Release Date: July 25, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Centamin PLC (CELTF, Financial) reported a solid first half of 2024, with production and cost metrics largely on track.
- The company maintained its guidance for 470,000 ounces of gold production for the year, with cash costs between $700 to $850 per ounce and all-in sustaining costs (AISC) between $1,200 to $1,350 per ounce.
- Significant progress was made on the Doropo project, including the approval of the Environmental and Social Impact Assessment (ESIA) and the release of a robust feasibility study.
- The company has successfully promoted internal talent, including the appointment of a new Chief Operating Officer (COO) and other key management positions.
- Centamin PLC (CELTF) reported a 9% increase in revenue year-on-year, driven by higher average realized gold prices and strong operational performance.
Negative Points
- The company experienced slightly unusual cash costs and AISC figures, which were attributed to changes in the strip ratio and the reclassification of waste to ore.
- There were two Lost Time Injuries (LTIs) at the EDX project during the second quarter, impacting the company's safety record.
- The grid connection project faced delays due to changes in the Egyptian government, potentially pushing the energization date into the first half of next year.
- The company had to reallocate some costs from capital expenditure to operating expenditure, affecting the cash cost metrics.
- The timing of gold pours versus shipments led to a larger-than-normal impact on unit metrics, which is expected to stabilize over the second half of the year.
Q & A Highlights
Q: Shouldn't you be raising the cash cost guidance by roughly $100 per ounce?
A: Martin Horgan (CEO): Operationally, we are at or slightly better than planned. The reallocation of costs due to IFRS 20 has muddied the cash cost versus AISC picture. However, our all-in sustaining cost (AISC) remains within guidance. Ross Jerrard (CFO): The cash cost will trend towards the upper end of our guidance range, but the all-in sustaining cost remains unaffected.
Q: Is there going to be an additional $46 million of sustaining CapEx?
A: Ross Jerrard (CFO): The $45 million that was not capitalized remains in OpEx. This will trend our cash cost towards the upper end of the range but will not affect the all-in sustaining cost.
Q: Can you clarify the outlook for closing the gap between sales and production for the rest of the year?
A: Ross Jerrard (CFO): The differential between gold poured and sold is expected to normalize by year-end. The timing of gold pours versus shipments has caused an abnormally large differential, but this will be managed down to more typical levels.
Q: Are you still considering moving from contract mining to owner-operator at Doropo, and is there a timeline for this decision?
A: Martin Horgan (CEO): We are considering both options. The decision will be part of the overall financing workstream in H2. We will evaluate operational, implementation, and financing aspects before making a decision.
Q: With Centamin purchasing new dump trucks, have you considered buying used trucks?
A: Martin Horgan (CEO): Given our mine life extending into the next decade, new trucks are more cost-effective over their lifecycle. Used trucks would require mid-life rebuilds sooner, increasing maintenance costs.
Q: Can you explain the impact of the reclassification of ore and waste on your financials?
A: Ross Jerrard (CFO): The reclassification has resulted in $45 million remaining in OpEx instead of being capitalized. This affects cash costs but not the all-in sustaining cost. The total material moved remains on track.
Q: What is the impact of the timing of gold pours versus shipments on your financials?
A: Ross Jerrard (CFO): The timing has caused a larger than usual differential between gold poured and sold. This will normalize by year-end, reducing the impact on financials.
Q: How does the diesel price impact your cost structure?
A: Martin Horgan (CEO): Diesel prices have been within our operating budget, providing headroom in our cost structure. This helps absorb any marginal cost increases from using contractors for additional work.
Q: What are the next steps for Doropo?
A: Martin Horgan (CEO): We will submit our mining license application, start early works, and finalize the financing structure. We aim for a final investment decision in early 2025 and first gold in early 2027.
Q: How do you plan to manage the social and environmental impacts at Doropo?
A: Martin Horgan (CEO): We have significantly reduced the number of impacted persons and imposed a voluntary buffer zone around the Comoé National Park. Our ESIA has been approved, de-risking the project.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
