All figures are in United States dollars and
all production figures are on a 100% basis and continuing
operations basis, unless otherwise stated. This news release
contains forward-looking information regarding Centerra Gold’s
business and operations. See “Caution Regarding Forward-Looking
Information”. 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.
TORONTO, Nov. 05, 2021 (GLOBE NEWSWIRE) --
Centerra Gold Inc. (“Centerra” or the “Company”) (TSX: CG and NYSE:
CGAU) today reported its third quarter 2021 results.
Significant financial and operating highlights
of the third quarter include:
- Net earnings and
adjusted net
earningsNG of $27.6 million or
$0.09 per common share (basic), and $35.7 million or $0.12 per
common share (basic), respectively.
- Cash flow provided by
operating activities and free cash
flowNG of $62.4 million and
$41.0 million, respectively.
- Mount Milligan Mine and
Öksüt Mine recognized free cash flow from mine operations
of $25.9 million and $48.9 million, respectively.
- Cash position at
quarter-end of $911.7 million with total liquidity of $1,311.7
million.
- Consolidated
production of 76,913 ounces of gold and 17.9 million
pounds of copper.
- Consolidated gold
production costs and copper production
costs were $630 per ounce and $1.50 per pound,
respectively.
- Consolidated all-in
sustaining costs on a by-product basisNG and
consolidated all-in costs on a by-product
basisNG were $781 per ounce and $932 per ounce,
respectively.
- Full-year 2021 cost
guidance lowered for the Öksüt
Mine. The Öksüt Mine’s gold production costs and
all-in sustaining costs on a by-product basisNG are now
expected to be in the range of $450 to $500 per ounce and $680 to
$730 per ounce, respectively. The Company’s consolidated gold
production costs and all-in sustaining costs on a by-product
basisNG are now expected to be in the range of $600 to
$650 per ounce and $700 to $750 per ounce, respectively.
- Legal proceedings relating
to the Kumtor Mine continue. During the third quarter of
2021, an arbitrator was appointed in the arbitration proceedings
against the Kyrgyz Republic and Kyrgyzaltyn JSC and the Company
filed an application seeking interim measures in the Kumtor
arbitration proceedings to prevent, among other things, the Kyrgyz
Republic and Kyrgyzaltyn JSC from causing irreparable damage to the
mine. On October 27, 2021, the appointed arbitrator resigned,
citing the refusal by the Kyrgyz Republic and Kyrgyzaltyn JSC to
agree to protections he had requested against personal claims being
brought against him by the parties or to pay his requested
fees. The Company has requested that the Permanent Court of
Arbitration and its designated appointing authority promptly
appoint a replacement arbitrator.
- Quarterly dividend
declared of CAD$0.07 per common share.
Commentary
Scott Perry, President and Chief Executive
Officer of Centerra stated, “During the third quarter we continued
to demonstrate positive safety performance as the Öksüt mine
achieved two million work hours without a lost-time injury. At the
same time, Thompson Creek Mine, Langeloth Facility and Kemess UG
Project each achieved one year without a lost-time injury and our
75%-owned Endako Mine achieved eight years without a lost-time
injury.”
“Across the organization we continue to stay
vigilant with respect to the COVID-19 virus. At both our Mount
Milligan and Öksüt Mines, vaccination clinics have been set up for
employees and contractors, with second vaccination doses having
been provided to the majority of site employees. We are proactively
maintaining our rigorous safety protocols across the organization
to prevent any outbreaks and reduce the spread of COVID-19 for the
health and safety of our employees, contractors, communities and
other stakeholders.”
“Our operations performed well in the third
quarter and we achieved Company-wide gold production from
continuing operations of 76,913 ounces at all-in sustaining costs
on a by-product basis of $781 per ounce. With this performance, and
what we are expecting in the fourth quarter, we are on track to
achieve the upper-end of our gold production guidance and the
lower-end of the all-in sustaining costs on a by-product basis
guidance. During the third quarter, the Mount Milligan Mine
produced 39,658 ounces of gold and 17.9 million pounds of copper at
all-in sustaining costs on a by-product basis of $727 per ounce. In
the same period, the Öksüt Mine produced 37,255 ounces of gold at
all-in sustaining costs on a by-product basis of $603 per ounce
during the third quarter as we started mining and stacking higher
grade material, making it our lowest cost producer in the
quarter.”
“Financially, the Company continues to generate
significant free cash flow, even without the contribution from the
Kumtor Mine. During the third quarter, we generated $62.4 million
in cash provided by operating activities, including $43.3 million
from the Mount Milligan Mine and $52.1 million from the Öksüt Mine.
Company-wide free cash flow from continuing operations in the third
quarter of 2021 totalled $41.0 million, including $25.9 million
from the Mount Milligan Mine and $48.9 million from the Öksüt Mine.
Both mines are on track to achieve record free cash flow for the
full year. We finished the quarter with a debt-free balance sheet
and a cash position of $911.7 million.”
“Based on the Company’s financial position,
strong operating results and cash flows, the Board approved on
November 4, 2021, a quarterly dividend of CAD$0.07 per share.”
“While we continue to seek resolution to the
Kumtor Mine dispute, the Company continues to be financially and
operationally strong. At the Öksüt Mine, mining activities will
continue in the high-grade zones in the fourth quarter of 2021 and
in 2022. Based on the consolidated results for the first nine
months of the year, including consolidated free cash
flowNG from continuing operations of $139.7 million, the
Company remains on track to achieve our revised 2021 consolidated
production and cost guidance and potentially exceed the upper-end
of our consolidated free cash flowNG from continuing
operations guidance of $125 to $175 million in 2021.”
“Lastly, I would like to recognize that after
more than 15 years with Centerra, John Pearson, Vice-President,
Investor Relations will be retiring at the end of this year. I
want to congratulate John on his upcoming retirement and thank him
for his continuous commitment and dedicated service. During his
long tenure, with Centerra, John has been the backbone of our
investor relations efforts, consistently communicating with the
marketplace. Over this time, the Company transformed from having a
Central Asia focus into a multi-mine diverse business. On behalf of
myself, the Company, and the Board, I would like to wish John a
happy retirement. Upon John’s retirement, all investor relations
responsibilities will be assumed by Toby Caron, Treasurer and
Director, Investor Relations.”
Exploration Update
Exploration activities in the third 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 and the United States of America.
Exploration expenditures at the Company’s
operations were $7.2 million in the third quarter of 2021 The
activities were focused on expanded drilling programs at the Mount
Milligan Mine and the Öksüt Mine, as well as at the Sivritepe
Project in Turkey.
A resource expansion drilling program commenced
in August 2021 at the Mount Milligan Mine. The drilling is designed
to develop and upgrade resources and reserves in the MBX, WBX and
DWBX zones below and to the west of the current ultimate open-pit
boundary. There is the potential for significant resources to exist
in these areas and assays returned throughout the third quarter of
2021 show wide intercepts of potentially significant mineralization
outside the ultimate open-pit boundary. The resource expansion
drilling program will continue into the fourth quarter of 2021 and
additional drilling will be completed in advance of an updated
resource model to support a new life-of-mine plan.
At the Öksüt Mine, a resource expansion drilling
which commenced earlier in the year was completed early in the
third quarter of 2021. Drilling activities were performed to
provide greater confidence to the resources and reserves within the
Keltepe and Güneytepe deposits in support of an updated resource
model and new life-of-mine plan. Exploration drilling activities
completed late in the third quarter of 2021 expanded oxide gold
mineralization at the Keltepe North and Keltepe Northwest deposits
and provided encouragement that it may be possible to join these
two deposits in the future.
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/7c29d6c2-5f7e-4117-9e23-a12eae1bccab
About Centerra
Gold
Centerra Gold Inc. is a Canadian-based gold
mining company focused on operating, developing, exploring and
acquiring gold properties in North America, Turkey, and other
markets worldwide. Centerra operates two mines: the Mount Milligan
Mine in British Columbia, Canada, and the Öksüt Mine in Turkey.
While the Company still owns the Kumtor Mine in the Kyrgyz
Republic, it is currently no longer under the Company’s control.
The Company also owns the pre-development stage Kemess Underground
Project in British Columbia, Canada and owns and operates the
Molybdenum Business Unit in the United States. 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 Call
Centerra invites you to join its 2021 third
quarter conference call on Friday, November 5, 2021 at 9:00 AM
Eastern Time. The call is open to all investors and the media. To
join the call, please dial toll-free in North America: +1 (800)
759-0876. International participants may access the call at: +1
(416) 981-0157. 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 on Centerra Gold’s website at www.centerragold.com. A recording of the call
will also be available on Centerra Gold’s website at
www.centerragold.com shortly after the call
and via telephone until midnight Eastern Standard Time on November
12, 2021 by calling: +1 (416) 626-4100 or 1 (800) 558-5253 and
using passcode 21998229.
For more
information:
John W. Pearson
Vice President, Investor Relations
Centerra Gold Inc.
(416) 204-1953
john.pearson@centerragold.com
Toby Caron
Treasurer and Director, Investor Relations
Centerra Gold Inc.
(416) 204-1153
toby.caron@centerragold.com
Additional information on Centerra Gold
is available on the Company’s website at
www.centerragold.com and on SEDAR at
www.sedar.com and EDGAR at www.sec.gov/edgar.
Management’s Discussion and
Analysis
For the Period Ended September
30, 2021
This Management Discussion and Analysis
(“MD&A”) has been prepared as of November 4, 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 and nine months ended September 30, 2021 in
comparison with the corresponding period ended September 30, 2020.
This discussion should be read in conjunction with the Company’s
unaudited condensed consolidated interim financial statements (the
“interim financial statements”) and the notes thereto, for the
three and nine months ended September 30, 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 AIF”). The Company’s unaudited condensed consolidated
interim financial statements and the notes thereto for the three
and nine months ended September 30, 2021, the 2020 Annual Report
and the 2020 AIF 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”)
at www.sec.gov/edgar. In addition,
this MD&A 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 MD&A. 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
Information
Information contained in this MD&A which
is not a statement of historical fact, 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 outlook on production (including the timing
thereof), cost, free cash flow and capital spend in 2021, and the
assumptions used in preparing such guidance and outlook, including
those discussed under “2021 Material Assumptions”; the impact of
the seizure of the Kumtor Mine on the Company’s other operations
and businesses; the outcome of arbitration and other proceedings
initiated by the Company regarding the unlawful seizure by the
Kyrgyz Government of the Kumtor Mine in May, 2021, or the outcome
or effect of the legacy environmental and tax disputes and criminal
investigations relating to the Kumtor Mine, or the outcome of any
future discussions or negotiations to resolve any or all of the
disputes relating to the Kumtor Mine; possible impacts to
operations relating to COVID-19; the Company’s expectation
regarding having sufficient water at the Mount Milligan Mine in the
medium-term for its targeted throughput and its plans for a
long-term water solution; the Company’s continued evaluation of
potential activity at the Kemess East Project; expectations
regarding the resources and reserves within the Keltepe and
Güneytepe deposits in support of an updated resource model and new
life-of-mine plan; expectations regarding the future joining of the
Keltepe North and Keltepe Northwest deposits; the Company’s
expectations regarding exploration results in connection with the
Sivritepe Project and 2XFred Project; the Company’s expectations of
adequate liquidity and capital resources for 2021; and,
expectations regarding contingent payments to be received from the
sale of Greenstone Partnership.
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 Turkey
and Canada; 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; 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 and/or
Kyrgyzaltyn JSC (“Kyrgyzaltyn”) or that such claims may not be
practically enforceable against the Kyrgyz Republic and/or
Kyrgyzaltyn; risks related to the continued imposition by the
Kyrgyz Government of external management on the Company’s
wholly-owned subsidiary, Kumtor Gold Company (“KGC”) or the
prolongation of such external management, including risks that the
external manager materially damages the Kumtor Mine’s operations;
the ongoing failure of the Kyrgyz Republic Government to comply
with its continuing obligations under the investment agreements
governing the Kumtor Mine and not take any expropriation action
against the Kumtor Mine; risks that the Kyrgyz Government undertake
further unjustified civil or criminal action against the Company,
its affiliates, or its current or former employees; the impact of
constitutional changes in 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; and, the fact
that 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 the Company’s operations; 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 mining operations; the adequacy of the
Company’s insurance to mitigate operational risks; mechanical
breakdowns; the occurrence of any labour unrest or disturbance and
the ability of the Company to successfully renegotiate 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; 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 “Risk Factors” in the Company’s
most recently filed 2020 AIF available on SEDAR at www.sedar.com and EDGAR at
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 November 4, 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
Overview of Consolidated Financial and Operating
Results
Overview of Consolidated
Results
Outlook
Recent Events and
Developments
Financial Performance
Balance Sheet Review
Financial Instruments
Operating Mines and
Facilities
Discontinued Operations
Quarterly Results – Previous Eight Quarters
Related party
transactions
Contingencies
Accounting Estimates, Policies and Changes
Disclosure Controls and Procedures and Internal Controls
Over Financial Reporting
Non-GAAP Measures
Qualified Person & QA/QC – Non-Exploration (including
Production information) |
9
10
11
14
19
23
25
28
29
40
41
41
41
43
43
44
50 |
Overview
Centerra is a Canadian-based gold mining company
focused on operating, developing, exploring and acquiring gold
properties in North America, Turkey and other markets worldwide.
Centerra’s principal continuing operations are the Mount Milligan
gold-copper mine located in British Columbia, Canada (the “Mount
Milligan Mine”), and the Öksüt gold mine located in Turkey (the
“Öksüt Mine”). The Company also owns the pre-development stage
Kemess underground project (the “Kemess UG Project”) in British
Columbia, Canada as well as 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 and operates a
Molybdenum Business Unit, particularly the Langeloth metallurgical
processing facility, operating in Pennsylvania, United States of
America, and two primary molybdenum mines in care and maintenance:
the Thompson Creek Mine in Idaho, United States of America and the
Endako Mine (75% ownership) in British Columbia, Canada.
Prior to May 15, 2021, the Company also
consolidated the results of the Kumtor Mine, located in the Kyrgyz
Republic, through its wholly-owned subsidiary, KGC. Although the
Company remains the rightful owner of KGC, the illegal seizure of
the Kumtor Mine and the continuing actions by the Kyrgyz Republic
and Kyrgyzaltyn have resulted in the following: (i) the carrying
value of the net assets of the mine were derecognized from the
Company’s balance sheet, (ii) no value was ascribed to the
Company’s interest in KGC, (iii) the Company recognized a loss on
the change of control in the second quarter of 2021 and (iv)
results of the Kumtor Mine’s operations are now presented as a
discontinued operation in the Company’s financial statements.
As of September 30, 2021, Centerra’s significant
subsidiaries are as follows:
|
|
Current |
Property |
Entity |
Property - Location |
Status |
Ownership |
Thompson Creek Metals Company Inc. |
Mount Milligan Mine - Canada |
Operation |
100% |
|
|
|
|
Öksüt Madencilik A.S. |
Öksüt Mine - Turkey |
Operation |
100% |
|
|
|
|
Langeloth Metallurgical Company LLC |
Langeloth - USA |
Operation |
100% |
|
|
|
|
AuRico Metals Inc. |
Kemess UG Project - Canada |
Pre-development |
100% |
|
|
|
|
Thompson Creek Mining Co. |
Thompson Creek Mine - USA |
Care and maintenance |
100% |
|
|
|
|
Thompson Creek Metals Company Inc. |
Endako Mine - Canada |
Care and maintenance |
75% |
|
|
|
|
Kumtor Gold Company (“KGC”) |
Kumtor Mine - Kyrgyz Republic |
Discontinued operation |
100% |
|
|
|
|
|
|
|
|
The Company’s common shares are listed on the
Toronto Stock Exchange and the New York Stock Exchange and trade
under the symbols “CG” and “CGAU”, respectively.
As of November 4, 2021, there
are 296,920,978 common shares issued and outstanding, options
to acquire 3,273,950 common shares outstanding under the
Company’s stock option plan and 1,034,794 restricted share
units outstanding under the Company’s restricted share unit plan
(exercisable on a 1:1 basis for common shares).
Overview of Consolidated Financial and
Operating Results
Unaudited ($ thousands, except as
noted) |
Three months ended September 30, |
Nine months ended September 30, |
Financial Highlights (Continuing operations basis, except
as noted) |
|
2021 |
|
2020 |
% Change |
|
2021 |
|
|
2020 |
|
% Change |
Revenue |
$ |
220.6 |
$ |
251.3 |
(12 |
%) |
$ |
649.1 |
|
$ |
509.3 |
|
27 |
% |
Production costs |
|
121.6 |
|
103.8 |
17 |
% |
|
355.7 |
|
|
310.8 |
|
14 |
% |
Depreciation, depletion, and amortization |
|
30.4 |
|
30.8 |
(1 |
%) |
|
89.5 |
|
|
70.8 |
|
26 |
% |
Earnings from mine operations |
$ |
68.6 |
$ |
116.7 |
(41 |
%) |
$ |
203.9 |
|
$ |
127.7 |
|
60 |
% |
Net earnings (loss) from continuing operations |
|
27.6 |
|
82.4 |
(67 |
%) |
|
172.1 |
|
|
(15.4 |
) |
(1218 |
%) |
Adjusted net earnings from continuing operations(1) |
|
35.7 |
|
82.4 |
(57 |
%) |
|
113.9 |
|
|
28.1 |
|
305 |
% |
Net earnings (loss) from discontinued operations |
|
- |
|
123.3 |
(100 |
%) |
|
(828.7 |
) |
|
328.8 |
|
(352 |
%) |
Net earnings (loss) (2) |
$ |
27.6 |
$ |
205.7 |
(87 |
%) |
$ |
(656.6 |
) |
$ |
313.3 |
|
310 |
% |
Adjusted net earnings(1)(2) |
$ |
35.7 |
$ |
205.7 |
(83 |
%) |
$ |
198.3 |
|
$ |
356.8 |
|
(44 |
%) |
Cash provided by operating activities from continuing
operations |
|
62.4 |
|
151.7 |
(59 |
%) |
|
209.1 |
|
|
188.0 |
|
11 |
% |
Free cash flow from continuing operations(1) |
|
41.0 |
|
124.9 |
(67 |
%) |
|
139.7 |
|
|
120.1 |
|
16 |
% |
Adjusted free cash flow from continuing
operations(1) |
|
45.3 |
|
124.9 |
(64 |
%) |
|
148.6 |
|
|
120.1 |
|
24 |
% |
Cash provided by operating activities from discontinued
operations |
|
- |
|
207.1 |
(100 |
%) |
|
143.9 |
|
|
560.0 |
|
(74 |
%) |
Net cash flow from discontinued operations(8) |
|
- |
|
156.1 |
(100 |
%) |
|
47.8 |
|
|
400.8 |
|
(88 |
%) |
Capital expenditures - total(3) |
|
20.1 |
|
25.7 |
(22 |
%) |
|
65.2 |
|
|
63.8 |
|
2 |
% |
Sustaining capital expenditures |
|
18.7 |
|
13.2 |
42 |
% |
|
62.3 |
|
|
28.9 |
|
116 |
% |
Non-sustaining capital expenditures |
|
1.4 |
|
12.5 |
(89 |
%) |
|
2.9 |
|
|
34.9 |
|
(92 |
%) |
Net earnings (loss) from continuing operations per common share -
basic(4) |
|
0.09 |
|
0.28 |
(68 |
%) |
|
0.58 |
|
|
(0.05 |
) |
(1260 |
%) |
Net earnings (loss) per common share - $/share
basic(2)(4) |
|
0.09 |
|
0.70 |
(87 |
%) |
|
(2.21 |
) |
|
1.06 |
|
(308 |
%) |
Adjusted net earnings from continuing operations per common share -
basic(1)(4) |
|
0.12 |
|
0.28 |
(57 |
%) |
|
0.38 |
|
|
0.10 |
|
280 |
% |
Adjusted net earnings per common share - $/share
basic(1)(2)(4) |
|
0.12 |
|
0.70 |
(83 |
%) |
|
0.67 |
|
|
1.21 |
|
(45 |
%) |
Operating Highlights (Continuing operations
basis) |
|
|
|
|
|
|
|
|
|
|
Gold produced (oz) |
|
76,913 |
|
101,266 |
(24 |
%) |
|
216,944 |
|
|
185,880 |
|
17 |
% |
Gold sold (oz)(7) |
|
75,721 |
|
95,937 |
(21 |
%) |
|
224,445 |
|
|
186,294 |
|
20 |
% |
Average market gold price ($/oz)(5) |
|
1,790 |
|
1,911 |
(6 |
%) |
|
1,800 |
|
|
1,737 |
|
4 |
% |
Average realized gold price ($/oz )(1)(6) |
|
1,542 |
|
1,685 |
(8 |
%) |
|
1,477 |
|
|
1,506 |
|
(2 |
%) |
Copper produced (000s lbs) |
|
17,861 |
|
23,305 |
(23 |
%) |
|
56,282 |
|
|
62,441 |
|
(10 |
%) |
Copper sold (000s lbs) |
|
18,512 |
|
21,726 |
(15 |
%) |
|
60,833 |
|
|
61,502 |
|
(1 |
%) |
Average market copper price ($/lb)(5) |
|
4.26 |
|
2.93 |
45 |
% |
|
4.17 |
|
|
2.64 |
|
58 |
% |
Average realized copper price ($/lb)(1)(6) |
|
2.55 |
|
2.43 |
5 |
% |
|
2.73 |
|
|
2.04 |
|
34 |
% |
Molybdenum sold (000s lbs) |
|
2,615 |
|
3,599 |
(27 |
%) |
|
9,100 |
|
|
10,056 |
|
(10 |
%) |
Average market molybdenum price ($/lb) |
|
19.06 |
|
7.71 |
147 |
% |
|
15.02 |
|
|
8.57 |
|
75 |
% |
Unit Costs (Continuing operations basis) |
|
|
|
|
|
|
|
|
|
|
Gold production costs ($/oz) |
|
630 |
|
495 |
27 |
% |
|
625 |
|
|
649 |
|
(4 |
%) |
All-in sustaining costs on a by-product
basis ($/oz)(1)(6) |
|
781 |
|
367 |
113 |
% |
|
672 |
|
|
679 |
|
(1 |
%) |
All-in costs on a by-product basis ($/oz)(1)(6) |
|
932 |
|
689 |
35 |
% |
|
806 |
|
|
1,104 |
|
(27 |
%) |
Gold - All-in sustaining costs on a co-product
basis($/oz)(1) |
|
928 |
|
648 |
43 |
% |
|
916 |
|
|
906 |
|
1 |
% |
Copper production costs ($/lb) |
|
1.50 |
|
1.02 |
47 |
% |
|
1.44 |
|
|
1.21 |
|
19 |
% |
Copper - All-in sustaining costs on a co-product basis –
($/lb)(1) |
|
1.95 |
|
1.19 |
64 |
% |
|
1.21 |
|
|
1.38 |
|
(12 |
%) |
(1) |
Non-GAAP measure. See discussion under “Non-GAAP
Measures”. |
(2) |
Inclusive of the results from the Kumtor Mine prior to the
loss of control on May 15, 2021. |
(3) |
Capital expenditures are presented as incurred and
accrued. |
(4) |
At September 30, 2021, the Company had 296,777,174 common
shares issued and outstanding. |
(5) |
Average for the period as reported by the London Bullion
Market Association (LBMA US-dollar Gold P.M. Fix Rate) and, for
Copper, the 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. |
(7) |
Includes 6,654 ounces of gold in the first nine months of
2020, which were sold prior to achieving commercial production at
the Öksüt Mine on May 31, 2020. |
(8) |
Calculated as the sum of cash flow provided by operating
activities from discontinued operations, cash flow used in
investing activities from discontinued operations and cash flow
used in financing activities from discontinued
operations. |
|
|
Overview of Consolidated
Results
Although the Company remains the rightful legal
owner of KGC, due to the seizure of the Kumtor Mine and the
continuing actions by the Kyrgyz Republic, the Company derecognized
the assets and liabilities of the Kumtor Mine in the statement of
financial position and presented its financial and operating
results prior to the loss of control as discontinued operations for
the three and nine months ended September 30, 2021 and 2020. As a
result, the Company’s consolidated results from continuing
operations discussed in this MD&A (including prior periods)
exclude the Kumtor Mine’s operations, unless otherwise noted.
Third Quarter 2021 compared to Third
Quarter 2020
Net earnings and earnings from continuing
operations of $27.6 million were recognized in the third quarter of
2021, compared to net earnings of $205.7 million in the third
quarter of 2020. In 2020, net earnings figures include the results
from the Kumtor Mine which is accounted for as a discontinued
operation. Net earnings from continuing operations were $82.4
million in the third quarter of 2020. The decrease in net earnings
from continuing operations was primarily due to a decrease in the
gold ounces sold at the Mount Milligan Mine and at the Öksüt Mine,
a decrease in the copper pounds sold at the Mount Milligan Mine and
lower average realized gold prices, partially offset by the higher
average copper and molybdenum prices.
Adjusted net earningsNG and adjusted
net earnings from continuing operationsNG in the third
quarter of 2021 were $35.7 million, compared to adjusted net
earningsNG in the third quarter of 2020 of $205.7
million and adjusted net earnings from continuing
operationsNG of $82.4 million in the third quarter of
2020.
The most significant adjusting item to net
earnings in the third quarter of 2021 was:
- $8.1 million in legal and other
costs directly related to the seizure of the Kumtor Mine.
Cash provided by operating activities from
continuing operations was $62.4 million in the third quarter of
2021, compared to $151.7 million in the third quarter of 2020. The
decrease in cash provided by operating activities from continuing
operations was primarily due to a decrease in the gold ounces sold
at the Mount Milligan Mine and the Öksüt Mine, a decrease in the
copper pounds sold at the Mount Milligan Mine due to mine
sequencing, and lower average realized gold prices. In addition,
there was an unfavourable working capital change at the Molybdenum
Business Unit with a significant increase in molybdenum concentrate
inventory held at quarter-end at a higher average molybdenum price
as well as the effect of an $11.4 million tax refund received in
the third quarter of 2020.
Free cash flow from continuing
operationsNG of $41.0 million was recognized in the
third quarter of 2021, compared to $124.9 million in the third
quarter of 2020. The decrease in free cash flow from continuing
operationsNG was primarily due to lower cash provided by
operating activities from continuing operations and higher
sustaining capital expenditures at the Mount Milligan Mine.
Sustaining capital expenditures were higher primarily due to
development costs associated with the tailing storage facility
(“TSF”), and capital expenditures related to mill equipment and
capital components.
Adjusted free cash flow from continuing
operationsNG of $45.3 million was recognized in the
third quarter of 2021, compared to $124.9 million in the third
quarter of 2020.
The most significant adjusting item to free cash
flow in the third quarter of 2021 was:
- $4.3 million of legal and other
related costs directly related to the seizure of the Kumtor
Mine.
Gold production costs from continuing operations
were $630 per ounce in the third quarter of 2021 compared to $495
per ounce in the third quarter of 2020. The increase in production
costs from continuing operations was primarily due to a decrease in
gold ounces sold at the Mount Milligan and Öksüt Mines, a decrease
in pounds of copper sold at the Mount Milligan Mine due to mine
sequencing, and an increase in production costs at the Mount
Milligan Mine.
All-in sustaining costs on a by-product
basisNG from continuing operations were $781 per ounce
in the third quarter of 2021 compared to $367 per ounce in the
third quarter of 2020. The increase in all-in sustaining costs on a
by-product basis was primarily due to a decrease in ounces of gold
sold at the Mount Milligan and Öksüt Mines, a decrease in pounds of
copper sold, and higher sustaining capital expenditures at the
Mount Milligan Mine.
All-in costs on a by-product basisNG
from continuing operations were $932 per ounce in the third quarter
of 2021 compared to $689 per ounce in the third quarter of 2020.
The increase was primarily due to higher all-in sustaining costs on
a by-product basisNG, partially offset by lower
non-sustaining capital expenditures at the Kemess UG Project and
lower non-sustaining capital expenditures at the Öksüt Mine as mine
construction was completed in 2020.
First Nine Months 2021 compared to
First Nine Months 2020
A net loss of $656.6 million was recognized in
the first nine months of 2021, compared to net earnings of $313.3
million in the first nine months of 2020. Net loss and net earnings
figures include the results from the Kumtor Mine which is accounted
for as a discontinued operation. The change was primarily due to
the loss on the change of control of the Kumtor Mine of $926.4
million, partially offset by a gain of $72.3 million on the
disposition of the Company’s interest in the Greenstone Partnership
and an increase in net earnings from continuing operations between
periods.
Adjusted net earningsNG in the first
nine months of 2021 were $198.3 million, compared to adjusted net
earningsNG in the first nine months of 2020 of $356.8
million.
Significant adjusting items to net loss in the
first nine months of 2021 include:
- $926.4 million non-cash loss on the
change of control of the Kumtor Mine;
- $72.3 million gain on the sale of
the Greenstone Partnership;
- $15.3 million gain from the
discontinuance of the Kumtor Mine’s fuel hedge instruments;
and,
- $16.2 million of legal and other
related costs directly related to the seizure of the Kumtor
Mine.
The most significant adjusting items to net
earnings in the first nine months of 2020 was:
- $43.5 million non-cash reclamation
provision revaluation expense at sites on care and maintenance
related to the Molybdenum Business Unit, resulting solely from the
movement in the discount rates being applied to the underlying
reclamation cash flows.
Net earnings from continuing operations of
$172.1 million were recognized in the first nine months of 2021,
compared to net loss from continuing operations of $15.4 million in
the first nine months of 2020. The change was primarily due to an
increase in gold ounces sold at the Mount Milligan Mine and the
Öksüt Mine, higher average realized copper prices, an increase in
net earnings from the Molybdenum Business Unit due to higher
average molybdenum prices, a gain on the disposition of the
Company’s interest in the Greenstone Partnership, lower corporate
administration costs as a result of a decrease in the Company’s
share-based compensation costs and a decrease in reclamation
expense at sites placed on care and maintenance related to the
Molybdenum Business Unit. This was partially offset by higher tax
expense resulting from both the gain on the sale of the Company’s
interest in the Greenstone Partnership and higher net earnings from
the Mount Milligan Mine.
Adjusted net earnings from continuing
operationsNG in the first nine months of 2021 were
$113.9 million compared to adjusted net earnings from continuing
operationsNG in the first nine months of 2020 of $28.1
million.
Significant adjusting items to net earnings from
continuing operations in the first nine months of 2021 include:
- $14.2 million of legal and other
related costs directly related to the seizure of the Kumtor Mine;
and,
- $72.3 million gain on the sale of
the Company’s interest in the Greenstone Partnership.
The most significant adjusting items to net loss
from continuing operations in the first nine months of 2020
was:
- $43.5 million non-cash reclamation
provision revaluation expense at sites on care and maintenance
related to the Molybdenum Business Unit, resulting solely from the
movement in the discount rates being applied to the underlying
reclamation cash flows.
Cash provided by operating activities from
continuing operations was $209.1 million in the first nine months
of 2021, compared to $188.0 million in the first nine months of
2020. The increase in cash provided by operating activities from
continuing operations was primarily due to an increase in ounces of
gold sold at the Mount Milligan and the Öksüt Mines, higher average
realized copper prices and a more favourable change in working
capital at the Mount Milligan Mine from the timing of vendor
payments between periods. Partially offsetting the increase was an
unfavourable working capital change at the Molybdenum Business Unit
from an increase in product inventory held at a higher average
molybdenum price as well as the effect of a $22.8 million tax
refund received in the first nine months of 2020.
Free cash flow from continuing
operationsNG of $139.7 million was recognized in the
first nine months of 2021, compared to free cash flow NG
from continuing operations of $120.1 million in the first nine
months of 2020. The increase in free cash flow from continuing
operationsNG was due to higher cash provided by
operating activities from continuing operations, lower
non-sustaining capital expenditures as the construction of the
Öksüt Mine was completed in 2020 and lower non-sustaining capital
expenditures at the Kemess UG Project. Partially offsetting the
increase in free cash flow from continuing operationsNG
between the periods were higher sustaining capital expenditures at
the Mount Milligan Mine primarily due to higher expenditures
related to the purchase of new mining equipment, TSF development
costs and major planned equipment rebuilds as well as higher
sustaining capital expenditures at the Öksüt Mine primarily due to
higher deferred stripping following the commencement of commercial
production.
Adjusted free cash flow from continuing
operationsNG of $148.6 million was recognized in the
first nine months of 2021, compared to adjusted free cash flow from
continuing operationsNG of $120.1 million in the first
nine months of 2020.
The most significant adjusting item to free cash
flow in the first nine months of 2021 was:
- $8.9 million of legal and other
related costs directly related to the seizure of the Kumtor
Mine.
Gold production costs from continuing operations
were $625 per ounce in the first nine months of 2021 compared to
$649 per ounce in the first nine months of 2020. The decrease in
gold production costs from continuing operations was primarily due
to an increase in ounces of gold sold at the Mount Milligan and
Öksüt Mines, partially offset by higher mining costs at the Mount
Milligan Mine as a result of higher maintenance costs and diesel
prices as well as higher processing costs due to higher
throughput.
All-in sustaining costs on a by-product
basisNG from continuing operations were $672 per ounce
in the first nine months of 2021 compared to $679 per ounce in the
first nine months of 2020. The decrease was primarily due to an
increase in ounces of gold sold at the Mount Milligan and Öksüt
Mines, higher average realized copper prices and lower corporate
administration expenses as a result of a decrease in the share
price used to calculate the Company’s share-based compensation
liability. Partially offsetting this decrease were higher mining
and administrative costs at the Öksüt Mine, including higher social
contributions, and higher sustaining capital expenditures at the
Mount Milligan and Öksüt Mines.
All-in costs on a by-product basisNG
from continuing operations were $806 per ounce in the first nine
months of 2021 compared to $1,104 per ounce in the first nine
months of 2020. The decrease was due to lower all-in sustaining
costs on a by-product basisNG and lower non-sustaining
capital expenditures at the Kemess UG Project and at the Öksüt Mine
as the mine construction was completed in 2020.
Outlook
2021 Guidance
Centerra has revised its 2021 cost guidance for
the Öksüt Mine and on a consolidated basis, including gold
production costs, all-in sustaining costs on a by-product
basisNG, all-in sustaining costs on a co-product
basisNG and all-in costs on a by-product
basisNG to reflect updated unit costs at the Öksüt Mine.
More detailed discussion on changes to the Company’s 2021 guidance
is provided below.
2021 Production
Guidance
The Company’s consolidated gold production in
the first nine months of 2021 was 216,944 ounces of gold and
Centerra’s 2021 full year production guidance remains unchanged,
with both the Mount Milligan and the Öksüt Mines trending towards
the top end of guidance. The Company continues to monitor the
impact of global supply chain disruption on shipping logistics and
does not currently expect it to materially affect the performance
of the Mount Milligan Mine other than timing of concentrate
sales.
2021 production guidance is currently forecast
as follows:
|
Units |
Kumtor(1) |
Mount
Milligan(2) |
Öksüt |
Centerra
Consolidated |
Actual gold production September 30 YTD |
(Koz) |
- |
137 |
80 |
217 |
Gold: full-year production forecast |
|
|
|
|
|
Unstreamed gold production |
(Koz) |
- |
117 - 130 |
90 - 110 |
207 - 240 |
Streamed gold production(2) |
(Koz) |
- |
63 - 70 |
- |
63 - 70 |
Consolidated gold production |
(Koz) |
- |
180 - 200 |
90 - 110 |
270 - 310 |
Actual copper production September 30 YTD |
|
- |
56 |
- |
56 |
Copper: full-year production forecast |
|
|
|
|
|
Unstreamed copper production |
(Mlbs) |
- |
57 - 65 |
- |
57 - 65 |
Streamed copper production(2) |
(Mlbs) |
- |
13 - 15 |
- |
13 - 15 |
Consolidated copper production |
(Mlbs) |
- |
70 - 80 |
- |
70 - 80 |
(1) |
|
Centerra has suspended providing any forward-looking
information on the Kumtor Mine’s operations including the mine’s
production and costs until the Kumtor situation is
resolved. |
(2) |
|
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 $435 per ounce of gold delivered and 15% of the
spot price per metric tonne of copper delivered. |
|
|
|
2021 Sales, All-in Sustaining and
All-in Unit Costs
GuidanceNG
Centerra’s 2021 sales, all-in sustaining costs
per ounceNG calculated on a by-product and co-product
basis, and all-in costs per ounceNG calculated on a
by-product basis are forecasted as follows:
|
Units |
Kumtor(1) |
Mount
Milligan |
Öksüt |
Centerra
Consolidated(2) |
Gold sold |
(Koz) |
- |
180 - 200 |
90 - 110 |
270 - 310 |
Gold production costs |
($/oz) |
- |
650 - 700 |
450 - 500 |
600 - 650 |
All-in sustaining costs on a by-product
basis(2) |
($/oz) |
- |
530 - 580 |
680 - 730 |
700 - 750 |
All-in costs on a by-product basis(2)(3) |
($/oz) |
- |
590 - 640 |
740 - 790 |
850 - 900 |
Gold - All-in sustaining costs on a co-product
basis(2)(3) |
($/oz) |
- |
850 - 900 |
680 - 730 |
900 - 950 |
Copper production costs |
($/lb) |
- |
1.45 - 1.60 |
- |
1.45 - 1.60 |
Copper - All-in sustaining costs on a co-product
basis(2)(3) |
($/lb) |
- |
2.10 - 2.25 |
- |
2.10 - 2.25 |
(1) |
|
Centerra has suspended providing any forward-looking
information on the Kumtor Mine’s operations including the mine’s
production and costs until the situation at the Kumtor Mine is
resolved. |
(2) |
|
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. |
(3) |
|
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. |
|
|
|
The Company’s consolidated gold production costs
were $625 per ounce in the first nine months of 2021 and the full
year gold production costs are expected to be in $600 to $650 per
ounce range compared to the previously issued guidance of $625 to
$675 per ounce, reflecting lower unit costs at the Öksüt Mine. The
Öksüt Mine’s gold production costs are expected to be in the range
of $450 to $500 per ounce compared to the previous guidance range
of $500 to $550 per ounce.
The Company’s consolidated all-in sustaining
costs on a by-product basisNG were $672 per ounce in the
first nine months of 2021 and the full year all-in sustaining costs
on a by-product basisNG are expected to be in the range
of $700 to $750 per ounce compared to the previous guidance range
of $750 to $800 per ounce, reflecting lower unit costs at the Öksüt
Mine. All-in sustaining costs on a by-product basisNG at
the Öksüt Mine are expected to be in the range of $680 to $730 per
ounce compared to the previous guidance range of $730 to $780 per
ounce as the mining activities are expected to continue in the
higher grade zones in the fourth quarter of 2021. Mount Milligan’s
all-in sustaining costs on a by-product basisNG is
expected to be in the range of $530 to $580 per ounce, which is
unchanged from the previous guidance range.
Consolidated all-in costs on a by-product
basisNG are expected to be in the range of $850 to $900
per ounce compared to the previous guidance range of $900 to $950
per ounce. Öksüt Mine’s all-in costs on a by-product
basisNG are expected to be between $740 to $790 per
ounce, compared to the previous guidance range of $790 to $840 per
ounce. Mount Milligan Mine’s all-in costs on a by-product
basisNG are expected to be in the range of $590 to $640
per ounce, which is unchanged from the previous guidance range.
2021 Capital Expenditures
Guidance
Centerra’s 2021 guidance for capital spending,
excluding capitalized stripping, remains unchanged at $95 to $115
million. Projected capital expenditures are currently forecast as
follows:
|
Sustaining |
Non-sustaining |
|
Projects ($ millions) |
Capital(1) |
Capital(2) |
Total |
Mount Milligan Mine |
65 - 70 |
5 - 10 |
70 - 80 |
Öksüt Mine |
15 - 25 |
- |
15 - 25 |
Other |
~5 |
~5 |
~10 |
Consolidated Total |
85 - 100 |
10 – 15 |
95 – 115 |
1) |
|
Sustaining capital includes capitalized stripping costs of $10
million to $15 million at the Öksüt Mine. |
2) |
|
Non-sustaining capital expenditures are distinct projects designed
to increase the net present value of the mine. The 2021 guidance
includes the stage floatation reactor at the Mount Milligan
Mine. |
|
|
|
Molybdenum Business Unit 2021
Guidance
The Molybdenum Business Unit in 2021 is expected
to incur net cash expenditures including cash outflows for changes
in working capital of $30 to $35 million, which is unchanged from
the previous guidance. The Molybdenum Business Unit’s cash outflows
before changes in working capital are estimated to be $3 million to
$5 million for 2021. The Company is currently assuming a molybdenum
price of $18.00 per pound for the fourth quarter of 2021, which is
unchanged from the previous estimate.
Kemess Underground Project 2021
Guidance
Total expenditures at the Kemess UG Project for
2021 are estimated to be $13 million to $15 million, including $11
million for care and maintenance activities, which is unchanged
from previous guidance.
2021 Exploration
Expenditures
Exploration expenditures for 2021 are expected
to be approximately $30 million, which is unchanged from the
previous guidance.
2021 Corporate
Administration
Cash expenditures for corporate and
administration costs for 2021 are forecasted to be between $45
million and $55 million, which is unchanged from the previous
guidance. Corporate and administration expenses for 2021 on an
accrual basis are expected to be between $30 million and $35
million, of which approximately $20 million was incurred in the
first nine months of 2021. Main differences in corporate
administration costs on a cash and an accrual basis are related to
share-based compensation plan and short-term inventive plan
payments. In the first nine months of 2021, the Company made cash
payments of approximately $11 million related to share-based
compensation plans which were accrued in prior years and are not
included in the 2021 expense.
2021 Depreciation, Depletion and
Amortization
Consolidated depreciation, depletion, and
amortization expense included in costs of sales expense for 2021 is
forecasted to be in the range of $110 to $125 million, which is
unchanged from the previous guidance.
2021 Taxes
The Mount Milligan operations are subject to
corporate income tax and British Columbia mineral tax. The British
Columbia mineral tax is forecast to be between $7 and $9 million,
which is unchanged from the previous guidance. At the Öksüt Mine,
income tax expense is expected to be between $7 to $9 million
compared to $1 to $2 million in the previous guidance. The higher
tax expense at the Öksüt Mine reflects higher taxable earnings
generated by the Öksüt Mine, partially offset by benefits from the
eligible expenditures under the Investment Incentive Certificate
which are now expected to be fully utilized by the end of 2021.
2021 Material
Assumptions
Material assumptions or factors used to forecast
production and costs for the fourth quarter of 2021, after giving
effect to the hedges in place as at September 30, 2021, include the
following:
- a market gold price of $1,750 per
ounce (unchanged from the previous guidance) and an average
realized gold price at Mount Milligan Mine of $1,290 per ounce
after reflecting the streaming arrangement with Royal Gold (35% of
the Mount Milligan Mine’s gold at $435 per ounce).
- a market copper price of $3.45 per
pound reflects an average swap price of $3.40 per pound on 90% of
the Company’s unstreamed copper (previously assumed at $3.48 per
pound); an average realized copper price at the Mount Milligan Mine
of $2.88 per pound after reflecting the streaming arrangement with
Royal Gold (18.75% of the Mount Milligan Mine’s copper at 15% of
the spot price per metric tonne).
- a molybdenum price of $18.00 per
pound (unchanged from the previous guidance).
- exchange rates:
- $1USD:$1.30 Canadian dollar
(previously assumed at $1USD:$1.27 Canadian dollar),
- $1USD:8.50 Turkish lira (previously
assumed at $1USD:8.00 Turkish lira).
- diesel fuel price assumption:
- $0.67/litre (CAD$0.87/litre) at
Mount Milligan Mine (previously assumed at $0.71/litre
(CAD$0.90/litre)).
Mount Milligan Streaming Arrangement
The 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
produced at the Mount Milligan Mine for $435 per ounce of gold
delivered and 15% of the spot price per metric tonne of copper
delivered (the “Mount Milligan Streaming Arrangement”). To satisfy
its obligations under the Mount Milligan Streaming Arrangement, the
Company purchases refined gold and copper warrants and arranges for
delivery to Royal Gold. The difference between the cost of the
purchases of refined gold and copper warrants and the corresponding
amounts payable to the Company under the Mount Milligan Mine
Streaming Arrangement is recorded as a reduction of revenue and not
a cost of operating the mine.
Other Material Assumptions
Other material assumptions used in forecasting
production and costs for 2021 can be found under the heading
“Caution Regarding Forward-Looking Information” in this document.
Production, cost, and capital forecasts for 2021 are
forward-looking information and are based on key assumptions and
subject to material risk factors that could cause actual results to
differ materially, and which are discussed under the heading “Risks
Factors” in the Company’s most recent 2020 AIF.
2021 Sensitivities
Centerra’s revenues, net earnings, and cash
flows for the remaining three months of 2021 are sensitive to
changes in certain key inputs or currencies. The Company has
estimated the impact of any such changes on revenues, net earnings,
and cash flows for the fourth quarter of 2021.
|
Impact on
($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 |
0.1 - 0.5 |
- |
5.0 - 6.5 |
5.0 - 6.0 |
5.0 - 6.0 |
2.0 - 3.0 |
Copper price(4) |
10 |
% |
0.1 - 0.2 |
- |
0.1 - 1.0 |
0.1 - 0.8 |
0.1 - 0.8 |
5.0 - 6.5 |
Diesel fuel(3) |
10 |
% |
1.0 - 1.5 |
0.1 - 0.5 |
- |
1.5 - 2.0 |
1.0 - 1.5 |
11.0 - 14.5 |
Canadian dollar(1)(3) |
10 cents |
5.0 - 5.5 |
0.9 - 1.0 |
- |
6.0 - 6.5 |
5.0 - 5.5 |
20.0 - 27.0 |
Turkish lira(1) |
1 lira |
1.5 - 2.0 |
0.1 - 0.5 |
- |
2.0 - 3.0 |
1.5 - 2.0 |
15.5 - 21.0 |
(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 fourth quarter copper sales are hedged up to
90%. |
|
|
|
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. These are discussed herein under the
headings “2021 Material Assumptions” and “Caution Regarding
Forward-Looking Information” as well as under the heading “Risk
Factors” in the Company’s most recently filed 2020 AIF.
Recent Events and
Developments
Kumtor Mine
As previously disclosed, since the beginning of
2021, the Kyrgyz Republic and Kyrgyzaltyn have taken a number of
coordinated actions that resulted in the seizure of the Kumtor Mine
by the Kyrgyz Republic and a loss of control of the mine by
Centerra. In particular:
- The Kyrgyz Republic Parliament
established a State Commission in February 2021 to, among other
things, review the performance of the Kumtor Mine and to review the
results of a previous Kyrgyz Republic state commission established
in 2012;
- The Kyrgyz Government resurrected a
number of historical tax claims and environmental claims relating
to Kumtor, each of which was resolved years ago either through
previous settlements or Kyrgyz court decisions. When the Company
disclosed the tax claims in March 2021, the amounts claimed by the
Kyrgyz Republic were estimated to be approximately $352 million,
including taxes, interest and penalties. However, the Company now
understands that Kyrgyz officials may have subsequently increased
the amounts claimed to over $1 billion;
- A Kyrgyz court rendered a decision
awarding damages against KGC of approximately $3.1 billion payable
to the Kyrgyz Republic in respect of alleged damages caused by
KGC’s past practice of placing waste rock on glaciers;
- During the spring of 2021, the
Kyrgyz Republic Parliament began to consider a number of laws and
legislative amendments that, among other things, would
fundamentally alter and breach the 2009 restated Kumtor project
agreements, including the 2009 Kyrgyz law that ratified the Kumtor
Project Agreements. Such amendments would not only delete
provisions that ensure the primacy of the Kumtor Project Agreements
over other Kyrgyz legislation but also subject Kumtor to certain
Kyrgyz laws of general application, including tax laws;
- The Kyrgyz Republic seized control
of the Kumtor Mine on May 15, 2021 through a coordinated effort to
take control of the Kumtor Mine site, KGC’s offices, personnel,
computers and documents. The Kyrgyz Republic acted following a
preliminary report of the State Commission which made a number of
groundless claims against Centerra, KGC and the Kumtor Mine and
under the purported authority of a new Temporary Management Law
hastily passed by the Kyrgyz Republic Parliament only a few days
prior to such seizure; and
- According to statements made by
Kyrgyz Republic authorities during and after the events described
above, the Company understands that the Kyrgyz Republic has opened
a series of criminal investigations relating to the Kumtor Mine
and, in particular, alleged corruption of previous agreements
entered into between Centerra, its predecessor, and the Kyrgyz
Republic Government. The Company further understands that the
Kyrgyz Republic has arrested or detained a significant number of
former Kyrgyz politicians and government officials, including
several former prime ministers, in connection with such
investigations. More recently, there have been reports that the
Kyrgyz Republic has reopened a series of criminal investigations in
connection with the Kyrgyz Republic General Prosecutor Office’s
attempt to unwind an ordinary course $200 million dividend declared
and paid by KGC to its sole shareholder, Centerra, in December
2013. Such reports identify certain members of former Centerra and
KGC management teams and state that those individuals were
prosecuted in absentia and put on wanted lists by the State
Committee for National Security of the Kyrgyz Republic. The use of
the Kyrgyz criminal law and investigations as a pressure tactic in
aid of economic or commercial goals is not new for the Kyrgyz
Republic. The Company strenuously denies any such allegations which
should be viewed in the broader context, including the Kyrgyz
Republic Government’s goal of seizing the Kumtor Mine and
intimidating its political opponents.
As a result of this loss of control, the Company
has been unable to ensure the safety of the mine’s employees or
operations and is unable to maintain insurance over the Kumtor
Mine.
Centerra, KGC and Kumtor Operating Company
(“KOC”) have taken a number of measures in response to the Kyrgyz
Republic’s unjustified and illegal seizure of the Kumtor Mine,
including but not limited the following:
- The Company has initiated binding
arbitration (the “Kumtor Arbitration Proceedings”) against the
Kyrgyz Republic and Kyrgyzaltyn to enforce its rights under
longstanding agreements governing the Kumtor Mine and to, among
other things, hold the Kyrgyz Republic and Kyrgyzaltyn accountable
in the arbitration for any and all losses and damages that result
from its actions against KGC and the Kumtor Mine. On September 27,
2021, the Company announced that it was seeking urgent interim
measures in the Kumtor Arbitration Proceedings to address certain
critical operational and safety problems at the Kumtor Mine,
principally seeking to prevent the Kyrgyz Republic and Kyrgyzaltyn
from causing irreparable damage to the Kumtor Mine, to preserve the
status quo at the mine and not to deviate from the approved mine
plan, and obtain transparency and regular reporting as to the
mine’s operations;
- In accordance with long-standing
shareholder and investment agreements, the Company has taken steps
to restrict Kyrgyzaltyn from transferring or encumbering any common
shares of the Company or exercising any voting rights or dissent
rights attached to Centerra common shares. In addition, dividends
or distributions on Centerra common shares that would otherwise be
payable to Kyrgyzaltyn or its affiliates are waived and will be
donated to the Company to the extent such dividends or
distributions can be attributed reasonably to KGC (or the Kumtor
Mine’s assets or operations) or distributions from KGC;
- KGC and KOC filed for protection
under Chapter 11 of the federal U.S. Bankruptcy Code in the
Southern District of New York. The court-supervised process
provides for, among other things, a worldwide automatic stay of all
claims against KGC and KOC which the Company hopes will deter the
Kyrgyz Republic from taking further precipitous action against KGC
and the Kumtor Mine, including actions to enforce the meritless
environmental and tax claims noted above; and
- The Company has initiated
proceedings in the Ontario Superior Court of Justice against Tengiz
Bolturuk, a former director of the Company who resigned from the
Company’s board of directors to assume control of the Kumtor Mine
on behalf of the Kyrgyz Republic as external manager, for breaches
of his fiduciary duties to the Company.
While Centerra will continue to pursue all
measures necessary to protect its rights in arbitration and in
other legal proceedings, the Company remains willing and available
to engage with the Kyrgyz Republic and Kyrgyzaltyn in a
constructive dialogue on the matters it considers to be the subject
of dispute. No assurances can be given that Centerra will be
successful in any of the foregoing legal proceedings or that the
Company will be able to negotiate a solution that will not have a
material impact on Centerra. There remains the further risk that
additional regulatory, tax, or civil claims will be commenced
against KGC or the Company. See “Caution Regarding Forward-Looking
Information” and the section titled “Risk Factors” in the Company’s
2020 AIF.
The figures related to the Kumtor Mine presented
in this document and Centerra’s interim financial statements are
accounting figures and do not represent the potentially recoverable
damages based on legal claims asserted by the Company and certain
subsidiaries arising from the loss of control of the Kumtor Mine.
Nothing in this MD&A or the interim financial statements shall
act as a waiver of any rights or claims the Company and its
subsidiaries may have in connection with the Kumtor Mine.
For more information regarding the events
surrounding the seizure of the Kumtor Mine, please refer to the
Company’s 2020 AIF dated March 15, 2021 and Management’s Discussion
and Analysis for the periods ended March 31, 2021 and June 30,
2021.
COVID-19 Update
Centerra continues to take steps to minimize the
effect of the COVID-19 on its business. The Company has established
strict protocols at its mine sites to help prevent infection and
reduce the potential transmission of COVID-19. A testing facility,
funded by the Company, has been recently established at the Mount
Milligan Mine to perform rapid testing of all employees,
contractors, and other visitors to the site. Vaccination clinics
have been set up for employees and contractors at the Mount
Milligan Mine and the Öksüt Mine. More than 95% of site employees
at the Öksüt Mine have received two doses of vaccination. A
vaccination program was also conducted at the Mount Milligan Mine
with two vaccination doses provided to over 64% of site employees,
a figure that does not include site employees that may have been
inoculated offsite. Overall, more than 70% of eligible population
in northern British Colombia, where the Mount Milligan Mine is
located, received two vaccination doses. While COVID-19 vaccination
rates continue to rise in the communities and countries in which
the Company operates its mine sites and offices, the Company
continues to maintain its COVID-19 protocols.
Neither the Mount Milligan Mine nor the Öksüt
Mine have been adversely impacted by COVID-19 in any significant
way as employee absences due to COVID-19, or any other illnesses,
have so far been successfully managed. However, the Company notes
that the effects of COVID-19 on its business continue to change
rapidly. Centerra continues to assess the resiliency of its supply
chains, maintaining increased mine site inventories of key
materials. Additionally, the Company is pursuing an active sourcing
strategy to identify alternatives for its critical supplies that
can be purchased locally to reduce the risk of extended lead-times.
All measures enacted to date reflect the Company’s best assessment
at this time but will remain flexible and will be revised as
necessary or advisable and/or as recommended by public health and
governmental authorities.
Safety and
Environment
The Company recognized the following notable
developments in the course of the third quarter of 2021:
- The Öksüt Mine achieved two million
work hours without a lost-time injury.
- The Thomson Creek Mine, Langeloth
Facility and Kemess UG Project each achieved one full year without
a lost-time injury.
- The Endako Mine achieved eight
years without a lost-time injury.
- There were eight reportable
injuries company-wide, including four lost-time injuries, two
medical aid injuries, and two restricted work injuries.
- There were no reportable releases
to the environment.
Financial Performance
As previously disclosed, the Company lost
control of the Kumtor Mine in May 2021 and, accordingly, the
Kumtor Mine has been classified as a
discontinued operation. The financial and operating data below
is presented on a continuing operations basis and thus excludes the
Kumtor Mine for all periods discussed, unless otherwise noted.
Third Quarter 2021 compared to Third
Quarter 2020
Revenue of $220.6 million was recognized in the
third quarter of 2021 compared to $251.3 million in the third
quarter of 2020. The decrease in revenue was primarily due to a
decrease in ounces of gold sold at both the Mount Milligan Mine and
the Öksüt Mine, lower average realized gold prices, and a decrease
in pounds of copper sold at the Mount Milligan Mine, partially
offset by higher average realized copper and molybdenum prices.
Gold production was 76,913 ounces in the third
quarter of 2021 compared to 101,266 ounces in the third quarter of
2020. Gold production in the third quarter of 2021 included 39,658
and 37,255 ounces of gold from the Mount Milligan Mine and the
Öksüt Mine, respectively, a decrease compared to the third quarter
of 2020, primarily due to lower gold grades.
Copper production at the Mount Milligan Mine was
17.9 million pounds in the third quarter of 2021 compared to 23.3
million pounds in the third quarter of 2020. The decrease was
primarily due to lower copper grades and total throughput.
The Langeloth Facility roasted 2.5 million
pounds of molybdenum in the third quarter of 2021 compared to 3.1
million pounds in the third quarter of 2020. This decrease was
primarily due to a decline in molybdenum concentrate available for
roasting, resulting from a decrease in concentrate supply and
increased competition for concentrate.
Cost of sales of $152.0 million was recognized
in the third quarter of 2021 compared to $134.6 million in the
third quarter of 2020. The increase was primarily due to higher
production costs at the Molybdenum Business Unit from higher
average molybdenum prices paid to obtain product inventory to be
processed.
Income tax expense of $8.4 million was
recognized in the third quarter of 2021 compared to an income tax
expense of $3.5 million in the third quarter of 2020. Income tax
expense in the third quarter of 2021 comprised current income tax
expense of $2.7 million and deferred income tax expense of $5.7
million. In comparison, income tax expense in the third quarter of
2020 comprised current income tax expense of $2.6 million and
deferred income tax expense of $0.9 million. The increase in income
tax expense was primarily due to differences in the level of
taxable income in the Company’s operating jurisdictions between
periods.
First Nine Months 2021 compared to
First Nine Months 2020
Revenue of $649.1 million was recognized in the
first nine months of 2021 compared to $509.3 million in the first
nine months of 2020. The increase in revenue was primarily due to
higher ounces of gold sold at the Mount Milligan Mine and the Öksüt
Mine and higher average realized copper and molybdenum prices.
Gold production was 216,944 ounces in the first
nine months of 2021 compared to 185,880 ounces in the first nine
months of 2020. Gold production in the first nine months of 2021
included 136,909 ounces of gold from the Mount Milligan Mine, an
increase compared to the first nine months of 2020, primarily due
to higher throughput and higher gold grades and recoveries. The
Öksüt Mine, which commenced commercial production May 31, 2020,
produced 80,035 ounces of gold in the first nine months of 2021
compared to 66,689 ounces of gold in first nine months of 2020,
primarily due to a higher number of ore tonnes stacked on the heap
leach and higher heap leach recoveries, partially offset by lower
gold grades due to mine sequencing.
Copper production at the Mount Milligan Mine was
56.3 million pounds in the first nine months of 2021 compared to
62.4 million pounds in the first nine months of 2020. The decrease
was primarily due to lower copper grades, partially offset by
higher throughput.
The Langeloth Facility roasted 7.8 million
pounds of molybdenum in the first nine months of 2021 compared to
11.0 million pounds in the first nine months of 2020. The decrease
in pounds roasted was primarily due to a decline in molybdenum
concentrate available for roasting, resulting from a decrease in
concentrate supply and increased competition for concentrate.
Cost of sales of $445.2 million was recognized
in the first nine months of 2021 compared to $381.6 million in the
first nine months of 2020. The increase was primarily due to higher
mining and milling costs and timing of concentrate sales at the
Mount Milligan Mine and higher mining and processing costs from a
longer operating period at the Öksüt Mine. Additionally, there was
higher depreciation, depletion and amortization expense at the
Öksüt Mine primarily due to a higher number of tonnes stacked on
the heap leach pad.
Corporate administration expenses of $19.7
million were recognized in the first nine months of 2021 compared
to $28.3 million in the first nine months of 2020. The decrease was
primarily due to the effect of the decline in the Company’s share
price on the provision for share-based compensation.
Reclamation recovery of $0.1 million was
recognized in the first nine months of 2021 compared to an expense
of $44.0 million in the first nine months of 2020. The decrease in
expense was primarily due to a decline in discount rates which
occurred in the first nine months of 2020 that are applied to the
underlying future reclamation costs at the Molybdenum sites
currently on care and maintenance.
A gain on sale of $72.3 million (excluding
contingent receivable consideration) was recognized in the first
quarter of 2021 on the disposal of the Company’s 50% interest in
the Greenstone Partnership.
Other non-operating expenses of $14.1 million
were recognized in the first nine months of 2021 compared to $4.4
million in the first nine months of 2020. The increase in other
non-operating expenses was primarily due to corporate legal costs
incurred in connection with the seizure and the loss of control of
the Kumtor Mine.
Income tax expense of $17.6 million was
recognized in the first nine months of 2021 compared to an income
tax expense of $4.8 million in the first nine months of 2020.
Income tax expense in the first nine months of 2021 comprised
current income tax expense of $8.1 million and deferred income tax
expense of $9.5 million. In comparison, income tax expense in the
first nine months of 2020 comprised current income tax expense of
$4.7 million and deferred income tax expense of $0.1 million. The
increase in income tax expense was primarily due to deferred tax
expense recorded on the sale of the Company’s interest in the
Greenstone Partnership and higher current tax recorded on net
earnings from the Mount Milligan Mine.
Net loss from discontinued operations of $828.7
million was recognized in the first nine months of 2021 compared to
net earnings from discontinued operations of $328.8 million in the
first nine months of 2020. The decrease in net earnings was
primarily due to the loss on the change of control of $926.4
million recognized in the second quarter of 2021 and a shorter
operating period as a result of the seizure of the Kumtor Mine.
Partially offsetting the decrease in net earnings was a gain
recognized on the discontinuance of the Kumtor Mine’s fuel hedging
program.
Balance Sheet Review
As a result of the loss of control of the Kumtor
Mine in the second quarter of 2021, the Company deconsolidated the
assets and liabilities of KGC, a 100%-owned subsidiary that holds
the Kumtor Mine, in the Company’s statement of financial position
for the period ended September 30, 2021. The assets and liabilities
presented as at December 31, 2020 are inclusive of the Kumtor
Mine.
Cash at September 30, 2021 was $911.7 million
compared to $545.2 million at December 31, 2020. The increase was
due to the receipt of $210.0 million as consideration for the sale
of the Company’s 50% interest in the Greenstone Partnership, free
cash flow from continuing operationsNG of $139.7 million
and net cash flow from discontinued operations of $49.7 million.
The increase in cash was partially offset by dividends paid of
$33.0 million in the first nine months of 2021.
Total inventories at September 30, 2021 were
$214.5 million compared to $580.6 million at December 31, 2020. The
decrease in inventories was primarily due to the processing of a
large portion of ore stockpiles at the Kumtor Mine prior to the
loss of control as well as derecognition of associated inventory
balances of $333.6 million from the Company’s consolidated
financial position upon the loss of control. The decrease was
partially offset by an increase in inventories at the Langeloth
Facility primarily due to higher working capital needs as result of
higher molybdenum prices.
At September 30, 2021, the product inventory
balance consisted of 82,700 contained gold ounces and 20.6 million
contained pounds of copper in surface stockpiles at the Mount
Milligan Mine (6.1 million tonnes of ore at a grade of 0.42 g/t
gold and 0.14% copper), of which roughly 16% is expected to be
processed in 2021. Additionally, the product inventory balance at
the Öksüt Mine consisted of 16,239 contained gold ounces in
solution at the absorption, desorption, and recovery plant and
28,297 contained gold ounces on surface and stacked (0.1 million
tonnes of ore at a grade of 0.80 g/t gold in surface stockpiles and
1.21 g/t gold stacked on the heap leach pad).
Other current assets at September 30, 2021 was
$25.8 million compared to $41.0 million at December 31, 2020. The
decrease was primarily due to the loss of control of the Kumtor
Mine and derecognition of the associated other current assets from
the Company’s consolidated financial position.
The carrying value of property, plant and
equipment at September 30, 2021 was $1.11 billion compared to $1.69
billion at December 31, 2020. The decrease was primarily due to the
derecognition of property, plant and equipment of $629.4 million
associated with the loss of control of the Kumtor Mine and the
derecognition of property, plant and equipment of $139.6 million
associated with the sale of the Company’s 50% interest in the
Greenstone Partnership. Partially offsetting the overall decrease
were $72.0 million of additions capitalized to the property, plant
and equipment related to the Company’s continuing operations and
$95.7 million of additions capitalized to the property, plant and
equipment related to the Kumtor Mine, which was subsequently
derecognized.
Other non-current assets at September 30, 2021
was $10.6 million compared to $77.1 million at December 31, 2020.
The decrease was primarily due to the loss of control of the Kumtor
Mine and derecognition of the associated reclamation deposits
balance of $52.9 million from the Company’s consolidated financial
position.
Accounts payable and accrued liabilities at
September 30, 2021 was $174.6 million compared to $232.7 million at
December 31, 2020. The decrease was primarily due to the loss of
control of the Kumtor Mine and derecognition of the associated
accounts payable and accrued liabilities balances of $63.3 million
from the Company’s consolidated financial position.
The provision for reclamation at September 30,
2021 was $295.5 million compared to $352.2 million at December 31,
2020. The decrease was primarily due to the loss of control of the
Kumtor Mine and derecognition of the associated reclamation
provision balance of $56.5 million from the Company’s consolidated
financial position.
Liquidity and Capital
Resources
The Company’s total liquidity position is
$1,311.7 million, representing a cash balance of $911.7 million and
$400.0 million available under the corporate credit facility. The
Company believes that the current liquidity position and forecasted
free cash flows from the Company’s Mount Milligan and Öksüt Mines
are expected to be sufficient to satisfy working capital needs,
contractual obligations and planned capital expenditure and
exploration and meet other liquidity requirements through at least
the end of 2021 (see “Caution Regarding Forward-Looking
Information”).
Due to the seizure of the Kumtor Mine and the
continuing actions by the Kyrgyz Republic, the Company derecognized
the assets and liabilities of the Kumtor Mine in the statement of
financial position and presented its financial and operating
results prior to the loss of control as discontinued operations for
the three and nine months ended September 30, 2021 and 2020. As a
result, the Company’s consolidated cash flow results from
continuing operations discussed in this MD&A (including prior
periods) exclude the Kumtor Mine’s operations, unless otherwise
noted.
Third Quarter
2021 compared to Third
Quarter 2020
Cash provided by operating activities from
continuing operations was $62.4 million in the third quarter of
2021, compared to $151.7 million in the third quarter of 2020. The
decrease in cash provided by operating activities from continuing
operations was primarily due to a decrease in the gold ounces sold
at the Mount Milligan Mine and the Öksüt Mine, a decrease in the
copper pounds sold at the Mount Milligan Mine and lower average
realized gold prices. Additionally, there was an unfavourable
working capital change at the Molybdenum Business Unit from an
increase in product inventory held at a higher average molybdenum
price as well as the effect of an $11.4 million tax refund received
during the three months ended September 30, 2020.
Cash used in investing activities from
continuing operations of $20.3 million was recognized in the third
quarter of 2021 compared to $25.1 million in the third quarter of
2020. The decrease was primarily due to lower non-sustaining
capital expenditures at the Kemess UG Project, partially offset by
higher sustaining capital expenditures at the Mount Milligan Mine
primarily related to TSF development costs, mill equipment and
capital components.
Cash used in financing activities during the
third quarter of 2021 was $13.3 million compared to $10.8 million
in the third quarter of 2020. The increase was primarily due to
higher dividends paid and lower proceeds received from the issuance
of common shares.
First Nine Months 2021 compared to
First Nine Months 2020
Cash provided by operating activities from
continuing operations was $209.1 million in the first nine months
of 2021, compared to $188.0 million in the first nine months of
2020. The increase in cash provided by operating activities from
continuing operations was primarily due to an increase in ounces of
gold sold at the Mount Milligan Mine and the Öksüt Mines, higher
average realized gold and copper prices, a more favourable change
in working capital at the Mount Milligan Mine. Partially offsetting
the increase was an unfavourable working capital change at the
Molybdenum Business Unit from an increase in product inventory held
in 2021 at a higher average molybdenum price as well as the effect
of a $22.8 million tax refund received during the nine months ended
September 30, 2020.
Cash provided by investing activities from
continuing operations of $145.6 million was recognized in the first
nine months of 2021 compared to cash used in investing activities
from continuing operations of $38.8 million in the first nine
months of 2020. The cash provided by investing activities from
continuing operations was primarily due to the proceeds received
from the sale of the Company’s 50% interest in the Greenstone
Partnership, lower non-sustaining capital expenditures as the
construction of the Öksüt Mine was completed in 2020 and lower
non-sustaining capital expenditures at the Kemess UG Project. The
increase was partially offset by higher sustaining capital
expenditures at the Mount Milligan Mine primarily due to the
expenditures related to the purchase of new mining equipment, TSF
development costs and major planned equipment rebuilds and higher
sustaining capital expenditures at the Öksüt Mine primarily due to
higher deferred stripping following the commencement of commercial
production.
Cash used in financing activities of $36.0
million was recognized in the first nine months of 2021 compared to
$108.6 million in the first nine months of 2020. The decrease was
primarily due to the net repayment of the corporate revolving
credit facility in first nine months of 2020.
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 outstanding hedge positions for each of
these programs as at September 30, 2021 are summarized as
follows:
|
Average Strike Price |
Settlements (% of exposure hedged) |
As of September 30, 2021 |
Instrument |
Unit |
Type |
Q4 2021 |
2022 |
2023 |
2021 |
2022 |
2023 |
Total
position(2) |
Fair value
($000s) |
|
|
|
|
|
|
|
|
|
|
|
FX hedges |
|
|
|
|
|
|
|
|
|
|
USD/CAD zero-cost collars |
CAD |
Fixed |
$1.33/$1.39 |
$1.30/$1.37 |
$1.23/$1.29 |
$55.4 M (41%) |
$180.0 M (34%) |
$70.0 M (18%) |
$305.4 M |
6,288 |
USD/CAD forward contracts |
CAD |
Fixed |
$1.35 |
$1.29 |
$1.27 |
$32.0 M (23%) |
$94.0 M (18%) |
$70.0 M (18%) |
$196.0 M |
2,531 |
Total |
|
|
$1.34 |
$1.30 |
$1.25 |
$87.4 M (64%) |
$274.0 M (52%) |
$140.0 M (36%) |
$501.4 M |
8,819 |
|
|
|
|
|
|
|
|
|
|
|
Fuel hedges |
|
|
|
|
|
|
|
|
|
|
ULSD zero-cost collars |
Barrels |
Fixed |
$54/$60 |
$62/$68 |
$73/$78 |
18,152 (42%) |
45,100 (30%) |
13,500 (12%) |
76,752 |
2,257 |
ULSD swap contracts |
Barrels |
Fixed |
$65 |
$61 |
$75 |
12,504 (38%) |
61,500 (42%) |
30,000 (27%) |
104,004 |
2,925 |
Total |
|
|
|
|
|
30,656 (80%) |
106,600 (72%) |
43,500 (39%) |
180,756 |
5,182 |
|
|
|
|
|
|
|
|
|
|
|
Copper hedges(1): |
|
|
|
|
|
|
|
|
|
|
Copper forward contracts |
Pounds |
Fixed |
$3.40 |
N/A |
N/A |
12.9 M (92%) |
N/A |
N/A |
12.9M |
(8,694) |
Copper zero-cost collars |
Pounds |
Fixed |
N/A |
$3.59/$4.82 |
N/A |
N/A |
34.6 M (56%) |
N/A |
34.6 M |
1,873 |
|
|
|
|
|
|
|
|
|
|
|
Gold/copper hedges (Royal Gold deliverables): |
|
|
|
|
|
|
|
|
|
|
Gold forward contracts |
Ounces |
Float |
N/A |
N/A |
N/A |
21,162 |
N/A |
N/A |
21,162 |
(801) |
Copper forward contracts |
Pounds |
Float |
N/A |
N/A |
N/A |
3.4 M |
N/A |
N/A |
3.4 M |
(419) |
(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 three and nine months of 2021 and 2020 were as follows:
Hedge program |
Realized gain (loss) ($000s) |
Three months ended
September 30, |
% Change |
Nine months ended
September 30, |
% Change |
2021 |
|
2020 |
|
2021 |
|
2020 |
|
FX hedges |
$ |
4,101 |
|
$ |
1,797 |
|
(128 |
%) |
$ |
14,042 |
|
$ |
(1,569 |
) |
995 |
% |
Fuel hedges |
|
993 |
|
|
(1,342 |
) |
174 |
% |
|
19,379 |
|
|
(3,459 |
) |
660 |
% |
Copper hedges |
|
(12,934 |
) |
|
N/A |
|
N/A |
|
|
(36,984 |
) |
|
N/A |
|
N/A |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
During the second quarter of 2021, the Company
unwound certain positions that were hedging future fuel purchases
at the Kumtor Mine after May 15, 2021. Unwinding these positions
resulted in the recognition of realized gain on settlement of $14.2
million, which was recorded in earnings (loss) from discontinued
operations in the condensed consolidated interim statements of
earnings (loss) and comprehensive income (loss).
As at September 30, 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
Mount Milligan
Mine
The 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 Royal Gold pursuant to which Royal
Gold is entitled to purchase 35% of the gold produced and 18.75% of
the copper produced at the Mount Milligan Mine for $435 per ounce
of gold delivered and 15% of the spot price per metric tonne of
copper delivered. To satisfy its obligations under the Mount
Milligan Streaming Arrangement, the Company purchases refined gold
and copper warrants and arranges for delivery to Royal Gold. The
difference between the cost of the purchases of refined gold and
copper warrants and the corresponding amounts payable to the
Company under the Mount Milligan Streaming Arrangement is recorded
as a reduction of revenue and not a cost of operating the mine.
Water Update
Stored water inventory at the Mount Milligan
Mine is critical to the ability to process ore through the process
plant on a sustainable basis. The Mount Milligan Mine accessed
water from surface water sources and groundwater wells near the
tailings storage facility (“TSF”) during the third quarter of 2021.
The stored water inventory was approximately 5.9 million cubic
metres as at September 30, 2021, which is sufficient to enable
continuous production for a period of at least 12 months, under
normal conditions. The Company expects the water inventory level to
decrease during winter months before being replenished during
freshet in the spring.
The Company continues to pursue a longer-term
solution to its water requirements at the Mount Milligan Mine and
is in discussions with regulators, First Nations partners and other
stakeholders. In 2021, the Company obtained an environmental
assessment certificate amendment, and related permits, to access
surface water sources for the Mount Milligan Mine through November
2023.
Mount Milligan Financial and Operating
Results
Unaudited ($millions, except as noted) |
Three months ended September 30, |
Nine months ended September 30, |
Financial Highlights: |
|
2021 |
|
|
2020 |
|
% Change |
|
2021 |
|
|
2020 |
|
% Change |
Gold revenue |
$ |
50.8 |
|
$ |
64.1 |
|
(21 |
%) |
$ |
189.0 |
|
$ |
158.3 |
|
19 |
% |
Copper revenue |
|
47.1 |
|
|
52.8 |
|
(11 |
%) |
|
166.0 |
|
|
125.6 |
|
32 |
% |
Other by-product revenue |
|
1.7 |
|
|
3.5 |
|
(51 |
%) |
|
8.3 |
|
|
7.8 |
|
6 |
% |
Total Revenues |
$ |
99.6 |
|
$ |
120.4 |
|
(17 |
%) |
$ |
363.3 |
|
$ |
291.7 |
|
25 |
% |
Production costs |
|
57.4 |
|
|
51.5 |
|
11 |
% |
|
186.8 |
|
|
169.4 |
|
10 |
% |
Depreciation, depletion and amortization |
|
19.5 |
|
|
20.8 |
|
(6 |
%) |
|
62.2 |
|
|
56.7 |
|
10 |
% |
Earnings from mine operations |
$ |
22.7 |
|
$ |
48.1 |
|
(53 |
%) |
$ |
114.3 |
|
$ |
65.6 |
|
74 |
% |
Earnings from operations |
$ |
19.4 |
|
$ |
44.8 |
|
(57 |
%) |
$ |
101.4 |
|
$ |
55.4 |
|
83 |
% |
Cash provided by mine operations |
|
43.3 |
|
|
70.4 |
|
(38 |
%) |
|
206.6 |
|
|
141.3 |
|
46 |
% |
Free cash flow from mine operations(1) |
|
25.9 |
|
|
63.1 |
|
(59 |
%) |
|
156.5 |
|
|
119.5 |
|
31 |
% |
Capital expenditures - total |
|
16.4 |
|
|
8.8 |
|
87 |
% |
|
48.4 |
|
|
21.2 |
|
129 |
% |
Sustaining capital expenditures(3) |
|
15.5 |
|
|
8.8 |
|
77 |
% |
|
46.5 |
|
|
21.2 |
|
120 |
% |
Non-sustaining capital expenditures(3)(4) |
|
0.9 |
|
|
- |
|
100 |
% |
|
1.9 |
|
|
- |
|
100 |
% |
Operating Highlights: |
|
|
|
|
|
|
|
|
|
|
Tonnes mined (000s) |
|
11,131 |
|
|
11,305 |
|
(2 |
%) |
|
33,436 |
|
|
30,304 |
|
10 |
% |
Tonnes ore mined (000s) |
|
4,644 |
|
|
5,016 |
|
(7 |
%) |
|
14,769 |
|
|
13,845 |
|
7 |
% |
Tonnes processed (000s) |
|
5,053 |
|
|
5,324 |
|
(5 |
%) |
|
15,452 |
|
|
14,568 |
|
6 |
% |
Process plant head grade gold (g/t) |
|
0.38 |
|
|
0.47 |
|
(18 |
%) |
|
0.43 |
|
|
0.41 |
|
4 |
% |
Process plant head grade copper (%) |
|
0.21% |
|
|
0.26% |
|
(19 |
%) |
|
0.22% |
|
|
0.26% |
|
(16 |
%) |
Gold recovery (%) |
|
65.5% |
|
|
64.1% |
|
2 |
% |
|
65.8% |
|
|
63.5% |
|
4 |
% |
Copper recovery (%) |
|
80.2% |
|
|
80.4% |
|
(0 |
%) |
|
79.4% |
|
|
78.9% |
|
1 |
% |
Concentrate produced (dmt) |
|
39,546 |
|
|
52,643 |
|
(25 |
%) |
|
125,089 |
|
|
138,972 |
|
(10 |
%) |
Gold produced (oz) (2) |
|
39,658 |
|
|
49,854 |
|
(20 |
%) |
|
136,909 |
|
|
119,191 |
|
15 |
% |
Gold sold (oz)(2) |
|
38,517 |
|
|
44,817 |
|
(14 |
%) |
|
144,461 |
|
|
120,171 |
|
20 |
% |
Average realized gold price - combined
($/oz)(1)(2) |
|
1,317 |
|
|
1,429 |
|
(8 |
%) |
|
1,308 |
|
|
1,317 |
|
(1 |
%) |
Copper produced (000s lbs)(2) |
|
17,861 |
|
|
23,305 |
|
(23 |
%) |
|
56,282 |
|
|
62,441 |
|
(10 |
%) |
Copper sold (000s lbs)(2) |
|
18,512 |
|
|
21,726 |
|
(15 |
%) |
|
60,833 |
|
|
61,502 |
|
(1 |
%) |
Average realized copper price - combined
($/lb)(1)(2) |
|
2.55 |
|
|
2.43 |
|
5 |
% |
|
2.73 |
|
|
2.04 |
|
34 |
% |
Unit Costs: |
|
|
|
|
|
|
|
|
|
|
Gold production costs ($/oz) |
|
774 |
|
|
656 |
|
18 |
% |
|
689 |
|
|
792 |
|
(13 |
%) |
All-in sustaining costs on a by-product basis
($/oz) (1)(5) |
|
727 |
|
|
171 |
|
325 |
% |
|
504 |
|
|
570 |
|
(12 |
%) |
All-in costs on a by-product basis ($/oz)(1)(4) |
|
781 |
|
|
224 |
|
249 |
% |
|
549 |
|
|
607 |
|
(10 |
%) |
Gold - All-in sustaining costs on a co-product basis
($/oz)(1) |
|
1,014 |
|
|
773 |
|
31 |
% |
|
883 |
|
|
909 |
|
(3 |
%) |
Copper production costs ($/lb) |
|
1.50 |
|
|
1.02 |
|
46 |
% |
|
1.44 |
|
|
1.21 |
|
19 |
% |
Copper - All-in sustaining costs on a co-product basis
($/lb)(1) |
|
1.95 |
|
|
1.19 |
|
64 |
% |
|
1.21 |
|
|
1.38 |
|
(12 |
%) |
(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. |
|
|
Third Quarter 2021 compared to Third Quarter
2020
Earnings from mine operations of $22.7 million
were recognized in the third quarter of 2021 compared to $48.1
million in the third quarter of 2020. The decrease was primarily
due to lower average realized gold prices, lower gold ounces and
copper pounds sold from fewer shipments, and an increase in
production costs from higher average cost of inventory transferred
to cost of sales, partially offset by lower average realized copper
prices.
A chart accompanying this announcement is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/b8b57d7c-8660-430f-98f6-a5e8a98e129b
Cash provided by mine operations of $43.3
million was recognized in the third quarter of 2021 compared to
$70.4 million in the third quarter of 2020. The decrease was
primarily due to lower average realized gold prices, lower gold
ounces and copper pounds sold, increase in production costs,
partially offset by an increase in copper average realized
prices.
Free cash flow from mine operationsNG
of $25.9 million was recognized in the third quarter of 2021
compared to $63.1 million in the third quarter of 2020, primarily
due to a decrease in cash provided by mine operations and an
increase in capital expenditures related to TSF development costs
and capital expenditures related to mill equipment and capital
components.
During the third quarter of 2021, mining
activities were carried out in phases 4, 5 and 8 of the open pit.
Total tonnes mined were 11.1 million tonnes in the third quarter of
2021 compared to 11.3 million tonnes in the third quarter of
2020.
Total process plant throughput for the third
quarter of 2021 was 5.1 million tonnes, averaging 54,928 tonnes per
calendar day, compared to 5.3 million tonnes, averaging 57,873
tonnes per calendar day in the third quarter of 2020. Decreased
throughput was a result of the timing of the planned process plant
shutdown in the third quarter of 2021 compared to the prior
period.
Gold production was 39,658 ounces in the third
quarter of 2021 compared to 49,854 ounces in the third quarter of
2020. The decrease was due to lower throughput and lower gold
grades, partially offset by higher recoveries. During the third
quarter of 2021, the average gold grade was 0.38 g/t and recoveries
were 65.5% compared to 0.47 g/t and recoveries of 64.1% in the
third quarter of 2020. Total copper production was 17.9 million
pounds in the third quarter of 2021 compared to 23.3 million pounds
in the third quarter of 2020. The decrease was due to lower
throughput and grades.
Gold production costs were $774 per ounce in the
third quarter of 2021 compared to $656 per ounce in third quarter
of 2020. The increase primarily was due to fewer ounces of gold
sold in the third quarter of 2021.
A chart accompanying this announcement is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/f58d686e-ed69-4614-8ff1-6cf68fc82222
All-in sustaining costs on a by-product
basisNG were $727 per ounce in the third quarter of 2021
compared to $171 per ounce in the third quarter of 2020. The
increase was primarily due to higher sustaining capital
expenditures and production costs, combined with fewer gold ounces
and copper pounds sold. All-in sustaining costs on a by-product
basisNG in the third quarter of 2020 were unusually low
due to lower production costs as a result of decreased water
sourcing and electricity costs and increased copper credits due to
higher realized copper prices.
All-in costs on a by-product basisNG
were $781 per ounce in the third quarter of 2021 compared to $224
per ounce in the third quarter of 2020. The increase was primarily
due to higher all-in sustaining costs on a by-product
basisNG and an increase in non-sustaining capital
expenditures related to the staged flotation reactors project.
First Nine Months 2021 compared to First Nine
Months 2020
Earnings from mine operations of $114.3 million
were recognized in the first nine months of 2021 compared to $65.6
million in the first nine months of 2020. The increase was
primarily due to higher average realized copper prices and an
increase in gold ounces sold. This was partially offset by an
increase in production costs from higher mining and milling costs,
the timing of concentrate sales and an increase in depreciation,
depletion and amortization expense attributable to the decrease in
reserves between the periods.
A chart accompanying this announcement is available at
https://www.globenewswire.com/NewsRoom/AttachmentNg/d4f11458-9e03-44dc-bb43-a22d893d3d49
Cash provided by mine operations of $206.6
million was recognized in the first nine months of 2021 compared to
$141.3 million in the first nine months of 2020. The increase was
due to higher average realized copper prices, an increase in gold
ounces sold and a favourable change in working capital, mostly
resulting from the timing of vendor payments between periods. This
was partially offset by an increase in production costs from higher
mining and milling costs and the timing of concentrate sales.
Free cash flow from mine operationsNG
of $156.5 million was recognized in the first nine months of 2021
compared to $119.5 million in the first nine months of 2020,
primarily due to an increase in cash provided by mine operations,
partially offset by an increase in capital expenditures related to
the purchase of mining equipment, TSF development costs and major
planned equipment rebuilds.
During the first nine months of 2021, mining
activities were carried out in phases 4, 5 and 8 of the open pit.
Total tonnes mined were 33.4 million tonnes in the first nine
months of 2021 compared to 30.3 million tonnes in the first nine
months of 2020.
Total process plant throughput for the first
nine months of 2021 was 15.5 million tonnes, averaging 56,600
tonnes per calendar day, compared to 14.6 million tonnes, averaging
53,152 tonnes per calendar day in the first nine months of 2020.
Higher throughput was a result of an increase in the unit
processing rate in the first nine months of 2021 compared to the
first nine months of 2020.
Gold production was 136,909 ounces in the first
nine months of 2021 compared to 119,191 ounces in the first nine
months of 2020 primarily due to higher throughput and both higher
gold grades and improved recoveries. During the first nine months
of 2021, the average gold grade was 0.43 g/t and a recovery rate of
65.8% compared to 0.41 g/t and a recovery rate of 63.5% in the
first nine months of 2020. Total copper production was 56.3 million
pounds in the first nine months of 2021 compared to 62.4 million
pounds in the first nine months of 2020. The decrease was primarily
due to lower copper grades, partially offset by higher
throughput.
Gold production costs were $689 per ounce in the
first nine months of 2021 compared to $792 per ounce in the first
nine months of 2020. The decrease was primarily due to an increase
in ounces of gold sold, partially offset by slightly higher mining
costs as a result of higher maintenance costs and higher diesel and
tires prices, higher milling costs as a result of higher
maintenance costs and the timing of concentrate sales.
A chart accompanying this announcement is available at https://www.globenewswire.com/NewsRoom/AttachmentNg/e01ec333-56c0-4fc4-b47f-d72bd9a06325
All-in sustaining costs on a by-product
basisNG were $504 per ounce in the first nine months of
2021 compared to $570 per ounce in the first nine months of 2020.
The decrease was primarily due to higher average realized copper
prices and an increase in gold ounces sold, partially offset by
higher sustaining capital expenditures and production costs.
All-in costs on a by-product basisNG
were $549 per ounce in the first nine months of 2021 compared to
$607 per ounce in the first nine months of 2020. The decrease was
due to lower all-in sustaining costs on a by-product
basisNG, partially offset by an increase in
non-sustaining capital expenditure relating to the stage flotation
reactor project.
Öksüt Mine
The Öksüt Mine is located in Turkey
approximately 300 kilometres southeast of Ankara and 48 kilometres
south of Kayseri, the provincial capital. The nearest
administrative centre is Develi, located approximately 10
kilometres north of the mine site. The Öksüt Mine achieved
commercial production on May 31, 2020. Prior to achieving
commercial production, revenue from the sale of gold ounces was
deducted from the cost of related property, plant and equipment and
the associated production costs were added to the cost of the
related property, plant and equipment.
Öksüt Financial and Operating Results
Unaudited ($millions, except as noted) |
Three months ended September 30, |
Nine months ended September 30, |
Financial Highlights: |
|
2021 |
|
2020 |
% Change |
|
2021 |
|
2020 |
% Change |
Revenue |
$ |
66.0 |
$ |
97.6 |
(32 |
%) |
$ |
142.5 |
$ |
112.2 |
27 |
% |
Production costs |
|
17.9 |
|
18.1 |
(1 |
%) |
|
40.7 |
|
21.4 |
90 |
% |
Depreciation, depletion and amortization |
|
9.3 |
|
8.3 |
12 |
% |
|
22.4 |
|
8.9 |
152 |
% |
Earnings from mine operations |
$ |
38.8 |
$ |
71.2 |
(46 |
%) |
$ |
79.4 |
$ |
81.9 |
(3 |
%) |
Earnings from operations |
$ |
37.4 |
$ |
70.5 |
(47 |
%) |
$ |
77.2 |
$ |
81.2 |
(5 |
%) |
Cash provided by mine operations |
|
52.1 |
|
85.4 |
(39 |
%) |
|
92.2 |
|
84.3 |
9 |
% |
Free cash flow from mine operations(1) |
|
48.9 |
|
74.1 |
(34 |
%) |
|
76.3 |
|
58.7 |
30 |
% |
Capital expenditures - total |
|
3.1 |
|
9.8 |
(68 |
%) |
|
15.3 |
|
28.4 |
(46 |
%) |
Sustaining capital expenditures(2) |
|
3.0 |
|
3.1 |
(3 |
%) |
|
14.7 |
|
4.2 |
250 |
% |
Non-sustaining capital expenditures(2)(3) |
|
0.1 |
|
6.7 |
(99 |
%) |
|
0.6 |
|
24.2 |
(98 |
%) |
Operating Highlights: |
|
|
|
|
|
|
|
|
|
|
Tonnes mined (000s) |
|
4,066 |
|
4,351 |
(7 |
%) |
|
11,432 |
|
10,674 |
7 |
% |
Tonnes ore mined (000s) |
|
1,480 |
|
1,396 |
6 |
% |
|
2,942 |
|
2,463 |
19 |
% |
Ore mined - grade (g/t) |
|
1.63 |
|
2.23 |
(27 |
%) |
|
1.23 |
|
1.67 |
(26 |
%) |
Ore crushed (000s) |
|
1,417 |
|
1,427 |
(1 |
%) |
|
2,901 |
|
2,790 |
4 |
% |
Tonnes of ore stacked (000s) |
|
1,421 |
|
1,315 |
8 |
% |
|
2,905 |
|
2,494 |
16 |
% |
Heap leach grade (g/t) |
|
1.63 |
|
2.32 |
(30 |
%) |
|
1.21 |
|
1.63 |
(26 |
%) |
Heap leach contained ounces stacked |
|
74,220 |
|
98,054 |
(24 |
%) |
|
113,047 |
|
130,998 |
(14 |
%) |
Gold produced (oz) |
|
37,255 |
|
51,412 |
(28 |
%) |
|
80,035 |
|
66,689 |
20 |
% |
Gold sold (oz)(4) |
|
37,204 |
|
51,120 |
(27 |
%) |
|
79,984 |
|
66,123 |
21 |
% |
Average realized gold price ($/oz)(1) |
|
1,774 |
|
1,910 |
(7 |
%) |
|
1,782 |
|
1,887 |
(6 |
%) |
Unit Costs: |
|
|
|
|
|
|
|
|
|
|
Gold production costs ($/oz) |
|
481 |
|
354 |
36 |
% |
|
509 |
|
360 |
41 |
% |
All-in sustaining costs on a by-product basis
($/oz)(1) |
|
603 |
|
416 |
45 |
% |
|
736 |
|
433 |
70 |
% |
All-in costs on a by-product basis ($/oz)(1) |
|
644 |
|
559 |
15 |
% |
|
770 |
|
852 |
(10 |
%) |
(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. |
(4) |
|
Includes 6,654 ounces of gold which were sold in the first
nine months of 2020 prior to achieving commercial
production. |
|
|
|
Third Quarter 2021 compared to Third Quarter
2020
Earnings from mine operations of $38.8 million
was recognized in the third quarter of 2021, compared to $71.2 in
the third quarter of 2020. The decrease was primarily due to lower
gold revenue as a result of both lower ounces of gold sold and
lower average realized gold prices.
A chart accompanying this announcement is available at
https://www.globenewswire.com/NewsRoom/AttachmentNg/f51bb703-564c-48db-b7d6-fc492926c630
Cash provided by mine operations of $52.1
million was recognized in the third quarter of 2021 compared to
$85.4 million in the third quarter of 2020. The decrease was
primarily due to a decrease in gold revenues.
Free cash flow from mine operationsNG
of $48.9 million was recognized in the third quarter of 2021
compared to $74.1 in the third quarter of 2020. The decrease was
primarily due to gold lower revenue, partially offset by lower
non-sustaining capital expenditures as the construction of the
Öksüt Mine was completed in 2020.
Mining in the third quarter of 2021 was focused
on the development of Phase 2 of the Güneytepe pit and Phases 3, 4,
and 5 of the Keltepe pit, with total tonnes mined of 4.1 million,
compared with 4.4 million tonnes mined in the comparative
period.
Processing activities in the third quarter of
2021 were focused on the preparation, stacking and irrigation of
the heap leach pad, with 1.4 million tonnes stacked at a grade of
1.63 g/t, containing 74,220 ounces of gold compared to 1.4 million
tonnes stacked at a grade of 2.32 g/t, containing 98,054 ounces of
gold in the third quarter of 2020.
Gold production was 37,255 ounces in the third
quarter of 2021 compared to 51,412 ounces in the third quarter of
2020, primarily due to lower gold grades.
Gold production costs were $481 per ounce in the
third quarter of 2021 compared to $354 in the third quarter of
2020. The increase was primarily due to a decrease in ounces of
gold sold in the third quarter of 2021.
A chart accompanying this announcement is available at
https://www.globenewswire.com/NewsRoom/AttachmentNg/29fc84aa-3be6-471b-86d9-9dc313ca17dd
All-in sustaining costs on a by-product
basisNG were $603 per ounce in the third quarter of 2021
compared to $416 in the third quarter of 2020. The increase was
primarily due to a decrease in ounces of gold sold.
All-in costs on a by-product basisNG
were $644 per ounce in the third quarter of 2021 compared to $559
in the third quarter of 2020. The increase was primarily due to
higher all-in sustaining costs on a by-product basisNG,
partially offset by lower non-sustaining capital expenditures as
the construction of the Öksüt Mine was completed in 2020.
First Nine Months 2021 compared to First Nine
Months 2020
As the Öksüt Mine achieved commercial production
on May 31, 2020, financial and operating results in the first nine
months of 2021 may not be comparable to the first nine months of
2020.
Earnings from mine operations were $79.4 million
during the first nine months of 2021 compared with $81.9 million in
the first nine months of 2020. The decrease was primarily due to an
increase in production costs from a longer operating period and an
increase in depreciation, depletion and amortization expense from a
longer operating period and higher number of tonnes stacked on the
heap leach pad.
Cash provided by mine operations was $92.2
million during the first nine months of 2021 compared with $84.3
million during the first nine months of 2020. The increase was
primarily due to an increase in gold revenue from higher ounces of
gold sold, partially offset by an increase in production costs due
to the reasons outlined above.
Free cash flow from mine operationsNG
was $76.3 million during the first nine months of 2021 compared
with $58.7 million in the first nine months of 2020. The increase
was primarily due to the higher cash provided by mine operations,
partially offset by higher sustaining capital expenditures from
higher deferred stripping costs following the commencement of
commercial production.
Mining in the first nine months of 2021 was
focused on the development of Phase 2 of the Güneytepe pit and
Phases 3, 4, and 5 of the Keltepe pit, with total tonnes mined of
11.4 million compared with 10.7 million tonnes mined in the first
nine months of 2020.
Processing activities in the first nine months
of 2021 were focused on the preparation, stacking and irrigation of
the heap leach pad, with 2.9 million tonnes stacked at a grade of
1.21 g/t containing 113,047 ounces of gold compared with 2.5
million tonnes stacked at a grade of 1.63 g/t containing 130,998
ounces of gold in the comparable period.
Gold production was 80,035 ounces in the first
nine months of 2021 compared to 66,689 ounces in the first nine
months of 2020, primarily due to greater number of ore tonnes
mined, crushed and stacked on the heap leach pad, partially offset
by lower gold grades.
Gold production costs were $509 per ounce,
during the first nine months of 2021 compared with $360 per ounce
during the first nine months of 2020. The increase was primarily
due to higher production costs, as previously outlined above,
partially offset by an increase in ounces of gold sold between the
periods.
All-in sustaining costs on a by-product
basisNG were $736 per ounce during the first nine months
of 2021 compared with $433 per ounce during the first nine months
of 2020. The increase was primarily due to higher production costs
and higher sustaining capital expenditures, partially offset by an
increase in ounces of gold sold between the periods.
All-in costs on a by-product basisNG
were $770 per ounce in the first nine months of 2021 compared with
$852 per ounce during the comparable period. The decrease was
primarily due to lower non-sustaining capital expenditures as the
construction of the Öksüt Mine was completed in 2020, partially
offset by higher all-in sustaining costs on a by-product
basisNG.
Molybdenum Business
Unit
The Molybdenum Business unit includes two North
American molybdenum mines that are currently on care and
maintenance: the Thompson Creek Mine in Idaho and the 75%-owned
Endako Mine in British Columbia. The Molybdenum Business Unit also
includes the Langeloth Facility in Pennsylvania. The Thompson Creek
Mine operates a molybdenum beneficiation circuit to treat
molybdenum concentrates to supplement the concentrate feed sourced
directly for the Langeloth Facility. This beneficiation process
allows the Company to upgrade high copper content molybdenum
concentrate, purchased from third parties, into upgraded products
which are then sold in the metallurgical and chemical markets.
Molybdenum Business Unit Financial and
Operating Results
($millions, except as noted) |
Three months ended September 30, |
Nine months ended September
30,
|
Financial Highlights: |
|
2021 |
|
|
2020 |
|
% Change |
|
2021 |
|
|
2020 |
|
% Change |
Molybdenum (Mo) revenue |
$ |
51.6 |
|
$ |
31.6 |
|
63 |
% |
$ |
135.9 |
|
$ |
98.6 |
|
38 |
% |
Other revenue |
|
3.3 |
|
|
1.7 |
|
94 |
% |
|
7.3 |
|
|
6.8 |
|
7 |
% |
Total revenues |
$ |
54.9 |
|
$ |
33.3 |
|
65 |
% |
$ |
143.2 |
|
$ |
105.4 |
|
36 |
% |
Production costs |
|
46.3 |
|
|
34.2 |
|
35 |
% |
|
128.2 |
|
|
119.9 |
|
7 |
% |
Depreciation, depletion and amortization |
|
1.7 |
|
|
1.7 |
|
0 |
% |
|
4.9 |
|
|
5.2 |
|
(6 |
%) |
Earnings (loss) from mine operations |
$ |
6.9 |
|
$ |
(2.6 |
) |
366 |
% |
$ |
10.1 |
|
$ |
(19.7 |
) |
(151 |
%) |
Care and Maintenance costs - Molybdenum mines |
|
3.6 |
|
|
3.3 |
|
9 |
% |
|
10.3 |
|
|
9.8 |
|
5 |
% |
Reclamation (recovery) expense |
|
(0.9 |
) |
|
0.5 |
|
280 |
% |
|
(0.9 |
) |
|
44.0 |
|
(102 |
%) |
Net earnings (loss) from operations |
$ |
3.9 |
|
$ |
(7.1 |
) |
154 |
% |
$ |
(1.0 |
) |
$ |
(75.4 |
) |
(99 |
%) |
Cash (used in) provided by operations |
|
(13.7 |
) |
|
7.2 |
|
(290 |
%) |
|
(21.5 |
) |
|
15.2 |
|
(241 |
%) |
Free cash flow (deficit) from operations(1) |
|
(14.0 |
) |
|
5.9 |
|
(337 |
%) |
|
(22.6 |
) |
|
11.7 |
|
293 |
% |
Total capital expenditures(2) |
|
0.3 |
|
|
1.3 |
|
(79 |
%) |
|
1.1 |
|
|
3.5 |
|
(67 |
%) |
Operating Highlights: |
|
|
|
|
|
|
|
|
|
|
Mo purchased (lbs) |
|
2,505 |
|
|
3,453 |
|
(27 |
%) |
|
7,709 |
|
|
10,653 |
|
(28 |
%) |
Mo roasted (lbs) |
|
2,456 |
|
|
3,059 |
|
(20 |
%) |
|
7,811 |
|
|
11,048 |
|
(29 |
%) |
Mo sold (lbs) |
|
2,615 |
|
|
3,599 |
|
(27 |
%) |
|
9,100 |
|
|
10,056 |
|
(10 |
%) |
Average market Mo price ($/lb) |
|
19.06 |
|
|
7.71 |
|
147 |
% |
|
15.02 |
|
|
8.57 |
|
75 |
% |
(1) |
|
Non-GAAP measure. See discussion under “Non-GAAP
Measures”. |
(2) |
|
Capital expenditures are presented as spent and
accrued. |
|
|
|
Third Quarter 2021 compared to Third Quarter
2020
Earnings from mine operations of $6.9 million
were recognized in the third quarter of 2021 compared to loss from
mine operations of $2.6 million in the third quarter of 2020. The
increase was primarily due to increased sales margin from rising
molybdenum prices and the effect of various cost control
measures.
Cash used in operations of $13.7 million was
recognized in the third quarter of 2021 compared to cash provided
by operations of $7.2 million in the third quarter of 2020. The
decline is primarily due to an unfavourable working capital change
from an increase in product inventory and as a result of the higher
average molybdenum prices paid to obtain that inventory as well as
the effect of an $11.4 million non-recurring tax refund received
during the three months ended September 30, 2020.
Free cash flow deficit from
operationsNG of $14.0 million was recognized in the
third quarter of 2021 compared to free cash flow from
operationsNG of $5.9 million in the third quarter of
2020 primarily due to lower cash provided by operations.
The Langeloth Facility roasted and sold 2.5
million pounds and 2.6 million pounds of molybdenum, respectively,
in the third quarter of 2021, compared to 3.1 million pounds and
3.6 million pounds in the third quarter of 2020. The decrease in
the molybdenum roasted and sold was primarily due to a decline in
molybdenum concentrate available for roasting, resulting from a
decrease in concentrate supply and increased competition for
concentrate.
A chart accompanying this announcement is available at
https://www.globenewswire.com/NewsRoom/AttachmentNg/633c57a4-212a-49a3-9550-f974b3ca3572
First Nine Months 2021 compared to First Nine
Months 2020
Earnings from mine operations of $10.1 million
were recognized in the first nine months of 2021 compared to a loss
from mine operations of $19.7 million in the first nine months of
2020. The increase in the first nine months of 2021 was mainly due
to the increased sales margin from rising molybdenum prices and the
effect of various cost control measures.
Cash used in operations of $21.5 million was
recognized in the first nine months of 2021 compared with cash
provided by operations of $15.2 million in the first nine months of
2020. The decline was primarily due to an unfavourable working
capital change from an increase in product inventory and as a
result of the higher average molybdenum prices paid to obtain that
inventory and the effect of a $22.8 million non-recurring tax
refund that was received in the first nine months of 2020.
Free cash flow deficit from
operationsNG of $22.6 million was recognized in the
first nine months of 2021 compared to free cash flow from
operationsNG of $11.7 million in the first nine months
of 2020, primarily due to lower cash provided by operations, as
described above.
The Langeloth Facility roasted and sold 7.8
million pounds and 9.1 million pounds of molybdenum, respectively,
during the first nine months of 2021 compared to 11.0 million
pounds and 10.1 million pounds, respectively, during the first nine
months of 2020. The decrease in the molybdenum both roasted and
sold was primarily due to a decline in molybdenum concentrate
available for roasting, resulting from a decrease in concentrate
supply and increased competition for concentrate.
Discontinued Operations
Kumtor Mine
As a result of the events described in the
Recent Events and Developments section, the Kumtor Mine
was reclassified as a discontinued operation in the second quarter
of 2021. Consequently, the Company is only presenting 2021
financial and operating results pertaining to the period up to date
that the control was lost. Consequently, the results may not be
comparable between reporting periods.
Kumtor Financial and Operating
Results
Unaudited ($ millions, except as noted) |
Three months ended
September 30, |
Nine months ended
September 30, |
Financial Highlights: |
|
2021 |
|
2020 |
|
|
2021 |
|
|
2020 |
|
Revenue |
$ |
- |
$ |
270.4 |
|
$ |
264.1 |
|
$ |
809.3 |
|
Production costs |
|
- |
|
48.5 |
|
|
72.6 |
|
|
158.3 |
|
Depreciation, depletion and amortization |
|
- |
|
52.5 |
|
|
57.9 |
|
|
170.9 |
|
Standby costs |
|
- |
|
- |
|
|
- |
|
|
6.7 |
|
Earnings from mine operations |
$ |
- |
$ |
169.4 |
|
$ |
133.6 |
|
$ |
473.4 |
|
Loss on the change of control of the Kumtor Mine |
|
- |
|
- |
|
|
(926.4 |
) |
|
- |
|
Net earnings (loss) from discontinued operations |
$ |
- |
$ |
123.3 |
|
$ |
(828.7 |
) |
$ |
328.8 |
|
Cash provided by operating activities from discontinued
operations |
|
- |
|
207.1 |
|
|
143.9 |
|
|
560.0 |
|
Cash used in investing activities from discontinued operations |
|
- |
|
51.0 |
|
|
96.1 |
|
|
159.2 |
|
Net cash flow from discontinued operations |
|
- |
|
156.1 |
|
|
47.8 |
|
|
400.8 |
|
Free cash flow from discontinued operations(1) |
|
- |
|
157.3 |
|
|
53.7 |
|
|
409.8 |
|
Capital expenditures - total |
|
- |
|
51.6 |
|
|
95.1 |
|
|
174.2 |
|
Sustaining capital expenditures(3) |
|
- |
|
48.2 |
|
|
69.2 |
|
|
166.8 |
|
Non-sustaining capital expenditures(3)(4) |
|
- |
|
3.4 |
|
|
25.9 |
|
|
7.4 |
|
Operating Highlights: |
|
|
|
|
|
|
|
|
Tonnes mined (000s) |
|
- |
|
17,927 |
|
|
74,261 |
|
|
61,001 |
|
Tonnes ore mined (000s) |
|
- |
|
5 |
|
|
1,298 |
|
|
590 |
|
Tonnes processed (000s) |
|
- |
|
1,590 |
|
|
2,343 |
|
|
4,760 |
|
Process plant head grade (g/t) |
|
- |
|
3.48 |
|
|
2.52 |
|
|
3.65 |
|
Recovery (%)(2) |
|
- |
|
80.3% |
|
|
71.5% |
|
|
82.8% |
|
Gold produced (oz) |
|
- |
|
140,182 |
|
|
139,830 |
|
|
465,734 |
|
Gold sold (oz) |
|
- |
|
142,132 |
|
|
147,800 |
|
|
472,572 |
|
Unit Costs: |
|
|
|
|
|
|
|
|
Gold production costs ($/oz) |
|
- |
|
341 |
|
|
491 |
|
|
335 |
|
All-in sustaining costs on a by-product basis
($/oz)(1) |
|
- |
|
643 |
|
|
929 |
|
|
666 |
|
All-in costs on a by-product basis ($/oz)(1) |
|
- |
|
956 |
|
|
1,414 |
|
|
943 |
|
(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. |
|
|
|
Sale of Interest in Greenstone
Partnership
On January 19, 2021, the Company completed the
sale of its 50% interest in the Greenstone Partnership with final
cash consideration received of $210.0 million, net of adjustments,
and recognized a gain on sale of $72.3 million (excluding
contingent consideration). Pursuant to an agreement dated December
15, 2020, with an affiliate of the Orion Mine Finance Group
(“Orion”) and Premier Gold Mines Limited, the Company is entitled
to received further contingent consideration, payable based on the
construction decision and subsequent production from the mine,
which will be recorded should the various additional milestones be
met.
Quarterly Results – Previous Eight
Quarters
As a result of the loss of control of the Kumtor
Mine, the Company deconsolidated the results of the Kumtor Mine and
presented its financial results as a discontinued operation,
separate from the Company’s consolidated financial results.
Accordingly, the quarterly results presented below were updated
retrospectively to reflect the impact of discontinued operations
accounting.
$million, except per share data |
2021
|
2020 |
2019 |
Quarterly data unaudited |
|
Q3 |
Q2 |
Q1 |
Q4 |
Q3 |
Q2 |
Q1 |
Q4 |
Revenue |
221 |
202 |
|
226 |
212 |
251 |
130 |
|
128 |
|
115 |
|
Net earnings (loss) from continuing operations |
28 |
33 |
|
111 |
31 |
82 |
(39 |
) |
(66 |
) |
(68 |
) |
Basic earnings (loss) per share - continuing operations |
0.09 |
0.11 |
|
0.37 |
0.10 |
0.28 |
(0.13 |
) |
(0.22 |
) |
(0.23 |
) |
Diluted earnings (loss) per share - continuing operations |
0.09 |
0.10 |
|
0.36 |
0.10 |
0.26 |
(0.13 |
) |
(0.24 |
) |
(0.23 |
) |
Net earnings (loss) |
28 |
(852 |
) |
167 |
95 |
206 |
81 |
|
20 |
|
(12 |
) |
Basic earnings (loss) per share |
0.09 |
(2.87 |
) |
0.57 |
0.32 |
0.70 |
0.27 |
|
0.07 |
|
(0.04 |
) |
Diluted earnings (loss) per share |
0.09 |
(2.87 |
) |
0.55 |
0.32 |
0.68 |
0.27 |
|
0.06 |
|
(0.04 |
) |
Related party transactions
Kyrgyzaltyn
While the Company was in control of the Kumtor
Mine, the sole customer of gold doré from the Kumtor Mine was
Kyrgyzaltyn, the Company’s largest shareholder and a state-owned
entity of the Kyrgyz Republic. Revenues from the Kumtor Mine were
subject to a management fee of $1.00 per ounce based on sales
volumes, payable to Kyrgyzaltyn.
The breakdown of sales transactions with
Kyrgyzaltyn in the normal course of business are as follows:
|
|
Three months ended
September 30, |
|
|
Nine months ended
September 30, |
|
|
2021 |
|
|
2020 |
|
|
|
2021 |
|
|
|
2020 |
|
Gross gold and silver sales to Kyrgyzaltyn |
$ |
- |
|
$ |
271,979 |
|
|
$ |
265,407 |
|
|
$ |
814,405 |
|
Refinery and financing charges |
|
- |
|
|
(1,584 |
) |
|
|
(1,248 |
) |
|
|
(5,063 |
) |
Net revenue received from
Kyrgyzaltyn(1) |
$ |
- |
|
$ |
270,395 |
|
|
$ |
264,159 |
|
|
$ |
809,342 |
|
(1) |
|
Included in results from discontinued operations. |
|
|
|
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 2020 AIF and specifically the section
therein entitled “Risk Factors” 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
Kumtor Mine
As a result of the seizure of the Kumtor Mine
and the loss of control of the mine, the Company deconsolidated
KGC, and derecognized the assets and liabilities of the Kumtor Mine
at their carrying amounts at the date when control was lost.
Arbitration Proceedings
The Company has initiated the Kumtor Arbitration
Proceedings against the Kyrgyz Republic and Kyrgyzaltyn to enforce
its rights under longstanding agreements governing the Kumtor Mine
and to, among other things, hold the Government of the Kyrgyz
Republic and Kyrgyzaltyn accountable in the arbitration for any and
all losses and damage that result from their actions against KGC
and the Kumtor Mine. On September 27, 2021, the Company announced
that it was seeking urgent interim measures in the Kumtor
Arbitration Proceedings to address certain critical operational and
safety problems at the Kumtor Mine, principally seeking to prevent
the Kyrgyz Republic and Kyrgyzaltyn from causing irreparable damage
to the Kumtor Mne, to preserve the status quo at the Kumtor Mine
and not to deviate from the approved mine plan, and obtain
transparency and regular reporting as to the mine’s operations.
The Kumtor Arbitration Proceedings will be
adjudicated by a single arbitrator in Stockholm, Sweden and
conducted under the arbitration rules of the United Nations
Commission on International Trade Law. The applicable governing law
of the arbitration is the law of the State of New York and of
England. An arbitrator was appointed in the Kumtor Arbitration
Proceedings. However, on October 27, 2021, the appointed arbitrator
resigned, citing the refusal by the Kyrgyz Republic and Kyrgyzaltyn
to agree to protections he had requested against personal claims
being brought against him by the parties or to pay his requested
fees. The Company has requested that the Permanent Court of
Arbitration and its designated appointing authority promptly
appoint a replacement arbitrator.
While Centerra will continue to pursue all
measures necessary to protect its rights in arbitration and in
other legal proceedings, no assurances can be given that Centerra
will be successful in any of these legal proceedings or that the
Company will be able to negotiate a solution that will not have a
material impact on Centerra. There remains further risk that
additional regulatory, tax, or civil claims will be commenced by
the Kyrgyz Republic against KGC or the Company.
Mount Milligan Mine
As previously disclosed in the Company’s
consolidated financial statements for the year ended December 31,
2020, the Company received a notice of civil claim from H.R.S.
Resources Corp. (“HRS”), the holder of a 2% production royalty at
the Mount Milligan Mine. HRS claims that since November 2016 (when
the royalty became payable) the Company has been incorrectly
calculating amounts payable under the production royalty agreement
and has therefore underpaid amounts owing to HRS. The Company
disputes the claim and believes it has been correctly calculating
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 jurisdictions. 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 September
30, 2021, the Company did not have any material provision for
claims or taxation assessments.
Accounting Estimates, Policies and
Changes
Accounting
Estimates
The preparation of the Company’s consolidated
financial statements in accordance with IFRS requires management to
make estimates and judgments that affect the amounts reported in
the consolidated financial statements and accompanying notes. With
exception of the accounting for the Company’s loss of control of
Kumtor Mine as disclosed in Note 4 of the Company’s interim
financial statements, the critical estimates and judgments applied
in the preparation of the Company’s interim financial statements
for the three and nine months ended September 30, 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 interim financial
statements that might have a significant risk of causing a material
adjustment to the carrying value of assets and liabilities and
earnings (loss) are outlined in Note 4 of the audited consolidated
financial statements for the year ended December 31, 2020 and in
Note 4 of the interim financial statements for the third quarter
ended September 30, 2021.
Disclosure Controls and Procedures and
Internal Controls 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 third 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, 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 third quarter of
2021.
In response to the COVID-19 pandemic, the
Company asked all of its corporate office staff and many site
administrative staff at regional, mine site and exploration offices
to work from home. Most of these offices were subsequently
re-opened, under new hygiene and physical distancing protocols;
however, employees whose work does not require physical presence in
the office can continue to work remotely. This change requires
certain processes and controls that were previously done or
documented manually to be completed and retained in electronic
form. The Company continues to monitor whether remote work
arrangements have adversely affected the Company’s ability to
maintain internal controls over financial reporting and disclosure
controls and procedures. Despite the changes required by the
current environment, there have been no significant changes in the
Company’s internal controls during the three months ended September
30, 2021, that have materially affected, or are reasonably likely
to materially affect, internal control over financial
reporting.
Non-GAAP Measures
This MD&A contains the following non-GAAP
financial measures: all-in sustaining costs per ounce on a
by-product basis, all-in sustaining costs per ounce or pound 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 and average realized copper
price.
Management believes that the use of these
non-GAAP measures assists analysts, investors and other
stakeholders of the Company in understanding the costs associated
with producing gold, understanding the economics of gold mining,
assessing operating performance, the Company’s ability to generate
free cash flow from current operations and on an overall Company
basis, and for planning and forecasting of future periods. However,
the measures 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. These financial measures
do not have any standardized meaning prescribed by GAAP and may not
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. Accordingly, these non-GAAP measures
should not be considered in isolation, or as a substitute for,
analysis of the Company’s recognized measures presented in
accordance with IFRS.
Definitions
As a result of the seizure of the Kumtor Mine by
the Kyrgyz Republic on May 15, 2021 and the loss of control of the
mine, the Company presented the results from the Kumtor Mine as a
discontinued operation, separate from the Company’s continuing
operations. Consequently, the following non-GAAP financial measures
were added: adjusted net earnings from continuing operations,
adjusted net earnings from continuing operations per common share
(basic and diluted), free cash flow from continuing operations and
adjusted free cash flow from continuing operations. These measures
are calculated in a similar fashion as the equivalent measures
presented on a total basis, inclusive of both continuing operations
and discontinued operations.
The 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 are calculated as the
aggregate of production costs as recorded in the condensed
consolidated interim statements of earnings (loss), refining and
transport costs, cash component of capitalized stripping and
sustaining capital expenditures, lease payments related to
sustaining assets, corporate general and administrative expenses,
accretion expenses, asset retirement depletion expenses, copper and
silver revenue and the associated impact of hedging by-product
sales revenue (added in the current year and applied
retrospectively to the previous year). 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
for the Kumtor Mine 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 equivalent ounces
of gold. For the third quarter and first nine months of 2021, 517
pounds and 479 pounds, respectively, of copper were equivalent to
one ounce of gold. All-in sustaining costs on a co-product basis
per ounce of gold for the Kumtor Mine excludes revenue-based
taxes.
- All-in costs on a by-product
basis per ounce include all-in sustaining costs on a
by-product basis, exploration and study costs, non-sustaining
capital expenditures, care and maintenance and pre-development
costs. All-in costs on a by-product basis per ounce for the Kumtor
Mine includes revenue-based taxes.
- 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. The
Company believes that this generally accepted industry measure
allows the evaluation of the results of continuing
income-generating capabilities and is useful in making comparisons
between periods. This measure adjusts for the impact of items not
associated with ongoing operations. Management uses this measure to
monitor and plan for the operating performance of the Company in
conjunction with other data prepared in accordance with IFRS.
- Adjusted net earnings from
continuing operations is calculated by adjusting net earnings
(loss) from continuing operations as recorded in the consolidated
statements of income (loss) and comprehensive income (loss) for
items not associated with continuing operations. This measure
adjusts for the impact of items not associated with continuing
operations. Management uses this measure to monitor and plan for
the operating performance of continuing operations of the Company
in conjunction with other data prepared in accordance with
IFRS.
- 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) 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) by the
number of pounds sold.
- Free cash flow from continuing
operations 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
continuing operations is calculated as free cash flow adjusted
for items not associated with ongoing operations.
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 September 30, |
(Unaudited - $millions, unless otherwise
specified) |
Consolidated(3) |
Mount Milligan |
Öksüt |
|
Kumtor |
|
2021 |
2020 |
2021 |
2020 |
2021 |
2020 |
|
2021 |
2020 |
|
|
|
|
|
|
|
|
|
|
Production costs attributable to gold |
47.7 |
|
47.5 |
|
29.8 |
|
29.4 |
|
17.9 |
18.1 |
|
- |
48.5 |
|
Production costs attributable to copper |
27.7 |
|
22.1 |
|
27.7 |
|
22.1 |
|
- |
- |
|
- |
- |
|
Total production costs excluding molybdenum segment, as
reported |
75.4 |
|
69.6 |
|
57.5 |
|
51.5 |
|
17.9 |
18.1 |
|
- |
48.5 |
|
Adjust for: |
|
|
|
|
|
|
|
|
|
Third party smelting, refining and transport costs |
2.4 |
|
2.0 |
|
2.3 |
|
2.0 |
|
0.1 |
- |
|
- |
1.6 |
|
By-product and co-product credits |
(48.9 |
) |
(56.3 |
) |
(48.9 |
) |
(56.3 |
) |
- |
- |
|
- |
(2.2 |
) |
Community costs related to current operations |
- |
|
- |
|
- |
|
- |
|
- |
- |
|
- |
3.4 |
|
Adjusted production costs |
28.9 |
|
15.3 |
|
10.9 |
|
(2.8 |
) |
18.0 |
18.1 |
|
- |
51.3 |
|
Corporate general administrative and other costs |
8.8 |
|
6.7 |
|
0.1 |
|
0.4 |
|
- |
- |
|
- |
- |
|
Reclamation and remediation - accretion (operating sites) |
1.6 |
|
0.3 |
|
0.4 |
|
0.3 |
|
1.2 |
- |
|
- |
0.9 |
|
Sustaining capital expenditures(1) |
18.5 |
|
11.9 |
|
15.5 |
|
8.8 |
|
3.0 |
3.1 |
|
- |
39.1 |
|
Sustaining leases |
1.3 |
|
1.1 |
|
1.2 |
|
1.0 |
|
0.1 |
0.1 |
|
- |
- |
|
All-in sustaining costs on a by-product basis |
59.1 |
|
35.3 |
|
28.1 |
|
7.7 |
|
22.3 |
21.3 |
|
- |
91.3 |
|
Revenue-based taxes |
- |
|
- |
|
- |
|
- |
|
- |
- |
|
- |
37.9 |
|
Exploration and study costs |
6.0 |
|
8.5 |
|
1.2 |
|
2.4 |
|
1.4 |
0.7 |
|
- |
3.2 |
|
Non-sustaining capital expenditures(1)(2) |
1.4 |
|
15.2 |
|
0.9 |
|
- |
|
0.1 |
6.7 |
|
- |
3.4 |
|
Care and maintenance costs and pre-development costs |
4.0 |
|
7.2 |
|
- |
|
- |
|
- |
- |
|
- |
- |
|
All-in costs on a by-product basis |
70.5 |
|
66.2 |
|
30.2 |
|
10.1 |
|
23.8 |
28.7 |
|
- |
135.8 |
|
Ounces sold (000s) |
75.7 |
|
95.9 |
|
38.5 |
|
44.8 |
|
37.2 |
51.1 |
|
- |
142.1 |
|
Pounds sold (millions) |
18.5 |
|
21.7 |
|
18.5 |
|
21.7 |
|
- |
- |
|
- |
- |
|
Gold production costs ($/oz) |
630 |
|
495 |
|
774 |
|
656 |
|
481 |
354 |
|
- |
341 |
|
All-in sustaining costs on a by-product basis ($/oz) |
781 |
|
367 |
|
727 |
|
171 |
|
603 |
416 |
|
- |
643 |
|
All-in costs on a by-product basis ($/oz) |
932 |
|
689 |
|
781 |
|
224 |
|
644 |
559 |
|
- |
956 |
|
Gold - All-in sustaining costs on a co-product basis ($/oz) |
928 |
|
648 |
|
1,014 |
|
773 |
|
603 |
416 |
|
- |
643 |
|
Copper production costs ($/pound) |
1.50 |
|
1.02 |
|
1.50 |
|
1.02 |
|
n/a |
n/a |
|
- |
n/a |
Copper - All-in sustaining costs on a co-product basis
($/pound) |
1.95 |
|
1.19 |
|
1.95 |
|
1.19 |
|
n/a |
n/a |
|
- |
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 quarter, non-sustaining capital
expenditures included costs related primarily to the installation
of staged flotation reactors at the Mount Milligan Mine. |
(3) |
|
Presented on a continuing operations basis, excluding results
from the Kumtor Mine. |
|
|
|
|
Nine months ended September 30, |
(Unaudited - $millions, unless otherwise
specified) |
Consolidated(3) |
Mount Milligan |
Öksüt |
|
Kumtor(4) |
|
2021 |
2020 |
2021 |
2020 |
2021 |
2020 |
|
2021 |
2020 |
|
|
|
|
|
|
|
|
|
|
Production costs attributable to gold |
140.2 |
|
116.6 |
|
99.5 |
|
95.2 |
|
40.7 |
21.4 |
|
72.6 |
158.3 |
|
Production costs attributable to copper |
87.3 |
|
74.2 |
|
87.3 |
|
74.2 |
|
- |
- |
|
- |
- |
|
Total production costs excluding molybdenum segment, as
reported |
227.5 |
|
190.8 |
|
186.8 |
|
169.4 |
|
40.7 |
21.4 |
|
72.6 |
158.3 |
|
Adjust for: |
|
|
|
|
|
|
|
|
|
Third party smelting, refining and transport costs |
8.8 |
|
6.4 |
|
7.9 |
|
6.4 |
|
0.9 |
- |
|
1.2 |
5.1 |
|
By-product and co-product credits |
(174.3 |
) |
(133.4 |
) |
(174.3 |
) |
(133.4 |
) |
- |
- |
|
- |
(5.9 |
) |
Community costs related to current operations |
- |
|
- |
|
- |
|
- |
|
- |
- |
|
2.6 |
17.1 |
|
Adjusted production costs |
62.0 |
|
63.8 |
|
20.4 |
|
42.4 |
|
41.6 |
21.4 |
|
76.4 |
174.6 |
|
Corporate general administrative and other costs |
20.3 |
|
28.6 |
|
1.1 |
|
0.8 |
|
- |
- |
|
- |
- |
|
Reclamation and remediation - accretion (operating sites) |
3.4 |
|
0.9 |
|
1.3 |
|
0.9 |
|
2.1 |
- |
|
0.3 |
2.9 |
|
Sustaining capital expenditures(1) |
61.2 |
|
25.4 |
|
46.5 |
|
21.2 |
|
14.7 |
4.2 |
|
60.6 |
137.1 |
|
Sustaining leases |
4.0 |
|
3.2 |
|
3.5 |
|
3.1 |
|
0.5 |
0.1 |
|
- |
- |
|
All-in sustaining costs on a by-product basis |
150.9 |
|
121.9 |
|
72.8 |
|
68.4 |
|
58.9 |
25.7 |
|
137.3 |
314.6 |
|
Revenue-based taxes |
- |
|
- |
|
- |
|
- |
|
- |
- |
|
37.0 |
113.3 |
|
Exploration and study costs |
17.1 |
|
15.7 |
|
4.5 |
|
4.5 |
|
2.1 |
0.7 |
|
8.8 |
10.4 |
|
Non-sustaining capital expenditures(1)(2) |
2.9 |
|
42.1 |
|
1.9 |
|
- |
|
0.6 |
24.2 |
|
25.9 |
7.4 |
|
Care and maintenance costs and pre-development costs |
10.1 |
|
18.5 |
|
- |
|
- |
|
- |
- |
|
- |
- |
|
All-in costs on a by-product basis |
181.0 |
|
198.2 |
|
79.2 |
|
72.9 |
|
61.6 |
50.6 |
|
209.0 |
445.7 |
|
Ounces sold (000s) |
224.5 |
|
179.7 |
|
144.5 |
|
120.2 |
|
80.0 |
59.5 |
|
147.8 |
472.6 |
|
Pounds sold (millions) |
60.8 |
|
61.5 |
|
60.8 |
|
61.5 |
|
- |
- |
|
- |
- |
|
Gold production costs ($/oz) |
625 |
|
649 |
|
689 |
|
792 |
|
509 |
360 |
|
491 |
335 |
|
All-in sustaining costs on a by-product basis ($/oz) |
672 |
|
679 |
|
504 |
|
570 |
|
736 |
433 |
|
929 |
666 |
|
All-in costs on a by-product basis ($/oz) |
806 |
|
1,104 |
|
549 |
|
607 |
|
770 |
852 |
|
1,414 |
943 |
|
Gold - All-in sustaining costs on a co-product basis ($/oz) |
916 |
|
906 |
|
883 |
|
909 |
|
736 |
433 |
|
929 |
666 |
|
Copper production costs ($/pound) |
1.44 |
|
1.21 |
|
1.44 |
|
1.21 |
|
n/a |
n/a |
|
n/a |
n/a |
Copper - All-in sustaining costs on a co-product basis
($/pound) |
1.21 |
|
1.38 |
|
1.21 |
|
1.38 |
|
n/a |
n/a |
|
n/a |
n/a |
(1) |
|
Capital expenditures are presented on an accrual
basis. |
(2) |
|
Non-sustaining capital expenditures are distinct projects
designed to have a significant increase in the net present value of
the mine. In the current year, non-sustaining capital expenditures
included costs related primarily to the installation of staged
flotation reactors at Mount Milligan Mine and the expansion of the
Kumtor Mine while in the prior year they related primarily to
construction costs at the Öksüt Mine and the water treatment plant
at the Kemess UG Project. |
(3) |
|
Presented on a continuing operations basis. |
(4) |
|
Results for the periods ended September 30, 2021 from the
Kumtor Mine are prior to the seizure of the mine on May 15,
2021. |
|
|
|
Adjusted net earnings can be
reconciled as follows:
|
|
Three months ended
September 30, |
Nine months ended
September 30, |
($millions, except as noted) |
2021 |
2020 |
2021 |
2020 |
|
|
|
|
|
|
|
|
|
|
Net earnings (loss) |
$ |
27.6 |
$ |
205.7 |
$ |
(656.6 |
) |
$ |
313.3 |
|
|
|
|
|
|
|
|
|
|
Adjust for items not associated with ongoing operations: |
|
|
|
|
|
|
|
|
|
Loss of control of the Kumtor Mine |
|
- |
|
- |
|
926.4 |
|
|
- |
|
Kumtor Mine legal costs, onerous contract and other related
costs |
|
8.1 |
|
- |
|
16.2 |
|
|
- |
|
Gain from the discontinuance of Kumtor Mine hedge instruments |
|
- |
|
- |
|
(15.3 |
) |
|
- |
|
Gain on the sale of Greenstone Partnership |
|
- |
|
- |
|
(72.3 |
) |
|
- |
|
Reclamation provision revaluation expense (recovery) at sites on
care and maintenance |
|
- |
|
- |
|
(0.1 |
) |
|
43.5 |
|
|
|
|
|
|
|
|
|
|
Adjusted net earnings |
$ |
35.7 |
$ |
205.7 |
$ |
198.3 |
|
$ |
356.8 |
|
|
|
|
|
|
|
|
|
|
Net earnings (loss) per share - basic |
$ |
0.09 |
$ |
0.70 |
$ |
(2.21 |
) |
$ |
1.06 |
Net earnings (loss) per share - diluted |
$ |
0.09 |
$ |
0.68 |
$ |
(2.23 |
) |
$ |
1.05 |
Adjusted net earnings per share - basic |
$ |
0.12 |
$ |
0.70 |
$ |
0.67 |
|
$ |
1.21 |
Adjusted net earnings per share - diluted |
$ |
0.12 |
$ |
0.68 |
$ |
0.65 |
|
$ |
1.20 |
|
|
|
|
|
|
|
|
|
|
Adjusted net earnings from
continuing operations can be reconciled as
follows:
|
|
Three months ended
September 30, |
Nine months ended
September 30, |
($millions, except as noted) |
2021 |
2020 |
2021
|
2020 |
|
|
|
|
|
|
|
|
|
|
Net earnings (loss) from continuing
operations |
$ |
27.6 |
$ |
82.4 |
$ |
172.1 |
|
$ |
(15.4 |
) |
|
|
|
|
|
|
|
|
|
|
Adjust for items not associated with ongoing operations: |
|
|
|
|
|
|
|
|
|
Kumtor Mine litigation and other related costs |
|
8.1 |
|
- |
|
14.2 |
|
|
- |
|
|
Gain on the sale of Greenstone Partnership |
|
- |
|
- |
|
(72.3 |
) |
|
- |
|
|
Reclamation provision revaluation expense (recovery) at sites on
care and maintenance |
|
- |
|
- |
|
(0.1 |
) |
|
43.5 |
|
|
|
|
|
|
|
|
|
|
|
Adjusted net earnings from continuing
operations |
$ |
35.7 |
$ |
82.4 |
$ |
113.9 |
|
$ |
28.1 |
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss) from continuing operations per share -
basic |
$ |
0.09 |
$ |
0.28 |
$ |
0.58 |
|
$ |
(0.05 |
) |
Net earnings (loss) from continuing operations per share -
diluted |
$ |
0.09 |
$ |
0.28 |
$ |
0.56 |
|
$ |
(0.05 |
) |
Adjusted net earnings from continuing operations per share
- basic |
$ |
0.12 |
$ |
0.28 |
$ |
0.38 |
|
$ |
0.10 |
|
Adjusted net earnings from continuing operations per share
- diluted |
$ |
0.12 |
$ |
0.28 |
$ |
0.36 |
|
$ |
0.10 |
|
|
|
|
|
|
|
|
|
|
|
Free cash flow from continuing
operations is calculated as follows:
|
|
Three months ended
September 30, |
Nine months ended
September 30, |
($millions, except as noted) |
2021 |
2020 |
2021 |
2020 |
|
|
|
|
|
|
|
|
|
|
Cash provided by operating activities from continuing
operations (1) |
$ |
62.4 |
|
$ |
151.7 |
|
$ |
209.1 |
|
$ |
188.0 |
|
|
|
|
|
|
|
|
|
|
|
Adjust for: |
|
|
|
|
|
|
|
|
|
Additions to property, plant & equipment at continuing
operations(1) |
|
(21.4 |
) |
|
(26.8 |
) |
|
(69.4 |
) |
|
(67.9 |
) |
|
|
|
|
|
|
|
|
|
|
Free cash flow from continuing operations |
$ |
41.0 |
|
$ |
124.9 |
|
$ |
139.7 |
|
$ |
120.1 |
|
|
|
|
|
|
|
|
|
|
|
Adjust for: |
|
|
|
|
|
|
|
|
|
Kumtor Mine legal and other related costs |
|
4.3 |
|
|
- |
|
|
8.9 |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
Adjusted free cash flow from continuing
operations |
$ |
45.3 |
|
$ |
124.9 |
|
$ |
148.6 |
|
$ |
120.1 |
|
|
|
|
|
|
|
|
|
|
|
(1) |
|
As presented in the condensed consolidated interim statements
of cash flows. |
|
|
|
Average realized sales price for
gold
Average realized sales price for gold at continuing
operations |
Three months ended
September 30, |
Nine months ended
September 30, |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
|
|
|
|
|
|
Gold sales reconciliation ($millions) |
|
|
|
|
Gold sales - Öksüt Mine |
66.0 |
|
97.6 |
|
142.6 |
|
112.2 |
|
|
|
|
|
|
Gold sales - Mount Milligan
Mine |
|
|
|
|
Total gold sales under Royal Gold stream(1) |
6.5 |
|
7.3 |
|
23.0 |
|
14.3 |
|
Total gold sales to third-party customers(1) |
44.5 |
|
57.0 |
|
166.7 |
|
144.6 |
|
Gold sales, net of adjustments |
51.0 |
|
64.3 |
|
189.7 |
|
158.9 |
|
Refining and treatment costs |
(0.2 |
) |
(0.2 |
) |
(0.7 |
) |
(0.6 |
) |
Total gold sales |
50.8 |
|
64.1 |
|
189.0 |
|
158.3 |
|
|
|
|
|
|
Total gold revenue - Consolidated |
116.8 |
|
161.7 |
|
331.6 |
|
270.5 |
|
|
|
|
|
|
Ounces of gold sold |
|
|
|
|
Gold ounces sold - Öksüt Mine |
37,204 |
|
51,120 |
|
79,984 |
|
59,469 |
|
Ounces sold to Royal Gold - Mount Milligan Mine(1) |
13,392 |
|
15,623 |
|
50,309 |
|
41,842 |
|
Ounces sold to third-party customers - Mount Milligan
Mine(1) |
25,125 |
|
29,194 |
|
94,152 |
|
78,329 |
|
|
|
|
|
|
Total ounces sold - Consolidated |
75,721 |
|
95,937 |
|
224,445 |
|
179,640 |
|
|
|
|
|
|
Average realized sales price for gold on a per ounce
basis |
|
|
|
|
Average realized sales price - Öksüt Mine |
1,774 |
|
1,910 |
|
1,782 |
|
1,887 |
|
|
|
|
|
|
Average realized gold price - Mount Milligan Mine - Royal Gold |
471 |
|
454 |
|
459 |
|
336 |
|
Average realized gold price - Mount Milligan Mine - Third
parties |
1,771 |
|
1,951 |
|
1,770 |
|
1,845 |
|
Average realized gold price - Mount Milligan Mine - Combined |
1,317 |
|
1,429 |
|
1,308 |
|
1,317 |
|
|
|
|
|
|
Average realized sales price for gold -
Consolidated |
1,542 |
|
1,685 |
|
1,477 |
|
1,506 |
|
|
|
|
|
|
(1) |
|
Includes both current and prior period final pricing and metal
content adjustments such as mark-to-market adjustments on
provisionally priced sales and final adjustments to originally
invoiced weights and assays. |
|
|
|
Average realized sales price for
copper - Mount Milligan Mine
Average realized sales price for copper - Mount Milligan
Mine |
Three months ended
September 30, |
Nine months ended
September 30, |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
|
|
|
|
|
|
Copper sales reconciliation ($millions) |
|
|
|
|
Total copper sales under Royal Gold stream(1) |
2.9 |
|
1.8 |
|
5.5 |
|
4.0 |
|
Total copper sales to third-party customers(1)(2) |
47.7 |
|
55.4 |
|
170.8 |
|
133.3 |
|
Copper sales, net of adjustments |
50.6 |
|
57.2 |
|
176.3 |
|
137.3 |
|
Refining and treatment costs |
(3.5 |
) |
(4.4 |
) |
(10.3 |
) |
(11.7 |
) |
Copper sales |
47.1 |
|
52.8 |
|
166.0 |
|
125.6 |
|
|
|
|
|
|
Pounds of copper sold (000s pounds) |
|
|
|
|
Pounds sold to Royal Gold(1) |
3,479 |
|
4,082 |
|
11,422 |
|
11,561 |
|
Pounds sold to third-party customers(1) |
15,033 |
|
17,644 |
|
49,411 |
|
49,941 |
|
Total pounds sold |
18,512 |
|
21,726 |
|
60,833 |
|
61,502 |
|
|
|
|
|
|
Average realized sales price for copper on a per pound
basis |
|
|
|
|
Average realized copper price - Royal Gold |
0.83 |
|
0.44 |
|
0.49 |
|
0.35 |
|
Average realized copper price - Third parties |
3.17 |
|
3.14 |
|
3.43 |
|
2.70 |
|
|
|
|
|
|
Average realized copper price - Combined |
2.55 |
|
2.43 |
|
2.73 |
|
2.04 |
|
(1) |
|
Includes both current and prior period final pricing and metal
content adjustments such as mark-to-market adjustments on
provisionally priced sales and final adjustments to originally
invoiced weights and assays. |
(2) |
|
Includes the impact of copper hedges. |
|
|
|
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 National Instrument 43-101 Standards of
Disclosure for Mineral Projects (“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-compliant 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. While Centerra owns 100% of the Kumtor Mine, the mine is no
longer under the Company’s control as a result of Kyrgyz Government
actions that took place in May 2021. Kumtor Mine’s previously
issued 2021 guidance and three-year outlook have been suspended by
Centerra.
The Mount Milligan deposit is described in a
NI 43-101-compliant 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 while
independent certified assay labs are used.
The Öksüt deposit is described in a NI
43-101-compliant 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 while
independent certified assay labs are used.
Centerra Gold Inc. |
Condensed Consolidated Interim Statements of Financial
Position |
|
|
|
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
September 30, |
|
December 31, |
|
|
|
2021 |
|
2020 |
(Expressed in thousands of United States
dollars) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets |
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
|
$ |
911,702 |
|
$ |
545,180 |
|
Amounts receivable |
|
|
|
69,265 |
|
|
66,108 |
|
Inventories |
|
|
|
214,525 |
|
|
580,587 |
|
Assets held-for-sale |
|
|
|
- |
|
|
140,005 |
|
Other current assets |
|
|
|
25,777 |
|
|
40,961 |
|
|
|
|
|
1,221,269 |
|
|
1,372,841 |
Property, plant and equipment |
|
|
|
1,108,041 |
|
|
1,686,067 |
Other non-current assets |
|
|
|
10,579 |
|
|
77,101 |
|
|
|
|
|
1,118,620 |
|
|
1,763,168 |
Total assets |
|
|
$ |
2,339,889 |
|
$ |
3,136,009 |
|
|
|
|
|
|
|
|
|
Liabilities and shareholders' equity |
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
|
|
Accounts payable and accrued liabilities |
|
|
$ |
174,637 |
|
$ |
232,704 |
|
Income taxes payable |
|
|
|
2,666 |
|
|
2,474 |
|
Liabilities held-for-sale |
|
|
|
- |
|
|
2,255 |
|
Other current liabilities |
|
|
|
16,640 |
|
|
20,395 |
|
|
|
|
|
193,943 |
|
|
257,828 |
|
|
|
|
|
|
|
|
Deferred income tax liability |
|
|
|
48,431 |
|
|
39,473 |
Provision for reclamation |
|
|
|
295,076 |
|
|
351,149 |
Other non-current liabilities |
|
|
|
19,441 |
|
|
21,541 |
|
|
|
|
|
362,948 |
|
|
412,163 |
Shareholders' equity |
|
|
|
|
|
|
|
|
Share capital |
|
|
|
982,138 |
|
|
975,122 |
|
Contributed surplus |
|
|
|
32,325 |
|
|
30,601 |
|
Accumulated other comprehensive income |
|
|
|
9,534 |
|
|
11,600 |
|
Retained earnings |
|
|
|
759,001 |
|
|
1,448,695 |
|
|
|
|
|
1,782,998 |
|
|
2,466,018 |
Total liabilities and shareholders' equity |
|
|
$ |
2,339,889 |
|
$ |
3,136,009 |
Commitments and contingencies (note 17) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes form an integral part of these condensed
consolidated interim financial statements. |
|
|
|
|
|
|
|
|
|
Centerra Gold Inc. |
|
|
|
|
|
|
|
|
|
|
|
|
Condensed Consolidated Interim Statements of Earnings
(Loss) and Comprehensive Income (Loss) |
(Unaudited) |
|
|
|
Three months ended |
|
|
Nine months ended |
|
|
|
September 30, |
|
|
September 30, |
|
|
|
2021 |
|
|
|
2020 |
|
|
2021 |
|
|
|
2020 |
|
(Expressed in thousands of United States
dollars) |
|
|
|
|
|
|
|
|
|
|
|
(except per share amounts) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
$ |
220,561 |
|
|
$ |
251,247 |
|
$ |
649,059 |
|
|
$ |
509,264 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales |
|
|
|
|
|
|
|
|
|
|
|
|
|
Production costs |
|
|
121,641 |
|
|
|
103,785 |
|
|
355,691 |
|
|
|
310,764 |
|
|
Depreciation, depletion and amortization |
|
|
30,413 |
|
|
|
30,764 |
|
|
89,461 |
|
|
|
70,771 |
|
Earnings from mine operations |
|
|
68,507 |
|
|
|
116,698 |
|
|
203,907 |
|
|
|
127,729 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exploration and development costs |
|
|
6,597 |
|
|
|
11,124 |
|
|
18,819 |
|
|
|
22,361 |
|
|
Corporate administration |
|
|
8,881 |
|
|
|
6,439 |
|
|
19,676 |
|
|
|
28,324 |
|
|
Care and maintenance expense |
|
|
7,638 |
|
|
|
7,870 |
|
|
20,472 |
|
|
|
21,732 |
|
|
Reclamation (recovery) expense |
|
|
(871 |
) |
|
|
533 |
|
|
(913 |
) |
|
|
44,038 |
|
|
Other operating expenses |
|
|
2,627 |
|
|
|
2,932 |
|
|
10,392 |
|
|
|
8,866 |
|
Earnings from operations |
|
|
43,635 |
|
|
|
87,800 |
|
|
135,461 |
|
|
|
2,408 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gain on sale of Greenstone Partnership |
|
|
- |
|
|
|
- |
|
|
(72,274 |
) |
|
|
- |
|
|
Other non-operating expenses |
|
|
6,975 |
|
|
|
101 |
|
|
14,067 |
|
|
|
4,425 |
|
|
Finance costs |
|
|
694 |
|
|
|
1,754 |
|
|
4,001 |
|
|
|
8,618 |
|
Earnings (loss) before income tax |
|
|
35,966 |
|
|
|
85,945 |
|
|
189,667 |
|
|
|
(10,635 |
) |
|
Income tax expense |
|
|
8,383 |
|
|
|
3,548 |
|
|
17,598 |
|
|
|
4,804 |
|
Net earnings (loss) from continuing
operations |
|
|
27,583 |
|
|
|
82,397 |
|
|
172,069 |
|
|
|
(15,439 |
) |
|
Net earnings (loss) from discontinued operations |
|
|
- |
|
|
|
123,346 |
|
|
(828,717 |
) |
|
|
328,766 |
|
Net earnings (loss) |
|
$ |
27,583 |
|
|
$ |
205,743 |
|
$ |
(656,648 |
) |
|
$ |
313,327 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Comprehensive Income (Loss) |
|
|
|
|
|
|
|
|
|
|
|
|
Items that may be subsequently reclassified to
earnings: |
|
|
|
|
|
|
|
|
|
|
|
Net gain (loss) on translation of foreign operation |
$ |
- |
|
|
$ |
732 |
|
$ |
31 |
|
|
$ |
(875 |
) |
|
Net unrealized gain (loss) on derivative instruments |
|
|
3,799 |
|
|
|
4,905 |
|
|
(2,097 |
) |
|
|
3,173 |
|
Other comprehensive income (loss) |
|
|
3,799 |
|
|
|
5,637 |
|
|
(2,066 |
) |
|
|
2,298 |
|
Total comprehensive income (loss) |
|
$ |
31,382 |
|
|
$ |
211,379 |
|
$ |
(658,714 |
) |
|
$ |
315,625 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per share - continuing
operations: |
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.09 |
|
|
$ |
0.28 |
|
$ |
0.58 |
|
|
$ |
(0.05 |
) |
|
Diluted |
|
$ |
0.09 |
|
|
$ |
0.28 |
|
$ |
0.56 |
|
|
$ |
(0.05 |
) |
Earnings (loss) per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.09 |
|
|
$ |
0.70 |
|
$ |
(2.21 |
) |
|
$ |
1.06 |
|
|
Diluted |
|
$ |
0.09 |
|
|
$ |
0.68 |
|
$ |
(2.23 |
) |
|
$ |
1.05 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash dividends declared per common share (C$) |
$ |
0.07 |
|
$ |
0.05 |
$ |
0.17 |
|
$ |
0.13 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes form an integral part of these condensed
consolidated interim financial statements. |
|
Centerra Gold Inc. |
|
|
|
|
Condensed Consolidated Interim Statements of Cash
Flows |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
Nine months ended |
|
|
|
September 30, |
|
September 30, |
|
|
|
2021 |
|
|
|
2020 |
|
|
|
2021 |
|
|
|
2020 |
|
(Expressed in thousands of United States
dollars) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating activities |
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss) from continuing operations |
|
$ |
27,583 |
|
|
$ |
82,397 |
|
|
$ |
172,069 |
|
|
$ |
(15,439 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation, depletion and amortization |
|
|
31,873 |
|
|
|
32,426 |
|
|
|
93,941 |
|
|
|
75,643 |
|
|
Reclamation (recovery) expense |
|
|
(871 |
) |
|
|
414 |
|
|
|
(913 |
) |
|
|
43,919 |
|
|
Share-based compensation |
|
|
3,560 |
|
|
|
926 |
|
|
|
918 |
|
|
|
11,806 |
|
|
Finance costs |
|
|
694 |
|
|
|
3,576 |
|
|
|
4,001 |
|
|
|
10,440 |
|
|
Inventory impairment |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
13,588 |
|
|
Gain on sale of Greenstone Partnership |
|
|
- |
|
|
|
- |
|
|
|
(72,274 |
) |
|
|
- |
|
|
Income tax expense |
|
|
8,383 |
|
|
|
3,548 |
|
|
|
17,598 |
|
|
|
4,804 |
|
|
Income taxes (paid) refunded |
|
|
(4,829 |
) |
|
|
10,798 |
|
|
|
(7,585 |
) |
|
|
20,647 |
|
|
Other |
|
|
452 |
|
|
|
(682 |
) |
|
|
2,747 |
|
|
|
(2,182 |
) |
|
|
|
66,845 |
|
|
|
133,403 |
|
|
|
210,502 |
|
|
|
163,226 |
|
Changes in working capital |
|
|
(4,477 |
) |
|
|
18,355 |
|
|
|
(1,406 |
) |
|
|
24,820 |
|
Cash provided by operating activities from
continuing operations |
|
|
62,368 |
|
|
|
151,758 |
|
|
|
209,096 |
|
|
|
188,046 |
|
|
Cash provided by operating activities from
discontinued operations |
|
|
- |
|
|
|
207,075 |
|
|
|
143,853 |
|
|
|
560,003 |
|
Cash provided by operating activities |
|
62,368 |
|
|
|
358,833 |
|
|
|
352,949 |
|
|
|
748,049 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investing activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
Property, plant and equipment additions |
|
|
(21,416 |
) |
|
|
(26,828 |
) |
|
|
(69,383 |
) |
|
|
(67,910 |
) |
|
Proceeds from sale of Greenstone Partnership |
|
|
- |
|
|
|
- |
|
|
|
210,291 |
|
|
|
- |
|
|
Proceeds from disposition of marketable securities |
|
|
- |
|
|
|
2,902 |
|
|
|
- |
|
|
|
2,902 |
|
|
Proceeds from disposition of fixed assets |
|
|
1,154 |
|
|
|
29 |
|
|
|
1,889 |
|
|
|
317 |
|
|
Decrease in restricted cash |
|
|
2 |
|
|
|
432 |
|
|
|
2,660 |
|
|
|
26,422 |
|
|
Increase in other assets |
|
|
1 |
|
|
|
(1,664 |
) |
|
|
187 |
|
|
|
(526 |
) |
Cash (used in) provided by investing
activities
from continuing operations |
|
|
(20,259 |
) |
|
|
(25,129 |
) |
|
|
145,644 |
|
|
|
(38,795 |
) |
|
Cash used in investing activities from
discontinued operations |
|
|
- |
|
|
|
(50,955 |
) |
|
|
(96,081 |
) |
|
|
(159,205 |
) |
Cash (used in) provided by investing
activities |
|
|
(20,259 |
) |
|
|
(76,084 |
) |
|
|
49,563 |
|
|
|
(198,000 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing activities |
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends paid |
|
|
(12,166 |
) |
|
|
(11,277 |
) |
|
|
(33,046 |
) |
|
|
(28,269 |
) |
|
Debt drawdown |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
250,000 |
|
|
Debt repayment |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(327,472 |
) |
|
Payment of borrowing costs |
|
|
(488 |
) |
|
|
(1,008 |
) |
|
|
(2,093 |
) |
|
|
(5,862 |
) |
|
Repayment of lease obligations |
|
|
(1,555 |
) |
|
|
(1,284 |
) |
|
|
(4,891 |
) |
|
|
(4,436 |
) |
|
Proceeds from common shares issued |
|
|
927 |
|
|
|
2,794 |
|
|
|
4,040 |
|
|
|
7,460 |
|
Cash used in financing activities |
|
|
(13,282 |
) |
|
|
(10,775 |
) |
|
|
(35,990 |
) |
|
|
(108,579 |
) |
Increase in cash during the period |
|
|
28,827 |
|
|
|
271,974 |
|
|
|
366,522 |
|
|
|
441,470 |
|
Cash at beginning of the period |
|
|
882,875 |
|
|
|
212,213 |
|
|
|
545,180 |
|
|
|
42,717 |
|
Cash at end of the period |
|
$ |
911,702 |
|
|
$ |
484,187 |
|
|
$ |
911,702 |
|
|
$ |
484,187 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes form an integral part of these condensed
consolidated interim financial statements. |
|
The interim financial statements, and notes
thereto, for the three and nine months ended September 30, 2021 and
the MD&A for the three and nine months ended September 30,
2021, have been filed on SEDAR at www.sedar.com,
on EDGAR at www.sec.gov/edgar, and are
available at the Company’s website at: www.centerragold.com.
Supplementary Information: Third Quarter
2021 Exploration Update
Mount Milligan
Mine
The 2021 brownfield exploration drilling program
at the Mount Milligan Mine comprises 70 drill holes for a planned
total of approximately 36,000 metres of diamond drilling. Primary
targets include zones below the current ultimate open-pit boundary
(i.e., MBX Deep and WBX Deep) and on the eastern margin of the
open-pit (i.e., Great Eastern Fault) where positive drilling
results were returned in 2019 and 2020.
Mount Milligan Brownfield Drilling and
Exploration
Exploration and resource expansion drilling
continued in the third quarter of 2021 with 22 diamond drill holes
completed, totalling 11,811 metres. Three drill holes, totalling
2,101 metres, were completed in the MBX and WBX Deep zones, an
exploration target below the current ultimate open-pit boundary in
the central portion of the deposit. Six drill holes, totalling
4,420 metres, were completed in the DWBX zone planned for resource
expansion on the western pit wall. Four drill holes, totalling
1,735 metres, were completed in the Great Eastern Fault (“GEF”)
zone, testing for both shallow mineralization associated with the
GEF, and deeper porphyry mineralization associated with the Great
Eastern stock. Five drill holes were completed in the South
Boundary zone, totalling 1,601 metres, targeting high gold-low
copper mineralization, west of the ultimate open-pit boundary. Four
drill holes were completed in the Rainbow Extension zone, totalling
1,954 metres, for resource expansion potential south of the
ultimate open-pit boundary.
During the third quarter of 2021, assay results
were returned for 23 drill holes, including results from nine holes
drilled in the second quarter and 14 holes drilled in the third
quarter. These include potential significant mineralization from
below the ultimate open-pit boundary in the MBX Deep zone, along
the eastern margin of the open-pit in the GEF zone, west of the
open-pit in the South Boundary zone, and on the southern margin of
the open-pit in the Rainbow Extension zone.
Selected significant intersections are reported
below:
MBX Deep Zone (central portion of the
open-pit)
21-1313 |
302.3 metres @ 0.40 g/t Gold (“Au”), 0.27% Copper (“Cu”) from 12.7
metres
including 11.5
metres @ 1.02 g/t Au, 0.38% Cu from 275.5 metres
21.0 metres @ 0.62 g/t Au, 0.02% Cu from 344.0 metres |
GEF Shallow and Porphyry Stock Zones (eastern
margin of the open-pit)
21-1314
|
107.0 metres @ 0.30 g/t Au, 0.22% Cu from 262.0 metres
59.9 metres @ 0.23 g/t Au, 0.14% Cu from 375.1 metres
119.0 metres @ 0.46 g/t Au, 0.37% Cu from 490.0 metres |
21-1316 |
78.0 metres @ 0.45 g/t Au, 0.31% Cu from 24.0 metres
68.0 metres @ 0.09 g/t Au, 0.16% Cu from 469.0 metres |
21-1318 |
40.0 metres @ 0.30 g/t Au, 0.43% Cu from 31.0 metres
45.0 metres @ 0.18 g/t Au, 0.33% Cu from 280.0 metres |
21-1322 |
19.4 metres @ 1.02 g/t Au, 0.11% Cu from 183.0 metres
63.2 metres @ 0.15 g/t Au, 0.19% Cu from 354.0 metres |
21-1325 |
32.4 metres @ 0.17 g/t Au, 0.18% Cu from 64.6 metres
32.4 metres @ 0.25 g/t Au, 0.27% Cu from 122.0 metres
57.0 metres @ 0.16 g/t Au, 0.16% Cu from 277.0 metres |
South Boundary Zone (west of the
open-pit)
21-1327 |
21.4 metres @ 0.60 g/t Au, 0.02% Cu from 72.0 metres
46.0 metres @ 1.25 g/t Au, 0.03% Cu from 107.0 metres
19.7 metres @ 2.00 g/t Au, 0.02% Cu from 234.1 metres |
21-1328 |
31.1 metres @ 0.43 g/t Au, 0.02% Cu from 19.0 metres
33.0 metres @ 0.30 g/t Au, 0.03% Cu from 88.0 metres |
21-1330 |
21.3 metres @ 1.29 g/t Au, 0.04% Cu from 60.3 metres
56.5 metres @ 0.43 g/t Au, 0.01% Cu from 121.5 metres |
Rainbow Extension Zone (southern margin of the
open-pit)
21-1320 |
121.6 metres @ at 0.12 g/t Au, 0.11% Cu from 185.7 metres |
21-1321 |
42.0 metres @ at 0.24 g/t Au, 0.17% Cu from 282.0 metres |
21-1323 |
32.0 metres @ at 0.25 g/t Au, 0.14% Cu from 207.0 metres |
21-1326 |
63.0 metres @ at 0.30 g/t Au, 0.12% Cu from 212.0 metres |
Assays returned from the MBX Deep zone
throughout the third quarter show wide intercepts of potentially
significant mineralization below the ultimate open-pit boundary.
Porphyry-style mineralization is associated with potassic altered
monzonite porphyry and footwall latite-andesite units. Lithologies
are variably crosscut by early, transitional, and late-stage veins.
To date, the tested dimensions of the MBX Deep zone are
approximately 200 metres (north-northeast to south-southwest) by
140 metres (east to west) with an average width of 110 metres, for
significant intervals, and potential to expand to the south and to
the east.
Drilling in the GEF zone throughout the third
quarter continued to define two targets: a shallow target
associated with the GEF and an underlying target associated with
the recently discovered potassic-altered monzonite porphyry stock
(i.e., the Great Eastern stock). To date, the tested dimensions of
the GEF shallow zone are approximately 400 metres (north-northwest
to south-southeast) by 230 metres (east to west) with an average
width of 25 metres, for significant intervals. Assay results
returned from the Great Eastern stock zone show wide intercepts of
potential significant mineralization in the hanging wall and
footwall margins of the stock and surrounding potassic-altered
volcanic-volcaniclastic units. The highest grade intervals are
associated with zones of quartz stockwork within the stock and in
the footwall margins. To date, the east-west dimensions of the
Great Eastern stock defined by 2021 drilling are approximately 300
metres with no surrounding drill holes to the north or to the
south.
Assays returned from the South Boundary zone,
throughout the third quarter, showed high gold-low copper-style
mineralization. Mineralization is hosted in pyrite stringers and
semi-massive pyrite ± magnetite veins, concentrated at the margins
of narrow monzonite porphyry dykes. To date, the tested dimensions
of the South Boundary zone are approximately 400 metres (northwest
to southeast) by 150 metres (east to west) with an average width of
30 metres, for significant intervals.
The above mineralized intercepts were
calculated using a cut-off grade of 0.1 g/t Au or 0.1% Cu and a
maximum internal dilution interval of 4.0 metres. 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/7c29d6c2-5f7e-4117-9e23-a12eae1bccab
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 SEDAR at www.sedar.com and are
available on the Company’s website at www.centerragold.com.
Öksüt Mine
During the third quarter, geotechnical, resource
definition, and exploration diamond drilling continued at the Öksüt
Mine with five drill rigs. The program was mainly focused on
expanding the known gold resources at the Keltepe and Güneytepe
deposits, developing the Keltepe North and Keltepe Northwest oxide
gold satellite resources, and targeting geochemical and geophysical
anomalies at the Büyüktepe, Yelibelen, and Boztepe prospects.
During the quarter, 68 drill holes were
completed, including 13 geotechnical, 38 resource infill/step-out,
and 17 exploration holes, totalling 11,501 metres. Geotechnical
drill holes, designed to obtain slope stability measurements for
expanding open-pit boundaries, were also treated as resource
infill/step-out holes, and were assayed. Exploration drill holes
have returned anomalous results from Yelibelen and Büyüktepe and
these prospects will be further tested in the fourth quarter.
All assay results from holes ODD0501 to ODD0568
were received, excluding the results from ten exploration drill
holes as the analysis of the resource infill drilling was given
priority.
Selected significant intersections are reported
below:
Güneytepe (resource upgrade and expansion
oxide gold)
ODD0502 |
55.9 metres @ 0.5 g/t Au from 1.5 metres
including
5.5 metres @ 1.1 g/t Au from
36.5 metres |
ODD0505 |
16.0 metres @ 0.92 g/t Au from the surface
including
9.0 metres @ 1.23 g/t Au from the surface |
ODD0506 |
70.6 metres @ 1.51 g/t Au from the surface
including
26.9 metres @ 2.96 g/t Au from the
surface |
ODD0510 |
70.0 metres @ 1.53 g/t Au from the surface
including
30.4 metres @ 2.85 g/t Au from 17.4 metres |
Keltepe (resource expansion oxide
gold)
ODD0507 |
24.4 metres @ 0.44 g/t Au from 2.6 metres |
ODD0514 |
19.2 metres @ 0.65 g/t Au from
143.8 metres |
ODD0522 |
32.4 metres @ 0.63 g/t Au from 119.0 metres |
Keltepe North and Keltepe Northwest
(resource expansion oxide gold)
ODD0524 |
29.2 metres @ 0.42 g/t Au from
65.8 metres |
ODD0527 |
23.0 metres @ 0.47 g/t Au from 4.0 metres |
ODD0534 |
34.0 metres @ 0.53 g/t Au from 21.6 metres |
ODD0556 |
37.3 metres @ 0.71 g/t Au from 4.5 metres
including
13.7 metres @ 1.13 g/t Au from 27.0 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 5.0 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/7c29d6c2-5f7e-4117-9e23-a12eae1bccab
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 Mine have been
filed on SEDAR at www.sedar.com and
are available on the Company’s website at www.centerragold.com.
Other Projects
Turkey
Sivritepe Project
The Sivritepe Project is located in the Amasya
Province, approximately 265 km north-northeast of the Öksüt Mine.
The 2021 drilling program continued with two diamond drill rigs
during the third quarter at two prospects, Sivritepe East and
Sivritepe West. Twenty-seven drill holes were completed,
totalling 6,807 metres. Potentially significant gold
mineralization was intersected at both prospects. In Sivritepe
East, mineralization was detected as a number of northward dipping
zones of oxidized higher grade gold mineralization near to the
surface. In Sivritepe West, the drill holes targeted a greater than
1 km-long, east-west trending gold-in-soil anomaly that follows the
contact between magmatic-hydrothermal breccias and intrusive rocks.
Most drill holes drilled to date have returned mineralized
intercepts. Drill hole results returned from Sivritepe East and
Sivritepe West have indicated that the mineralization is still open
to the east and west at both prospects.
Selected significant intersections are reported
below:
Sivritepe East
STE0019 |
53.0 metres @ 0.31 g/t Au from the surface (oxide
gold) |
STE0021 |
30.1 metres @ 1.12 g/t Au from 55.9 metres
including
14.1 metres @ 2.08 g/t Au from 57.6 metres
(partially oxide gold) |
STE0026 |
33.0 metres @ 6.93 g/t Au from 98.0 metres
including 15.4
metres @ 14.53 g/t Au from 104.6 metres (oxide gold) |
Sivritepe West
STW0015 |
55.1 metres @ 0.70 g/t Au from 68.0 metres
including 14.0
metres @ 1.42 g/t Au from 75.0 metres (oxide gold) |
STW0016 |
31.0 metres @ 1.07 g/t Au from the surface
including
7.0 metres @ 2.32 g/t Au from 9 metres (oxide
gold) |
STW0018 |
73.0 metres @ 0.60 g/t Au from the surface
including 10.0
metres @ 1.05 g/t Au from the surface, and
including 13.0
metres @ 1.16 g/t Au from 17.0 metres (oxide gold) |
The above mineralized intercepts were
calculated using a cut-off grade of 0.1 g/t Au and a maximum
internal dilution interval of 5.0 metres. Significant assay
intervals reported represent apparent widths due to the undefined
geometry of mineralization in this zone. Drill collar
locations and associated graphics are available at the following
link:
http://ml.globenewswire.com/Resource/Download/7c29d6c2-5f7e-4117-9e23-a12eae1bccab
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 Sivritepe Project have
been filed on SEDAR at www.sedar.com and are
available on the Company’s website at www.centerragold.com.
BC Generative/New
Projects
2XFred Project
The Two Times Fred (“2XFred”) project, located
in the Nechako Plateau of Central British Columbia, is an earn-in
project under option from Kootenay Silver Inc.
In the third quarter of 2021, remaining assay
results were returned from the 2021 Phase 1 exploration drilling
program; this included four drill holes, three of which were
drilled in the northern part of the project area. Drilling in Phase
1 tested two sections within a low-sulfidation epithermal gold
system, an interpreted mid-zone and a shallow zone separated by 1.7
kilometres along strike direction.
Several holes intersected multiple zones of
elevated, but subeconomic gold and silver values associated with
anomalous antimony, arsenic, and mercury. These intervals include
quartz veins up to 20 cm wide with banded, colloform, and minor
bladed carbonate texture. Mineralization includes thin bands of
sooty sulfide in veins and quartz-cemented breccia, or within
silicified fault breccia with quartz vein fragments. These veins
underlie a near surface pseudo-sinter environment.
The 2021 Phase 2 drilling program began late in
the third quarter. The program is expected to comprise 2,000 to
3,000 metres of drilling in up to 11 drill holes. At the end of the
third quarter, three drill holes totalling 861 metres, had been
completed. Drilling tested for veins in the Borrow Pit zone in the
southern part of the project area, and the Saki vein zone, in the
mid part of the project area, where kaolinite clay alteration was
identified at surface.
Additional exploration activities at 2XFred in
the third quarter included a controlled-source audio-frequency
magnetotellurics survey. A total of 27 line-kilometres were
completed in six new lines and four existing line extensions.
Qualified Person & QA/QC –
Exploration
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 while independent certified
assay labs are used. The Mount Milligan deposit is described in the
2020 AIF 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, with respect to 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
and Exploration Manager at the Company’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 while independent certified
assay labs are used. The Öksüt deposit is described in the
Company’s 2020 AIF 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.
Exploration information, and other related
scientific and technical information in this document, with respect
to 2XFred and other BC generative projects, were prepared in
accordance with the standards of NI 43-101 and were prepared,
reviewed, verified, and compiled by C. Paul Jago, Member of
Engineers and Geoscientists British Columbia and Exploration
Manager - Generative North America, 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 while independent certified
assay labs are used.
For more
information:
John W. Pearson
Vice President, Investor Relations
Centerra Gold Inc.
(416) 204-1953
john.pearson@centerragold.com
Toby Caron
Treasurer and Director, Investor Relations
Centerra Gold Inc.
(416) 204-1153
toby.caron@centerragold.com
Additional information on Centerra Gold
is available on the Company’s website at
www.centerragold.com and on SEDAR at www.sedar.com and on EDGAR at www.sec.gov/edgar.
A PDF accompanying this announcement is available
at: http://ml.globenewswire.com/Resource/Download/7b886824-2b75-4df6-969b-bc7d3b3342a5
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