(Alliance News) - Centamin PLC said on Tuesday that the underground operations at its Sukari gold mine in Egypt have transitioned to owner-operator mining from contractor-mining.
The Jersey, UK-based gold mining company with production in Egypt and additional assets in Ivory Coast and Burkina Faso said the change will bring cost savings, improve operational control and mining flexibility.
Centamin explained that the move to owner-operator mining following the expiry of the current five-year contract was based on: tripling reserve growth, expected cost savings of USD19 million per year from 2023, and an expected mine life extension of 10 years.
The company added that it has also executed its contractual right to purchase the current underground mining fleet from the current contractor for a total capital cost of USD10.5 million to be paid in the first quarter of 2022.
Following the contractor process, Centamin said it awarded Geodrill Ltd a five-year contract to provide underground drilling services. The contract includes a minimum of 90,000 metres of drilling per annum and the introduction of reverse circulation drilling to the underground. The contract is to commence this quarter of 2022, the company explained.
Centamin said that there was no change to its 2022 annual production and cost guidance but noted a USD10.5 million increase to its capital expenditure guidance for the year. Last month, Centamin confirmed guidance for 2022 production at 430,000 to 460,000 ounces of gold at cash costs of USD900 to USD1,000 per ounce. Spot gold is currently trading just under USD1,820 an ounce.
Chief Executive Martin Horgan said: "The decision to transition the underground to owner mining reflects extensive planning and evaluation to determine the most effective operating model as we continue to grow and maximise the value of the Sukari orebody. Following a 200% increase in underground reserves with further identified growth opportunities and an underground expansion study underway, we believe this move best places us to extract the maximum value safely, efficiently and cost-effectively from the expanding underground operations."
Shares in Centamin were down 0.2% at 93.10 pence on Tuesday morning in London.
By Heather Rydings; heatherrydings@alliancenews.com
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Centamin PLC (CEY)