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Capitalised deferred stripping costs are included in ‘Mine Development Properties’, within property, plant, and equipment.
These form part of the total investment in the relevant cash generating unit, which is reviewed for impairment if events or a change in circumstances indicate that the carrying value may not be recoverable.
The stripping costs associated with the current period operations are expensed during that period and any stripping activity cost associated with producing future benefit is deferred on the balance sheet and amortised over the period that the benefit is received i.e., is classified as capital expenditure, creating a Deferred Stripping asset.
The pit components are the separate stages of the open pit mine. For each component, the stripping ratio is determined, and costs are capitalised if the stripping ratio in the year for that component is greater than the overall LOM stripping ratio for that component.
The change in mine plan* has necessitated an increase in stripping activity during the year (more than has been experienced in the past) and includes activity from both internal and external parties. As a result, there has been a significant increase in the stripping activity. Based on the calculations performed the amount capitalised to the balance sheet for 2022 is US$141 million (2021: $59m).
Capitalisation occurs when the strip ratio exceeds the life of mine strip ratio for that stage.
Only the costs related to the excess stripping are capitalised. In line with the accelerated stripping programme (2022-2024) we expect to be above the life of mine strip ratio, resulting in a larger quantum to be capitalised to the balance sheet.
--->>
Included within non-current other creditors and current other creditors and accruals is $7.3m (2021: $9.8m) and $4.9m (2021: $2.4m) respectively in relation to the remaining instalments of a $17.6m settlement agreement signed with EMRA in 2021. ***
By its nature, elements of the cost recovery mechanism within the Concession Agreement are subject to interpretation and ongoing audits by EMRA.
It is possible that future settlement agreements may be agreed with EMRA in relation to historic items.
The Directors have assessed that it is not probable that any additional settlements with EMRA will be required as at 31 December 2022, and therefore no additional provisions have been recognised within these financial statements
pg 56
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Questions:
1)What was the settlement agreement for $17.6 million signed with the EMRA in 2021?? *** (see above)
2) The EMRA can look back at historic capital costs deducted & audit them (like the massive waste contract Centamin is currenty undertaking) & deem them inadmissible - requiring a settlement payment (as referred to above) Who's to say this won't occur?
3) Centamin refers to a 'change in mine plan'* above but as far as I know the mine plan hasn't changed since 2017 - where's the new mine plan? Why hasn't it
Hi Cowichan,
Very fair and relevant questions!
Well done for picking up on this what appears to be an important change of mine plan that was tucked away on page 56, now why was that?
I wonder why the analyst haven't picked up on this?
Thanks Tibbs - the settlement payment sure was hidden away!
Why are details only coming out now, with 2022 year end results?
Just in case any other shareholders want to ask Centamin investor relations it can be found here:
https://www.centamin.com/media/2886/cey-rns_fy22-results_final_160323_website.pdf
Included within non-current other creditors and current other creditors and accruals is $7.3m (2021: $9.8m) and $4.9m (2021: $2.4m) respectively in relation to the remaining instalments of a $17.6m settlement agreement signed with EMRA in 2021
What I find particularly disturbing is the EMRA's ability to demand monetary compensation at a whim without Centamin shareholders knowing what the heck payment was in regards to.
IMO the waste contract is a big liability going forward - cuz if the EMRA feels it's unfair to capitalize - guess what - they'll want another settlement and this time it won't be a mere $17.6 million - goodbye dividend ad infinitum
Hidden away ?
No .
IT was there ,clear to see. ;-),
The big question you raised for me is the change in mine plan & why there has been no update to the market - the mine plan is significant & material & changes to it should be disclosed.
Based on the performance of the current management to date both in operational & disclosure terms, the absence of market updates is due primarily to the absence of any real plan.
They seem to behave like spoilt children playing with big tonka toys in a sand pit, mummy & daddy have already funded their activities so they can just move stuff around without any goals or objectives - unlike kids, the current management get to reward themselves with our money for conducting their seemingly aimless meanderings which makes them all the more galling!
Life of Mine plan/assett review
28 dec 2021 https://www.globalminingreview.com/exploration-development/28122021/centamin-completes-life-of-asset-review/
8 Feb 2022 https://www.globalminingreview.com/mining/08022022/centamin-surkari-gold-mine-to-transition-to-owner-operator-mining/
31 Aug 2022 https://www.centamin.com/media/2868/cey_disclosures_on_tailings_management_2022_v0.pdf
16 March 2023, a few things that caught my eye ....
Capex guidance is US$225 million, weighted towards H1 (55:45), as the Company continues to identify growth and
optimisation projects at Sukari, including development of a gravity circuit; expansion of the dump leach capacity;
and commencement of the underground expansion. This also reflects inflationary pressures on the contracted
waste-stripping programme specifically from higher fuel prices
• Exploration spend is budgeted at US$30 million, including US$23 million for the pre-development study work on
the Doropo Project....sounds good to me ....
2023 KEY MILESTONES
• June 2023: Doropo Project (Côte d’Ivoire) complete pre-feasibility study
• H2 2023: Sukari Gold Mine (Egypt) update Life of Mine Plan (NI 43-101), including underground expansion, and
• Announcements on the ongoing exploration programmes
I feel reasonably informed. There are a few companies who do a lot worse. Quite a few.
regards
the Gnome