CENTAMIN interim CEO, Ross Jerrard, rebuffed a question at the firm’s fourth quarter presentation today that the company would “high-grade” in order to meet this year’s gold production guidance of between 510,000 to 540,000 ounces.
He instead pointed investors to the growth opportunities offered by Centamin, including its West African exploration portfolio which has prospects in Côte d’Ivoire and Burkina Faso. The firm’s operating mine, Sukari in Egypt, also contained a number of “different assets” in a single orebody, he said.
In December, Centamin was the target of a merger proposal with Endeavour Mining, a Toronto-listed firm that said it could bring Centamin shareholders geographic diversity and growth opportunities not offered in their single-asset company.
Endeavour stood down about six weeks later, largely because Centamin thought Endeavour’s all-share bid undervalued the company. Endeavour complained that it had not received sufficient information from Centamin to lodge a firm proposal.
In the wake of these events, Jerrard took pains today to set out Centamin’s investment proposition: the company’s six cents/share dividend – taking total dividends to 10c/share equal to $115.6m – was its sixth successive cash payout.
In addition, it was reviewing Sukari’s constituent parts with the aim of extending its 11 million oz resource base, whilst also setting aside $20m this year to study five million oz worth of exploration properties in West Africa.
West Africa has been given prominence before by Centamin – its former CEO, Andrew Pardey in February last year described exploration at Doporo in Côte d’Ivoire as merely “scratching the surface” – but given Endeavour’s merger plans, growth options are an important aspect of Centamin’s future offering.
Asked if a timeline could be attached to the development of Doporo, Jeremy Langford, Centamin’s COO since mid-2019, said it was too early to think beyond improving confidence in the resource. He promised to provide further details later in the year.
Centamin produced 480,529 oz in its 2019 financial year, a shade below adjusted guidance of 490,000 oz (520,000 oz had been initially targeted in 2019) at an all-in sustaining cost (AISC) of $792/oz (FY:$943/oz). The company had generated $658.1m in revenue at an average gold price of $1,399/oz.
Some 60% of next year’s production would be mined in the second half of the year which attracted questions about the mining approach. “The 40/60 split is driven around mine plan and schedule, and nothing more than that,” said Jerrard in respect to the ‘high-grading question’. High grading normally means miners are selecting the best areas of the orebody whilst simultaneously shortening mine life.
Candidates short-listed for the CEO position were being interviewed by the board, said Centamin today. In addition to the appointment of Jim Rutherford as deputy chairman, who is later this year to become chairman replacing Josef El-Raghy, the board would undergo further restructuring, the company said.
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