers were identified. The committee reviewed as part of the assessment for potential impairment at Sukari, the updated mine plan, latest Mineral Reserve and Resource update and production profile for 2021. West Africa – Batie West The committee assessed the carry value maintained on the balance sheet at the year end representing the original goodwill on the project upon the acquisition of Ampella. The committee considered, among other matters, the latest discussions with government and legal analysis of remaining tenure of the exploitation licence. The committee agreed with management that there were no impairment triggers and therefore no impairment was needed for the West African exploration assets. The committee considered the inventory valuation of the low grade ore stockpiles noting that the split in Mine ROM stockpile inventory between current and non-current assets in the financial statements reflected the usage of the Mine ROM stockpiles and is of more relevance and use to investors and users of the financial statements. The result of the impairment assessment was a NPV of higher value than the cost of the non- current Mine ROM recognised in the financial statements. The committee agreed that the stockpiles and associated accounting treatment would be further assessed with the life of mine planning in 2021. The committee noted the correspondence with EMRA to seek to resolve and settle the unrecovered cost recovery items. The committee agreed to include a provision which was considered appropriate given the nature and status of the settlement agreement. Negotiations continued in 2021 to bring resolution to the unrecovered cost recovery items. TOPIC SIGNIFICANT ISSUE SUMMARY OF THE SIGNIFICANT ISSUE KEY ACTION POINTS 127 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 five 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 three years as part of the overall viability statement. The period of three 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 80 and 81. 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 • Mineral Reserve and Resource update • 2021 – 2023 budgets • estimated gold price • variable and fixed cost assumptions • updates to the ongoing legal cases These financial statements for the year ended 31 December 2020 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. Going Concern: Committee Action The Audit and Risk Committee reviewed the papers presented by management in respect to the going concern assumption. The committee were satisfied that management had performed a detailed analysis and forecasting to assess the economic impact of the Group on a going concern basis. The Group continues to benefit from a strong balance sheet with significant cash balances and no debt. Based on the information presented the committee were in agreement with management’s conclusion that the Group is expected to be a going concern for at least twelve months from the date of signing the financial statements. Viability: 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 three years as part of the overall viability statement. Further details of this assessment can be found in the viability section in the Risk Review. COVID-19 In assessing the potential impacts of COVID-19 on the Group, the committee challenged management on the parameters and risk assessment of the scenarios, input assumptions and mitigating factors and were satisfied this was a realistic review, however, further analysis on the impacts of the wider supply chain and continued restrictions on movement of personnel would be assessed through 2021. The committee agreed with management assessment that there were no material financial implications to our operations and Sukari continued to operate with gold sales still operating normally. To date there have been no significant impact to critical stock on site and additional stock has been purchased where required, however the committee continued to assess the backup plans in place. Fair, balanced and understandable The Audit and Risk Committee is satisfied that the controls over the accuracy and consistency of the information in the 2020 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 2020. 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 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. Centamin Annual Report 2020 > Additional Information> Corporate Governance> Foreword> Financial Statements> Strategic Report128 CORPORATE GOVERNANCE – AUDIT AND RISK COMMITTEE REPORT CONTINUED 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 details are covered in the Operational Review on page 44 and in the Principal Risks on Page 72. 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 2020, 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 As part of the 2020 audit, the management team met with PwC to critically assess the previous Annual Report and discuss ways to improve the report for shareholders. 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 • 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 • linkages between governance, business and the strategy Financial statements • balance across the Annual Report as a whole • understanding of the key judgments and estimates • 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 Chief Financial Officer. The assessment tool included approximately 16 questions which were completed by way of questionnaire and covered the following areas: • 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 relationships between the Company and the external audit (apart from the ordinary course of business) • the qualifications, expertise and resources of the auditor including a report of the auditor’s own internal quality procedures • 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 issues presented by the auditor were around areas of estimates such as, impairment assessment of non- current assets and going concern, which is an example of high-quality challenge and awareness of material issues exemplified by the auditor. Following the evaluation process, any relevant findings were relayed to the audit partner and, where applicable, actions were incorporated into the audit plan. Centamin Annual Report 2020 129 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 OBSERVATIONS BY THE AUDIT AND RISK COMMITTEE Audit planning 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 22 March 2021. 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. In-spite of the COVID-19 pandemic and travelling restrictions, the audit team were able to travel to Egypt in 2020 where possible including the opportunity for the Egypt audit team members to also visit the site to conduct the audit. Having carried out the evaluation, the Audit and Risk Committee is satisfied that the audit engagement for the financial year ended 2020 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. PwC performed no non-audit services in the year, other than the half year review. Deloitte LLP tax teams in the UK and Australia continue to provide tax advisory services, and none were provided by the external auditor. The Group’s policy for non-audit services requires approval in advance by the Audit and Risk Committee of all non-audit services carried out by the external auditor. For certain services that are not excluded, 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. Fees for audit services incurred during the year amounted to US$789k; there were non-audit services carried out by PwC during the year of US$134k. 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 seven 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 2021 AGM. PwC has expressed its willingness to continue in office as auditor. Internal audit The committee noted that whilst a reasonable approach to the existing scope of work had been undertaken, additional resourcing was necessary within the Group to maximise the impact of recommendations that were being put forward by the internal auditor. Centamin Annual Report 2020 > Additional Information> Corporate Governance> Foreword> Financial Statements> Strategic Report130 CORPORATE GOVERNANCE – AUDIT AND RISK COMMITTEE REPORT CONTINUED During 2020 it was recognised that due to the impact of COVID-19 some of the planned internal activity would need to be revised. When the Head of Risk was appointed they coordinated a review by BDO of all historical audits and a refresh of the previously provided recommendations to present the latest position at the Audit and Risk Committee in December 2020. During the course of this review, BDO provided a subjective view on direction of travel for the design and effectiveness of the controls against the original scope of the historical audits. The overall view was that positive steps had been made and the review allowed us to have an updated perspective and focus for the remaining improvement areas moving forward. The committee will be working with management to review the level of independent assurance which is provided to the Group in 2021. Following the development of the approach to assurance mapping, 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 rolling plan of work will contain suggested areas of review, with space for ad-hoc audits as required by the committee or management following any additional areas of risk which require further assurance. The Audit and Risk Committee will monitor the progress this year and ensure the required resources and information are available to the Head of Risk to complete their scope of work. Over the course of 2021 it is expected that BDO will work with the Head of Risk to ensure that their activities align with the restructuring of the governance, risk and internal control framework. Risk management and internal controls 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 emerging risks alongside the principal risks. Further detail on the oversight and monitoring is highlighted in the risk framework on pages 66 to 79 including the frequency of review and the accountabilities across the Group. While the Board has overall responsibility for ensuring the adequacy of risk management and internal controls, the Board has delegated certain responsibilities to the Audit and Risk Committee. These include responsibility over monitoring the effectiveness risk management and internal control systems implemented by management, making suggestions on ways in which the business can improve its effectiveness. It advises on significant changes to that structure to obtain reasonable assurance that the Company’s assets are safeguarded and that reliable financial records are maintained. Due to the limitations inherent in any system of internal control, the oversight by the Audit and Risk Committee, provide robust but not absolute assurance against material misstatement or loss and is designed to manage rather that wholly mitigate risk. During 2020, no significant internal control failings were identified. The risk review on pages 66 to 79 of the Strategic Report includes further information on principal risks for the Group, emerging risks which were considered, an overview of our risk framework, the Group’s statements on risk appetite and long-term viability. The Audit and Risk Committee noted that, at an operational level, increased resourcing of key personnel within the senior management team drove focused activity in the potential improvements to the internal control environment through an understanding of the key risks and controls including budgeting, forecasting and overall reliability of information for the Group. Whilst we recognise the existing environment is adequate for our needs, improvements are Centamin Annual Report 2020 131 being driven by an understanding of the need for increased documentation and formalisation of the environment in response to the recommendations which were made by the Kingman and then Brydon reviews. Recognising the potential move towards a UK-SOX style of regime, we want to ensure we have a plan in place to meet any requirements and will be finalising the plan for this through 2021. The Audit and Risk Committee and the Board are pleased to confirm that the Company remains in compliance with recognised good practice and with the 2018 Code, unless otherwise highlighted, and relevant Canadian requirements to ensure we have a sounds system of risk management and internal control in place during 2020. 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, as shown on the risk framework page 67 of the risk review section, in different locations with the ability to work remotely and utilise technology. Key individuals for 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. 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 finance team 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. 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. Going concern and long-term viability As set out in the report, with the Audit and Risk Committee recommendation and the Board’s agreement, it was 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 1.3.5 to the financial statements. The statements in relation to the Group’s viability, over the longer term, are set out in the Risk Review on pages 80 and 81. 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 2021 AGM along with the Chief Financial Officer to answer any questions in relation to this report. Marna Cloete Chair of the Audit and Risk Committee Centamin Annual Report 2020 > Additional Information> Corporate Governance> Foreword> Financial Statements> Strategic Report132 CORPORATE GOVERNANCE – REMUNERATION COMMITTEE REPORT REMUNERATION COMMITTEE REPORT OUR PERFORMANCE IS TESTAMENT TO THE LEADERSHIP DEMONSTRATED THROUGH THE YEAR AND THE COMMITTEE ACKNOWLEDGE THE STRATEGIC PROGRESS PARTICULARLY GIVEN THE CHALLENGING BACKDROP OF THE GLOBAL COVID-19 PANDEMIC. CHAIR OF THE REMUNERATION COMMITTEE DR. SALLY EYRE Dear shareholders Introduction As chair of the Remuneration Committee, I am pleased to present the 2020 Remuneration Report. This is my first report as chair of the Remuneration Committee following my appointment at the 2020 AGM. I would like to thank the previous Chairman, Edward Haslam, for his contribution and dedication to the Remuneration Committee during his tenure. This report includes our annual report on remuneration which describes how our Directors’ Remuneration Policy was implemented for the year ended 31 December 2020 and how it is intended that the policy be implemented for the forthcoming year. For convenience, the report also provides a summary of the current policy approved by shareholders at the 2019 AGM. Committee activities during the year The committee activities during the year included: • Revising the new Chief Executive Officer’s service agreement to align with the Company’s operating model allowing time to be split between Jersey and London • Assessing the FY 2019 executive bonus and FY 2017 Performance Share Plan award outturns • Setting the 2020 incentive plan targets and monitoring performance against those targets • Reviewing the Chief Financial Officer’s base salary • Setting the appointment terms of the new Chief Executive Officer, effective 6 April 2020 • Confirming the retirement terms of the former Chief Executive Officer • Reviewing the remuneration packages for Executives Directors and new and existing members of the senior management team • Reviewing the application of remuneration policy for 2021 (including the 2021 Performance Share Plan targets) Background to remuneration decisions This has been a year of transition at Centamin, with key changes on the Board including a new Non-Executive Chairman and Chief Executive Officer, as well as a considerable strengthening of our senior management team. Under the leadership of our new Chief Executive Officer, we have made considerable strategic progress against the challenging backdrop of the global COVID-19 pandemic. We completed Phase 1 of our Life of Asset Review of our Sukari mine and also completed a wide- reaching strategic review that focuses on how we intend to unlock Centamin’s potential. Although we have managed our operational activity through the COVID-19 pandemic, there have been challenges during the year, including deferral of the Centamin Annual Report 2020 133 MAINTENANCE AREA AT SUKARI GOLD MINE mining of higher-grade material from the open pit due to the movement in the Stage 4 west wall at Sukari. This impacted annual production guidance but reiterated our commitment to the safety and wellbeing of our employees. Notwithstanding the operational challenges, we achieved total gold production of 452,320 ounces, delivered adjusted EBITDA of $437.6m and did so with a strong health and safety record through the year. In the context of COVID-19, our performance is testament to the leadership demonstrated through the year, especially by our operating team at Sukari who have been fast-acting and agile in their response to protect the health, safety and wellbeing of our workforce and contractors. This enabled the business to deliver continuity of operations through extended staff rosters, supply chain management and effective operational planning. The Board is proud of the commitment and resilience of all our employees throughout 2020. Centamin has not taken any government support, did not furlough any employees or make any employees redundant and did not cancel any dividends as a result of COVID-19. Incentive outcomes for 2020 The remuneration outcomes for the year reflected the context detailed above, recognising the strategic progress made but also the operational challenges faced during the year. Martin Horgan and Ross Jerrard’s maximum annual bonus opportunity was 125% of salary. As was the case in previous years, 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 the allocation of capital, improvements in the governance and control environment and personal targets for development of self and team. As disclosed in last year’s Remuneration Report Ross Jerrard’s personal/strategic targets included additional targets for the period he was Interim Chief Executive Officer from 1 January 2020 to 6 April 2020. Martin Horgan’s bonus was pro-rata for the period of the financial year that he was employed, commencing on 6 April 2020. As explained further on pages 144 to 148, based on actual performance against the various original targets set, Martin Horgan was awarded a bonus totalling 59% of the maximum bonus opportunity of 125% of salary (based on his pro-rata salary from his appointment on 6 April to 31 December 2020). Ross Jerrard was awarded a bonus totalling 59% of the maximum bonus opportunity of 125% of salary (which was inclusive of the pro- rata premium payable during his time as Interim Chief Executive Officer). Centamin Annual Report 2020 > Additional Information> Corporate Governance> Foreword> Financial Statements> Strategic Report134 CORPORATE GOVERNANCE – REMUNERATION COMMITTEE REPORT CONTINUED The bonuses earned for the year at £266,890 for the Chief Executive Officer and £334,448 for the Chief Financial Officer were considered to be fair and balanced based on performance against the targets set and also reflective of the progress the business made during the year. The performance conditions were not adjusted once set to take into account the impact of COVID 19. Payment of bonuses based on an assessment against the targets set was consistent with the approach taken across the Group for all employees who are eligible to receive annual bonus payments. In June 2018, the Performance Share Plan (“PSP”) awards were granted to Ross Jerrard (and Andrew Pardey the former CEO). Vesting was based on performance against independent targets relating to Centamin’s relative total shareholder return compared against a bespoke set of mining peers (40%), compound growth in gold production (40%) over the three year period ending 31 December 2020 and compound growth in adjusted EBITDA (20%) over the same period. The TSR of Centamin was below the median performance of the comparator companies over the period and therefore the TSR element of the 2018 awards lapsed. Threshold for gold production was not achieved as production in 2020 was below the threshold target set for the 2018 awards. Adjusted EBITDA performance was strong over the three-year performance period ending 31 December 2020, exceeding the 3.5% compound annual growth rate required for this part of the award to vest in full. Full details of the vesting criteria and the vesting outcome are set out on page 148. The committee did not use discretion in relation to FY 2020 remuneration outcomes concluding that, overall, the remuneration payments were consistent with the overall performance of the Company during the relevant performance periods. The committee is comfortable that our Remuneration Policy operated as intended in 2020. In reaching this decision, the committee noted that the bonus awards earned as a percentage of maximum were generally consistent across the senior leadership team as was the vesting of the 2018 long-term incentive awards. Whilst different bonus structures operate outside of the corporate leadership team, the committee noted that bonuses were payable across the Company based on performance against objectives set at the start of the year (as noted below). Given the Remuneration Policy operated as intended the committee is comfortable that it is achieving the right balance between performance and reward. As a result, the same structure will operate in FY 2021. With regards to other remuneration payments, the Committee confirmed the retirement terms for the former CEO which were as set out in last year’s Directors’ Remuneration Report and included confirming that there would be no entitlement to a 2020 annual bonus for the period of his employment during the year and that he would be treated as a good leaver in line with default treatment and relevant discretions included in the 2015 PSP (e.g. awards vest subject to time pro- rating and performance targets). Further details are set out on page 153. Wider employee remuneration context During 2020, work was undertaken to update the corporate salary structures that operate and ensure that there were no gender or diversity biases within the current pay structures. Adjustments to salaries were made post year end to address the small number of anomalies that the work identified. The committee also had sight of the Company’s response to COVID-19 across the Group in terms of its impact on working conditions and was satisfied that employees were being treated appropriately in light of the exceptional challenges arising as a result of COVID-19. The Bonus Scheme at Sukari is paid each quarter and includes KPIs such as safety, gold production and free cash flow generation. Executive and site based KPIs were considered and discussed with representatives from the workforce committees as well as formal discussions on workforce pay and benefits with senior members of the site-based team through the budget preparatory process. Approach to remuneration in 2021 The Remuneration Committee intends to adopt the following approach to the Executive Directors’ remuneration in 2021, in compliance with the existing policy: Base salary In line with the salary increase budget set for Jersey and UK based employees, Executive Director salaries will be increased by 2% for the FY 2021. Following the increase Martin Horgan’s base salary is £494,700 and Ross Jerrard’s base salary is £435,552. The Chief Executive Officer’s salary was positioned conservatively versus comparative market benchmarks on appointment with this being his first Official Listed Company CEO role. The appropriateness of this market positioning will be considered during the year in light of his increased experience and performance in the role. Pension Executive Directors have not historically received any Company contributions towards a pension. However, as a result of revising the CEO’s service agreement which provides for the CEO to split time between Jersey and London, the CEO (along with all UK employees) is entitled to participate in a workplace pension in relation to his UK salary. In line with the UK auto-enrolment requirements, any employee may participate by contributing 5% of UK salary and the Company will contribute 3% of the UK salary. As a result of the change in his employment status in the UK the CEO has participated in our workplace pension scheme on the same terms as other UK employees from 1 October 2020 on his UK salary and continues to do so. Annual bonus Annual bonus opportunity for Executive Directors will remain unchanged at 125% of salary and continue to operate on a balanced scorecard basis. The same structure as operated in FY 2020 will continue albeit with metrics and targets within each category updated to reflect the current strategic priorities which Centamin Annual Report 2020 135 were informed by the work in relation to the strategic review undertaken during the year that is focused on unlocking Centamin’s potential: • 70% of the bonus will be based on structured corporate objectives that include operations (e.g. production, material moved, strip ratio, recoveries, development and drilling), financing (e.g. profitability, costs and capex) and ESG (e.g. safety and environmental incidents) • 30% of the bonus will be based on tailored strategic targets that for the Chief Executive include (but are not limited to) exploration, capital projects and growth objectives and for the Chief Financial Officer capital allocation, risk management and corporate funding • any bonus earned in excess of 75% of salary will be deferred into shares. 2021 Performance Share Plan (“PSP”) 2021 PSP awards will vest based upon an independent three year relative TSR, cash flow and production targets. In line with the approach outlined last year, Martin Horgan and Ross Jerrard will receive a PSP award over shares worth 150% of salary. Further details of the incentive plan targets to operate in 2021 are included on page 153. Remuneration Committee Engagement Since the current Remuneration Policy is considered to be working effectively, and noting the wider feedback from employees through the Voice of Sukari forum which suggested remuneration more generally is well understood and aligned with Corporate objectives and culture, the committee did not make any material changes to remuneration for FY 2021. In light of this, there was no direct engagement on remuneration with our shareholders. With a Remuneration Policy to be taken to the 2022 AGM, it is intended that shareholders, and the leading shareholder advisory bodies, will be consulted on directors’ remuneration in 2021. 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. 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. Dr Sally Eyre Chair of the Remuneration Committee Executive Director remuneration at a glance Key component How implemented in 2020 Intended implementation for 2021 Base salary CEO – £485,000 Pension CFO – £427,012. In addition, Ross received a salary supplement of £107,600 p.a. pro rata for the period of time that he fulfilled the role as Interim CEO. CEO – 0% until 1 October 2020 followed by participation in the UK workplace pension from 1 October 2020 (where the Company contributed 3% of UK salary linked to a 5% of UK salary contribution) CFO – 0% CEO – £494,700 CFO – £435,552 CEO – participation in the UK workplace pension (3% of UK salary Company contribution with a 5% of UK salary employee contribution in line with the UK workforce) CFO – 0% Benefits CEO/CFO – between 5% and 15% of base salary CEO/CFO – between 5% and 15% of base salary Annual bonus CEO/CFO – 125% of salary maximum CEO/CFO – 125% of salary maximum Targets: • 70% – financial/quantitative e.g. Production, EBITDA, sustaining and direct operating costs, non-sustaining costs and capital projects Targets: • 70% – financial/quantitative e.g. production, profitability, costs, material moved, strip ratio, recoveries, development, drilling, safety and environmental incidents • 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 CEO – 200% of salary (exceptional award granted on appointment) CEO/CFO – 150% of salary CFO – 150% of salary Targets: • 50% – relative TSR vs industry peer group Targets: • 50% – relative TSR vs FTSE Gold Mines Index • 25% – free cash flow generation • 25% – free cash flow generation • 25% – production • 25% – production Shareholding requirements 200% of salary 200% of salary Centamin Annual Report 2020 > Additional Information> Corporate Governance> Foreword> Financial Statements> Strategic Report136 CORPORATE GOVERNANCE – REMUNERATION COMMITTEE REPORT CONTINUED 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 refiner 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 Link to Incentive Plans Asset quality Gold production Material movement and strip ratio Financial flexibility Cost control Discipline on capital allocation Stakeholder returns Consistent dividend policy Shareholder return relative to peers Active growth pipeline Optimising production, development and drilling meters Self-funded growth and exploration Exploration in West Africa People Safety and incident reduction Government relations and community initiatives Production targets employed in both the annual bonus and PSP. Adherence to the longer term mine planning assessed in the annual bonus. EBITDA, cash costs and all in sustaining costs per ounce sold included in the annual bonus. Cost control is a driver of long-term returns to shareholders, measured via relative TSR in the PSP. Measurable and personal KPIs to reflect sound policy decisions and intelligent use of capital. Delivering shareholder returns in line with the dividend policy will drive TSR which is measured in the PSP. 50% of PSP based on relative performance against peers. Identifying high grade from the existing mineral resource with production targets used in the annual bonus. Mineral resource exploration development and growth targets are employed in the strategic element of individual KPIs within the annual bonus. Individual KPIs to identify and deliver on projects outside of Egypt. LTIFR and TRIFR reduction used in ESG elements of the bonus structure. Ongoing workforce engagement, implementation of Group policies and embedding the workplace culture are assessed through personal KPIs. Maintaining key relationships and delivery of initiatives linked directly to individual bonus KPIs. Centamin Annual Report 2020 137 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 118 to 143 of the 2018 Annual Report found on the Company’s website: Remuneration Policy for Executive Directors Element of pay and link to strategy Operation Opportunity Performance conditions 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. N/A 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. Pension Positioned to ensure competitive packages and provision of appropriate income for executives in retirement. 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. N/A 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). 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. N/A 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. Centamin Annual Report 2020 > Additional Information> Corporate Governance> Foreword> Financial Statements> Strategic Report138 CORPORATE GOVERNANCE – REMUNERATION COMMITTEE REPORT CONTINUED Remuneration Policy continued Element of pay and link to strategy Operation Opportunity Performance conditions 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. Annual bonus To provide a driver and reward for the delivery of short-term performance goals, normally over the course of the financial year. The Remuneration Committee will determine the bonus payable after the year end based on performance against targets. 125% of salary. 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. Long-term incentives To align the long-term interests of the executives with those of shareholders. 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. • 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. Share ownership requirement To encourage ownership of shares, thereby creating alignment of interest between shareholders and the executives. 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 the Executive Directors. Centamin Annual Report 2020 139 Remuneration Policy for Non-Executive Directors Element of pay and link 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 GB£250,000 effective from the 2020 AGM when Jim Rutherford took 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 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 Predictability Proportionality Alignment to culture 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. 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. 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 38 and 43. 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. Through the remuneration policy we incentivise development of our culture, our values, attitudes, and behaviours. Our core values are protect, ownership, innovate, educate and passion which are linked to remuneration, in particular through the sustainability objectives that ensure we have robust safety standards that protect the workforce every day, improve our socio economic development in the countries of operation and responsibly manage and minimise the environmental impact of Centamin’s activities. Details of our core values can be found on page 04 and 05 of the Strategic Report. 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. Centamin Annual Report 2020 > Additional Information> Corporate Governance> Foreword> Financial Statements> Strategic Report140 CORPORATE GOVERNANCE – REMUNERATION COMMITTEE REPORT CONTINUED 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 the Executives. CEO £’000 CFO £’000 Maximum 28% 33% 39% £2,271k Maximum 28% 33% 39% £1,986k £1,900k £1,659k On target 49% 35% 17% £1,111k On target 48% 35% 17% £965k Fixed 100% £539k Fixed 100% £462k £0 £500 £1,000 £1,500 £2,000 £2,500 £0 £500 £1,000 £1,500 £2,000 £2,500 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 2021 and benefits calculated using the 2020 figure as set out in the table on page 135. 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. Members of the senior management team 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, safety and cost control measures at the mine. Further details on employee relations can be found in the Sustainability Report, which is published separately. At a site level, a benchmarking exercise was undertaken to align roles and experience and where applicable reset pay by grade and responsibility. 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 UK Corporate Governance 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 particularly through the budget process and more informal discussion groups to engage on workforce benefits and remuneration. Centamin Annual Report 2020 141 Due to the advent of widespread lockdown and travel restrictions we introduced a voluntary extended roster from the start of Q2 2020 which included increased pay by a ratchet mechanism for days worked over existing rosters. From mid-May 2020 we transitioned to an interim roster for expatriates which included additional allowances for isolation periods but normalised pay for on-roster time, then from 15 July we introduced the ‘new normal’ for all staff which closer aligned to previous rosters with additional days for isolation requirements. Throughout 2020 it was agreed that bonuses were paid to all staff on a quarterly basis to recognise their effort and in appreciation of their support. A discretionary bonus of an additional 14 days’ pay (nationals) and seven days’ pay (expatriates) was awarded to recognise the hard work, goodwill and resilience the team showed at Sukari through the global pandemic. All of the changes were discussed with representatives from site, approved by the COVID-19 Executive Committee and summarised to the Board. Consideration of shareholder views Feedback from shareholders and proxy advisors 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. The Remuneration Committee has not undergone any significant direct consultation with shareholders during the year. However, when considering the implementation of the Remuneration Policy in 2020 and the proposed implementation in 2021, the Remuneration Committee considered the views of investors and best practice. We expect to hold a shareholder consultation process in the upcoming year as a part of the Remuneration Policy review process. 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. Details of the Executive Directors’ service contracts are included on page 150. The Chairman and Non-Executive Directors (appointed in the last two years) have formal letters of appointment which provide for three months’ notice and those under existing service agreements (two years plus) ‘reasonable notice’. 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). Centamin Annual Report 2020 > Additional Information> Corporate Governance> Foreword> Financial Statements> Strategic Report142 CORPORATE GOVERNANCE – REMUNERATION COMMITTEE REPORT CONTINUED 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. 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 12 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 2020 143 ANNUAL REMUNERATION REPORT Single figure table in US$ (audited) Salary Benefits Bonus LTI Pension Total Total fixed remuneration Total variable remuneration Executives 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 Martin Horgan 466,992 – 40,699 – 366,374 – – Ross Jerrard 589,862 544,169 35,706 78,966 459,115 440,711 186,214 Total 1,056,854 544,169 76,405 78,966 825,489 440,711 186,214 – – – 439 – 439 – – 874,504 – 508,130 – 366,374 – 1,270,896 1,063,846 625,568 623,135 645,328 440,711 2,145,400 1,063,846 1,133,698 623,135 1,011,702 440,711 Salary Benefits Bonus LTI Pension Total Total fixed remuneration Total variable remuneration Non-Executives 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 2020 2019 James Rutherford 244,333 – Sally Eyre 106,761 64,071 Catherine Farrow 96,988 28,284 Marna Cloete 100,081 30,459 Professor Ibrahim Fawzy 96,491 89,847 Mark Bankes 102,584 115,518 Hennie Faul 56,790 – Josef El-Raghy 157,995 320,870 Edward Haslam 77,304 160,442 Mark Arnesen 55,659 115,518 Alison Baker – 96,410 Total 1,094,987 1,021,419 – – – – – – – – – – – – – – – – – – – – – – Notes to table: • The following changes occurred in the relevant period: – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – – 244,333 – 244,333 – 106,761 64,071 106,761 64,071 96,988 28,284 96,988 28,284 100,081 30,459 100,081 30,459 96,491 89,847 96,491 89,847 102,584 115,518 102,584 115,518 56,790 – 56,790 – 157,995 320,870 157,995 320,870 77,304 160,442 77,304 160,442 55,659 115,518 55,659 115,518 – 96,410 – 96,410 – 1,094,987 1,021,419 1,094,987 1,021,419 – – – – – – – – – – – – – – – – – – – – – – • James Rutherford joined the Board on 1 January 2020 as Deputy Chair and Non-Executive Director and was appointed Board chair on 29 June 2020. • Martin Horgan joined the Board on 6 April 2020. • Ross Jerrard’s remuneration relates to his period as CFO and Interim CEO (1 January to 6 April 2020) and CFO (from 6 April 2020). • Josef El-Raghy retired from the Board on 29 June 2020. • Edward Haslam retired from the Board on 29 June 2020. Edward was retained in an advisory capacity for six months, providing advice on both ESG and wider remuneration and the link between pay and performance for executive and senior management. He received a fee of £25,000 for the six month period. • Mark Arnesen retired from the Board on 29 June 2020. The Board agreed to retain the services of Mark Arnesen for the provision of directorship services to the Company’s Australian subsidiaries, providing continuity at a subsidiary level and ensuring ongoing compliance with the required number of resident Directors. He receives a fee of AU$90,000 per annum for these services. • Hennie Faul joined the Board on 1 July 2020. • All salaries and fees are paid in sterling and to reflect the financial reporting currency of US$, year end bonuses are shown in the single figure table based on the year end exchange rate of $1.37/£1. All other values use the rate of exchange in the month of payment. • The performance conditions relating to PSP awards granted in 2018 have been partially met as at 31 December 2020 (20% of the original award will vest) as detailed on page 148. None of the total LTIP value for Ross Jerrard ($186,214) is attributable to share price appreciation. The Remuneration Committee did not apply any discretion due to share price depreciation. Due to the performance conditions relating to PSP awards granted in 2017 not being met, the vesting figure remains nil. • Benefits are within the limits of the policy and relate to the benefits package for the Executive Directors and include benefits for travel and insurances. • Effective from 1 October 2021 – the CEO has participated in the UK pension by contributing 5% of UK salary and the Company contributed 3% of the UK salary. Centamin Annual Report 2020 > Additional Information> Corporate Governance> Foreword> Financial Statements> Strategic Report144 CORPORATE GOVERNANCE – REMUNERATION COMMITTEE REPORT CONTINUED 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 2021 As at 31 December 2020 As at 31 December 2019 GB£65,000 GB£65,000 (US$89,050) GB£65,000 (US$89,050) GB£10,000 GB£10,000 (US$13,700) GB£10,000 (US$13,700) GB£5,000 GB£5,000 (US$6,850) GB£5,000 (US6,850) Deputy Chairman and Senior Independent Director N/A N/A GB£125,000 (US171,250) Senior Independent Director Notes to table: GB£10,000 GB£10,000 (US$13,700) N/A • Until his retirement from the Board on 29 June 2020 Edward Haslam undertook an enhanced role as Deputy Chairman and senior Non-Executive Director and received a fee of GB£125,000. The duties associated with this role were detailed in the 2019 Annual Report in the Governance Report. Since the AGM in 2020 this role no longer operates and a separate fee became payable of GBP£10,000 for the role of Senior Independent Director in recognition of the additional time commitment of this role. • The Company reviewed the Non-Executive Director fees during 2020 and no increases were proposed. • The Non-Executive Directors do not participate in any of the Company’s share plans or incentive plans. • The US$ figures for FY 2020 and FY 2019 in the table reflects the FY 2020 year end exchange rate of $1.37/£1. 2020 annual bonus (audited) As summarised on page 135 the 2020 bonus plan for the Executive Directors was structured with 70% of the bonus opportunity based on financial/objectively measurable targets and 30% was based on personal/strategic targets. As set out in the risk matrix, the Company is exposed to the daily fluctuations in the price of gold, receiving the market rates on the day of sale. Consequently, revenue cannot be directly linked with the performance of the executive and therefore the Remuneration Committee used these other measurable and personal targets to assess performance such as controls over costs, production rates, targeted drilling through exploration as well as encouraging a safety culture and sustainable operations. Financial/objectively measurable targets (70% of bonus opportunity) Consistent structured financial/objectively measurable targets (audited) applied to both Martin Horgan and Ross Jerrard during the year as detailed below. The performance delivered against the targets resulted in 33% out of the maximum 70% available as being achieved (equating to 41.25% of salary) as detailed below. Gold Production, LTIFR and Adjusted EBITDA (30% of bonus opportunity) Under the gold production, LTIFR and adjusted EBITDA elements the committee determined that 16.5% of the maximum 30% of bonus opportunity was payable, using the following performance as the basis for this calculation: Category Gold production LTIFR (global) Adjusted EBITDA Notes to table: Performance measure % of bonus opportunity Threshold Target Maximum ‘000 ounces Range US$m 10% 10% 10% 484.5 0.29 297.7 510 0.18 330.8 535.5 0.01 363.9 Actual 452.3 0.17 $437.6m Outturn as % of maximum bonus opportunity Outturn as % of salary 0 6.5 10 0 8.1 12.5 • 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 measure. • Maximum achievement represents 100% of the bonus opportunity for the respective performance measure. • Production is based on ounces of gold produced. • LTIFR is based on 200,000 working hours calculated for the Group. • Adjusted EBITDA removes the effect of transactions that are not core to the Group’s main operations. Centamin Annual Report 2020 145 Sustaining and direct operating costs (25% 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 therefore. Under the sustaining and direct operating costs element, the committee determined that 6.8% of the maximum 25% of bonus opportunity was payable, using the following performance as the basis for this calculation: Performance measure % of bonus opportunity Threshold Target Maximum Actual Outturn as % of maximum bonus opportunity Outturn as % of salary Category Sustaining & operating Costs Cash cost of production (produced) Rebuilds $/ounce $,000 Capital projects (progress to budget) See note 1 Open pit Open pit mining Open pit cost per tonne mined Underground mining Underground mining Underground cost per tonne mined Processing Processing Cost per tonne mined $,000 $/t $,000 $/t $,000 $/t 5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 2.5% 677 645 612 719 28,167 26,826 25,485 31,270 See note 1 See note 1 See note 1 See note 1 124.7 1.45 113.7 1.38 102.0 1.24 121.2 1.52 28,462 25,875 23,287 25,604 50 47 45 68 167,702 152,457 137,211 151,385 13 12.45 12 12.71 0% 0% 1. 5% 0.9% 0% 1.6% 0% 1.6% 1.2% 0% 0% 1.9% 1.1% 0% 2.0% 0% 2.0% 1.5% Note 1. The committee assessed progress to budget and stage of completion and determined TSF2, solar and camp upgrades to be successful for the year. Two further projects did not meet the criteria for the year with the out-turn reflecting the importance attached to each objective at the start of the year. Non-sustaining costs and capital projects (15% of bonus opportunity) Under the non-sustaining costs and capital projects element, the committee determined that 9.7% of the maximum 15% of bonus opportunity was payable, using the following performance as the basis for this calculation: Category AISC per ounce sold Corporate costs per ounce produced Sukari – exploration costs West Africa – exploration costs Performance measure % of bonus opportunity Threshold Target Maximum $,000/ounce $,000/ounce $,000 $,000 5.0% 2.5% 5.0% 2.5% 931 35 16,511 20,683 908 33 15,010 18,803 863 32 13,509 16,923 Actual 1,036 26 11,717 17,391 Outturn as % of maximum bonus opportunity Outturn as % of salary 0% 2.5% 5.0% 2.2% 0% 3.1% 6.3% 2.8% Note 1. The costs targets were met through efficiency of spend for the budgeted activities. Centamin Annual Report 2020 > Additional Information> Corporate Governance> Foreword> Financial Statements> Strategic Report146 CORPORATE GOVERNANCE – REMUNERATION COMMITTEE REPORT CONTINUED Personal/strategic targets (30% of bonus opportunity) Martin Horgan Achieved (audited) The targets applicable to Martin Horgan’s non-financial bonus were set in connection with his appointment on 6 April 2020. They included a combination of personal and strategic targets with the Remuneration Committee considering the key milestones achieved during the year which he was instrumental in delivering. These included the following: Topic: Target: Achievement 2021 Budget 2021 Budget delivered to take account of Phase 1 of the LOA Review and impact on 2021. Team development Finalise the management structure, reporting lines, job roles and responsibilities. Develop the geology, engineering, project and ESG teams to provide effective management control and oversight to support corporate growth plans. Implemented revised budgeting process as part of the conclusions of strategic review. Enabled simplification of budgeting process with improved information flows. Delivery of senior leadership recruitment proposals and senior management expertise. Management of a refreshed team, delivering clear purpose, values and objectives. Sukari review Progress a comprehensive review of the Sukari operations to include the first phase of the LOA Review. Fundamental base line work to underpin Phase 1 of the LOA Review. Demonstrated clear ownership and delivery of the review to investors in December 2020. Planning cycle Complete three-year planning cycle with capex reset programme for Board presentation. The operational planning cycle and capital allocation proposals were presented and agreed to the satisfaction of the Board. Exploration Strategic direction and delivery across the exploration portfolio. Delivery of a clear strategy to assess and provide preliminary studies across all projects in West Africa. ESG Establish and support the E&S group to lead the business. Delivery of a clear strategy for regional exploration over the Sukari concession and broader regional potential. These were presented to and agreed by the Board. Recruitment of an E&S Group lead and embedding the role within the leadership and Sustainability Committee reporting structure. Weighting (% of bonus opportunity) Achieved (% of maximum) Outturn as % of maximum bonus opportunity 3% 100% 3% Outturn as % of salary 3.8% 2% 92% 1.9% 2.4% 5% 88% 4.4% 5.5% 5% 4% 85% 4.3% 5.4% 78% 3.1% 3.9% 2% 85% 1.7% 2.1% Business development Agree and progress business development strategy for growth targets. Delivery of a clear strategic plan for Board review and discussion. 3% 75% 2.3% 2.9% Preparation for growth opportunities in Egypt culminating in a comprehensive application in the bid round. Achieved external market engagement based on the investor response to the LOA Review. Building of key relationships across Egypt and West Africa. Completion of the preliminary works for the solar project and contractual progress. Completion of the new TSF (“TSF2”) and facility upgrades. Market & government relations Assessment of external market engagement and government relations across all the sites’ operations. Assessment against progress on the capital projects (consideration to quality of the assessment, planning and delivery). Capital projects TOTAL 3% 90% 2.7% 3.4% 3% 85% 2.6% 3.3% 30% 26% 32.5% Total outturn: 26% out of a possible 30% of the max bonus opportunity. Martin Horgan’s total bonus based on a formulaic assessment of all the targets (financial / objectively measurable plus personal / strategic targets) was 59% of his maximum bonus opportunity. This level of achievement was applied to his pro-rated salary for the period of his employment (6 April 2020 to 31 December 2020) and multiplied by the bonus opportunity as a percentage of salary. As a result, Martin received a bonus of £266,890 or 73.75% of salary. As the net amount of the bonus earned is under 75% of salary, the bonus is payable in cash. Centamin Annual Report 2020 147 Ross Jerrard Achieved (audited) Ross Jerrard had objectives set at the start of the year which encompassed his dual roles of CFO and Interim CEO. His targets were revised following the appointment of Martin Horgan on 6 April 2020 (as set out in last year’s Directors’ Remuneration Report) with the targets set relating to his interim CEO responsibilities reverting to those relating to his CFO role only. Weighting (% of bonus opportunity) Joint* / CFO Achieved (% of maximum) Joint* / CFO Outturn as % of maximum bonus opportunity Joint* / CFO Outturn as % of salary Joint* / CFO 3%* / 3.6% 100% 3%* / 3.6% 3.8* / 4.5 5%* / N/A 97%* 4.9%* 6.1%* 5%* / 6% 94%* / 90% 4.7% / 5.4% 5.8%* / 6.7% 3%* / 3.6% 80%* / 79% 2.4% / 2.9% 3%* / 3.6% 3%* / 3.6% 78%* / 80% 2.3% / 2.9% 2.8%*/ 3.6% 2%* / 2.4% 68%* / 65% 1.4%* / 1.6% 1.7%* / 2% Topic: Target: Achievement 2021 Budget Interim CEO role and corporate assistance M&A 2021 Budget delivered to take account of Phase 1 of the LOA Review and impact on 2021. Implemented revised budgeting process as part of the conclusions of strategic review. Enabled simplification of budgeting process with improved information flows. Lead the business as interim CEO whilst the recruitment process for a CEO is found. Following the recruitment undertake a hand over. The committee reflected on the dedication and resilience shown by Ross Jerrard during this period which saw the Company manage a corporate defence, COVID-19 and a transition of Board and management team that was delivered ahead of expectations. Assessment of financial modelling and setting valuation parameters and assessment of potential targets. In addition to maintaining and refining detailed valuation models for the Group’s assets the targets were exceeded through the detailed and timely production of assessments of a number of growth opportunities that enabled the Board to take informed decisions ahead of agreed milestones. Undertaking a comprehensive review of the Company’s approach to risk assessment, identification, monitoring, tolerance and mitigation across all aspects of the business. Delivery required tailored training and regular working groups and involvement of the Audit and Risk Committee. The targets were largely delivered in full as evidenced to the Board. Assessment of internal and external assurance, and recommendations to the Audit and Risk Committee to improve the mapping and monitoring of the control framework. Navigation of budgetary approvals and cost recovery mechanism with EMRA for key capital projects during the year. Risk and Risk Assessment Group wide risk assessment review. Regulatory and control environment Group wide assessment of controls and adherence to regulations. Capital allocation Training Project assessment to ensure key stakeholder engagement with required approvals for capex and cost recovery. Drive training programmes to ensure understanding of corporate policies including ABC and MSA across the business. Tailings storage facility Tailings management and relevant approvals for TSF2. Market & relationships Review overall external market engagement process and approach in conjunction with CEO. Meeting with government officials across all the sites’ operations as appropriate. Refreshed training programme delivered throughout the senior leadership and senior management team. 2%* / 2.4% 95%* / 95% 1.9%* / 2.3% 2.3%* / 2.8% Board information and engagement with key stakeholders to ensure approvals for the TSF2 and resource allocation for the existing facility. Consideration was given to the significant role undertaken to maintain market confidence and key relationships whist acting as interim CEO. The committee considered the strong relationships in Egypt that had been built and enabled the transition of CEO, Board Chair and senior leadership roles. 2%* / 2.4% 65%* / 68% 1.3%* / 1.6% 1.6%* / 2% 3%* / 3.6% 88%* / 89% 2.6%* / 3.2% 3.2%* / 4% Treasury management Application and consideration to the forex strategy, cash management and maximising returns. Maintaining the Company’s strategic objectives ensuring the options to deliver on the Company’s dividend policy and ensuring a high level of capital discipline. Review of cash, debt & hedging arrangements and opportunities. Successful renewal, tendering and renegotiation of significant contracts. Bringing protocols to the tendering and contract renewal process in line with the Concession Agreement and to the satisfaction of the Board. Contracts TOTAL 1%* / 1.2% 80%* / 88% 0.8% / 1% 1%* / 1.2% 1%* / 1.2% 80% / 86% 0.8% / 1% 1%* / 1.2% 30% / 30% 26.1%* / 25.5% 32.6%* / 31.8% Centamin Annual Report 2020 > Additional Information> Corporate Governance> Foreword> Financial Statements> Strategic Report148 CORPORATE GOVERNANCE – REMUNERATION COMMITTEE REPORT CONTINUED Total outturn: 26.1% out of a possible 30% of the max bonus opportunity for the period of operating as Interim Chief Executive and CFO and 25.5% out of a possible 30% of the max bonus for the period operating as CFO. Ross Jerrard’s total bonus based on a formulaic assessment of all the targets (financial / objectively measurable plus personal / strategic targets) for the period to 6 April (i.e. his period as Interim Chief Executive) was 59.1% of his maximum bonus opportunity. This resulted in a bonus for the period to 6 April 2020 being calculated by applying this level of achievement to his pro-rata salary, including the pro-rata premium for undertaking the role of Interim CEO, for the period to 6 April 2020 and multiplying by the bonus opportunity as a percentage of salary. This resulted in a payment of £104,016. The same calculation was then undertaken for the balance of the year, based on his pro-rata CFO salary only to reflect his role as CFO, and based on an achievement of 58.5% of his maximum bonus opportunity this resulted in a further payment of £230,432. This resulted in a total payment of £334,448 being 59% of the maximum possible bonus over the full FY 2020 (or 73.75% of salary including the pro-rata salary supplement). As the net amount of the bonus earned is under 75% of salary, the bonus is payable in cash. Long-term incentives – shares award table (audited) Vesting of June 2018 PSP award The performance conditions for the grants made in June 2018 covered the period from 31 December 2017 to 31 December 2020. Performance against the targets is set out below: Category Relative TSR vs a bespoke peer group of miners 2020 adjusted EBITDA 2020 gold production Notes to the table Targets Outturn Weighting Threshold (25% of maximum) Maximum (100% of maximum) Actual Achieved Median Upper quartile TSR below the median +3.5% CAGR 2020 Adjusted EBITDA $437.6m Nil 20% +3.5% CAGR 452.3k/oz Nil 40% 20% 40% Growth in EBITDA from the 2017 Adjusted EBITDA of $309.2m Production maintained at levels achieved in 2017 544.6k/oz • TSR against the comparator group was independently verified by Korn Ferry. 25% of award vests at median, full vesting at the upper quartile. • Adjusted EBITDA removes the effect of transactions that are not core to the Group’s main operations. Consequently, 20% of the awards granted in 2018 will vest in 2021 of which 50% of the vested shares will be deferred for a further two years. It is anticipated that 30 participants will receive a share of 650k award shares in June 2021. The awards will be satisfied by newly issued shares. PSP award table (conditional awards) – Martin Horgan Award date and basis(1) Face value of award at grant date US$ Fair value of award at grant date in US$ End of performance period Shares granted Total outcome of vest Total lapsed in 2020 Awards held on 31 December 2020 PSP 5 June 2020 (200% of salary) 1,254,977 837,800 31 Dec 2022 590,000 – – 590,000 Notes to the table • There is nil cost for conditional awards which are subject to performance conditions. • The face value of the 2020 awards was £1.64 per award applying an FX rate of $1.297. The face value was calculated using the 5 day average share price based on the high and low daily share prices prior to grant. • The fair values of the awards are based on IFRS 2 valuation methodology set out in note 6.3 of the Financial Statements. Centamin Annual Report 2020 149 PSP award table (conditional awards) – Ross Jerrard Face value of award at grant date US$ Fair value of award at grant date in US$ 813,899 786,466 831,480 554,880 618,542 553,800 End of performance period 31 Dec 2020 31 Dec 2021 31 Dec 2022 Shares granted 510,000 617,000 390,000 Outcome of Vest 102,000 Total lapsed in 2020 408,000 – – – – Awards held on 31 December 2020 102,000 617,000 390,000 Award date and basis PSP 27 June 2018 (150% of salary) PSP 14 June 2019 (150% of salary) PSP 5 June 2020 (150% of salary) Notes to the table • There is nil cost for conditional awards which are subject to performance conditions. • The performance conditions of the grant made on 27 June 2018 are set out on page 148 of this Remuneration Report. • The face value of the 2020 awards was £1.64 per award applying an FX rate of $1.297. The face value was calculated using the 5 day average share price based on the high and low daily share prices prior to grant. • The fair values of the awards are based on IFRS 2 valuation methodology set out in note 6.3 of the Financial Statements. June 2019 performance criteria: 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: Metric Relative TSR vs bespoke mining peer group Free cash flow Gold production June 2020 performance criteria: Weighting Threshold (25% vesting) Stretch (100% vesting) 50% 25% 25% Median Upper Quartile 65 510 110 590 $ million ‘000 ounces The awards 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: Metric Relative TSR vs bespoke mining peer group Free cash flow Gold production Weighting Threshold (25% vesting) Stretch (100% vesting) 50% 25% 25% Median Upper Quartile 45 500 70 550 $ million ‘000 ounces 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. Centamin Annual Report 2020 > Additional Information> Corporate Governance> Foreword> Financial Statements> Strategic Report150 CORPORATE GOVERNANCE – REMUNERATION COMMITTEE REPORT CONTINUED Expiry date Pension Benefits Annual bonus Termination payment Martin Horgan Date of agreement April 2020 (1 October 2020 revised split contracts). Notice period Twelve months’ notice from either party. No fixed expiry date as rolling contract. Martin Horgan is eligible to participate in the UK workplace pension under which the Company contributes 3% of UK salary linked to a 5% of UK salary contribution Ross Jerrard February 2019. Twelve months’ notice from either party. No fixed expiry date as rolling contract. 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. 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 2020. Name Executive Directors(2) Martin Horgan Ross Jerrard Non-Executive Directors(3) Jim Rutherford Mark Bankes Dr Ibrahim Fawzy Sally Eyre Catharine Farrow Marna Cloete Hendrik Faul Josef El-Raghy Mark Arnesen Edward Haslam As at 31 December 2020 Unvested conditional awards 606,405 1,882,000 590,000 1,517,000 – – – – – – – 200,000 190,000 – – – 15,000 – As at 29 June 2020 10,500,000 49,000 127,056 Balance (1) 16,405 365,000 200,000 190,000 – – – 15,000 – 10,500,000 49,000 127,056 Percentage of base salary(3,5) 4% 114% 106% 337% – – – 23% – 5,500% 77% 135% (1) Of the Executive Directors the balance reflects the total shares owned and exclude the unvested share awards which remain subject to performance conditions. (2) For Ross Jerrard, the Balance of shares includes 138,250 shares which are subject to the two year holding period under the terms of the PSP. (3) Jim Rutherford joined the Board on 1 January 2020. Josef El-Raghy, Mark Arneson and Edward Haslam all left the Board on 29 June. The shareholdings of the departing Directors are as at their date of departure from the Board. (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 three month average share price to 31 December 2020 of £1.33. Centamin Annual Report 2020 151 The Company does not currently have a policy on post-cessation holding requirements (as set out in Provision 36 of the UK Corporate Governance Code) but has been monitoring market practice in this area and shareholder views. The adoption of a policy on post cessation of employment share ownership requirements will form part of Remuneration Policy review to take place in 2021. The committee notes that the PSP rules have a two-year holding period requirement for vested shares that continues following the departure of an executive and so there is already a basic requirement in the current Remuneration Policy to retain shares post cessation of employment. There has been no change to Directors’ shareholdings from 31 December 2020 to the date of this report. Performance graph and CEO remuneration table (unaudited) 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 nine 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 Mines FTSE 250 2012 2013 2014 2015 2016 2017 2018 2019 2020 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 (1) 2011 (Chairman/CEO) 2012 (Chairman/CEO) 2013 (Chairman/CEO) 2014 (Chairman/CEO) 2015 (Chairman) CEO – Andrew Pardey (2) 2015 2016 2017 2018 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$1,063,348 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 68% 77% 78% Bonus waived 30% 0% 0% 100% 40% 0% (1) The CEO pay from 2012 to 2014 reflects the total remuneration for Josef El-Raghy while he held the position of CEO and Chairman. (2) Andrew Pardey was appointed CEO from 1 February 2015 and retired on 13 December 2019 and received awards under the performance share plan from June 2015. Prior to 2015 awards were granted under the deferred bonus share plan reflecting his prior role as a COO. Centamin Annual Report 2020 > Additional Information> Corporate Governance> Foreword> Financial Statements> Strategic Report152 CORPORATE GOVERNANCE – REMUNERATION COMMITTEE REPORT CONTINUED Interim CEO – Ross Jerrard (3) 2019 2020 CEO – Martin Horgan (3) 2020 Single figure remuneration US$1,063,847 US$1,270,896 Single figure remuneration US$874,065 Annual bonus as % of maximum Long-term incentives vesting in year as % of maximum 63% 59% 0% 20% Annual bonus as % of maximum Long-term incentives vesting in year as % of maximum 59% N/A (3) Ross Jerrard was appointed Interim CEO on 13 December 2019 until 6 April 2020 when Martin Horgan was appointed. Percentage change in the remuneration of the Directors (unaudited) The table below show the percentage change in salary, benefits and bonus for all Directors compared all employees. Martin Horgan Ross Jerrard (2) Jim Rutherford (4) Sally Eyre (3) Catharine Farrow (3) Marna Cloete (3) Dr Ibrahim Fawzy (3) Mark Bankes Hendrik Faul Josef El-Raghy (Director until 29 June 2020) (4) Edward Haslam (Director until 29 June 2020) (4) Mark Arnesen (Director until 29 June 2020) (4) All employees (1) Average percentage change 2019–2020 Salary / Fee Taxable benefits Annual bonus N/C 8% N/C N/C N/C N/C 7% -11% N/C N/C N/C N/C 15% N/C -55% N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A -1% N/C 4% N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A -15% (1) Centamin plc does not have any direct employees, therefore we have voluntarily shown the change in Directors pay vs a wider employee comparator group. Centamin plc employs the senior management team through subsidiary service entities therefore the senior management team have been used as the comparator group 2020: 18 employees (2019: 13 employees). The percentage increase in salary reflects a restructuring of the senior executive team which has resulted in an increase to the average level of seniority of employee in 2020 versus 2019 within the team. (2) The percentage reflects the year-on-year change recording in US$ in the single figure table. The base salary for Ross Jerrard increased by 3% from 2019 to 2020 and the difference in the table relates to the foreign exchange difference in the reporting currency and additional salary whilst Ross undertook the role of CEO and CFO. The maximum benefits and available bonus opportunity as a percentage of salary for the Executive Directors remained unchanged in 2019 and 2020. (3) Any increase or decrease in Non-Executive Director fees reflects a change in the membership or chairmanship of committees. There were no increases to the base level fees for the Non-Executive Directors from 2019 to 2020. (4) Jim Rutherford joined the Board on 1 January 2020. Josef El-Raghy, Mark Arneson and Edward Haslam all left the Board on 29 June and their annualised fee remained unchanged from 2019 to 2020. (5) N/C is referenced where there is no comparator data for that individual or where a Director has not worked a full year (either in 2019 or 2020) and so the change would not be representative. N/A is referenced where the individual does not receive benefits of pension or an annual bonus. Centamin Annual Report 2020 153 Relative spend on pay (unaudited) 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 2019 and 2020 Comparator group (1) Remuneration of Centamin’s Executive Directors Remuneration of Centamin’s Non-Executive Directors (2) Distributions to Centamin shareholders(3) Percentage change 2019 Spend on pay $’million 2020 Spend on pay $’million 4.4% 2.9% 7% -6% 41.6 2.08 1 111 48.4 2.14 1.1 104 (1) The comparator group is based on the average number of employees based in Egypt in 2020 where the majority of the Company’s employees are based: 1,530 (2019: 1,374 employees). (2) An increase in Non-Executive Director fees reflects a change in the membership of committees. There were no increases to the base level fees of the Non-Executive Directors from 2019 to 2020. (3) The percentage change relates to distributions to shareholders for each financial year. 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. Payment to past Directors (audited) As disclosed in the 2019 Director’s Remuneration Report, Andrew Pardey notified the Board of his intention to retire on 2 October 2019 and stepped down from the Board 13 December 2019 and remained an employee of the Company until 3 October 2020. In 2020, in line with his contractual terms Andrew Pardey continued to receive his salary (totalling £395,648) and benefits (totalling £40,408) during the period of his employment. In line with previous years, Andrew did not receive a pension contribution. The treatment of Andrew’s remuneration arrangements upon leaving were in line with the policy and disclosed in full on page 159 of 2019 Annual Report. Pursuant to the rules of the PSP, he was determined a ‘good leaver’ in line with the default treatment and relevant discretions included in the 2015 PSP due to his retirement and so was eligible to receive outstanding PSP awards (2018 and 2019 award) on a time pro-rated basis subject to performance conditions at the normal vesting dates and subject to the two year holding period post vesting that will continue to apply for the 2019 award and the phased release of the 2018 award will continue to apply with 50% released on vesting at the end of the 3 year performance period and 50% a year later. In relation to his 2018 long-term incentive award granted on 27 June 2018, following a pro-rata reduction for the period if his employment (29 out of the 36-month performance period) and the application of the performance targets as detailed on page 148, 103,111 shares will vest out of the original award of 640,000 shares. The value on vest will be disclosed in the 2021 Directors’ Remuneration Report. Edward Haslam was retained in an advisory capacity for six months and Mark Arnesen provides directorship services to the Company’s Australian subsidiaries. The fees payable in relation to Edward Haslam were £25,000 for the six-month period and Mark Arnesen AU$90,000 per annum. There were no other payments to past Directors during the year. Payments for loss of office (audited) There were no payments for loss of office. Centamin Annual Report 2020 > Additional Information> Corporate Governance> Foreword> Financial Statements> Strategic Report154 CORPORATE GOVERNANCE – REMUNERATION COMMITTEE REPORT CONTINUED The committee (unaudited) The Remuneration Committee is a committee of the Company represented by three independent Non-Executive Directors, namely Dr Sally Eyre (chair of the committee), Jim Rutherford and Marna Cloete. It is noted that as a result of the Board refreshment that took place during the year that included Jim Rutherford transitioning from Independent Non-Executive and Deputy Chairman to Company Chairman that the committee does not include three Independent Non-Executive Directors in addition to the Company Chairman. At the recommendation of the Nomination Committee, the Board approved in March 2020 the appointment of Dr Fawzy as a member of the Remuneration Committee effective from 31 March 2021. The Remuneration Committee membership will then consist of Dr Sally Eyre (chair), Marna Cloete, Jim Rutherford and Dr Fawzy. In compliance with the 2018 UK Corporate Governance Code, 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. The Executive Directors may attend meetings of the committee to make recommendations relating to the performance and remuneration of their direct reports but neither, nor the Company Secretary, attend meetings when their own remuneration is under consideration. Current committee members Sally Eyre (chairman of the committee) Jim Rutherford Marna Cloete Other committee members during the year Edward Haslam Mark Arnesen Joined 2019 2020 (1) 2020 (1) 2011 (2) 2011(2 Attendance in 2020 4/ 4 2/ 2 2/ 2 2/ 2 2/ 2 (1) Jim Rutherford and Marna Cloete joined with effect from 29 June 2020. (2) Edward Haslam and Mark Arnesen left the Board on 29 June 2020. Activities of the committee The committee met four times during the year and also approved one set of resolutions by way of written resolution. The business conducted during the year is set out below: Date of activity Summary of activity Q1 2020 • Assessing the FY 2019 bonus and FY 2017 Performance Share Plan award outturns • Preparing the 2019 Directors Remuneration Report • Setting the 2020 incentive plan targets Q2 2020 • Setting the appointment terms of the current Chief Executive Officer, effective 6 April 2020 • Reviewing the Chief Financial Officer’s base salary and 2020 performance targets as interim CEO • Overseeing the remuneration packages of the newly appointed senior management team • Approving awards under the Company’s Performance Share Plan and Deferred Bonus Share Plan • Review of shareholder, proxy and stewardship feedback from the annual general meeting Q3 2020 • Review the architecture of the Remuneration Policy • Confirming the leaver terms of the former CEO Q4 2020 • Revising the Chief Executive Officer’s service agreement to align with the Company’s future operating model which will require the Chief • Setting the performance conditions for the Executive Directors for the remainder of the year Executive Officer to split his time between Jersey and London • Reviewing the application of remuneration policy for 2021 • Preparing the executive performance conditions for the Executive Directors for 2021 • Undertaking the committee evaluation Centamin Annual Report 2020 155 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 chair 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 2020 totalled GBP£ 50,313. 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. The committee is satisfied that the advice provided on matters of remuneration remains objective and independent. Korn Ferry provided other human capital related services during the year to a separate part of the business, but these services were carried out by a team wholly separate to the remuneration advisory team. The committee is comfortable that the controls in place at Korn Ferry do not result in the potential for any conflicts of interest to arise. Shareholder voting at the AGM (unaudited) Set out in the table below are the votes cast for and against the adoption of the Remuneration Report at the AGM on 29 June 2020 and the Remuneration Policy at the AGM on 8 April 2019. Approval of the Remuneration Report (2020 AGM) Approval of the Remuneration Policy (2019 AGM) Policy implementation in 2021 (unaudited) For Against 837,525,271 (99.9%) 820,555 (0.1%) 788,094,546 (98.6%) 11,189,768 (1.4%) Withheld 9,360,624 2,598,083 Base salary In line with the salary increase budget set for Jersey and UK based employees, Executive Director salaries will be increased by 2% for the FY 2021. Following the increase Martin Horgan’s base salary is £494,700 and Ross Jerrard’s base salary is £435,552. The Chief Executive Officer’s salary was positioned conservatively versus comparative market benchmarks on appointment with this being his first Official Listed Company CEO role. The appropriateness of this market positioning will be considered during the year in light of his increased experience and performance in the role. Pension Executive Directors have not historically received any Company contributions towards a pension. However, as a result of revising the CEO’s service agreement which provides for the CEO to split time between Jersey and London, the CEO (along with all UK employees) is entitled to participate in a workplace pension in relation to his UK salary. In line with the UK auto-enrolment requirements, any employee may participate by contributing 5% of UK salary and the Company will contribute 3% of the UK salary. As a result of the change in his employment status in the UK the CEO has participated in our workplace pension scheme on the same terms as other UK employees from 1 October 2020 on his UK salary and continues to do so. Ross Jerrard does not participate in, or receive, a Company pension. Annual bonus The annual bonus opportunity for Executive Directors will remain unchanged at 125% of salary and continue to operate on a balanced scorecard basis. The same structure as operated in FY 2020 will continue albeit with metrics and targets within each category updated to reflect the current strategic priorities as follows: • 70% of the bonus will be based on structured corporate objectives that include operations (e.g. production, material moved, strip ratio, development, drilling meters and recoveries), financing (e.g. profitability and costs) and ESG (e.g. safety and environmental incidents). • 30% of the bonus will be based on tailored strategic targets that for the Chief Executive Officer include (but are not limited to) exploration, capital projects and growth objectives and for the Chief Financial Officer capital allocation, risk management and corporate funding. Centamin Annual Report 2020 > Additional Information> Corporate Governance> Foreword> Financial Statements> Strategic Report156 CORPORATE GOVERNANCE – REMUNERATION COMMITTEE REPORT CONTINUED Further detail of the 2021 bonus structure is set out below: Performance measure Weighting Notes: The targets are challenging ranges that are set with reference to budgeted performance levels and will be tested using Financial and objectively measurable LTIFR / LTIRFR Environmental incidents Gold production Material moved / strip ratio/ development / drilling / recoveries 10% 5% 10% 25% Published Group safety statistics Published major incidents and unpublished minor incidents. Production from the Sukari concession Committee to assess contract management. Actual strip ratio to be adjusted for low grade ore that has been re-classified from waste Cash costs / AISC 10% Published Group total cash cost per ounce produced. Commodity assumption of the fuel price will be assessed by the committee. Profitability / adjusted EBITDA Capital projects 5% 5% Adjusted EBITDA will be per the published Non-GAAP measures. Committee assessment of budget and stage of completion for solar and plant fill. Individual KPIs Balanced scorecard 30% Strategic and personal KPIs to be assessed by the committee. For the CEO, the key objectives relate to an optimised LOM plan, exploration, solar and paste fill, E&S framework and cost initiatives. For the CFO, the key objectives relate to capital allocation and financial planning, cost initiatives, group risk, controls and governance. Notes to table: • 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 Chair’s letter). • Maximum achievement represents 100% of the bonus opportunity for the respective performance measure. In line with previous years, 62.5% of maximum is payable for performance targets. 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. Any bonus earned in excess of 75% of salary will be deferred into shares for two years. Details of the bonus outcome will be summarised in the 2021 Directors’ Remuneration Report. Centamin Annual Report 2020 157 Performance Share Plan (“PSP”) Executive Directors will receive a PSP award over shares worth 150% of salary, reflecting the approach disclosed in the 31 December 2019 Annual Report. Awards will vest based upon a blend of three-year relative TSR, cash flow and production targets. Also, reflecting the Remuneration policy, these awards will be subject to a full two year post vesting holding period. More particularly, the targets to be applied to this award are expected to be as follows: Metric Relative TSR vs FTSE Gold Mines Index (the Index) Free cash flow Gold production Notes: Weighting Threshold (25% vesting) Stretch (100% vesting) 50% 25% 25% Performance equal to the Index Annual out-performance of the Index by 10% p.a. 45 450 70 480 $ million ‘000 ounces • The Company’s TSR performance will be assessed against the FTSE Gold Mines Index. • The Remuneration Committee will assess performance based on free cash flow generated over the Sukari Concession Agreement in 2023. • 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. The committee will consider an adjustment at the time of the vested award if the average annual gold price in 2023 is outside a 5% range of the budgeted estimate of $1,650/oz in the calculation of the estimated Free Cash Flow in 2023. • The Remuneration Committee will assess performance based on gold produced in 2023 over the Sukari concession. With regard to the targets set for the FY 2021 PSP award, they were the subject of review during the final quarter of 2020 and the targets are considered similarly challenging to those set in prior years. With regard to the TSR performance target, the committee reviewed the existing comparator companies and having had regard to the geography and nature of the mining operations within the comparator companies concluded that a simpler and more robust approach to testing relative TSR performance would be to test performance against the FTSE Gold Mines Index. Historical back testing was undertaken to determine the appropriate level of out-performance required for full vesting under this element of the performance condition and it was set at 10% p.a. This level of out-performance was set as a proxy for typical upper quartile performance versus the constituents of the Index based on back-testing using data over the past five years which included two full award cycles. Furthermore, the committee also noted that sector peers using performance versus the FTSE Gold Mines Index also required 10% p.a. out- performance for maximum vesting. With regard to the cash flow and gold production targets these were set with reference to both internal and external expectations for Centamin’s future performance and, in particular, having had regard to the conclusions of the Centamin’s wide reaching strategic review that focuses on how Centamin’s potential can be unlocked but also having had regard to the short to medium term challenges posed by the structural issues within the open pit Stage 4 west wall at Sukari. In light of these factors, the committee was comfortable that the rebased targets were appropriately challenging and no less challenging than the performance targets set in prior years allowing for current commercial circumstances. A final review of the quantum and targets will be undertaken prior to granted the awards. Non-Executive Directors No changes to the fees of the Non-Executive Directors will be made for 2021. This report was approved by the Board of Directors and signed on its behalf by: Dr Sally Eyre Chair of the Remuneration Committee 22 March 2021 Centamin Annual Report 2020 > Additional Information> Corporate Governance> Foreword> Financial Statements> Strategic Report158 FINANCIAL STATEMENTS A CLEAR STRATEGY FOR FUTURE GROWTH We start 2021 in a stronger position, with clear plans and milestones in place towards delivering consistent results, maximising free cash flow generation and unlocking further potential from our portfolio. Centamin Annual Report 2020 > Foreword > Strategic Report > Corporate Governance > Financial Statements > Additional Information 159 FINANCIAL STATEMENTS – CONTENTS 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 160 161 168 169 170 171 172 Centamin Annual Report 2020 160 DIRECTORS’ RESPONSIBILITIES For the year ended 31 December 2020 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. Companies (Jersey) Law 1991, as amended (the “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 Company Law. 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 Board receives written assurances from the CEO and CFO that to the best of their knowledge and belief, the Group’s financial position presents a true and fair view and that the financial statements are founded on a sound system of risk management, internal compliance and control. Further, they confirm that the Group’s risk management and internal compliance is operating efficiently and effectively. The Board recognises that internal control assurances from the CEO and CFO can only be reasonable rather than absolute, and therefore they are not and cannot be designed to detect all weaknesses in control procedures. The financial statements have been audited by 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 Martin Horgan (CEO) and Ross Jerrard (CFO) on 22 March 2021. 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 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. • 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: Martin Horgan Chief Executive Officer Director 22 March 2021 Ross Jerrard Chief Financial Officer Director 22 March 2021 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 130 and 131 and the risk management and principal risks section of the Strategic Report on pages 66 to 81. Centamin Annual Report 2020 FINANCIAL STATEMENTS 161 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 2020 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 2020; 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. Our opinion is consistent with our reporting to the Audit and Risk Committee. 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 public interest entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. To the best of our knowledge and belief, we declare that non-audit services prohibited by the FRC’s Ethical Standard were not provided to the group. Other than those disclosed in note 6.5 to the financial statements, we have provided no non-audit services to the group in the period under audit. Our audit approach Overview Audit scope We performed an audit of the one significant component of the group, Sukari Gold Mine, based in Egypt, and performed specified procedures over other components in the group which are in three other locations; Burkina Faso, Ivory Coast and Jersey. 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 • Going concern assessment in light of COVID-19 impact Materiality • Overall materiality: US$10.8m (2019: US$8.8m) based on 5% of three-year average profit before tax. • Performance materiality: US$8.1m. 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. Centamin Annual Report 2020 > Additional Information> Corporate Governance> Foreword> Financial Statements> Strategic Report162 INDEPENDENT AUDITOR’S REPORT CONTINUED Capability of the audit in detecting irregularities, including fraud Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined in the Auditors’ responsibilities for the audit of the financial statements section, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below. Based on our understanding of the group and industry, we identified that the principal risks of non-compliance with laws and regulations were connected with the ongoing legal actions which are under appeal before the Supreme Administrative Court and Administrative Court in Egypt; in relation to the validity of the Sukari Concession agreement and diesel fuel disputes respectively (see page 206 in the Annual Report), and we considered the extent to which non-compliance might have a material effect on the financial statements. We also considered those laws and regulations that have a direct impact on the preparation of the financial statements such as the Companies (Jersey) Law 1991, and relevant local laws in Egypt, Burkina Faso and Ivory Coast. We developed our understanding of the relevance of these laws and regulations to our fraud risk assessment, and how the Company manages this risk, through liaising with the Company’s finance teams in both Egypt and West Africa, and utilising local team knowledge (under a body shopping arrangement) where necessary. We evaluated management’s incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls), and determined that the principal risks were related to posting inappropriate journal entries to manipulate results, and management bias in accounting estimates. We also note that the Company operates in countries which are at the higher end of the corruption risk index and therefore we designed procedures to address this risk. Audit procedures performed by the engagement team included: • performing inquires with the group’s external legal advisors and obtaining legal letters regarding the Sukari Concession Agreement and diesel fuel dispute cases; • inspecting correspondence and related documentation, including the Concession Agreement, to understand any challenges to the cost recovery amounts and the basis of the directors’ assessment of the likely outcome of the challenges (refer to the “Key audit matters” section below for further information on the procedures performed); • testing journals that exhibit risk-based criteria, including unexpected account combinations that could be used to manipulate results including EBITDA and other key performance indicators, and journals posted by unexpected personnel; • performing substantive procedures focussing on West Africa exploration activity, including direct enquiries with the local finance teams, and sample testing of expenses in relation to consultants used in West African exploration; and • critical assessment of material estimates and judgements used by management, including in relation to the provision for restoration and rehabilitation, valuation of long-term stockpiles and amounts due to government. There are inherent limitations in the audit procedures described above and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we would become aware of it. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion. Based on our procedures performed above, no instances of actual or suspected fraud, or non-compliance with laws and regulations, were identified. Key audit matters Key audit matters are those matters that, in the auditors’ professional judgement, 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. Impairment of property, plant and equipment, which was a key audit matter last year, is no longer included because we did not consider this to be an area of higher risk in the current year due to the price of gold increasing significantly year on year, and the fact that the group’s market capitalisation remained in excess of the carrying value of its net assets. We also note that an impairment trigger assessment was performed by management in 2020, and no impairment triggers were identified. Based on the audit procedures performed we are satisfied that there were no impairment triggers in the current year. Otherwise, the key audit matters below are consistent with last year. Centamin Annual Report 2020 FINANCIAL STATEMENTS163 Key audit matter Ongoing legal actions How our audit addressed the key audit matter The appeal before the Supreme Administrative Court in Egypt concerning the validity of the Sukari Concession Agreement Refer to page 207 (note 5.1 to the financial statements) and page 69 (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 consequentially there could be risk of material impairment in non-current assets at Sukari, which have a carrying value of $921 million at 31 December 2020. 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 206 (note 5.1 to the financial statements) and page 69 (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 $367 million and the potential amount that the group could have to pay if they lose the historical case is approximately $26 million as at 31 December 2020. To date, the group has not recognised any upside on the balance sheet in relation to the $367 million fuel payment. It has also not provided for the historical $26 million, 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. 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 fuel payments 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 $26 million historical case and no residual contingent asset was recognised in respect of the current subsidy case. We agreed the disclosures for both of these matters in notes 2.8 and 5.1 to the financial statements and concluded that they are consistent with our understanding. Amounts due to the government with respect to the Sukari operation Refer to page 179 (note 2.1 to the financial statements), page 185 (note 2.4 to the financial statements) and page 69 (Principal risks). We agreed the amounts in the profit share calculation to source documentation and the underlying accounting records. 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 the 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 estimate of the probable amount of the profit share liability. For the year ended 31 December 2020, the group has accrued and paid dividends to the non-controlling interest in SGM of $174 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. As at 31 December 2020, the provision for amounts due to EMRA (in respect of historic issues) was approximately $17m. We read the minutes of meetings with EMRA and held discussions with the group’s external legal advisors. 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. With respect to the provision relating to historic cost recovery items, we have agreed this amount to the final written offer that was sent to EMRA in March 2021, and understand that both parties are in the process of finalising this agreement. We read the disclosures in notes 2.1 and 2.4 to the financial statements to ensure they were consistent with our knowledge and understanding of the matter obtained in the course of the audit. Going concern assessment in light of COVID-19 impact Refer to page 177 (note 1.3.5 to the financial statements) and page 69 (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 performed a risk assessment of the potential ongoing impact of COVID-19 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 prepared a cash flow forecast covering the going concern period which included a number of downside scenarios, in order to assess the risk to going concern. The scenarios include significantly reducing processing and mining activities which management consider to be severe but plausible. Whilst the group has experienced some increase in costs in the year due to the impact of COVID-19, it is currently performing significantly better than the performance modelled by management in the downside scenarios. In all of the downside scenarios, management’s forecasts showed that the group had positive closing liquidity during the going concern period, 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 and working capital reductions, both of which are in their control. Accordingly, the financial statements have been prepared on a going concern basis. We obtained management’s evaluation of the cash flow forecasts for the going concern period. 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. We agreed the opening cash balance per management’s model to the underlying accounting records. We critically evaluated management’s downside scenarios and agreed that these were severe but plausible. We considered the impact of the downside scenarios on the group and the directors’ disclosures thereon. The procedures that we performed to evaluate management’s going concern assessment and our conclusions are included in the “Conclusions relating to going concern” section below. 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 1.3.5 of the financial statements and considered this to be acceptable. Centamin Annual Report 2020 > Additional Information> Corporate Governance> Foreword> Financial Statements> Strategic Report164 INDEPENDENT AUDITOR’S REPORT CONTINUED 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 Ivory Coast, and has corporate office in Jersey. For financial reporting purposes, each of these represents a separate component of the group. Our group audit scope focused primarily on the Sukari Gold Mine, which was subject to a full-scope audit. We visited the Sukari mine and conducted audit fieldwork in Egypt. 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 is based in Cairo. In addition, specific audit procedures were performed over material balances for three components relating to the group’s exploration operations and corporate activities. Additionally, we performed work over the consolidation of the group’s components and the parent company. Note that all procedures were performed by the group engagement team, including the work on the in-scope components. 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 judgement, we determined materiality for the financial statements as a whole as follows: Overall group materiality How we determined it US$10.8m (2019: US$8.8m). 5% of three-year average profit before tax Rationale for benchmark applied 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 Sukari gold production and gold prices. 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 $9.8 million. We use performance materiality to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements exceeds overall materiality. Specifically, we use performance materiality in determining the scope of our audit and the nature and extent of our testing of account balances, classes of transactions and disclosures, for example in determining sample sizes. Our performance materiality was 75% of overall materiality, amounting to US$8.1 million. In determining the performance materiality, we considered a number of factors - the history of misstatements, risk assessment and aggregation risk and the effectiveness of controls - and concluded that an amount at the upper end of our normal range was appropriate. We agreed with the Audit and Risk Committee that we would report to them misstatements identified during our audit above $540,000 (2019: $440,000), being 5% of overall materiality, as well as misstatements below that amount that, in our view, warranted reporting for qualitative reasons. Centamin Annual Report 2020 FINANCIAL STATEMENTS165 Conclusions relating to going concern Our evaluation of the directors’ assessment of the group’s ability to continue to adopt the going concern basis of accounting included: • obtaining the FY21 board approved budget, challenging management’s assumptions and verifying that it is consistent with our existing knowledge and understanding of the business; • obtaining and reviewing the group’s cashflow forecasts for the going concern period, tying the opening cash balance to the financial statements, agreeing the inputs back to the board approved budget, and testing the model for mathematical accuracy; and • reviewing the group’s cashflow forecasts under severe but plausible downside scenarios, evaluating the assumptions used, and verifying that the group is able to maintain liquidity within the going concern period under these scenarios. Refer also to the “Key audit matters” section above for further information on our audit procedures performed on the going concern assessment in light of COVID-19 impact. Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the group’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue. In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate. However, because not all future events or conditions can be predicted, this conclusion is not a guarantee as to the group’s ability to continue as a going concern. In relation to the company’s reporting on how they have applied the UK Corporate Governance Code, we have nothing material to add or draw attention to in relation to the directors’ statement in the financial statements about whether the directors considered it appropriate to adopt the going concern basis of accounting. Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this 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 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. Centamin Annual Report 2020 > Additional Information> Corporate Governance> Foreword> Financial Statements> Strategic Report166 INDEPENDENT AUDITOR’S REPORT CONTINUED Corporate governance statement The Listing Rules require us to review the directors’ statements in relation to going concern, longer-term viability and that part of the corporate governance statement relating to the company’s compliance with the provisions of the UK Corporate Governance Code specified for our review. Our additional responsibilities with respect to the corporate governance statement as other information are described in the Reporting on other information section of this report. Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the corporate governance statement is materially consistent with the financial statements and our knowledge obtained during the audit, and we have nothing material to add or draw attention to in relation to: • The directors’ confirmation that they have carried out a robust assessment of the emerging and principal risks; • The disclosures in the Annual Report that describe those principal risks, what procedures are in place to identify emerging risks and an explanation of how these are being managed or mitigated; • The directors’ statement in the financial statements about whether they considered it appropriate to adopt the going concern basis of accounting in preparing them, and their identification of any material uncertainties to the group’s ability to continue to do so over a period of at least twelve months from the date of approval of the financial statements; • The directors’ explanation as to their assessment of the group’s prospects, the period this assessment covers and why the period is appropriate; and • The directors’ 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 its assessment, including any related disclosures drawing attention to any necessary qualifications or assumptions. Our review of the directors’ statement regarding the longer-term viability of the group was substantially less in scope than an audit and only consisted of making inquiries and considering the directors’ process supporting their statement; checking that the statement is in alignment with the relevant provisions of the UK Corporate Governance Code; and considering whether the statement is consistent with the financial statements and our knowledge and understanding of the group and its environment obtained in the course of the audit. In addition, based on the work undertaken as part of our audit, we have concluded that each of the following elements of the corporate governance statement is materially consistent with the financial statements and our knowledge obtained during the audit: • The directors’ statement that they consider the Annual Report, taken as a whole, is fair, balanced and understandable, and provides the information necessary for the members to assess the group’s position, performance, business model and strategy; • The section of the Annual Report that describes the review of effectiveness of risk management and internal control systems; and • The section of the Annual Report describing the work of the Audit and Risk Committee. We have nothing to report in respect of our responsibility to report when 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. Opinion 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. Responsibilities for the financial statements and the audit Responsibilities of the directors for the financial statements As explained more fully in the Directors’ Responsibilities in respect of the Annual Report and financial statements Statement, 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. Centamin Annual Report 2020 FINANCIAL STATEMENTS167 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. Our audit testing might include testing complete populations of certain transactions and balances, possibly using data auditing techniques. However, it typically involves selecting a limited number of items for testing, rather than testing complete populations. We will often seek to target particular items for testing based on their size or risk characteristics. In other cases, we will use audit sampling to enable us to draw a conclusion about the population from which the sample is selected. 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. Appointment Following the recommendation of the Audit and Risk Committee, we were appointed by the members on 24 January 2014 to audit the financial statements for the year ended 31 December 2014 and subsequent financial periods. The period of total uninterrupted engagement is 7 years, covering the years ended 31 December 2014 to 31 December 2020. Jonathan Lambert for and on behalf of PricewaterhouseCoopers LLP Chartered Accountants and Recognized Auditors London 22 March 2021 Centamin Annual Report 2020 > Additional Information> Corporate Governance> Foreword> Financial Statements> Strategic Report168 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME for the year ended 31 December 2020 Revenue Cost of sales Gross profit Exploration and evaluation expenditure Other operating costs Other income Profit on financial assets at fair value through profit or loss Finance income 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 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) 31 December 2020 US$’000 31 December 2019 US$’000 Note 2.2 2.3 2.1 2.3 2.3 2.6 2.3 2.5 2.4 2.4 6.4 6.4 828,737 (449,441) 379,296 (17,391) (56,392) 6,972 960 1,554 314,999 (50) 314,949 155,979 158,970 314,949 155,979 158,970 13.531 13.453 652,344 (439,285) 213,059 (16,883) (38,709) 5,856 3,889 5,817 173,029 (112) 172,917 87,463 85,454 172,917 87,463 85,454 7.588 7.535 The above audited consolidated statement of comprehensive income should be read in conjunction with the accompanying notes. Centamin Annual Report 2020 FINANCIAL STATEMENTSCONSOLIDATED STATEMENT OF FINANCIAL POSITION as at 31 December 2020 169 Non-current assets Property, plant and equipment Exploration and evaluation asset Inventories – mining stockpiles Other receivables Total non-current assets Current assets Inventories – mining stockpiles and consumables Financial assets at fair value through profit or loss Trade and other receivables Prepayments Cash and cash equivalents Total current assets Total assets Non-current liabilities Provisions Other payables Total non-current liabilities Current liabilities Trade and other payables Tax liabilities Provisions Total current liabilities Total liabilities Net assets Equity Issued capital Share option reserve Accumulated profits Total equity attributable to: – owners of the parent – non-controlling interest in SGM Total equity Note 2.9 2.10 2.11 2.7 2.11 2.6 2.7 2.8 2.16(a) 2.13 2.12 2.12 2.5 2.13 2.14 2.15 31 December 2020 US$’000 31 December 2019 US$’000 829,884 63,701 64,870 103 958,558 804,717 68,138 52,658 93 925,606 118,705 108,957 – 18,424 8,908 291,281 437,318 6,454 47,061 6,132 278,229 446,833 1,395,876 1,372,439 32,752 1,437 34,189 64,488 267 7,480 72,235 106,424 14,575 – 14,575 57,411 227 8,589 66,227 80,802 1,289,452 1,291,637 668,807 3,343 617,302 672,105 4,179 615,353 1,306,648 1,293,528 2.4 (17,196) (1,891) 1,289,452 1,291,637 The above audited consolidated statement of financial position should be read in conjunction with the accompanying notes. The audited consolidated financial statements on pages 168 to 215 were authorised by the Board of Directors for issue on 22 March 2021 and signed on its behalf by: Martin Horgan Chief Executive Officer Director 22 March 2021 Ross Jerrard Chief Financial Officer Director 22 March 2021 Centamin Annual Report 2020 > Additional Information> Corporate Governance> Foreword> Financial Statements> Strategic Report 170 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY for the year ended 31 December 2020 Balance as at 1 January 2020 Profit for the year after tax Total comprehensive income for the year Own shares acquired Net reversal of share-based payments Dividend paid – non-controlling interest in SGM Dividend paid – owners of the parent Note 2.4 Issued capital US$’000 672,105 – – (3,298) – – – Share option reserve US$’000 Accumulated profits US$’000 Total US$’000 Non-controlling interests US$’000 Total equity US$’000 4,179 – – – (836) – – 617,244 155,979 1,293,528 (1,891) 1,291,637 155,979 158,970 314,949 155,979 155,979 158,970 314,949 – – – (3,298) (836) – – – (174,275) (138,725) (138,725) – (3,298) (836) (174,275) (138,725) Balance as at 31 December 2020 668,807 3,343 634,498 1,306,648 (17,196) 1,289,452 Balance as at 1 January 2019 Profit for the year after tax Total comprehensive income for the year Recognition of share-based payments Transfer of share-based payments Dividend paid – non-controlling interest in SGM Dividend paid – owners of the parent Balance as at 31 December 2019 Note 2.4 Issued capital US$’000 670,589 Share option reserve US$’000 5,688 – – – – – 7 1,516 (1,516) – – – – 672,105 4,179 Accumulated profits US$’000 610,810 87,463 Total US$’000 1,287,087 87,463 Non-controlling interests US$’000 Total equity US$’000 (270) 1,286,817 85,454 172,917 87,463 87,463 85,454 172,917 – – – 7 – – (81,029) 617,244 (81,029) 1,293,528 – – 7 – (87,075) – (87,075) (81,029) (1,891) 1,291,637 The above audited consolidated statement of changes in equity should be read in conjunction with the accompanying notes. Centamin Annual Report 2020 FINANCIAL STATEMENTSCONSOLIDATED STATEMENT OF CASH FLOWS for the year ended 31 December 2020 171 Cash flows from operating activities Cash generated from operating activities Income tax refund received Income tax paid Net cash generated by operating activities Cash flows from investing activities Acquisition of financial assets at fair value through profit or loss Disposal of financial assets at fair value through profit or loss Acquisition of property, plant and equipment Brownfield exploration and evaluation expenditure Finance income Net cash used in investing activities Cash flows from financing activities Own shares acquired Dividend paid – non-controlling interest in SGM Dividend paid – owners of the parent Net cash used in financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the year Effect of foreign exchange rate changes Cash and cash equivalents at the end of the year 31 December 2020 US$’000 31 December 2019 US$’000 Note 2.16(b) 453,315 249,048 – (10) 170 (214) 453,305 249,004 – 7,414 (127,099) (11,717) 1,554 (129,848) (3,298) (174,275) (138,725) (316,298) 7,159 278,229 5,893 291,281 (9,364) 6,799 (81,207) (12,198) 5,817 (90,153) – (87,075) (81,029) (168,104) (9,253) 282,627 4,855 278,229 2.3 2.4 2.16(a) The above audited consolidated statement of cash flows should be read in conjunction with the accompanying notes. Centamin Annual Report 2020 > Additional Information> Corporate Governance> Foreword> Financial Statements> Strategic Report172 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS for the year ended 31 December 2020 Basis of preparation These financial statements are denominated in US dollars (“US$”), 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 (“EU”) and interpretations issued from time to time by the IFRS Interpretations Committee (“IFRS IC”) both as adopted by the EU and which are mandatory for EU reporting as at 31 December 2020 and 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 and financial liabilities (including derivative) instruments at fair value through profit or loss. The consolidated financial statements for the year ended 31 December 2020 were authorised by the Board of Directors of the Company for issue on 22 March 2021. 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. 1. Current reporting period amendments 1.1 Changes in critical judgments and estimates There were no material 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 Group has applied the following standards and amendments for the first time for their annual reporting period commencing 1 January 2020: • Definition of Material – Amendments to IAS 1 and IAS 8; The amendments listed above did not have any impact on the amounts recognised in prior periods and are not expected to significantly affect the current or future periods. For a detailed discussion about the Group’s performance and financial position, please refer to the financial review. 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 Judgement: Control 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. Centamin Annual Report 2020 FINANCIAL STATEMENTS173 The consolidated financial statements include the information and results of each subsidiary and controlled entity 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. 1.3.1.1 Judgment: Accounting treatment of the Sukari Gold Mining Company (“SGM”) Pharaoh Gold Mines NL (the holder of an Egyptian branch) (“PGM”) and EMRA are 50:50 partners in SGM. However, SGM is fully consolidated within the Group as if it were a subsidiary due to it being a controlled entity, reflecting the substance and economic reality of the Concession Agreement (“CA”) (see note 4.1 and note 4.2 to the financial statements). IFRS 10 ‘consolidated financial statements’ defines control as encompassing three distinct principles, which, if present, identify the existence of control by an investor over an investee, hence forming a parent-subsidiary relationship. The principles are: 1. power over the investee; 2. exposure, or rights, to variable returns from its involvement with the investee; and 3. 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 Company’s control, through PGM, of SGM PGM is a 100% owned subsidiary of the Company. The Company, through PGM, has the right to appoint or remove the managing director of SGM under the terms of the CA and in doing so controls the activities in relation to the operation of SGM that most significantly affect the returns of SGM. These are all illustrated in the sections that follow: a) The duties of PGM • PGM controls the appointment of the General Manager (“GM”) at the Sukari Gold Mine; • By controlling the appointment of the GM and directing their activities, the GM will make all day-to-day decisions to allow the mine to operate in a manner that aligns with the Company’s objectives 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 (“LOM”) and approval of the same; • managing 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 LOM (i.e. exploration, development and production phases); • funding additional exploration and expansion programmes within the mine during the production phase; • taking 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. b) The duties of EMRA • EMRA must, under the terms of the CA, provide the required approvals to allow the mine to operate. Centamin Annual Report 2020 > Additional Information> Corporate Governance> Foreword> Financial Statements> Strategic Report174 1. Current reporting period amendments continued 1.3 Critical judgments and estimates in applying the entity’s accounting policies continued c) The duties, role, and function of the board of SGM: • The board of SGM has 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. • The board of SGM 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, review, and approve all the following in relation to SGM: • the budget; • the annual financial statements; • the cost recovery position; and • other compliance matters. • The board of SGM is not allowed to unreasonably withhold approval of any of the above. • If there is a disputed matter or deadlock position at an SGM board level, it is resolved as follows: • 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, under the 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, through PGM, is therefore exposed to the variable returns of SGM, 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 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. Centamin Annual Report 2020 FINANCIAL STATEMENTSfor the year ended 31 December 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED175 1.3.1.2 Judgment: Treatment and disclosure of EMRA profit share EMRA holds 50% of the shares in the Group controlled entity, 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(“NCI”) in SGM 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. 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, including current cost recovery payments due, 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 from 1 July 2016), 55/45 (second two years from 1 July 2018) and 50/50 (from 1 July 2020) 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. Centamin Annual Report 2020 > Additional Information> Corporate Governance> Foreword> Financial Statements> Strategic Report176 1. Current reporting period amendments continued 1.3 Critical judgments and estimates in applying the entity’s accounting policies continued 1.3.2 Judgment: Impairment trigger assessment IFRS requires management to test for impairment if events or changes in circumstances indicate that the carrying amount of a finite life asset may not be recoverable. Considering the requirements of IAS36 an impairment trigger assessment has been performed. Group operating assets As part of the impairment trigger assessment, management have also considered movements in the key assumptions which have historically been used in impairment assessments and are satisfied that there have not been any changes that would constitute an impairment trigger. These include changes to: • forecast gold prices; • discount rates; • production volumes; • reserves and resources report; and • costs, taking into consideration the impact of the solar plant on those costs and emissions targets; and • recovery rates. On review, no impairment triggers were identified. Exploration and evaluation assets 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 judgements 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 judgements 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 judgement is made that recovery of the expenditure is unlikely or the project is to be abandoned, this would constitute an impairment trigger which requires an impairment assessment to be performed. The result of that impairment assessment could be that the relevant capitalised amount will be written off to the income statement. On review, no impairment triggers were identified. 1.3.3 Judgment: 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 any financial settlement. The Group is currently a party to two significant legal actions in Egypt, both of which could adversely affect its profitability and, in the case of one of them, may affect its ability to operate the mine at Sukari in the manner in which it is currently operated. 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 continued to pay international prices for Diesel Fuel Oil until 2020, when the domestic subsidy on Diesel Fuel Oil was withdrawn. Consequently, there is no longer a distinction between domestic and international prices for Diesel Fuel Oil, and the Group is liable to pay the price announced quarterly by the Egyptian Ministry of Petroleum which is generally applicable. Centamin Annual Report 2020 FINANCIAL STATEMENTSfor the year ended 31 December 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED177 With respect to the Administrative Court ruling in the Concession Agreement case (discussed in note 5.1 below), 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 2016, the Company’s appeal was indefinitely stayed by the Supreme Administrative Court, pending judgment in a case currently before the Supreme Constitutional Court, the outcome of which may affect the Concession Agreement case. Further details are provided in note 5.1 below. 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 Group is in regular contact with its Egyptian lawyers, who are monitoring developments in the litigation cases on a day-to-day basis and is therefore in a position to react swiftly if and when action is required. 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 Estimate: Mineral Reserve and Resource statement impact on ore reserves The Group Mineral Reserve and Resource statement for SGM with an effective date of 31 December 2020 is contained in this report on page 216. The Mineral Reserve estimation has used an assumed gold price of US$1,450 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 Mineral Reserves. Assumptions that are valid at the time of estimation may change significantly when new information becomes available. 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. Please refer to the Mineral Reserve and Resource statement impact on ore reserves sensitivity, note 3.1.1(i). 1.3.5 Estimate: 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. COVID-19 The FRC has released updated guidelines regarding disclosure of “material uncertainties” related 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 possibility 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 has and will continue to have its effect, but currently there are no material financial implications to our operations, Sukari continues to operate with confirmed cases on site, gold sales are still commencing on a weekly basis. Weekly cash flow forecasts continue to be performed and distributions to EMRA and PGM are continuing at the moment, however these can be halted should cash be required locally. To date there has been no significant impact to critical stock on site and additional stock has been purchased where required, this is continuously being assessed and further backup plans are in place. Due to the current travel restrictions, the expatriates and Egyptian nationals on site are working longer shifts and are being compensated accordingly when this occurs, however everything possible is being done to assist them to meet their rotation schedules. Centamin Annual Report 2020 > Additional Information> Corporate Governance> Foreword> Financial Statements> Strategic Report178 1. Current reporting period amendments continued 1.3 Critical judgments and estimates in applying the entity’s accounting policies continued 1.3.5 Estimate: Going concern continued COVID-19 continued 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 2020 the Group had cash and cash equivalents of US$291 million and therefore it is very likely that liquidity security for the Group is given for at least twelve 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 and the 2021 budget to assess the potential downturn this pandemic could have on its business, the scenarios addressed were: • Open pit: 30% reduction in ore and waste; • Underground: 30% reduction in stoping and development; • Processing: 20% reduction in ore processed; • Processing: 50% reduction in ore processed; and • A combination of the first three reduction scenarios above. 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 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 a combination of the first three reduction scenarios above 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 22 March 2021. 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 CV-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, all corporate offices are currently open with strict COVID-19 protocols for the employees that choose to work from there, however, most employees are still 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. Based on a detailed cash flow forecast prepared by management, in which it included any reasonably possible change in the key assumptions on which the cash flow forecast is based and assessed 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 22 March 2021 and that at this point in time there are no material uncertainties regarding going concern. Key assumptions underpinning this forecast include: • available cash balances; • favourable litigation outcomes, for current litigation refer to note 5.1 to the financial statements; • gold price of US$1,450/oz.; and • production volumes in line with 2021 guidance. These financial statements for the year ended 31 December 2020 have therefore been prepared on a going concern basis, which contemplate the realisation of assets and liquidation of liabilities during the normal course of operations, in preparing these financial statements. Centamin Annual Report 2020 FINANCIAL STATEMENTSfor the year ended 31 December 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED179 1.3.6 Estimate: Long-term gold price used in the non-current stockpiles NRV assessment All inventories are stated at the lower of cost and net realisable value. Management and Directors believe that the estimates used regarding long-term gold prices in the non-current stockpiles NRV assessment are critical estimates and are realistic based on current information. Please refer to inventories, note 2.11. 1.3.7 Estimate: Restoration and rehabilitation provision unit rates 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$1.8 million impact on the provision and corresponding asset amounts, with a highly insignificant effect on the consolidated statement of comprehensive income. Please refer to note 2.13. 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 Additions to non-current assets mainly relate to Egypt and are disclosed in note 2.9. 31 December 2020 US$’000 31 December 2019 US$’000 921,427 35,766 467 898 958,558 888,681 35,845 524 556 925,606 Centamin Annual Report 2020 > Additional Information> Corporate Governance> Foreword> Financial Statements> Strategic Report180 2. How numbers are calculated continued 2.1 Segment reporting continued Statement of financial position by operating segment: 31 December 2020 Statement of financial position Total assets Total liabilities Net assets/total equity 31 December 2019 Statement of financial position Total assets Total liabilities Net assets/total equity Statement of comprehensive income by operating segment: For the year ended 31 December 2020 Statement of comprehensive income Revenue Cost of sales Gross profit Exploration and evaluation costs Other operating (costs)/income Other income Profit on financial assets at fair value through profit or loss Finance income Total US$’000 Egypt US$’000 Burkina Faso US$’000 Côte d’Ivoire US$’000 Corporate US$’000 1,395,876 1,077,949 (106,424) 1,289,452 (101,096) 976,853 37,001 (635) 36,366 1,087 (390) 697 279,839 (4,303) 275,536 Total US$’000 Egypt US$’000 Burkina Faso US$’000 Côte d’Ivoire US$’000 Corporate US$’000 1,372,439 1,048,764 (80,802) 1,291,637 (69,002) 979,762 36,904 (426) 36,478 1,282 (704) 578 285,489 (10,670) 274,819 Total US$’000 Egypt US$’000 Burkina Faso US$’000 Côte d’Ivoire US$’000 Corporate US$’000 828,737 828,737 (449,441) (449,441) 379,296 379,296 – – – – – – (17,391) (56,392) 6,972 960 1,554 – (2,803) (14,588) (30,760) 4,820 – 77 307 54 – – (197) 35 – – – – – – (25,742) 2,063 960 1,477 Profit/(loss) for the year before tax 314,999 353,433 (2,442) (14,750) (21,242) Tax (50) (50) – – – Profit/(loss) for the year after tax 314,949 353,383 (2,442) (14,750) (21,242) Profit/(loss) for the year after tax attributable to: – the owners of the parent(1) – non-controlling interest in SGM(1) 155,979 158,970 194,413 158,970 (2,442) (14,750) (21,242) – – – (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 was in place from 1 July 2018 to 30 June 2020 and 50%:50% split from 1 July 2020 onwards that occurs in practice, refer to the statement of cash flows by operating segment below for further information. Centamin Annual Report 2020 FINANCIAL STATEMENTSfor the year ended 31 December 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED181 For the year ended 31 December 2019 Statement of comprehensive income Revenue Cost of sales Gross profit Exploration and evaluation costs Other operating costs Other income Profit on financial assets at fair value through profit or loss Finance income 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$’000 652,344 (439,285) 213,059 (16,883) (38,709) 5,856 3,889 5,817 173,029 (112) 172,917 87,463 85,454 652,344 (439,285) 213,059 – (18,492) 6,105 – 42 200,714 (282) 200,432 114,978 85,454 – – – (2,715) (159) (55) – – (2,929) – (2,929) (2,929) – – – – (14,168) (205) (299) – – (14,672) – (14,672) (14,672) – – – – – (19,852) 105 3,889 5,775 (10,083) 170 (9,913) (9,913) – (1) Please note that the cost recovery model on which profit share is based under the Concession Agreement is different to the accounting results presented above due to various adjustments and as such the share of profit disclosed above is not reflective of the 55%:45% split that was in place from 1 July 2018 to 30 June 2020 and 50%:50% split from the 1 July 2020 onwards that occurs in practice, refer to the statement of cash flows by operating segment below for further information. Statement of cash flows by operating segment: For the year ended 31 December 2020 Statement of cash flows Net cash generated by/(used in) operating activities (1) Net cash (used in)/generated by investing activities Net cash (used in)/generated by financing activities Own shares acquired Dividend paid – non-controlling interest in SGM Dividend paid – controlling interest in SGM Dividend paid – owners of the parent Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the year Effect of foreign exchange rate changes Cash and cash equivalents at the end of the year Total US$’000 Egypt US$’000 Burkina Faso US$’000 Côte d’Ivoire US$’000 Corporate US$’000 453,305 517,341 (129,848) (138,722) (3,298) (174,275) – (138,725) 7,159 278,229 5,893 291,281 – (174,275) (196,725) – 7,619 5,881 (3,608) 9,893 343 (3) – – – – 340 16 (351) 5 (41) (65) – – – – (106) 562 – 456 (64,338) 8,942 (3,298) – 196,725 (138,725) (694) 271,770 9,852 280,927 (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. Centamin Annual Report 2020 > Additional Information> Corporate Governance> Foreword> Financial Statements> Strategic Report182 2. How numbers are calculated continued 2.1 Segment reporting continued Statement of cash flows by operating segment: continued For the year ended 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)/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 year Effect of foreign exchange rate changes Cash and cash equivalents at the end of the year Total US$’000 Egypt US$’000 Burkina Faso US$’000 Côte d’Ivoire US$’000 Corporate US$’000 249,004 (90,153) (87,075) – (81,029) (9,253) 282,627 4,855 278,229 285,534 (92,571) (87,075) (106,425) – (537) 3,714 2,704 5,881 (282) (4) – – – (286) 28 274 16 777 (160) – – – 617 241 (296) 562 (37,025) 2,582 – 106,425 (81,029) (9,047) 278,644 2,173 271,770 (1) Please note that the cash generated by operating activities for Burkina Faso and Côte d’Ivoire are affected by the movements in working capital, specifically intercompany loans, with its direct parent entity Centamin West Africa Holdings Limited which is included within the corporate segment. Exploration expenditure by operating segment: The following table provides a breakdown of the total exploration expenditure of the Group by operating segment: Burkina Faso Côte d’Ivoire Egypt (Sukari tenement including Cleopatra excluding pre-production gold sales adjustment) Total exploration expenditure ACCOUNTING POLICY: SEGMENT REPORTING For the year ended 31 December 2020 US$’000 For the year ended 31 December 2019 US$’000 2,803 14,588 11,717 29,108 2,715 14,168 16,478 33,361 Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Board of Directors. 2.2 Revenue An analysis of the Group’s revenue for the year, from continuing operations, is as follows: Gold sales (Including pre-production gold sales related to Cleopatra) Less: Pre-production gold sales related to Cleopatra – transferred to exploration and evaluation asset Gold sales (Excluding pre-production gold sales related to Cleopatra) Silver sales For the year ended 31 December 2020 US$’000 For the year ended 31 December 2019 US$’000 827,622 – 827,622 1,115 828,737 657,124 (5,767) 651,357 987 652,344 All gold and silver sales during the year were made to a single customer in North America, Asahi Refining Canada Ltd. Centamin Annual Report 2020 FINANCIAL STATEMENTSfor the year ended 31 December 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED183 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 SGM. 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. 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 For the year ended 31 December 2020 US$’000 For the year ended 31 December 2019 US$’000 6,922 50 6,972 1,554 5,806 50 5,856 5,817 Mine production costs (Including costs related to gold produced from Cleopatra) (339,012) (353,232) Mine production costs related to gold produced from Cleopatra – transferred to exploration and evaluation asset Mine production costs Movement in inventory Depreciation and amortisation – (339,012) 13,704 (124,133) (449,441) 1,487 (351,745) 28,254 (115,794) (439,285) Centamin Annual Report 2020 > Additional Information> Corporate Governance> Foreword> Financial Statements> Strategic Report184 2. How numbers are calculated continued 2.3 Profit before tax continued Other operating costs Corporate compliance Fees payable to the external auditors Corporate consultants Communications and IT Salaries and wages Travel, accommodation, and entertainment Short term leases Other administration expenses Insurances Other taxes Employee equity settled share-based payments Corporate costs (sub-total) Other provisions Net movement on provision for stock obsolescence Inventory written off Prepayments written off Office related depreciation Royalty – attributable to the ARE government Bank charges Finance charges (Loss)/gain on disposal of asset For the year ended 31 December 2020 US$’000 For the year ended 31 December 2019 US$’000 (3,049) (924) (4,033) (430) (7,262) (397) (146) (1,270) (897) (7) 836 (17,579) (10,309) (958) (29) (986) (379) (24,792) (179) (558) (623) (56,392) (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 (38,709) 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. Centamin Annual Report 2020 FINANCIAL STATEMENTSfor the year ended 31 December 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED185 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’. 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 2020 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 For the year ended 31 December 2020 US$’000 For the year ended 31 December 2019 US$’000 Statement of comprehensive income Profit for the year after tax attributable to the non-controlling interest in SGM (1) 158,970 85,454 Statement of financial position Total equity attributable to non-controlling interest in SGM (1) (opening) Profit for the year after tax attributable to the non-controlling interest in SGM(1) Dividend paid – non-controlling interest in SGM Total equity attributable to non-controlling interest in SGM (1) (closing) (1,891) 158,970 (174,275) (17,196) (270) 85,454 (87,075) (1,891) (1) Profit share commenced during the third quarter of 2016. The first two years was a 60:40 split of net production surplus to PGM and EMRA respectively. From 1 July 2018 this changed to a 55:45 split for the next two-year period until 30 June 2020, after which all net production surpluses have been split 50:50. Any variation between payments made during the year (which are based on the Company’s estimates) and the SGM audited financial statements, may result in a balance due and payable to EMRA or advances to be offset against future distributions. This will be reflected as an amount attributable to the non-controlling interest in SGM on the statement of financial position and statement of changes in equity. (b) Statement of cash flows impact Statement of cash flows Dividend paid – non-controlling interest in SGM (1) For the year ended 31 December 2020 US$’000 For the year ended 31 December 2019 US$’000 (174,275) (87,075) (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. Centamin Annual Report 2020 > Additional Information> Corporate Governance> Foreword> Financial Statements> Strategic Report186 2. How numbers are calculated continued 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 (“PGM”) has entered into a Concession Agreement (“CA”) that provides that the income generated by SGM’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 CA grants certain tax exemptions, including the following: • from 1 April 2010, being the date of commercial production, SGM is entitled to a 15-year exemption from any taxes imposed by the Egyptian government on the revenues generated from SGM. 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 SGM. 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 SGM; • 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. 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. Centamin Annual Report 2020 FINANCIAL STATEMENTSfor the year ended 31 December 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDTax 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 187 For the year ended 31 December 2020 US$’000 For the year ended 31 December 2019 US$’000 (50) – (50) (112) – (112) 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) (2019: 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 For the year ended 31 December 2020 US$’000 For the year ended 31 December 2019 US$’000 314,999 – (50) (50) 173,029 – (112) (112) (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 (2019: 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 2020 US$’000 31 December 2019 US$’000 267 – 227 – 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. Centamin Annual Report 2020 > Additional Information> Corporate Governance> Foreword> Financial Statements> Strategic Report188 2. How numbers are calculated continued 2.6 Financial assets at fair value through profit or loss Balance at the beginning of the year 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 2020 US$’000 31 December 2019 US$’000 6,454 – (7,414) 960 – – – 9,364 (6,799) 4,041 (152) 6,454 The financial assets at fair value through profit or loss at 31 December 2020 relates to an equity interest in a listed public company which 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. 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. Centamin Annual Report 2020 FINANCIAL STATEMENTSfor the year ended 31 December 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED189 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. 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. 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. Centamin Annual Report 2020 > Additional Information> Corporate Governance> Foreword> Financial Statements> Strategic Report190 2. How numbers are calculated continued 2.7 Trade and other receivables Non-current Other receivables – deposits Current Gold and silver sales debtors Other receivables 31 December 2020 US$’000 31 December 2019 US$’000 103 103 93 93 31 December 2020 US$’000 31 December 2019 US$’000 12,492 5,932 18,424 34,695 12,366 47,061 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 eight days (2019: 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. 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 2020 US$’000 31 December 2019 US$’000 8,908 – 8,908 4,776 1,356 6,132 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$367.2 million to 31 December 2020, of which US$4.3 million relates to and was provided for during 2020. All fuel subsidies provided by the Egyptian Government were removed in 2020. Centamin Annual Report 2020 FINANCIAL STATEMENTSfor the year ended 31 December 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUEDIn order to allow a better understanding of the financial statements presented within the consolidated financial statements, and specifically the Group’s underlying business performance, the effect of the DFO dispute is shown below. 191 Movement in fuel prepayments Balance at the beginning of the year Fuel prepayment recognised Less: Provision charged to: Mine production costs Property, plant and equipment Inventories Balance at the end of the year Cumulative fuel prepayment and provision recognised Fuel prepayment recognised Less: provision charged to: Mine production costs Property, plant and equipment Inventories 31 December 2020 US$’000 31 December 2019 US$’000 1,356 4,342 (2,126) (4,231) 659 – 1,547 35,922 (31,058) (5,712) 657 1,356 31 December 2020 US$’000 31 December 2019 US$’000 367,228 362,885 (335,231) (31,997) – (333,104) (27,766) (659) This has resulted in a net charge of US$11 million in the profit and loss for the year. Expenses Cost of sales Mine production costs Movement in inventory Depreciation and amortisation For the year ended 31 December 2020 For the year ended 31 December 2019 Before adjustment US$’000 Adjustment US$’000 Total US$’000 Before adjustment US$’000 Adjustment US$’000 Total US$’000 (336,886) 22,397 (124,133) (438,622) (2,126) (8,693) – (10,819) (339,012) 13,704 (124,133) (449,441) (320,687) 25,159 (115,794) (411,322) (31,058) 3,095 – (27,963) (351,745) 28,254 (115,794) (439,285) Centamin Annual Report 2020 > Additional Information> Corporate Governance> Foreword> Financial Statements> Strategic Report192 2. How numbers are calculated continued 2.9 Property, plant and equipment (“PPE”) Office equipment US$’000 Buildings US$’000 Plant and equipment US$’000 Mining equipment US$’000 Mine development properties US$’000 Capital work in progress US$’000 Total US$’000 Balance at 31 December 2020 (7,542) (1,641) (242,853) (298,572) (317,514) Year ended 31 December 2020 Cost Balance at 1 January 2020 Additions Additions: IFRS16 right of use assets Increase in rehabilitation asset Transfers from capital work in progress Transfers from exploration and evaluation asset Disposals Disposals: IFRS16 right of use assets 7,789 73 – – 930 – – – Balance at 31 December 2020 8,792 Accumulated depreciation and amortisation Balance at 1 January 2020 Depreciation and amortisation Disposals (6,974) (568) – 3,533 203 1,604 – 480 – – (130) 5,690 (1,097) (609) 65 Year ended 31 December 2019 Cost Balance at 1 January 2019 Additions Additions: IFRS16 right of use assets Increase in rehabilitation asset Transfers from capital work in progress Transfers from exploration and evaluation asset Disposals Disposals: IFRS16 right of use assets Balance at 31 December 2019 Accumulated depreciation and amortisation Balance at 1 January 2019 Depreciation and amortisation Disposals 7,307 73 – – 409 – – – 7,789 (6,384) (590) – 2,347 – 1,229 – 25 – – (68) 3,533 (695) (403) 1 613,792 334,119 561,780 28,584 1,549,597 141 – – 153 47 – – – 5,574 – – 126,529 127,099 3,784 25,787 78,988 (109,969) – (110) (142) – 16,154 (1,097) – – – – (590) – 1,651 5,574 – 16,154 (1,797) (272) 617,465 359,009 662,496 44,554 1,698,006 (213,681) (250,519) (272,609) (29,303) (49,127) (44,905) 131 1,074 – 604,158 59 298 – 309,788 10,069 95 – 9,292 14,189 – (15) – – (22) – 517,629 689 – 570 39,678 3,214 – – – – – – 23,482 68,695 – – (63,593) – – – (744,880) (124,512) 1,270 (868,122) 1,464,711 79,586 1,622 570 – 3,214 (37) (68) 613,792 334,119 561,780 28,584 1,549,597 (185,075) (205,103) (231,467) (28,613) (45,438) (41,142) 7 22 – – – – – (628,724) (116,186) 30 (744,880) Balance at 31 December 2019 (6,974) (1,097) (213,681) (250,519) (272,609) Net book value As at 31 December 2020 As at 31 December 2019 1,250 815 4,049 2,436 374,612 400,111 60,437 344,982 44,554 829,884 83,600 289,171 28,584 804,717 Included within the depreciation charge is US$0.5 million within the buildings asset class and US$0.1 million related to plant and equipment in relation to depreciation of ROU assets (2019: US$0.4 million buildings and plant and equipment). An impairment trigger assessment was performed in 2020 on the Sukari Cash Generating Unit (“CGU”), refer to note 1.3.2 above, however no impairment triggers were identified in the assessment. Assets that have been cost recovered under the terms of the Concession Agreement (“CA”) 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 CA. Centamin Annual Report 2020 FINANCIAL STATEMENTSfor the year ended 31 December 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED193 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 tonne 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. Centamin Annual Report 2020 > Additional Information> Corporate Governance> Foreword> Financial Statements> Strategic Report 194 2. How numbers are calculated continued 2.10 Exploration and evaluation asset Balance at the beginning of the year Expenditure for the year 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 2020 US$’000 31 December 2019 US$’000 68,138 11,717 – (16,154) 63,701 59,154 16,478 (4,280) (3,214) 68,138 The exploration and evaluation asset relates to the drilling, geological exploration and sampling of potential ore reserves and can be attributed to Egypt (US$28.5 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 trigger assessment was performed in 2020 on the Exploration and Evaluation asset (“CGU”), refer to note 1.3.2 of above, however no impairment triggers were identified in the assessment. 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. 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 Centamin Annual Report 2020 FINANCIAL STATEMENTSfor the year ended 31 December 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED195 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 Inventories 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 1.35% over the expected life of the asset to an future expected selling price, this was assessed using two different future expected selling prices: • US$1,891 per ounce which was the year end spot price. This resulted in headroom of US$78 million above the cost; and • US$1,450 per ounce which was the three-year internal budgeted gold price used in the going concern and viability assessments. This resulted in headroom of US$10 million above the cost. US$1,386 per ounce which was calculated as the breakeven selling price. The net realisable value was the higher than the cost in of all of the above scenarios and as such it is valued at cost. Non-current Mining stockpiles Current Mining stockpiles, ore in circuit, doré supplies Stores inventory Provision for obsolete stores inventory 31 December 2020 US$’000 31 December 2019 US$’000 64,870 64,870 52,658 52,658 31 December 2020 US$’000 31 December 2019 US$’000 40,112 81,383 (2,790) 118,705 38,620 72,169 (1,832) 108,957 Stores inventories written off in the year total US$0.03 million as per note 2.3 (2019: US$0.6 million). Centamin Annual Report 2020 > Additional Information> Corporate Governance> Foreword> Financial Statements> Strategic Report196 2. How numbers are calculated continued 2.11 Inventories continued ACCOUNTING POLICY: INVENTORIES Inventories include mining stockpiles, gold in circuit, doré supplies and stores and materials. All inventories 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 Non-current Other creditors Current Trade payables Other creditors and accruals 31 December 2020 US$’000 31 December 2019 US$’000 1,437 – 31 December 2020 US$’000 31 December 2019 US$’000 31,483 33,005 64,488 27,249 30,162 57,411 Trade payables principally comprise the amounts outstanding for trade purchases and ongoing costs. The average credit period taken for trade purchases is 26 days (2019: 23 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 Directors consider that the carrying amount of trade payables approximate their fair value. Centamin Annual Report 2020 FINANCIAL STATEMENTSfor the year ended 31 December 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED197 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 twelve 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) Provision for cost recovery items(2) Other current provisions(3) Non-current Restoration and rehabilitation(4) Provision for cost recovery items(2) 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 2020 US$’000 31 December 2019 US$’000 1,440 5,089 951 7,480 20,496 12,229 27 32,752 14,572 5,574 350 20,496 701 7,060 828 8,589 14,572 – 3 14,575 13,591 570 411 14,572 (1) Employee benefits relate to annual, sick and long service leave entitlements and bonuses. (2) Provision held for in-country settlement of cost recovery items relating to EMRA, The amount is based on the written offer proposed to EMRA in March 2021 to settle all outstanding matters which includes payment of US$17.6 million spread over a 5.5 year period, this was discounted to present value. The prior year provision was based on a probability weighted outcome of the matters under discussion which are being finalised as part of the proposed settlement. (3) Provision for customs, rebates and withholding taxes. (4) The provision for restoration and rehabilitation has all been discounted by 1.35% (2019: 2.40%) using a US$ applicable rate and inflation applied at 1.23% (2019: 1.77%). The annual review undertaken as at 31 December 2020 has resulted in a US$5.6 million increase in the provision (2019: US$0.57 million). 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 are considered to be the key assumption within the estimate which range between $0.33/m2 to $6.62/m2. A 10% change in these unit and fixed costs would have a US$1.8 million impact on the provision and corresponding asset amounts, with a minimal effect on the consolidated statement of comprehensive income. 10% is chosen as an appropriate sensitivity as this is in line with the year on year increase in nominal cost base, when excluding one-off changes in relation to increases in rehabilitation site areas. In 2021, in line with the Life of Asset Review Centamin will commence a full review of the restoration and rehabilitation plan for Sukari which could result in a change in the provision recognised to date. Centamin Annual Report 2020 > Additional Information> Corporate Governance> Foreword> Financial Statements> Strategic Report 198 2. How numbers are calculated continued 2.13 Provisions continued 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 in accordance with the requirements of the Concession Agreement. 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 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 at the end of the life of mine. 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. Discount rates to present value the future obligations are determined by reference to market risk free rates for periods which approximate the period of the associated obligation. 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 year Own shares acquired during the year Employee share option scheme – proceeds from shares issued Transfer from share option reserve Balance at end of the year 31 December 2020 31 December 2019 Number US$’000 Number US$’000 1,155,955,384 – – – 672,105 (3,298) – – 1,154,722,984 – 1,232,400 – 1,155,955,384 668,807 1,155,955,384 670,589 – 1,312 204 672,105 The authorised share capital is an unlimited number of no par value shares. At 31 December 2020, the trustee of the deferred bonus share plan held 2,373,049 ordinary shares (2019: 473,049 ordinary shares) pursuant to the plan rules. Fully paid ordinary shares carry one vote per share and carry the right to dividends. See note 6.3 for more details of the share options. ACCOUNTING POLICY: ISSUED CAPITAL Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. Where the Company or other members of the consolidated Group purchase the Company’s equity share capital, the consideration paid is deducted from the total shareholders’ equity of the Group and/or of the Company as treasury shares until they are cancelled. Where such shares are subsequently sold or reissued, any consideration received is included in shareholders’ equity of the Group and/or the Company. Centamin Annual Report 2020 FINANCIAL STATEMENTSfor the year ended 31 December 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED2.15 Share option reserve Share option reserve Balance at beginning of the year Share-based payments expense Transfer to accumulated profits Transfer to issued capital Balance at the end of the year 199 31 December 2020 US$’000 31 December 2019 US$’000 4,179 3,190 (4,026) – 3,343 5,688 2,646 (2,639) (1,516) 4,179 The share option reserve arises on the grant of share options to employees under the employee share option plan. Amounts are transferred out of the reserve and into issued capital when the options and warrants are exercised/vested. Amounts are transferred out of the reserve into accumulated profits when the options and warrants are forfeited. 2.16 Cash flow information (a) Reconciliation of cash and cash equivalents For the purpose of the statement of cash flows, cash and cash equivalents includes cash on hand and at bank and deposits. Cash and cash equivalents ACCOUNTING POLICY: CASH AND CASH EQUIVALENTS 31 December 2020 US$’000 31 December 2019 US$’000 291,281 278,229 Cash comprises cash on hand and demand deposits. Cash equivalents are short term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. (b) Reconciliation of profit for the year to cash flows from operating activities Profit for the year before tax Adjusted for: Profit on financial assets at fair value through profit or loss Depreciation/amortisation of property, plant and equipment Inventory written off Prepayments written off Inventory obsolescence provision Foreign exchange gains, net Share-based payments (credit)/expense Finance income Loss/(gain) on disposal of property, plant and equipment Changes in working capital during the year: Decrease/(increase) in trade and other receivables (Increase) in inventories (Increase)/decrease in prepayments Increase in trade and other payables Increase in provisions Cash flows generated from operating activities (c) Non-cash financing and investing activities During the year there have been no non-cash financing and investing activities. For the year ended 31 December 2020 US$’000 For the year ended 31 December 2019 US$’000 314,999 173,029 (960) 124,512 29 986 958 (6,921) (836) (1,554) 623 28,637 (22,919) (2,785) 7,076 11,470 453,315 (3,889) 116,187 594 – (1,500) (5,806) 7 (5,817) (137) (13,619) (30,141) 559 18,167 1,414 249,048 Centamin Annual Report 2020 > Additional Information> Corporate Governance> Foreword> Financial Statements> Strategic Report200 3. Group financial risk and capital management 3.1 Group financial risk management 3.1.1 Financial instruments (a) Group risk management The Group manages its capital to ensure that entities within the Group will be able to continue as a going concern while maximising the return to stakeholders through the optimisation of the cash and equity balance. The Group’s overall strategy remains unchanged from the previous financial period. The Group has no debt and thus not geared at the year end or in the prior year. The capital structure consists of cash and cash equivalents and equity attributable to equity holders of the parent, comprising issued capital and reserves as disclosed in notes 2.14 and 2.15. The Group operates in Australia, Jersey, Egypt, Burkina Faso and Côte d’Ivoire. None of the Group’s entities are subject to externally imposed capital requirements. The Group utilises inflows of funds toward the ongoing exploration and development of SGM in Egypt, and the exploration projects in Burkina Faso and Côte d’Ivoire. Categories of financial assets and liabilities Financial assets Cash and cash equivalents Trade and other receivables (excluding VAT receivables) Financial assets at fair value through profit or loss Financial liabilities Trade and other payables (b) Financial risk management and objectives 31 December 2020 US$’000 31 December 2019 US$’000 291,281 17,593 – 308,874 278,229 46,320 6,454 331,003 64,488 57,411 The Group’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential risk adverse effects and ensure that net cash flows are sufficient to support the delivery of the Group’s financial targets whilst protecting future financial security. The Group continually monitors and tests its forecast financial position against these objectives. The Group’s activities expose it to a variety of financial risks: market, commodity, credit, liquidity, foreign exchange, and interest rate. These risks are managed under Board approved directives through the Audit and Risk Committee. The Group’s principal financial instruments comprise interest bearing cash and cash equivalents. Other financial instruments include trade receivables and trade payables, which arise directly from operations. It is, and has been throughout the period under review, Group policy that no speculative trading in financial instruments be undertaken. (c) Market risk The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the Australian dollar, Great British pound and Egyptian pound. Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities that are denominated in a currency that is not the entity’s functional currency. The risk is measured by regularly monitoring, forecasting and performing sensitivity analyses on the Group’s financial position. Centamin Annual Report 2020 FINANCIAL STATEMENTSfor the year ended 31 December 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED201 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 2020 US$’000 31 December 2019 US$’000 31 December 2020 US$’000 31 December 2019 US$’000 31 December 2020 US$’000 31 December 2019 US$’000 4,997 – 4,997 2,682 2,682 2,315 1,999 – 1,999 224 224 1,775 17,566 – 17,566 19,883 19,883 (2,317) 1,339 6,454 7,793 10,192 10,192 (2,399) 2,057 – 2,057 13,829 13,829 (11,772) 2,141 – 2,141 (858) (858) 2,999 The following table summarises the sensitivity of financial instruments held at the reporting date to movements in the exchange rate of the Great British pound, Egyptian pound and Australian dollar to the US dollar, with all other variables held constant. The sensitivities are based on reasonably possible changes over a financial period, using the observed range of actual historical rates. US$/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$/EGP decrease by 10% Impact on profit Impact on equity 31 December 2020 US$’000 31 December 2019 US$’000 31 December 2020 US$’000 31 December 2019 US$’000 555 (680) 588 (718) (655) 799 161 (197) (805) 984 273 (333) – – – – – – – – (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$211,212) and West African Franc (US$460,730), and net payables in Euro (US$4,110,508) and in West African Franc (US$951,748). A movement of 10% up or down in these currencies would have a negligible effect on the assets/liabilities. The Group has not entered into forward foreign exchange contracts. Natural hedges are utilised wherever possible to offset foreign currency liabilities. The Company maintains a policy of not hedging its currency positions and maintains currency holdings in line with underlying requirements and commitments. Centamin Annual Report 2020 > Additional Information> Corporate Governance> Foreword> Financial Statements> Strategic Report202 3. Group financial risk and capital management continued 3.1 Group financial risk management continued 3.1.1 Financial instruments continued (d) Commodity price risk The Group’s future revenue forecasts are exposed to commodity price fluctuations, in particular gold and fuel prices. The Group has not entered into forward gold hedging contracts. Gold price The table below summarises the impact of increases/decreases of the average realised gold price on the Group’s profit after tax for the year. The analysis assumes that the average realised gold price per ounce had increased/decreased by 10% with all other variables held constant. Average realised gold price Profit after tax Fuel price Decrease by 10% US$/oz 31 December 2020 US$/oz Increase by 10% US$/oz 1,589 1,766 1,942 Decrease by 10% US$’000 31 December 2020 US$’000 Increase by 10% US$’000 233,588 314,949 394,147 Any variation in the fuel price has an impact on the mine production costs. The analysis assumes that the average fuel price had increased/decreased by a few US cents per litre with all other variables held constant. Fuel price Mine production costs (e) Interest rate risk and liquidity risk Decrease by 10% US$/litre 31 December 2020 US$/litre Increase by 10% US$/litre 0.41 0.45 0.50 Decrease by 10% US$’000 31 December 2020 US$’000 Increase by 10% US$’000 (7,416) (339,012) 7,416 The Group’s main interest rate risk arises from cash and short-term deposits and is not considered to be a material risk due to the short-term nature of these financial instruments. Cash deposits are placed on term period of no more than 30 days at a time. The financial instruments exposed to interest rate risk and the Group’s exposure to interest rate risk as at the balance sheet date were as per the table below. The Group’s liquidity position is managed to ensure that sufficient funds are available to meet its financial commitments in a timely and cost-effective manner. Ultimate responsibility for liquidity risk management rests with the Board, which has established an appropriate management framework for the management of the Group’s funding requirements. The Group manages liquidity risk by maintaining adequate cash reserves and management monitors rolling forecasts of the Group’s liquidity on the basis of expected cash flow. The tables in section (a) to (c) of this note above reflect a balanced view of cash inflows and outflows and show the implied risk based on those values. Trade payables and other financial liabilities originate from the financing of assets used in the Group’s ongoing operations. These assets are considered in the Group’s overall liquidity risk. Management continually reviews the Group’s liquidity position including cash flow forecasts to determine the forecast liquidity position and maintain appropriate liquidity levels. Centamin Annual Report 2020 FINANCIAL STATEMENTSfor the year ended 31 December 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED 203 Weighted average effective interest rate % Less than one month US$’000 One to twelve months US$’000 Total US$’000 0.42% – – 1.32% – – 111,147 47,718 158,865 66,694 66,694 162,360 57,853 220,213 57,567 57,567 150,009 – 150,009 – – 110,790 – 110,790 – – 261,156 47,718 308,874 66,694 66,694 273,149 57,853 331,003 57,567 57,567 31 December 2020 Financial assets Variable interest rate instruments Non-interest bearing Financial liabilities Non-interest bearing 31 December 2019 Financial assets Variable interest rate instruments Non-interest bearing Financial liabilities Non-interest bearing (f) Credit risk 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. Centamin Annual Report 2020 > Additional Information> Corporate Governance> Foreword> Financial Statements> Strategic Report204 3. Group financial risk and capital management continued 3.1 Group financial risk management continued 3.1.1 Financial instruments continued (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). Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss Level 1 US$’000 – Level 1 US$’000 6,454 2020 Level 2 US$’000 – 2019 Level 2 US$’000 – Level 3 US$’000 – Level 3 US$’000 – Total US$’000 – Total US$’000 6,454 There were no financial assets or liabilities subsequently measured at fair value on Level 3 fair value measurement bases. (i) Mineral reserve and resource statement impact on 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 SGM 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 25% 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 25% US$’000 31 December 2020 US$’000 Increase by 25% US$’000 (1,161) (58,711) 330,014 814,916 (871) (44,033) 344,982 829,884 (653) (33,025) 356,208 841,110 • safeguard their ability to continue as a going concern, so that they can continue to provide returns for shareholders and benefits for other stakeholders; and • maintain an optimal capital structure to reduce the cost of capital. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to owners of the parent, return capital to owners of the parent or issue new shares. Centamin Annual Report 2020 FINANCIAL STATEMENTSfor the year ended 31 December 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED3.2.2 Dividends to owners of the parent Ordinary shares Q1 interim dividend for the year ended 31 December 2020 of 6.0 US cents per share (2019: Final dividend for the year ended 31 December 2018 of 3.0 US cents per share) Q2 Interim dividend for the year ended 31 December 2020 of 6.0 US cents per share (2019: Interim dividend for the year ended 31 December 2019 of 4.0 US cents per share) Total dividends provided for or paid Dividends to owners of the parent: Paid in cash 4. Group structure 205 31 December 2020 US$’000 31 December 2019 US$’000 69,240 69,485 138,725 138,725 34,672 46,357 81,029 81,029 4.1 Subsidiaries and controlled entities The parent entity of the Group is Centamin plc, incorporated in Jersey, and the details of its subsidiaries and controlled entities are as follows: Nature of activity Country of incorporation 31 December 2020 % 31 December 2019 % Ownership interest Centamin Egypt Limited Pharaoh Gold Mines NL (holder of an Egyptian branch) Sukari Gold Mining Company(10) Centamin Group Services UK Limited 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 Resources Burkina Faso Konkera SA Ampella Mining Côte d’Ivoire Centamin Côte d’Ivoire Ampella Mining Exploration CDI Centamin Exploration CI Holding company Holding company Mining Company Services Company Holding company Holding company Exploration Company Services Company Holding company Holding company Holding company Holding company Exploration Company Exploration Company Exploration Company Mining Company Exploration Company Exploration Company Exploration Company Exploration Company Australia(2) Australia(2) Egypt(5) UK(3) UK(4) UK(4) UK(4) Jersey(9) Jersey(9) Jersey(9) Bermuda(8) Australia(2) Burkina Faso(6) Burkina Faso(6) Burkina Faso(6) Burkina Faso(6) Côte d’Ivoire(7) Côte d’Ivoire(7) Côte d’Ivoire(7) Côte d’Ivoire(7) 100 100 50 100 100 100 100 100 100 100 100 100 100 100 100 90 100 100 100 100 100 100 50 – 100 100 100 100 100 100 100 100 100 100 100 90 100 100 100 100 (1) Previously Sheba Exploration (UK) plc.(2) Address of all Australian entities: Suite 8, 7 The Esplanade, Mount Pleasant, WA 6153. (3) Address of Centamin Group Services UK Limited, Second Floor, 9-10 Savile Row, London, W1S 3PF. (4) Address of all other UK entities: Hill House, 1 Little New Street, London, EC4A 3TR. (5) Address of all Egypt entities: 361 El-Horreya Road, Sedi Gaber, Alexandria, Egypt. (6) 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. (7) Address of all Côte d’Ivoire entities: 20 BP 945 Abidjan 20. (8) Address of Bermuda entity: Appleby Corporate Services (Bermuda) Ltd, Canon’s Court, 22 Victoria Street, Hamilton HM EX, Bermuda. (9) Address of all Jersey entities: 2 Mulcaster Street, St Helier, Jersey JE2 3NJ. (10) Sukari Gold Mining Company is fully consolidated within the Group under IFRS 10 ‘Consolidated financial statements’ as if it were a subsidiary due to it being a controlled entity, reflecting the substance and economic reality of the Concession Agreement (“CA”) (see note 1.3.1, note 4.1 and note 4.2). Centamin Annual Report 2020 > Additional Information> Corporate Governance> Foreword> Financial Statements> Strategic Report 206 4. Group structure continued 4.1 Subsidiaries continued Through its wholly owned subsidiary, PGM, the Company entered into the Concession Agreement (“CA”) 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 CA 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 CA. Responsibility for the day-to-day management of the project rests with the general manager, who is appointed by PGM. The fiscal terms of the CA require that PGM solely funds SGM. PGM is however entitled to recover from sales revenue recoverable costs, as defined in the CA. 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 CA are recognised as dividend paid to the non-controlling interest in SGM. 4.2 Joint arrangements The consolidated entity has interests in the following joint arrangements: Name of joint operation Sukari Gold Mining Company (1) Egyptian Pharaoh Investments (2) Percentage interest 31 December 2020 % 31 December 2019 % 50 50 50 50 (1) Sukari Gold Mining Company is fully consolidated within the Group under IFRS 10 ‘Consolidated financial statements’ as if it were a subsidiary due to it being a controlled entity, reflecting the substance and economic reality of the Concession Agreement (“CA”) (see note 1.3.1, note 4.1 and note 4.2). (2) Dormant company. The Group has a US$1 (cash) interest in the Egyptian Pharaoh Investments 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 CA (see note 1.3.1 note 4.1 and note 4.2). 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 was notified by Chevron, its supplier of Diesel Fuel Oil, that, on the instructions of the Egyptian General Petroleum Corporation (“EGPC”), Chevron would only be able to supply Diesel Fuel Oil to the mine at Sukari at international prices rather than at local subsidised prices which had been charged prior to that date. It is understood that EGPC had been advised by 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. On 19 June 2012, legal proceedings were issued by PGM in the Administrative Court against EGPC and the Minister of Petroleum, alleging that the withdrawal of the subsidy was unlawful. 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, amounting to EGP403 million (approximately US$25.9 million at current exchange rates). EGPC filed a counterclaim against PGM for this amount. Centamin Annual Report 2020 FINANCIAL STATEMENTSfor the year ended 31 December 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED207 In September 2016, the State Commissioner issued a report on the case, which was unfavourable to PGM, although this report is not binding on the court. In June 2020 the Administrative Court issued a judgment rejecting PGM’s claim on procedural grounds, and at the same time it also rejected EGPC’s counterclaim. The Court did not consider the merits of either PGM’s case or the counterclaim. The Group’s legal advisers remain of the view that the Group has a strong case and have advised that the judgment against PGM is based on an error of law. The Group has therefore submitted an appeal, as has EGPC. In September 2020 both appeals were referred to the State Commissioner for preparation of a legal report, which is expected later this year. If either appeal is successful, the case will be returned to the Administrative Court for consideration of the relevant claim or claim on its merits. The Group believes that its grounds for challenging EGPC’s decision 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 continued to advance funds to its fuel supplier based on the international price for fuel from 2012 until the withdrawal of the domestic subsidy for Diesel Fuel Oil in 2020. Should this court action be successfully concluded the Group will look to recover the excess funds advanced. 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$367 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 2020. 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. 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 immediate 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 Group believes this demonstrates the government’s commitment to their investment at Sukari and the government’s desire to stimulate further investment in the Egyptian mining industry. In 2016 the Supreme Administrative Court 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 right of third parties to challenge contractual agreements between the Egyptian government and an investor and has partial retrospective effect, applying to any cases then before the courts but in which no final judgment had been given. The validity of this law, which was ratified by the Egyptian parliament in 2016, is currently under review by the Supreme Constitutional Court (“SCC”). In 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 took the view that Law no. 32 was unconstitutional. The State Commissioner’s report and complementary report are advisory and non-binding on the SCC. If Law 32 is upheld, it is expected that a decision to uphold the Company’s appeal would be taken in a relatively short time frame. If Law 32 is held to be invalid, it is possible that the Egyptian Government could introduce further legislative changes either to amend or replace Law 32, in which case the stay on proceedings would remain in place until the position is clear. If the Government decides against legislative action, then the stay on proceedings would be lifted and PGM’s appeal would proceed to be considered on its merits. The Group 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, it remains confident that its appeal would be successful. Centamin Annual Report 2020 > Additional Information> Corporate Governance> Foreword> Financial Statements> Strategic Report208 5. Unrecognised items continued 5.1 Contingent liabilities and contingent assets continued Contingent liabilities continued Concession Agreement court case continued Consequently, at this stage, it is not possible to say when the appeal will conclude, although there is the potential for court 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 affected 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 2019: nil). 5.2 Dividends per share The dividends paid in 2020 were US$138,724,519 and are reflected in the consolidated statement of changes in equity for the year (2019: US$81,029,238). A final dividend in respect of the year ended 31 December 2020 of 3 US cents per share, totalling approximately US$34.7 million has been proposed by the Board of Directors and is subject to shareholder approval at the annual general meeting on 11 May 2021. These financial statements do not reflect the 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 proposed a final dividend for 2020 of 3 US cents per share. Subject to shareholder approval at the annual general meeting on 11 May 2021, the final dividend will be paid on 15 June 2021 to shareholders on record date of 21 May 2021. As referred to in note 1.3.4, the Group Mineral Reserve and Resource statement for SGM has been published with an effective date of 31 December 2020. The changes from the previous statement published with an effective date of 30 June 2019 will have a prospective effect on the amortisation of the rehabilitation asset and mine development properties. Please refer to the Mineral Reserve and Resource statement impact on ore reserves note 3.1.1(i) where these sensitivities to the change has been disclosed. 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 2020 FINANCIAL STATEMENTSfor the year ended 31 December 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED209 (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 For the year ended 31 December 2020 US$ For the year ended 31 December 2019 US$ 7,627,053 7,292 1,564,277 9,198,622 5,906,929 7,311 1,919,602 7,833,841 (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 year ended 31 December 2020 are as follows: 31 December 2020 Balance at 1 January 2020 Granted as remuneration (“DBSP”) Granted as remuneration (“PSP”) Net other change – share plan lapse(1) 590,000 390,000 – (420,000) M Horgan R Jerrard J Rutherford S Eyre M Bankes M Cloete C Farrow I Fawzy H Faul Y El-Raghy H Bills P Cannon J Singleton C Murray A Carse D Le Masurier R Nel – 1,897,000 – – 190,000 15,000 – – – – – – – – – – – – 793,662 60,000 – – 546,000 – 385,336 527,000 230,000 – – – – 80,000 67,500 50,000 – – – – – – – 110,000 200,000 – 200,000 200,000 80,000 67,500 50,000 Net other change(2) 16,405 15,000 200,000 Balance at 31 December 2020 606,405(3) 1,882,000(3) 200,000 – – – – – – – – – – – – – (72,000) (200,000) – – – – – – – – – – (107,000) (117,700) – – – 190,000 15,000 – – – 691,662(3) 200,000(3) – 746,000(3) 200,000(3) 545,336(3) 437,300(3) 330,000(3) (1) “Net other change – share plan lapse” relates to awards that have lapsed due to the full performance conditions not being met on the 2017 grant. (2) “Net other change” relates to the on-market acquisition or disposal of fully paid ordinary shares. (3) Balance includes unvested grants under the Company’s performance share plan. Centamin Annual Report 2020 > Additional Information> Corporate Governance> Foreword> Financial Statements> Strategic Report210 6. Other information continued 6.1 Related party transactions continued (c) Key management personnel equity holdings continued Since 31 December 2020 to the date of this report there have been no transactions notified to the Company under DTR 3.1.2.R. The details of the movement in key management personnel equity holdings of fully paid ordinary shares in Centamin plc during the financial year ended 31 December 2019 are as follows: 31 December 2019 R Jerrard S Eyre M Bankes M Cloete C Farrow I Fawzy Y El-Raghy J Singleton A Carse D Le Masurier R Nel Balance at 1 January 2019 Granted as remuneration (“DBSP”) Granted as remuneration (“PSP”) Net other change – share plan lapse(1) 617,000 (525,000) 1,805,000 – 190,000 – – – 763,662 – 216,336 576,000 120,000 – – – – – – – – – – – – – – – – 114,000 546,000 169,000 127,000 110,000 – – – – – (84,000) – – Net other change(2) – – – 15,000 – – – – – Balance at 31 December 2019 1,897,000(3) – 190,000 15,000 – – 793,662(3) 546,000(3) 385,336(3) 527,000(3) 230,000(3) (96,000) (80,000) – – (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. (3) Balance includes unvested grants under the Company’s performance share plan. (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 2020 are summarised below: • salaries, superannuation contributions, bonuses, LTIs, consulting and directors’ fees paid to Directors during the year ended 31 December 2020 amounted to US$3,915,877 (31 December 2019: US$3,507,050); and (f) Transactions with the government of Egypt Royalty costs attributable to the government of Egypt of US$24,792,435 (2019: US$19,700,850) were incurred in 2020. Profit share to EMRA of US$174,275,000 (2019: US$87,075,000) was incurred in 2020. (g) Transactions with other related parties Other related parties include the parent entity, subsidiaries, and other related parties. During the financial year, the Company recognised tax payable in respect of the tax liabilities of its wholly owned subsidiaries. Payments to/from the Company are made in accordance with terms of the tax funding arrangement. During the financial year the Company provided funds to and received funding from subsidiaries. All amounts advanced to related parties are unsecured. No expense has been recognised in the year for bad or doubtful debts in respect of amounts owed by related parties. Transactions and balances between the Company and its subsidiaries were eliminated in the preparation of the consolidated financial statements of the Group. Centamin Annual Report 2020 FINANCIAL STATEMENTSfor the year ended 31 December 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED211 6.2 Contributions to Egypt (a) Gold sales agreement On 20 December 2016, SGM entered into a contract with the Central Bank of Egypt (“CBE”). The agreement provides that the parties may elect, on a monthly basis, for the CBE to supply SGM with its local Egyptian currency requirements for that month to a maximum value of EGP80 million (2019: EGP50 million). In return, SGM facilitates the purchase of refined gold bullion for the CBE from SGM’s refiner, Asahi Refining Canada Ltd. This transaction has been entered into as SGM requires local currency for its operations in Egypt (it receives its revenue for gold sales in US dollars). Thirty-four transactions have been entered into at the date of this report, eight of which in the current year, pursuant to this agreement, and the values related thereto are as follows: Gold purchased Refining costs Freight costs Gold purchased For the year ended 31 December 2020 US$’000 For the year ended 31 December 2019 US$’000 29,319 15 30 29,364 35,641 19 53 35,713 For the year ended 31 December 2020 Oz For the year ended 31 December 2019 Oz 16,262 25,721 At 31 December 2020 the net receivable in EGP owing from the Central Bank of Egypt is approximately the equivalent of US$42,987 (2019: US$30,893 net payable owing to CBE). (b) University grant During 2018, 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 accounted for under donations expense in profit and loss in 2019 and in 2020 the interest earned has also been accounted for under donations expense. 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 2021 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 2018 awards Of the 4,908,000 awards granted on 27 June 2018 under the PSP, 585,400 awards remain granted to eligible participants (31 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 2020 > Additional Information> Corporate Governance> Foreword> Financial Statements> Strategic Report212 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, 2,711,000 awards remain granted to eligible participants (14 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”. June 2020 awards Of the 2,582,500 awards granted on 5 June 2020 under the PSP, 2,382,500 awards remain granted to eligible participants (13 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 2020 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 year: 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$(1) Vesting period (years) Holding period applicable to 50% of the award (years) Expected volatility (%) Expected dividend yield (%) PSP 2020 5 June 2020 1,090,000 0.87 1.07 1.28 1.58 3 2 49% 0% 1,492,500 0.99 1.22 1.47 1.81 3 0 49% 0% (1) The vesting of 50% of the awards granted under this plan are dependent on a TSR performance condition. As relative TSR is defined as a market condition under IFRS 2 ‘Share- based payments’, this requires that the valuation model used takes into account the anticipated performance outcome. We have therefore applied a Monte-Carlo simulation model. The simulation model takes into account the probability of performance based on the expected volatility of Centamin and the peer group companies and the expected correlation of returns between the companies in the comparator group. The remaining 50% of the awards are subject to adjusted free cash flow and gold production performance conditions. As these are classified as non-market conditions under IFRS 2 they do not need to be taken into account when determining the fair value. These grants have been valued using a Black-Scholes model. The fair value calculated was then converted at the closing GBP:US$ 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. Centamin Annual Report 2020 FINANCIAL STATEMENTSfor the year ended 31 December 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED213 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. DBSP awards granted during the year: Grant date Number of instruments Share price/fair value at grant date Tranche 1 £(1) Share price/fair value at grant date Tranche 1 US$(1) Share price/fair value at grant date Tranche 2 £(1) Share price/fair value at grant date Tranche 2 US$(1) Share price/fair value at grant date Tranche 3 £(1) Share price/fair value at grant date Tranche 3 US$(1) Vesting period Tranche 1 (years)(2) Vesting period Tranche 2 (years)(2) Vesting period Tranche 3 (years)(2) Expected dividend yield Tranche 1 (%) Expected dividend yield Tranche 2 (%) Expected dividend yield Tranche 3 (%) DBSP 2020 5 June 2020 3,679,500 1.39 1.72 1.27 1.57 1.17 1.44 1 2 3 5.90% 4.88% 7.60% (1) The fair value of the shares awarded under the DBSP were calculated by using the closing share price on grant date, converted at the closing GBP:US$ foreign exchange rate on that day. No other factors were taken into account in determining the fair value of the shares awarded under the DBSP. (2) Variable vesting dependent on one to three years of continuous employment. 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). Centamin Annual Report 2020 > Additional Information> Corporate Governance> Foreword> Financial Statements> Strategic Report214 6. Other information continued 6.3 Share-based payments continued Share-based payments continued 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. 6.4 Earnings per share (“EPS“) attributable to owners of the parent Basic earnings per share Diluted earnings per share For the year ended 31 December 2020 US cents per share For the year ended 31 December 2019 US cents per share 13.531 13.453 7.588 7.535 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 Diluted earnings per share attributed to owners of the parent For the year ended 31 December 2020 US$’000 For the year ended 31 December 2019 US$’000 155,979 87,463 For the year ended 31 December 2020 Number For the year ended 31 December 2019 Number 1,152,715,180 1,152,715,180 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 For the year ended 31 December 2020 US$’000 For the year ended 31 December 2019 US$’000 155,979 87,463 For the year ended 31 December 2020 Number For the year ended 31 December 2019 Number 1,152,715,180 1,152,715,180 6,703,214 8,011,425 1,159,418,394 1,160,726,605 No potential ordinary shares were excluded from the calculation of weighted average number of ordinary shares for the purpose of diluted earnings per share. Centamin Annual Report 2020 FINANCIAL STATEMENTSfor the year ended 31 December 2020NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS CONTINUED215 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 Audit fee for the current year audit (1) Non-recurring audit fee in relation to scope changes (2) Fees payable to the Company’s auditors and their associates for other services to the Group Audit fee of the Company’s subsidiaries Total audit fees Non-audit fees: Audit related assurance services – interim review Risk management and advisory services Total non-audit fees For the year ended 31 December 2020 US$’000 For the year ended 31 December 2019 US$’000 564 151 65 780 134 – 134 436 86 58 580 112 154 266 (1) 2020 fee includes amounts in relation to the base audit fee US$437k (2019: US$420k), new applicable regulatory and auditing standards US$40k , changes in scope and timetable of the audit US$48k, corporate reporting review US$18k (2019: US$16k) and going concern assessments US$21k (2019: US$27k). (2) Non-recurring audit fees relate to the prior year audit addressing going concern assessments US$27k, impairment assessments US$51k and changes in scope and timetable of the audit as a result of Covid-19 US$73k. All audit fees are billed in GBP and were translated at a foreign exchange rate of US$1.37:GB£1 (2019: US$1.32:GB£1). Not included within the above amounts are auditors’ expenses (recharged to the company) of US$9k (2019: US$24k). 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 2020 > Additional Information> Corporate Governance> Foreword> Financial Statements> Strategic Report216 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 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 2019 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 14.3 million ounces of gold with the addition of approximately 3.7 million ounces of gold in the Inferred category. The Mineral Resources were estimated using a gold price assumption of US$2,000/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. No changes have been made for Batie West. The 2021 Sukari mine development programme has budgeted for 150,000 metres of diamond and reverse circulation drilling, focusing on reserve replacement, near-term resource growth, long term resource definition and new life of mine target generation. In West Africa, strategic reviews for each exploration project are underway and scheduled for completion in H1 2021. For more information on the Company’s approach to orebody stewardship and exploration please refer to the Operational Review on page 48 and the Exploration Review on page 50. 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 Sukari Mineral Resource estimated at the end of December 2020 saw a one million ounces of gold reduction in Measured and Indicated resources, reflecting 18 months mining depletion, changes in gold price, pit wall slopes, reporting parameters and a drop in cut-off grade for underground. For the purposes of the Sukari Mineral Resource update, the Company has retained the previously developed 2019 Mineral Resource model as developed by H&S Consultants Pty Ltd (“H&SC”) and updated it to account for 18 months of mining depletion, between 30 June 2019 and 31 December 2020: • H&SC depleted the 2019 open pit Multiple Indicator Kriging (“MIK”) Mineral Resource estimate for Sukari as at 31 December 2020, within a whittle pit shell generated by Cube Consultants (“Cube”) using a gold price of US$2,000/oz. • The 2020 Mineral Resource estimate excludes the planned underground voids within the selected pit shell, which had previously been included in the 2019 Mineral Resource estimate. • A cut-off grade of 0.3 g/t gold is used for reporting the open pit Mineral Resource estimate. In respect of the Sukari underground Mineral Resource, Cube completed the estimation for Sukari underground as at 31 December 2020. • An updated model has been developed by Cube utilising geological information with an effective cut-off date of 31 August 2020. • The estimation methodology employed in preparing the updated Mineral Resource is consistent with the 2019 estimate except for using the reporting cut-off grade of 1.0g/t contained gold (2.0g/t cut-off grade was used in the 2019 Sukari underground Mineral Resource estimation). • The Sukari underground Mineral Resources are defined below the US$2,000/oz open pit shell and combined with the open pit Mineral Resources to provide a Sukari Gold Mine Mineral 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. Category Measured (M) Indicated (I) M+I Inferred Measured Indicated M+I Inferred SUKARI GOLD MINE DOROPO PROJECT Centamin Annual Report 2020 2020 2019 Tonnage (Mt) Grade (g/t) Gold Content (Moz) Tonnage (Mt) Grade (g/t) Gold Content (Moz) 223 65 288 14 5.2 56.1 61.3 30.1 1.04 0.88 1.00 1.9 1.52 1.21 1.22 1.1 7.45 1.85 9.31 0.9 0.26 2.18 2.44 1.0 248 74 321 12 5.2 56.1 61.3 30.1 1.05 0.88 1.01 1.5 1.52 1.21 1.22 1.1 8.21 2.11 10.3 0.6 0.26 2.18 2.44 1.0 ADDITIONAL INFORMATION217 ABC PROSPECT BATIE WEST PROJECT Category Measured Indicated M+I Inferred Measured Indicated M+I Inferred GROUP MINERAL RESOURCES M+I Inferred Resource Notes • Sukari Open Pit 2020 2019 Tonnage (Mt) Grade (g/t) Gold Content (Moz) Tonnage (Mt) Grade (g/t) Gold Content (Moz) – 20 20 16 – 34 34 25 404 85 – 1.03 1.03 0.9 – 1.70 1.70 1.7 1.10 1.35 – 0.65 0.65 0.5 – 1.92 1.92 1.3 14.3 3.7 – 20 20 16 – 34 34 25 435 81 – 1.03 1.03 0.9 – 1.70 1.70 1.7 1.09 1.3 – 0.65 0.65 0.5 – 1.92 1.92 1.3 15.3 3.4 • 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 • 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 open-pit MRE at a 0.3 g/t Au cut-off grade extends over a strike length of 2.5 kilometres, a width of 500 m and from current surface to a depth of ~900 m • The open-pit MRE used all available surface drilling, channel and chip samples as at 18 July 2019, and longer underground production holes were also included. The open-pit resource data set comprised 389,856 two-metre drill hole composites and surface rock chip samples • H&SC has checked the drilling completed between July 2019 and December 2020 and considers that this data is unlikely to have a significant impact globally, although some local differences are expected • The MRE was adjusted to the mining surface and underground mining voids as at the 31st of December 2020 • Sukari Underground • All underground Mineral Resources are estimated using Ordinary Kriging using Surpac software • Measured Resources lie in areas where drilling is available at least 20 x 20 metre spacing and the interpreted mineralisation defined by underground mine development. Indicated resources occur in areas drilled at approximately 20 x 20 metre spacing and Inferred Resources exist in areas of broader spaced drilling of approximately 50 x 50 metre spacing • The underground Mineral Resource estimate at a 1.0 g/t Au cut-off grade extends over a strike length of 2.5 kilometres, a width of ~500 m and from current surface to a depth of 1,200 m • All available surface drilling, channel and underground samples were used as at 31st August 2020. The resource data set used directly in the Mineral Resource Estimate comprised a total of 68,202one metre down hole drilling composites and 53,970 one metre down hole channel sample composites • The Mineral Resource Estimates were adjusted to the mining surface and underground mining voids as at end of December 2020 • Doropo Project • The estimation method is Multiple Indicator Kriging (MIK) using GS3 software • 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 of 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 • The estimation method is Multiple Indicator Kriging (MIK) using GS3 software • 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 of 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 sets include RC and Diamond drill data with gold estimates based on 50-gram Fire Assay analysis completed at Bureau Veritas Mineral Laboratories, Abidjan • Batie West Project • 2014 Konkera Mineral Resource estimate 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 Mineral Resource estimate is 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 2020 > Additional Information> Corporate Governance> Foreword> Financial Statements> Strategic Report218 MINERAL RESOURCE AND RESERVE STATEMENTS CONTINUED MINERAL RESERVE ESTIMATE (Sukari Gold Mine only) Included in the Mineral Resources, the Mineral Reserves at 31 December 2020 were 5.0 million ounces of gold. The decrease from 2019 is attributable to mining depletion more than Mineral Reserve additions, Mineral Resource changes, changes in the open pit design and stope sterilisation. The gold price assumption of US$1,450 per ounce was used for estimating Mineral Reserves. Based on the expected throughput rates, the remaining Mineral Reserve life of Sukari open pit operation and stockpiles is approximately 12 years and approximately 4 years for the underground, as of 31 December 2020. OPEN PIT UNDERGROUND STOCKPILES Category Proven Probable P & P Proven Probable P & P Proven Probable P & P SUKARI MINERAL RESERVE P & P Reserve Notes • Open pit and stockpiles cut-off grade for reporting of 0.4g/t 2020 2019 Tonnage (Mt) Grade (g/t) Gold Content (Moz) Tonnage (Mt) Grade (g/t) Gold Content (Moz) 96.6 20.6 117.2 1.1 3.2 4.3 15.8 15.8 137.2 1.2 1.0 1.2 3.5 2.9 3.0 0.5 0.5 1.1 3.7 0.7 4.4 0.1 0.3 0.4 0.2 0.2 5.0 134.6 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 • Open pit Mineral Reserve estimate includes 7.5Mt at 0.4g/t for 0.1Moz gold, using a 0.2g/t cut-off, for the dump leach • Underground cut-off grade for reporting of 0.4g/t gold for development with stopes defined within a 1.6g/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 Mineral Resource estimates, was prepared by and under the supervision of Howard Bills and Craig Barker, the 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. Centamin Annual Report 2020 ADDITIONAL INFORMATION 219 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 – OP 18 July 2019 • Sukari Gold Mine – UG 31 December 2020 • Doropo Project • ABC Project 18 August 2019 10 December 2018 • Batie West Project 26 March 2014 Varying cut-off grades have been used, and clearly marked, for estimating the Mineral Resource estimates at different Group properties, depending on the stage of project, maturity, and ore type. Centamin Annual Report 2020 > Additional Information> Corporate Governance> Foreword> Financial Statements> Strategic Report 220 COMPANY LEGAL FORM 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. 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. 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 their appointment unless they are 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 2020 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 2020 1,155,955,384 2,373,049 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, no ordinary shares of no par value were issued in 2020 as no shares vested during the year. 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 2.14 and 2.15 to the financial statements. Centamin Annual Report 2020 ADDITIONAL INFORMATION221 The Company was authorised by shareholders at the 2020 AGM 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 2020. This standard authority is renewable annually and the Directors will seek to renew this authority at the 2021 AGM. This current authority will expire on 30 June 2021. 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 VanEck Inc. BlackRock Inc. Dimensional Fund Advisors Schroders The Vanguard Group, Inc BrightSphere Investment Group Note to table: Shareholding 115,327,845 97,543,974 57,651,099 58,108,557 47,651,060 40,495,133 % holding 9.98 8.43 4.99 5.03 4.12 3.50 Information as at 31 December 2020 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 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 and proposed in 2020. Only the second interim dividend and final dividend are attributable to the 2020 financial year’s performance, ending 31 December 2020. 2020 first interim dividend An interim dividend of 6 US cents per share on Centamin plc ordinary shares (totalling approximately US$69.2 million) was declared on 21 April 2020 to replace the 2019 final dividend. 2020 second interim dividend An interim dividend of 6 US cents per share on Centamin plc ordinary shares (totalling approximately US$69.5 million) was declared on 4 August 2020. The interim dividend for the half year period ending 30 June 2020 was paid on 11 September 2020 to shareholders on the register on the record date of 14 August 2020. 2020 final dividend A final dividend of 3 US cents per share on Centamin plc ordinary shares (totalling approximately US$34.7 million) was proposed by the Directors on 22 March 2021. The final dividend for the financial year ended 31 December 2020 will be paid on 15 June 2021 to shareholders on the register on the record date of 21 May 2021. The dividend is subject to AGM approval on 11 May 2021, following which the dividend will be final. The ex-dividend date is 20 May 2021 for LSE and TSX listed shareholders. Centamin Annual Report 2020 > Additional Information> Corporate Governance> Foreword> Financial Statements> Strategic Report222 COMPANY LEGAL FORM CONTINUED SUMMARY TABLE OF DIVIDENDS DECLARED BY CENTAMIN PLC 2020 4 August 2020 2019 31 July 2019 2018 2 August 2018 6.0 US cents per share 4.0 US cents per share 2.5 US cents per share 11 September 2020 27 September 2019 28 September 2018 Approximately US$69.5 million Approximately US$46.2 million Approximately US$28.9 million 22 March 2021 Due 11 May 2021 3 US cents per share Due 15 June 2021 14 January 2020 (replaced) 25 February 2019 Final dividend replaced by interim dividend in 2020. 21 April 2020 8 April 2019 6 US cents per share 3 US cents per share 15 May 2020 13 May 2019 Approximately US$34.7 million Approximately US$69.2 million Approximately US$34.6 million Interim Declared on: Final Amount: Paid on: Total Proposed on: Declared on: Amount: Paid on: Total: COMPANY LEGAL FORM AND STRUCTURE Company details Centamin plc (LSE: CEY, TSX: CEE) ISIN: JE00B5TT1872 LEI: 213800PDI9G7OUKLPV84 Company number: 109180 SHAREHOLDER COMMUNICATION ANNUAL GENERAL MEETING The 2021 Annual General Meeting (“2021 AGM”) will be held at 11.00 AM BST on Tuesday, 11 May 2021 at 2 Mulcaster Street, St. Helier, Jersey, JE2 3NJ. The Centamin Board of Directors will be assessing UK and Jersey Government public health guidance on COVID-19 to determine whether physical attendance at the 2021 AGM is possible for shareholders. If it becomes necessary to change the arrangements for the AGM, information will be found on the Company website www.centamin.com and via a regulatory announcement. Shareholders will be offered the opportunity to listen to the formal business of the AGM through an audio link. 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 2021 AGM The 2020 Annual Report and accounts and Notice of AGM are due to be mailed to shareholders on 31 March 2021. Details will also be available on the Company’s website, www.centamin.com. Centamin Annual Report 2020 ADDITIONAL INFORMATION223 The Chairman, CEO, CFO, Senior Independent Non-Executive Director, as well as our Head of Corporate Communications, 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. Due to COVID-19, many of the face-to-face meetings were not possible and for continuity, major shareholders utilised virtual meetings and other ways of communicating. 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. 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. INDICATIVE FINANCIAL CALENDAR Event Annual general meeting Q1 2021 operating results Q2 2021 operating results Interim results Q3 2021 operating results Q4 2021 operating results Date 11 May 2021 22 April 2021 22 July 2021 5 August 2021 27 October 2021 19 January 2022 Centamin Annual Report 2020 > Additional Information> Corporate Governance> Foreword> Financial Statements> Strategic Report224 ADVISERS REGISTRAR SERVICES Canada Computershare 100 University Avenue 8th Floor Toronto On M5J 2Y1 Jersey, Channel Islands Computershare Investor Services (Jersey) Plc Queensway House Hilgrove Street St Helier Jersey JE1 1ES PUBLIC RELATIONS Buchanan 107 Cheapside London EC2V 6DN Telephone: +44 (0)20 7466 5000 BROKERS Bank of America Securities 2 King Edward Street London EC1A 1HQ Telephone: +44 (0)20 7628 1000 BMO Capital Markets 55 Basinghall Street London EC2V 5DX Telephone: +44 (0)20 7236 1010 Tamesis Partners LLP 125 Old Broad Street London EC2N 1AR Telephone: +44 (0)20 3882 2868 AUDITOR PricewaterhouseCoopers LLP 1 Embankment Place London WC2N 6RH Telephone: +44 (0)20 7583 5000 Centamin Annual Report 2020 ADDITIONAL INFORMATION225 GLOSSARY 2018 Code 2020 AGM AISC ARC ARE assay Au CA CBE CGU the 2018 UK Corporate Governance Code published by the Financial Reporting Council the annual general meeting of the Company held in 2020 all-in sustaining costs the Audit and Risk Committee of the Company Arab Republic of Egypt qualitative analysis of ore to determine its components chemical symbol for the element gold Concession Agreement. The Eastern Desert Concession Agreement dated 29 January 1995 between PGM, EGSMA (now EMRA) and ARE relating to the exploration and exploitation of gold and associated minerals in the predetermined localities in the Eastern Desert of Egypt Central Bank of Egypt Cash Generating Unit Code of Conduct Company’s Code of Conduct Group Policy Company Centamin plc, number 109180 is a mineral exploration, development and mining company dual listed on the London Stock Exchange (LSE: CEY) and the Toronto Stock Exchange (TSX: CEE) Company Law Company (Jersey) Law 1991 (as amended) COVID-19 COVID-19 is the disease caused by a new coronavirus called SARS-CoV-2 which was declared a global pandemic on the 11 March 2020 by the World Health Organisation DBSP deferred bonus share plan Directors or Board the Directors of the Board of Centamin plc dump leach a process used for the recovery of metal ore from typically weathered low-grade ore. Blasted material is laid on a slightly sloping, impervious pad and uniformly leached by the percolation of the leach liquor trickling through the beds by gravity to ponds. The metals are recovered by conventional methods from the solution E&E EGPC EMRA EPS FCA exploration and evaluation The Egyptian General Petroleum Corporation Egyptian Mineral Resource Authority earnings per share Financial Conduct Authority feasibility study extensive technical and financial study to assess the commercial viability of a project flotation FRC GISTM Gold Doré grade g/t Group 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 Financial Reporting Council Global Industry Standard Tailings Management an alloy that is produced after the first stage of the purification process, containing approximately 90% gold as well as metals such as silver or copper. It must be refined in order to achieve the levels of purity required to be traded on gold markets relative quantity or the percentage of ore mineral or metal content in an orebody gram per metric tonne The Company and/or Centamin and its subsidiaries and subsidiary undertakings as the context requires, and SGM, which, for accounting purposes is wholly consolidated within the Group, reflecting the substance and economic reality of the Concession Agreement Centamin Annual Report 2020 > Additional Information> Corporate Governance> Foreword> Financial Statements> Strategic Report226 GLOSSARY CONTINUED IFRS International Financial Reporting Standards Indicated Resource Inferred Resource JORC LOA LTIs LTIFR mill 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 Joint Ore Reserves Committee of the Australasian Institute of Mining and Metallurgy, Australian Institute of Geoscientists and the Minerals Council of Australia Life of Asset Review 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 million ounces Mineral Reserve that part of a Mineral Resource which has been demonstrated to be economically exploitable Mineral Resource a concentration or occurrence of natural, solid, inorganic or fossilized organic material in or on the Earth’s crust in such form and quantity and of such a grade or quality that it has reasonable prospects for economic extraction. The location, quantity, grade, geological characteristics and continuity of a mineral resource are known, estimated or interpreted from specific geological evidence and knowledge. Mt Mtpa NCI 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 OHS open pit ore orebody ore reserve the Nomination Committee of the Company Occupational Health and Safety large scale hard rock surface mine or mine workings for ores open to the surface, a pit; like a quarry for stone 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) Centamin Annual Report 2020 ADDITIONAL INFORMATION227 PGM PPE Pharaoh Gold Mines NL property, plant and equipment as described in the financial statements Probable Reserves 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 PSP R&R REM RGMP performance share plan (formerly the restricted share plan) Resources and Reserves the Remuneration Committee of the Company Responsible Gold Mining Principles Risk Framework Group’s risk management framework ROM SASB Run of Mine Sustainability Accounting Standards Board Section 172 Directors duties as set out in Section 172 of Companies Act 2006 SGM SHW Sus TCFD Tech TSF1 TSF2 TSR Sukari Gold Mining Company Safety, Health and Wellbeing: An active workplace health and safety culture ensuring and promoting our employee’s physical and mental wellbeing the Sustainability Committee of the Company Task Force on Climate-related Financial Disclosures the Technical Committee of the Company existing tailings storage facility second tailings storage facility completed 2020 total shareholder return Centamin Annual Report 2020 > Additional Information> Corporate Governance> Foreword> Financial Statements> Strategic Report228 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. 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. In addition, there are a number of factors that could cause actual results, performance, achievements or developments to differ materially from those expressed or implied by such forward-looking statements; the risks and uncertainties associated with the ongoing impacts of COVID-19 or other pandemic, general business, economic, competitive, political and social uncertainties; the results of exploration activities and feasibility studies; assumptions in economic evaluations which prove to be inaccurate; currency fluctuations; changes in project parameters; future prices of gold and other metals; possible variations of ore grade or recovery rates; accidents, labour disputes and other risks of the mining industry; climatic conditions; political instability; decisions and regulatory changes enacted by governmental authorities; delays in obtaining approvals or financing or completing development or construction activities; and discovery of archaeological ruins. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such information or statements, particularly in light of the current economic climate and the significant volatility, uncertainty and disruption caused by the outbreak of COVID-19. 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 report 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 Centamin Annual Report 2020 ADDITIONAL INFORMATIONRegistered 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

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