Centerra Gold Inc. (“Centerra” or the “Company”) (TSX: CG and NYSE:
CGAU) today reported its first quarter 2021 results. Key events and
operating results of the first quarter included:
- Net earnings and
adjusted net earningsNG of $167.4 million, $0.57
per common share (basic), and $84.2 million, $0.28 per common share
(basic), respectively.
- Cash flow from
operations and free cash flowNG of $153.1
million and $72.1 million, respectively.
- Cash position at
quarter-end of $823.2 million with total liquidity of $1,223
million.
- Consolidated
Production of 160,346 ounces of gold and 18.6 million
pounds of copper.
- Gold production
costs and copper production costs were
$561 per ounce and $1.42 per pound, respectively.
- All-in sustaining costs on
a by-product basisNG and All-in costs on a
by-product basisNG were $745 per ounce and $1,073 per
ounce, respectively.
- Finalized the sale of 50%
interest in Greenstone Gold Mines Partnership for cash
consideration of $210 million and contingent consideration of
approximately $75 million. A gain of $72.3 million was
recorded on the sale (excluding contingent consideration).
- Recent Kyrgyz Republic
Developments resulted in several new legislative changes
and legal claims affecting the Kumtor Mine, including a new Kyrgyz
Republic law which could result in “external management” being
imposed on Kumtor Gold Company (“KGC”), a $3 billion civil claim
against KGC; various tax claims estimated at $352 million and
several new and re-opened criminal investigations.
- Mount Milligan water
permits extension received in April 2021, extending access
to surface water sources to November 2023.
- Commenced trading on the
New York Stock Exchange under the symbol “CGAU” on April
15, 2021.
- Quarterly Dividend
declared of CAD$0.05 per common share.
Commentary
Scott Perry, President and Chief Executive
Officer of Centerra stated, “During the first quarter we continued
to demonstrate positive safety performance as the Kumtor mine
achieved one-year lost time injury free and Endako achieved six
years reportable injury free. Across the organization we continue
to stay vigilant with respect to the COVID-19 virus, proactively
maintaining our rigorous safety protocols to prevent an outbreak
and reduce the spread of the COVID-19 virus for the health and
safety of our employees, contractors, communities and other
stakeholders.”
“In the first quarter, our three operating mines
continued to deliver solid performances, including the Mount
Milligan mine which generated record quarterly free cash flow.
Company-wide our operations in the quarter delivered gold
production of 160,346 ounces at all-in sustaining costsNG on a
by-product basis of $745 per ounce. The Mount Milligan mine
produced 42,576 ounces of gold and 18.6 million pounds of copper at
all-in sustaining costsNG on a by-product basis of $367 per ounce,
making it our lowest cost producer in the quarter. The Kumtor mine
produced 90,169 ounces of gold at all-in sustaining costsNG on a
by-product basis of $888 per ounce and the Öksüt mine produced
27,601 ounces of gold at all-in sustaining costsNG on a by-product
basis of $804 per ounce as it now enters its first full year of
commercial production.”
“Financially, the Company generated $153.1
million of cash from operations for the first three months of 2021,
which includes $89.7 million from the Mount Milligan mine, $66.7
million from the Kumtor mine and $32 million from the Öksüt mine.
Company-wide free cash flowNG generated in the first quarter of
2021 totalled $72.1 million, including $80.2 million from the Mount
Milligan mine, $25.7 million from the Öksüt mine and $4 million
from the Kumtor mine. With the proceeds of the disposition of the
Greenstone property, we finished the quarter with a cash position
of $823.2 million.”
“Based on the Company’s financial position,
strong operating results and cash flows, the Board approved on May
10, 2021, a quarterly dividend of CAD$0.05 per share.”
“The Company notes that there is a great deal of
uncertainty regarding future production and operations at the
Kumtor Mine due to recent legislative changes in the Kyrgyz
Republic relating to the Kumtor Mine. Accordingly, the 2021
guidance and previously disclosed 3-year outlook should be viewed
with caution. We remain on track to achieve 2021 production and
cost guidance at our Mount Milligan and Öksüt mines, and the
Company is expected to generate $160 million (guidance midpoint) in
free cashflow, excluding the Kumtor Mine.”
“The Company remains committed to trying to work
with Kyrgyz Republic authorities to resolve these issues in
accordance with the 2009 restated project agreements applicable to
the Kumtor Mine, if the authorities are willing to do so.
However, the Company will also use all legal avenues to defend
itself against baseless environmental and tax cases in the Kyrgyz
Republic as well against legislative changes that not only violate
but fundamentally undermine the terms of the 2009 restated project
agreements.”
“Recently, the Company successfully listed and
commenced trading on the New York Stock Exchange to increase the
Company’s visibility and exposure to investors in the United
States.”
New York Stock Exchange
Listing
Centerra’s common shares began trading on the
New York Stock Exchange (NYSE) under the symbol “CGAU” on Thursday,
April 15, 2021.
Kyrgyz Republic Update
As previously disclosed, the Kyrgyz Republic
Parliament passed a law on May 6, 2021 which would enable the
Kyrgyz Republic Government to impose “external management” on
companies in the Kyrgyz Republic operating under concession
agreements. The sponsor of the law, Mr. Akylbek Japarov, has
acknowledged that the only project operating under a concession
agreement in the Kyrgyz Republic is the Kumtor Mine and therefore
this new law purports to regulate only the Kumtor Project. The
Company understands that this newly adopted law on external
management would apply in circumstances where Kumtor Gold Company
(KGC) violates certain Kyrgyz laws relating to safety and thereby
creates an immediate threat to the life or health of
people. In such instances, the law would (i) enable the Prime
Minister of the Kyrgyz Republic to appoint an external manager to
take control of all management activities of KGC, including its
bank accounts, and (ii) prohibit the Company or KGC’s board of
directors from directing the external managers (or else face
criminal sanctions).
Mr. A. Japarov is also the Chairman of the
Kyrgyz Republic State Commission which was formed in February 2021
to review the activities of the Kumtor Mine and is expected to
report its findings shortly.
The Company is also aware of other draft laws
and decrees in the Kyrgyz Republic which seek to undermine the 2009
restated Kumtor project agreements and the tax and fiscal regime
under which the Kumtor Mine has operated since 2009. It is unclear
whether such drafts have progressed past the proposal stage.
On May 7, 2021, a Kyrgyz Republic court ruled
against KGC in a case brought by four Kyrgyz Republic private
citizens seeking a determination that KGC’s past practice of
placing waste rock on glaciers was illegal. The court awarded
damages of over U.S.$3 billion in favour of the Kyrgyz Republic.
The Company notes that one of the claimants is the son of the
current Director of the Kyrgyz Republic State Agency for
Environment Protection and Forestry.
The Company has also received further tax
assessments from the Kyrgyz Republic State Tax Service which when,
combined with previous tax claims, amount to hundreds of millions
of dollars.
As the Company has noted many times, the 2009
restated Kumtor project agreements provide a solid foundation for
Kumtor’s operations and were approved by the Kyrgyz Republic
Parliament and Constitutional Court in 2009. Those agreements were
re-affirmed by the Government of the Kyrgyz Republic in 2017 when
it entered into the Strategic Agreement on Environmental Protection
and Investment Promotion which was completed and became fully
effective in 2019. KGC’s operations and activities have always
carefully adhered to those agreements and applicable laws.
Furthermore, the Strategic Agreement included a release of the
Company and KGC by the Kyrgyz Republic Government of all
outstanding claims at such time, including damages for harm
allegedly caused to the environment from storing production tails
on glaciers. The Company therefore believes strongly that the
claims advanced by the State Tax Service and such individual Kyrgyz
Republic claimants are meritless and the new and draft Kyrgyz
Republic laws noted above, if implemented, would clearly violate
the 2009 restated project agreements and the 2009 Kyrgyz Republic
laws which confirmed such agreements. The Kumtor Mine’s
environmental performance adheres to international standards,
including those of the European Bank for Reconstruction and
Development, and has been audited multiple times by, among others,
the Kyrgyz Government’s own environmental consultant, AMEC Foster
Wheeler. AMEC’s reports have confirmed that the Kumtor Mine is
operated in accordance with international best practice and its
recommendations for improvements have been fully implemented by the
Company in a manner agreed by the Kyrgyz Government in the
2017 Strategic Agreement. In terms of Kumtor’s safety record, the
mine recently achieved, one year of operations free of any lost
time injuries.
The Company believes that the actions of the
Kyrgyz Republic authorities described above are a concerted effort
to coerce Centerra to give up economic value or ownership of the
Kumtor Mine or to falsely justify a nationalization of the Kumtor
Mine. While the Company has benefited from a close and constructive
dialogue with the Kyrgyz Republic authorities over many years and
remains committed to trying to work with them to resolve any
outstanding issues in accordance with the 2009 Restated Project
Agreements applicable to the Kumtor Mine, it will not hesitate to
use all legal avenues to protect its rights and interests and those
of its shareholders and it intends to pursue its claim in
international arbitration proceedings.
No assurances can be given that any of the
current or future legal claims of the State Tax Service or
individual claimants, disputes as to the application of current or
future Kyrgyz Republic laws relating to the Kumtor Mine, the
results of the State Commission review or any other future
regulatory, civil or criminal claims impacting KGC or Centerra can
be resolved without a material impact on the Company. See
“Contingencies” for further information relating to these Kyrgyz
Republic developments.
COVID-19 Update
Centerra continues to prioritize the health,
safety and well-being of its employees, contractors, communities,
and other stakeholders during the current outbreak of COVID-19 and
to take steps to minimize the effect of the pandemic on its
business. The Company has established strict COVID-19 protocols at
its mine sites to help prevent infection and reduce the potential
transmission of COVID-19. In addition, operating mine sites
continue to assess the resiliency of their supply chains,
maintaining increased mine site inventories of key materials. The
Company has also implemented travel restrictions and has
temporarily closed or limited office capacity at its various
administration offices including its head office in
Toronto.
In Turkey and the Kyrgyz Republic, the
week-over-week status appears to be stabilizing, with the national
daily COVID-19 case count in Turkey at approximately 25,000 (down
from a high of 65,000 in recent weeks) and the national COVID-19
daily case count in the Kyrgyz Republic holding at approximately
300 cases per day. At the Öksüt mine, 17 individuals are in
quarantine, primarily from the mine’s open pit mining contractor.
The Turkish Government has declared a nine-day public holiday &
stay-at-home period for the post Ramadan celebration in May 2021,
during which blasting activities in the open pit at the Öksüt mine
will be halted, resulting in a net two to three days of no mining
activity. In the Prince George region of British Columbia,
Canada, near the Mount Milligan mine, daily COVID-19 case counts at
approximately 150, (down from a high of approximately 200 in recent
weeks). As part of the roll-out of vaccinations across Northern
British Columbia, COVID-19 vaccinations were made available to
Mount Milligan employees in April 2021. The majority of the
Molybdenum Business Unit is located in the United States have not
been materially affected by COVID-19 due, in part, to a rapid
COVID-19 vaccination roll-out.
COVID-19 has not materially affected Centerra’s
operations as employee absences due to COVID-19 and other illnesses
have so far been successfully managed. The Company notes that the
effects of COVID-19 on its business continue to change rapidly. The
measures enacted to date reflect the Company’s best assessment at
this time but will remain flexible and be revised as necessary or
advisable and/or as recommended by the public health and
governmental authorities.
Exploration Update
Exploration activities in the first quarter of
2021 included drilling, surface sampling, geological mapping and
geophysical surveying at the Company’s various projects and earn-in
properties, targeting gold and copper mineralization in Canada,
Turkey, Finland, USA and the Kyrgyz Republic.
Exploration expenditures were $9.3 million in
the first quarter of 2021 compared to $7.8 million in the same
quarter of 2020. The increase in exploration expenditures was due
to a significantly expanded drilling program at the Kumtor mine,
drilling approximately 20,000 metres in the first quarter of 2021,
as well as the recommencement of drilling activities at Öksüt and
Mount Milligan earlier in than the prior period.
Selected drill program results and intercepts
are highlighted in the supplementary data at the end of this news
release. The drill collar locations and associated graphics are
available at the following
link: http://ml.globenewswire.com/Resource/Download/ebc019dc-6dc1-46a5-a948-2fde2391fd4f
About Centerra GoldCenterra
Gold Inc. is a Canadian-based gold mining company focused on
operating, developing, exploring and acquiring gold properties in
North America, Asia and other markets worldwide and is one of the
largest Western-based gold producers in Central Asia. Centerra
operates three mines, the Kumtor mine in the Kyrgyz Republic, the
Mount Milligan mine in British Columbia, Canada and the Öksüt mine
in Turkey. Centerra's shares trade on the Toronto Stock Exchange
(TSX) under the symbol CG and on the New York Stock Exchange (NYSE)
under the symbol CGAU. The Company is based in Toronto, Ontario,
Canada.
Conference CallCenterra invites
you to join its 2021 first quarter conference call on Tuesday, May
11, 2021 at 8:30 AM Eastern Time. The call is open to all investors
and the media. To join the call, please dial toll-free in North
America: (800) 582-1443. International participants may access the
call at: +1 (212) 231-2910. Results summary presentation slides are
available on Centerra Gold’s website at www.centerragold.com.
Alternatively, an audio feed webcast will be broadcast live by
Intrado and can be accessed live at Centerra Gold’s website at
www.centerragold.com. A recording of the call will be available
on www.centerragold.com shortly after the call and via
telephone until midnight Eastern Time on May 18, 2021 by calling:
+1 (416) 626-4100 or 1 (800) 558-5253 and using passcode
21993267.
For more information:John W.
PearsonVice President, Investor RelationsCenterra Gold Inc.(416)
204-1953john.pearson@centerragold.com
Additional information on Centerra Gold
is available on the Company’s web site at
www.centerragold.com and at SEDAR at www.sedar.com and EDGAR
at www.sec.gov/edgar.
A PDF accompanying this announcement is available
at: http://ml.globenewswire.com/Resource/Download/496ad340-125b-4cfd-afdd-b55846342aab
Management’s Discussion and
Analysis For the Period Ended March 31,
2021
This Management Discussion and Analysis
(“MD&A”) has been prepared as of May 10, 2021 and is intended
to provide a review of the financial position and results of
operations of Centerra Gold Inc. (“Centerra” or the “Company”) for
the three months ended March 31, 2021 in comparison with the
corresponding period ended March 31, 2020. This discussion should
be read in conjunction with the Company’s unaudited condensed
consolidated interim financial statements and the notes thereto for
the three months ended March 31, 2021 prepared in accordance with
International Financial Reporting Standards (“IFRS”). This MD&A
should also be read in conjunction with the Company’s audited
annual consolidated financial statements for the years ended
December 31, 2020 and 2019, the related MD&A and the Annual
Information Form for the year ended December 31, 2020 (the “2020
Annual Information Form”). The Company’s unaudited condensed
consolidated interim financial statements and the notes thereto for
the three months ended March 31, 2021, the 2020 Annual Report and
the 2020 Annual Information Form are available at
www.centerragold.com, on the System for Electronic Document
Analysis and Retrieval (“SEDAR”) at www.sedar.com and on the
Electronic Data Gathering, Analysis and Retrieval system (“EDGAR”)
www.sec.gov/edgar. In addition, this discussion contains forward
looking information regarding Centerra’s business and operations.
Such forward-looking statements involve risks, uncertainties and
other factors that could cause actual results to differ materially
from those expressed or implied by such forward looking statements.
See “Caution Regarding Forward-Looking Information” in this
discussion. All dollar amounts are expressed in United States
dollars (“USD”), except as otherwise indicated. All references in
this document denoted with NG indicate a non-GAAP term which is
discussed under “Non-GAAP Measures” and reconciled to the most
directly comparable GAAP measure.
Caution Regarding Forward-Looking
InformationInformation contained in this document which
are not statements of historical facts, and the documents
incorporated by reference herein, may be “forward-looking
information” for the purposes of Canadian securities laws and
within the meaning of the United States Private Securities
Litigation Reform Act of 1995. Such forward-looking
information involves risks, uncertainties and other factors that
could cause actual results, performance, prospects and
opportunities to differ materially from those expressed or implied
by such forward looking information. The words “believe”, “expect”,
“anticipate”, “contemplate”, “plan”, “intends”, “continue”,
“budget”, “estimate”, “may”, “will”, “schedule”, “understand” and
similar expressions identify forward-looking information. These
forward-looking statements relate to, among other things:
statements regarding 2021 Guidance, including guidance on
production, cost and capital spend in 2021, and the assumptions
used in preparing; the impact, if any, of the Kyrgyz State
Commission, new and proposed Kyrgyz legislation which appears to
provide a means of temporary or permanent nationalization of the
Kumtor Mine, other Kyrgyz Republic developments to date including
the tax claims and requests to re-audit initiated by Kyrgyz
Republic State Tax Services, the citizens claim commenced in Kyrgyz
courts claiming for damage caused by the historical practice of
placing waste rock on glaciers, and criminal investigations
commenced or re-opened by the Kyrgyz Republic authorities; pursuit
of the Company’s claims against the Kyrgyz Republic in
international arbitration; planned exploration in 2021;
possible impacts to its operations relating to COVID-19; the
Company’s expectations regarding having sufficient liquidity for
2021; the Company’s expectation regarding having sufficient water
at the Mount Milligan mine in the medium term, and its plans for a
long term solution; expectations regarding the receipt of a
forestry permit for the Öksüt mine and plans to access the
Güneytepe deposit in 2022; and expectations regarding litigation
involving the Company.
Forward-looking information is necessarily based
upon a number of estimates and assumptions that, while considered
reasonable by Centerra, are inherently subject to significant
technical, political, business, economic and competitive
uncertainties and contingencies. Known and unknown factors could
cause actual results to differ materially from those projected in
the forward-looking information. Factors and assumptions that could
cause actual results or events to differ materially from current
expectations include, among other things: (A) strategic, legal,
planning and other risks, including: political risks associated
with the Company’s operations in the Kyrgyz Republic, Turkey and
Canada; the failure of the Kyrgyz Republic Government to comply
with its continuing obligations under the Strategic Agreement,
including the requirement that it comply at all times with its
obligations under the Kumtor Project Agreements, allow for the
continued operation of the Kumtor mine by KGC and KOC and not take
any expropriation action against the Kumtor mine including through
imposition of external management appointed by the Kyrgyz Republic
Government; actions by the Kyrgyz Republic Government or any state
agency or the General Prosecutor's Office that serve to restrict or
otherwise interfere with the payment of funds by KGC and KOC to
Centerra; resource nationalism including the management of external
stakeholder expectations; the impact of changes in, or to the more
aggressive enforcement of, laws, regulations and government
practices, including unjustified civil or criminal action against
the Company, its affiliates or its current or former employees,
including the interaction of claims of harm to the environment or
human health with a new Kyrgyz Republic law that could enable
imposition of external management on the Kumtor Mine by the Kyrgyz
Republic Government; risks that community activism may result in
increased contributory demands or business interruptions; the risks
related to outstanding litigation affecting the Company, including
the potential failure to negotiate a mutually acceptable outcome of
disputes relating to the Kumtor Mine; risks that an arbitrator will
reject the Company’s claims against the Kyrgyz Republic or that
such claims may not be practically enforceable against the Kyrgyz
Republic; the impact of the delay by relevant government agencies
to provide required approvals, expertise and permits; potential
impact on the Kumtor mine of investigations by Kyrgyz Republic
instrumentalities; the impact of constitutional changes in the
Kyrgyz Republic and/or Turkey; the impact of any sanctions imposed
by Canada, the United States or other jurisdictions against various
Russian and Turkish individuals and entities; potential defects of
title in the Company’s properties that are not known as of the date
hereof; the inability of the Company and its subsidiaries to
enforce their legal rights in certain circumstances; the presence
of a significant shareholder that is a state-owned company of the
Kyrgyz Republic; risks related to anti-corruption legislation;
risks related to the concentration of assets in Central Asia;
Centerra not being able to replace mineral reserves; Indigenous
claims and consultative issues relating to the Company’s properties
which are in proximity to Indigenous communities; and potential
risks related to kidnapping or acts of terrorism; (B) risks
relating to financial matters, including: sensitivity of the
Company’s business to the volatility of gold, copper and other
mineral prices, the use of provisionally-priced sales contracts for
production at the Mount Milligan mine, reliance on a few key
customers for the gold-copper concentrate at the Mount Milligan
mine, use of commodity derivatives, the imprecision of the
Company’s mineral reserves and resources estimates and the
assumptions they rely on, the accuracy of the Company’s production
and cost estimates, the impact of restrictive covenants in the
Company’s credit facilities which may, among other things, restrict
the Company from pursuing certain business activities or making
distributions from its subsidiaries, the Company’s ability to
obtain future financing, the impact of global financial conditions,
the impact of currency fluctuations, the effect of market
conditions on the Company’s short-term investments, the Company’s
ability to make payments including any payments of principal and
interest on the Company’s debt facilities depends on the cash flow
of its subsidiaries; and (C) risks related to operational matters
and geotechnical issues and the Company’s continued ability to
successfully manage such matters, including the stability of the
pit walls at our operations, the movement of the Davidov
Glacier, waste and ice movement and continued performance of the
buttress at the Kumtor mine; the occurrence of further ground
movements at the Kumtor mine and mechanical availability; the risk
of having sufficient water to continue operations at the Mount
Milligan mine and achieve expected mill throughput; the success of
the Company’s future exploration and development activities,
including the financial and political risks inherent in carrying
out exploration activities; inherent risks associated with the use
of sodium cyanide in the mining operations; the adequacy of the
Company’s insurance to mitigate operational risks; mechanical
breakdowns; the Company’s ability to replace its mineral reserves;
the occurrence of any labour unrest or disturbance and the ability
of the Company to successfully re-negotiate collective agreements
when required; the risk that Centerra’s workforce and operations
may be exposed to widespread epidemic including, but not limited
to, the COVID-19 pandemic; seismic activity in the vicinity of the
Company’s properties; long lead times required for equipment and
supplies given the remote location of some of the Company’s
operating properties; reliance on a limited number of suppliers for
certain consumables, equipment and components; the ability of the
Company to address physical and transition risks from climate
change and sufficiently manage stakeholder expectations on
climate-related issues; the Company’s ability to accurately predict
decommissioning and reclamation costs; the Company’s ability to
attract and retain qualified personnel; competition for mineral
acquisition opportunities; risks associated with the conduct of
joint ventures/partnerships; and the Company’s ability to manage
its projects effectively and to mitigate the potential lack of
availability of contractors, budget and timing overruns and project
resources. For additional risk factors, please see section titled
“Risks Factors” in the Company’s most recently filed Annual
Information Form available on SEDAR at www.sedar.com and EDGAR
www.sec.gov/edgar. There can be no assurances that
forward-looking information and statements will prove to be
accurate, as many factors and future events, both known and unknown
could cause actual results, performance or achievements to vary or
differ materially from the results, performance or achievements
that are or may be expressed or implied by such forward-looking
statements contained herein or incorporated by reference.
Accordingly, all such factors should be considered carefully when
making decisions with respect to Centerra, and prospective
investors should not place undue reliance on forward looking
information. Forward-looking information is as of May 10, 2021.
Centerra assumes no obligation to update or revise forward-looking
information to reflect changes in assumptions, changes in
circumstances or any other events affecting such forward-looking
information, except as required by applicable law.
TABLE OF CONTENTS
Overview |
11 |
Consolidated Financial and Operational
Highlights |
12 |
Overview of Consolidated Results |
13 |
Outlook |
14 |
Financial Performance |
18 |
Balance Sheet Review |
19 |
Market Conditions |
20 |
Financial Instruments |
22 |
Operating Mines and Facilities |
23 |
Pre-Development Projects |
32 |
Quarterly Results – Previous Eight
Quarters |
33 |
Related party transactions |
34 |
Contingencies |
34 |
Accounting Estimates, Policies and
Changes |
38 |
Disclosure Controls and Procedures and Internal Control
Over Financial Reporting |
39 |
Non-GAAP Measures |
39 |
Qualified Person & QA/QC – Non-Exploration
(including Production information) |
45 |
Overview
Centerra is a Canadian-based gold mining company
focused on operating, developing, exploring and acquiring gold
properties worldwide and is one of the largest Western-based gold
producers in Central Asia. Centerra’s principal operations are the
Kumtor Gold mine located in the Kyrgyz Republic, the Mount Milligan
Gold-Copper mine located in British Columbia, Canada, and the Öksüt
Gold mine located in Turkey. The Company has one property in Canada
in the pre-development stage, the Kemess Underground Gold Property.
The Company sold its interest in the Greenstone Gold Mines
Partnership, which included its interest in the Hardrock deposit,
effective January 19, 2021. The Company owns exploration properties
in Canada, the United States of America and Turkey and has options
to acquire exploration joint venture properties in Canada, Finland,
Turkey, and the United States of America. The Company owns various
assets within its Molybdenum Business Unit, particularly the
Langeloth metallurgical processing facility in Pennsylvania, United
States of America and two primary molybdenum mines currently on
care and maintenance, the Thompson Creek Mine in Idaho, United
States of America, and the Endako Mine (75% ownership) in British
Columbia, Canada.
As of March 31, 2021, Centerra’s significant
subsidiaries are as follows:
|
|
Current |
Property |
Entity |
Property - Location |
Status |
Ownership |
Kumtor Gold Company (“KGC”) |
Kumtor Mine - Kyrgyz Republic |
Operation |
100% |
|
|
|
|
Thompson Creek Metals Company Inc. |
Mount Milligan Mine - Canada |
Operation |
100% |
|
|
|
|
Öksüt Madencilik A.S. (“OMAS”) |
Öksüt Mine - Turkey |
Operation |
100% |
|
|
|
|
Langeloth Metallurgical Company LLC |
Langeloth - United States |
Operation |
100% |
|
|
|
|
AuRico Metals Inc. |
Kemess Underground Project - Canada |
Pre-development |
100% |
|
|
|
|
Thompson Creek Mining Co. |
Thompson Creek Mine - United States |
Care and Maintenance |
100% |
|
|
|
|
Thompson Creek Metals Company Inc. |
Endako Mine - Canada |
Care and Maintenance |
75% |
|
|
|
|
The Company’s common shares are listed on the
Toronto Stock Exchange and trade under the symbol CG and, effective
April 15, 2021, on the New York Stock Exchange and trade under the
symbol CGAU.
As of May 10, 2021, there are 296,696,357
common shares issued and outstanding, options to
acquire 3,551,054 common shares outstanding under its stock
option plan and 1,034,191 units outstanding under its
restricted share unit plan (exercisable on a 1:1 basis for common
shares).
The Company reports the results of its
operations in U.S. dollars, however not all of its costs are
incurred in U.S. dollars. As such, the movement in exchange rates
between the currencies in which the Company incurs costs and the
U.S. dollar impacts the reported costs of the Company.
Consolidated Financial and Operational
Highlights
Unaudited ($ millions, except as noted) |
Three months ended March 31 |
Financial Highlights |
|
2021 |
|
2020 |
% Change |
Revenue |
$ |
401.9 |
$ |
378.8 |
6 |
% |
Production costs |
|
169.7 |
|
169.4 |
0 |
% |
Standby costs |
|
- |
|
6.8 |
(100 |
%) |
Depreciation, depletion, and amortization |
|
72.9 |
|
73.0 |
(0 |
%) |
Earnings from mine operations |
$ |
159.3 |
$ |
129.6 |
23 |
% |
Net earnings |
$ |
167.4 |
$ |
20.0 |
737 |
% |
Adjusted net earnings(1) |
$ |
84.2 |
$ |
46.4 |
81 |
% |
Cash provided by operations |
|
153.1 |
|
121.1 |
26 |
% |
Cash provided by operations before changes in working capital |
|
183.4 |
|
143.3 |
28 |
% |
Free cash flow(1) |
|
72.1 |
|
77.0 |
(6 |
%) |
Sustaining capital expenditures(2) |
|
20.8 |
|
14.5 |
44 |
% |
Non-sustaining capital expenditures(2)(3) |
|
22.2 |
|
13.4 |
66 |
% |
Capitalized stripping(2) |
|
41.7 |
|
40.0 |
4 |
% |
Total assets |
|
3,327.7 |
|
2,792.9 |
19 |
% |
Long-term debt and lease obligations |
|
13.7 |
|
150.6 |
(91 |
%) |
Cash, and cash equivalents |
|
823.2 |
|
193.9 |
325 |
% |
Per Share Data |
|
|
|
|
|
Earnings per common share - $/share basic (4) |
$ |
0.57 |
$ |
0.07 |
714 |
% |
Adjusted net earnings per common share - $/share basic (1)(4) |
$ |
0.28 |
$ |
0.16 |
75 |
% |
Per Ounce Data (except as
noted) |
|
|
|
|
|
Average gold spot price ($/oz)(5) |
|
1,797 |
|
1,582 |
14 |
% |
Average realized gold price ($/oz )(1)(6) |
|
1,627 |
|
1,487 |
9 |
% |
Average copper spot price ($/lb)(5) |
|
3.86 |
|
2.57 |
50 |
% |
Average realized copper price ($/lb )(1)(6) |
|
2.72 |
|
1.61 |
69 |
% |
Operating Highlights |
|
|
|
|
|
Gold produced (oz) |
|
160,346 |
|
190,474 |
(16 |
%) |
Gold sold (oz) |
|
180,519 |
|
203,258 |
(11 |
%) |
Copper produced (000's lb) |
|
18,609 |
|
20,072 |
(7 |
%) |
Copper sold (000's lb) |
|
22,783 |
|
20,423 |
12 |
% |
Unit Costs |
|
|
|
|
|
Gold production costs ($/oz) |
$ |
561 |
$ |
437 |
28 |
% |
All-in sustaining costs on a by-product basis
($/oz)(1)(6) |
$ |
745 |
$ |
718 |
4 |
% |
All-in costs on a by-product basis ($ /oz)(1)(6) |
$ |
1,073 |
$ |
1,024 |
5 |
% |
Gold - All-in sustaining costs on a co-product basis($/oz)(1) |
$ |
876 |
$ |
676 |
30 |
% |
Copper production costs ($/lb) |
$ |
1.42 |
$ |
1.37 |
4 |
% |
Copper - All-in sustaining costs on a co-product basis –
($/lb)(1) |
$ |
1.68 |
$ |
1.52 |
11 |
% |
(1) |
Non-GAAP measure. See discussion under “Non-GAAP
Measures”. |
(2) |
Capital expenditures are presented as spent and accrued.
Capitalized stripping includes non-cash of $6.8 million in the
first quarter of 2021 (2020: $10 million). |
(3) |
Non-sustaining capital expenditures are distinct projects designed
to have a significant increase in the net present value of the
mine. In the current year, non-sustaining capital expenditures
included costs related to the mine expansion at Kumtor and
construction costs at the Öksüt mine. |
(4) |
At March 31 2021, the Company had 296,511,550 common shares issued
and outstanding. |
(5) |
Average for the period as reported by the London Bullion Market
Association (US dollar Gold P.M. Fix Rate) and London Metal
Exchange (LME). |
(6) |
Includes the impact of reduced metal prices resulting from the
Mount Milligan Streaming Arrangement, and the impact of copper
hedges. |
|
|
Overview of Consolidated
Results
First Quarter 2021 compared to First
Quarter 2020Net earnings of $167.4 million were recognized
in the first quarter of 2021, compared to net earnings of $20
million in the first quarter of 2020. The increase in net earnings
was due to the increase in ounces of gold sold at the Öksüt and
Mount Milligan mines, a 9% higher average realized gold price, and
a 69% higher average realized copper price, compared to the same
prior year period, as well as a gain of $72.3 million in the
current quarter, on the sale of Centerra’s 50% interest in the
Greenstone Gold Mines Partnership, partially offset by less gold
ounces sold at the Kumtor mine.
Adjusted net earningsNG in the first quarter of
2021 was $84.2 million after adjusting for the $72.3 million gain
on the sale of Centerra’s 50% interest in the Greenstone Gold Mines
Partnership and the $10.9 million gain resulting from the reduction
in the reclamation liability due to favourable discount rate
movements. Adjusted net earningsNG in the first quarter of 2020 was
$46.4 million, after adjusting for the $26.4 million charge
resulting from the increase in the reclamation liability due to
unfavourable discount rate movements.
Cash provided by operations was $153.1 million
in the first quarter of 2021, compared to $121.1 million in the
first quarter of 2020. The increase in cash provided by operations
was due to increased earnings from mine operations at the Öksüt
mine which recorded a full quarter of operations and the Mount
Milligan mine which recognized its highest quarterly cash from mine
operations since it commenced production. The comparative first
quarter of 2020 included the receipt of a tax refund of $11.4
million collected at the molybdenum business unit.
Free cash flowNG of $72.1 million was recognized
in the first quarter of 2021, compared to $77 million in the first
quarter of 2020. The decrease in free cash flowNG was due to higher
capital expenditures including the purchase of haul trucks for the
life of mine extension at the Kumtor mine and major planned
equipment rebuilds at the Mount Milligan mine, partially offset by
higher cash provided by operations.
Safety and EnvironmentDuring
the first quarter of 2021, the Kumtor mine achieved one-year lost
time injury free, and the Endako mine achieved six years reportable
injury free. In addition, Centerra experienced zero reportable
injuries and zero significant incidents Company-wide in the month
of March 2021.
There were four reportable injuries company-wide
in the first quarter of 2021, including one lost time injury, two
medical aid injuries and one restricted work injury.
Centerra has implemented a number of proactive
measures to prevent infection and reduce the spread of COVID-19 for
the health and safety of its employees, contractors, communities
and other stakeholders.
There were no reportable incidents to the
environment in the first quarter of 2021.
Outlook
The Company notes that there is a great deal of
uncertainty regarding future production and operations at the
Kumtor Mine due to recent legislative changes in the Kyrgyz
Republic, public rhetoric regarding nationalization, and tax and
legal claims and investigations relating to the Kumtor Mine.
Accordingly, the following 2021 guidance and previously disclosed
3-year outlook should be viewed with caution and may be materially
different as a result of the foregoing and similar matters. For
further information, please refer to “Caution Regarding
Forward-Looking Information” and “Contingencies”.
2021 Production
GuidanceCenterra’s 2021 consolidated gold production
guidance remains unchanged and is expected to be between 740,000 to
820,000 ounces. Production from the Kumtor, Mount Milligan and
Öksüt mines is expected to be weighted to the second half of the
year, representing up to 60% of 2021 annual gold production.
Öksüt’s second quarter production volumes are expected to represent
15% of its 2021 annual gold production due to the sequencing of
lower-grade ore onto the leach pad, with meaningfully higher-grade
ore stacking expected in the second half of the year.
Centerra’s 2021 production forecast is unchanged
from previous guidance and is as follows:
|
Units |
Kumtor |
Mount Milligan(1) |
Öksüt |
Centerra Consolidated |
Gold |
|
|
|
|
|
Unstreamed Gold Production |
(Kozs) |
470-510 |
117-130 |
90-110 |
677-750 |
Streamed Gold Production(1) |
(Kozs) |
- |
63-70 |
- |
63-70 |
Total Gold Production(2) |
(Kozs) |
470-510 |
180-200 |
90-110 |
740-820 |
|
|
|
|
|
|
Copper |
|
|
|
|
|
Unstreamed Copper Production |
(Mlb) |
- |
57-65 |
- |
57-65 |
Streamed Copper Production(1) |
(Mlb) |
- |
13-15 |
- |
13-15 |
Total Copper Production(3) |
(Mlb) |
- |
70-80 |
- |
70-80 |
(1) |
The Mount Milligan Streaming Arrangement entitles Royal Gold to 35%
and 18.75% of gold and copper sales, respectively, from the Mount
Milligan mine. Under the Mount Milligan Streaming Arrangement,
Royal Gold will pay $435 per ounce of gold delivered and 15% of the
spot price per metric tonne of copper delivered. |
(2) |
Gold production assumes recoveries of 81.9% at Kumtor, 63.9% at
Mount Milligan and approximately 75% at Öksüt. |
(3) |
Copper production assumes 78.8% recovery for copper at Mount
Milligan. |
|
|
2021 Sales, All-in Sustaining and All-in
Unit Costs GuidanceNGCenterra’s 2021 sales and cost
metrics are unchanged from the previous guidance and are as
follows:
|
Units |
Kumtor |
Mount Milligan |
Öksüt |
Centerra Consolidated(2) |
Ounces of gold sold |
(Kozs) |
470 - 510 |
180 - 200 |
90
- 110 |
740 - 820 |
Gold production costs |
($/oz) |
400 - 450 |
650 -700 |
500 - 550 |
475 - 525 |
All-in sustaining costs on a by-product
basis(1) |
($/oz) |
950 - 1,000 |
530 - 580 |
730 - 780 |
850 - 900 |
Revenue-based taxes |
($/oz) |
250 -
255 |
- |
- |
160 - 165 |
All-in sustaining costs on a by-product basis, including
revenue-based taxes (1), (2), (3) |
($/oz) |
1,200 -
1,255 |
530 -
580 |
730 -
780 |
1,010 - 1,065 |
All-in costs on a by-product
basis(1),(2),(3) |
($/oz) |
1,365 - 1,420 |
590 - 640 |
790 - 840 |
1,175 - 1,230 |
Gold - All-in sustaining costs on a co-product basis(1),(2) |
($/oz) |
950 -
1,000 |
910 -
1,025 |
730 -
780 |
950 - 1,055 |
Copper production costs |
($/lb) |
- |
1.30-1.45 |
- |
1.30-1.45 |
Copper - All-in sustaining costs on a co-product basis (1),(2) |
($/lb) |
- |
1.75-1.95 |
- |
1.75-1.95 |
(1) |
All-in sustaining costs and all-in costs on a by-product and
co-product basis are non-GAAP measures and are discussed under
“Non-GAAP Measures”. Gold production cost per ounce is different
from the all-in sustaining costs on a by-product basis measure and
is considered the nearest GAAP measure. |
(2) |
Mount Milligan production and ounces sold are on a 100% basis (the
Mount Milligan Streaming Arrangement entitles Royal Gold to 35% and
18.75% of gold and copper sales, respectively). Unit costs and
consolidated unit costs include a credit for forecasted copper
sales treated as by-product for all-in sustaining costs and all-in
sustaining costs including revenue-based taxes. Production for
copper and gold reflects estimated metallurgical losses resulting
from handling of the concentrate and metal deductions, subject to
metal content, levied by smelters. |
(3) |
Includes revenue-based taxes at Kumtor. |
|
|
2021 TaxesIn April 2021, the Government of
Turkey enacted a corporate tax rate increase from 20% to 25% for
2021. As a result of the tax benefits available under the Company’s
Investment Incentive Certificate, income tax in 2021 for the Öksüt
mine is expected to be unchanged from previous guidance of between
$1 to $2 million.
2021 SensitivitiesCenterra’s
revenues, earnings, and cash flows for 2021 are sensitive to
changes in certain key inputs or currencies. The Company has
estimated the impact of any such changes on revenues, net earnings,
and cash flows for the remaining nine months of 2021 as
follows:
|
Impact on ($ millions) |
Impact on ($ per ounce sold) |
|
Production Costs & Taxes |
Capital Costs |
Revenues |
Cash flows |
Net Earnings (after tax) |
AISC(2)(3) on
by-product basis |
Gold price |
$50/oz |
3.5 - 4.0 |
- |
26.0 - 29.5 |
22.5 - 25.5 |
22.5 - 25.5 |
1.5 - 2.0 |
Copper price(4) |
10% |
0.1 - 0.2 |
- |
1.5 -
4.5 |
1.4 –
4.3 |
1.4 – 4.3 |
6.5 - 7.5 |
Diesel fuel(3) |
10% |
4.5- 5.0 |
9.0 -
11.0 |
- |
13.5 -
16.0 |
4.5 - 5.0 |
25.0 - 28.5 |
Kyrgyz som(1) |
1 som |
0.5 - 1.0 |
- |
- |
0.5 -
1.0 |
0.5 - 1.0 |
1.5 - 2.0 |
Canadian dollar(1)(3) |
10 cents |
8.0 – 9.5 |
1.5 -
2.0 |
- |
9.5 –
11.5 |
8.0 – 9.5 |
18.0 – 20.5 |
Turkish lira(1) |
1 lira |
2.5 - 3.0 |
0.5 - 1.0 |
- |
3.0 - 4.0 |
2.5 - 3.0 |
6.5 - 7.0 |
(1) |
Appreciation of currency against the U.S. dollar will result in
higher costs and lower cash flow and earnings, depreciation of
currency against the U.S. dollar results in decreased costs and
increased cash flow and earnings. |
(2) |
Non-GAAP measure. See discussion under “Non-GAAP Measures”. |
(3) |
Includes the effect of hedging programs. |
(4) |
2021 copper sales are hedged up to 95%. |
|
|
Production, cost and capital forecasts for 2021
are forward-looking information and are based on key assumptions
and subject to material risk factors that could cause actual
results to differ materially, and which are discussed herein under
the headings “2021 Material Assumptions” and “Caution Regarding
Forward-Looking Information” in this document and under the heading
“Risks That Can Affect Our Business” in this document and the
Company’s most recently filed Annual Information Form. The Company
notes that there is a great deal of uncertainty regarding future
production and operations at the Kumtor Mine due to recent
legislative changes in the Kyrgyz Republic relating to the Kumtor
Mine. Accordingly, the 2021 guidance and previously disclosed
3-year outlook should be viewed with caution. The recent
legislative changes are discussed herein under the heading
“Contingencies”.
2021 Material
AssumptionsMaterial assumptions or factors used to
forecast production and costs for 2021, after giving effect to the
hedges in place at December 31, 2020, are unchanged and include the
following:
- a market gold price of $1,750 per ounce and an average realized
gold price at Mount Milligan of $1,290 per ounce after reflecting
the Mount Milligan Streaming Arrangement (35% of Mount Milligan’s
gold at $435 per ounce).
- a market copper price of $3.36 per pound and an average
realized copper price at Mount Milligan of $2.82 per pound after
reflecting the Mount Milligan’s Streaming Arrangement (18.75% of
Mount Milligan’s copper at 15% of the spot price per metric
tonne).
- a molybdenum price of $9 per pound.
- exchange rates:
- $1USD:$1.31 Canadian dollar,
- $1USD:80 Kyrgyz som,
- $1USD:7.50 Turkish lira.
- diesel fuel price assumption:
- $0.44/litre at Kumtor,
- $0.69/litre (CAD$0.90/litre) at Mount Milligan.
Kumtor FuelThe assumed diesel price of
$0.44/litre at the Kumtor mine assumes that no Russian export duty
will be paid on the fuel exports from Russia to the Kyrgyz
Republic. Diesel fuel for the Kumtor mine is sourced from separate
Russian suppliers. The diesel fuel price assumes a price of oil of
approximately $53 per barrel. Crude oil is a component of diesel
fuel purchased by the Company, such that changes in the price of
Brent crude oil generally impacts diesel fuel prices.
Mount Milligan Streaming ArrangementThe Mount
Milligan mine is an open pit mine located in north central British
Columbia, Canada producing a gold and copper concentrate.
Production at the Mount Milligan mine is subject to an arrangement
with RGLD Gold AG and Royal Gold, Inc. (together, “Royal Gold”)
pursuant to which Royal Gold is entitled to purchase 35% of the
gold produced and 18.75% of the copper production at the Mount
Milligan mine for $435 per ounce of gold delivered and 15% of the
spot price per metric tonne of copper delivered (the “Mount
Milligan Streaming Arrangement”). To satisfy its obligations
under the Mount Milligan Streaming Arrangement the Company
purchases refined gold and copper warrants and arranges for
delivery to Royal Gold. The difference between the cost of the
purchases of refined gold and copper warrants, and the
corresponding amounts payable to the Company under the Mount
Milligan Streaming Arrangement is recorded as a reduction of
revenue and not a cost of operating the mine.
Other Material AssumptionsOther material
assumptions used in forecasting production and costs for 2021 can
be found under the heading “Caution Regarding Forward-Looking
Information” in this document.
Financial Performance
First Quarter 2021 compared to First
Quarter 2020
Revenue of $401.9 million was recognized in the
first quarter of 2021 compared to $378.8 million in the first
quarter of 2020. The increase in revenue was due to 27,584 gold
ounces sold at the Öksüt mine, which commenced commercial
production on May 31, 2020, higher average realized gold and copper
prices and increased gold ounces sold at the Mount Milligan mine,
partially offset by fewer gold ounces sold at the Kumtor mine.
Total gold production was 160,346 ounces in the
first quarter of 2021 compared to 190,474 ounces in the first
quarter of 2020. Gold production in the first quarter of 2021
included 90,169 ounces at the Kumtor mine, 41% less ounces than the
comparable prior year period, due to the anticipated lower grades
and recoveries. The Mount Milligan mine produced 42,576 ounces of
gold in the first quarter of 2021, 26% more ounces than the first
quarter of 2020, due to higher gold grades and recoveries. The
Öksüt mine, which was not in commercial production in the first
quarter of 2020, produced 27,601 ounces of gold in the first
quarter of 2021.
Copper production at the Mount Milligan mine was
18.6 million pounds in the first quarter of 2021 compared to 20.1
million pounds in the first quarter of 2020. The decrease in copper
production was due to lower copper grades, which were partially
offset by higher copper recoveries.
Gold production costs were $561 per ounce in the
first quarter of 2021 compared to $437 per ounce in the first
quarter of 2020. The increase was primarily due to lower ounces of
gold sold at the Kumtor mine, compared to the same prior year
period.
Copper production costs were $1.42 per pound in
the first quarter of 2021 compared to $1.37 per pound in the first
quarter of 2020. The increase in copper pounds sold in the first
quarter of 2021, was offset by a higher allocation of production
costs to copper as a result of the relative strength of the copper
price compared to the gold price.
All-in sustaining costs on a by-product basisNG
were $745 per ounce in the first quarter of 2021 compared to $718
per ounce in the first quarter of 2020. The increase was due to
lower ounces sold, increased sustaining capital at the Mount
Milligan mine and greater capitalized stripping at the Kumtor mine,
partially offset by increased copper credits due to a 69% increase
in the average realized price of copper.
All-in costs on a by-product basisNG were $1,073
per ounce in the first quarter of 2021 compared to $1,024 per ounce
in the first quarter of 2020. The increase was due to higher all-in
sustaining costs on a by-product basisNG, explained above, and the
planned purchase of haul trucks for the life of mine extension at
the Kumtor mine, partially offset by lower revenue-based taxes paid
by Kumtor.
The Langeloth Facility roasted 2.7 million
pounds of molybdenum in the first quarter of 2021 compared to 4.4
million pounds in the first quarter of 2020. This decrease was the
result of a decline in demand for industrial products that use
molybdenum.
Exploration expenditures of $9.3 million were
recognized in the first quarter of 2021 compared to $7.8 million in
the first quarter of 2020. The increase in exploration expenditures
was due to a significantly expanded drilling program at the Kumtor
mine, drilling approximately 20,000 metres in the first quarter of
2021, as well as the recommencement of drilling activities at Öksüt
and Mount Milligan earlier in than the prior period.
Financing costs of $1.8 million were recognized
in the first quarter of 2021 compared to $3.6 million in the first
quarter of 2020. The decrease was due to the corporate revolving
credit facility remaining undrawn during the first quarter of
2021.
Corporate administration costs of $4.9 million
were recognized in the first quarter of 2021 compared to $3.4
million in the first quarter of 2020. The increase was primarily
due to an increase in advisory and legal fees.
A gain on sale of $72.3 million (excluding
contingent consideration) was recognized in the first quarter of
2021 on the disposal of the Company’s 50% interest in the
Greenstone Gold Mines Partnership.
Balance Sheet Review
|
$ millions |
As at |
|
|
|
|
|
Consolidated: |
March 31, 2021 |
December 31, 2020 |
%Change |
|
Cash |
823.2 |
545.2 |
51% |
|
Accounts receivable |
106.4 |
66.1 |
61% |
|
Inventories |
542.0 |
580.6 |
(7%) |
|
Assets held for sale(1) |
- |
140.0 |
(100%) |
|
Other current assets |
44.2 |
40.9 |
8% |
|
Property, plant and equipment |
1,724.2 |
1,686.1 |
2% |
|
Other non-current assets |
88.1 |
77.1 |
14% |
|
Total Assets |
3,328.1 |
3,136.0 |
6% |
|
Current liabilities |
295.2 |
256.7 |
15% |
|
Provision for reclamation |
338.8 |
352.2 |
(4%) |
|
Other non-current liabilities |
70.1 |
61.1 |
15% |
|
Total Liabilities |
704.1 |
670.0 |
5% |
|
Total Equity |
2,624.0 |
2,466.0 |
6% |
|
Total Liabilities and Equity |
3,328.1 |
3,136.0 |
6% |
|
(1) Centerra’s 50%
interest in the Greenstone Gold Mine Partnership |
Cash at March 31, 2021 was $823.2 million
compared to $545.2 million at December 31, 2020. The increase was
due to the receipt of $210 million as consideration for the
disposal of the Company’s 50% interest in the Greenstone Gold Mines
Partnership and free cash flowNG of $72.1 million generated in the
first quarter of 2021.
Accounts receivable at March 31, 2021 was $106.4
million compared to $66.1 million at December 31, 2020. The
increase is due to a shipment of gold from the Kumtor mine in late
March 2021, for which the funds were collected in April 2021.
Total inventories at March 31, 2021 were $542.0
million compared to $580.6 million at December 31, 2020. Total
inventory includes stockpiles of ore, gold in-circuit, gold doré,
copper and gold concentrate and molybdenum inventory (collectively
“Product Inventory”) of $323.6 million and supplies inventory of
$218.4 million, compared to $373.1 million and $207.5 million,
respectively, at December 31, 2020. The decrease in Product
Inventory was primarily due to the Kumtor mine processing from
stockpiles during a major stripping period in 2021.
At March 31, 2021, the Product Inventory balance
consisted of 429,172 contained gold ounces on surface in stockpiles
at Kumtor (9.9 million tonnes of ore with a grade of 1.337 g/t
gold), of which roughly 51% is expected to be processed in 2021,
87,051 contained gold ounces and 20.3 million contained pounds of
copper in surface stockpiles at Mount Milligan (6.5 million tonnes
of ore at a grade of 0.42 g/t gold and 0.14% copper), of which
roughly 15% is expected to be processed in 2021 and at the Öksüt
mine 3,083 contained gold ounces in solution at the absorption,
desorption and recovery (ADR) plant and 644 contained gold ounces
on surface and stacked (0.1 million tonnes of ore at a grade of
0.13 g/t gold in surface stockpiles and 1.32 g/t gold stacked on
the heap leach pad), which is expected to be processed in 2021.
The book value of property, plant and equipment
at March 31, 2021 was $1.72 billion compared to $1.69 billion at
December 31, 2020. The increase was due to higher capitalized
stripping and the purchase of haul trucks at the Kumtor mine.
The provision for reclamation at March 31, 2021
was $338.8 million compared to $352.2 million at December 31, 2020.
An increase in the risk-free interest rate used to calculate the
present value of reclamation costs at the Company’s North American
sites was the primary reason for the reduction in the
obligation.
In 1998, a reclamation trust fund was
established to cover the future costs of reclamation at the Kumtor
mine. At March 31, 2021, this fund had a balance of $53 million and
is shown as long-term asset on the balance sheet.
The Company’s total liquidity position is
$1,223.2 million, representing a cash balance of $823.2 million and
$400 million available under the Corporate Credit Facility. The
strong liquidity position and forecasted robust free cash flows
from the Company’s Kumtor, Mount Milligan and Öksüt operations are
expected to be sufficient to satisfy working capital needs, fund
the Company’s activities and meet other liquidity requirements
through the end of 2021. See “Caution Regarding Forward-Looking
Information”.
Market Conditions
Commodity pricesThe Company’s
profitability is materially affected by the market price of metals.
Metal prices fluctuate widely and are affected by numerous factors
beyond the Company's control.
Metal |
Average spot price |
Period end spot price |
Three months ended March 31 |
% Change |
March 31, |
December 31, |
% Change |
2021 |
2020 |
2021 |
2020 |
Gold (per oz) |
$ |
1,797 |
$ |
1,582 |
14% |
$ |
1,708 |
$ |
1,898 |
(10%) |
Copper (per lb) |
|
3.86 |
|
2.57 |
50% |
|
4.00 |
|
3.52 |
14% |
Molybdenum (per lb) |
|
11.29 |
|
9.64 |
17% |
|
11.05 |
|
10.03 |
10% |
Foreign ExchangeThe Company has
operations in Canada, including its corporate head office, the
Kyrgyz Republic, Turkey and the United States. The Company receives
its revenue through the sale of gold, copper and molybdenum in U.S.
dollars.
A significant cost driver of Centerra is the
performance of key currencies relative to the U.S. dollar. The
performance of these currencies over a 24-month period and at key
reporting dates was as follows:
A chart accompanying this announcement is available at
https://www.globenewswire.com/NewsRoom/AttachmentNg/3d78dc40-e9a0-4bc7-a8d2-12021d7ef3e6
Currency |
Average exchange rate |
Period end exchange rate |
Three months ended March 31 |
% Change |
March 31, |
December 31, |
% Change |
2021 |
2020 |
2021 |
2020 |
USD-CAD |
$ |
1.27 |
$ |
1.34 |
(5%) |
$ |
1.26 |
$ |
1.27 |
(1%) |
USD-Kyrgyz Som |
|
84.2 |
|
71.2 |
18% |
|
84.8 |
|
84.0 |
1% |
USD-Turkish Lira |
|
7.4 |
|
6.1 |
21% |
|
8.3 |
|
7.4 |
12% |
The Company utilizes its foreign exchange
hedging program in order to manage its exposure to adverse
fluctuations in the Canadian dollar, relative to the U.S. dollar,
see “Financial Instruments”. The Company does not currently
hedge the Kyrgyz som or the Turkish lira.
Diesel Fuel PricesFuel costs
represent a significant cost component for Centerra’s mining
operations, representing 10% of production costs in the first
quarter of 2021. Prices for each mine site’s fuel costs are
dependent on regional fuel prices along with the associated
transportation costs, seasonal premiums for winterizing fuel and
any additional costs to meet regulatory requirements. The Company
hedges its fuel exposures covering a portion of Kumtor and Mount
Milligan’s production needs, utilizing regression analysis for fuel
costs that closely track established market indices.
Commodity |
Average spot price |
Period end spot price |
Three months ended March 31 |
% Change |
March 31, |
December 31, |
% Change |
2021 |
2020 |
2021 |
2020 |
Kumtor Diesel (per ltr) |
$ |
0.44 |
$ |
0.39 |
13% |
$ |
0.48 |
$ |
0.41 |
17% |
ULSD (per bbl) |
|
73.13 |
|
64.76 |
13% |
|
74.39 |
|
62.00 |
20% |
Brent (per bbl) |
|
61.17 |
|
50.82 |
20% |
|
63.54 |
|
51.80 |
23% |
The Company utilizes its diesel hedging program
in order to manage its exposure to adverse fluctuations in diesel
fuel prices, see “Financial Instruments”.
Financial Instruments
The Company seeks to manage its exposure to
fluctuations in diesel fuel prices, commodity prices and foreign
exchange rates by entering into derivative financial instruments
from time-to-time.
The hedge positions for each of these programs
as at March 31, 2021 are summarized as follows:
|
Average Strike Price |
Settlements (% of exposure
hedged) |
As at March 31, 2021 |
Instrument |
Unit |
Type |
|
2021 |
|
2022 |
|
2023 |
2021 |
2022 |
2023 |
Total position (2) |
Fair value($'000's) |
|
|
|
|
|
|
|
|
|
|
|
FX Hedges |
|
|
|
|
|
|
|
|
|
|
USD/CAD zero-cost collars |
CAD |
Fixed |
$1.33/$1.40 |
$1.32/$1.38 |
N/A |
$166.8 M
(37%) |
$149.0 M (28%) |
N/A |
$315.8 M |
13,874 |
USD/CAD forward contracts |
CAD |
Fixed |
|
$1.35 |
|
$1.30 |
|
$1.27 |
$101.0 M (23%) |
$60.0 M (11%) |
$40.0 M (31%) |
$201.0 M |
7,309 |
Total |
|
|
|
$1.34 |
|
$1.31 |
|
$1.27 |
$267.8 M
(60%) |
$209.0 M (39%) |
$40.0 M (31%) |
$516.8 M |
21,183 |
|
|
|
|
|
|
|
|
|
|
|
Fuel Hedges |
|
|
|
|
|
|
|
|
|
|
Brent Crude Oil zero-cost collars |
Barrels |
Fixed |
$41/$47 |
$44/$51 |
$50/$62 |
59,474
(9%) |
96,966 (10%) |
22,000 (9%) |
178,440 |
1,876 |
Brent Crude Oil swap contracts |
Barrels |
Fixed |
|
$44 |
|
$51 |
|
$56 |
162,322
(26%) |
89,850 (9%) |
11,000 (4%) |
263,172 |
3,592 |
ULSD zero-cost collars |
Barrels |
Fixed |
$53/$59 |
$58/$64 |
$71/$77 |
58,124
(9%) |
125,066 (12%) |
22,000 (9%) |
205,190 |
2,550 |
ULSD swap contracts |
Barrels |
Fixed |
|
$58 |
|
$64 |
|
$73 |
160,492 (25%) |
121,850 (12%) |
22,000 (9%) |
304,342 |
4,236 |
Total |
|
|
|
|
|
440,412
(69%) |
433,732 (43%) |
77,000 (31%) |
951,144 |
12,254 |
|
|
|
|
|
|
|
|
|
|
|
Copper Hedges (Strategic
hedges)(1): |
|
|
|
|
|
|
|
|
|
|
Copper forward contracts |
Pounds |
Fixed |
|
$3.38 |
N/A |
N/A |
41.8 M
(90%) |
N/A |
N/A |
41.8 M |
(25,704) |
Copper zero-cost collars |
Pounds |
Fixed |
N/A |
$3.48/$4.71 |
N/A |
N/A |
27.0 M (37%) |
N/A |
27.0 M |
1,627 |
|
|
|
|
|
|
|
|
|
|
|
Gold/Copper Hedges (Royal Gold deliverables): |
|
|
|
|
|
|
|
|
|
|
Gold forward contracts |
Ounces |
Float |
N/A |
N/A |
N/A |
23,963 |
N/A |
N/A |
23,963 |
(2,149) |
Copper forward contracts |
Pounds |
Float |
N/A |
N/A |
N/A |
3.3 M |
N/A |
N/A |
3.3 M |
690 |
(1) |
The copper hedge ratio is based on the forecasted copper sales
production, net of the streaming arrangement with Royal Gold. |
(2) |
Royal Gold hedging program with a market price determined on
closing of the contract. |
|
|
The realized gains (losses) recorded in the
first quarters of 2021 and 2020 were as follows:
Hedge program |
Realized gain(loss) (thousands) |
Three months ended March 31 |
% Change |
2021 |
|
2020 |
|
FX Hedges |
$ |
3,680 |
|
$ |
(1,259 |
) |
392% |
Fuel hedges |
|
2,926 |
|
|
(1,124 |
) |
360% |
Copper Hedges (Strategic hedges) |
|
(9,025 |
) |
|
N/A |
|
N/A |
As at March 31, 2021, Centerra has not entered into any off-balance
sheet arrangements with special purpose entities, nor does it have
any unconsolidated affiliates.
Operating Mines and
Facilities
Kumtor MineThe Kumtor open pit
mine, located in the Kyrgyz Republic, is one of the largest gold
mines in Central Asia. It has been in production since 1997 and has
produced over 13.3 million ounces of gold to March 31, 2021.
Kumtor Operating Results
Unaudited ($ millions, except as noted) |
Three months ended March 31, |
Financial Highlights: |
|
2021 |
|
|
2020 |
|
% Change |
Revenue |
$ |
175.7 |
|
$ |
250.8 |
|
(30 |
%) |
Production costs |
|
48.4 |
|
|
53.4 |
|
(9 |
%) |
Depreciation, depletion and amortization |
|
38.5 |
|
|
53.6 |
|
(28 |
%) |
Standby costs |
|
- |
|
|
6.8 |
|
(100 |
%) |
Earnings from mine operations |
$ |
88.8 |
|
$ |
137.0 |
|
(35 |
%) |
Revenue-based taxes |
|
24.6 |
|
|
35.1 |
|
(30 |
%) |
Exploration and development costs |
|
5.9 |
|
|
4.7 |
|
26 |
% |
Other operating expenses |
|
2.2 |
|
|
11.4 |
|
(81 |
%) |
Earnings from operations |
$ |
56.1 |
|
$ |
85.8 |
|
(35 |
%) |
Cash provided by mine operations |
|
66.7 |
|
|
134.3 |
|
(50 |
%) |
Cash provided by mine operations before changes in working
capital |
|
94.5 |
|
|
142.6 |
|
(34 |
%) |
Free cash flow from mine operations (1) |
|
4.0 |
|
|
95.6 |
|
(96 |
%) |
Operating Highlights: |
|
|
|
|
|
Tonnes mined (000's) |
|
49,210 |
|
|
19,997 |
|
146 |
% |
Tonnes ore mined (000's) |
|
885 |
|
|
571 |
|
55 |
% |
Average mining grade (g/t) |
|
2.06 |
|
|
7.86 |
|
(74 |
%) |
Tonnes processed (000's) |
|
1,595 |
|
|
1,602 |
|
(0 |
%) |
Process plant head grade (g/t) |
|
2.41 |
|
|
3.53 |
|
(32 |
%) |
Recovery (%)(2) |
|
71.3 |
% |
|
83.7 |
% |
(15 |
%) |
Mining costs ($/t mined material) |
|
1.00 |
|
|
1.77 |
|
(44 |
%) |
Processing costs ($/t processed material) |
|
10.17 |
|
|
10.89 |
|
(7 |
%) |
Gold produced (oz) |
|
90,169 |
|
|
152,307 |
|
(41 |
%) |
Gold sold (oz) |
|
98,437 |
|
|
160,090 |
|
(39 |
%) |
Average realized gold price ($/oz)(1) |
|
1,763 |
|
|
1,555 |
|
13 |
% |
Sustaining capital expenditures(3) |
|
7.7 |
|
|
8.4 |
|
(9 |
%) |
Non-sustaining capital expenditures(3)(4) |
|
21.6 |
|
|
0.7 |
|
2986 |
% |
Capitalized stripping(3) |
|
30.5 |
|
|
30.0 |
|
2 |
% |
Capitalized stripping - non-cash |
|
6.8 |
|
|
10.0 |
|
(32 |
%) |
Capital expenditures - total |
|
66.6 |
|
|
49.1 |
|
36 |
% |
Unit Costs: |
|
|
|
|
|
Gold production costs ($/oz) |
$ |
492 |
|
$ |
334 |
|
47 |
% |
All-in sustaining costs on a by-product basis ($/oz)(1) |
$ |
888 |
|
$ |
648 |
|
37 |
% |
All-in costs on a by-product basis ($ /oz)(1) |
$ |
1,417 |
|
$ |
902 |
|
57 |
% |
(1) |
Non-GAAP
measure. See discussion under “Non-GAAP Measures”. |
(2) |
Metallurgical recoveries are based on recovered gold, not
produced gold. |
(3) |
Capital expenditures are presented as spent and
accrued. |
(4) |
Non-sustaining capital expenditures are distinct projects designed
to have a significant increase in the net present value of the
mine. In the current year, non-sustaining capital expenditures
included costs related to the expansion of the mine. |
First Quarter 2021 compared to First Quarter
2020Earnings from mine operations of $88.8 million were recognized
in the first quarter of 2021 compared to earnings from mine
operations of $137 million in the first quarter of 2020. The
decrease was primarily due to 39% fewer gold ounces sold, primarily
due to lower average process plant head grades and lower gold
recoveries as the Kumtor mine continues to process ore from
on-surface stockpiles, partially offset by 13% higher average
realized gold prices, lower production, depreciation and
revenue-based tax costs.
A chart accompanying this announcement is available at
https://www.globenewswire.com/NewsRoom/AttachmentNg/b59d1c93-963e-4ef0-b281-be9b1bdd7619
Cash provided by mine operations of $66.7
million was recognized in the first quarter of 2021 compared to
$134.3 million in the first quarter of 2020. The decrease was
primarily due to the lower earnings from mine operations mainly due
to lower production, and lower cash from working capital as a
result of inventory movements. In the first quarter of 2021, 55%
more ore tonnes were mined which resulted in higher mining costs
charged to stockpile inventory as compared to the comparative
quarter.
Free cash flow from mine operationsNG of $4
million was recognized in the first quarter of 2021 compared to
$95.6 million in the first quarter of 2020. The decrease was due to
lower cash provided by mine operations and an increase in capital
expenditure related to the purchase of additional haul trucks
required for the life of mine extension. In the first quarter of
2021, Kumtor received seven of the eight haul trucks that it
planned to purchase in 2021.
During the first quarter of 2021, the Kumtor
mine continued mining in cut-back 20. Tonnes mined were 49.2
million in the first quarter of 2021 compared to 20 million tonnes
in the first quarter of 2020. The increase was due to the
suspension of mining operations in January 2020 due to the Lysii
waste rock dump incident. Of the 49.2 million tonnes mined in the
first quarter of 2021, 30.3 million were capitalized as waste
stripping for the benefit of future gold production from cut-back
20.
Mining costs were $1.00 per tonne in the first
quarter of 2021 compared to $1.77 per tonne in the first quarter of
2020. The decrease was primarily due to more tonnes mined and
shorter haulage distances in 2021, partially offset by higher
maintenance costs. Total mining costs were $49.1 million of which
$30.5 million was capitalized in the first quarter of 2021,
compared to $35.4 million in mining costs of which $30 million was
capitalized in the first quarter of 2020.
Gold production was 90,169 ounces from
on-surface stockpiled ore in the first quarter of 2021 compared to
152,307 ounces of gold produced in the first quarter of 2020. The
decrease was primarily due to lower average process plant head
grades and lower gold recoveries. During the first quarter of 2021,
the Kumtor mine was processing ore with an average grade of 2.41
g/t and a recovery of 71.3% compared to ore from cut-back 19 with a
higher average grade of 3.53 g/t and a recovery of 83.7% in the
first quarter of 2020.
Processing costs were $10.17 per tonne in the
first quarter of 2021 compared to $10.89 per tonne in the first
quarter of 2020. The decrease was primarily due to lower costs
associated with foreign contractors and carbon fine processing.
Gold production costs were $492 per ounce in the
first quarter of 2021, compared to $334 per ounce in the first
quarter of 2020. The increase was primarily due to lower ounces of
gold sold.
A chart accompanying this announcement is available at
https://www.globenewswire.com/NewsRoom/AttachmentNg/a851c419-adb6-41b6-8056-b72c1fb81497
All-in sustaining costs on a by-product basisNG,
which excludes revenue-based tax, were $888 per ounce in the first
quarter of 2021 compared to $648 per ounce in the first quarter of
2020. The increase was primarily due to fewer ounces of gold
sold.
All-in costs on a by-product basisNG were $1,417
per ounce in the first quarter of 2021 compared to $902 per ounce
in the first quarter of 2020. The increase was due to an increase
in all-in sustaining costs on a by-product basisNG and the planned
purchase of additional haul trucks as required for the life of mine
extension.
Mount Milligan MineThe Mount
Milligan Mine is an open pit mine located in north central British
Columbia, Canada producing a gold and copper concentrate.
Production at the Mount Milligan mine is subject to an arrangement
with RGLD Gold AG and Royal Gold, Inc. (together, “Royal Gold”)
pursuant to which Royal Gold is entitled to purchase 35% of the
gold produced and 18.75% of the copper production at the Mount
Milligan mine for $435 per ounce of gold delivered and 15% of the
spot price per metric tonne of copper delivered. To satisfy its
obligations under the Mount Milligan Streaming Arrangement the
Company purchases refined gold and copper warrants and arranges for
delivery to Royal Gold. The difference between the cost of the
purchases of refined gold and copper warrants, and the
corresponding amounts payable to the Company under the Mount
Milligan Streaming Arrangement is recorded as a reduction of
revenue and not a cost of operating the mine.
Water UpdateStored water inventory at the Mount
Milligan mine is critical to the ability to process ore through the
mill process plant on a sustainable basis. Stored water was in
excess of 4.5 million cubic metres as at March 31, 2021. In
addition to accessing water from surface water sources throughout
the first quarter of 2021, the Mount Milligan mine continued to
access ground water from the Lower Rainbow Valley wellfield as well
as other groundwater wells near the tailings storage facility
during the quarter. The Company expects the water inventory level
to increase through the summer of 2021 following the spring
melt.
Exploration activities continue to focus on
extending the groundwater capacity in the vicinity of the existing
infrastructure. The Company continues to pursue a longer-term
solution to its water requirements at the Mount Milligan mine and
is in discussions with regulators, First Nations partners and other
stakeholders. In April 2021, the Company’s obtained an
environmental assessment certificate amendment to access surface
water sources for the Mount Milligan mine through November 2023,
subject to the receipt of permits which are expected to be received
shortly. The Company does not expect any interruptions to the Mount
Milligan mine operations in the medium term when considering
currently available water sources and inventory. See “Caution
Regarding Forward-Looking Information”.
Mount Milligan Operating
Results
Unaudited ($ millions, except as noted) |
Three months ended March 31, |
Financial Highlights: |
|
2021 |
|
|
2020 |
|
% Change |
Gold revenue |
$ |
70.3 |
|
$ |
48.9 |
|
44 |
% |
Copper revenue |
|
61.9 |
|
|
33.0 |
|
88 |
% |
By-product revenue |
|
3.3 |
|
|
1.7 |
|
94 |
% |
Total Revenues |
$ |
135.5 |
|
$ |
83.6 |
|
62 |
% |
Production costs |
|
69.1 |
|
|
62.3 |
|
11 |
% |
Depreciation, depletion and amortization |
|
22.9 |
|
|
18.0 |
|
27 |
% |
Earnings from mine operations |
$ |
43.5 |
|
$ |
3.3 |
|
1218 |
% |
Exploration and development costs |
|
0.9 |
|
|
0.5 |
|
82 |
% |
Other operating expenses |
|
2.9 |
|
|
2.1 |
|
37 |
% |
Earnings from operations |
$ |
39.7 |
|
$ |
0.7 |
|
5573 |
% |
Cash provided by mine operations |
|
89.7 |
|
|
27.2 |
|
230 |
% |
Cash provided by mine operations before changes in working
capital |
|
59.4 |
|
|
12.1 |
|
391 |
% |
Free cash flow from mine operations(1) |
|
80.2 |
|
|
22.0 |
|
265 |
% |
Operating Highlights: |
|
|
|
|
|
Tonnes mined (000's) |
|
10,673 |
|
|
10,889 |
|
(2 |
%) |
Tonnes ore mined (000's) |
|
5,122 |
|
|
4,689 |
|
9 |
% |
Tonnes processed (000's) |
|
4,770 |
|
|
4,871 |
|
(2 |
%) |
Process plant head grade gold (g/t) |
|
0.43 |
|
|
0.37 |
|
17 |
% |
Process plant head grade copper (%) |
|
0.23 |
% |
|
0.26 |
% |
(11 |
%) |
Gold recovery (%) |
|
66.2 |
% |
|
59.9 |
% |
11 |
% |
Copper recovery (%) |
|
80.0 |
% |
|
75.5 |
% |
6 |
% |
Mining costs ($/t mined material) |
|
1.89 |
|
|
1.75 |
|
8 |
% |
Processing costs - total ($/t processed material) |
|
5.93 |
|
|
4.93 |
|
20 |
% |
Concentrate produced (dmt) |
|
41,904 |
|
|
45,087 |
|
(7 |
%) |
Gold produced (oz) (2) |
|
42,576 |
|
|
33,681 |
|
26 |
% |
Copper produced (000's lb) (2) |
|
18,609 |
|
|
20,072 |
|
(7 |
%) |
Gold sold (oz)(2) |
|
54,498 |
|
|
40,353 |
|
35 |
% |
Copper sold (000's lb)(2) |
|
22,783 |
|
|
20,423 |
|
12 |
% |
Average realized gold price - combined ($/oz)(1)(2) |
|
1,291 |
|
|
1,213 |
|
6 |
% |
Average realized copper price - combined ($/lb) (1)(2) |
|
2.72 |
|
|
1.61 |
|
69 |
% |
Sustaining capital expenditures(3) |
|
11.3 |
|
|
5.3 |
|
115 |
% |
Unit Costs: |
|
|
|
|
|
Gold production costs ($/oz) |
$ |
675 |
|
$ |
848 |
|
(20 |
%) |
All-in sustaining costs on a by-product basis ($/oz) (1)(4) |
$ |
367 |
|
$ |
911 |
|
(60 |
%) |
All-in costs on a by-product basis ($ /oz)(1)(4) |
$ |
386 |
|
$ |
923 |
|
(58 |
%) |
Gold - All-in sustaining costs on a co-product basis ($/oz)(1) |
$ |
802 |
|
$ |
948 |
|
(15 |
%) |
Copper production costs ($/lb) |
$ |
1.42 |
|
$ |
1.37 |
|
4 |
% |
Copper - All-in Sustaining costs on a co-product basis
($/lb)(1) |
$ |
1.68 |
|
$ |
1.52 |
|
11 |
% |
(1) |
Non-GAAP measure. See discussion under “Non-GAAP Measures”. |
(2) |
Mount Milligan production and sales are presented on a 100% basis.
Under the Mount Milligan Streaming Arrangement, Royal Gold is
entitled to 35% of gold ounces and 18.75% of copper. Royal Gold
pays $435 per ounce of gold delivered and 15% of the spot price per
metric tonne of copper delivered. |
(3) |
Capital expenditures are
presented as spent and accrued. |
(4) |
Includes the impact of reduced
metal prices resulting from the Mount Milligan Streaming
Arrangement, and the impact of copper hedges. |
First Quarter 2021 compared to First Quarter
2020Earnings from mine operations of $43.5 million were recognized
in the first quarter of 2021 compared to $3.3 million in the first
quarter of 2020. The increase was primarily due to higher average
realized gold and copper prices, and an increase in ounces of gold
and pounds of copper sold, partially offset by an increase in
production costs and depreciation.
A chart accompanying this announcement is available at
https://www.globenewswire.com/NewsRoom/AttachmentNg/1c1b674b-585e-413c-a7dd-3449c36500b8
Cash provided by mine operations of $89.7
million was recognized in the first quarter of 2021 compared to
$27.2 million in the first quarter of 2020. The increase was
primarily due to higher net earnings from mine operations
(explained above) and an increase in cash generated from working
capital. Working capital levels decreased by approximately $19
million in the first quarter of 2021, as a result of lower product
inventories and higher payables due to the timing of shipments and
of payments, partially offset by an increase in receivables. The
reduction in working capital in the first quarter of 2020 was
approximately $8 million.
Free cash flow from mine operationsNG of $80.2
million was recognized in the first quarter of 2021 compared to $22
million in the first quarter of 2020, due to an increase in cash
provided by mine operations, partially offset by an increase in
capital expenditures related to major planned equipment rebuilds
and tailings storage facility development.
During the first quarter of 2021, mining
activities were carried out in phases 4, 5 and 8 of the open pit.
Total tonnes mined were 10.7 million tonnes in the first quarter of
2021 compared to 10.9 million tonnes in the first quarter of
2020.
Mining costs were $1.89 per tonne in the first
quarter of 2021 compared to $1.75 per tonne in the first quarter of
2020. The increase was due to higher maintenance costs associated
with planned repairs, higher tire costs as a result of higher tire
consumption and lower tonnage mined.
Total mill throughput for the first quarter of
2021 was 4.8 million tonnes, averaging 53,000 tonnes per calendar
day, compared to 4.9 million tonnes, averaging 53,500 tonnes per
calendar day in the first quarter of 2020. Lower mill throughput
was a result of a planned mill shutdown during the first quarter of
2021.
Gold production was 42,576 ounces in the first
quarter of 2021 compared to 33,681 ounces in the first quarter of
2020. The increase was due to higher gold grades and recoveries,
partially offset by lower throughput. During the first quarter of
2021, the average gold grade was 0.43 g/t with a recovery of 66%
compared to 0.37 g/t with a recovery of 60% in the first quarter of
2020. Total copper production was 18.6 million pounds in the first
quarter of 2021 compared to 20.1 million pounds in the first
quarter of 2020. The decrease was due to lower copper grades and
lower mill throughput, partially offset by higher copper
recoveries.
Processing costs were $5.93 per tonne in the
first quarter of 2021 compared to $4.93 per tonne in the first
quarter of 2020. The increase was due to higher maintenance cost
associated with the mill shutdown and lower tonnage processed. This
was partially offset by lower electricity consumption.
Gold production costs were $675 per ounce in the
first quarter of 2021 compared to $848 per ounce in first quarter
of 2020. The decrease was due to more ounces of gold sold,
partially offset by higher processing costs as a result of the
planned mill shutdown and slightly higher mining costs.
Copper production costs were $1.42 per pound in
the first quarter of 2021 compared to $1.37 per pound in the first
quarter of 2020. The increase in copper pounds sold in the first
quarter of 2021, was offset by a higher allocation of production
costs to copper as a result of the relative strength of the copper
price to the gold price.
A chart accompanying this announcement is available at
https://www.globenewswire.com/NewsRoom/AttachmentNg/69d6bbc9-686a-4a0d-9dc3-51530cae8a4a
All-in sustaining costs on a by-product basisNG
were $367 per ounce in the first quarter of 2021 compared to $911
per ounce in the first quarter of 2020. The decrease was primarily
due to 69% higher average realized copper prices and increased
pounds of copper and ounces of gold sold, compared to the same
prior year period, partially offset by higher production costs and
sustaining capital.
All-in costs on a by-product basisNG were $386
per ounce in the first quarter of 2021 compared to $923 per ounce
in the first quarter of 2020. The decrease was due to lower all-in
sustaining costs on a by-product basisNG.
Öksüt MineThe Öksüt mine is
located in Turkey approximately 300 kilometres southeast of Ankara
and 48 kilometres south of Kayseri, the provincial capital. The
nearest administrative centre is Develi, located approximately 10
kilometres north of the mine site.
Mining permit updateDuring 2020, the Öksüt mine
obtained an amendment to its environmental impact assessment
(“EIA”) to accommodate changes to the Güneytepe open pit’s mine
design and pit optimization although an application for the related
forestry permit remains under review. The Company’s expectation is
that the high-grade ore of the Güneytepe deposit will be accessed
in 2022, which remains unchanged.
Öksüt Operating ResultsThe Öksüt mine achieved
first gold pour on January 31, 2020 and achieved commercial
production on May 31, 2020. Up to the point of achieving commercial
production, gold revenue and the associated costs of production
were capitalized.
Unaudited ($ millions, except as noted) |
Three months ended March 31, |
Financial Highlights: |
2021 |
2020 |
% Change |
Revenue |
$ |
49.9 |
|
|
Production costs |
|
16.1 |
|
|
Depreciation, depletion and amortization |
|
9.7 |
|
|
Earnings from mine operations |
$ |
24.1 |
|
|
Exploration and development costs |
|
0.3 |
|
|
Earnings from operations |
$ |
23.8 |
|
|
Cash provided by mine operations |
|
32.0 |
|
|
Cash provided by mine operations before changes in working
capital |
|
32.7 |
|
|
Free cash flow from mine operations (1) |
|
25.7 |
|
|
Operating Highlights: |
|
|
|
|
Tonnes mined (000's) |
|
3,280 |
2,875 |
14 |
% |
Tonnes ore mined (000's) |
|
503 |
571 |
(12 |
%) |
Ore mined - grade (g/t) |
|
0.85 |
0.91 |
(7 |
%) |
Ore crushed (000's) |
|
525 |
403 |
30 |
% |
Tonnes stacked (000's) |
|
525 |
302 |
74 |
% |
Heap leach grade (g/t) |
|
0.83 |
1.05 |
(21 |
%) |
Heap leach contained ounces stacked |
|
14,064 |
10,191 |
38 |
% |
Mining costs ($/t mined material) |
|
1.76 |
|
|
Processing costs ($/t processed material) |
|
5.15 |
|
|
Gold produced (oz) |
|
27,601 |
4,486 |
515 |
% |
Gold sold (oz)(2) |
|
27,584 |
2,815 |
880 |
% |
Average realized gold price ($/oz)(1) |
|
1,809 |
|
|
Sustaining capital expenditures(2) |
|
1.1 |
|
|
Non-sustaining capital expenditures(2)(3) |
|
0.3 |
8.8 |
(97 |
%) |
Capitalized stripping(2) |
|
4.4 |
|
|
Capital expenditures - total |
|
5.8 |
8.8 |
(34 |
%) |
Unit Costs: |
|
|
|
|
Gold production costs ($/oz) |
$ |
583 |
|
|
All-in sustaining costs on a by-product basis ($/oz)(1) |
$ |
804 |
|
|
All-in costs on a by-product basis ($ /oz)(1) |
$ |
827 |
|
|
(1) |
Non-GAAP measure. See discussion under “Non-GAAP Measures”. |
(2) |
Capital expenditures are
presented as spent and accrued. |
(3) |
Non-sustaining capital expenditures are distinct projects designed
to have a significant increase in the net present value of the
mine. In the current year, non-sustaining capital expenditures
included construction costs. |
|
|
First Quarter 2021During the first quarter of
2021, earnings from mine operations were $24.1 million, cash
provided by mine operations was $32 million and free cash flow from
mine operationsNG was $25.7 million. Total gold ounces sold were
27,584, resulting in revenue of $49.9 million for the first quarter
of 2021.
Non-sustaining capital expenditures in the first
quarter of 2021 were $0.3 million compared to $8.8 million in the
first quarter of 2020. The higher capital costs in the first
quarter of 2020 were related to the final stages of the
construction of the
mine.
Mining in the first quarter of 2021 was focused
on the development of phase 3 and phase 4 of the Keltepe pit, with
total tonnes mined of 3.3 million. Processing in the first quarter
of 2021 was focused on the preparation, stacking and irrigation of
the heap leach pad, with tonnes stacked of 0.53 million at a gold
grade of 0.83 g/t.
Gold production costs were $583 per ounce,
all-in sustaining costs on a by-product basisNG were $804 per ounce
and all-in costs on a by-product basisNG were $827 per ounce in the
first quarter of 2021.
Molybdenum Business UnitThe
molybdenum business includes two North American molybdenum mines
that are currently on care and maintenance: the Thompson Creek mine
in Idaho and the 75%-owned Endako mine in British Columbia. The
molybdenum business also includes the Langeloth metallurgical
roasting facility (the "Langeloth Facility") in Pennsylvania. The
Thompson Creek mine (the “TC mine”) operates a molybdenum
beneficiation circuit to treat molybdenum concentrates to
supplement the concentrate feed sourced directly for the Langeloth
Facility. This beneficiation process allows the Company to upgrade
high copper content molybdenum concentrate purchased from third
parties into upgraded products which are then sold in the
metallurgical and chemical markets.
Additionally, the molybdenum business provides
tolling treatment services for customers by converting molybdenum
concentrates to molybdenum oxide powder, briquettes and
ferromolybdenum products.
($ millions, except as noted) |
Three months ended March 31, |
Financial Highlights: |
|
2021 |
|
|
2020 |
|
% Change |
Molybdenum (Mo) revenue |
$ |
38.7 |
|
$ |
41.7 |
|
(7 |
%) |
Tolling and calcining revenue |
|
0.8 |
|
|
1.6 |
|
(50 |
%) |
By-product revenue |
|
1.3 |
|
|
1.1 |
|
18 |
% |
Total revenues |
$ |
40.8 |
|
$ |
44.4 |
|
(8 |
%) |
Production costs |
|
36.1 |
|
|
53.7 |
|
(33 |
%) |
Depreciation, depletion and amortization |
|
1.8 |
|
|
1.4 |
|
29 |
% |
Earnings (loss) from mine operations |
$ |
2.9 |
|
$ |
(10.7 |
) |
127 |
% |
Care and Maintenance costs - Molybdenum mines |
|
3.2 |
|
|
3.2 |
|
0 |
% |
Reclamation (recovery) expense |
|
(10.9 |
) |
|
26.4 |
|
141 |
% |
Other operating expenses |
|
0.8 |
|
|
0.9 |
|
(12 |
%) |
Net earnings (loss) from operations |
$ |
9.8 |
|
$ |
(41.2 |
) |
124 |
% |
Cash (used in) provided by operations |
|
(6.8 |
) |
|
10.4 |
|
(165 |
%) |
Free cash flow (deficit) from operations (1) |
|
(7.5 |
) |
|
9.2 |
|
(182 |
%) |
Operating Highlights (000's lbs): |
|
|
|
|
|
Mo purchased |
|
2,795 |
|
|
3,342 |
|
(16 |
%) |
Mo roasted |
|
2,659 |
|
|
4,382 |
|
(39 |
%) |
Mo sold |
|
3,309 |
|
|
3,790 |
|
(13 |
%) |
Average Mo spot price ($/lb) |
$ |
11.29 |
|
$ |
9.64 |
|
17 |
% |
Total capital expenditures(2) |
$ |
0.7 |
|
$ |
0.8 |
|
(15 |
%) |
(1) |
Non-GAAP measure. See discussion under “Non-GAAP Measures”. |
(2) |
Capital expenditures are
presented as spent and accrued. |
First Quarter 2021 compared to First Quarter
2020Net earnings from operations of $9.8 million was recognized in
the first quarter of 2021 compared to a net loss of $41.2 million
in the first quarter of 2020. The increase in the first quarter of
2021 was mainly due to the gain recorded resulting from the
reduction in the underlying reclamation liability, as a result of a
change in interest rates and a higher gross margin on materials
sold.
Cash used in operations of $6.8 million was
recognized in the first quarter of 2021, compared to cash provided
by operations of $10.4 million in the first quarter of 2020. The
decrease was due to a $11.4 million tax refund that was received in
the first quarter of 2020. A free cash flow deficit from
operationsNG of $7.5 million was recognized in the first quarter of
2021 compared to a free cash flow from operationsNG of $9.2 million
in the first quarter of 2020, due to the tax refund received in
2020.
The Langeloth Facility roasted and sold 2.7
million pounds and 3.3 million pounds of molybdenum, respectively,
in the first quarter of 2021, compared to 4.4 million pounds and
3.8 million pounds of molybdenum in the first quarter of 2020. This
decrease in volume was the result of a decline in demand for
industrial products that use molybdenum in 2021.
A chart accompanying this announcement is available at
https://www.globenewswire.com/NewsRoom/AttachmentNg/e8806d6c-5274-49e0-b8cd-beda79a4d022
Pre-Development Projects
Kemess Underground Project:The
Kemess Project (“Kemess”) is located in north-central British
Columbia, Canada, approximately 250 kilometres north of Smithers,
430 kilometres northwest of Prince George and 209 kilometres from
the Mount Milligan mine. The Kemess site includes
infrastructure from the past producing Kemess South mine. There are
currently no mining activities at the Kemess site and on-site
activities consist of care and maintenance work and pre-development
activities for the proposed Kemess Underground Project.
First Quarter 2021 compared to First Quarter
2020Care and maintenance costs of $3.2 million were recognized in
the first quarter of 2021, compared to $3.5 million recognized in
the first quarter of 2020. Capital expenditures of $0.2 million
were recognized in the first quarter of 2021, compared to $1.8
million in the first quarter of 2020. The capital expenditures in
the first quarter of 2021 included costs for completion of the
value engineering project scope initiated in 2020. The capital
expenditures in the first quarter of 2020 included costs for
technical engineering studies, water treatment plant performance
testing preparation and southern collection system pond
construction. The water treatment plant was completed and
commissioned in September 2020.
Greenstone Gold Property:The
Greenstone Gold property is located in northern Ontario, Canada
approximately 275 kilometres northeast of Thunder Bay and includes
the Hardrock deposit.
On December 15, 2020, the Company entered into
an agreement with an affiliate of the Orion Mine Finance Group
(“Orion”) and Premier Gold Mines Limited to sell the Company’s 50%
interest in the Greenstone Gold Mines Partnership to Orion for cash
consideration of $225 million, subject to certain adjustments, and
contingent consideration of approximately $75 million, assuming a
gold price of $1,500 per ounce, based on the successful
construction and operation of the mine, which will be recorded on
achieving the applicable milestones.
On January 19, 2021, the Company completed the
sale of its 50% interest in the Greenstone Gold Mines Partnership
with final cash consideration received of $210 million, net of
adjustments, and recognized a gain on sale of $72.3 million
(excluding contingent consideration).
Quarterly Results – Previous Eight
Quarters
Over the last eight quarters, Centerra’s results
reflect the impact of consistent gold and copper sales during a
period of rising prices. Production costs have benefited from the
depreciating Kyrgyz and Turkish currencies over the last eight
quarters. Gold sold on a quarterly basis steadily increased
from the second quarter of 2019 to the third quarter of 2019,
followed by a slight decline in the fourth quarter of 2019,
increasing again in the first nine months of 2020 as the Öksüt mine
reached commercial production on May 31, 2020, declining in the
fourth quarter of 2020 due to lower ounces of gold sold at Kumtor
and rising again in the first quarter of 2021. The loss in the
third quarter of 2019 reflects the impairment of $230.5 million
recorded on the Mount Milligan mine and a $10 million Kyrgyz
Republic settlement expense. As a result of a change in the
interest rate used to discount the reclamation costs at the two
molybdenum mine sites which are not in operation, a non-cash
reclamation expense was recognized in the fourth quarters of 2019
and 2020 of $31.4 million and $53.4 million, respectively, while a
recovery of $10.9 million was recognized in the first quarter of
2021. The first quarter of 2021 also reflects a gain of $72.3
million on the sale of the Greenstone property. The quarterly
financial results for the last eight quarters are shown below:
$ million, except per share data |
2021 |
2020 |
2019 |
Quarterly data unaudited |
|
Q1 |
Q4 |
Q3 |
Q2 |
Q1 |
Q4 |
Q3 |
Q2 |
Revenue |
402 |
392 |
522 |
418 |
379 |
317 |
|
393 |
|
345 |
Net earnings (loss) |
167 |
95 |
206 |
88 |
20 |
(12 |
) |
(165 |
) |
33 |
Basic earnings (loss) per share |
0.57 |
0.32 |
0.70 |
0.30 |
0.07 |
(0.04 |
) |
(0.56 |
) |
0.11 |
Diluted earnings (loss) per share |
0.55 |
0.32 |
0.68 |
0.29 |
0.06 |
(0.04 |
) |
(0.56 |
) |
0.11 |
Related party transactions
KyrgyzaltynThe sole customer of
gold doré from the Kumtor mine, Kyrgyzaltyn JSC (“Kyrgyzaltyn”), is
a shareholder of the Company and is a state-owned entity of the
Kyrgyz Republic. Revenues from the Kumtor mine are subject to a
management fee of $1.00 per ounce based on sales volumes, payable
to Kyrgyzaltyn. In addition, Kyrgyzaltyn is obligated to provide
contracting services in support of Kumtor’s mining activities.
During the first quarter of 2021, net revenue
received for gold and silver sales by Kumtor to Kyrgyzaltyn
amounted to $175.6 million ($250.8 million in the first quarter of
2020). Contracting services and management fees payable to
Kyrgyzaltyn totalled $0.4 million in the first quarter of 2021
($0.3 million in the comparative quarter of 2020).
Contingencies
The following is a summary of contingencies with
respect to matters affecting the Company and its
subsidiaries. Readers are cautioned that the following is only
a brief summary of such matters. For a more complete
discussion of these matters, see the Company’s news releases and
its most recently filed Annual Information Form and specifically
the section therein entitled “Risks that can affect our business”
available on SEDAR at www.sedar.com.The following summary also
contains forward-looking statements and readers are referred to
“Caution Regarding Forward-looking Information”.
Kyrgyz Republic
State CommissionIn February 2021, a Kyrgyz
Republic State Commission (the “State Commission”) was formed to
review the effectiveness of the Kumtor Mine’s performance and to
oversee the implementation of the recommendations of a previous
Kyrgyz Parliamentary resolution which established a State
Commission in July 2012. The Company and its wholly owned
subsidiary, KGC, have received a significant number of detailed
inquiries from the State Commission, as well as related inquiries
from other state agencies and bodies, including Kyrgyzaltyn, and is
continuing to respond to all such inquiries. The Company
understands that the State Commission has completed its review and
will issue a report shortly.
New and Proposed Legislation
External Management LegislationAs previously
disclosed, the Company understands that a new law has been passed
by the Kyrgyz Republic Parliament which would enable the Kyrgyz
Republic Government to impose “external management” on companies in
the Kyrgyz Republic operating under concession agreements. The
sponsor of the law, Mr. Akylbek Japarov, publicly noted that the
only project operating under a concession agreement in the Kyrgyz
Republic is the Kumtor Mine.
Accordingly, the Company understands that this
newly adopted law on external management would apply in
circumstances where KGC violates certain Kyrgyz laws relating to
safety and thereby creates an immediate threat to the life or
health of people. In such circumstances, the law would (i)
enable the Prime Minister of the Kyrgyz Republic to appoint an
external manager to take control of all management activities of
KGC, including its bank accounts, and (ii) prohibit the
Company or KGC’s board of directors from directing the external
managers (or else face criminal sanctions). Mr. A. Japarov, who
proposed this new law, is also the Chairman of the Kyrgyz Republic
State Commission referred to above.
Draft Legislation Undermining 2009 Restated
Project AgreementsThe Company also understands that two draft laws
relating to Kumtor have been posted for public discussion on the
Kyrgyz Republic Parliament’s website. Such draft laws appear to
amend the 2009 Kyrgyz Republic Law which ratified the Agreement of
New Terms for the Kumtor Project, the 2009 Restated Project
Agreements and special fiscal and tax regime established therein
for the Kumtor Project. The precise impact of the draft laws is
unclear since there remain gaps in the drafting of the proposal;
however, the drafts have the potential to fundamentally alter the
legal foundation under which the Kumtor Mine has operated since
2009. Furthermore, the Company is aware of a draft decree of the
Kyrgyz Republic Government which appears to be seek ownership over
the Kumtor’s Mine’s tailings facilities.
Citizens Claims for Waste Rock Dumping on
GlaciersIn March 2021, four Kyrgyz Republic private citizens
commenced a civil claim against KGC seeking a determination that
KGC’s past practice of placing waste rock on glaciers was illegal.
In early May 2021, the Claimants amended their claim to demand over
$3 billion in environmental damages to be paid to the Kyrgyz
Republic. The Company notes that one of the claimants is the
son of the current Director of the Kyrgyz Republic State Agency for
Environment Protection and Forestry (“SAEPF”). The hearing on the
merits of this citizen claim was commenced in early May 2021 and a
decision was rendered by the Kyrgyz court on May 7, 2021, with a
demand that KGC pay approximately $3.1 billion to the Kyrgyz
Republic state. KGC is reviewing the court decision and plans to
appeal this decision, while reserving its right to international
arbitration. The Company notes that the Strategic Agreement
resolved all outstanding environmental disputes between the Kyrgyz
Republic Government and KGC relating to the Kumtor Project,
including “damages for harm allegedly caused to the environment by
storing production tails on glaciers”.
Tax ClaimsOn March 18, 2021, Centerra disclosed
certain tax claims received by its Kyrgyz Republic subsidiary KGC,
from the Kyrgyz Republic State Tax Service (“STS”) for an aggregate
of approximately $146 million (subsequently increased to
approximately $352 million) and which cover a variety of tax years,
as more fully described below. In some cases, these claims
contradict previous decisions from the STS and the Kyrgyz courts
and include significant penalties and / or sanctions that in some
cases are more than half of the total amount claimed. The Company
believes the claims are exaggerated and without merit and is
challenging the claims in the Kyrgyz courts while reserving its
rights to international arbitration.
The claims commenced by STS against KGC cover a
variety of bases and years, including tax years which STS
re-audited. In some cases, there are no monetary amounts attributed
yet to the claim, but management estimates that the aggregate
amount that could be claimed by STS on the bases set out below and
the years being audited/re-audited is approximately $352 million
(which includes amounts disclosed in the March 18, 2021 news
release). Unless otherwise stated below, these claims have been
brought by the STS and are not yet subject to any court
proceedings. Where court proceedings are occurring, KGC has
reserved its rights to international arbitration. The bases for the
tax claims include the following:
- Dividend Claims: Claims covering a
variety of years related to withholding taxes on dividends paid by
KGC to its direct parent company, Centerra. Management estimates
that these claims are for an aggregate of approximately $147
million which includes approximately $55 million for penalties and
sanctions. KGC has challenged the decision of the STS in relation
to their request for withholding taxes for the tax year 2016-2017
before the Kyrgyz administrative courts;
- Social Fund Claims: Claims covering
a variety of years in relation to alleged underpayments to the
Kyrgyz Republic Social Fund. Management estimates that the
aggregate amounts under these claims could be $21 million, which
includes approximately $10 million in penalties. KGC received a
statement of claim in relation to amounts allegedly owing for the
years 2016-2017 and is disputing the claim;
- Employee Income Tax Claims: Claims
covering a variety of years related to payroll deductions not
withheld by KGC on certain premiums paid primarily to national
employees. Management estimates that the aggregate amounts are of
these claims are approximately $36 million, which includes
approximately $9.5 million in penalties. STS has applied to a
Kyrgyz appeal court in respect to the years 2016 and 2017, and to
specifically overturn a lower court's 2018 decision in favour of
KGC which ruled that certain premiums payable to Kumtor employees
were not subject to income tax withholdings. In a single hearing,
the Kyrgyz appeal court reinstated the appeal period, quashed the
lower court ruling in favour of KGC, and ruled on the merits
against KGC on all issues. While KGC has appealed the
decision to the Supreme Court, it is possible that the State Tax
Service may demand payment in respect of these amounts which the
Company expects to be approximately $17 million (included in the
$36 million noted above); and
- Annual Amounts under the Restated
Investment Agreement: The Kyrgyz Republic is also claiming that KGC
has not fulfilled its obligations under the Restated Investment
Agreement regarding paying an annual amount equal to 4% of Kumtor’s
gross proceeds, beginning from 2010. The Company disputes this
claim and has referred the regulatory authorities to the full
provision in the 2009 Restated Investment Agreement which sets out
the calculation and the credits which are available to KGC in
determining whether any annual amount is payable. Management
estimates that the aggregate amount of this claim is approximately
$148 million.
Centerra notes that the 2009 Restated Project
Agreements which govern the Kumtor Mine contain a specific tax and
fiscal regime applicable to the Kumtor Mine. That tax and fiscal
regime provides, among other things, that no taxes are payable by
KGC on intercompany transactions with Centerra, including
dividends. The 2009 Restated Project Agreements were confirmed by
the Kyrgyz Republic Government in the Kumtor Strategic Agreement
signed on September 11, 2017, which was completed and reaffirmed in
August 2019.
New Barskoon ClaimantsIn January 2021, the
Kyrgyz Republic Supreme Court upheld a lower court ruling awarding
damages and other costs to plaintiffs in the 1998 Barskoon truck
accident case. An aggregate total of KGS 7,200,000 (or
approximately $91,000) was awarded in damages. That decision is
final and not subject to further appeal. KGC paid all plaintiffs
the required amounts and the process was completed in early March
2021. Under a 1999 settlement agreement, the Kyrgyz Republic
Government has agreed to indemnify KGC from any damages in
connection with the Barskoon cyanide incident and, under the terms
of the 2009 Restated Project Agreements, KGC may set off such
amounts against future taxes payable to the Government.
On April 12, 2021, KGC received a new Statement
of Claim initiated by 54 residents of Barskoon, Tosor, Kichi
Zhargylchak and Chon Zhargylchak villages of Jety-Oguz District,
seeking compensation in the amount of KGS 2 million (or
approximately $24,000) for each plaintiff in relation to the
Barskoon accident. KGC understands that the Kyrgyz court has
returned the Statement of Claim and refused to accept the claim for
further consideration.
New and Re-Opened Criminal ProceedingsThe
Company understands that the Kyrgyz Republic authorities have
opened an investigation into KGC allegedly exporting antimony ores
or concentrates from the Kyrgyz Republic, which the KGC denies. The
Company also understands that such authorities have re-opened
previously closed criminal investigations including those related
to the Lysii waste dump incident in 2019 and the Petrov Lake
incident in 2020. In this regard, KGC notes that the Kyrgyz
commissions previously formed to review such incidents concluded
that no crime had occurred in each case.
The Company believes that the actions of the
Kyrgyz Republic authorities described above are a concerted effort
to coerce Centerra to give up economic value or ownership of the
Kumtor Mine or to falsely justify a nationalization of the Kumtor
Mine. While the Company has benefited from a close and constructive
dialogue with the Kyrgyz Republic authorities over many years and
remains committed to trying to work with them to resolve any
outstanding issues in accordance with the 2009 Restated Project
Agreements applicable to the Kumtor Mine, it will not hesitate to
use all legal avenues to protect its legal rights and interests and
those of its shareholders and will pursue its claims in
international arbitration proceedings.
In light of the above developments, the Company
has formally notified the Kyrgyz Republic Government that, among
other things, their actions or threatened actions, including new
and proposed legislation, and the actions by the STS, violate or
may violate terms of the 2009 Restated Investment Agreement and
related project agreements applicable to the Kumtor Mine, and
constitute “Disputes” under those agreements.
There can be no assurance that any of these
matters can be resolved without a material impact on the Company.
There remains the further risk that additional regulatory, tax, or
civil claims will be commenced against the Company, and that
additional legislation is introduced which may impact the Kumtor
Mine’s operations. See “Caution Regarding Forward-Looking
Information” and the section titled “Risks Factors” in our most
recently completed Annual Information Form.
Canada
Mount Milligan Mine
As previously disclosed, in the first quarter of
2020, the Company received a notice of civil claim from H.R.S.
Resources Corp. (“H.R.S.”), the holder of a 2% production royalty
at Mount Milligan. H.R.S. claims that since November 2016 (when the
royalty became payable) the Company has incorrectly calculated
amounts payable under the production royalty agreement and has
therefore underpaid amounts owing to H.R.S. The Company disputes
the claim and believes it has correctly calculated the royalty
payments in accordance with the agreement. The Company believes
that the potential exposure in relation to this claim, over what
the Company has accrued, is not material.
Other
The Company operates in multiple countries
around the world and accordingly is subject to, and pays taxes
under the various regimes in those jurisdictions in which it
operates. These tax regimes are determined under general taxation
and other laws of the respective jurisdiction. The Company has
historically filed, and continues to file, all required tax returns
and to pay the taxes reasonably determined to be due. The tax rules
and regulations in many countries are complex and subject to
interpretation. From time to time the Company’s tax filings are
subject to review and in connection with such reviews, disputes can
arise with the taxing authorities over the Company’s interpretation
of the country’s tax laws. The Company records provisions for
future tax assessments considered to be probable. As at March 31,
2021, the Company did not have any material provision for claims or
taxation assessments.
Accounting Estimates, Policies and
Changes
Accounting EstimatesThe
preparation of the Company’s consolidated financial statements in
accordance with IFRS required management to make estimates and
judgments that affect the amounts reported in the consolidated
financial statements and accompanying notes. The critical estimates
and judgments applied in the preparation of the Company’s condensed
consolidated interim financial statements for the three months
ended March 31, 2021 are consistent with those used in the
Company’s consolidated financial statements for the year ended
December 31, 2020.
Management’s estimates and underlying
assumptions are reviewed on an ongoing basis. Any changes or
revisions to estimates and underlying assumptions are recognized in
the period in which the estimates are revised and in any future
periods affected. Changes to these critical accounting estimates
could have a material impact on the consolidated financial
statements.
The key sources of estimation uncertainty and
judgment used in the preparation of the consolidated financial
statements that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities and
earnings within the next financial year are outlined in detail in
note 4 of the December 31, 2020 financial statements.
Disclosure Controls and Procedures and
Internal Control Over Financial Reporting
The Company’s management, including the CEO and
CFO, is responsible for the design of disclosure controls and
procedures (“DC&P”) and internal controls over financial
reporting (“ICFR”). Centerra adheres to the Committee of Sponsoring
Organizations of the Treadway Commission’s (“COSO”) revised 2013
Internal Control Framework for the design of its ICFR. There was no
material change to the Company’s internal controls over financial
reporting that occurred during the first quarter of 2021 that has
materially affected, or is reasonably likely to materially affect,
the Company’s internal controls over financial reporting.
The evaluation of DC&P and ICFR was carried
out under the supervision of and with the participation of
management, including Centerra’s CEO and CFO. Based on these
evaluations, the CEO and the CFO concluded that the design of these
DC&P and ICFR were effective throughout the first quarter of
2021.
Non-GAAP Measures
This document contains the following non-GAAP
financial measures: all-in sustaining costs per ounce on a
by-product basis, all-in sustaining costs per ounce on a by-product
basis including revenue-based taxes, all-in sustaining costs per
ounce on a co-product basis and all-in costs on a by-product basis
per ounce. In addition, non-GAAP financial measures include
adjusted net earnings, adjusted net earnings per common share
(basic and diluted), average realized gold price, average realized
copper price, adjusted cash provided by operations, free cash flow
from operations and adjusted free cash flow from operations. These
financial measures do not have any standardized meaning prescribed
by GAAP and are therefore unlikely to be comparable to similar
measures presented by other issuers, even as compared to other
issuers who may be applying the World Gold Council (“WGC”)
guidelines, which can be found at http://www.gold.org.
Management believes that the use of these
non-GAAP measures will assist analysts, investors and other
stakeholders of the Company in understanding the costs associated
with producing gold, understanding the economics of gold mining,
assessing our operating performance, our ability to generate free
cash flow from current operations and to generate free cash flow on
an overall Company basis, and for planning and forecasting of
future periods. However, the measures do have limitations as
analytical tools as they may be influenced by the point in the life
cycle of a specific mine and the level of additional exploration or
expenditures a company has to make to fully develop its properties.
Accordingly, these non-GAAP measures should not be considered in
isolation, or as a substitute for, analysis of our results as
reported under GAAP.
DefinitionsThe following is a
description of the non-GAAP measures used in this MD&A:
- All-in sustaining costs on a
by-product basis per ounce include adjusted operating costs, the
cash component of capitalized stripping costs, corporate general
and administrative expenses, accretion expenses, and sustaining
capital, net of copper and silver credits. The measure incorporates
costs related to sustaining production. When calculating all-in
sustaining costs on a by-product basis, all revenue received from
the sale of copper from the Mount Milligan mine, as reduced by the
effect of the copper stream, is treated as a reduction of costs
incurred. All-in sustaining costs on a by-product basis per ounce
excludes revenue-based taxes.
- All-in sustaining costs on a
co-product basis per ounce of gold or per pound of copper, are
based on an allocation of production costs between copper and gold
based on the conversion of copper production to ounces of gold
equivalent. For the first quarter of 2021, 475 pounds of copper
were equivalent to one ounce of gold. All-in sustaining costs on a
co-product basis per ounce of gold or per pound of copper excludes
revenue-based taxes.
- All-in costs on a by-product basis
per ounce include all-in sustaining costs on a by-product basis
including revenue-based taxes, exploration and study costs,
non-sustaining capital expenditures, care and maintenance and
pre-development costs.
- Non-sustaining capital expenditures
are costs incurred at new operations and costs related to major
projects at existing operations where these projects will
materially benefit the operation.
- Adjusted net earnings is calculated
by adjusting net earnings (loss) as recorded in the consolidated
statements of income (loss) and comprehensive income (loss) for
items not associated with ongoing operations.
- Adjusted cash provided by
operations is calculated by adjusting cash provided by operations
as recorded in the condensed consolidated interim statements of
statements of cash flows for items not associated with ongoing
operations.
- Average realized gold price is
calculated by dividing the different components of gold sales
(including third party sales, mark to market adjustments, final
pricing adjustments and the fixed amount received under the Mount
Milligan Streaming Arrangement(1)) by the number of ounces
sold.
- Average realized copper price is
calculated by dividing the different components of copper sales
(including third party sales, mark to market adjustments, final
pricing adjustments and the fixed amount received under the Mount
Milligan Streaming Arrangement(1)) by the number of pounds
sold.
- Free cash flow is calculated as
cash provided by operations less additions to property, plant and
equipment.
- Free cash flow from mine operations
is calculated as cash provided by mine operations less additions to
property, plant and equipment.
- Adjusted free cash flow from
operations is calculated as free cash flow adjusted for items not
associated with ongoing operations.
(1) |
Realized revenue for the gold and copper concentrate produced at
the Mount Milligan mine reflects the actual price received from
customers upon final settlement for both the contained gold and
copper, less the difference between the cost of the purchased
refined gold and copper warrants to satisfy the Company’s
obligations under the Mount Milligan Streaming Arrangement and the
amount the Company receives under that arrangement. |
Certain unit costs, including all-in
sustaining costs on a by-product basis (including and excluding
revenue-based taxes) per ounce are non-GAAP measures and can be
reconciled as follows:
|
Three months ended March 31, |
(Unaudited - $ millions, unless otherwise
specified) |
Consolidated |
|
Kumtor |
|
Mount Milligan |
|
Öksüt |
|
2021 |
|
2020 |
|
|
2021 |
|
2020 |
|
|
2021 |
|
2020 |
|
|
2021 |
|
|
|
|
|
|
|
|
|
|
|
Production costs attributable to gold |
101.3 |
|
87.7 |
|
|
48.4 |
|
53.4 |
|
|
36.8 |
|
34.3 |
|
|
16.1 |
Production costs attributable to copper |
32.3 |
|
28.0 |
|
|
- |
|
- |
|
|
32.3 |
|
28.0 |
|
|
- |
Total production costs excluding molybdenum segment, as
reported |
133.6 |
|
115.7 |
|
|
48.4 |
|
53.4 |
|
|
69.1 |
|
62.3 |
|
|
16.1 |
Adjust for: |
|
|
|
|
|
|
|
|
|
|
Third party smelting, refining and transport costs |
3.8 |
|
4.0 |
|
|
0.9 |
|
1.7 |
|
|
2.9 |
|
2.3 |
|
|
- |
By-product and co-product credits |
(67.3 |
) |
(36.6 |
) |
|
(2.1 |
) |
(1.9 |
) |
|
(65.2 |
) |
(34.7 |
) |
|
- |
Community costs related to current operations |
1.8 |
|
11.3 |
|
|
1.8 |
|
11.3 |
|
|
- |
|
- |
|
|
- |
Adjusted production costs |
71.9 |
|
94.4 |
|
|
49.0 |
|
64.5 |
|
|
6.8 |
|
29.9 |
|
|
16.1 |
Corporate general administrative and other costs |
5.0 |
|
3.2 |
|
|
- |
|
- |
|
|
0.2 |
|
- |
|
|
- |
Reclamation and remediation - accretion (operating sites) |
1.3 |
|
1.5 |
|
|
0.2 |
|
1.0 |
|
|
0.6 |
|
0.5 |
|
|
0.5 |
Capitalized stripping(1) |
34.9 |
|
30.0 |
|
|
30.5 |
|
30.0 |
|
|
- |
|
- |
|
|
4.4 |
Sustaining capital expenditures(1) |
20.1 |
|
13.7 |
|
|
7.7 |
|
8.4 |
|
|
11.3 |
|
5.3 |
|
|
1.1 |
Sustaining leases |
1.2 |
|
1.0 |
|
|
- |
|
- |
|
|
1.1 |
|
1.0 |
|
|
0.1 |
All-in sustaining costs on a by-product basis |
134.4 |
|
143.8 |
|
|
87.4 |
|
103.9 |
|
|
20.0 |
|
36.7 |
|
|
22.2 |
Revenue-based taxes |
24.6 |
|
35.1 |
|
|
24.6 |
|
35.1 |
|
|
- |
|
- |
|
|
- |
All-in sustaining costs on a by-product basis (including
revenue-based taxes) |
159.0 |
|
178.9 |
|
|
112.0 |
|
139.0 |
|
|
20.0 |
|
36.7 |
|
|
22.2 |
Exploration and study costs |
9.3 |
|
7.8 |
|
|
5.8 |
|
4.7 |
|
|
0.9 |
|
0.5 |
|
|
0.3 |
Non-sustaining capital expenditures(1)(2) |
22.2 |
|
13.4 |
|
|
21.6 |
|
0.7 |
|
|
0.1 |
|
- |
|
|
0.3 |
Care and maintenance costs and pre-development costs |
3.2 |
|
5.2 |
|
|
- |
|
- |
|
|
- |
|
- |
|
|
- |
All-in costs on a by-product basis |
193.7 |
|
205.3 |
|
|
139.4 |
|
144.4 |
|
|
21.0 |
|
37.2 |
|
|
22.8 |
Ounces sold (000's) |
180.5 |
|
200.5 |
|
|
98.4 |
|
160.1 |
|
|
54.5 |
|
40.4 |
|
|
27.6 |
Pounds sold (millions) |
22.8 |
|
20.4 |
|
|
- |
|
- |
|
|
22.8 |
|
20.4 |
|
|
- |
Gold production costs ($ /oz) |
561 |
|
437 |
|
|
492 |
|
334 |
|
|
675 |
|
848 |
|
|
583 |
All-in sustaining costs on a by-product basis ($ /oz) |
745 |
|
718 |
|
|
888 |
|
648 |
|
|
367 |
|
911 |
|
|
804 |
All-in sustaining costs on a by-product basis, including
revenue-based taxes ($ /oz) |
881 |
|
893 |
|
|
1,138 |
|
868 |
|
|
367 |
|
911 |
|
|
804 |
All-in costs on a by-product basis ($ /oz) |
1,073 |
|
1,024 |
|
|
1,417 |
|
902 |
|
|
386 |
|
923 |
|
|
827 |
Gold - All-in sustaining costs on a co-product basis ($ /oz) |
876 |
|
676 |
|
|
888 |
|
648 |
|
|
802 |
|
948 |
|
|
804 |
Copper production costs ($ /pound) |
1.42 |
|
1.37 |
|
|
n/a |
|
n/a |
|
|
1.42 |
|
1.37 |
|
|
n/a |
Copper - All-in sustaining costs on a co-product basis ($
/pound) |
1.68 |
|
1.52 |
|
|
n/a |
|
n/a |
|
|
1.68 |
|
1.52 |
|
|
n/a |
(1) |
Capital expenditures are presented on a cash basis. |
(2) |
Non-sustaining capital expenditures are distinct projects designed
to have a significant increase in the net present value of the
mine. In the current year, non-sustaining capital expenditures
included costs related to the mine expansion at Kumtor and
construction costs at the Öksüt mine. |
Adjusted net earnings can be reconciled
as follows:Adjusted net earnings is intended to provide
investors with information about the Company’s continuing income
generating capabilities. This measure adjusts for the
earnings impact of items not associated with ongoing
operations.
|
|
Three months ended March 31, |
($ millions, except as noted) |
2021 |
|
|
2020 |
|
|
|
|
|
|
|
|
Net earnings |
$ |
167.4 |
|
$ |
20.0 |
|
|
|
|
|
|
|
|
Adjust for items not associated with ongoing operations: |
|
|
|
|
|
|
Gain on sale of Greenstone property |
|
(72.3 |
) |
|
- |
|
|
ARO revaluation at sites on care and maintenance |
|
(10.9 |
) |
|
26.4 |
|
|
|
|
|
|
|
|
Adjusted net earnings |
$ |
84.2 |
|
$ |
46.4 |
|
|
|
|
|
|
|
|
Net earnings per share - basic |
$ |
0.57 |
|
$ |
0.07 |
|
Net earnings per share - diluted |
$ |
0.55 |
|
$ |
0.06 |
|
Adjusted net earnings per share - basic |
$ |
0.28 |
|
$ |
0.16 |
|
Adjusted net earnings per share - diluted |
$ |
0.28 |
|
$ |
0.16 |
|
|
|
|
|
|
|
|
Free cash flow is calculated as
follows:
|
|
Three months ended March 31 |
($ millions, except as noted) |
2021 |
|
2020 |
|
|
|
|
|
|
|
Cash provided by operations
(1) |
$ |
153.1 |
|
$ |
121.1 |
|
|
|
|
|
|
|
Adjust for: |
|
|
|
|
|
Additions to property, plant and equipment (1) |
|
(81.0 |
) |
|
(44.1 |
) |
|
|
|
|
|
|
Free cash flow |
$ |
72.1 |
|
$ |
77.0 |
|
|
|
|
|
|
|
(1) |
As presented
in the Company’s Consolidated Statement of Cash Flows. |
Average realized sales price for
goldThe average realized gold price per ounce is
calculated by dividing gold sales revenue, together with the final
pricing adjustments, impact of reduced metal prices resulting from
the Mount Milligan Streaming Arrangement, the impact of gold hedges
and mark-to-market adjustments by the ounces sold, as shown in the
table below:
Average realized sales price for gold |
Three months ended March 31, |
|
2021 |
|
2020 |
|
|
|
|
Gold sales reconciliation ($ millions) |
|
|
Gold sales - Kumtor |
173.6 |
|
248.9 |
|
Gold sales - Öksüt |
49.9 |
|
- |
|
|
|
|
Gold sales - Mount Milligan |
|
|
Gold sales related to cash portion of Royal Gold stream |
8.1 |
|
6.0 |
|
Mark-to-market adjustments on sales to Royal Gold |
0.2 |
|
(0.1 |
) |
Final adjustments on sales to Royal Gold |
1.2 |
|
(0.8 |
) |
Total gold sales under Royal Gold stream |
9.5 |
|
5.1 |
|
|
|
|
Gold sales to third party customers |
63.2 |
|
40.3 |
|
Mark-to-market adjustments |
(1.0 |
) |
(0.6 |
) |
Final pricing adjustments |
(3.0 |
) |
3.5 |
|
Final metal adjustments |
1.9 |
|
0.8 |
|
Total gold sales to third party customers |
61.1 |
|
44.0 |
|
Gold sales, net of adjustments |
70.6 |
|
49.1 |
|
Refining and treatment costs |
(0.3 |
) |
(0.2 |
) |
Total gold sales |
70.3 |
|
48.9 |
|
|
|
|
Total gold revenue - Consolidated |
293.8 |
|
297.8 |
|
|
|
|
Ounces of gold sold |
|
|
Gold ounces sold - Kumtor |
98,437 |
|
160,090 |
|
Gold ounces sold - Öksüt |
27,584 |
|
- |
|
Ounces sold to Royal Gold - Mount Milligan |
19,010 |
|
14,027 |
|
Ounces sold to third party customers - Mount Milligan |
35,488 |
|
26,326 |
|
|
|
|
Total ounces sold - Consolidated |
180,519 |
|
200,443 |
|
|
|
|
Average realized sales price for gold on a per ounce
basis |
|
|
Average realized sales price - Kumtor |
1,763 |
|
1,555 |
|
Average realized sales price - Öksüt |
1,809 |
|
- |
|
|
|
|
Average realized gold price - Royal Gold |
435 |
|
435 |
|
Average realized gold price - Mark-to-market adjustments |
11 |
|
(24 |
) |
Average realized gold price - Final pricing adjustments |
62 |
|
(60 |
) |
Average realized gold price - Mount Milligan - Royal
Gold |
508 |
|
351 |
|
|
|
|
Average realized gold price - Third party |
1,782 |
|
1,540 |
|
Average realized gold price - Mark-to-market adjustments |
(28 |
) |
(22 |
) |
Average realized gold price - Final pricing adjustments |
(86 |
) |
134 |
|
Average realized gold price - Final metal adjustments |
53 |
|
29 |
|
Average realized gold price - Mount Milligan - Third
party |
1,721 |
|
1,681 |
|
Average realized gold price - Mount Milligan -
Combined |
1,291 |
|
1,213 |
|
|
|
|
Average realized sales price for gold -
Consolidated |
1,627 |
|
1,487 |
|
|
|
|
Average realized sales price for Copper
- Mount MilliganThe average realized copper price per
pound is calculated by dividing copper sales revenue, together with
the final pricing adjustments, impact of reduced metal prices
resulting from the Mount Milligan Streaming Arrangement, the impact
of copper hedges and mark-to-market adjustments by the pounds sold,
as shown in the table below:
Average realized sales price for Copper - Mount
Milligan |
Three months ended March 31, |
|
2021 |
|
2020 |
|
|
|
|
Copper sales reconciliation ($ millions) |
|
|
Copper sales related to cash portion of Royal Gold stream |
2.5 |
|
1.4 |
|
Mark-to-market adjustments on Royal Gold stream |
1.1 |
|
0.4 |
|
Final adjustments on sales to Royal Gold |
(2.8 |
) |
0.3 |
|
Total copper sales under Royal Gold stream |
0.8 |
|
2.1 |
|
|
|
|
Copper sales to third party customers |
71.0 |
|
40.7 |
|
Mark-to-market adjustments |
(13.6 |
) |
(4.8 |
) |
Final pricing adjustments |
7.6 |
|
(1.0 |
) |
Final metal adjustments |
(0.1 |
) |
(0.2 |
) |
Total copper sales to third party customers |
64.9 |
|
34.7 |
|
Copper sales, net of adjustments |
65.7 |
|
36.8 |
|
Refining and treatment costs |
(3.8 |
) |
(3.8 |
) |
Copper sales |
61.9 |
|
33.0 |
|
|
|
|
Pounds of copper sold (000's lbs) |
|
|
Pounds sold to Royal Gold |
4,271 |
|
3,839 |
|
Pounds sold to third party customers |
18,511 |
|
16,585 |
|
Total pounds sold |
22,783 |
|
20,423 |
|
|
|
|
Average realized sales price for copper on a per pound
basis |
|
|
Copper sales related to cash portion of Royal Gold stream |
0.57 |
|
0.37 |
|
Mark-to-market adjustments on Royal Gold stream |
0.25 |
|
0.11 |
|
Final pricing adjustments on Royal Gold stream |
(0.65 |
) |
0.07 |
|
Average realized copper price - Royal Gold |
0.19 |
|
0.55 |
|
|
|
|
Average realized copper price - Third party |
3.84 |
|
2.45 |
|
Average realized copper price - Mark-to-market adjustments |
(0.73 |
) |
(0.29 |
) |
Average realized copper price - Final pricing adjustments |
0.41 |
|
(0.06 |
) |
Average realized copper price - Metal pricing adjustments |
(0.01 |
) |
(0.01 |
) |
Average realized copper price - Third party |
3.51 |
|
2.09 |
|
|
|
|
Average realized copper price - Combined |
2.72 |
|
1.61 |
|
|
|
|
Qualified Person & QA/QC –
Non-Exploration (including Production information)
The production information and other scientific
and technical information presented in this document, including the
production estimates were prepared in accordance with the standards
of the Canadian Institute of Mining, Metallurgy and Petroleum and
NI 43-101 and were prepared, reviewed, verified, and compiled by
Centerra’s geological and mining staff under the supervision of
Slobodan (Bob) Jankovic, Professional Geoscientist, member of the
Association of Professional Geoscientists of Ontario (APGO) and
Centerra’s Senior Director, Technical Services, who is a qualified
person for the purpose of NI 43-101. Unless otherwise noted below,
sample preparation, analytical techniques, laboratories used and
quality assurance-quality control protocols used during the
exploration drilling programs are done consistent with industry
standards and independent certified assay labs are used.
The Kumtor deposit is described in a NI 43-101
technical report dated February 24, 2021 (with an effective date of
July 1, 2020) and filed on SEDAR at www.sedar.com. The technical
report describes the exploration history, geology, and style of
gold mineralization at the Kumtor deposit. Sample preparation,
analytical techniques, laboratories used, and quality
assurance-quality control protocols used are described in the
technical report.
The Mount Milligan deposit is described in a NI
43-101 technical report dated March 26, 2020 and filed on SEDAR at
www.sedar.com. The technical report describes the exploration
history, geology, and style of gold mineralization at the Mount
Milligan deposit. Sample preparation, analytical techniques,
laboratories used, and quality assurance-quality control protocols
used during the exploration drilling programs are done consistent
with industry standards and independent certified assay labs.
The Öksüt deposit is described in a NI 43-101
technical report dated September 3, 2015 and filed on SEDAR at
www.sedar.com. The technical report describes the exploration
history, geology, and style of gold mineralization at the Öksüt
deposit. Sample preparation, analytical techniques, laboratories
used, and quality assurance-quality control protocols used during
the exploration drilling programs are done consistent with industry
standards and independent certified assay labs.
Centerra Gold Inc. |
Condensed Consolidated Interim Statements of Financial
Position |
|
|
|
|
|
|
|
|
|
|
March 31, |
|
|
December 31, |
|
(Unaudited) |
|
|
2021 |
|
|
2020 |
|
(Expressed in thousands of United States
Dollars) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
|
$ |
823,233 |
|
$ |
545,180 |
|
|
Amounts receivable |
|
|
|
106,380 |
|
|
66,108 |
|
|
Inventories |
|
|
|
541,954 |
|
|
580,587 |
|
|
Assets held-for-sale |
|
|
|
- |
|
|
140,005 |
|
|
Other current assets |
|
|
|
44,187 |
|
|
40,961 |
|
|
|
|
|
|
1,515,754 |
|
|
1,372,841 |
|
Property, plant and equipment |
|
|
|
1,724,215 |
|
|
1,686,067 |
|
Reclamation deposits |
|
|
|
53,056 |
|
|
47,083 |
|
Other assets |
|
|
|
35,042 |
|
|
30,018 |
|
|
|
|
|
|
1,812,313 |
|
|
1,763,168 |
|
Total assets |
|
|
$ |
3,328,067 |
|
$ |
3,136,009 |
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Shareholders' equity |
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities |
|
|
$ |
246,080 |
|
$ |
232,704 |
|
|
Revenue-based tax payable |
|
|
|
15,006 |
|
|
5,073 |
|
|
Income tax payable |
|
|
|
6,760 |
|
|
2,474 |
|
|
Liabilities held-for-sale |
|
|
|
- |
|
|
2,255 |
|
|
Other current liabilities |
|
|
|
28,466 |
|
|
15,322 |
|
|
|
|
|
|
296,312 |
|
|
257,828 |
|
|
|
|
|
|
|
|
|
|
Deferred income tax liability |
|
|
|
52,263 |
|
|
39,473 |
|
Provision for reclamation |
|
|
|
337,656 |
|
|
351,149 |
|
Other liabilities |
|
|
|
17,805 |
|
|
21,541 |
|
|
|
|
|
|
407,724 |
|
|
412,163 |
|
Shareholders' equity |
|
|
|
|
|
|
|
|
|
Share capital |
|
|
|
980,193 |
|
|
975,122 |
|
|
Contributed surplus |
|
|
|
29,530 |
|
|
30,601 |
|
|
Accumulated other comprehensive income |
|
|
|
9,953 |
|
|
11,600 |
|
|
Retained earnings |
|
|
|
1,604,355 |
|
|
1,448,695 |
|
|
|
|
|
|
2,624,031 |
|
|
2,466,018 |
|
Total liabilities and Shareholders' equity |
|
|
$ |
3,328,067 |
|
$ |
3,136,009 |
|
Centerra Gold Inc. |
|
|
|
|
|
|
Condensed Consolidated Interim Statements of Earnings and
Comprehensive Income |
|
|
|
|
|
|
|
|
Three months ended March 31, |
(Unaudited) |
2021 |
|
2020 |
|
|
|
|
|
|
|
|
(Expressed in thousands of United States
Dollars) |
|
|
|
|
|
(except per share amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
$ |
401,853 |
|
|
$ |
378,791 |
|
|
|
|
|
|
|
|
|
|
Cost of sales |
|
|
|
|
|
|
|
Production costs |
|
|
169,718 |
|
|
|
169,380 |
|
|
Depreciation, depletion and amortization |
|
|
72,855 |
|
|
|
73,022 |
|
|
Standby costs |
|
|
- |
|
|
|
6,764 |
|
Earnings from mine operations |
|
|
159,280 |
|
|
|
129,625 |
|
|
|
|
|
|
|
|
|
|
Revenue-based taxes |
|
|
24,587 |
|
|
|
35,105 |
|
|
Exploration and development costs |
|
|
9,314 |
|
|
|
9,503 |
|
|
Corporate administration |
|
|
4,947 |
|
|
|
3,446 |
|
|
Care and maintenance expense |
|
|
6,432 |
|
|
|
6,788 |
|
|
Reclamation (recovery) expense |
|
|
(10,867 |
) |
|
|
26,440 |
|
|
Other operating expenses |
|
|
5,848 |
|
|
|
14,299 |
|
Earnings from operations |
|
|
119,019 |
|
|
|
34,044 |
|
|
|
|
|
|
|
|
|
|
Gain on sale of Greenstone Partnership |
|
|
(72,274 |
) |
|
|
- |
|
|
Other expenses |
|
|
2,501 |
|
|
|
7,570 |
|
|
Finance costs |
|
|
1,765 |
|
|
|
3,601 |
|
Earnings before income tax |
|
|
187,027 |
|
|
|
22,873 |
|
|
Income tax expense |
|
|
19,600 |
|
|
|
2,865 |
|
Net earnings |
|
$ |
167,427 |
|
|
$ |
20,008 |
|
|
|
|
|
|
|
|
|
Other Comprehensive Income |
|
|
|
|
|
|
Items that may be subsequently reclassified to
earnings: |
|
|
|
|
|
Net gain (loss) on translation of foreign operation |
$ |
31 |
|
|
$ |
(2,956 |
) |
|
Net loss on derivative instruments |
|
|
(1,678 |
) |
|
|
(7,307 |
) |
Other comprehensive income (loss) |
|
|
(1,647 |
) |
|
|
(10,263 |
) |
Total comprehensive income |
|
$ |
165,780 |
|
|
$ |
9,745 |
|
|
|
|
|
|
|
|
|
Basic earnings per share |
|
$ |
0.57 |
|
|
$ |
0.07 |
|
Diluted earnings per share |
|
$ |
0.55 |
|
|
$ |
0.06 |
|
|
|
|
|
|
|
|
|
Centerra Gold Inc. |
|
|
|
|
|
|
Condensed Consolidated Interim Statements of Cash
Flows |
|
Three months ended March 31, |
(Unaudited) |
|
|
2021 |
|
|
|
2020 |
|
(Expressed in thousands of United States
Dollars) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating activities |
|
|
|
|
|
|
Earnings from operations |
|
$ |
167,427 |
|
|
$ |
20,008 |
|
|
|
|
|
|
|
|
|
Adjustments for the following items: |
|
|
|
|
|
|
|
Depreciation, depletion and amortization |
|
|
74,344 |
|
|
|
74,730 |
|
|
Reclamation (recovery) expense |
|
|
(10,867 |
) |
|
|
26,440 |
|
|
Share-based compensation expense |
|
|
(3,116 |
) |
|
|
(3,239 |
) |
|
Finance costs |
|
|
1,765 |
|
|
|
3,601 |
|
|
Gain on sale of Greenstone Partnership |
|
|
(72,274 |
) |
|
|
- |
|
|
Settlement of derivatives |
|
|
5,245 |
|
|
|
159 |
|
|
Inventory impairment |
|
|
- |
|
|
|
7,488 |
|
|
Income tax expense |
|
|
19,600 |
|
|
|
2,865 |
|
|
Income taxes (refunded) paid |
|
|
(1,027 |
) |
|
|
10,864 |
|
|
Other |
|
|
2,354 |
|
|
|
381 |
|
Cash provided by operations before changes in
working capital |
|
|
183,451 |
|
|
|
143,297 |
|
Changes in working capital |
|
|
(30,303 |
) |
|
|
(22,142 |
) |
Cash provided by operations |
|
|
153,148 |
|
|
|
121,155 |
|
Investing activities |
|
|
|
|
|
|
|
Property, plant and equipment additions |
|
|
(81,070 |
) |
|
|
(44,134 |
) |
|
Proceeds from sale of Greenstone Partnership |
|
|
210,291 |
|
|
|
- |
|
|
Decrease in restricted cash |
|
|
1,619 |
|
|
|
25,841 |
|
|
Increase in other assets |
|
|
(5,368 |
) |
|
|
(7,218 |
) |
Cash provided by (used in) investing |
|
|
125,472 |
|
|
|
(25,511 |
) |
|
|
|
|
|
|
|
|
Financing activities |
|
|
|
|
|
|
|
Debt drawdown |
|
|
- |
|
|
|
136,000 |
|
|
Debt repayment |
|
|
- |
|
|
|
(77,472 |
) |
|
Payment of borrowing costs |
|
|
(691 |
) |
|
|
(2,065 |
) |
|
Lease payments |
|
|
(2,383 |
) |
|
|
(1,737 |
) |
|
Proceeds from common shares issued |
|
|
2,507 |
|
|
|
758 |
|
Cash (used in) provided by financing |
|
|
(567 |
) |
|
|
55,484 |
|
Increase in cash during the period |
|
|
278,053 |
|
|
|
151,128 |
|
Cash at beginning of the period |
|
|
545,180 |
|
|
|
42,717 |
|
|
Cash at end of the period |
|
$ |
823,233 |
|
|
$ |
193,845 |
|
The Unaudited Interim Consolidated Financial
Statements and Notes for the three months ended March 31, 2021 and
Management’s Discussion and Analysis for the three months ended
March 31, 2021 have been filed on the System for Electronic
Document Analysis and Retrieval (‘SEDAR’) at www.sedar.com, on the
Electronic Data Gathering, Analysis and Retrieval system (“EDGAR”)
at www.sec.gov/edgar, and are available at the Company’s web site
at: www.centerragold.com.
Supplementary Information: First Quarter
2021 Exploration Update
Exploration activities in the first quarter of
2021 included drilling, surface sampling, geological mapping and
geophysical surveying at the Company’s various projects (including
earn-in properties), targeting gold and copper mineralization in
Canada, Turkey, Finland, USA and the Kyrgyz Republic. Exploration
expenditures were $9.3 million in the first quarter of 2021
compared to $7.8 million in the same quarter of 2020. The increase
in exploration expenditures was due to a significantly expanded
drilling program at the Kumtor mine, drilling approximately 20,000
metres in the first quarter of 2021, as well as the recommencement
of drilling activities at Öksüt and Mount Milligan earlier in than
the prior period.
Kumtor Mine
The planned drilling program for 2021 includes
75,000 metres of exploration drilling, which will be focused on
priority and high potential targets. Primary targets include
various zones in the Central, Southwestern and Sarytor pits where a
recently updated Kumtor resource block model, based on enhanced
geological modelling and positive drilling results between 2018 and
2020, demonstrated substantial growth in measured, indicated, and
inferred resources. As well, inferred SW and NE extensions of
the Kumtor Gold Trend, i.e., the Bordoo, Akbel and Petrov targets,
will be drill tested.
During the first quarter of 2021, exploration
drilling programs continued with the completion of 57 diamond drill
holes for 17,515 metres, and 20 reverse circulation (“RC”) drill
holes for 2,426 metres. Exploration drilling focused on testing
zones of sulphide and oxide gold mineralization, at the Koshuluu,
Hope, Triangle and Deep Oxide Zones, and on testing the periphery
of the Sarytor, Bordoo and Muzdusuu areas and Northeast
targets.
Central PitIn the Triangle Zone of the Central
Pit, four exploration drill holes were completed in the first
quarter of 2021 for a total of 666 metres. The drill holes cut
several intervals with sulfide gold mineralization, in which gold
grades were >1 gram per tonne (g/t).
Southwest AreaIn the first quarter of 2021, a
total of 24 diamond drill holes were completed in the Southwest
area for a total of 8,000 metres. The majority of the drill holes
have been completed in the Koshuluu, Deep Oxide and Hope Zones.
In the Koshuluu Zone, 15 drill holes were
completed for a total of 5,278 metres, between section -110 and
section -134 (260 metres), where broad intervals of sulfide gold
mineralized rocks, which belong to Unit 2, were intersected.
Selected significant intercepts from the Koshuluu Zone are reported
below:
D2102 |
205.5 metres @ 0.93 g/t Gold (“Au”) from 160.2 metres |
|
including 9.2 metres @ 1.94 g/t
Au from 199.7 metres |
|
including 4.1 metres @ 2.06 g/t
Au from 219.1 metres |
|
including 3.2 metres @ 2.16 g/t
Au from 233.8 metres |
|
including 7.0 metres @ 1.90 g/t
Au from 250.1 metres |
|
including 29.5 metres @ 1.90 g/t
Au from 263.5 metres |
SW-20-385 |
81.6 metres @ 1.26 g/t Au from 208.5 metres |
|
including 15.5 metres @ 2.52 g/t Au
from 250.0 metres |
|
including 9.8 metres @ 2.61 g/t Au from
279.3 metres |
SW-20-389A |
27.3 metres @ 1.69 g/t Au from 228.6 metres |
|
including 7.3 metres @ 3.5 g/t Au from
238.5 metres |
|
74.7 metres @ 0.81 g/t Au from 267.0 metres |
|
including 6.5 metres @ 1.63 g/t Au from
267.0 metres |
|
including 7.4 metres @ 1.66 g/t Au from
306.4 metres |
|
including 5.0 metres @ 1.62 g/t Au from
326.9 metres |
SW-21-403 |
32.8 metres @ 1.19 g/t Au from 260.7 metres |
|
including 12.8 metres @ 2.71 g/t Au
from 280.7 metres |
In the Deep Oxide Zone,
six drill holes were completed for a total of 2,266 metres.
Selected significant intervals from the Deep Oxide Zone are
reported below:
SW-20-375 |
29.3 metres @ 1.83 g/t Au from 303.4 metres |
|
including 4.9 metres @ 3.77 g/t Au from
304.1 metres |
SW-20-388 |
41.1 metres @ 2.19 g/t Au from 362.5 metres |
|
including 13.1 metres @ 4.48 g/t Au
from 387.4 metres |
|
65.3 metres @ 1.77 g/t Au from 420.7 metres |
|
including 13.6 metres @ 3.66 g/t Au
from 443.8 metres |
|
21.7 metres @ 0.43 g/t Au from 497.0 metres |
|
including 3.6 metres @ 0.91 g/t Au from
501.7 metres |
SW-21-396A |
57.4 metres @ 3.25 g/t Au from 494.0 metres |
|
including 19.1 metres @ 6.72 g/t Au
from 499.7 metres |
SW-21-409 |
22 metres @ 0.73 g/t Au from 372.0 metres |
|
including 8.0 metres @ 1.5 g/t Au from 372.0
metres |
|
10.7 metres @ 1.7 g/t Au from 402.8 metres |
|
including 4.6 metres @ 3.67 g/t Au from
408.9 metres |
In the Hope Zone, three drill holes were
completed for a total of 456 metres. Results from recent drilling
have confirmed a zone of lens-shaped oxide gold mineralization.
This mineralization extends along the hanging wall of the Kumtor
Lower Thrust for more than 400 metres. Maximum thickness of the
oxide gold mineralization is around 20 metres. Selected significant
intervals from Hope Zone are reported below:
SW-21-412 |
5.6 metres @ 1.83 g/t Au from 87.4 metres |
|
20.5 metres @ 1.2 g/t Au from 161.5 metres |
|
including 8.8 metres @ 2.67 g/t Au from
161.5 metres |
Muzdusuu AreaEight diamond drill holes were
completed in the Muzdusuu Area for a total of 1,369 metres.
Drilling in the Muzdusuu Area (outside Central Pit) is designed to
explore for oxide and mixed gold mineralization along the Kumtor
Lower Thrust. Gold mineralization has been traced in both the
northeast and southwest directions, which demonstrates continuity
and a substantial volume under the ultimate Central pit. Selected
significant intercepts from Muzdusuu Area are reported below:
DM2092 |
57.5 metres @ 0.90 g/t Au from 38.4 metres |
|
including 15.1 metres @ 1.83 g/t Au
from 63.0 metres |
DM2100 |
55.0 metres @ 1.02 g/t Au from 6.3 metres |
|
including 19.7 metres @ 2.09 g/t Au
from 26.4 metres |
DM2107 |
9.0 metres @ 8.81 g/t Au from 18.8 metres |
|
11.4 metres @ 0.39 g/t Au from 33.1 metres |
|
including 3.9 metres @ 0.88 g/t Au from
33.1 metres |
DM2111 |
45.1 metres @ 0.97 g/t Au from 0 metres |
|
including 8.5 metres @ 1.98 g/t Au from
36.6 metres |
|
11.5 metres @ 0.55 g/t Au from 79.4 metres |
|
including 4.5 metres @ 1.11 g/t Au from
86.4 metres |
Sarytor AreaIn the first quarter of 2021, a
total of six diamond drill holes were completed in the Sarytor area
for a total of 1,557 metres. Several drill holes have intersected
significant sulfide gold mineralization, they are listed below:
SR-20-372 |
48.7 metres @ 3.60 g/t Au from 225.6 metres |
|
including 13.7 metres @ 7.31 g/t
Au from 234.2 metres |
SR-20-381 |
42.8 metres @ 3.05 g/t Au from 330.2 metres |
|
including 4.1 metres @ 6.15 g/t Au from
341.9 metres |
|
including 3.0 metres @ 7.72 g/t Au from
364.0 metres |
SR-21-390 |
37.4 metres @ 3.16 g/t Au from 348.2 metres |
|
including 11.1 metres @ 6.42 g/t Au
from 371.5 metres |
SR-21-402 |
42.7 metres @ 1.86 g/t Au from 320.1 metres |
|
including 8.0 metres @ 3.96 g/t Au from
332.0 metres |
Bordoo AreaIn the first quarter of 2021, a total
of nine diamond drill holes were completed in the Bordoo area for a
total of 3,541 metres. A few drill holes had minor intersections
with sulfide gold mineralization. Selected significant intercepts
are reported below:
BR-21-398B |
10.4 metres @ 0.63 g/t Au from 382.6 metres |
|
including 4.0 metres @ 1.38 g/t Au from
385.4 metres |
|
9.8 metres @ 1.61 g/t Au from 401.2 metres |
|
including 3.8 metres @ 3.65 g/t Au from
404.7 metres |
Airport AreaIn the first quarter of 2021, twelve
RC drill holes were completed in the Airport area for a total of
600 metres. No significant gold mineralization has been intersected
at the time of this report.
The above mineralized intercepts were calculated
using a cut-off grade of 1.0 g/t Au for sulfide and 0.1 g/t Au for
oxide gold mineralization, minimum interval of 4.0 metres and a
maximum internal dilution interval of 5.0 metres. The true widths
for sulfide gold mineralized intervals reported represent
approximately 70 to 95% of the stated down hole interval.
Significant assay intervals reported for oxide gold mineralization
represent apparent widths due to the uncertainty of the nature of
the mineralization at the time of reporting. Drill collar locations
and associated graphics are available at the following
link: http://ml.globenewswire.com/Resource/Download/ebc019dc-6dc1-46a5-a948-2fde2391fd4f
A full listing of the drill results, drill hole
locations and plan map (including the azimuth, dip of drill holes,
and depth of the sample intervals) for the Kumtor Mine have been
filed on the System for Electronic Document Analysis and Retrieval
(“SEDAR”) at www.sedar.com and are available at the Company’s web
site at www.centerragold.com.
Mount Milligan Mine
The 2021 exploration drilling program at Mount
Milligan Mine includes 20,000 metres of planned brownfield drilling
(~50 drill holes) and 4,200 metres of planned greenfield drilling
(~nine drill holes). Primary targets include zones below the
current ultimate pit boundary (MBX Deep) and on the eastern margin
of the pit (Great Eastern Fault) where positive drilling results
were returned in 2019 and 2020.
Mount Milligan Brownfield Drilling and
ExplorationExploration drilling resumed in the first quarter of
2021, with seven diamond drill holes completed totaling 2,395
metres. Of these, four drill holes (1,265 metres) were part of the
Southern Star zone in-fill drilling program designed to increase
confidence in models prior to mining. Three drill holes (1,130
metres) were completed in the MBX Deep zone, an exploration target
in the central portion of the deposit, below the current ultimate
pit boundary. The MBX Deep drilling is testing for a potential
corridor of high grade (>0.7% Copper Equivalent) mineralization
underlying the MBX composite stock.
During the first quarter of 2021, assay results
were returned for 25 drill holes completed in 2020 and 2021. These
include significant mineralization from the DWBX zone and Zone-4 in
the northwestern margin of the pit, the King Richard zone in the
western margin of the pit, and the Southern Star zone within and
along the southwestern margin of the pit.
The first assays returned from the MBX Deep zone
(drill hole 21-1301) show wide intercepts of significant
mineralization below the 2020 ultimate pit boundary, and extend the
zone intersected in drill hole 20-1269 to the south-southwest up to
65 metres.
Selected significant intersections are reported
below:
DWBX Zone (northwestern margin of the pit)
20-1266 |
37.0 metres @ 0.12 g/t Au, 0.17% Cu from 116.0 metres78.9 metres @
0.21 g/t Au, 0.22% Cu from 167.0 metres |
20-1290 |
128.0 metres @ 0.30 g/t Au, 0.12% Cu from 266.0 metres 31.4
metres @ 0.37 g/t Au, 0.21% Cu from 530.0 metres |
MBX Deep Zone (central portion of the pit)
21-1301 |
237.54 metres at 0.48 g/t Au, 0.26% Cu from 3.66 metres,
including
17.68 metres @ 1.29 g/t Au, 0.34% Cu from 48.46 metres |
Zone-4 (northwestern margin of the pit)
20-1257 |
26.0 metres @ 0.79 g/t Au, 0.02% Cu from 514.0 metres
including 1.9 metres @
3.92 g/t Au, 0.03% Cu from 519.1
metres and
3.9 metres @ 2.39 g/t Au, 0.02% Cu from 529.0 metres |
King Richard (western margin of the pit)
20-1270 |
31.0 metres @ 0.51 g/t Au, 0.10% Cu from 51.0 metres
including 2.0 metres @ 1.27 g/t
Au, 0.04% Cu from 54.4
metres and
5.5 metres @ 1.61 g/t Au, 0.08% Cu from 70.0 metres |
Southern Star (southwestern margin of the
pit)
20-1288 |
64.0 metres @ 0.26 g/t Au, 0.20% Cu from 189.0 metres 25.0 metres @
0.31 g/t Au, 0.22% Cu from 363.0 metres 32.5 metres @ 0.18 g/t Au,
0.19% Cu from 439.0 metres |
21-1297 |
55.8 metres @ 0.25 g/t Au, 0.27% Cu from 42.2 metres 26.3 metres @
0.25 g/t Au, 0.36% Cu from 137.8 metres |
Significant intersections at Mount Milligan are
generally hosted in andesite or latite volcaniclastic rocks, narrow
monzonite porphyry units or larger stocks (hangingwall and footwall
margins), or hydrothermal breccia units, and can be proximal to
fault structures and related breccia/fracture zones. Early-stage
alteration is variably potassic (magnetite bearing) and
inner-propylitic (albite bearing) with early-stage gold-copper
mineralized veins. This assemblage is variably overprinted by
quartz-sericite-pyrite-carbonate (QSPC) alteration with associated
transitional- to late-stage pyrite rich veins. The overprinting
QSPC assemblage can be grade enhancing, particularly for gold, and
is the predominant assemblage in parts of the deposit.
The assays returned from the Southern Star and
DWBX zones along the western pit walls show an extension of
low-grade porphyry Au-Cu mineralization associated with monzonite
porphyry and magmatic-hydrothermal breccias continuing to
the west of the current pit wall and below the ultimate pit
boundary. Intervals of high gold-low copper mineralization (Zone-4
and King Richard zones) have of up to 10% transitional pyrite ±
chalcopyrite stringers, veins, and semi-massive late-stage
pyrite-calcite veins.
The above mineralized intercepts were calculated
using a cut-off grade of 0.1 g/t Au and a maximum internal dilution
interval of 4 metres. Asterisk (*) indicates preliminary result for
Cu. Significant assay intervals reported represent apparent widths
due to the undefined geometry of mineralization in this zone,
relationship between fault blocks, and conceptual nature of the
exploration target. Drill collar locations and associated graphics
are available at the following link:
http://ml.globenewswire.com/Resource/Download/ebc019dc-6dc1-46a5-a948-2fde2391fd4f
A full listing of the drill results, drill hole
locations and plan map (including the azimuth, dip of drill holes,
and depth of the sample intervals) for the Mount Milligan Mine have
been filed on the System for Electronic Document Analysis and
Retrieval (“SEDAR”) at www.sedar.com and are available at the
Company’s web site at www.centerragold.com.
Öksüt Mine
At the Öksüt mine, all of the outstanding assay
results from the fourteen drill holes completed at the end of the
last quarter of 2020 were received. The assay results returned
significant intercepts at the Keltepe, Güneytepe, and Keltepe North
deposits. The intercepts warrant additional infill drill holes to
convert inferred material into indicated/measured within both the
Keltepe and Güneytepe resource pit shells and indicated the
extension of Keltepe North mineralization further to the
northeast.
The 2021 drilling program commenced in the first
quarter with infill and geotechnical drilling programs at Keltepe.
About 1,000 metres were drilled in five drill holes. The 2021
drilling program includes 26,000 planned metres focusing on:
- expanding the gold resources at Keltepe and Güneytepe main
mineralized zones,
- developing the Keltepe N/NW oxide gold satellite
resources,
- targeting geochemical gold and geophysical anomalism which has
not been tested before, and
- deeper sulphide gold and supergene copper mineralization
potential.
Also in the quarter, four samples were collected
from Güneytepe and one from Keltepe sulphide gold zones and were
dispatched to a third party for detailed metallurgical studies
including mineralogy, diagnostic heap leach, and flotation testing.
The metallurgical tests are expected to be completed in the third
quarter of 2021.
The selected significant intercepts for the
outstanding assays from the fourth quarter of 2020 and the recent
assays from the first quarter of 2021 are reported below:
Keltepe (resource upgrade and expansion of oxide
gold)
ODD0462 |
92.9 metres @ 2.63 g/t Au from the bottom of the pit
including 33.5 metres @ 4.07 g/t
Au from 0.5 metres |
ODD0464 |
18.5 metres @ 0.43 g/t Au from 100.5 metres |
ODD0468 |
40.4 metres @ 0.59 g/t Au from 149.6 metres |
ODD0470 |
96.2 metres @ 0.89 g/t Au from 130 metres
including 11 metres @ 2.58 g/t Au
from metres |
Güneytepe (testing resource expansion of oxide
and sulphide gold)
ODD0455 |
78 metres @ 0.55 g/t Au from 110 metres
including 12.2 metres @ 1.27 g/t Au from 148 metres
(sulphide gold) |
Keltepe North (testing oxide gold
expansion)
ODD0457 |
74.2 metres @ 0.41 g/t Au from 117.9 metres |
ODD0461 |
33 metres @ 0.38 g/t Au from 194 metres |
The above mineralized intercepts were calculated
using a cut-off grade of 0.2 g/t Au and a maximum internal dilution
interval of 5 metres. The true widths of the mineralized intervals
reported represent approximately 60 to 90% of the stated downhole
interval. Drill collar locations and associated graphics are
available at the following link:
http://ml.globenewswire.com/Resource/Download/ebc019dc-6dc1-46a5-a948-2fde2391fd4f
A full listing of the drill results, drill hole
locations and plan map (including the azimuth, dip of drill holes,
and depth of the sample intervals) for the Öksüt Gold Mine have
been filed on the System for Electronic Document Analysis and
Retrieval (“SEDAR”) at www.sedar.com and are available at
the Company’s web site at www.centerragold.com.
Other Projects
Turkey
Sivritepe ProjectPhase-2 diamond drilling
commenced on the Sivritepe East licence late in Q1. The
planned 5,000 metres 2021 drilling program is designed to follow up
on last year’s results and to target the remaining geochemical and
geophysical anomalies. Significant drill assays from the 2021
drilling program include:
Sivritepe East
STE005 |
25.8 metres @ 0.66 g/t Au from 58.0 metres38.0 metres @ 3.03 g/t Au
from 99.0 metres
including 5.0 metres @ 18.65 g/t Au from 132.0 metres |
Qualified Person & QA/QC –
Exploration
Exploration information and related scientific
and technical information in this document regarding the Kumtor
mine were prepared in accordance with the standards of National
Instrument 43-101 (“NI 43-101”) and were prepared, reviewed,
verified and compiled by Boris Kotlyar, a member with the American
Institute of Professional Geologists (AIPG), Chief Geologist,
Global Exploration with Centerra, who is the qualified person for
the purpose of NI 43-101. Sample preparation, analytical
techniques, laboratories used, and quality assurance-quality
control protocols used during the exploration drilling programs are
done as described in the Kumtor Technical Report dated February 24,
2021 (with an effective date of July 1, 2020) prepared in
accordance with NI 43-101. The Kumtor deposit is described in the
2020 Annual Information Form and the Kumtor Technical Report, which
are both filed on SEDAR at www.sedar.com. Exploration
information and related scientific and technical information in
this document regarding the Mount Milligan mine were prepared in
accordance with the standards of NI 43-101 and were prepared,
reviewed, verified and compiled by Cheyenne Sica, Member of the
Association of Professional Geoscientists Ontario, Exploration
Manager at Centerra’s Mount Milligan mine, who is the qualified
person for the purpose of NI 43-101. Sample preparation, analytical
techniques, laboratories used, and quality assurance quality
control protocols used during the exploration drilling programs are
done consistent with industry standards and independent certified
assay labs are used. The Mount Milligan deposit is described in the
2020 Annual Information Form and a technical report dated March 26,
2020 (with an effective date of December 31, 2019) prepared in
accordance with NI 43-101, both of which are available on SEDAR at
www.sedar.com.
Exploration information and related scientific
and technical information in this document regarding the Öksüt mine
and the Sivritepe Project were prepared, reviewed, verified and
compiled in accordance with NI 43-101 by Mustafa Cihan, Member of
the Australian Institute of Geoscientists (AIG), Exploration
Manager Turkey at Centerra’s Turkish subsidiary Centerra Madencilik
A.Ş., who is the qualified person for the purpose of NI 43-101.
Sample preparation, analytical techniques, laboratories used, and
quality assurance-quality control protocols used during the
exploration drilling programs are done consistent with industry
standards and independent certified assay labs are used. The Öksüt
deposit is described in Centerra’s 2020 Annual Information Form and
in a technical report dated September 3, 2015 (with an effective
date of June 30, 2015) prepared in accordance with NI 43-101, both
of which are available on SEDAR at www.sedar.com.
For more information:
John W. Pearson Vice President, Investor Relations
Centerra Gold Inc. (416) 204-1953 john.pearson@centerragold.com
Additional information on Centerra is
available on the Company’s web site at
www.centerragold.com and at SEDAR at www.sedar.com and EDGAR
at www.sec.gov/edgar.
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