Andrew Davidson - Head of Business Development and IR Johannes Petrus Louw - CFO

Brock Salier - GMP Securities L.P. Cailey Barker - Numis Securities Ltd. Patrick Morton - Macquarie

Good morning and welcome to the Centamin Q1 Results Conference Call. Throughout the call all participants will be in a listen-only mode. And afterwards there will be a question-and-answer session. Just to remind you this conference call is being recorded. And today I am pleased to present Andy Davidson. Please begin your meeting sir.

Hi thanks operator thanks everyone for joining us and welcome to the call. Andrew Pardey is travelling at the moment he's in the field. So he send his apologies. I've got myself and Petrus Louw, our CFO so to join us, I'm sure we can answer your questions. I'll just give a brief overview before the Q&A. Q1 total production was up 46% on the same period last year to just over 108,000 ounces. That's driven by the expanded production rate following completion of stage 4 last year. As expected and for warned in previous announcements quarterly production rates were down and the reason for the 16% drop from a 128,000 ounces produced in Q4 was the progressing of the open pit mine through the out proportions of the next stage of pit development which is below reserve average grade. The production rates are expected to pick up again in the second half to reach and stabilize at the 450,000 to 500,000 ounce per annum range. As those open pit grades return towards the reserve average. So 2015 production guidance is therefore maintained at 420,000 ounces. The prices per performance in Q1 was good, the rates of the nameplate 10 million per annum capacity. We completed the segment realign in the quarter that was brought forward and that was allowed us to install redesign list - which is expected is possibly ongoing optimization process to help list overall productivity. Against the schedule drop in grades, the open pit mining rates continue to improve we reached the target annualized rate of 66 million tons per annum in the month of March. And we expect to maintain at least our level of productivity going forward in order to make the planned mine schedule. Underground mining rates were down slightly on Q4 although still slightly ahead of our expectation for the full year of 1 million tons. The mine grades were up from around 5.5 grams a ton in Q4 versus a 6 gram a ton in Q1. And we expect grades to remain in the 6 to 6.5 grams per ton range for the remainder of the year. We continue to get positive results from the underground drilling program which is ongoing. And they're highlighted in the release. And we anticipate releasing the resource and reserve - quarter of this year. With regards to the financials, the Q1 cash cost of production is $717 per ounce is marginally above the $700 an ounce guidance and with grade driven production increases expected in the second half of the year and we're well placed to meet that $700 full year target which we maintained again. All in sustaining cost were $858 an ounce which is well below the $950 an ounce guidance albeit the expenditure on sustaining capital expected to increase during the remainder of the year. So we therefore also maintain a $950 an ounce guidance for the full year. So while the coal price remain weak, the solid production rate and low cost are reflected in the financial results. The cash from operations is $56 million and EBITDA $53 million. Earnings per share of .US2.5 cents was down 16% on Q4 which is in line with lower production rate. The cash flow as indicated clearly positive and reflecting that there is a strong increase in the cash balance with the more than $30 million total increase over the three months. To end March at $196 million of cash and accounts receivables and liquid financial assets. So that's a clear demonstration of the potential to Sukari to generate significant free cash flow and other than main CapEx phase of the project we've complete we look forward to the AGM on Monday for our shareholders to approve the proposed final dividend payout the full year payout quite into yield so we believe is well in excess or in excess of all our direct is. So with total production increase is ahead of Sukari recovery and with the commitment to an exploration led growth strategy together with the strong balance sheet and significant capital return to our shareholders. We believe Centamin remains in the strong position for the future even in the currently depressed gold price environment. So with that summary, we'd like to hand over operator please for any questions. Thank you.

Thank you sir. [Operator Instructions] The first question comes from the line of Brock Salier from GMP. Please go ahead. Your line is now open.

Good morning Andy, could you give us some guidance on the underground grade into next year you found being clear on the 6 to 6.5 now. But you've got some new development going in now. What is that looking like in the medium term?

Yeah Brock. We are forecasting 6-6.5 grams per ton going forward. We are focusing and this had we have to deliver grade higher than the annual path exploration drill reserve or indicating there are high grades tons continuing as we go longer the exploration program. But I think the expanded true up rate half of the grade is a million tons per annum we're happy with that 6 6.5 grams a ton guidance to the time being. Obviously as I said we have a reserve I'll say two in Q3. So we'll notify our outlook again at that time once we've completed that process. But I think any potential which is certainly there to deliver higher grade in 6.5 grams a ton in periods will sort of be reflected probably more than average more like 6 and 6.5 grams per ton for the time being not only the consider really average is. So may go up about that from time-to-time but as I think they're comfortable as I say with the 6 6.5 grams a ton on average.

Understood. And just on your exploration portfolio at the moment. Do you see again in the medium term future anything shaping up to be a new mine go to, should we look at that as a net pricing cost rather than development for the time medium term?

I think this is exploration at the moment so we haven't we haven't gone anywhere to make any decision on development outside of Sukari and for example Burkina Faso dam most advanced project. So that hopefully will be a decision point for next year as we work through the exploration process.

Thanks very much.

Thanks Brock. Cheers.

The next question comes from the line of Cailey Barker from Numis. Please go ahead. Your line is now open.

Good morning Andy. Just had a question on the cash costs. Are we expecting a jump or ticking up in Q2 given that you're going to hit the higher rates on the open pit and your strip rates are still pretty high?

Hi Cailey I'll let Petrus answer that one.

Hey Cailey, just with operating cost entities at the moment are cost of ton. I don't see that that we'll see any increases there. Obviously the cost per ounce will be coming down as we go into the higher grade area. I think the biggest cost driver will change in cost drivers where at the moment is the fuel price which we see coming through. At the moment we've quite significantly compared to last year. Yeah and that is still remains within the guidance as we calculated in our $700 an ounce number and $950 an ounce all in sustaining.

Okay. So the profile through this year should be fairly smooth decrease. Is that a good assumption?

Well if you took my cash operating cost rather all in sustaining. That depends obviously on the production in Q2 whether it's similar or slightly below. If it’s slightly below Q1 then it will be a bump up. But as Petrus said the unique cost per ton is the measure that's flat through the year and expected to be flat through the year relatively.

Okay thanks and then just on CapEx. Obviously lower this quarter and you said it's going to come up. Is this sort of $80 million you've previously indicated is that's still a good number or we looking at below lower than that?

Yeah we looking at there are between $70 million and $80 million on our last discussions with regards on price that have a slow start to the year on the CapEx front which is good for cash I guess but we will catch up it later in the year.

Great. And then just the final question just given the production in Q1 I mean that 420 number looks like a little bit light here if you're going to keep ounces coming up with great. Do you expect that the 420 to be quite a conservative number.

It's a little bit of a ranges from the - I have to say is that it's the lower end of towards the lower end of the range. But yeah we think again so far is we have potential to do both but I think the full cost of - on grade a realistic price and the pricing that are continually realistic and then in the light of schedule that the mining rates and processing rates slowly ticking up as we've guided towards the to the 11 million tons per annum rate by the fourth quarter which is also the number going forward in our estimate. There is a potential for the processing plant as we debated in that where we no factoring that into our forward-looking estimates at the moment. The only gram as we said we are sort of relatively flat 6, 6.5 grams a ton we could potentially be better than that which we may not be see today on the full 20 a be good key driver of that. But that is same if you're looking at which is going forward 6-6.5 grams a ton is the average. So I think we are comfortable with the assumptions behind the guidance.

Okay. That's great. Thanks very much guys.

Thanks Cailey.

The next question comes from the line of Patrick Morton from Macquarie. Please go ahead. Your line is now open.

Hi guys sorry to just well on the grade issue here. But ore from the - to the underground 4.9 gram a ton there in the quarter. Any specific reason for that's kind a slightly lower than estimated grade.

No there is scheduling has stopping. You saw there was an uptake in the development the often development. You get that from time to time some variation I mean a lot of at development these within the old body of course. And there is a great reflected from the development reflected at this sort of on average basis on a longer term period or reflect the overall average of those higher grades in terms of the mining underground. So it's no more scheduling and no more variation.

Okay sure thanks. And then on the exploration I mean continue to see some pretty substantial high grade results as those two I mean the --. I would have thought there is upside to the underground grade of this mine considering this high grade here in reporting with exploration. Can you give us any guidance on that?

You will and there are certainly are some good high grade change down there. I mean in terms of forecasting an impact from the average grade for the reserve I can't obviously can't say anything at the moment. We're looking through the resources of take process at the moment without more on that later in the year. But there is a great variation over there. Some significantly high grade areas. I think generally more of those higher grade areas are ready to unlock overtime with development fulfill this grade to flexibility of managing the underground operation and sustaining grade around the average. So I think that’s a sort of positive that we can expect overtime from those high grade but you will while the impact is on there is a I think when we really - on this.

Thanks guys.

Thank you Patrick.

Following question comes from the line of Alexander [ph] from RBC. Please go ahead. Your line is now open.

Good morning I just had a question that the profit share. I was wondering if you could tell me what the accumulative loss was at the end of the quarter. And you mention you expect payments in that fiscal year ending June 2017 but I was wondering if you just give any more color on when you expect to be making these makings.

Hi Alexander. Not show any mean by accumulative loss I presume you mean that the balance of cost yet to be recover. And look I'm talking also maybe talk about - and this number at the end of last year was about $50 million, but we have cost to add to that balance in terms of this year and next year in terms of unrecovered portions of that CapEx stays for. So that's the R&D assumptions that's going to the timing of the profit share.

Yeah, I think just the baseline and the way that the cost recovery works we've done investment over the period of time and so capitalization last year as soon as we capitalize we can recover those amount in first and our total investment in Egypt is about $1.2 billion, so we've been recovering those at various stages, but obviously there is not enough money so some of the money gets carried over and prices that's we manage with our partner so today I am not quite sure what I can you know how I can yeah it's not something we discussed we know that we would get into a position with our current gold prices and current ounces that we are producing to be in a position to profit share in 2017 and $150 an ounce at about between 420 and 470,000 ounces as we look forward.

Okay. Great. Thank you.

[Operator Instructions]. The following question comes from the line of Mick [ph] from Morgan Stanley. Please go ahead.

I just want to ask you about on as you go forward capitalize versus expense so I'm just trying to get a feel for you know how much of that as you could do before and then next year if any will come through in CapEx than OpEx?

At this point just off the top of my head I think 5.7, 5.8, so and I think that's the number that we had any at the moment below those and we have not got anything in capital at this point once we start stepping if the policies we have in places the effect capitalization which actually over stepping we would stop putting money onto the balance sheet and the last numbers we've been running just our focus on planning I haven't seen any about averages for the year about this number and next two three years so I don't see anything that I note in the balance sheet in the short term.

Sorry just to clarify not expect saying this to bring to the above 5.8 in because that does represent a change from where you are previously saying stepping might get to in those years?

What we are seeing as we are looking to the numbers at the moment with and the new that we are working on is that possibly would put us in the future. Just kind of working like I said and capitalize cost given the time our interest rate basis in this time we have a capital markets day on Monday and we've been working through what we're going to discuss at the moment and there is scheduling prices with the open results and we continue to optimize and revise the mining schedule going forward as we produce normal for large mining operation such continue prices refinement and optimization so the numbers you are discussing I think that's probably that took some time and possibly I take you to the moment.

So let's talk about that on Monday.

As there are no further questions registered. I will now turn the conference back to you.

Thanks very much operator and thanks everyone for being on the call. Thanks for your questions and speak to you soon. Bye.

Ladies and gentlemen, this concludes today's conference call. Thank you all for attending. You may now disconnect your lines.