12 October 2023

Centamin plc

("Centamin" or "the Company")

LSE: CEY / TSX: CEE

Sukari NEW LIFE OF MINE PLAN delivers improved margins

Martin Horgan, CEO, commented: "Today's new life of mine plan firmly reestablishes Sukari as a global tier one gold asset, with long-term production above 500,000 ounces per annum at all-in sustaining costs below US$1,000 per ounce, underscoring our dedication to maximising free cash flow generation. This plan is not only a substantial improvement on what was previously published but, importantly it incorporates significantly lower operational risk and delivers improved carbon abatement. This revised plan underpins our strategy to maximise the value of Sukari as the foundation for growth and diversification balanced with stakeholder returns."

HIGHLIGHTS

Sukari Gold Mine - Tier 1 Asset¹

·      The new life of mine plan ("LOM Plan") delivers long-term increased gold production, lower operational costs, reduced operational risk and significantly reduced carbon emissions through a combination of:

o  an improved open pit schedule, including a 40% improvement to LOM strip ratio (6.5x) compared to full year 2022 ("FY22") (10.8x)

o  an increased underground schedule, including a 75% increase in average LOM ore mining rates (1.4Mtpa) compared to FY22 (0.8Mt)

o  connection to the Egyptian national grid, delivering an estimated US$41 million of annual cost savings based on current diesel prices

o  integration of a gold gravity circuit to the processing plant, driving a 2% increase in LOM gold recoveries (89.8%) compared to FY22 (88.2%)

·      Average gold production of 506,000 ounces per annum for next nine years (2024-2032); and 475,000 ounces per annum for life of mine (2024-2034), reflecting a 5% increase in LOM gold production compared to FY22 (441koz)

·      Average LOM AISC of US$922 per ounce of gold sold, placing Sukari in the bottom half of the global cost curve² and reflecting a 34% reduction in AISC compared to FY22 (US$1,399/oz)

·      Average annual LOM greenhouse gas ("GHG") intensity of 0.69 tonnes CO₂-e per ounce, reflecting a 39% reduction compared to FY22 (1.14 tonnes CO₂-e per ounce)³

·      Multiple opportunities identified to extend the current 11-year LOM (2024-2034) within the Sukari underground, surface satellite deposits and EDX Nugrus exploration licences adjacent to the mine to further increase resource and reserves

·      Additional upside opportunities not included in the new LOM Plan have been identified to further reduce costs and carbon emissions and to improve operational productivities and efficiencies

2023 outlook

Full year guidance maintained

·      In September, as part of the routine mill relines, a potential issue was identified on SAG mill 1 ("SAG1") and the decision was taken to undertake pre-emptive repairs. The work was successfully completed and SAG1 has been fully operational since 1 October 2023

·      As a result, production for the three months ended 30 September ("Q3") was 101,370 ounces. Despite being lower than the internal forecast, the build-up of high grade material on the ROM pad and increased operational flexibility in the mine plan means that 2023 annual production guidance remains on track

·      The Company will publish detailed Q3 Results at 07.00 BST (UK time) next Thursday 19 October 2023 followed by a webcast and Q&A

·      2023 gold production guidance is maintained with a range of 450,000 to 480,000 oz, targeting the lower end of the range

·      2023 cash cost guidance is maintained with a range of US$840-990/oz produced and AISC guidance range of US$1,250-1,400/oz sold, targeting the midpoint of the ranges

·      2023 adjusted capex guidance is maintained at US$225 million, which excludes US$48 million of sustaining deferred stripping costs

WEBCAST

Investor and analyst presentation

Centamin is hosting a virtual investor presentation today, Thursday 12 October 2023, for investors and analysts. The event will be hosted by Martin Horgan, CEO, and Ross Jerrard, CFO.

The event will start at 14.30 BST (UK time) and, including a Q&A session, is expected to end no later than 16.00 BST.

·      Event access: To join the webcast: https://www.lsegissuerservices.com/spark/Centamin/events/e9d8edd6-7536-4e63-810f-a08189c4f89b.  Please allow a few minutes to register.

·      A recording of the event and presentation material will be available on the Company's website shortly after the webcast has concluded. 

·      Questions: During the live event, there is a tab where investors can submit questions. Should any questions arise after the event or while watching the replay, please email investor@centaminplc.com.

·      Presentation: If you wish to view the presentation after the event, it can be found on our website: https://www.centamin.com/investors/presentations-webcasts/

SUKARI LIFE OF MINE Overview

Objective

The new Sukari LOM Plan has been developed by Centamin's in-house technical team, supported by expert consultants, with a focus on sustaining a 500,000 ounces per year production rate at an optimised cost base, to maximise free cash flow generation over the LOM.

Basis of preparation

Restructuring the approach to geology at Sukari with the implementation of a dedicated Mineral Resource Management ("MRM") team has significantly improved the geological understanding of the orebody over the last three years. This improved understanding has moved Sukari from a sustained period of Mineral Reserve depletion to growth and as of 30 June 2022 the Measured and Indicated Mineral Resources estimate was 320 million tonnes grading 1.08 grams of gold per tonne containing 11.11 million ounces of gold, inclusive of 6.0 million ounces of Mineral Reserves.

The LOM Plan ("Reserve plus Resource Conversion Case") is based on the 2022 Mineral Resource and Reserve statement and includes the following assumptions:

·      US$1,450/oz reserve gold price which is consistent with the assumption used in the 2021 interim life of mine plan published in December 2021.

·      Mineral Reserve cut-off grades are unchanged across the open pit (0.4g/t) and underground reserves (2.2g/t)

·      A long term diesel price forecast of US$0.75/l, based on current pricing levels and oil price forecasts

·      25% conversion of underground resources (Measured & Indicated) to Mineral Reserves, that are not already included in the underground Reserve Case plan. This plan includes limited material from unclassified resource targets where drill spacing between holes is greater than that required for Inferred Resource classification. Underground Mineral Resource cut-off grades is 1.0g/t

The NI43-101 Technical Report will be filed on the new LOM Reserve Case (please refer to the table below).

Work programmes

The LOM Plan amalgamated four major workstreams: optimisation of the open pit; expansion of the underground mine; optimisation of the processing facility; and fully replacing the use of diesel for stationary power generation.

Result

The new robust long-term plan for Sukari reduces the operating risk and carbon emissions whilst delivering increased consistent gold production of 506,000 ounces per annum average over the next nine years at a lower AISC of US$956 per gold ounce sold, placing Sukari in the bottom half of the global cost curve, driving margins and free cash flow generation.

The total life of mine is 11 years (2024-2034), producing an estimated 5.2Moz in addition to the 5.5Moz produced since 2009, as of 30 June 2023.  

SUKARI LIFE OF MINE SUMMARY

For full life of mine schedules (link here)

KEY outputs

The new LOM Plan incorporates the following key areas of optimisation driving growth:

Optimised open pit

·      Redesign: Improved geological and geotechnical understanding of the orebody, alongside improved ground conditions following the incorporation of paste fill has resulted in a re-optimised open pit design.

·      Reduced strip ratio as a component of the redesign: Optimisation of the open pit wall angles alongside an increase in ore tonnes has resulted in a reduced strip ratio of 6.5x. 

·      Deferred processing of stockpiles: The updated approach to mine design and pit sequencing has improved earlier access to ore. As a result, there is a reduced reliance on low-grade stockpiles to supplement mill feed from 2025-2028 when compared with the 2021 LOM plan.

·      Optimised fleet strategy: An additional five trucks will be purchased in 2024 to support the LOM Plan, at an approximate cost of US$13 million taking the Sukari fleet capacity from approximately 90Mt to 110Mt per annum. This coincides with the completion of the 120Mt contractor waste-stripping programme mid-2024.

Underground expansion

·      Increased mining rates: The underground expansion study completed in Q4 2022 outlined an optimal 1.5Mt per annum ore mining rate for a capital requirement of US$25-35 million.

·      Reduced risk: Following full engineering of the expansion, opportunities arose to simplify the mine plan by removing the requirement to expand production by developing underground portals in the open pit, and therefore further reducing the delivery risk.

·      Lower capital costs: The LOM Plan has scheduled increased ore mining rates of 1.4Mt per annum by 2026 (up from current peak mining rates of 1Mt per annum) at a reduced capital cost of US$16 million primarily for equipment.

50MW national grid connection

·      Significant carbon abatement: The Egyptian government have made significant investments into power infrastructure including extending a high voltage power line within 25km of Sukari. Establishing a 50MW connection to the grid, in combination with the existing 30MW Sukari solar power plant will enable full displacement of diesel used for stationary power generation at Sukari.

·      Reduced maintenance: Following completion of the tender process and further project design work the decision has been made to proceed with a buried cable connection rather than overhead. This reduces ongoing maintenance and associated costs and environmental impact. The project capital cost is estimated at US$46 million and grid connection is expected from the end of 2024. 

·      Quick payback: Removing diesel from the Sukari power supply is expected to deliver an annual saving of approximately US$41 million (at current diesel prices and expected tariffs). The operation will also benefit from reduced operating cost volatility because of lower exposure to the diesel price.

Gold gravity circuit

·      Following completion of the conceptual design work and site selection a decision has been made to add a gold gravity circuit to the processing facility to improve the recovery of the coarse gold found in the higher grade ore from both the underground and open pit.

·      Improve gold recovery: Study work indicates this will improve gold metallurgical recoveries to 89.8%, compared to the 2022 full year average of 88.2%.

·      Construction is expected to be completed in H1 2025 for an estimated capital cost of up to US$20 million.

ONGOING UPSIDE opportinuties

There remains a number of opportunities for further optimisation of the LOM Plan. The following initiatives are not included  in the new LOM Plan are expected to be assessed as part of ongoing optimisation of the asset:

Mineral Resource and reserve growth

·      The Sukari orebody remains open at depth and along strike. The MRM team continue to implement a rolling strategy to support near term production by upgrading existing resources and support growth by testing known limits of mineralisation through discovery.

·      Small surface satellite deposits across the Sukari concession area are not included in the new LOM Plan, therefore discovery and development present an upside opportunity

·      The Company's EDX Nugrus block is adjacent to the Sukari Mining Concession and is within trucking distance to the Sukari processing facility. The first drill programme on the Nugrus block is currently underway.  

Dump leach expansion

·      The LOM Plan schedules that up to 2Mt per annum of low grade stockpiles (0.3-0.4g/t) will be processed on the dump leach for the next four years, producing an average of 10-12koz per annum.

·      There is an opportunity to expand the dump leach operation to process additional transitional (oxide/sulphide) material and rehandle current marginal grade stockpiles.

·      Study works to commence in 2024, defining the potential scale and design of an expanded dump leach.

Open pit optimisation

·      Ongoing slope angle optimisation with a potential to further reduce waste-stripping.

·      Haulage and waste dump optimisation, assessing the potential relocation of low-grade stockpiles and infrastructure as well as dumping waste at the southern end of the open pit in the latter years of the mine life, to shorten haulage distances. These two initiatives could deliver further cost savings and reduce emissions.

Plant optimisation

·      Ongoing test work on new reagents. Subject to the results, there is a potential to deliver further cost savings, improved metallurgical recoveries and therefore gold production, and could improve detoxification of the tailings and return water.

·      Continued focus on more efficient use of reagents and consumables further reducing costs.

Solar expansion

·      As part of the Company's Decarbonisation Roadmap (link here) the intention is to expand the existing 30MW solar plant to 45-50MW, delivering further reductions to carbon emissions and cost savings relative to grid.

·      A feasibility study is currently underway to identify the optimal location of the facility on the mining lease and define the optimal integration strategy with the current solar facility and future grid connection.

·      Associated capital expenditure for the project is not included in current forecasts, pending completion of the feasibility study.