Centerra Gold Inc. (“Centerra” or the “Company”) (TSX: CG and NYSE:
CGAU) today reported its fourth quarter and full-year 2021 results.
Significant financial and operating results of
the fourth quarter and year ended December 31, 2021 included:
- Net loss for the
year of $381.8 million or $1.29 per common share (basic), including
a $926.4 million loss on the change of control of the Kumtor Mine,
and an impairment reversal at the Mount Milligan Mine of $117.3
million (net of tax).
- Adjusted
net earningsNG for the year of $233.6
million or $0.79 per common share (basic), inclusive of earnings
from operations from the Kumtor Mine prior to the loss of control
event.
- Net
earnings from continuing operations and adjusted net
earningsNG from continuing
operations for the year of $446.9 million or $1.51 per
common share (basic) and $149.3 million or $0.50 per common share
(basic), respectively.
- Net
earnings and
adjusted net
earningsNG for the quarter of
$274.9 million or $0.93 per common share (basic) and $35.4 million
or $0.12 per common share (basic), respectively.
- Cash provided by operating
activities from continuing operation for the quarter of
$61.8 million.
- Free cash
flowNG from continuing
operation for the quarter of $38.7 million.
- Gold
production from continuing operations for the quarter of
91,197 ounces.
- Copper
production from continuing operations for the quarter of
17.0 million pounds.
- Gold
production costs from continuing operations for the
quarter of $550 per ounce.
- Copper
production costs from continuing operations for the
quarter of $1.79 per pound.
- All-in
sustaining costs on a by-product basisNG
from continuing operations for the quarter of $591
per ounce. All-in costs on a by-product
basisNG from continuing
operations for the quarter of $732 per ounce.
- Strong
balance sheet with cash position at the year-end of $947.2
million.
- Centerra
remains engaged in discussions and negotiations with
representatives of the Government of the Kyrgyz Republic
to resolve the outstanding disputes related to Kumtor Mine and the
Company continues to pursue legal proceedings in several
jurisdictions.
- Quarterly Dividend
declared of CAD$0.07 per common share.
On February 22, 2022, and subsequent to the year
ended December 31, 2021, the Company announced that it has entered
into an agreement to acquire Gemfield Resources LLC, owner of the
Goldfield Project from Waterton Nevada Splitter, LLC. Total
consideration consists of approximately $175 million in cash at
closing and a $31.5 million deferred milestone payment payable the
earlier of 18 months following the acquisition date and a
construction decision with respect to the Goldfield Project among
other things.
The Company’s 2021 full-year results on a continuing basis, and
previously disclosed full-year 2022 guidance are summarized
below:
(On continuing operations basis)(1) |
|
2021 Guidance |
2021 Full-Year Results |
2022 Guidance |
Production |
|
|
|
|
Total gold production |
(Koz) |
270 - 310 |
308 |
400 - 450 |
Total copper production |
(Mlb) |
70 - 80 |
73 |
70 - 80 |
Costs |
|
|
|
|
Gold production costs |
($/oz) |
600 - 650 |
604 |
500 - 550 |
All-in sustaining costs on a by-product basisNG |
($/oz) |
700 - 750 |
649 |
600 - 650 |
All-in costs on a by-product basisNG |
($/oz) |
850 - 900 |
785 |
700 - 750 |
All-in sustaining costs on a co-product basisNG |
($/oz) |
900 - 950 |
891 |
750 - 800 |
Copper production costs |
($/lb) |
1.45 - 1.60 |
1.51 |
1.70 - 1.85 |
All-in sustaining costs on a co-product basisNG |
($/lb) |
2.10 - 2.25 |
1.94 |
2.40 - 2.55 |
Cash Flows(2) |
|
|
|
|
Cash provided by operating activities |
($M) |
— |
270.9 |
300 - 350 |
Free cash flowNG |
($M) |
— |
178.4 |
200 - 250 |
(1) For the discussion of significant differences
in the forward-looking and historical non-GAAP measures, refer to
the “Outlook” section(2) Cash provided by operating activities from
discontinued operations and net cash flow from discontinued
operations for the year were $143.9 million and $47.8 million,
respectively.
Commentary
Scott Perry, President and Chief Executive
Officer of Centerra stated, “As always, safety remains our top
priority, and we are pleased that in its first full year of
operation, the Öksüt Mine achieved two million hours of work
without a lost time injury. While we experienced some setback in
our safety journey at the Mount Milligan Mine, we put a strategy in
place to improve the current performance. Additionally, we continue
to maintain rigorous health protocols at all of our operations to
help prevent the spread of COVID-19.”
“The Mount Milligan Mine and Öksüt Mine paved
the way for our strong operating performance in 2021. Record
performance at the Mount Milligan Mine and an impressive first full
calendar year of operations at the Öksüt Mine, enabled us to
achieve the upper end of our gold production guidance, producing
more than 308,141 ounces in the year, at gold production costs of
$604 per ounce and all-in sustaining costs on a by-product basisNG
of $649 per ounce. Gold production of 196,438 ounces at Mount
Milligan was at the upper end of its 2021 gold production guidance,
as the mine achieved the highest throughput since it started
operations in 2014. Mount Milligan achieved this record year while
maintaining a low cost operation with gold production costs and
all-in-sustaining cost on a by-product basisNG of $683 and $508 per
ounce sold, respectively. In its first full year of operations, the
Öksüt Mine favourably outperformed both its gold production and
all-in-sustaining cost on a by-product basisNG guidance, achieving
111,703 ounces of gold production at $668 per ounce, respectively.
The Öksüt Mine’s gold production costs of $457 per ounce sold were
at the low end of the 2021 guidance range.”
“Financially, the Company generated cash
provided by operating activities of $271 million, including a
record $269 million generated at the Mount Milligan Mine, in
addition to $132 million generated at the Öksüt Mine. The Company
ended the year with a cash balance of $947 million.”
“In 2022, we expect to see continued strong
operational performance at the Mount Milligan and Öksüt Mines, with
a significant increase in gold production and cash generation. We
anticipate consolidated gold production in 2022 to range from
400,000 to 450,000 ounces compared to 308,141 ounces of gold
production in 2021. We expect to achieve this higher production
level, while maintaining our low cost model with 2022 gold
production costs and all-in sustaining costs on a by-product
basisNG expected to be $500 to $550 per ounce and $600 to $650 per
ounce, respectively, in line with 2021. Cash provided by operating
activities and free cash flowNG in 2022 are expected to be between
$300 to $350 million and $200 to $250 million, respectively, an
increase from the $271 million and $178 million in 2021,
respectively.”
“Subsequent to year-end, we announced the
acquisition of Gemfield Resources which will assist in replenishing
Centerra’s pipeline by adding the Goldfield Project to our
portfolio. Host to a land package with an upside potential for
expansion, the Goldfield Project is positioned to deliver another
source of meaningful cash flow to Centerra in the future. We
continue to invest in greenfield and brownfield exploration, with
increased drilling programs at the Mount Milligan and Öksüt Mines,
where we have seen promising results. This is reflected in the
increased mineral resources of contained ounces of gold and pounds
of copper at the Mount Milligan Mine as at December 31, 2021.”
“Based on the Company’s continued strong
financial position, operating results and cash flows, the Board
approved a quarterly dividend of CAD0.07 per share on February 24,
2022 to shareholders of record on March 11, 2022.”
“We have a well-established track record of
delivering results and outperforming gold production guidance,
which speaks to the quality of our assets and gives us confidence
in our outlook at the core operations. In such regard, 2022 will be
an exciting year for Centerra and we expect to see continued strong
operational performance at the Mount Milligan and Öksüt Mines, with
increased gold production levels and meaningful generation of cash
provided by operating activities and free cash flowNG.”
Exploration Update
Exploration activities in the fourth 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
continuing operations for the year and for the quarter were $37.4
million and $9.2 million, respectively. The activities were
focused on expanded drilling programs at the Mount Milligan Mine
and the Öksüt Mine, as well as at the Sivritepe Project, which is a
greenfield exploration property located in north-eastern
Turkey.
In the fourth quarter of 2021, exploration
drilling (2,853 metres in four drill holes) and resource expansion
drilling (12,592 metres in 18 drill holes) continued at the Mount
Milligan Mine. Following previous successful in-pit and near-pit
exploration drilling programs, the resource expansion drilling was
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 potential for additional resources to
exist in these areas and assays obtained throughout the fourth
quarter of 2021 returned multiple intersections of potentially
economic gold and copper porphyry mineralization outside of the
current ultimate open-pit boundary. The Company announced updated
reserves and resources for the Mount Milligan Mine as at December
31, 2021 which showed an increase in mineral resources of contained
ounces of gold and pounds of copper. The results from the 2021
drilling program will be used in an updated resource model to
support a new National Instrument 43-101 Standards of Disclosure
for Mineral Projects technical report for the Mount Milligan Mine,
planned to be released in the second quarter of 2022, and a new
life-of-mine plan.
In 2022, drilling at the Mount Milligan Mine
will continue to target gold and copper porphyry mineralization
below and adjacent to the current ultimate open-pit boundary, as
well as continue to test targets with potential for shallower
mineralization peripheral to the current pits.
At the Öksüt Mine, exploration activities
comprised resource expansion drilling (7,399 metres in 35 drill
holes) and exploration drilling (5,413 metres in 20 drill holes).
Drilling activities were undertaken 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 in
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. In addition,
a new zone of oxide gold mineralization (Keltepe North-Northwest)
was discovered just to the east of the Keltepe North and Keltepe
Northwest deposits.
In 2022, drilling at the Öksüt Mine will
continue to target potential expansion of oxide gold mineralization
at the Keltepe North, Keltepe Northwest, and Keltepe
North-Northwest deposits and focus on new oxide gold mineralization
at targets peripheral to the known deposits.
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: https://ml.globenewswire.com/media/63702a77-3ee8-4dac-b4c3-ccff21f3d4a7/document/?v=02242022094200
About Centerra
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 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 fourth
quarter conference call on Friday, February 25, 2022 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)
757-5680. International participants may access the call at +1
(416) 981-9004. Results summary presentation slides are available
on Centerra’s website at www.centerragold.com. Alternatively, an
audio feed webcast will be broadcast live by Notified (formerly
Intrado) and can be accessed live at Centerra’s website at
www.centerragold.com. A recording of the call will be available on
Centerra’s website at www.centerragold.com shortly after the call
and via telephone until midnight Eastern Standard Time on March 4,
2022 by calling +1 (416) 626-4100 or 1 (800) 558-5253 and
using passcode 21989633.
For more information:
Toby CaronTreasurer and Director, Investor Relations (416)
204-1694toby.caron@centerragold.com
Shae FrosstManager, Investor Relations (416)
204-2159shae.frosst@centerragold.com
Additional information on Centerra is available on the
Company’s website at www.centerragold.com and at SEDAR at
www.sedar.com and EDGAR at www.sec.gov/edgar.
Management’s Discussion and
Analysis
For the Years Ended December 31, 2021
and 2020
This Management’s Discussion and Analysis
(“MD&A”) has been prepared as of February 24, 2022 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 twelve month periods ended December 31, 2021 in
comparison with the corresponding periods ended December 31, 2020.
This discussion should be read in conjunction with the Company’s
audited financial statements and the notes thereto for the year
ended December 31, 2021 prepared in accordance with International
Financial Reporting Standards (“IFRS”). The Company’s audited
financial statements and the notes thereto for the year ended
December 31, 2021, are available at www.centerragold.com and on the
System for Electronic Document Analysis and Retrieval (“SEDAR”) at
www.sedar.com and EDGAR at www.sec.gov/edgar. In addition, this
discussion contains forward-looking information regarding
Centerra’s business and operations. Such forward-looking statements
involve risks, uncertainties and other factors that could cause
actual results to differ materially from those expressed or implied
by such forward-looking statements. See “Caution Regarding
Forward-Looking Information” below. All dollar amounts are
expressed in United States dollars (“USD”), except as otherwise
indicated. All references in this document denoted with NG indicate
a “specified financial measure” within the meaning of National
Instrument 52-112 Non-GAAP and Other Financial Measures Disclosure
of the Canadian Securities Administrators. None of these measures
is a standardized financial measure under IFRS and these measures
might not be comparable to similar financial measures disclosed by
other issuers. See section “Non-GAAP and Other Financial Measures”
below for a discussion of the specified financial measures used in
this document and a reconciliation to the most directly comparable
IFRS measure.
Caution Regarding Forward-Looking
Information
Information contained in this document 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 2022 Outlook
and 2022 Guidance, including outlook on production (including the
timing thereof), cost, free cash flow and capital spend in 2022,
and the assumptions used in preparing such guidance and outlook,
including those discussed under “2022 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 and the potential terms
and conditions (including legal and regulatory requirements and
approvals in connection therewith) of any such resolution; possible
impacts to its operations relating to COVID-19; the Company’s
expectation regarding having sufficient water at Mount Milligan 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; expectations in respect of
the acquisition of Gemfield Resources LLC, owner of the Goldfield
District Project (the “Goldfield Project”), including the
completion and the anticipated benefits and strategic rationale of
the transaction and future prospects in respect of the Goldfield
Project; the Company’s expectations of adequate liquidity and
capital resources for 2022; 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, the USA 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 and any negotiations or resolution between Centerra
and the Kyrgyz Republic and the potential terms and conditions
(including legal and regulatory requirements and approvals in
connection therewith) of any such resolution; 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 CJSC (“KGC”) or the
prolongation of such external management, including risks that
the external manager materially damages the Kumtor Mine’s
operations; the inability of the external management of KGC to
obtain equipment, spare parts, consumables or other supplies; the
Kyrgyz Republic Government taking further steps to nationalize or
expropriate the Kumtor Mine, and/or utilizing the purported
environmental and tax claims being asserted against KGC to strip
KGC of its assets; 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; 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; completion of the acquisition of the
Goldfield Project in accordance with, and on the timeline
contemplated by, the terms and conditions of the relevant
agreements in respect thereof, management’s assessment of the
effects of the successful completion of the proposed acquisition of
the Goldfield Project and the making of a determination to proceed
with the development of the Goldfield Project on terms acceptable
to Centerra; (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; changes to tax regimes; the
Company’s ability to obtain future financing; the impact of global
financial conditions; the impact of currency fluctuations; the
effect of market conditions on the Company’s short-term
investments; the Company’s ability to make payments, including any
payments of principal and interest on the Company’s debt
facilities, which 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 integrity of tailings storage facilities and the
management thereof, including as to stability, compliance with
laws, regulations, licenses and permits, controlling seepages and
storage of water where applicable; the risk of having sufficient
water to continue operations at the Mount Milligan Mine and achieve
expected mill throughput; changes to, or delays in, transportation
routes, including cessation or disruption in rail and shipping
networks whether caused by decisions of third-party providers or
force majeure events (including, but not limited to, flooding or
COVID-19, respectively); the success of the Company’s future
exploration and development activities, including the financial and
political risks inherent in carrying out exploration activities;
inherent risks associated with the use of sodium cyanide in the
mining operations; the adequacy of the Company’s insurance to
mitigate operational and corporate 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; wildfires; long
lead-times required for equipment and supplies given the remote
location of some of the Company’s operating properties; reliance on
a limited number of suppliers for certain consumables, equipment
and components; the ability of the Company to address physical and
transition risks from climate change and sufficiently manage
stakeholder expectations on climate-related issues; the Company’s
ability to accurately predict decommissioning and reclamation
costs; the Company’s ability to attract and retain qualified
personnel; competition for mineral acquisition opportunities; risks
associated with the conduct of joint ventures/partnerships; and,
the Company’s ability to manage its projects effectively and to
mitigate the potential lack of availability of contractors, budget
and timing overruns and project resources. For additional risk
factors, please see section titled “Risks Factors” in the Company’s
most recently filed Annual Information Form (“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 February 24, 2022. 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 |
1 |
Overview of Consolidated Financial and Operational
Highlights |
3 |
Overview of Consolidated Results |
4 |
Outlook |
6 |
Recent Events and Developments |
11 |
Risks That Can Affect Centerra's Business |
15 |
Market Conditions |
17 |
Financial Performance |
19 |
Financial Instruments |
22 |
Balance Sheet Review |
23 |
Liquidity and Capital Resources |
24 |
Contractual Obligations |
25 |
2022 Liquidity and Capital Resources Analysis |
26 |
Operating Mines and Facilities |
26 |
Discontinued Operations |
37 |
Quarterly Results – Previous Eight Quarters |
38 |
Related Party Transactions |
38 |
Accounting Estimates, Policies and Changes |
39 |
Disclosure Controls and Procedures and Internal Control
Over Financial Reporting |
39 |
Non-GAAP and Other Financial Measures |
40 |
Mineral Reserves and Mineral Resources |
47 |
Qualified Person & QA/QC – Production, Mineral Reserves
and Mineral Resources |
48 |
Overview
Vision and Strategy
Centerra’s vision is to build a team-based culture of excellence
that responsibly delivers sustainable value and growth.
Centerra aims to meaningfully grow its low-cost
operating portfolio, while building a great place to work, with
care and consideration for the environment and the communities in
which the Company operates. Centerra aims to achieve this overall
strategy through the following strategic imperatives:
- Driving growth: Identifying,
critically evaluating, and executing targeted growth opportunities
to ensure the organization is best positioned for sustainable
growth and value-creation.
- Optimizing
existing assets: leveraging the Company’s existing operations with
consistent performance, focusing on activities that generate the
most value.
- Creating a great
place to work: attracting, retaining, and developing diverse
skilled talent to create a collaborative and inclusive
environment.
- Improving the
Company’s environmental social governance (“ESG”) profile:
maintaining and enhancing value for all of Centerra’s stakeholders
by embedding ESG principles across the enterprise throughout the
mine life cycle and by delivering on the Company’s targets.
Centerra’s Business
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 project (the “Kemess 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. The Company owns and operates a Molybdenum business unit
(the “Molybdenum BU”), which includes the Langeloth metallurgical
processing facility, operating in Pennsylvania, USA (the “Langeloth
Facility”), and two primary molybdenum mines in care and
maintenance: the Thompson Creek Mine in Idaho, USA, 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, Kumtor Gold Company
CJSC (“KGC”). Although the Company remains the rightful owner of
KGC, the 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 December 31, 2021, Centerra’s significant
subsidiaries are as follows:
Entity |
Property - Location |
Current Status |
Ownership |
Thompson Creek Metals Company Inc. |
Mount Milligan Mine - Canada |
Operation |
100% |
|
Endako Mine - Canada |
Care and maintenance |
75% |
Öksüt Madencilik A.S. |
Öksüt Mine - Turkey |
Operation |
100% |
Langeloth Metallurgical Company LLC |
Langeloth - USA |
Operation |
100% |
AuRico Metals Inc. |
Kemess Project - Canada |
Pre-development |
100% |
Thompson Creek Mining Co. |
Thompson Creek Mine - USA |
Care and maintenance |
100% |
Kumtor Gold Company CJSC |
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 February 24, 2022, there
are 297,233,839 common shares issued and outstanding, options
to acquire 3,076,614 common shares outstanding under the
Company’s stock option plan, and 933,718 restricted share
units outstanding under the Company’s restricted share unit plan
(exercisable on a 1:1 basis for common shares). Based on its public
filings, as of February 24, 2022, Kyrgyzaltyn beneficially owned
77,401,766 common shares of the Company.
Overview of Consolidated Financial and Operating
Highlights
($millions, except as noted) |
Three months ended December
31 |
Year ended December 31 |
|
|
|
% |
|
|
|
% |
|
2021 |
2020 |
Change |
2021 |
|
2020 |
Change |
Financial Highlights (continuing operations basis, except
as noted) |
|
|
|
|
|
|
Revenue |
251.1 |
212.1 |
18 |
% |
900.1 |
|
721.3 |
25 |
% |
Production costs |
132.0 |
99.2 |
33 |
% |
487.7 |
|
410.0 |
19 |
% |
Depreciation, depletion, and amortization |
31.0 |
25.0 |
24 |
% |
120.5 |
|
95.8 |
26 |
% |
Earnings from mine operations |
88.1 |
87.9 |
0 |
% |
292.0 |
|
215.5 |
35 |
% |
Net earnings from continuing operations |
274.9 |
31.6 |
770 |
% |
446.9 |
|
16.1 |
2669 |
% |
Adjusted net earnings from continuing operations(1) |
35.4 |
40.9 |
(13 |
)% |
149.3 |
|
69.5 |
115 |
% |
Net earnings (loss) from discontinued operations |
— |
63.6 |
(100 |
)% |
(828.7 |
) |
392.4 |
(311 |
)% |
Net earnings (loss)(2) |
274.9 |
95.2 |
189 |
% |
(381.8 |
) |
408.5 |
193 |
% |
Adjusted net earnings(1)(2) |
35.4 |
104.5 |
(66 |
)% |
233.6 |
|
461.9 |
(49 |
)% |
Cash provided by operating activities from continuing
operations |
61.8 |
84.3 |
(27 |
)% |
270.9 |
|
272.4 |
(1 |
)% |
Free cash flow from continuing operations(1) |
38.7 |
48.7 |
(21 |
)% |
178.4 |
|
168.9 |
6 |
% |
Adjusted free cash flow from continuing operations(1) |
44.0 |
48.7 |
(10 |
)% |
192.6 |
|
168.9 |
14 |
% |
Cash provided by operating activities from discontinued
operations |
— |
97.6 |
(100 |
)% |
143.9 |
|
657.6 |
(78 |
)% |
Net cash flow from discontinued operations(3) |
— |
28.1 |
(100 |
)% |
47.8 |
|
428.9 |
(89 |
)% |
Additions to property, plant and equipment (“PP&E”) |
46.9 |
65.8 |
(29 |
)% |
118.9 |
|
140.7 |
(15 |
)% |
Capital expenditures - total(1) |
28.1 |
40.4 |
(30 |
)% |
93.3 |
|
110.7 |
(16 |
)% |
Sustaining capital expenditures(1) |
25.7 |
28.0 |
(8 |
)% |
88.0 |
|
57.0 |
54 |
% |
Non-sustaining capital expenditures(1) |
2.4 |
12.4 |
(81 |
)% |
5.3 |
|
53.7 |
(90 |
)% |
Net earnings from continuing operations per common share -
basic(4) |
0.93 |
0.11 |
764 |
% |
1.51 |
|
0.05 |
2651 |
% |
Net earnings (loss) per common share - $/share basic(2)(4) |
0.93 |
0.32 |
186 |
% |
(1.29 |
) |
1.39 |
(193 |
)% |
Adjusted net earnings from continuing operations per common share -
basic(1)(4) |
0.12 |
0.14 |
(14 |
)% |
0.50 |
|
0.24 |
113 |
% |
Adjusted net earnings per common share - $/share
basic(1)(2)(4) |
0.12 |
0.35 |
(66 |
)% |
0.79 |
|
1.57 |
(50 |
)% |
Operating highlights (continuing operations
basis) |
|
|
|
|
|
|
Gold produced (oz) |
91,197 |
82,044 |
11 |
% |
308,141 |
|
267,923 |
15 |
% |
Gold sold (oz)(5) |
90,312 |
73,309 |
23 |
% |
314,757 |
|
259,603 |
21 |
% |
Average market gold price ($/oz)(6) |
1,795 |
1,876 |
(4 |
)% |
1,799 |
|
1,772 |
2 |
% |
Average realized gold price ($/oz )(7) |
1,504 |
1,650 |
(9 |
)% |
1,485 |
|
1,508 |
(2 |
)% |
Copper produced (000s lbs) |
16,993 |
20,376 |
(17 |
)% |
73,275 |
|
82,816 |
(12 |
)% |
Copper sold (000s lbs) |
17,184 |
18,975 |
(9 |
)% |
78,017 |
|
80,477 |
(3 |
)% |
Average market copper price ($/lb)(6) |
4.40 |
3.27 |
35 |
% |
4.23 |
|
2.80 |
51 |
% |
Average realized copper price ($/lb)(7) |
3.59 |
2.79 |
29 |
% |
2.92 |
|
2.22 |
32 |
% |
Molybdenum sold (000s lbs) |
2,361 |
3,610 |
(35 |
)% |
11,461 |
|
13,667 |
(16 |
)% |
Average market molybdenum price ($/lb) |
18.89 |
9.01 |
110 |
% |
15.98 |
|
8.68 |
84 |
% |
Unit costs (continuing operations basis) |
|
|
|
|
|
|
Gold production costs ($/oz) |
550 |
537 |
2 |
% |
604 |
|
615 |
(2 |
)% |
All-in sustaining costs on a by-product basis ($/oz)(1) |
591 |
813 |
(27 |
)% |
649 |
|
718 |
(10 |
)% |
All-in costs on a by-product basis ($/oz)(1) |
732 |
1,144 |
(36 |
)% |
785 |
|
1,116 |
(30 |
)% |
Gold - All-in sustaining costs on a co-product basis($/oz)(1) |
829 |
1,070 |
(23 |
)% |
891 |
|
954 |
(7 |
)% |
Copper production costs ($/lb) |
1.79 |
1.31 |
37 |
% |
1.51 |
|
1.24 |
22 |
% |
Copper - All-in sustaining costs on a co-product basis –
($/lb)(1) |
2.34 |
1.80 |
30 |
% |
1.94 |
|
1.48 |
31 |
% |
(1) Non-GAAP financial measure. See discussion under “Non-GAAP
and Other Financial Measures”.(2) Inclusive of the results from the
Kumtor Mine prior to the loss of control on May 15, 2021.(3)
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.(4) As at
December 31, 2021, the Company had 297,064,750 common shares issued
and outstanding, of which 26.1% were held by Kyrgyzaltyn.(5)
Includes 6,654 ounces of gold in 2020, which were sold prior to
achieving commercial production at the Öksüt Mine on May 31,
2020.(6) Average for the period as reported by the London Bullion
Market Association (“LBMA”) US-dollar Gold P.M. Fix Rate and London
Metal Exchange (“LME”).(7) This supplementary financial measure
within the meaning of 52-112 is calculated as a ratio of revenue
from the consolidated financial statements and units of metal sold
and includes the impact from the Mount Milligan Streaming
Arrangement and the impact of copper hedges.
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 and Kyrgyzaltyn, the
Company derecognized the assets and liabilities of the Kumtor Mine
in the statements of financial position and presented its financial
and operating results prior to the loss of control as discontinued
operations for the three months and year ended December 31, 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.
Fourth Quarter 2021 compared to Fourth Quarter
2020
Net earnings of $274.9 million were recognized
in the fourth quarter of 2021, compared to net earnings from
continuing operations of $31.6 million in the fourth quarter of
2020. The increase in net earnings was primarily due to a $117.3
million impairment reversal at the Mount Milligan Mine (net of
tax), the recognition of a $144.0 million deferred tax asset
related to the Mount Milligan Mine and a $25.0 million incremental
gain recognized on the sale of the Company’s interest in the
Greenstone Gold Mines Partnership (“Greenstone Partnership”). The
increase was partially offset by higher current income tax expense
related to the Öksüt Mine. The Company did not report any earnings
related to discontinued operations in the fourth quarter of 2021.
Net earnings from discontinued operations were $63.6 million in the
fourth quarter of 2020.
Adjusted net earningsNG of $35.4 million were
recognized in the fourth quarter of 2021, compared to adjusted net
earningsNG from continuing operations of $40.9 million in the
fourth quarter of 2020. The slight decrease in adjusted net
earningsNG was primarily due to a decrease in gold sold at the
Öksüt Mine and a decrease in the copper sold at the Mount Milligan
Mine, partially offset by an increase in gold sold at the Mount
Milligan Mine.
The most significant adjusting items to net earnings in the
fourth quarter of 2021 were:
- $11.3 million in legal and other
costs directly related to the seizure of the Kumtor Mine;
- $24.2 million
reclamation provision revaluation expense at sites on care and
maintenance in the Molybdenum BU, resulting primarily from the
change in estimated future reclamation cash flows and a decrease in
the discount rate applied to these cash flows;
- $132.7 million
of income tax adjustments related primarily to the recognition of a
deferred tax asset related to the Mount Milligan Mine;
- $117.3 million,
net of tax, related to the impairment reversal of the Mount
Milligan Mine; and
- $25.0 million
gain on the sale of the Greenstone project as a result of the
construction decision milestone at the Greenstone project,
triggering an additional payment to the Company by no later than
December 2023.
The most significant adjusting item to net
earnings from continuing operations in the fourth quarter of 2020
was a $9.3 million reclamation provision revaluation expense at
sites on care and maintenance in Molybdenum BU, primarily due to a
decrease in the discount rate being applied to the estimated future
reclamation cash flows.
Cash provided by operating activities was $61.8
million in the fourth quarter of 2021, compared to cash provided by
operating activities from continuing operations of $84.3 million in
the fourth quarter of 2020. The decrease in cash provided by
operating activities was primarily due to an unfavourable working
capital change at the Molybdenum BU from an increase in product
inventory held and a higher average molybdenum price and an
increase in income taxes paid of $9.6 million, primarily related to
the Öksüt Mine. The Company did not report any cash flows related
to discontinued operations in the fourth quarter of 2021. Cash
provided by operating activities from discontinued operations was
$97.6 million in the fourth quarter of 2020.
Free cash flowNG of $38.7 million was recognized
in the fourth quarter of 2021, compared to free cash flowNG from
continuing operations of $48.7 million in the fourth quarter of
2020. The decrease in free cash flowNG was primarily due to lower
cash provided by operating activities, partially offset by slightly
lower sustaining capital expendituresNG.
Year ended December 31, 2021 compared to
2020
A net loss of $381.8 million was recognized in
2021, compared to net earnings of $408.5 million in 2020. The
decrease was primarily due to the loss of $926.4 million recognized
on the change of control of the Kumtor Mine and a full year of
earnings from the Kumtor Mine in 2020, compared to four and half
months in 2021. Net earnings from continuing operations of $446.9
million were recognized in 2021, compared to $16.1 million in 2020.
The increase was primarily due to a $117.3 impairment reversal at
the Mount Milligan Mine (net of tax), the recognition of a $144.0
million deferred tax asset related to the Mount Milligan Mine, a
gain of $97.3 million on the sale of the Company’s interest in the
Greenstone Partnership, an increase in earnings from mine
operations at the Mount Milligan Mine and the Molybdenum BU and a
decrease in reclamation expense at sites placed on care and
maintenance. The increase 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 income tax
expense related to the Öksüt Mine.
Adjusted net earningsNG were $233.6 million in
2021, compared to adjusted net earningsNG of $461.9 million in
2020. The difference is primarily due to the inclusion of earnings
from operations from the Kumtor Mine up to the loss of control on
May 15, 2021 of $84.4 million, compared to a full year of earnings
from operations from the Kumtor Mine in 2020 of $394.3. Adjusted
net earningsNG from continuing operations in 2021 were $149.3
million, compared to $69.5 million in 2020.
Significant adjusting items to net loss in 2021
include:
- $926.4 million loss on the change of
control of the Kumtor Mine;
- $27.5 million of
legal and other related costs directly related to the seizure of
the Kumtor Mine;
- $24.1 million
reclamation provision revaluation expense at sites on care and
maintenance in the Molybdenum BU, resulting primarily from the
change in the estimated future reclamation cash flows and a
decrease in the discount rate applied to these cash flows;
- $132.7 million of
income tax adjustments related primarily to the recognition of a
deferred tax asset related to the Mount Milligan Mine;
- $117.3 million,
net of tax, related to the impairment reversal of the Mount
Milligan Mine;
- $97.3 million
gain on the sale of the Greenstone Partnership; and
- $15.3 million gain
from the discontinuance of the Kumtor Mine’s fuel hedging
instruments.
The most significant adjusting item to net
earnings in 2020 was a $53.4 million reclamation provision
revaluation expense at sites on care and maintenance related to the
Molybdenum BU, resulting solely from the movement in the discount
rate being applied to the estimated future reclamation cash
flows.
Cash provided by operating activities from
continuing operations was $270.9 million in 2021, compared to
$272.4 million in 2020. The decrease in cash provided by operating
activities from continuing operations was primarily due to an
unfavourable working capital change at the Molybdenum BU from an
increase in product inventory held at a higher average molybdenum
price, a decrease in earnings from mine operations at the Öksüt
Mine and an increase in income taxes paid of $17.2 million in 2021
compared to income taxes refunded of $18.5 million in 2020.
Partially offsetting the decrease was an increase in earnings from
mine operations and a more favourable change in working capital at
the Mount Milligan Mine from the timing of vendor payments between
periods.
Free cash flowNG from continuing operations of
$178.4 million was recognized in 2021 compared to $168.9 million in
2020. The increase in free cash flowNG from continuing operations
was due to lower spending at the Kemess Project as well as no
spending at the Greenstone project which was divested in January
2021, partially offset by higher sustaining capital expendituresNG
at the Öksüt Mine primarily due to heap leach expansion and
capitalized drilling costs.
2022 Outlook
The Company’s 2022 outlook and comparative actual results for
2021 are set out in the following table and exclude information
related to the Goldfield Project:
|
Units |
Mount Milligan(1) |
Öksüt |
Consolidated(2) |
|
|
2021 |
2022 |
2021 |
2022 |
2021 |
2022 |
(on continuing operations basis) |
|
|
Guidance |
|
Guidance |
|
Guidance |
Production |
|
|
|
|
|
|
|
Unstreamed gold production |
(Koz) |
127 |
123 -
136 |
112 |
210 -
240 |
239 |
333 -
376 |
Streamed gold production |
(Koz) |
69 |
67 - 74 |
— |
— |
69 |
67 - 74 |
Total gold
production(3) |
(Koz) |
196 |
190 - 210 |
112 |
210 - 240 |
308 |
400 - 450 |
Unstreamed copper production |
(Mlb) |
59 |
57 -
65 |
— |
— |
59 |
57 -
65 |
Streamed copper production |
(Mlb) |
14 |
13 - 15 |
— |
— |
14 |
13 - 15 |
Copper
production(3) |
(Mlb) |
73 |
70 - 80 |
— |
— |
73 |
70 - 80 |
Costs |
|
|
|
|
|
|
|
Gold production costs |
($/oz) |
683 |
675 -
725 |
457 |
300 -
350 |
604 |
500 -
550 |
All-in sustaining costs |
($/oz) |
508 |
575 -
625 |
668 |
425 -
475 |
649 |
600 -
650 |
All-in costs |
|
|
|
|
|
|
|
NG ($/oz) |
($/oz) |
556 |
600 -
650 |
694 |
450 -
500 |
785 |
700 -
750 |
All-in sustaining costs |
($/oz) |
883 |
900 -
950 |
668 |
425 -
475 |
891 |
750 -
800 |
Copper production costs |
($/lb) |
1.51 |
1.70 -
1.85 |
— |
— |
1.51 |
1.70 -
1.85 |
All-in sustaining costs |
($/lb) |
1.94 |
2.40 - 2.55 |
— |
— |
1.94 |
2.40 - 2.55 |
Capital Expenditures |
|
|
|
|
|
|
|
Additions to PP&E ($M) |
($M) |
83.7 |
70
- 75 |
24.9 |
20
- 25 |
118.9 |
95
- 105 |
Total Capital
ExpendituresNG |
($M) |
70.8 |
70 - 75 |
19.6 |
20 - 25 |
93.3 |
95 - 105 |
Sustaining capitalNG |
($M) |
66.7 |
65 -
70 |
18.8 |
20 -
25 |
88 |
90 -
100 |
Non-sustaining capitalNG |
($M) |
4.1 |
5 |
0.8 |
— |
5.3 |
5 |
Other Costs |
|
|
|
|
|
|
|
Kemess Project |
($M) |
— |
— |
— |
— |
14.1 |
13 -
15 |
Molybdenum BU |
($M) |
— |
— |
— |
— |
39.8 |
15 -
20 |
Exploration(4) |
($M) |
— |
— |
— |
— |
37.4 |
35 -
45 |
Corporate administration |
($M) |
— |
— |
— |
— |
27.1 |
40 -
45 |
Depreciation, depletion and |
($M) |
83.9 |
95 -
105 |
30.2 |
45 -
50 |
120.5 |
150 -
165 |
Current income taxes |
($M) |
— |
— |
— |
— |
40.1 |
85 - 100 |
Cash
Flows |
|
|
|
|
|
|
|
Cash provided by operating activities ($M) |
($M) |
— |
— |
— |
— |
270.9 |
300 -
350 |
Free cash flowNG ($M) |
($M) |
— |
— |
— |
— |
178.4 |
200 - 250 |
|
|
|
|
|
|
|
|
(1) The Mount Milligan Streaming Arrangement entitles Royal Gold
to 35% and 18.75% of gold and copper sales, respectively, and
requires Royal Gold to pay $435 per ounce of gold and 15% of the
spot price per metric tonne of copper delivered. Assuming a market
gold price of $1,700 per ounce and market copper price of
$4.00 per pound, Mount Milligan Mine’s average realized gold and
copper price for 2022 would be $1,257 per ounce and $3.36 per
pound, respectively.(2) Unit costs and consolidated unit costs
include a credit for forecasted copper sales treated as by-product
for all-in sustaining costs. Production for copper and gold
reflects estimated metallurgical losses resulting from handling of
the concentrate and metal deductions, subject to metal content,
levied by smelters.(3) Gold and copper production at the Mount
Milligan Mine assumes recoveries of 69% and 81%, respectively, and
72% gold recovery at theÖksüt Mine. 2022 gold ounces and copper
pounds sold are expected to be consistent with production.(4)
Includes both expensed and capitalized exploration costs and
excludes business development expenses. Capitalized exploration
costs are included in the sustaining capital expendituresNG.
Production Profile
Centerra’s 2022 gold production is expected to
be between 400,000 to 450,000 ounces, compared to 308,141 ounces
produced in 2021.
Mount Milligan Mine’s 2022 production is
expected to be consistent with 2021. Gold production is expected to
be in the range of 190,000 to 210,000 ounces compared to 196,438
ounces produced in 2021. Copper production is expected to be in the
range of 70 to 80 million pounds compared to 73 million pounds
produced in 2021. Gold and copper production is expected to be
back-end weighted in 2022, with the first half of the year
representing approximately 40% of the 2022 annual metal production
total while the second half of the year will represent
approximately 60% of the 2022 annual metal production total. The
changes to expected gold and copper production at the Mount
Milligan Mine are due to mine sequence.
At the Öksüt Mine, 2022 gold production is
expected to increase to the range of 210,000 to 240,000 ounces
compared to 111,703 ounces produced in 2021. Gold production is
expected to be back-end weighted in 2022, with the first half of
the year representing approximately 40% of the 2022 annual gold
production total while the second half of the year will represent
approximately 60% of the 2022 annual gold production total. The
average grade of ore stacked to the heap leach pad in 2022 is
expected to be approximately 2.30 g/t compared to 1.54 g/t in 2021.
Gold production guidance assumes that mining will continue at the
Keltepe pit and the Güneytepe pit and assumes the receipt of
permits from local authorities mid-2022.
Cost Profile
Gold production costs are expected to be in the
range of $500 to $550 per ounce in 2022, a reduction from $604 per
ounce in 2021, primarily due to higher gold sales at the Öksüt
Mine. Mount Milligan Mine’s gold production costs are expected to
be in the range of $675 to $725 per ounce in 2022, compared to $683
per ounce in 2021 as higher mining, milling and site administration
costs are expected to be partially offset by a higher allocation of
costs to copper. Gold production costs at the Öksüt Mine are
expected to be in the range of $300 to $350 per ounce in 2022, a
significant decrease compared to $457 per ounce in 2021, primarily
due to an increase in gold production, partially offset by slightly
higher operating costs, including higher royalty costs due to
higher revenue.
Copper production costs at the Mount Milligan
Mine are expected to be $1.70 to $1.85 per pound in 2022, an
increase from $1.51 per pound of copper in 2021. The increase in
copper production costs is due to higher mining, milling and site
administration costs at the mine, and a higher allocation of these
costs to copper in 2022.
Consolidated all-in sustaining costs on a
by-product basisNG are expected to be in the range of $600 to $650
per ounce, compared to $649 per ounce in 2021. Mount Milligan
Mine’s all-in sustaining costs on a by-product basisNG are expected
to be in the range of $575 to $625 per ounce in 2022 compared to
$508 per ounce in 2021, primarily due to higher production costs.
The expected increase in production costs at the Mount Milligan
Mine is primarily due to inflationary pressure. In 2021, the Mount
Milligan Mine benefited from significant levels of inventory
purchased at lower cost in 2020, which insulated the Company from
the impacts of COVID-19 and inflation. The Öksüt Mine’s all-in
sustaining costs on a by-product basis per ounceNG are expected to
be in the range of $425 to $475 per ounce, a significant decrease
compared to $668 per ounce in 2021 due to an increase in gold
ounces sold, partially offset by higher operating costs.
Consolidated all-in sustaining costs on a by-product basis per
ounceNG are estimated to be in the range of $600 to $650 per ounce
for 2022 compared to $649 per ounce in 2021, which reflect higher
operating costs at the Mount Milligan Mine, higher corporate
administration costs, offset by a significant increase in ounces
sold for the Öksüt Mine.
Consolidated all-in costs on a by-product
basisNG are expected to be in the range of $700 to $750 per ounce,
a decrease compared to $785 in 2021. The Mount Milligan Mine’s
all-in costs on a by-product basisNG are expected to be in the
range of $600 to $650 per ounce in 2022 compared to $556 per ounce
in 2021. The all-in costs on a by-product basis per ounceNG at the
Mount Milligan Mine are expected to increase in 2022 due to higher
operating costs compared to 2021. The Öksüt Mine’s all-in costs on
a by-product basisNG are forecasted to be in the range of $450 to
$500 per ounce, a significant decrease compared to $694 per ounce
in 2021 due to an increase in gold ounces sold, partially offset by
higher operating costs.
Capital Expenditures
Additions to PP&E, which is a GAAP figure,
include certain non-cash additions to PP&E such as changes in
future reclamation costs and capitalization of leases while capital
expendituresNG, comprised of sustaining capital expendituresNG and
non-sustaining capital expendituresNG, which are non-GAAP measures
and exclude them. Consolidated additions to PP&E in 2022 are
expected to be in the range of $95 to $105 million compared to
$118.9 million in 2021. Total capital expendituresNG in 2022 are
expected to be in the range of $95 to $105 million, consistent with
2022 expected additions to PP&E and slightly higher than 2021
capital expendituresNG of $93.3 million, primarily due to a slight
increase in sustaining capital expenditures at the Öksüt Mine.
Sustaining capital expendituresNG in 2022 are
expected to be $90 to $100 million, a slight increase from $88
million in 2021. Sustaining capital expendituresNG in 2022 at the
Mount Milligan Mine are estimated to be in the range of $65
to $70 million, in line with $66.7 million in 2021 and relate
primarily to the tailings storage facility (“TSF”) costs, major
overhauls and water management costs. Sustaining capital
expendituresNG in 2022 at the Öksüt Mine are expected to
be $20 to $25 million compared to $18.8 million in 2021 and
relate primarily to the heap leach expansion, improvements to the
absorption, desorption and recovery (“ADR”) plant, capitalized
stripping costs and other site support equipment costs.
Non-sustaining capital expendituresNG in 2022
are consistent with prior year and relate to the Stage Flotation
Reactors (“SFR”) project to improve future metal recoveries at the
Mount Milligan Mine, which is expected to be commissioned in the
first half of 2022.
Molybdenum Business Unit
In 2022, care and maintenance expenses and
reclamation expenditures related to the Molybdenum BU are estimated
to be between $20 and $25 million, including approximately $5 to $7
million of reclamation expenditures at the Endako Mine. In 2021,
the Company incurred $14.6 million of care and maintenance expenses
related to the Molybdenum BU and $1.0 million of reclamation
expenditures at the Endako Mine. 2022 care and maintenance costs
are expected to be partially offset by the cash generated by the
Langeloth metallurgical processing facility. The net cash required
to maintain the Molybdenum BU is expected to be in the range of $15
to $20 million, compared to $39.8 million in 2021. The Company’s
assumed molybdenum price for 2022 is $17 per pound compared to
average market price of $16 per pound in 2021.
Exploration Expenditures
|
Mount Milligan |
Öksüt |
Other |
Consolidated |
($millions) |
2021 |
2022 Guidance |
2021 |
2022Guidance |
2021 |
2022Guidance |
2021 |
2022Guidance |
Exploration |
|
|
|
|
|
|
|
|
|
Expensed |
|
$6 |
$6 |
$2 |
$5 |
$24 |
$18 - $28 |
$32 |
$29 - $39 |
Capitalized(1) |
$3 |
$6 |
$2 |
- |
- |
- |
$5 |
$6 |
|
|
$9 |
$12 |
$4 |
$5 |
$24 |
$18 - $28 |
$37 |
$35 - $45 |
|
|
|
|
|
|
|
|
|
|
(1) Included in sustaining capital
expendituresNG.
Planned exploration expenditures for 2022 are
expected to be between $35 million and $45 million, including
approximately $17 million for exploration at our existing mine
sites and the balance for greenfield and generative exploration
programs at other locations. At the Mount Milligan Mine,
exploration activities are focused on extending resources and
reserves below the current ultimate pit boundary by testing the
width and continuity of a corridor of high- grade mineralization in
the MBX stock footwall. At the Öksüt Mine, the key objectives for
drilling activities in 2022 include expanding oxide gold resources
at the Keltepe North, Keltepe Northwest, and Keltepe
North-Northwest deposits. Greenfield exploration programs will
focus on expanding and enhancing existing portfolio of projects in
the US, Canada, Turkey, Finland and other global locations which
include $3 million for the Sivritepe project in Turkey.
In addition to the exploration expenditures
identified above, the Company expects to incur $15 to $20 million
in relation to the exploration activities at the Goldfield Project
in 2022.
Corporate Administration
Corporate and administration expenses for 2022
are expected to be in the range of $40 to $45 million (including $8
million to $10 million of stock-based compensation expense).
Corporate and administration expenses in 2021 were $27.1 including
stock-based compensation expense of $1.3 million. The corporate and
administration expenses are expected to be higher in 2022 compared
to 2021 due to higher stock-based compensation expense, higher
travel and personnel costs assuming a return to in-office work
arrangements and lifting of public health measures and travel
advisories, higher consulting costs related to corporate
initiatives, including implementation of new enterprise resource
planning software and higher insurance costs.
Depreciation, Depletion and Amortization
Consolidated depreciation, depletion, and
amortization (“DD&A”) expense included in costs of sales
expense for 2022 is expected to be in the range of $150 to $165
million, an increase compared to $120.5 million in 2021, primarily
due to the increased PP&E depreciable balance from the reversal
of an impairment at the Mount Milligan Mine in the fourth quarter
of 2021. Mount Milligan Mine’s DD&A expense is expected to be
$95 to $105 million, and Öksüt Mine’s DD&A expense is expected
to be $45 to $50 million in 2022.
Taxes
Income tax in relation to the Öksüt Mine is
estimated to be between $80 to $90 million, reflecting a 23% income
tax rate, as well as withholding tax on expected repatriation of
earnings. The higher 2022 tax expense at the Öksüt Mine reflects
the full utilization of the Investment Incentive Certificate by the
end of 2021. The Mount Milligan Mine is subject to British Columbia
mineral tax which is forecast to be between $5 and $10 million.
Cash Flow Profile
The Company expects higher cash generation in
2022 compared to cash generation from continuing operations in
2021. In 2022, consolidated cash provided by operating activities
and free cash flowNG are expected to be in the range of $300 to
$350 million and $200 to $250 million, respectively. Consolidated
cash provided by operating activities and free cash flowNG from
continuing operations in 2021 were $270.9 million and $178.4
million, respectively. The increase in cash generation from
continuing operations in 2022 compared to 2021, is primarily due to
an increase in gold ounces sold at the Öksüt Mine, partially offset
by higher production costs at both mines, an increase in sustaining
capital expendituresNG at the Öksüt Mine, higher cash taxes at the
Öksüt Mine and higher corporate administration spending.
2022 Material Assumptions
Material assumptions or factors used to forecast production and
costs for 2022, after giving effect to the hedges in place as at
December 31, 2021, include the following:
- a market gold price
of $1,700 per ounce and an average realized gold price at the Mount
Milligan Mine of $1,257 per ounce after reflecting the streaming
arrangement with Royal Gold (35% of the Mount Milligan Mine’s gold
is sold for $435 per ounce).
- a market copper
price of $4.00 per pound and an average realized copper price at
the Mount Milligan Mine of $3.36 per pound after reflecting the
streaming arrangement with Royal Gold (18.75% of the Mount Milligan
Mine’s copper is sold at 15% of the spot price per metric
tonne).
- a molybdenum price
of $17.00 per pound.
- exchange rates:
$1USD:$1.26 CAD; $1USD:13.0 Turkish lira; with a Turkish inflation
assumption of 36%.
- diesel fuel price
assumption: $0.72/litre (CAD$0.91/litre) at the Mount Milligan
Mine.
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
production at the Mount Milligan Mine for $435 per ounce of gold
delivered and 15% of the spot price per metric tonne of copper
delivered (the “Mount Milligan Streaming Arrangement”). To satisfy
its obligations
under the Mount Milligan Streaming Arrangement
the Company purchases refined gold and copper warrants and arranges
for delivery to Royal Gold. The difference between the cost of the
purchases of refined gold and copper warrants, and the
corresponding amounts payable to the Company under the Mount
Milligan Streaming Arrangement is recorded as a reduction of
revenue and not a cost of operating the mine.
Other Material Assumptions
Other material assumptions used in forecasting
production and costs for 2022 can be found under the heading
“Caution Regarding Forward-Looking Information” in this document.
Production, cost, and capital forecasts for 2022 are forward-
looking information and are based on key assumptions and subject to
material risk factors that could cause actual results to differ
materially and which are discussed under the heading “Risks That
Can Affect Centerra’s Business” in the Company’s most recent AIF.
The costs and cash flow impact associated with continued litigation
and/or potential settlement of the Kumtor Mine dispute have not
been incorporated into the 2022 guidance.
2022 Sensitivities
Centerra’s revenues, earnings, and cash flows
for 2022 are sensitive to changes in certain key inputs or
currencies. The Company has estimated the impact of any such
changes on revenues, net earnings, and cash flows.
|
|
|
Impact on ($millions) |
|
|
Impacts on ($ per ounce sold) |
|
Production Costs
& Taxes |
Capital Costs |
Revenues |
Cash flows |
Net Earnings(after
tax) |
All-in sustaining costs on a by-product basis per
ounceNG |
|
|
|
|
|
|
Gold price |
$50/oz |
1.5 - 4.0 |
— |
16.5 - 19.0 |
12.5 - 17.5 |
12.5 - 17.5 |
4.0 - 5.0 |
Copper price(1) |
10% |
0.2 - 0.4 |
— |
4.4 - 6.7 |
4.2 - 6.5 |
4.2 - 6.5 |
14.5 - 16.5 |
Diesel
fuel(1) |
10% |
1.5 -
1.6 |
0.3 -
0.5 |
— |
1.8 -
2.1 |
1.5 -
1.6 |
4.5 -
5.5 |
Canadian
dollar(1)(2) |
10
cents |
11.5 -
13.5 |
1.5 -
2.0 |
— |
13.0 -
15.5 |
11.5 -
13.5 |
34.5 -
39.0 |
Turkish lira(2)(3) |
1 lira |
1.5 - 2.5 |
0.5 - 1.0 |
— |
2.0 - 3.5 |
2.0 - 3.5 |
5.0 - 7.0 |
|
|
|
|
|
|
|
|
(1) Includes the effect of the Company’s copper sales, diesel
fuel and Canadian dollars hedging programs, with current 2022
exposure coverage approximately 70%, 65% and 65%, respectively.(2)
Appreciation of currency against the US dollar will result in
higher costs and lower cash flow and earnings, depreciation of
currency against the US dollar results in decreased costs and
increased cash flow and earnings.(3) Assumes an increase in the
Turkish Lira will be partially offset by inflation.
Production, cost and capital guidance for 2022
are forward-looking information and are based on key assumptions
and subject to material risk factors that could cause actual
results to differ materially and which are discussed herein under
the headings “2022 Material Assumptions” and “Caution Regarding
Forward-Looking Information” in this document and under the heading
“Risks That Can Affect Centerra’s Business” in this document and
the Company’s most recently filed AIF.
Mount Milligan Mine Technical Report and
Three-Year Outlook / 2023 Guidance Update
The Company expects to conclude its ongoing life
of mine planning work and issue a new National Instrument 43-101
Standards of Disclosure for Mineral Projects (“NI 43-101”)
technical report for the Mount Milligan Mine in the second quarter
of 2022. Accordingly, the Company is reviewing its consolidated
three-year outlook, including 2023 guidance which is likely to
change from previously issued guidance and should no longer be
relied upon. The Company expects to release an updated three-year
outlook during the second quarter of 2022.
Recent Events and Developments
Goldfield Project
On February 22, 2022, Centerra announced that it
had entered into an agreement to acquire Gemfield Resources LLC,
owner of the Goldfield Project, from Waterton Nevada Splitter, LLC
for total consideration comprised of $175 million in cash at
closing and a $31.5 million deferred milestone payment. At the
option of Centerra, the deferred milestone payment is payable in
cash or common shares of the Company and becomes payable the
earlier of 18 months following the closing of the transaction or
the date a construction decision is confirmed with respect to the
project, among other things.
Goldfield is a conventional open-pit, heap leach
project located in a Tier 1 mining jurisdiction and contains three
known deposits. The Company believes that the project has an upside
potential from its large, under-explored land position in an
established mining area in Nevada. The project increases Centerra's
exposure to North America and provides an asset that can act as a
foothold for further opportunities in the United States.
The Company has identified numerous targets for
drilling activities in 2022 with the potential to expand known
deposits. Centerra also plans to further refine existing technical
studies undertaken to date by the previous owner, with a resource
estimate expected to be released in the first half of 2023 and an
updated technical study thereafter.
Kumtor Mine
In 2021, the Kyrgyz Republic and Kyrgyzaltyn
took 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 Kumtor 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
Republic Government resurrected a number of historical tax claims
and environmental claims relating to Kumtor, each of which was
resolved years prior 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 and the Kyrgyz officials subsequently increased the
amounts claimed to over $1 billion and brought them into the
arbitration proceedings. The Company denies these claims;
- 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. The Company denies these claims;
- During the
spring of 2021, the Kyrgyz Republic Parliament began to consider
several 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; and,
- 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.
According to statements made by Kyrgyz Republic
authorities during and after the events described above, the
Company understands that the Government of 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 Government
of the Kyrgyz Republic. The Company further understands that at
various times the Kyrgyz Republic Government has arrested or
detained a significant number of former Kyrgyz politicians and
government officials, including several former prime ministers, in
connection with such investigations.
In addition, 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. The Company also understands that the Kyrgyz Republic has
opened a criminal investigation into alleged “cyber-sabotage” and
violations of Kumtor Mine employee rights related to actions taken
by Centerra to disable Kyrgyz users from accessing its IT systems
around the time of the seizure of the Kumtor Mine. 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
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.
Centerra, KGC and Kumtor Operating Company CJSC
(“KOC”) have taken a number of measures in response to the Kyrgyz
Republic’s unjustified and illegal seizure of the Kumtor Mine. In
particular:
- The Company has initiated binding
arbitration 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 for any and all losses and damages that
result from its actions against KGC and the Kumtor Mine. Following
the resignation of the arbitrator on October 27, 2021 (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), a new
arbitrator was appointed to adjudicate the arbitration dispute. The
Company also filed an application requesting urgent interim
measures in connection with the arbitration proceedings to address
certain critical operational and safety problems at the Kumtor Mine
to preserve the status quo at the Kumtor Mine and obtain some
transparency and reporting as to the mine’s activities;
- In accordance
with longstanding 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
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.
No assurances can be given that Centerra will be
successful in any of the foregoing legal proceedings. There also
remains the further risk that additional regulatory, tax, or civil
claims will be commenced against the Company and/or its Kyrgyz
subsidiaries.
Since late 2021, the Company has been engaged in
discussions and negotiations with representatives of the Government
of the Kyrgyz Republic to resolve the outstanding disputes relating
to the illegal seizure of control of the Kumtor Mine by the
Government of the Kyrgyz Republic in May 2021. On January 3, 2022,
and subsequent to the year ended December 31, 2021, Centerra
publicly confirmed such negotiations and stated the framework of a
resolution under discussion could involve the following principal
terms:
- Centerra receiving the
approximately 26.1% in Centerra common shares held by Kyrgyzaltyn
(an instrumentality of the Kyrgyz Republic). Upon receipt, Centerra
would cancel the shares surrendered by Kyrgyzaltyn.
- The Kyrgyz
Republic receiving, and assuming all responsibility for KGC and
KOC, the Company’s two Kyrgyz subsidiaries, and the Kumtor
Mine.
- Payment, by
Centerra, of a cash amount equal to the net amount of the three
dividends paid by Centerra in 2021 that Kyrgyzaltyn did not receive
as a result of the seizure of the mine and certain other financial
consideration associated with the settlement of intercompany
balances between Centerra and its Kyrgyz subsidiaries.
- The resignation
from Centerra’s Board of Directors of Kyrgyzaltyn’s two
nominees.
- Full and final
releases of all claims of the parties and termination of all legal
proceedings involving the parties in all jurisdictions with no
admissions of liability.
Negotiations with representatives of the
Government of the Kyrgyz Republic are ongoing, and there can be no
assurance that any proposed resolution will be consummated or as to
the final economic and other terms and conditions of any such
resolution, if agreed. Any such resolution would need to be
formalized in a definitive agreement and would be subject to
compliance with all applicable legal and regulatory requirements
and approvals, including any applicable independent valuation or
shareholder or government approval requirements.
On February 15, 2022, the Ontario Superior Court
of Justice rendered a decision in the Company’s favour in its
application for an order restraining Tengiz Bolturuk from breaching
of his fiduciary duties as a former director of the Company. The
Ontario Superior Court of Justice issued an injunction, permanently
enjoining Mr. Bolturuk from disclosing or using any of the
Company’s confidential information and restraining him from having
any involvement, directly or indirectly, with the management,
operation or control of the Kumtor Mine so long as Centerra has or
asserts an interest in KGC or the Kumtor Mine, as well as awarding
costs to the Company. As previously noted, Mr. Bolturuk resigned
from the Company’s Board of Directors in May 2021 to assume control
of the Kumtor Mine on behalf of the Kyrgyz Republic as external
manager. No assurances can be given that any injunctions ordered
are respected, or that any costs awards granted in connection with
any resolved proceedings will be paid.
For more information regarding the events
surrounding the seizure of the Kumtor Mine, please refer to the
Company’s Management’s Discussion and Analysis for the periods
ended March 31, 2021, June 30, 2021, and September 30, 2021.
COVID-19 Update
Centerra continues to take steps to minimize the
effect of the COVID-19 pandemic 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. As at December 31,
2021, more than 99% and 75% of site employees at the Öksüt Mine
have received two and three doses of vaccination, respectively. A
vaccination program was also conducted at the Mount Milligan Mine
making first second and third doses available to all employees. The
Company believes that this program, in combination with a robust
provincial program in British Columbia, has resulted in a large
percentage of employees being inoculated. 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 and fixed asset components. Additionally, the Company is
pursuing an active sourcing strategy to identify potential
alternatives for its critical supplies that can be purchased in
alternative countries to reduce the risk of extended lead-times
while trying to maintain an optimal cost structure. 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.
Employee Health and Safety
Centerra continued to develop and implement best
international practices and initiatives in 2021. The Company’s
safety leadership program, Work Safe | Home Safe has been
implemented across the company and continues to be a foundational
cornerstone of Centerra’s safety culture. Extensive health and
safety training continued to be provided to employees during 2021.
Centerra also continued on its journey of safety risk management
through the development and implementation of several health and
safety risk mitigation measures including the mitigation of fatal
risk and critical control management. The success of these
initiatives resulted in an overall reduction in the total number of
significant incidents by 41% in 2021 compared to 2020.
The Company’s total reportable injury frequency
rate in 2021 was 1.02, higher than expectation, primarily due an
increase in reportable incidents at the Mount Milligan Mine. The
Company has formulated a strategy to improve the current
performance by expanding safety leadership training programs and
dedicating more professional on-site resources towards improving
health and safety performance. Despite the overall disappointing
safety score, the Company recognized the following important
milestones during the year ended December 31, 2021:
- The Öksüt Mine achieved two million
work hours without a lost-time injury;
- The Thompson Creek
Mine, Langeloth Facility and Kemess Project each achieved one full
year without a lost- time injury;
- The Endako Mine achieved eight years
without a lost-time injury.
The Company’s strategic initiatives for 2022
include the ongoing implementation of a new data collection and
analysis software application to enhance its reporting function
and, the initiation of a corporate level occupational health and
industrial hygiene program.
Environmental
Centerra is subject to certain environmental
regulations in connection with our exploration, development,
mining, and reclamation activities in each of the jurisdictions in
which the Company operates. Prior to development and expansion,
each mining property is subject to environmental assessment and
permitting processes, including the engagement with applicable
stakeholders. Environmental management plans and internal audits
guide the compliance and monitoring programs at each operating
site. The Company works closely with regulatory authorities in each
jurisdiction where it operates to ensure ongoing compliance. In
2021, there were no reportable releases to the environment.
Centerra actively manages six TSFs. One facility
is currently active, three are on care and maintenance, one is
entering the closure phase and the final one is in the early stages
of the closure phase. Centerra’s TSFs are actively managed to
maintain structural performance and ensure worker, environmental
and public safety. Centerra’s TSFs are designed in accordance with
all applicable dam safety regulations and requirements. In
addition, operation of the TSFs is informed by, and routinely
checked against, guidance from the Canadian Dam Association and the
International Commission on Large Dams. The Company has three types
of TSFs: centreline (Mount Milligan Mine and Thompson Creek Mine),
modified centreline (Kemess Project) and upstream (Endako Mine).
The Öksüt Mine has a heap leach facility and does not have a
TSF.
Mining properties have closure and reclamation
plans and related financial assurance. The Company adopts a strict
regime for mine closure including at least annual updates to its
reclamation provisions which are aligned with the International
Council on Mining and Metals Mine Closure framework. The Company’s
total liability for reclamation and closure cost obligations at
December 31, 2021 was estimated to be $337.5 million. The Company
provides financial assurance (surety bonds and letters of credit)
for reclamation costs related to the operations in North America.
As at December 31, 2021, the Company has provided the regulatory
authorities with $165.7 million in reclamation bonds and letters of
credit for mine closure obligations. For more information please
see note 15 to the annual financial statements.
Risks That Can Affect Centerra’s Business
Overview
The Company’s business contains significant risk
due to the nature of mining, exploration, and development
activities. Certain risk factors, including but not limited to
those listed below, are similar across the mining industry while
others are specific to Centerra. The risk factors below may include
details of how Centerra seeks to mitigate these risks where
possible. For additional discussion of risk factors please refer to
the Company’s Annual Information Form for the year ended December
31, 2020, which is available on the Company’s website
www.centerragold.com, at SEDAR at www.sedar.com and EDGAR at
www.sec.gov/edgar.
The Company is subject to risks that can have a
material effect on the profitability, future cash flow, financial
condition of the Company and its stated mineral reserves. Some of
these risks relate to the mining industry in general, and others
apply to specific properties, operations or planned operations. The
Company has implemented an enterprise risk management (“ERM”)
program which applies to all of its operations and corporate
offices. The program is based on leading international risk
management standards and industry best practice. It employs both a
bottom-up and top-down approach to identify and address risks from
all sources that threaten the achievement of the Company’s
objectives.
The ability to deliver on the Company’s vision,
strategic objectives and operating guidance depends on Centerra’s
ability to understand and appropriately respond to the
uncertainties or “risks” the Company faces that may prevent
Centerra from achieving the Company’s objectives. In order to
achieve this, Centerra:
- Maintains a framework that permits the
Company to manage risk effectively and in a manner that creates the
greatest value through risk informed decision making;
- Integrates a process
for managing risk into all the Company’s important decision-making
processes so that Centerra reduces the effect of uncertainty on
achieving the Company’s objectives;
- Actively monitors
key controls the Company relies on to achieve Centerra’s objectives
so that they remain in place and are effective at all times;
and,
- Provides assurance
to senior management and relevant committees of the Board on the
effectiveness of key control activities.
Centerra’s Vice President, Risk & Insurance
is responsible for providing the requisite tools, guidance, and
leadership of the ERM program. Each operating site and project are
responsible for identifying, assessing, mitigating, and monitoring
risk. Efforts are coordinated by appointed “Risk Champions” who
facilitate the process and provide regular reporting to Centerra’s
Vice President, Risk & Insurance.
The risk management program at Centerra
considers the full life of mine cycle from exploration through to
closure. All aspects of the operation and the Company’s
stakeholders are considered when identifying risks. As such, the
Company’s risk management program encompasses a broad range of
risks including technical, financial, commercial, social,
reputational, environmental, governance, health and safety,
political and human resources related risks.
Board and Committee
Oversight
The Risk Committee of the Board of Directors has
oversight responsibilities for the policies, processes and systems
for the identification, assessment, and management of the Company’s
principal strategic, financial, and operational risks. To ensure
consistent communication of risks amongst Board committees, the
members of the Risk Committee are comprised of at least one member
from each of the other standing committees of the Board. Each of
the other Board committees is responsible for overseeing risks
related to their area of responsibility and reviewing the policies,
standards and actions undertaken to mitigate such risks.
Management Oversight
The Company’s executive team meets regularly
with its Vice President, Risk and Insurance to review the risks
facing the organization and to discuss the implementation and
effectiveness of mitigation actions.
Principal Risks
The following section describes the risks that
are most material to the Company’s business. This is not a complete
list of the potential risks the Company faces; there may be others
the Company is not aware of, or risks that the Company feels are
not material today that could become material in the future. For a
more comprehensive discussion about the Company’s risks, see the
most recent Form 40-F/AIF on file with the SEC and Canadian
provincial securities regulatory authorities and see the “Caution
Regarding Forward-Looking Information” in this MD&A.
Strategic, Legal and Planning Risks
Strategic, legal and planning risks include
political risks associated with the Company’s operations in Turkey,
United States and Canada; resource nationalism; reliance on cash
flow from its subsidiaries; the impact of changes in, or more
aggressive enforcement of laws, regulations and government
practices including with respect to the environment; risk of
failure of Centerra or its operations to comply with such laws,
regulations or government practices and the potentially significant
consequences thereof, including potential fines and penalties, loss
of permits, interruptions or cessation of operations and loss of
reputation; impact of community activism on laws and regulations;
increases in contributory demands or business interruption; delays
or refusals to grant required permits and licenses; status of the
Company’s relationships with local communities; Indigenous claims
and consultation issues relating to the Company’s properties which
are in proximity to Indigenous communities; disputes with the
Kyrgyz Republic relating to the Kumtor Mine; the risks related to
outstanding litigation affecting the Company; the impact of any
sanctions imposed by Canada, the United States or other
jurisdictions against various 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; conflicts of interest
among its board members; risks related to anti-corruption
legislation; Centerra’s future exploration and development
activities not being successful; Centerra not being able to replace
mineral reserves and resources; risks related to mineral reserves
and resources being imprecise; production and cost estimates may be
inaccurate; reputational risks, particularly in light of the
increase in social media; inability to identify new opportunities
and to grow the business; large fluctuations in the Company’s
trading price that are beyond the Company’s control or ability to
predict and mitigate; potential risks related to kidnapping or acts
of terrorism.
Financial Risks
The Company is subject to risks related to its
financial position and total liquidity, 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 and gold doré at the Öksüt Mine; use of commodity derivatives;
sensitivity to fuel price volatility; the impact of currency
fluctuations; global financial conditions; access to future
financing including the impact of environmental, social and
corporate governance practices and reporting on the Company’s
ability to obtain future financing or accessing capital; the impact
of restrictive covenants in the Company’s credit facility which
may, among other things, restrict the Company from pursuing certain
business activities; the effect of market conditions on the
Company’s short-term investments; ability to obtain adequate
insurance coverage; and changes to taxation laws in the
jurisdictions where the Company operates.
Operational Risks
Mining and metals processing involve significant
production and operational risks. Some of these risks are outside
of the Company’s control or ability to predict and mitigate. Risks
include, but are not limited to, the following: unanticipated
ground and water conditions; shortages of water for processing
activities; adjacent or adverse land or mineral ownership that
results in constraints on current or future mine operations;
geological risks, including earthquakes and other natural
disasters; wildfires; metallurgical and other processing risks;
unusual or unexpected mineralogy or rock formations; ground or
slope failures; pit flooding; tailings design or operational
issues, including dam breaches, failures or significant seepages;
structural cave-ins, wall failures or rock-slides; flooding or
fires; equipment failures or performance problems; periodic
interruptions due to inclement or hazardous weather conditions or
operating conditions and other force majeure events; lower than
expected ore grades or recovery rates; accidents; changes to, or
delays in, transportation routes, including cessation or disruption
in rail and shipping networks whether caused by decisions of third
party providers or force majeure events (including COVID-19);
interruption of energy supply; labour disturbances; the
availability of drilling and related equipment in the area where
mining operations will be conducted; the failure of equipment or
processes to operate in accordance with specifications or
expectations; tailings management facilities; exposure of workforce
to widespread pandemic (including COVID-19); cyanide use;
regulations regarding greenhouse gas emissions and climate change;
development and construction costs being over budget; predicting
decommissioning and reclamation costs; attracting and retaining
qualified personnel; long lead-times required for equipment and
supplies given the remote location of some of the Company’s
operating properties, and the potential that COVID-19 could disrupt
such supply chains; reliance on a limited number of suppliers for
certain consumables, equipment and components; and security of
critical operating systems.
Market Conditions
Commodities
The Company's profitability is materially
affected by the market price of metals, primarily the prices of
gold, copper and molybdenum. Metal prices fluctuate widely and are
affected by numerous factors beyond the Company's control.
|
Average spot price |
|
Three months ended December
31, |
Twelve months ended December
31, |
|
2021 |
2020 |
% Change |
2021 |
2020 |
% Change |
Gold (per oz) |
1,795 |
1,876 |
(4)% |
1,799 |
1,772 |
2% |
Copper (per lb) |
4.40 |
3.27 |
35% |
4.23 |
2.80 |
51% |
Molybdenum (per lb) |
18.89 |
9.01 |
110% |
15.98 |
8.68 |
84% |
In the fourth quarter of 2021, the gold price
remained on average, consistent with the comparative period. There
were significant fluctuations in the course of 2021 when the gold
price ranged from a low of $1,684 per ounce to a high
of $1,943 per ounce as the gold price was impacted by a
variety of factors, including the effects of the COVID-19 pandemic,
rising inflation and expectations in the shift in monetary policy
by central banks.
In the fourth quarter and year ended December
31, 2021, the average copper price increased compared to the fourth
quarter of 2020 and year ended December 31, 2020. This increase in
the average copper price was driven by expectations surrounding
global growth and changing shifts in monetary policy. There were
significant price fluctuations in the course of 2021, primarily in
the first half of 2021, with the copper price trading from a low of
$3.51 per pound to a high of $4.86 per pound.
In the fourth quarter and year ended December
31, 2021, the average molybdenum price increased significantly
compared to the fourth quarter of 2020 and year ended December 31,
2020. The initial increase in the price of molybdenum occurred in
the second quarter of 2021, with this price increase from $10.95 to
$18.95 per pound, stabilizing through the remainder of 2021. The
significant increase in the price of molybdenum was impacted by
Chinese supply and demand, including the increase in the number of
global infrastructure projects.
Foreign Exchange
The Company receives its revenue through the
sale of gold, copper and molybdenum in US dollars. The Company has
operations in Canada, including its corporate head office, Turkey
and the United States.
The exchange rate of the Canadian dollar and
Turkish lira relative to the US dollar is an important financial
driver for the Company for the following reasons:
- all revenues are earned in US
dollars;
- a significant
portion, approximately 50%, of operating and capital costs at the
Öksüt Mine are incurred in Turkish lira;
- a majority, approximately 90%, of
operating and capital costs at the Mount Milligan Mine are incurred
in Canadian dollars;
Approximately 57% (2020 - 43%) of the Company’s
combined expenditures from continuing operations were incurred in
currencies other than the US dollar during the year ended December
31, 2021.
The performance of these currencies during the
periods ended December 31, 2021 and 2020 is as follows:
|
Average market exchange rate |
|
Three months ended December
31, |
Twelve months ended December
31, |
|
2021 |
2020 |
% Change |
2021 |
2020 |
% Change |
USD-CAD |
1.26 |
1.30 |
(3)% |
1.25 |
1.34 |
(7)% |
USD-Turkish Lira |
11.16 |
7.87 |
42% |
8.89 |
7.02 |
27% |
A chart accompanying this announcement is available
at https://ml.globenewswire.com/media/8448183c-d0a9-4a8b-90a9-dcd9448494a0/hires/?v=02242022090400
On average, the Canadian dollar strengthened
against the US dollar, ending the year at $1.26 while the Turkish
lira weakened relative to the US dollar, ending the year at 13.3.
The devaluation of the Turkish lira is being offset by persistent
high levels of inflation in Turkey, reaching a 19-year high year
over year change in 2021 of 36%. The Company expects this trend in
Turkey to continue in the near term.
The Company utilizes its foreign exchange
hedging program in order to manage its exposure to adverse
fluctuations in the Canadian dollar, relative to the US dollar, see
“Financial Instruments”. The Company does not currently hedge the
Turkish lira.
Diesel Fuel
Fuel costs at Centerra’s continuing operations
represent approximately 6% of production costs. The prices for
Mount Milligan Mine’s diesel fuel are based on a supply agreement
for weekly deliveries and priced at the Prince George Rack Rate.
The Prince George Rack Rate reflects general benchmark movements,
plus additional costs such as seasonal premiums for winterizing,
costs to meet regulatory requirements and transportation costs.
Mining operations at the Öksüt Mine are outsourced, and the fuel
operating cost is included in the outsourcing contract costs, based
on the published local retail diesel market price.
The Company utilizes its diesel hedging program
in order to manage its exposure to adverse fluctuations in diesel
fuel prices, see “Financial Instruments” section of this
MD&A.
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.
Fourth quarter 2021 compared to fourth
quarter 2020
Revenue of $251.1 million was recognized in the
fourth quarter of 2021 compared to $212.1 million in the fourth
quarter of 2020. The increase in revenue was primarily due to an
increase in ounces of gold sold at the Mount Milligan Mine and
higher average realized copper and molybdenum prices, partially
offset by a decrease in ounces of gold sold at the Öksüt Mine,
pounds of copper sold at the Mount Milligan Mine and pounds of
molybdenum sold at the Molybdenum BU.
Gold production was 91,197 ounces in the fourth
quarter of 2021 compared to 82,044 ounces in the fourth quarter of
2020. Gold production in the fourth quarter of 2021 included 59,529
ounces of gold from the Mount Milligan Mine, compared to 42,664
ounces in 2020, primarily due to higher gold grades and recoveries,
partially offset by slightly lower throughput. The Öksüt Mine
produced 31,668 ounces of gold in the fourth quarter of 2021
compared to 39,380 ounces of gold in the fourth 2020, primarily due
to the site management’s decision to apply lower volume of solution
to the ore tonnes stacked on the heap leach in the fourth quarter
of 2021.
Copper production at the Mount Milligan Mine was
17.0 million pounds in the fourth quarter of 2021 compared to 20.4
million pounds in the fourth quarter of 2020. The decrease was
primarily due to lower copper grades and mill throughput.
The Langeloth Facility roasted and sold 2.5
million pounds and 2.4 million pounds of molybdenum, respectively,
in the fourth quarter of 2021, compared to 2.7 million pounds and
3.6 million pounds, respectively in the fourth quarter of 2020.
This 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.
Cost of sales of $163.0 million was recognized
in the fourth quarter of 2021 compared to $124.2 million in the
fourth quarter of 2020. The increase was primarily due to higher
gold ounces sold, higher production costs at the Mount Milligan
Mine and higher production costs at the Molybdenum BU as a result
of higher average molybdenum prices paid to obtain product
inventory to be processed.
Gold production costs were $550 per ounce in the
fourth quarter of 2021 compared to $537 per ounce in the fourth
quarter of 2020. The increase in gold production costs was
primarily due to an increase in production costs at the Mount
Milligan Mine, partially offset by a higher allocation of costs to
copper production costs, due to the relative changes in the market
prices of gold and copper.
All-in sustaining costs on a by-product basisNG
from continuing operations were $591 per ounce in the fourth
quarter of 2021 compared to $813 per ounce in the fourth quarter of
2020. The decrease in all-in sustaining costs on a by-product
basisNG was primarily due to an increase in ounces of gold sold,
higher average realized copper prices, and a decrease in corporate
general and administrative costs.
All-in costs on a by-product basisNG from
continuing operations were $732 per ounce in the fourth quarter of
2021 compared to $1,144 per ounce in the fourth quarter of 2020.
The decrease was primarily due to lower all-in sustaining costs on
a by-product basisNG and lower non-sustaining capital expenditures
at the Kemess Project and at the Öksüt Mine as mine construction
was completed in 2020.
Corporate administration costs of $7.5 million
were recognized in the fourth quarter of 2021 compared to $17.3
million in the fourth quarter 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 and a decrease in
transaction costs. In the fourth quarter of 2020, $2.0 million of
transaction costs were incurred in relation to the disposal of the
Company’s interest in the Greenstone Partnership.
Reclamation expense, which primarily relates to
movement in the reclamation liabilities for the Company’s
Molybdenum BU sites currently on care and maintenance, was $24.3
million in the fourth quarter of 2021 compared to $9.3 million in
the fourth quarter of 2020. The increase in expense was primarily
due to a decline in discount rates applied to the underlying future
reclamation costs and an increase in underlying future reclamation
cash flows impacted by various factors, including higher inflation
and change in timing of reclamation activities.
An impairment reversal of $160.0 million ($117.3
million, net of tax) was recognized in the fourth quarter of 2021,
related to the Mount Milligan Mine, which demonstrated improved and
reliable performance since 2019 when the initial impairment loss
was recognized. The impairment reversal also reflects the Company’s
increased confidence of resource to reserve conversion and
increased long-term gold and copper price expectations relative to
the prior period. The impairment reversal related to the Mount
Milligan Mine represents a full reversal of the impairment taken in
the fourth quarter of 2019 allocated to long-lived assets, as
adjusted for amortization. The Company did not identify any
impairments or impairment reversals in the fourth quarter of
2020.
A gain on sale of Greenstone Partnership of
$25.0 million was recognized in the fourth quarter of 2021 in
relation to a portion of contingent consideration owing to the
Company from Orion Mine Finance Group (“Orion”) becoming payable in
the future based on a construction decision being made at the
Greenstone project.
The company recognized an income tax recovery of
$61.6 million, in the fourth quarter of 2021, including deferred
income tax recovery of $93.6 million and current income tax expense
of $32.0 million, compared to an income tax expense of $2.9 million
in the fourth quarter of 2020, including current income tax expense
of $1.7 million and deferred income tax expense of $1.2 million.
The increase in current income tax expense was due to higher income
tax expense related to the Öksüt Mine which had higher taxable
earnings, the full utilization of its Investment Incentive
Certificate in the year, and a withholding tax expense incurred on
dividend distribution. The increase in deferred income tax recovery
was primarily due to the partial release of a valuation allowance
on deductible temporary differences relating to the Mount Milligan
Mine.
Year ended December 31, 2021 compared to
2020
Revenue of $900.1 million was recognized in 2021
compared to $721.3 million in 2020. The increase in revenue was
primarily due to higher gold sold at the Mount Milligan Mine and
the Öksüt Mine and higher average realized copper and molybdenum
prices, partially offset by a decrease in pounds of copper sold at
the Mount Milligan Mine and a decrease in pounds of molybdenum sold
at the Molybdenum BU.
Gold production was 308,141 ounces in 2021
compared to 267,923 ounces in 2020. Gold production in 2021
included 196,438 ounces of gold from the Mount Milligan Mine,
compared to 161,855 ounces in 2020, primarily due to higher
throughput, gold grades and recoveries. The Öksüt Mine, which
commenced commercial production on May 31, 2020, produced 111,703
ounces of gold in 2021 compared to 106,068 ounces of gold in 2020,
primarily due to higher number of ore tonnes stacked on the heap
leach, higher heap leach grade and recoveries.
Copper production at the Mount Milligan Mine was
73.3 million pounds in 2021 compared to 82.8 million pounds in
2020. The decrease was primarily due to lower copper grades,
partially offset by higher throughput.
The Langeloth Facility roasted and sold 10.3
million pounds and 11.5 million pounds of molybdenum, respectively,
in 2021 compared to 13.8 million pounds and 13.7 million pounds,
respectively, in 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.
Cost of sales of $608.2 million was recognized
in 2021 compared to $505.8 million in 2020. The increase was
primarily due to an increase in gold and molybdenum sold and,
higher production costs at the Mount Milligan Mine and the Öksüt
Mine. In addition, there were higher production costs at the
Molybdenum BU related to higher average molybdenum prices paid to
obtain product inventory to be processed. The increase in cost of
sales was also partially due to higher depreciation, depletion and
amortization expense at the Öksüt Mine primarily due to a higher
number of tonnes stacked on the heap leach pad and the Mount
Milligan Mine primarily due to a decrease in reserves between the
periods.
Gold production costs from continuing operations
were $604 per ounce in 2021 compared to $615 per ounce in 2020. The
decrease in gold production costs from continuing operations was
primarily due to an increase in gold sold at the Mount Milligan
Mine and the Öksüt Mine, partially offset by an increase in
production costs at both mines.
All-in sustaining costs on a by-product basisNG
from continuing operations were $649 per ounce in 2021 compared
to $718 per ounce in 2020. The decrease was primarily due to
an increase in ounces of gold sold at the Mount Milligan Mine and
the Öksüt Mine, 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 production costs at the Mount Milligan Mine and Öksüt
Mine.
All-in costs on a by-product basisNG were $785
per ounce in 2021 compared to $1,116 per ounce in 2020. The
decrease was due to lower all-in sustaining costs on a by-product
basisNG and lower non-sustaining capital expendituresNG and care
and maintenance costs at the Kemess Project. In addition, there
were minimal non-sustaining capital expendituresNG at the Öksüt
Mine as the mine construction was completed in 2020.
Corporate administration expenses were $27.1
million in 2021, compared to $45.7 million in 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 expense, which primarily relates to
movement in the reclamation liabilities for the Company’s
Molybdenum BU sites currently on care and maintenance, was $23.3
million in 2021 compared to $53.4 million in 2020. The decrease in
reclamation expense was primarily due to a larger decline in
discount rates applied in 2020. This was partially offset by an
increase in underlying future reclamation cash flows in 2021
impacted by various factors, including higher inflation and change
in timing of reclamation activities.
An impairment reversal of $160.0 million ($117.3
million net of tax) was recognized in the fourth quarter of 2021,
related to the Mount Milligan Mine, a full reversal of the
impairment taken in the fourth quarter of 2019. The Company did not
identify any impairments or impairment reversals in 2020.
A gain on sale of $97.3 million was recognized
in 2021 on the disposal of the Company’s 50% interest in the
Greenstone Partnership. This gain was partially recognized in the
first quarter of 2021 when the sale was completed and partially
recognized in the fourth quarter of 2021 when the construction date
was declared for the Greenstone project and an initial contingent
payment of $25.0 million became receivable and owing from
Orion.
Other non-operating expenses of $23.5 million
were recognized in 2021 compared to $6.2 million in 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 recovery of $44.0 million, including
current income tax expense of $40.1 million and deferred income tax
recovery of $84.1 million, was recognized in 2021, compared to an
income tax expense of $7.7 million, including current income tax
expense of $6.5 million and deferred income tax expense of $1.2
million in 2020. The increase in current income tax expense was
primarily due to higher taxable earnings generated by the Öksüt
Mine as the benefits from the eligible expenditures under the
Investment Incentive Certificate were fully utilized, and
withholding tax expense in relation to dividend distributions. The
increase in deferred income tax recovery was primarily due to the
partial release of a valuation allowance on deductible temporary
differences relating to the Mount Milligan Mine, partially offset
by deferred income tax expense recorded on the sale of the
Company’s interest in the Greenstone Partnership.
Net loss from discontinued operations of $828.7
million was recognized in 2021, compared to net earnings from
discontinued operations of $392.4 million in 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 in May 2021. Partially offsetting the decrease in net earnings
was a gain recognized on the discontinuance of the Kumtor Mine’s
fuel hedging program.
Financial Instruments
The Company seeks to manage its exposure to fluctuations in
diesel fuel prices, commodity prices and foreign exchange rates by
entering into derivative financial instruments from
time-to-time.
The hedge positions for each of these programs as at December
31, 2021 are summarized as follows:
|
|
|
Average Strike Price |
Settlements(% of exposure hedged) |
As atDecember 31, 2021 |
Instrument |
Unit |
Type |
2022 |
2023 |
2024 |
2022 |
2023 |
2024 |
Totalposition |
Fair Value($000s) |
FX Hedges |
|
|
|
|
|
|
|
|
|
|
USD/CAD zero-cost collars(1) |
CAD |
Fixed |
$129/$1.36 |
$1.24/$1.29 |
$1.25/$1.33 |
$242.0 M(40%) |
$122.0 M(22%) |
$36.0 M(6%) |
$400.0 M |
5,257 |
|
USD/CAD forward contracts(2) |
CAD |
Fixed |
1.29 |
1.26 |
1.29 |
$160.M(24%) |
$80.0 M(14%) |
$24.0 M(4%) |
$264.0 M |
2,022 |
|
Total |
|
|
|
|
|
$402.0 M(64%) |
$202.0 M(36%) |
$60.0 M(10%) |
$664.0 M |
7,279 |
|
Fuel Hedges |
|
|
|
|
|
|
|
|
|
|
USD/CAD zero-cost collars(3) |
Barrels |
Fixed |
$62/$68 |
$73/$78 |
N/A |
45,100(30%) |
13,500(9%) |
N/A |
58,600 |
1,563 |
|
USD/CAD forward contracts(2) |
Barrels |
Fixed |
$62 |
$79 |
$82 |
61,500(40%) |
44,000(28%) |
15,600(10%) |
121,100 |
2,652 |
|
Total |
|
|
|
|
|
106,600(70%) |
57,500(37%) |
15,600(10%) |
179,700 |
4,215 |
|
Copper Hedges: |
|
|
|
|
|
|
|
|
|
|
Copper zero-cost collars(4) |
Pounds |
Fixed |
$3.66/$4.84 |
$4.00/$4.89 |
N/A |
41.2 M(67%) |
15.9 M(34%) |
N/A |
57.1 M |
(1,776 |
) |
Gold/Copper Hedges (Royal Gold
deliverables): |
Gold forward contracts |
Ounces |
Float |
N/A |
N/A |
N/A |
16,410 |
N/A |
N/A |
16,410 |
495 |
|
Copper forward contracts |
Pounds |
Float |
N/A |
N/A |
N/A |
1.7 M |
N/A |
N/A |
1.7 M |
94 |
|
(1) Under the currency zero-cost collars, the
Company retains the right to buy foreign currency at the contract’s
‘floor’ price if the market price was to fall below this price upon
contract expiration, while requiring it to sell foreign currency at
the ‘ceiling’ price if the market price was to exceed this price
upon expiration. At the end of each contract the Company has the
right for financial settlement or physical settlement.(2) Under the
swap and forward contracts, the Company ‘buys’ or ‘sells’ metals,
currencies and commodities, at a specified price at a certain
future date.(3) Under the fuel zero-cost collars, the Company
retains the right to buy fuel barrels at the contract’s ‘ceiling’
price if the market price was to exceed this price upon contract
expiration, while requiring the Company to buy fuel barrels at the
‘floor’ price if the market price fell below this price upon
expiration. At the end of each contract there is no exchange of the
underlying item and the contract is financially settled.(4) Under
the copper zero-cost collars, the Company retains the right to sell
copper at the contract’s ‘floor’ price if the market price fell
below this price upon contract expiration, while requiring it to
buy copper at the ‘ceiling’ price if the market price were to
exceed this price upon expiration. At the end of each contract
there is no exchange of the underlying item and the contract is
financially settled.
The realized gain (loss) recorded in the
consolidated statements of (loss) earnings was as follows:
|
Three Months Ended December 31,
2021 |
Year Ended December 31, 2021 |
($millions) |
2021 |
|
2020 |
|
% Change |
2021 |
|
2020 |
|
% Change |
Foreign exchange hedges |
3,789 |
|
2,415 |
|
57 |
% |
17,543 |
|
4,266 |
|
311 |
% |
Fuel hedges |
945 |
|
(2,835 |
) |
133 |
% |
20,631 |
|
(5,771 |
) |
457 |
% |
Copper hedges |
(13,150 |
) |
(1,359 |
) |
(868 |
)% |
(50,259 |
) |
(1,359 |
) |
(3,598 |
)% |
During the second quarter of 2021, the Company
unwound certain positions that were hedging future fuel purchases
at the Kumtor Mine beyond the loss of control event in May 2021.
Unwinding these positions resulted in the recognition of realized
gain on settlement of $14.2 million, which was recorded in (loss)
earnings from discontinued operations in the consolidated
statements of (loss) earnings and comprehensive (loss) income.
As at December 31, 2021, Centerra has not entered into any
off-balance sheet arrangements with special purpose entities, nor
does it have any unconsolidated affiliates.
Balance Sheet Review
($millions) |
December 31,2021 |
December 31,2020 |
% Change |
Total Assets |
2,676.60 |
3,136.00 |
(15%) |
Total Liabilities |
633 |
670 |
(6%) |
Total Equity |
2,043.60 |
2,466.00 |
(17%) |
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 consolidated statements of
financial position for the period ended December 31, 2021. The
assets and liabilities presented as at December 31, 2020 are
inclusive of the Kumtor Mine. The movement in the following
financial statement line items between December 31, 2021 and
December 31, 2020 was significantly impacted by the loss of control
of the Kumtor Mine:
- Inventory: derecognition of product
inventory of $333.6 million;
- Property, plant and
equipment: derecognition of $629.4 million;
- Other non-current
assets: derecognition of reclamation deposits balance of $52.9
million;
- Accounts payable and
accrued liabilities: derecognition of $63.3 million; and
- Provision for
reclamation: derecognition of $56.5 million.
Cash as at December 31, 2021 was $947.2 million
compared to $545.2 million as 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 in
the first quarter of 2021, free cash flowNG from continuing
operations of $178.4 million and net cash flow from discontinued
operations of $47.8 million. The increase in cash was partially
offset by dividends paid of $45.0 million in 2021.
Total inventories as at December 31, 2021 were
$221.2 million compared to $580.6 million as 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, the loss of control of the Kumtor Mine as outlined
above as well as processing of a large portion of ore stockpiles
and timing of concentrate sales at the Mount Milligan Mine. The
decrease was partially offset by an increase in inventories at the
Langeloth Facility from higher working capital needs as result of
higher molybdenum prices and an increase in heap leach inventory
balance at the Öksüt Mine from the site management’s decision to
apply lower volume of solution to the ore tonnes stacked on the
heap leach in the fourth quarter of 2021.
At December 31, 2021, the product inventory
balance consisted of 58,333 contained gold ounces and 15.8 million
contained pounds of copper in surface stockpiles at the Mount
Milligan Mine (4.3 million tonnes of ore at a grade of 0.42 g/t
gold and 0.17% copper), of which 30% is expected to be processed in
2022. Additionally, the product inventory balance at the Öksüt Mine
consisted of 21,077 contained gold ounces in solution at the
absorption, desorption, and recovery plant and 80,102 contained
gold ounces on surface and stacked (0.5 million tonnes of ore at a
grade of 1.23 g/t gold in surface stockpiles and 1.54 g/t gold
stacked on the heap leach pad).
Other current assets at December 31, 2021 were
$25.8 million compared to $41.0 million at December 31, 2020. The
decrease was primarily due to decrease in the current portion of
derivative assets, particularly the Company’s position on foreign
exchange contracts.
The carrying value of property, plant and
equipment as at December 31, 2021 was $1.27 billion compared to
$1.69 billion as at December 31, 2020. The decrease was primarily
due to the loss of control of the Kumtor Mine, as outlined above,
and depreciation, depletion and amortization of property, plant and
equipment in their normal course of operations during the year.
Partially offsetting the overall decrease was $214.6 million of
additions capitalized to the property, plant and equipment and the
$160.0 million impairment reversal at the Mount Milligan Mine.
Deferred income tax assets as at December 31,
2021 were $101.3 million compared to nil as at December 31, 2020.
The increase was due to the partial release of a valuation
allowance on deductible temporary differences related to the Mount
Milligan Mine.
Other non-current assets at December 31, 2021
were $32.1 million compared to $77.1 million at December 31, 2020.
The decrease was primarily due to the loss of control of the Kumtor
Mine, as outlined above, partially offset by $25.0 million
receivable from Orion as a result of Greenstone project being
approved for construction.
Income taxes payable at December 31, 2021 was
$25.3 million compared to $2.5 million at December 31, 2020. The
increase was primarily due to the net impact of current income tax
expense and payments during the year, with the most significant
balance related to current income tax of the Öksüt Mine.
Deferred income tax liabilities at December 31,
2021 were $54.9 million compared to $39.5 million at December 31,
2020. The increase was primarily due to the tax effects, including
the impact of foreign exchange on temporary differences between
accounting and tax basis at the Öksüt Mine and deferred income tax
expense of $9.3 million recorded on the sale of the Company’s
interest in the Greenstone Partnership.
The provision for reclamation at December 31,
2021 was $337.5 million compared to $352.2 million at December 31,
2020. The decrease was primarily due to the loss of control of the
Kumtor Mine, partially offset by a decrease in the discount rates
applied to the future cash flows and an increase in the underlying
future reclamation cash flows at the Endako Mine, the Thompson
Creek Mine and Kemess Project due to variety of factors, including
higher inflation, timing of reclamation activities and changes to
the closure plan.
Liquidity and Capital
Resources
The Company’s total liquidity position as at
December 31, 2021 was $1,347.2 million, representing a cash balance
of $947.2 million and $400 million available under a corporate
credit facility.
Due to the seizure of the Kumtor Mine and the
continuing actions by the Kyrgyz Republic and Kyrgyzaltyn, the
Company derecognized the assets and liabilities of the Kumtor Mine
in the statements of financial position and presented its financial
and operating results prior to the loss of control as discontinued
operations for the three months and year ended December 31, 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.
Fourth quarter 2021 compared to fourth
quarter 2020
Cash provided by operating activities from
continuing operations was $61.8 million in the fourth quarter of
2021, compared to $84.3 million in the fourth quarter of 2020. The
decrease in cash provided by operating activities from continuing
operations was primarily due to an unfavourable working capital
change at the Molybdenum BU as a result of an increase in product
inventory held and a higher average molybdenum price, as well as an
increase in income taxes paid of $9.6 million.
Cash used in investing activities from
continuing operations of $13.1 million was recognized in the fourth
quarter of 2021 compared to $35.8 million in the fourth quarter of
2020. The decrease was primarily due to proceeds received on the
disposition of PP&E, and lower PP&E additions at the Kemess
Project and the Öksüt Mine.
Cash used in financing activities during the
fourth quarter of 2021 was $13.1 million compared to $15.4 million
in the fourth quarter of 2020. The decrease was primarily due to a
reduction in borrowing costs.
Year-ended December 31, 2021 compared to
2020
Cash provided by operating activities from
continuing operations was $270.9 million in 2021 compared to $272.4
million in 2020. The decrease in cash provided by operating
activities from continuing operations was primarily due to an
unfavourable working capital change at the Molybdenum BU as a
result of an increase in product inventory held and a higher
average molybdenum price, as well as a decrease in earnings from
mine operations at the Öksüt Mine and an increase in income taxes
paid of $17.2 million in 2021 compared to income taxes refunded of
$18.5 million in 2020. Partially offsetting the decrease was an
increase in earnings from mine operations at the Mount Milligan
Mine and a more favourable change in working capital at the Mount
Milligan Mine.
Cash provided by investing activities from
continuing operations of $132.5 million was recognized in 2021
compared to cash used in investing activities from continuing
operations of $74.6 million in 2020. The increase in 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 and proceeds received on the
disposition of PP&E, lower PP&E additions related to the
construction at the Öksüt Mine as it was completed in 2020, and
lower PP&E additions at the Kemess Project. The increase was
partially offset by higher PP&E additions 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 PP&E additions at the Öksüt Mine
primarily related to the heap leach expansion, capitalized drilling
costs, LOM study costs and ADR plant upgrade costs.
Cash used in financing activities of $49.1
million was recognized in 2021 compared to $124.0 million in 2020.
The decrease was primarily due to the net repayment of the
corporate revolving credit facility in 2020 and lower borrowing
costs, partially offset by higher dividends paid.
Contractual Obligations
The following table summarizes Centerra’s contractual
obligations as of December 31, 2021:
($millions) |
2022 |
2023 |
2024 |
2025 |
Thereafter |
Total |
Contractual commitments(1) |
$ |
14.8 |
$ |
0.2 |
$ |
— |
$ |
— |
$ |
— |
$ |
15.0 |
Reclamation provisions(2) |
6.2 |
— |
— |
— |
314.7 |
320.9 |
Pension obligations(3) |
0.1 |
0.1 |
0.2 |
0.2 |
3.4 |
4.0 |
Lease obligations |
6.6 |
5.8 |
3.4 |
3.0 |
2.9 |
21.7 |
Total |
$ |
27.7 |
$ |
6.1 |
$ |
3.6 |
$ |
3.2 |
$ |
321.0 |
$ |
361.6 |
(1) Excludes trade payables and accrued
liabilities.(2) Mining operations are subject to environmental
regulations that require companies to reclaim and remediate land
disturbed by mining operations. The Company has submitted closure
plans to the appropriate governmental agencies which estimate the
nature, extent and costs of reclamation for each of its mining
properties. Expected reclamation cash flows are presented above on
an undiscounted basis. Reclamation provisions recorded in the
Company’s consolidated financial statements are measured at the
expected value of future cash flows discounted to their present
value using a risk-free interest rate.(3) The Company provides
defined benefit plans for certain employees. The benefits are
generally based on the employee’s years of service, age and
level of compensation.
2022 Liquidity and Capital Resources
Analysis
The Company believes that it has sufficient
capital resources to satisfy its 2022 mandatory expenditure
commitments (including the contractual obligations set out above)
and discretionary expenditure commitments. The following table sets
out expected capital requirements and resources for 2022:
2022 Mandatory Commitments ($millions):Contractual
obligations(1) |
$ |
27.7 |
Accounts payable and accrued liabilities (as at December 31,
2021) |
|
186.8 |
Net income taxes payable (as at December 31, 2021) |
|
25.3 |
Total 2022 mandatory expenditure commitments |
$ |
239.8 |
2022 Discretionary
Commitments(2):Expected
capital expendituresNG |
$ |
100.0 |
Expected exploration costs(3) |
|
34.0 |
Total 2022 discretionary expenditure commitments |
$ |
134.0 |
Total 2022 mandatory and discretionary expenditure
commitments |
$ |
373.8 |
(1) From the
Contractual Obligations
table.(2) From the
Outlook
table.(3) Excludes
exploration costs expected to be capitalized which are included in
the expected capital expendituresNG. |
As of December 31, 2021, the Company had
adequate capital resources available to satisfy its commitments,
which include cash and cash equivalents of $947.2 million and an
undrawn $400.0 million Credit Facility. In addition, the Company
anticipated funding its commitments through cash provided by
operating activities.
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 production at the Mount Milligan Mine for $435 per ounce
of gold delivered and 15% of the spot price per metric tonne of
copper delivered. To satisfy its obligations under the Mount
Milligan Streaming Arrangement, the Company purchases refined gold
and copper warrants and arranges for delivery to Royal Gold. The
difference between the cost of the purchases of refined gold and
copper warrants and the corresponding amounts payable to the
Company under the Mount Milligan Streaming Arrangement is recorded
as a reduction of revenue and not a cost of operating the mine.
Water Update
Stored water inventory at the Mount Milligan
Mine’s TSF is critical to the mine’s ability to process ore through
the process plant on a sustainable basis. During 2021, the Mount
Milligan Mine accessed water from surface water sources and
groundwater wells near the TSF. The stored water as at December 31,
2021 is sufficient to enable continuous production for a period of
at least 12 months, under normal conditions. The Company expects
the water inventory level to decrease during the winter months
before being replenished during freshet in the spring.
In January 2022, and subsequent to the year
ended December 31, 2021, after significant discussions and
consultation with British Columbia regulators, First Nations
partners and other stakeholders, the Company obtained an amendment
to the Mount Milligan Mine’s environmental assessment certificate
which will allow access to long-term surface water sources for the
life of the project, subject to the receipt of ordinary course
permits.
Mount Milligan Mine Financial and Operating Results
|
Three months ended December
31 |
Year ended December 31 |
($millions, except as noted) |
2021 |
|
2020 |
|
% Change |
2021 |
|
2020 |
|
% Change |
Financial Highlights: |
|
|
|
|
|
|
Gold revenue |
78.9 |
|
46.7 |
|
69 |
% |
267.9 |
|
205.0 |
|
31 |
% |
Copper revenue |
61.7 |
|
53.0 |
|
16 |
% |
227.7 |
|
178.6 |
|
27 |
% |
Other by-product revenue |
2.0 |
|
2.6 |
|
(23 |
)% |
10.3 |
|
10.4 |
|
(1 |
)% |
Total revenue |
142.6 |
|
102.3 |
|
39 |
% |
505.9 |
|
394.0 |
|
28 |
% |
Production costs |
70.0 |
|
50.4 |
|
39 |
% |
256.8 |
|
219.8 |
|
17 |
% |
Depreciation, depletion and amortization |
21.7 |
|
16.4 |
|
32 |
% |
83.9 |
|
73.1 |
|
15 |
% |
Earnings from mine operations |
50.9 |
|
35.5 |
|
43 |
% |
165.2 |
|
101.1 |
|
63 |
% |
Impairment reversal |
(160.0 |
) |
— |
|
(100 |
)% |
(160.0 |
) |
— |
|
(100 |
)% |
Earnings from operations(1) |
207.8 |
|
28.4 |
|
632 |
% |
309.2 |
|
83.9 |
|
269 |
% |
Cash provided by mine operations |
63.5 |
|
44.0 |
|
44 |
% |
268.9 |
|
185.3 |
|
45 |
% |
Free cash flow from mine operations(2) |
46.3 |
|
30.7 |
|
51 |
% |
201.5 |
|
150.2 |
|
34 |
% |
Additions to property, plant and equipment |
28.9 |
|
16.0 |
|
80 |
% |
83.7 |
|
38.1 |
|
120 |
% |
Capital expenditures - total(2) |
22.4 |
|
16.6 |
|
35 |
% |
70.8 |
|
37.8 |
|
87 |
% |
Sustaining capital expenditures(2) |
20.2 |
|
16.6 |
|
22 |
% |
66.7 |
|
37.8 |
|
76 |
% |
Non-sustaining capital expenditures(2) |
2.2 |
|
— |
|
100 |
% |
4.1 |
|
— |
|
100 |
% |
Operating Highlights: |
|
|
|
|
|
|
Tonnes mined (000s) |
10,152 |
|
10,935 |
|
(7 |
)% |
43,588 |
|
41,238 |
|
6 |
% |
Tonnes ore mined (000s) |
3,554 |
|
5,350 |
|
(34 |
)% |
18,323 |
|
19,196 |
|
(5 |
)% |
Tonnes processed (000s) |
5,448 |
|
5,498 |
|
(1 |
)% |
20,900 |
|
20,067 |
|
4 |
% |
Process plant head grade gold (g/t) |
0.53 |
|
0.40 |
|
31 |
% |
0.46 |
|
0.41 |
|
11 |
% |
Process plant head grade copper (%) |
0.20 |
% |
0.24 |
% |
(18 |
)% |
0.21 |
% |
0.26 |
% |
(16 |
)% |
Gold recovery (%) |
65.9 |
% |
61.2 |
% |
8 |
% |
65.8 |
% |
62.9 |
% |
5 |
% |
Copper recovery (%) |
74.8 |
% |
73.4 |
% |
2 |
% |
78.3 |
% |
77.4 |
% |
1 |
% |
Concentrate produced (dmt) |
37,161 |
|
45,943 |
|
(19 |
)% |
162,250 |
|
184,915 |
|
(12 |
)% |
Gold produced (oz) (3) |
59,529 |
|
42,664 |
|
40 |
% |
196,438 |
|
161,855 |
|
21 |
% |
Gold sold (oz)(3) |
58,642 |
|
33,929 |
|
73 |
% |
203,103 |
|
154,100 |
|
32 |
% |
Average realized gold price - combined ($/oz)(3)(4) |
1,345 |
|
1,376 |
|
(2 |
)% |
1,319 |
|
1,330 |
|
(1 |
)% |
Copper produced (000s lbs)(3) |
16,993 |
|
20,376 |
|
(17 |
)% |
73,275 |
|
82,816 |
|
(12 |
)% |
Copper sold (000s lbs)(3) |
17,184 |
|
18,975 |
|
(9 |
)% |
78,017 |
|
80,477 |
|
(3 |
)% |
Average realized copper price - combined ($/lb)(3)(4) |
3.59 |
|
2.79 |
|
29 |
% |
2.92 |
|
2.22 |
|
32 |
% |
Unit Costs: |
|
|
|
|
|
|
Gold production costs ($/oz) |
670 |
|
755 |
|
(11 |
)% |
683 |
|
781 |
|
(13 |
)% |
All-in sustaining costs on a by-product basis ($/oz)(2) |
518 |
|
488 |
|
6 |
% |
508 |
|
552 |
|
(8 |
)% |
All-in costs on a by-product basis ($/oz)(2)(5) |
573 |
|
577 |
|
(1 |
)% |
556 |
|
600 |
|
(7 |
)% |
Gold - All-in sustaining costs on a co-product basis ($/oz)(2) |
883 |
|
1,043 |
|
(15 |
)% |
883 |
|
939 |
|
(6 |
)% |
Copper production costs ($/lb) |
1.79 |
|
1.31 |
|
37 |
% |
1.51 |
|
1.24 |
|
22 |
% |
Copper - All-in sustaining costs on a co-product basis
($/lb)(2) |
2.34 |
|
1.80 |
|
30 |
% |
1.94 |
|
1.48 |
|
31 |
% |
(1) Includes exploration costs, marketing and
selling costs and impairment reversal.(2) Non-GAAP financial
measure. See discussion under “Non-GAAP and Other Financial
Measures”.(3) 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.(4) This supplementary
financial measure within the meaning of 52-112 is calculated as a
ratio of revenue from the consolidated financial statements
and units of metal sold.(5) Includes the impact from the Mount
Milligan Streaming Arrangement and the impact of copper hedges.
Fourth Quarter 2021 compared to Fourth
Quarter 2020
Earnings from mine operations of $50.9 million
were recognized in the fourth quarter of 2021 compared to $35.5
million in the fourth quarter of 2020. The increase was primarily
due to higher gold ounces sold and higher average realized copper
prices, partially offset by an increase in production costs, higher
depreciation, depletion and amortization expenses and lower copper
pounds sold.
Mount Milligan Q4 cash provided by mine
operations ($ millions)
- https://ml.globenewswire.com/media/ed78a20a-3c95-45da-8001-9289073b671b/hires/?v=02242022091300
Cash provided by mine operations of $63.5
million was recognized in the fourth quarter of 2021 compared to
$44.0 million in the fourth quarter of 2020. The increase was
primarily due to higher gold ounces sold and higher average
realized copper prices, partially offset by an increase in
production costs and lower copper pounds sold.
Free cash flowNG from mine operations of $46.3
million was recognized in the fourth quarter of 2021 compared to
$30.7 million in the fourth quarter of 2020, primarily due to an
increase in cash provided by mine operations, partially offset by
an increase in sustaining capital expendituresNG related to the
implementation of a tailings pumping system, which will replace the
current gravity system. In addition, there were higher
non-sustaining capital expendituresNG related related to the stage
flotation reactors project in the fourth quarter of 2021.
During the fourth quarter of 2021, mining
activities were carried out in phases 4, 5, 7, 8, and 9 of the open
pit. Total tonnes mined were 10.2 million tonnes in the fourth
quarter of 2021 compared to 10.9 million tonnes in the fourth
quarter of 2020. The decrease in tonnes mined was primarily due to
lower tonnes of ore mined as a result of lower operator
availability for mining equipment and consequently higher
rehandling from the stockpile to maintain the required
throughput.
Total process plant throughput for the fourth
quarter of 2021 was 5.4 million tonnes, averaging 59,223 tonnes per
calendar day, compared to 5.5 million tonnes, averaging 59,762
tonnes per calendar day in the fourth quarter of 2020. The decrease
in throughput was a result of the longer planned process plant
shutdown in the fourth quarter of 2021 which required the full SAG
mill lining changeover compared to a less significant shutdown in
the fourth quarter of 2020.
Gold production was 59,529 ounces in the fourth
quarter of 2021 compared to 42,664 ounces in the fourth quarter of
2020. The increase was due to higher gold grades and recoveries.
During the fourth quarter of 2021, the average gold grade and
recoveries were 0.53 g/t and 66%, compared to 0.40 g/t and 61% in
the fourth quarter of 2020. Total copper production was 17.0
million pounds in the fourth quarter of 2021 compared to 20.4
million pounds in the fourth quarter of 2020. The decrease was due
to lower copper grades, partially offset by higher recoveries.
Gold production costs were $670 per ounce in the
fourth quarter of 2021 compared to $755 per ounce in fourth quarter
of 2020. The decrease was due to an increase in gold sold during
the fourth quarter of 2021 and a higher allocation of costs to
copper production costs, due to the relative changes in the market
prices of gold and copper. This was partially offset by higher
milling costs due to higher contractor costs associated with the
SAG mill liners changeover during the planned shutdown, higher
mining costs due to an increase in fuel consumption from higher
number of tonnes moved (including tonnes rehandled from the
stockpile), higher professional services costs related to mining
studies and the impact of the strengthening of the Canadian dollar
relative to the US dollar between periods. In the fourth quarter of
2021, the Company was able to minimize the impact of foreign
exchange and diesel fuel cost pressures on the Mount Milligan Mine
through its hedging program. In addition, the mine was able to
partially insulate itself from rising inflation in Canada and
COVID-19 related supply chain issues by maintaining increased
levels of supplies inventory.
Copper production costs were $1.79 per pound in
the fourth quarter of 2021 compared to $1.31 per pound in the
fourth quarter of 2020. The increase was primarily due to a
decrease in copper sold, a higher allocation of costs to copper
production costs, due to the relative changes in the market prices
of gold and copper, and higher production costs outlined above.
Mount Milligan Q4 All-in sustaining costs
on a by-product basis per ounceNG
($/oz)
- https://ml.globenewswire.com/media/cf1c1a1b-0103-4648-8eab-9db917331600/hires/?v=02242022091600
All-in sustaining costs on a by-product basisNG
were $518 per ounce in the fourth quarter of 2021 compared to $488
per ounce in the fourth quarter of 2020. The increase was primarily
due to higher production costs and higher sustaining capital
expendituresNG related to the implementation of a tailings pumping
system, which will replace the current gravity system, partially
offset by higher gold ounces sold and higher average realized
copper prices.
All-in costs on a by-product basisNG were $573
per ounce in the fourth quarter of 2021 compared to $577 per ounce
in the fourth quarter of 2020. The decrease was due to lower
exploration expense, partially offset by an increase in all-in
sustaining costs on a by-product basisNG and higher non-sustaining
capital expendituresNG related to the stage flotation reactors
project.
Year-ended December 31, 2021 compared to
2020
Earnings from mine operations of $165.2 million
were recognized in 2021 compared to $101.1 million in 2020. The
increase was primarily due to an increase in gold sold and higher
average realized copper prices. This was partially offset by an
increase in production costs from higher throughput, higher milling
costs, and the impact of the strengthening of the Canadian dollar.
In addition, there was an increase in depreciation, depletion and
amortization expense primarily due to the decrease in reserves
between the periods.
Mount Milligan YTD cash provided by mine
operations ($ millions)
- https://ml.globenewswire.com/media/f50cb97a-cb76-40b7-b559-5d493d763eb1/hires/?v=02242022091800
Cash provided by mine operations of $268.9
million was recognized in 2021 compared to $185.3 million in 2020.
The increase was due to an increase in gold sold, higher average
realized copper prices, and a favourable change in working capital,
primarily related to the timing of vendor payments between periods.
This was partially offset by an increase in production costs.
Free cash flowNG from mine operations of $201.5
million was recognized in 2021 compared to $150.2 million in 2020,
The increase was primarily due to an increase in cash provided by
mine operations, partially offset by an increase in sustaining
capital expendituresNG related to the purchase of mining equipment,
TSF development costs and the tailings pumping system project. In
addition, there were higher non-sustaining capital expendituresNG
related to the stage flotation reactors project in 2021.
During 2021, mining activities were carried out
in phases 4, 5, 7, 8 and 9 of the open pit. Total tonnes mined were
43.6 million tonnes in 2021 compared to 41.2 million tonnes in
2020. An increase in tonnes mined was primarily due to higher
step-out tonnes from more equipment availability in 2021 compared
to 2020.
The Mount Milligan Mine reported record mill
throughput in 2021, processing 20.9 million tonnes, averaging
57,261 tonnes per calendar day, compared to 20.1 million tonnes in
2020, averaging 54,827 tonnes per calendar day. The higher
throughput was primarily due to improved processing efficiency rate
and better reliability of the secondary crushing circuit in 2021
compared to 2020.
Gold production was 196,438 ounces in 2021
compared to 161,855 ounces in 2020. The increase was due to higher
throughput, gold grades and recoveries. During 2021, the average
gold grade was 0.46 g/t and recoveries were 66% compared to 0.41
g/t and 63% in 2020. Total copper production was 73.3 million
pounds in 2021 compared to 82.8 million pounds in 2020. The
decrease was primarily due to lower copper grades, partially offset
by higher throughput.
Gold production costs were $683 per ounce in
2021 compared to $781 per ounce in 2020. The decrease was primarily
due to an increase in gold sold, partially offset by higher milling
costs as a result of higher maintenance costs, and the impact of
the strengthening of the Canadian dollar. In 2021, the Company was
able to minimize the impact of foreign exchange and diesel fuel
cost pressures on the Mount Milligan Mine through its hedging
program. In addition, the mine was able to partially insulate
itself from rising inflation in Canada and COVID-19 related supply
chain issues, by maintaining increased levels of supplies
inventory.
Copper production costs were $1.51 per pound in
2021 compared to $1.24 per pound in 2020, primarily as a result of
a decrease in copper pounds sold and higher production costs due to
the reasons outlined above.
Mount Milligan YTD All-in sustaining costs
on a by-product basis per ounceNG
($/oz)
- https://ml.globenewswire.com/media/f9ffe1e8-1dae-49fb-8c29-e903a0fd37c4/hires/?v=02242022092000
All-in sustaining costs on a by-product basisNG
were $508 per ounce for 2021 compared to $552 per ounce in 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 expendituresNG and production costs.
All-in costs on a by-product basisNG were $556
per ounce in 2021 compared to $600 per ounce in 2020. The decrease
was due to lower all-in sustaining costs on a by-product basisNG.
This was partially offset by an increase in non- sustaining capital
expendituresNG relating to the stage flotation reactors
project.
Öksüt Mine
The Öksüt Mine is located in Turkey
approximately 300 kilometres southeast of Ankara and 48 kilometres
south of Kayseri, the provincial capital. The nearest
administrative centre is at Develi, located approximately 10
kilometres north of the mine site. The Öksüt Mine achieved
commercial production on May 31, 2020. Prior to achieving
commercial production, revenue from the sale of gold ounces was
deducted from the cost of related property, plant and equipment and
the associated production costs were added to the related property,
plant and equipment.
Öksüt Mine Financial and Operating Results
|
Three months ended December
31 |
Year ended December 31 |
($millions, except as noted) |
2021 |
2020 |
% Change |
2021 |
2020 |
% Change |
Financial Highlights: |
|
|
|
|
|
|
Revenue |
56.9 |
74.3 |
(23 |
)% |
199.4 |
186.5 |
7 |
% |
Production costs |
10.4 |
13.8 |
(25 |
)% |
51.1 |
35.2 |
45 |
% |
Depreciation, depletion and amortization |
7.8 |
7.1 |
10 |
% |
30.2 |
16.0 |
89 |
% |
Earnings from mine operations |
38.7 |
53.4 |
(28 |
)% |
118.1 |
135.3 |
(13 |
)% |
Earnings from operations(1) |
39.2 |
52.4 |
(25 |
)% |
116.4 |
133.6 |
(13 |
)% |
Cash provided by mine operations |
39.5 |
61.8 |
(36 |
)% |
131.7 |
146.1 |
(10 |
)% |
Free cash flow from mine operations(2) |
35.3 |
46.5 |
(24 |
)% |
111.6 |
105.2 |
6 |
% |
Additions to property, plant and equipment |
9.3 |
38.4 |
(76 |
)% |
24.9 |
69.3 |
(64.1 |
)% |
Capital expenditures - total(2) |
4.3 |
15.3 |
(72 |
)% |
19.6 |
43.8 |
(55 |
)% |
Sustaining capital expenditures(2) |
4.1 |
9.1 |
(55 |
)% |
18.8 |
13.4 |
40 |
% |
Non-sustaining capital expenditures(2) |
0.2 |
6.2 |
(97 |
)% |
0.8 |
30.4 |
(97 |
)% |
Operating Highlights: |
|
|
|
|
|
|
Tonnes mined (000s) |
3,820 |
4,440 |
(14 |
)% |
15,251 |
15,115 |
1 |
% |
Tonnes ore mined (000s) |
1,410 |
115 |
1128 |
% |
4,352 |
2,578 |
69 |
% |
Ore mined - grade (g/t) |
2.18 |
1.91 |
14 |
% |
1.54 |
1.68 |
(8 |
)% |
Ore crushed (000s) |
1,047 |
637 |
64 |
% |
3,947 |
3,428 |
15 |
% |
Tonnes of ore stacked (000s) |
1,064 |
952 |
12 |
% |
3,969 |
3,445 |
15 |
% |
Heap leach grade (g/t) |
2.42 |
0.78 |
210 |
% |
1.54 |
1.40 |
10 |
% |
Heap leach contained ounces stacked |
82,943 |
23,950 |
246 |
% |
195,990 |
154,948 |
26 |
% |
Gold produced (oz) |
31,668 |
39,380 |
(20 |
)% |
111,703 |
106,068 |
5 |
% |
Gold sold (oz)(3) |
31,670 |
39,380 |
(20 |
)% |
111,654 |
105,503 |
6 |
% |
Average realized gold price ($/oz)(4) |
1,796 |
1,887 |
(5 |
)% |
1,786 |
1,768 |
1 |
% |
Unit Costs: |
|
|
|
|
|
|
Gold production costs ($/oz) |
328 |
350 |
(6 |
)% |
457 |
356 |
28 |
% |
All-in sustaining costs on a by-product basis ($/oz)(2) |
495 |
658 |
(25 |
)% |
668 |
523 |
28 |
% |
All-in costs on a by-product basis ($/oz)(2) |
501 |
841 |
(40 |
)% |
694 |
848 |
(18 |
)% |
(1) Includes exploration costs.(2) Non-GAAP financial measure.
See discussion under “Non-GAAP and Other Financial Measures”.(3)
Includes 6,654 ounces sold before the mine was in commercial
production.(4) This supplementary financial measure, within the
meaning of 52-112, is calculated as a ratio of revenue from the
consolidated financial statements and units of metal sold.
Fourth Quarter 2021 compared to Fourth
Quarter 2020
Earnings from mine operations were $38.7 million
in the fourth quarter of 2021, compared to $53.4 million in the
fourth quarter of 2020. The decrease was primarily due to lower
gold revenue as a result of both a decrease in ounces of gold sold
and slightly lower average realized gold prices. The decrease was
partially offset by lower production costs, primarily due to a
decrease in ounces of gold sold and the weakening of the Turkish
lira relative to the US dollar between the periods which offset the
impact of rapidly increasing inflation starting in December
2021.
Öksüt Mine Q4 cash provided by mine
operations ($ millions)
- https://ml.globenewswire.com/media/adba953b-0495-47e8-a4b5-4224dbdfe1ba/hires/?v=02242022092100
Cash provided by mine operations of $39.5 million was recognized
in the fourth quarter of 2021, compared to $61.8 million in the
fourth quarter of 2020. The decrease was primarily due to a
decrease in gold revenues and higher cash taxes paid, partially
offset by a decrease in production costs.
Free cash flowNG from mine operations of $35.3
million was recognized in the fourth quarter of 2021, compared to
$46.5 million in the fourth quarter of 2020. The decrease was
primarily due to a decrease in cash provided by mine operations,
partially offset by lower sustaining capital expendituresNG from a
decrease in capitalized stripping costs and lower non- sustaining
capital expendituresNG as the construction of the Öksüt Mine was
completed in 2020.
Mining activities in the fourth quarter of 2021
were carried out in phases 2 and 4 of the Keltepe pit and phase 2
of the Güneytepe pit. Total tonnes mined were 3.8 million tonnes in
the fourth quarter of 2021 compared to 4.4 million tonnes in the
fourth quarter of 2020. The decrease in tonnes mined was primarily
due to higher downtime in the pit from unfavourable weather
conditions, including heavy fog, poor visibility and snow.
Processing activities in the fourth quarter of
2021 were focused on the preparation, stacking and irrigation of
the heap leach pad. In the fourth quarter of 2021 the Öksüt Mine
stacked 1.1 million tonnes at an average grade of 2.42 g/t,
containing 82,943 ounces of gold, compared to 1.0 million tonnes
stacked at an average grade of 0.78 g/t, containing 23,950 ounces
of gold in the fourth quarter of 2020.
Gold production was 31,668 ounces in the fourth
quarter of 2021 compared to 39,380 ounces in the fourth quarter of
2020, primarily due to the site management’s decision to apply
lower volume of solution to the ore tonnes stacked on the heap
leach in the fourth quarter of 2021. Gold production associated
with the tonnes of ore stacked but not leached in the fourth
quarter of 2021 is expected to occur early in 2022 as solution is
applied.
Gold production costs were $328 per ounce in the
fourth quarter of 2021 compared to $350 in the fourth quarter of
2020. The decrease was primarily due to the weakening of the
Turkish lira relative to the US dollar, partially offset by a
decrease in ounces of gold sold.
Öksüt Mine Q4 All-in sustaining costs on a
by-product basis per ounceNG
($/oz)
- https://ml.globenewswire.com/media/ddeb4bb3-d52d-4644-ad1b-e1642bc46a69/hires/?v=02242022092200
All-in sustaining costs on a by-product basisNG were $495 per
ounce in the fourth quarter of 2021 compared to $658 in the fourth
quarter of 2020. The decrease was primarily due to lower production
costs and lower sustaining capital expenditures from lower
capitalized stripping costs, partially offset by lower ounces of
gold sold.
All-in costs on a by-product basisNG were $501
per ounce in the fourth quarter of 2021 compared to $841 in the
fourth quarter of 2020. The decrease was due to lower all-in
sustaining costs on a by-product basisNG and lower non-sustaining
capital expenditures as the construction of the Öksüt Mine was
completed in 2020.
Year-ended December 31, 2021 and
2020
As the Öksüt Mine achieved commercial production
on May 31, 2020, financial and operating results for the year ended
December 31, 2021 may not be comparable to the results for the year
ended December 31, 2020.
Earnings from mine operations were $118.1
million in 2021 compared with $135.3 million in 2020. The decrease
was primarily due to an increase in production costs and
depreciation, depletion and amortization expense from a longer
operating period and higher number of ore tonnes stacked on the
heap leach pad. The increase in production costs was also due to a
lower strip ratio, resulting in lower portion of mining costs being
capitalized and higher community and social spending undertaken in
the first full year of commercial production. The decrease was
partially offset by the weakening of the Turkish lira relative to
the US dollar between periods.
Cash provided by mine operations was $131.7
million in 2021 compared with $146.1 million in 2020. The decrease
was primarily due to an increase in production costs and an
increase in income taxes paid, partially offset by an increase in
gold revenue from higher ounces of gold sold.
Free cash flowNG from mine operations was $111.6
million in 2021 compared with $105.2 million in 2020. The increase
was primarily due to lower non-sustaining capital expenditures, as
the mines construction was completed in 2020, partially offset by
lower cash provided by mine operations and higher sustaining
capital expendituresNG related to the heap leach expansion,
capitalized drilling costs, and ADR plant upgrades.
Processing activities in 2021 were focused on
the preparation, stacking and irrigation of the heap leach pad,
with 4.0 million tonnes stacked at an average grade of 1.54 g/t
containing 195,990 ounces of gold compared with 3.4 million tonnes
stacked in 2020 at an average grade of 1.40 g/t containing 154,948
ounces of gold.
Gold production was 111,703 ounces in 2021
compared to 106,068 ounces in 2020, primarily due to higher number
of ore tonnes stacked on the heap leach pad and higher average gold
grade stacked, partially offset by the site management’s decision
to apply lower volume of solution to the ore tonnes stacked on the
heap leach in the fourth quarter of 2021.
Gold production costs were $457 per ounce in
2021 compared with $356 per ounce in 2020. The increase was
primarily due to lower strip ratio, resulting in lower portion of
mining costs being capitalized and higher community and social
spending related to various one-off initiatives in the local
community, some of which were undertaken in the first full year of
commercial production. The increase was partially offset by an
increase in ounces of gold sold.
All-in sustaining costs on a by-product basisNG
were $668 per ounce in 2021 compared with $523 per ounce in 2020.
The increase was primarily due to higher production costs and
higher sustaining capital expendituresNG, partially offset by an
increase in ounces of gold sold.
All-in costs on a by-product basisNG were $694
per ounce in 2021 compared with $848 per ounce in 2020. The
decrease was primarily due to lower non-sustaining capital
expenditures as the construction of the Öksüt Mine was completed in
2020, partially offset by higher all-in sustaining costs on a
by-product basisNG.
Molybdenum Business Unit
The Molybdenum BU includes the Langeloth
Facility in Pennsylvania and two North American molybdenum mines
that are currently on care and maintenance: the Thompson Creek Mine
in Idaho and the 75%-owned Endako Mine in British Columbia. The
Thompson Creek Mine operates a molybdenum beneficiation circuit to
treat molybdenum concentrates to supplement the concentrate feed
sourced directly for the Langeloth Facility. This beneficiation
process allows the Company to upgrade high copper content
molybdenum concentrate, purchased from third parties, into upgraded
products which are then sold in the metallurgical and chemical
markets.
Molybdenum BU Financial and Operating
Results
|
Three months ended December
31 |
Year ended December 31 |
($millions, except as noted) |
2021 |
|
2020 |
|
% Change |
2021 |
|
2020 |
|
% Change |
Financial Highlights: |
|
|
|
|
|
|
Molybdenum revenue |
48.6 |
|
33.7 |
|
44 |
% |
184.5 |
|
132.3 |
|
40 |
% |
Other revenue |
2.9 |
|
1.7 |
|
74 |
% |
10.2 |
|
8.5 |
|
21 |
% |
Total revenue |
51.6 |
|
35.4 |
|
46 |
% |
194.8 |
|
140.8 |
|
38 |
% |
Production costs |
51.5 |
|
35.0 |
|
47 |
% |
179.7 |
|
154.9 |
|
16 |
% |
Depreciation, depletion and amortization |
1.5 |
|
1.7 |
|
(12 |
)% |
6.4 |
|
6.8 |
|
(6 |
)% |
(Loss) earnings from mine operations |
(1.2 |
) |
(1.3 |
) |
6 |
% |
8.7 |
|
(20.9 |
) |
(142 |
)% |
Care and maintenance costs - Molybdenum mines |
4.3 |
|
3.1 |
|
37 |
% |
14.6 |
|
12.9 |
|
13 |
% |
Reclamation expense |
24.1 |
|
9.3 |
|
(159 |
)% |
23.2 |
|
53.4 |
|
(57 |
)% |
Other operating expenses |
0.8 |
|
0.6 |
|
31 |
% |
2.2 |
|
2.1 |
|
4 |
% |
Net loss from operations |
(30.4 |
) |
(14.1 |
) |
(115 |
)% |
(31.4 |
) |
(89.3 |
) |
(65 |
)% |
Cash (used in) provided by operations |
(15.8 |
) |
(3.8 |
) |
316 |
% |
(37.3 |
) |
11.4 |
|
(427 |
)% |
Free cash flow (deficit) from operations(1) |
(17.2 |
) |
(6.2 |
) |
177 |
% |
(39.8 |
) |
5.6 |
|
811 |
% |
Additions to property, plant and equipment |
1.4 |
|
3.0 |
|
(53 |
)% |
2.5 |
|
6.5 |
|
62 |
% |
Total capital expenditures(1) |
1.4 |
|
2.3 |
|
(39 |
)% |
2.5 |
|
5.8 |
|
(57 |
)% |
Operating Highlights: |
|
|
|
|
|
|
Mo purchased (lbs) |
2,941 |
|
2,924 |
|
1 |
% |
10,650 |
|
13,577 |
|
(22 |
)% |
Mo roasted (lbs) |
2,475 |
|
2,712 |
|
(9 |
)% |
10,286 |
|
13,760 |
|
(25 |
)% |
Mo sold (lbs) |
2,361 |
|
3,610 |
|
(35 |
)% |
11,461 |
|
13,667 |
|
(16 |
)% |
Average market Mo price ($/lb) |
18.89 |
|
9.01 |
|
110 |
% |
15.98 |
|
8.68 |
|
84 |
% |
(1) Non-GAAP financial measure. See discussion under “Non-GAAP
and Other Financial Measures”.
Fourth Quarter 2021 compared to Fourth
Quarter 2020
Loss from mine operations of $1.2 million was
recognized in the fourth quarter of 2021 compared to a loss of $1.3
million in the fourth quarter of 2020. The decrease in loss from
mine operations was primarily due to increased sales margin from
rising molybdenum prices and the effect of various cost control
measures.
Cash used in operations of $15.8 million was
recognized in the fourth quarter of 2021, compared to $3.8 million
in the fourth quarter of 2020. The increase in cash used in
operations 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.
Free cash flow deficit from operationsNG of
$17.2 million was recognized in the fourth quarter of 2021,
compared to $6.2 million in the fourth quarter of 2020. The
increased deficit was primarily due to lower cash provided by
operations.
The Langeloth Facility roasted and sold 2.5
million pounds and 2.4 million pounds of molybdenum, respectively,
in the fourth quarter of 2021, compared to 2.7 million pounds and
3.6 million pounds, respectively in the fourth quarter of 2020.
This 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.
Reclamation expense was $24.1 million in the
fourth quarter of 2021 compared to $9.3 million in the fourth
quarter of 2020. The increase in expense was primarily due to a
decline in the estimated discount rates applied to the underlying
future reclamation costs and an increase in estimated future
reclamation cash flows impacted by various factors, including
higher inflation.
Moly Oxide Pricing $USD/lb (Jan 2020 - Dec
2021)
- https://ml.globenewswire.com/media/2664189b-45ab-4567-a088-85d3f73e1f42/hires/?v=02242022092300
Year-ended December 31, 2021 compared to
2020
Earnings from mine operations of $8.7 million
were recognized in 2021 compared to a loss from mine operations of
$20.9 million in 2020. The increase was primarily due to the
increased sales margin from rising molybdenum prices and a non-
cash write-down related to product inventory recorded in 2020 of
$13.6 million.
Cash used by operations was $37.3 million in
2021 compared to cash provided by operations of $11.4 million in
2020. The decline was primarily due to an unfavourable working
capital change related to product inventory purchases at higher
average molybdenum prices and a $22.8 million non-recurring tax
refund received in 2020.
Free cash flow deficit from operationsNG of
$39.8 million was recognized in 2021 compared to $5.6 million in
2020, primarily due to lower cash provided by operations, as
described above.
The Langeloth Facility roasted and sold 10.3
million pounds and 11.5 million pounds of molybdenum, respectively,
in 2021 compared to 13.8 million pounds and 13.7 million pounds,
respectively, in 2020. The decrease in the molybdenum both roasted
and sold was primarily due to a decline in molybdenum concentrate
available for roasting, resulting from a decrease in concentrate
supply and increased competition for concentrate.
Discontinued Operations
Kumtor Mine
As a result of the events described in the
Recent Events and Developments section, the Kumtor Mine was
reclassified as a discontinued operation in the second quarter of
2021. Consequently, the Company is only presenting 2021 financial
and operating results pertaining to the period up to the date that
the loss of control occurred. Therefore, the results may not be
comparable between reporting periods.
Kumtor Mine Financial and Operating Results
|
Three months ended December 31 |
|
Year ended December 31 |
($millions, except as noted) |
2021 |
2020 |
|
2021 |
|
2020 |
Financial Highlights: |
|
|
|
|
|
Revenue |
— |
179.6 |
|
264.1 |
|
988.9 |
Production costs |
— |
43.9 |
|
72.6 |
|
202.1 |
Depreciation, depletion and amortization |
— |
38.5 |
|
57.9 |
|
209.5 |
Standby costs |
— |
— |
|
— |
|
6.7 |
Earnings from mine operations |
— |
97.2 |
|
133.6 |
|
570.6 |
Loss on the change of control of the Kumtor Mine |
— |
— |
|
(926.4 |
) |
— |
Net earnings (loss) from discontinued operations |
— |
63.6 |
|
(828.7 |
) |
392.4 |
Cash provided by operating activities from discontinued
operations |
— |
97.6 |
|
143.9 |
|
657.6 |
Cash used in investing activities from discontinued operations |
— |
69.5 |
|
96.1 |
|
228.7 |
Net cash flow from discontinued operations |
— |
28.1 |
|
47.8 |
|
428.9 |
Free cash flow from discontinued operations(1) |
— |
25.1 |
|
53.7 |
|
434.9 |
Operating Highlights: |
|
|
|
|
|
Tonnes mined (000s) |
— |
42,733 |
|
74,261 |
|
103,735 |
Tonnes ore mined (000s) |
— |
115 |
|
1,298 |
|
705 |
Tonnes processed (000s) |
— |
1,563 |
|
2,343 |
|
6,323 |
Process plant head grade (g/t) |
— |
2.11 |
|
2.52 |
|
3.27 |
Recovery (%)(2) |
— |
74.2 |
% |
71.5 |
% |
81.4% |
Gold produced (oz) |
— |
90,402 |
|
139,830 |
|
556,136 |
Gold sold (oz) |
— |
96,641 |
|
147,800 |
|
569,213 |
Unit Costs: |
|
|
|
|
|
Gold production costs ($/oz) |
— |
311 |
|
491 |
|
355 |
All-in sustaining costs on a by-product basis ($/oz)(1) |
— |
778 |
|
929 |
|
746 |
All-in costs on a by-product basis ($/oz)(1) |
— |
1,062 |
|
1,414 |
|
1,047 |
(1) Non-GAAP measure. See discussion under “Non-GAAP and Other
Financial Measures”.(2) Metallurgical recoveries are based on
recovered gold, not produced gold.
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 an initial gain on sale of $72.3 million (excluding
any contingent consideration). Pursuant to an agreement dated
December 15, 2020, with Orion and Premier Gold Mines Limited, the
Company was entitled to received further contingent consideration,
payable upon making a construction decision and upon achieving
certain production milestones.
In the fourth quarter of 2021, the Greenstone
project was approved for construction and thus the initial
contingency payment of $25.0 million became receivable and owing
from Orion, payable no later than December 2023. As a result, the
Company recognized an additional gain on the sale of its interest
in Greenstone Partnership of $25.0 million in the fourth quarter of
2021.
The remaining contingent payments are payable no
later than 30 days following the date on which a cumulative
production milestone of (i) 250,000 ounces; (ii) 500,000 ounces;
and, (iii) 750,000 ounces have been achieved. The amounts are
payable in US dollars, equal to the product of 11,111 and the
20-day average gold market price on the business day immediately
prior to the date of the payment.
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.
$millions, except per share data |
2021 |
2020 |
quarterly data unaudited |
Q4 |
Q3 |
Q2 |
Q1 |
Q4 |
Q3 |
Q2 |
Q1 |
Revenue |
251 |
221 |
202 |
226 |
212 |
251 |
130 |
128 |
Net earnings (loss) from continuing operations |
275 |
28 |
33 |
111 |
31 |
82 |
(39) |
(66) |
Basic earnings (loss) per share - continuing operations |
0.93 |
0.09 |
0.11 |
0.37 |
0.10 |
0.28 |
(0.13) |
(0.22) |
Diluted earnings (loss) per share - continuing operations |
0.92 |
0.09 |
0.10 |
0.36 |
0.10 |
0.26 |
(0.13) |
(0.24) |
Net earnings (loss) |
275 |
28 |
(852) |
167 |
95 |
206 |
81 |
20 |
Basic earnings (loss) per share |
0.93 |
0.09 |
(2.87) |
0.57 |
0.32 |
0.70 |
0.27 |
0.07 |
Diluted earnings (loss) per share |
0.92 |
0.09 |
(2.87) |
0.55 |
0.32 |
0.68 |
0.27 |
0.06 |
Related Party Transactions
Kyrgyzaltyn
The breakdown of sales transactions in the
normal course of business with Kyrgyzaltyn, prior to the loss of
control event in respect of the Kumtor Mine, is as follows:
|
|
2021 |
|
2020 |
Gross gold and silver sales to Kyrgyzaltyn |
$ |
265,407 |
$ |
995,111 |
Deduct: refinery and financing charges |
|
(1,248) |
|
(6,164) |
Net revenue received from
Kyrgyzaltyn(1) |
$ |
264,159 |
$ |
988,947 |
(1) Presented in results from discontinued operations.
Sojitz Corporation
The Endako Mine is operated as a joint operation
between the Company, holding a 75% interest, and Sojitz Corporation
(“Sojitz”), a Japanese company, holding a 25% interest. The
Langeloth Facility which is part of the Molybdenum BU segment sells
refined molybdenum concentrate product to Sojitz.
The breakdown of the Company’s transactions in the normal course
of business with Sojitz is as follows:
|
|
2021 |
|
2020 |
Sales to Sojitz |
$ |
24,780 |
$ |
12,469 |
Deduct: commission charges |
|
(305) |
|
(253) |
Revenue(1) |
$ |
24,475 |
$ |
12,216 |
(1) Amount receivable from Sojitz as at December 31, 2021
was $2.6 million (December 31, 2020 - $0.3 million ).
Transactions with key management personnel
The Company transacts with key management
personnel, who have authority and responsibility to plan, direct
and control the activities of the Company and receive compensation
for services rendered in that capacity. Key management personnel
include members of the Board of Directors and members of the senior
leadership team.
During the years ended December 31, 2021 and 2020, remuneration
to key management personnel was as follows:
Compensation of key management personnel |
|
|
|
2021 |
|
2020 |
Director fees earned and other compensation |
$ |
754 |
$ |
820 |
Salaries and benefits |
|
7,830 |
|
6,354 |
Share-based compensation |
|
1,894 |
|
12,275 |
Total compensation |
$ |
10,478 |
$ |
19,449 |
|
|
|
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.
Management’s estimates and underlying
assumptions are reviewed on an ongoing basis. Any changes or
revisions to estimates and underlying assumptions are recognized in
the period in which the estimates are revised and in any future
periods affected. Changes to these critical accounting estimates
could have a material impact on the consolidated financial
statements.
The key sources of estimation uncertainty and
judgment used in the preparation of the consolidated financial
statements that might have a significant risk of causing a material
adjustment to the carrying value of assets and liabilities and
(loss) earnings are outlined in Note 4 of the audited consolidated
financial statements for the year ended December 31, 2021.
Disclosure Controls and Procedures and Internal Control
Over Financial Reporting
The Company’s management, including the CEO and
CFO, is responsible for the design of disclosure controls and
procedures (“DC&P”) and internal controls over financial
reporting (“ICFR”). Centerra adheres to the Committee of Sponsoring
Organizations of the Treadway Commission’s (“COSO”) revised 2013
Internal Control Framework for the design of its ICFR. There was no
material change to the Company’s internal controls over financial
reporting that occurred during 2021 that has materially affected,
or is reasonably likely to materially affect, the Company’s
internal controls over financial reporting.
The evaluation of DC&P and ICFR was carried
out under the supervision of and with the participation of
management, including Centerra’s CEO and CFO. Based on these
evaluations, the CEO and the CFO concluded that the design and
operation of these DC&P and ICFR were effective throughout
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 year ended December 31, 2021
that have materially affected, or are reasonably likely to
materially affect, internal control over financial reporting.
Non-GAAP and Other Financial Measures
This MD&A contains “specified financial
measures” within the meaning of NI 52-112, specifically the
non-GAAP financial measures, non-GAAP ratios and supplementary
financial measures described below. Management believes that the
use of these measures assists analysts, investors and other
stakeholders of the Company in understanding the costs associated
with producing gold and copper, understanding the economics of gold
and copper 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.
The specified financial measures used in this MD&A do not have
any standardized meaning prescribed by IFRS 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 specified financial
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 in this MD&A: adjusted net earnings from continuing
operations; free cash flow from continuing operations and adjusted
free cash flow from continuing operations, and the following
non-GAAP ratio was added in this MD&A: adjusted net earnings
from continuing operations per common share (basic and diluted).
These measures are calculated in a similar fashion as the
equivalent non-GAAP financial measures and ratios presented on a
total basis, inclusive of both continuing operations and
discontinued operations.
The following is a description of the non-GAAP
financial measures, non-GAAP ratios and supplementary financial
measures used in this MD&A:
- All-in sustaining
costs on a by-product basis per ounce is a non-GAAP ratio
calculated as all-in sustaining costs on a by-product basis divided
by ounces of gold sold. All-in sustaining costs on a by-product
basis is a non- GAAP financial measure calculated as the aggregate
of production costs as recorded in the consolidated statements of
(loss) earnings, 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 for the Kumtor Mine excludes revenue-based taxes.
A reconciliation of all-in sustaining costs on a by-product basis
to the nearest IFRS measure is set out below. Management uses these
measures to monitor the cost management effectiveness of each of
its operating mines.
- All-in sustaining
costs on a co-product basis per ounce of gold or per pound of
copper, is a non-GAAP ratio calculated as all-in sustaining costs
on a co-product basis divided by ounces of gold or pounds of copper
sold, as applicable. All-in sustaining costs on a co-product basis
is a non-GAAP financial measure based on an allocation of
production costs between copper and gold based on the conversion of
copper production to equivalent ounces of gold. The Company uses a
conversion ratio for calculating gold equivalent ounces for its
copper sales calculated by multiplying the copper pounds sold by
estimated average realized copper price and dividing the resulting
figure by estimated average realized gold price. For the fourth
quarter and year ended December 31, 2021, 375 pounds and 452
pounds, respectively, of copper were equivalent to one ounce of
gold. All-in sustaining costs on a co-product basis for the Kumtor
Mine excludes revenue-based taxes. A reconciliation of all-in
sustaining costs on a co-product basis to the nearest IFRS measure
is set out below. Management uses these measures to monitor the
cost management effectiveness of each of its operating mines.
- Sustaining
capital expenditures and Non-sustaining capital expenditures are
non-GAAP financial measures. Sustaining capital expenditures are
defined as those expenditures required to sustain current
operations and exclude all expenditures incurred at new operations
or major projects at existing operations where these projects will
materially benefit the operation. Non-sustaining capital
expenditures are primarily costs incurred at ‘new operations’ and
costs related to ‘major projects at existing operations’ where
these projects will materially benefit the operation. A material
benefit to an existing operation is considered to be at least a 10%
increase in annual or life of mine production, net present value,
or reserves compared to the remaining life of mine of the
operation. A reconciliation of sustaining capital expenditures and
non-sustaining capital expenditures to the nearest IFRS measures is
set out below. Management uses the distinction of the sustaining
and non-sustaining capital expenditures as an input into the
calculation of all-in sustaining costs per ounce and all-in costs
per ounce.
- All-in costs on
a by-product basis per ounce is a non-GAAP ratio calculated as
all-in costs on a by-product basis divided by ounces sold. All-in
costs on a by-product basis is a non-GAAP financial measure which
includes all- in sustaining costs on a by-product basis.
exploration and study costs, non-sustaining capital expenditures,
care and maintenance and predevelopment costs. All-in costs on a
by-product basis per ounce for the Kumtor Mine include
revenue-based taxes. A reconciliation of all-in costs on a
by-product basis to the nearest IFRS measures is set out below.
Management uses these measures to monitor the cost management
effectiveness of each of its operating mines.
- Adjusted net
earnings is a non-GAAP financial measure calculated by adjusting
net (loss) earnings as recorded in the consolidated statements
of (loss) income and comprehensive (loss) income 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. A
reconciliation of adjusted net earnings to the nearest IFRS
measures is set out below. 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 a non-GAAP financial measure
calculated by adjusting net (loss) earnings from continuing
operations as recorded in the consolidated statements of (loss)
earnings and comprehensive (loss) income for items not
associated with continuing operations. This measure adjusts for the
impact of items not associated with continuing operations. A
reconciliation of adjusted net earnings from continuing operations
to the nearest IFRS measures is set out below. 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.
- Free cash flow
from continuing operations is a non-GAAP financial measure
calculated as cash provided by operating activities from continuing
operations less property, plant and equipment additions. A
reconciliation of free cash flow from continuing operations to the
nearest IFRS measures is set out below. Management uses this
measure to monitor the amount of cash available to reinvest in the
Company and allocate for shareholder returns.
- Free cash flow
from mine operations is a non-GAAP financial measure calculated as
cash provided by mine operations less property, plant and equipment
additions. A reconciliation of free cash flow from mine operations
to the nearest IFRS measures is set out below. Management uses this
measure to monitor the degree of self- funding of each of its
operating mines and facilities.
- Free cash flow
from discontinued operations is a non-GAAP financial measure
calculated as cash provided by operating activities from
discontinued operations less property, plant and equipment
additions associated with discontinued operations. A reconciliation
of free cash flow from discontinued operations to the nearest IFRS
measures is set out below.
- Adjusted free
cash flow from operations is a non-GAAP financial measure
calculated as free cash flow adjusted for items not associated with
ongoing operations. A reconciliation of adjusted free cash flow
from operations to the nearest IFRS measures is set out below.
Management uses this measure to monitor the amount of cash from
ongoing operations available to reinvest in the Company and
allocate for shareholder returns.
- Average realized
gold price is a supplementary financial measure 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. Management uses this
measure to monitor its sales of gold ounces against the average
market gold price.
- Average realized
copper price is a supplementary financial measure 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. Management uses this
measure to monitor its sales of gold ounces against the average
market copper price.
- Total liquidity
is a supplementary financial measure calculated as cash and cash
equivalents and amount available under the corporate credit
facility. Management uses this measure to determine if the Company
can meet all of its commitments, execute on the business plan, and
to mitigate the risk of economic downturns.
Certain unit costs, including all-in
sustaining costs on a by-product basis (including and excluding
revenue-based taxes) per ounce, are non-GAAP ratios which include
as a component certain non-GAAP financial measures including all-in
sustaining costs on a by-product basis which can be reconciled as
follows:
(Unaudited - $millions, unless otherwise
specified) |
Three months ended December 31 |
Consolidated(2)
|
Mount Milligan |
Öksüt |
Kumtor |
2021 |
2020 |
2021 |
2020 |
2021 |
2020 |
2021 |
2020 |
Production costs attributable to gold |
49.7 |
39.4 |
39.3 |
25.6 |
10.4 |
13.8 |
— |
43.9 |
Production costs attributable to copper |
30.7 |
24.9 |
30.7 |
24.9 |
— |
— |
— |
— |
Total production costs excluding molybdenum segment, as
reported |
80.4 |
64.3 |
70.0 |
50.5 |
10.4 |
13.8 |
— |
43.9 |
Adjust for: |
|
|
|
|
|
|
|
|
Third party smelting, refining and transport costs |
2.3 |
2.3 |
2.2 |
2.3 |
0.1 |
— |
— |
1.1 |
By-product and co-product credits |
(63.8) |
(55.5) |
(63.8) |
(55.5) |
— |
— |
— |
(1.4) |
Community costs related to current operations |
— |
— |
— |
— |
— |
— |
— |
2.2 |
Adjusted production costs |
18.9 |
11.1 |
8.4 |
(2.7) |
10.5 |
13.8 |
— |
45.8 |
Corporate general administrative and other costs |
7.3 |
17.5 |
(0.1) |
0.3 |
— |
— |
— |
— |
Reclamation and remediation - accretion (operating sites) |
1.5 |
0.7 |
0.5 |
0.7 |
1.0 |
— |
— |
0.7 |
Sustaining capital expenditures |
24.3 |
25.7 |
20.2 |
16.6 |
4.1 |
9.1 |
— |
63.4 |
Sustaining leases |
1.4 |
4.7 |
1.3 |
1.7 |
0.1 |
3.0 |
— |
— |
All-in sustaining costs on a by-product basis |
53.4 |
59.7 |
30.3 |
16.6 |
15.7 |
25.9 |
— |
109.9 |
Revenue-based taxes |
— |
— |
— |
— |
— |
— |
— |
25.2 |
Exploration and study costs |
6.4 |
7.5 |
1.1 |
3.0 |
— |
1.0 |
— |
5.5 |
Non-sustaining capital expenditures(1) |
2.4 |
10.8 |
2.2 |
— |
0.2 |
6.2 |
— |
9.4 |
Care and maintenance costs and pre-development costs |
4.0 |
5.8 |
— |
— |
— |
— |
— |
— |
All-in costs on a by-product basis |
66.2 |
83.8 |
33.6 |
19.6 |
15.9 |
33.1 |
— |
150.0 |
Ounces sold (000s) |
90.3 |
73.3 |
58.6 |
33.9 |
31.7 |
39.4 |
— |
141.3 |
Pounds sold (millions) |
17.2 |
19.0 |
17.2 |
19.0 |
— |
— |
— |
— |
Gold production costs ($/oz) |
550 |
537 |
670 |
755 |
328 |
350 |
— |
311 |
All-in sustaining costs on a by-product basis ($/oz) |
591 |
813 |
518 |
488 |
495 |
658 |
— |
778 |
All-in costs on a by-product basis ($/oz) |
732 |
1,144 |
573 |
577 |
501 |
841 |
— |
1,062 |
Gold - All-in sustaining costs on a co-product basis ($/oz) |
829 |
1,070 |
883 |
1,043 |
495 |
658 |
— |
778 |
Copper production costs ($/pound) |
1.79 |
1.31 |
1.79 |
1.31 |
n/a |
n/a |
— |
n/a |
Copper - All-in sustaining costs on a co-product basis
($/pound) |
2.34 |
1.80 |
2.34 |
1.80 |
n/a |
n/a |
— |
n/a |
(1) 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 include costs related primarily
to the installation of the staged flotation reactors at the Mount
Milligan Mine.(2) Presented on a continuing operations basis,
excluding the results from the Kumtor Mine.
|
Year ended December 31 |
|
Consolidated(2) |
Mount Milligan |
Öksüt |
|
Kumtor(3) |
(Unaudited - $millions, unless otherwise
specified) |
2021 |
|
2020 |
|
2021 |
|
2020 |
|
2021 |
2020 |
|
2021 |
2020 |
|
Production costs attributable to gold |
189.9 |
|
155.6 |
|
138.8 |
|
120.4 |
|
51.1 |
35.2 |
|
72.6 |
202.2 |
|
Production costs attributable to copper |
118 |
|
99.4 |
|
118 |
|
99.4 |
|
— |
— |
|
— |
— |
|
|
|
|
|
|
|
|
|
|
|
|
Total production costs excluding molybdenum segment, as
reported |
307.9 |
|
255 |
|
256.8 |
|
219.8 |
|
51.1 |
35.2 |
|
72.6 |
202.2 |
|
Adjust for: |
|
|
|
|
|
|
|
|
|
|
Third party smelting, refining and transport costs |
11.1 |
|
8.7 |
|
10.1 |
|
8.7 |
|
1.0 |
— |
|
1.2 |
6.2 |
|
By-product and co-product credits |
(238.0 |
) |
(188.9 |
) |
(238.0 |
) |
(188.9 |
) |
— |
— |
|
— |
(7 |
) |
Community costs related to current operations |
— |
|
— |
|
— |
|
— |
|
— |
— |
|
2.6 |
19.3 |
|
Adjusted production costs |
81 |
|
74.8 |
|
28.9 |
|
39.6 |
|
52.1 |
35.2 |
|
76.4 |
220.4 |
|
Corporate general administrative and other costs |
27.7 |
|
46.1 |
|
1 |
|
1.2 |
|
— |
— |
|
— |
— |
|
Reclamation and remediation - accretion (operating sites) |
4.9 |
|
1.6 |
|
1.8 |
|
1.6 |
|
3.1 |
— |
|
0.3 |
3.6 |
|
Sustaining capital expenditures |
85.5 |
|
51.2 |
|
66.7 |
|
37.8 |
|
18.8 |
13.4 |
|
60.6 |
200.5 |
|
Sustaining leases |
5.4 |
|
7.9 |
|
4.8 |
|
4.8 |
|
0.6 |
3.1 |
|
— |
— |
|
All-in sustaining costs on a by-product basis |
204.5 |
|
181.6 |
|
103.2 |
|
85 |
|
74.6 |
51.7 |
|
137.3 |
424.5 |
|
Revenue-based taxes |
— |
|
— |
|
— |
|
— |
|
— |
— |
|
37 |
138.5 |
|
Exploration and study costs |
23.6 |
|
23.3 |
|
5.6 |
|
7.5 |
|
2.1 |
1.7 |
|
8.8 |
15.9 |
|
Non-sustaining capital expenditures(1) |
5.3 |
|
53 |
|
4.1 |
|
— |
|
0.8 |
30.4 |
|
25.9 |
16.8 |
|
Care and maintenance costs and pre-development costs |
14.1 |
|
24.3 |
|
— |
|
— |
|
— |
— |
|
— |
— |
|
All-in costs on a by-product basis |
247.4 |
|
282.2 |
|
112.9 |
|
92.5 |
|
77.5 |
83.8 |
|
209 |
595.7 |
|
Ounces sold (000s) |
314.8 |
|
253 |
|
203.1 |
|
154.1 |
|
111.7 |
98.9 |
|
147.8 |
569.2 |
|
Pounds sold (millions) |
78 |
|
80.5 |
|
78 |
|
80.5 |
|
— |
— |
|
— |
— |
|
Gold production costs ($/oz) |
604 |
|
615 |
|
683 |
|
781 |
|
457 |
356 |
|
491 |
355 |
|
All-in sustaining costs on a by-product basis ($/oz) |
649 |
|
718 |
|
508 |
|
552 |
|
668 |
523 |
|
929 |
746 |
|
All-in costs on a by-product basis ($/oz) |
785 |
|
1116 |
|
556 |
|
600 |
|
694 |
848 |
|
1414 |
1047 |
|
Gold - All-in sustaining costs on a co-product basis ($/oz) |
891 |
|
954 |
|
883 |
|
939 |
|
668 |
523 |
|
929 |
746 |
|
Copper production costs ($/pound) |
1.51 |
|
1.24 |
|
1.51 |
|
1.24 |
|
n/a |
n/a |
|
n/a |
n/a |
|
Copper - All-in sustaining costs on a co-product basis
($/pound) |
1.94 |
|
1.48 |
|
1.94 |
|
1.48 |
|
n/a |
n/a |
|
n/a |
n/a |
|
|
|
|
|
|
|
|
|
|
|
(1) Non-sustaining capital expenditures are
distinct projects designed to have a significant increase in the
net present value of the mine. In the current year, non-sustaining
capital expenditures include costs related primarily to the
installation of the staged flotation reactors at the Mount Milligan
Mine and the expansion of the Kumtor Mine while in prior year they
related primarily to construction costs at the Öksüt Mine and the
water treatment plant at the Kemess Project.(2) Presented on a
continuing operations basis, excluding the results from the Kumtor
Mine.(3) Results for the periods ended December 31, 2021 from the
Kumtor Mine are prior to the seizure of the mine on May 15,
2021.
Adjusted net earnings is a non-GAAP financial measure
and can be reconciled as follows:
|
Three months ended December 31, |
Year ended December 31, |
($millions, except as noted) |
2021 |
|
2020 |
2021 |
|
2020 |
Net earnings (loss) |
274.9 |
|
95.2 |
(381.8 |
) |
408.5 |
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 |
11.3 |
|
— |
27.5 |
|
— |
Gain from the discontinuance of Kumtor Mine hedge instruments |
— |
|
— |
(15.3 |
) |
— |
Impairment reversal, net of tax |
(117.3 |
) |
— |
(117.3 |
) |
— |
Gain on the sale of Greenstone property |
(25.0 |
) |
— |
(97.3 |
) |
— |
Reclamation provision revaluation expense at sites on care and
maintenance |
24.2 |
|
9.3 |
24.1 |
|
53.4 |
Income and mining tax adjustments(1) |
(132.7 |
) |
— |
(132.7 |
) |
— |
Adjusted net earnings |
35.4 |
|
104.5 |
233.6 |
|
461.9 |
Net earnings (loss) per share - basic |
0.93 |
|
0.32 |
(1.29 |
) |
1.39 |
Net earnings (loss) per share - diluted |
0.92 |
|
0.32 |
(1.29 |
) |
1.37 |
Adjusted net earnings per share - basic |
0.12 |
|
0.35 |
0.79 |
|
1.57 |
Adjusted net earnings per share - diluted |
0.12 |
|
0.35 |
0.77 |
|
1.55 |
(1) Income and mining taxes adjustments reflect foreign currency
translation recorded to the income and mining taxes (recovery)
expense and the tax impact on impairment reversal.
Adjusted net earnings from continuing operations is a
non-GAAP financial measure and can be reconciled as
follows:
|
Three months ended December 31, |
Year ended December 31, |
($millions, except as noted) |
2021 |
|
2020 |
2021 |
|
2020 |
Net earnings from continuing operations |
274.9 |
|
31.6 |
446.9 |
|
16.1 |
Adjust for items not associated with ongoing operations: |
|
|
|
|
Kumtor Mine litigation and other related costs |
11.3 |
|
— |
25.5 |
|
— |
Impairment reversal, net of tax |
(117.3 |
) |
— |
(117.3 |
) |
— |
Gain on the sale of Greenstone property |
(25.0 |
) |
— |
(97.3 |
) |
— |
Reclamation provision revaluation expense at sites on care and
maintenance |
24.2 |
|
9.3 |
24.1 |
|
53.4 |
Income and mining tax adjustments(1) |
(132.7 |
) |
— |
(132.7 |
) |
— |
Adjusted net earnings from continuing
operations |
35.4 |
|
40.9 |
149.3 |
|
69.5 |
Net earnings from continuing operations per share -
basic |
0.93 |
|
0.11 |
1.51 |
|
0.05 |
Net earnings from continuing operations per share -
diluted |
0.92 |
|
0.11 |
1.50 |
|
0.05 |
Adjusted net earnings from continuing operations per share
- basic |
0.12 |
|
0.14 |
0.50 |
|
0.24 |
Adjusted net earnings from continuing operations per share
- diluted |
0.12 |
|
0.14 |
0.50 |
|
0.23 |
(1) Income and mining taxes adjustments reflect foreign currency
translation recorded to the income and mining taxes (recovery)
expense and the tax impact on impairment reversal.
Free cash flow from continuing operations and adjusted
free cash flow from continuing operations are non-GAAP financial
measures and can be reconciled as follows:
|
Three months ended December 31 |
Consolidated |
Mount Milligan |
Öksüt |
Molybdenum |
Other |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
|
Cash provided by (used in) operating activities from
continuing operations(1) |
61.8 |
|
84.3 |
|
63.5 |
|
44.0 |
|
39.5 |
|
61.8 |
|
(15.8 |
) |
(3.8 |
) |
(25.4 |
) |
(17.7 |
) |
Adjust for: |
|
|
|
|
|
|
|
|
|
|
Additions to property, plant & equipment at continuing
operations(1) |
(23.1 |
) |
(35.6 |
) |
(17.3 |
) |
(13.3 |
) |
(4.2 |
) |
(15.3 |
) |
(1.4 |
) |
(2.3 |
) |
(0.2 |
) |
(4.7 |
) |
Free cash flow (defecit) from continuing
operations |
38.7 |
|
48.7 |
|
46.2 |
|
30.7 |
|
35.3 |
|
46.5 |
|
(17.2 |
) |
(6.1 |
) |
(25.6 |
) |
(22.4 |
) |
Adjust for: |
|
|
|
|
|
|
|
|
|
|
Kumtor Mine legal and other related costs |
5.3 |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
5.3 |
|
— |
|
Adjusted free cash flow from continuing
operations |
44.0 |
|
48.7 |
|
46.2 |
|
30.7 |
|
35.3 |
|
46.5 |
|
(17.2 |
) |
(6.1 |
) |
(20.3 |
) |
(22.4 |
) |
(1) As presented in the Company’s consolidated statements of
cash flows.
|
Year ended December 31 |
|
Consolidated |
Mount Milligan |
Öksüt |
Molybdenum |
Other |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
|
Cash provided by (used in) operating activities from
continuing operations(1) |
270.9 |
|
272.4 |
|
268.9 |
|
185.3 |
|
131.7 |
|
146.1 |
|
(37.3 |
) |
11.4 |
|
(92.4 |
) |
(70.4 |
) |
Adjust for: |
|
|
|
|
|
|
|
|
|
|
Additions to property, plant & equipment at continuing
operations(1) |
(92.5 |
) |
(103.5 |
) |
(67.4 |
) |
(35.1 |
) |
(20.1 |
) |
(40.9 |
) |
(2.5 |
) |
(5.8 |
) |
(2.5 |
) |
(21.7 |
) |
Free cash flow (defecit) from continuing
operations |
178.4 |
|
168.9 |
|
201.5 |
|
150.2 |
|
111.6 |
|
105.2 |
|
(39.8 |
) |
5.6 |
|
(94.9 |
) |
(92.1 |
) |
Adjust for: |
|
|
|
|
|
|
|
|
|
|
Kumtor Mine legal and other related costs |
14.2 |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
— |
|
14.2 |
|
— |
|
Adjusted free cash flow from continuing
operations |
192.6 |
|
168.9 |
|
201.5 |
|
150.2 |
|
111.6 |
|
105.2 |
|
(39.8 |
) |
5.6 |
|
(80.7 |
) |
(92.1 |
) |
(1) As presented in the Company’s consolidated statements of
cash flows.
Free cash flow from discontinued operations is a
non-GAAP financial measure and can be reconciled as
follows:
|
Three months ended December 31 |
Year ended December 31 |
|
2021 |
2020 |
|
2021 |
|
2020 |
|
Cash provided by operating activities from discontinued
operations(1) |
— |
97.6 |
|
143.9 |
|
657.6 |
|
Adjust for: |
|
|
|
|
Additions to property, plant & equipment from discontinued
operations(1) |
— |
(72.5 |
) |
(90.2 |
) |
(222.7 |
) |
Free cash flow from discontinued operations |
— |
25.1 |
|
53.7 |
|
434.9 |
|
(1) As presented in the Company’s consolidated statements of
cash flows.
Sustaining capital expenditures and non-sustaining
capital expenditures are non-GAAP measures and can be reconciled as
follows:
|
Three months ended December 31 |
|
Consolidated |
Mount Milligan |
Öksüt |
Molybdenum |
Other |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
|
2021 |
2020 |
|
2021 |
|
2020 |
|
Additions to PP&E(1) |
46.9 |
|
65.8 |
|
28.9 |
|
16.0 |
|
9.3 |
|
38.4 |
|
1.4 |
3.0 |
|
7.3 |
|
8.3 |
|
Adjust for: |
|
|
|
|
|
|
|
|
|
|
Costs capitalized to the ARO assets |
(17.8 |
) |
(27.0 |
) |
(5.3 |
) |
(2.8 |
) |
(5.2 |
) |
(21.9 |
) |
— |
— |
|
(7.3 |
) |
(2.3 |
) |
Costs capitalized to the ROU assets |
(1.3 |
) |
— |
|
(1.5 |
) |
0.0 |
|
0.2 |
|
0.0 |
|
— |
— |
|
0.0 |
|
0.0 |
|
Other(2)(3) |
0.3 |
|
1.6 |
|
0.3 |
|
3.4 |
|
0.0 |
|
(1.2 |
) |
— |
(0.7 |
) |
0.1 |
|
0.1 |
|
Capital expenditures |
28.1 |
|
40.4 |
|
22.4 |
|
16.6 |
|
4.3 |
|
15.3 |
|
1.4 |
2.3 |
|
0.1 |
|
6.2 |
|
Sustaining capital expenditures |
25.7 |
|
28.0 |
|
20.2 |
|
16.6 |
|
4.1 |
|
9.1 |
|
1.4 |
2.3 |
|
0.1 |
|
— |
|
Non-sustaining capital expenditures |
2.4 |
|
12.4 |
|
2.2 |
|
— |
|
0.2 |
|
6.2 |
|
— |
— |
|
— |
|
6.2 |
|
(1) As presented in the note 29 of the Company’s consolidated
financial statements.(2) Includes reclassification of insurance and
capital spares from supplies inventory to PP&E.(3) 2020 figures
at the Öksüt Mine include deferred financing costs related to the
construction phase.
|
Year ended December 31 |
|
Consolidated |
Mount Milligan |
Öksüt |
Molybdenum |
Other |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
|
2021 |
|
2020 |
|
2021 |
2020 |
|
2021 |
|
2020 |
|
Additions to PP&E(1) |
118.9 |
|
140.7 |
|
83.7 |
|
38.1 |
|
24.9 |
|
69.3 |
|
2.5 |
6.5 |
|
7.8 |
|
26.8 |
|
Adjust for: |
|
|
|
|
|
|
|
|
|
|
Costs capitalized to the ARO assets |
(17.8 |
) |
(29.9 |
) |
(5.3 |
) |
(3.4 |
) |
(5.2 |
) |
(23.1 |
) |
— |
— |
|
(7.3 |
) |
(3.3 |
) |
Costs capitalized to the ROU assets |
(6.9 |
) |
(1.1 |
) |
(6.8 |
) |
(0.5 |
) |
(0.1 |
) |
(0.1 |
) |
— |
— |
|
0.0 |
|
(0.5 |
) |
Other(2)(3) |
(0.9 |
) |
1.0 |
|
(0.8 |
) |
3.6 |
|
0.0 |
|
(2.3 |
) |
— |
(0.7 |
) |
(0.1 |
) |
0.4 |
|
Capital expenditures |
93.3 |
|
110.7 |
|
70.8 |
|
37.8 |
|
19.6 |
|
43.8 |
|
2.5 |
5.8 |
|
0.4 |
|
23.3 |
|
Sustaining capital expenditures |
88.0 |
|
57.0 |
|
66.7 |
|
37.8 |
|
18.8 |
|
13.4 |
|
2.5 |
5.8 |
|
0.4 |
|
— |
|
Non-sustaining capital expenditures |
5.3 |
|
53.7 |
|
4.1 |
|
— |
|
0.8 |
|
30.4 |
|
— |
— |
|
— |
|
23.3 |
|
(1) As presented in the note 29 of the Company’s consolidated
financial statements.(2) Includes reclassification of insurance and
capital spares from supplies inventory to PP&E.(3) 2020 figures
at the Öksüt Mine include deferred financing costs related to the
construction phase.
Mineral Reserves and Mineral
Resources
The Company released the results of the updated
mineral reserve and mineral resource estimates for the Mount
Milligan Mine, the Öksüt Mine, and the Kemess Property as of
December 31, 2021. The 2021 mineral reserves and resources estimate
excludes the Greenstone project which was divested on January 19,
2021 as well the Kumtor Mine. The Kyrgyz Republic seized the Kumtor
Mine on May 15, 2021 and the Company concluded that it had lost
control of the Kumtor Mine. Therefore, the mineral reserves and
mineral resources as at December 31, 2021 do not include the Kumtor
Mine.
Mount Milligan’s mineral reserves and mineral
resources are presented on a 100% basis. Sales of gold and copper
from the Mount Milligan Mine are subject to the Mount Milligan
Streaming Arrangement whereby Royal Gold is entitled to 35% and
18.75% of gold and copper sales respectively. Under this streaming
arrangement, Royal Gold pays Centerra $435 per ounce of gold
delivered and 15% of the spot price per metric tonne of copper
delivered.
Total gold mineral reserves and resources |
|
Gold (000s attributable ounces
contained)(1)(4) |
2021 |
2020 |
Total proven and probable mineral reserves |
4,849 |
11,166 |
Total measured and indicated mineral resources(2) |
7,084 |
7,948 |
Total inferred mineral resources(2)(3) |
1,032 |
5,379 |
(1) Centerra’s equity interests as at December 31, 2021, are as
follows: Mount Milligan Mine 100%, Öksüt Mine 100% and Kemess
Project 100%. The mineral reserves and mineral resources above
reflect Centerra's equity interests in the applicable
properties.(2) Mineral resources are in addition to mineral
reserves. Mineral resources do not have demonstrated economic
viability.(3) Inferred mineral resources have a great amount of
uncertainty as to their existence and as to whether they can be
mined economically. It cannot be assumed that all or part of the
inferred mineral resources will ever be upgraded to a higher
category.(4) Production at the Mount Milligan Mine is subject to a
streaming agreement which entitles Royal Gold to 35% of gold sales
from the Mount Milligan Mine. Under the stream arrangement,
Royal Gold will pay $435 per ounce of gold delivered. Mineral
resources for the Mount Milligan property are presented on a 100%
basis.
Total copper mineral reserves and resources |
|
Copper (millions of pounds
contained)(1)(4) |
2021 |
2020 |
Total proven and probable mineral reserves |
1,366 |
1,467 |
Total measured and indicated mineral resources(2) |
5,783 |
5,329 |
Total inferred mineral resources(2)(3) |
539 |
520 |
(1) Centerra’s equity interests as at December
31, 2021, are as follows: Mount Milligan Mine 100%, Kemess Project
100% and Berg property 100%. In December 2020, the Berg property
was optioned to a third party which has the right to acquire a 70%
interest in the property over a period of up to five years.(2)
Mineral resources are in addition to mineral reserves. Mineral
resources do not have demonstrated economic viability.(3) Inferred
mineral resources have a great amount of uncertainty as to their
existence and as to whether they can be mined economically. It
cannot be assumed that all or part of the inferred mineral
resources will ever be upgraded to a higher category.(4) Production
at the Mount Milligan Mine is subject to a streaming agreement
which entitles Royal Gold to 18.75% of copper sales from
the Mount Milligan mine. Under the stream arrangement, Royal
Gold will pay 15% of the spot price per metric tonne of copper
delivered. Mineral resources for the Mount Milligan property are
presented on a 100% basis.
Total molybdenum mineral reserves and
resources |
|
Molybdenum (millions of pounds
contained)(1)(3)(4) |
2021 |
2020 |
Total proven and probable mineral reserves |
— |
— |
Total measured and indicated mineral resources(2) |
636 |
636 |
Total inferred mineral resources(3) |
50 |
50 |
(1) Centerra’s equity interests are Berg property 100%,
Thompson Creek Mine 100%, and Endako Mine 75%. In December 2020,
the Berg property was optioned to a third party which has the right
to acquire a 70% interest in the property over a period of up to
five years.(2) Mineral resources are in addition to mineral
reserves. Mineral resources do not have demonstrated economic
viability.(3) Inferred mineral resources have a great amount
of uncertainty as to their existence and as to whether they can be
mined economically. It cannot be assumed that all or part of the
inferred mineral resources will ever be upgraded to a higher
category.
Material assumptions used to determine mineral reserves and mineral
resources are as follows: |
|
|
|
2021 |
2020 |
Gold priceGold mineral reserves ($/oz) |
1,250-1,350 |
1,250-1,350 |
Gold mineral resources
($/oz) |
1,450-1,550 |
1,500-1,550 |
|
|
|
Copper priceCopper mineral reserves ($/lb)
|
3.00 |
3.00 |
Copper mineral resources
($/lb) |
3.50 |
3.50 |
|
|
|
Molybdenum priceMolybdenum mineral resources
($/lb) |
14.00 |
14.00 |
|
|
|
Foreign exchange rates1 USD : Canadian
dollar |
1.25-1.30 |
1.25 |
1 USD : Turkish
lira |
7.50 |
5.50 |
Qualified Person & QA/QC –
Production, Mineral Reserves and Mineral ResourcesThe
production information and other scientific and technical
information presented in this document, including the production
estimates, were prepared in accordance with the standards of the
Canadian Institute of Mining, Metallurgy and Petroleum and NI
43-101 and were prepared, reviewed, verified, and compiled by
Centerra’s geological and mining staff under the supervision of
Slobodan (Bob) Jankovic, Professional Geoscientist, member of the
Association of Professional Geoscientists of Ontario (“APGO”) and
Centerra’s Senior Director, Technical Services, who is a qualified
person for the purpose of NI 43-101. Unless otherwise noted below,
sample preparation, analytical techniques, laboratories used and
quality assurance and 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
and EDGAR at www.sec.gov/edgar. 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 and 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 and which are disclosed above under “Recent
Events and Developments – Kumtor Mine”.
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 and EDGAR at www.sec.gov/edgar. 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 and 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 and quality control
protocols used during the exploration drilling programs are done
consistent with industry standards while independent certified
assay labs are used.
Supplementary Information: Fourth Quarter 2021
Exploration Update
Mount Milligan Mine
The 2021 diamond drilling program at the Mount
Milligan Mine totalled 39,505 metres in 68 drill holes (13,914
metres in 27 exploration drill holes) and 25,591 metres in 41
resource expansion drill holes). Primary brownfield exploration
targets included 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 (“GEF”) zone, where
positive drilling results were returned in 2019 and 2020.
Mount Milligan Brownfield Drilling and Exploration
Exploration and resource expansion drilling
continued in the fourth quarter of 2021 with the completion of 22
diamond drill holes totalling 15,445 metres. Fifteen drill holes,
totalling 10,024 metres, were completed in the MBX and WBX Deep
zones resource expansion/exploration targets below the current
ultimate open-pit boundary in the central portion of the deposit.
Three drill holes, totalling 2,568 metres, were completed in the
DWBX zone planned for resource expansion on the western pit wall.
Four drill holes, totalling 2,853 metres, were completed in the GEF
zone, testing for both shallow mineralization associated with the
GEF, and deeper porphyry mineralization associated with the
underlying Great Eastern stock.
Complete or partial assay results were returned
for 22 drill holes, including results from 8 holes drilled in the
third quarter of 2021 and 14 holes drilled in the fourth quarter of
2021. These include potential significant mineralization from below
the ultimate open-pit boundary in the MBX and WBX Deep zones, and
along the western margin of the open-pit in the DWBX zone.
Selected significant intersections are reported below:
MBX and WBX Deep Zones (central portion of the open-pit)
21-1349 |
71.1 metres @ 0.67 g/t Gold (“Au”), 0.24% Copper (“Cu”) from 3.7
metres including12.0 metres @ 1.22 g/t Au, 0.36% Cu from 36.0
metres93.0 metres @ 0.35 g/t Au, 0.31% Cu from 168.0 metres60.0
metres @ 1.15 g/t Au, 0.03% Cu from 267.0 metresincluding 16.4
metres @ 2.06 g/t Au, 0.03% Cu from 306.0 metres |
21-1339 |
40.9 metres @ 0.13 g/t Au, 0.11% Cu from 24.0 metres72.0 metres @
0.28 g/t Au, 0.14% Cu from 159.0 metres |
21-1342 |
73.3 metres @ 0.23 g/t Au, 0.18% Cu from 9.1 metres101.5 metres @
0.17 g/t Au, 0.16% Cu from 88.1 metres |
21-1344 (partial results) |
76.0 metres @ 0.26 g/t Au, 0.15% Cu from 3.0 metres22.0 metres @
0.15 g/t Au, 0.18% Cu from 87.0 metres |
21-1345 |
53.3 metres @ 0.23 g/t Au, 0.17% Cu from 3.7 metres50.3 metres @
0.70 g/t Au, 0.24% Cu from 262.7 metresincluding 13.0 metres @ 1.03
g/t Au, 0.17% Cu from 299.0 metres |
21-1348 |
17.0 metres @ 1.05 g/t Au, 0.11% Cu from 6.0 metresincluding 11.00
metres @ 1.47 g/t Au, 0.12 Cu from 8.0 metres58.6 metres @ 0.30 g/t
Au, 0.27% Cu from 186.0 metres |
21-1351 |
62.1 metres @ 0.16 g/t Au, 0.08% Cu from 7.9 metres148.0 metres @
0.47 g/t Au, 0.17% Cu from 211.0 metresincluding 14.0 metres @ 1.46
g/t Au, 0.17% Cu from 304.0 metres |
21-1352 |
63.0 metres @ 0.24 g/t Au, 0.24% Cu from 37.0 metres |
21-1353 |
45.3 metres @ 0.38 g/t Au, 0.17% Cu from 3.7 metres |
21-1354 (partial results) |
112.2 metres @ 0.71 g/t Au, 0.34% Cu from 424.3 metres |
21-1355 (partial results) |
29.0 metres @ 0.27 g/t Au, 0.30% Cu from 3.0 metres31.0 metres @
0.14 g/t Au, 0.24% Cu from 42.0 metres45.5 metres @ 0.31 g/t Au,
0.05% Cu from 141.5 metres |
21-1356 (partial results) |
152.5 metres @ 0.35 g/t Au, 0.06% Cu from 6.4 metres |
DWBX Zone (western margin of the open-pit)
21-1335 |
113.0 metres @ 0.22 g/t Au, 0.17% Cu from 260.0 metres59.9 metres @
0.23 g/t Au, 0.14% Cu from 375.1 metres119.0 metres @ 0.46 g/t Au,
0.37% Cu from 490.0 metres |
21-1336 |
196.5 metres @ 0.33 g/t Au, 0.35% Cu from 84.5 metres88.0 metres @
0.38 g/t Au, 0.61% Cu from 290.0 metres |
21-1337 |
53.1 metres @ 0.17 g/t Au, 0.24% Cu from 319.0 metres42.0 metres @
0.16 g/t Au, 0.28% Cu from 396.0 metres |
21-1338 |
15.3 metres @ 1.10 g/t Au, 0.34% Cu from 318.7 metres50.2 metres @
0.30 g/t Au, 0.35% Cu from 339.5 metres |
21-1340 |
26.0 metres @ 0.68 g/t Au, 0.10% Cu from 145.0 metres183.0 metres @
0.27 g/t Au, 0.37% Cu from 198.0 metres |
21-1346 (partial results) |
90.0 metres @ 0.22 g/t Au, 0.31% Cu from 80.0 metres42.0 metres @
1.22 g/t Au, 0.26% Cu from 230.0 metresincluding 22.6 metres @ 1.96
g/t Au, 0.11% Cu from 239.4 metres |
21-1350 (partial results) |
181.7 metres @ 0.92 g/t Au, 0.27% Cu from 333.0 metres53.0 metres @
0.32 g/t Au, 0.44% Cu from 541.0 metres |
Assay results returned from the MBX Deep zone
during the fourth quarter of 2021 show wide intercepts of
potentially significant mineralization below the ultimate open-pit
boundary. Porphyry-style mineralization is associated with potassic
altered latite-andesite units in the footwall of the MBX monzonite
porphyry stock. All 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. A second series of fault-bound
monzonite porphyry intrusions with potassic alteration ±
mineralized early veins have been drilled at depth underlying the
ultimate pit boundary and the MBX stock by approximately 400 metres
to 600 metres.
Assay results returned from the DWBX zone during
the fourth quarter show wide intercepts of porphyry-style
mineralization along the western margins of the ultimate pit
boundary, with narrow intercepts of vein associated high gold-low
copper mineralization. Porphyry-style mineralization is associated
with potassic alteration and early quartz veins within the DWBX
composite stock and the stock margins. A moderately west-dipping
hydrothermal breccia body has been identified at shallow depth in
host volcanic rocks in the northern part of the DWBX zone. This
feature is believed to be associated with emplacement of porphyry
stocks and remains to be tested down-dip to the west and into the
Goldmark stock footwall volcanic rocks. Results returned from the
DWBX zone in 2021 show potential for resource expansion to the west
of the current ultimate pit boundary.
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: https://ml.globenewswire.com/media/63702a77-3ee8-4dac-b4c3-ccff21f3d4a7/document/?v=02242022094200
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 EDGAR at
www.sec.gov/edgar and are available on the Company’s website
at www.centerragold.com.
Öksüt Mine
During the fourth quarter of 2021, 55 drill
holes totalling 12,812 metres were completed before the end of the
2021 diamond drilling campaign in November. In the fourth quarter
of 2021, the drilling program mainly focused on developing the
Keltepe North (“Keltepe N”) and Keltepe Northwest (“Keltepe NW”)
oxide gold satellite resources and targeting geochemical gold and
geophysical anomalism at the Büyüktepe, Yelibelen and Boztepe
prospects. In addition to these areas, the drilling in the fourth
quarter confirmed the discovery of a new mineralized zone, Keltepe
North- Northwest (“Keltepe NNW”), which has the potential to be
another satellite deposit.
A total of 31,525 metres in 159 drill holes were
completed in the 2021 drilling program. The 2021 drilling program
contributed to increased resource expansion and development around
the known deposits (Keltepe, Güneytepe, Keltepe N and Keltepe NW).
The oxide gold mineralization that has been delineated at Keltepe
N, Keltepe NW and now at Keltepe NNW requires additional infill
drilling, which will commence in the first quarter of 2022.
All the outstanding core samples were dispatched
to the assay laboratory by the end of the year. As the priority was
given to the analysis of samples from Keltepe N, Keltepe NW, and
Keltepe NNW, most of the assay results from Büyüktepe, Yelibelen
and Boztepe prospects are still pending. Significant mineralized
intercepts were received from Keltepe N, Keltepe NW and Keltepe
NNW. Selected significant intersections are reported below:
Keltepe North (resource expansion oxide gold)
ODD0574 |
55.0 metres @ 0.93 g/t Au from 126.4 metresincluding 6.0 metres @
3.32 g/t Au from 147.2 metres |
ODD0591 |
16.7 metres @ 1.20 g/t Au from 15.7 metresincluding 13.0 metres @
1.4 g/t Au from 15.7 metres |
ODD0614 |
42.3 metres @ 1.21 g/t Au from 26.7 metresincluding 13.5 metres @
2.37 g/t Au from 27.5 metres |
ODD0616 |
37.3 metres @ 0.53 g/t Au from 11.4 metresincluding 5.0 metres @
1.14 g/t Au from 22.0 metres |
Keltepe North-West (resource expansion oxide gold)
ODD0596 |
33.0 metres @ 0.48 g/t Au from 65.7 metres |
ODD0620 |
36.0 metres @ 0.87 g/t Au from 10.7 metresincluding 23.8 metres @
1.18 g/t Au from 21.8 metres |
ODD0622 |
19.3 metres @ 0.3 g/t Au from 22.9 metres |
Keltepe North-Northwest (oxide gold)
ODD0593 |
68.9 metres @ 0.41 g/t Au from 18.6 metres |
ODD0612 |
91.7 metres @ 0.33 g/t Au from 62.5 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: https://ml.globenewswire.com/media/63702a77-3ee8-4dac-b4c3-ccff21f3d4a7/document/?v=02242022094200
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 EDGAR at
www.sec.gov/edgar and are available on the Company’s
website at www.centerragold.com.
Other Projects Turkey
Sivritepe Project
The 2021 diamond drilling program was completed
with a further 20 drill holes being drilled in the fourth quarter
for a total of 4,662 metres. A total of 15,459 metres in 62 drill
holes were completed in 2021. Drilling mainly targeted gold-in-
soil geochemical anomalism and succeeded in identifying multiple
mineralized zones. Drilling at the two major prospects, Sivritepe
West and Sivritepe East, was specifically designed to be able to
define potential gold resources. The drilling data received to date
indicates that the identified mineralized zones are still open
along strike and at depth and need to be targeted by infill and
step-out drilling in the 2022 drilling season.
In the fourth quarter of 2021, drilling was
focused on the Sivritepe West Prospect, where the extent of the
east-west trending gold mineralized zone was outlined at surface by
a nearly one km long gold-in-soil geochemical anomaly. It is
interpreted that gold mineralization is related to the contact
between magmatic-hydrothermal breccias and trachy- andesitic
intrusive rocks. All the drill holes returned anomalous oxide
and/or sulfide gold mineralized intervals.
Selected significant intersections are reported below:
Sivritepe West (oxide gold)
STW0026 |
12.5 metres @ 0.56 g/t Au from 8.0 metresincluding 3.5 metres @
1.47 g/t Au from 13.6 metres |
STW0027 |
35.0 metres @ 0.40 g/t Au from the surface |
STW0028 |
22.0 metres @ 0.47 g/t Au from 47.0 metresincluding 4 metres @ 1.67
g/t Au from 64 metres |
STW0040 |
48.0 metres @ 0.30 g/t Au from 37.0 metres including 6.9 metres @
1.4 g/t Au from 46.0 metres |
Sivritepe West (sulfide gold)
STW0022 |
51.1 metres @ 0.41 g/t Au from 137.0 metresincluding 6.0 metres @
1.53 g/t Au from 148.0 metres |
STW0024 |
26.6 metres @ 0.60 g/t Au from 247.0 metresincluding 5.6 metres @
1.39 g/t Au from 248.0 metres |
STW0039 |
16.7 metres @ 2.34 g/t Au from 199.3 metresincluding 10.0 metres @
3.8 g/t Au from 205.0 metres |
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. The true widths of the mineralized
intervals reported represent approximately 30%-85% of the stated
downhole interval and averages around 60%. Drill collar locations
and associated graphics are available at the following
link: https://ml.globenewswire.com/media/63702a77-3ee8-4dac-b4c3-ccff21f3d4a7/document/?v=02242022094200
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 EDGAR at
www.sec.gov/edgar 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 Resources Inc.
The 2021 Phase-2 diamond drilling program began
late in the third quarter and was completed in the fourth quarter
of 2021. The entire Phase-2 program comprised 4,704 metres of
drilling in 15 drill holes. In the fourth quarter of 2021, there
were 3,842 metres drilled in 12 drill holes. Drilling tested
geophysical anomalies and areas with coincident near- surface
kaolinite clay alteration for low-sulfidation epithermal
gold-silver vein mineralization over a strike distance of 2.4
kilometres. Five target zones were tested, including Borrow Pit,
Saki, Shinju, Western and Gold Hill zones. As of the end of the
quarter, all final assay results are pending.
Additional exploration activities in the fourth
quarter included the completion of a controlled-source
audiofrequency magnetotellurics survey (CSAMT; 26.6
line-kilometres), a tensor AMT survey (four line-kilometres), an
induced polarization survey (1.8 line-kilometres), and a ground
magnetic survey (33 line-kilometres).
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 and 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 Mine’s 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 and EDGAR at
www.sec.gov/edgar.
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 and 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, which is available on SEDAR at www.sedar.com and EDGAR at
www.sec.gov/edgar and in a technical report dated September 3, 2015
(with an effective date of June 30, 2015) prepared in accordance
with NI 43-101, which is 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 and 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.Consolidated Statements of Financial
Position
|
December 31, |
December 31, |
|
2021 |
2020 |
(Expressed in thousands of United States
dollars) |
|
|
Assets |
|
|
Current assets |
|
|
Cash and cash equivalents |
$ |
947,230 |
$ |
545,180 |
Amounts receivable |
|
76,841 |
|
66,108 |
Inventories |
|
221,220 |
|
580,587 |
Assets held-for-sale |
|
— |
|
140,005 |
Other current assets |
|
25,802 |
|
40,961 |
|
|
1,271,093 |
|
1,372,841 |
Property, plant and equipment |
|
1,272,091 |
|
1,686,067 |
Deferred income tax assets |
|
101,300 |
|
— |
Other non-current assets |
|
32,084 |
|
77,101 |
|
|
1,405,475 |
|
1,763,168 |
Total assets |
$ |
2,676,568 |
$ |
3,136,009 |
Liabilities and shareholders' equity |
|
|
Current liabilities |
|
|
Accounts payable and accrued liabilities |
$ |
186,820 |
$ |
232,704 |
Income tax payable |
|
25,253 |
|
2,474 |
Liabilities held-for-sale |
|
— |
|
2,255 |
Other current liabilities |
|
15,281 |
|
20,395 |
|
|
227,354 |
|
257,828 |
Deferred income tax liabilities |
|
54,861 |
|
39,473 |
Provision for reclamation |
|
331,312 |
|
351,149 |
Other non-current liabilities |
|
19,425 |
|
21,541 |
|
|
405,598 |
|
412,163 |
Shareholders' equity |
|
|
Share capital |
|
984,095 |
|
975,122 |
Contributed surplus |
|
30,809 |
|
30,601 |
Accumulated other comprehensive income |
|
6,829 |
|
11,600 |
Retained earnings |
|
1,021,883 |
|
1,448,695 |
|
|
2,043,616 |
|
2,466,018 |
Total liabilities and shareholders' equity |
$ |
2,676,568 |
$ |
3,136,009 |
Centerra Gold Inc.Consolidated
Statements of Earnings (Loss) and Comprehensive Income
(Loss)
|
|
Three months ended December 31, |
|
Year ended December 31, |
(Expressed in thousands of United States
dollars) |
|
2021 |
|
|
2020 |
|
2021 |
|
|
2020 |
Revenue |
$ |
251,082 |
|
$ |
212,058 |
$ |
900,141 |
|
$ |
721,262 |
Cost of sales |
|
|
|
|
Production costs |
|
131,985 |
|
|
99,203 |
|
487,676 |
|
|
409,967 |
Depreciation, depletion and amortization |
|
31,044 |
|
|
25,039 |
|
120,505 |
|
|
95,810 |
Earnings from mine operations |
|
88,053 |
|
|
87,756 |
|
291,960 |
|
|
215,485 |
Exploration and development costs |
|
7,263 |
|
|
9,176 |
|
26,082 |
|
|
31,537 |
Corporate administration |
|
7,458 |
|
|
17,350 |
|
27,134 |
|
|
45,674 |
Care and maintenance expense |
|
8,251 |
|
|
7,385 |
|
28,723 |
|
|
29,117 |
Impairment reversal |
|
(160,000 |
) |
|
— |
|
(160,000 |
) |
|
— |
Reclamation expense |
|
24,260 |
|
|
9,343 |
|
23,347 |
|
|
53,381 |
Other operating expenses |
|
2,367 |
|
|
2,996 |
|
12,759 |
|
|
11,862 |
Earnings from operations |
|
198,454 |
|
|
41,506 |
|
333,915 |
|
|
43,914 |
Gain on sale of Greenstone Partnership |
|
(25,000 |
) |
|
— |
|
(97,274 |
) |
|
— |
Other non-operating expenses |
|
9,426 |
|
|
1,822 |
|
23,493 |
|
|
6,247 |
Finance costs |
|
761 |
|
|
5,200 |
|
4,762 |
|
|
13,818 |
Earnings before income tax |
|
213,267 |
|
|
34,484 |
|
402,934 |
|
|
23,849 |
Income tax (recovery) expense |
|
(61,613 |
) |
|
2,905 |
|
(44,015 |
) |
|
7,709 |
Net earnings from continuing operations |
|
274,880 |
|
|
31,579 |
|
446,949 |
|
|
16,140 |
Net earnings (loss) from discontinued operations |
|
— |
|
|
63,632 |
|
(828,717 |
) |
|
392,398 |
Net earnings (loss) |
$ |
274,880 |
|
$ |
95,211 |
$ |
(381,768 |
) |
$ |
408,538 |
Other Comprehensive (Loss) Income |
|
|
|
|
Items that may be subsequently reclassified to
earnings: |
|
|
|
|
Net gain on translation of foreign operation |
$ |
— |
|
$ |
1,714 |
$ |
31 |
|
$ |
839 |
Net (loss) gain on derivative instruments |
|
(2,705 |
) |
|
8,340 |
|
(4,802 |
) |
|
11,513 |
Other comprehensive (loss) income |
|
(2,705 |
) |
|
10,054 |
|
(4,771 |
) |
|
12,352 |
Total comprehensive income (loss) |
$ |
272,175 |
|
$ |
105,265 |
$ |
(386,539 |
) |
$ |
420,890 |
Earnings per share - continuing operations: |
|
|
|
|
Basic |
$ |
0.93 |
|
$ |
0.05 |
$ |
1.51 |
|
$ |
0.05 |
Diluted |
$ |
0.92 |
|
$ |
0.05 |
$ |
1.48 |
|
$ |
0.05 |
(Loss) earnings per share: |
|
|
|
|
Basic |
$ |
0.93 |
|
$ |
1.39 |
$ |
(1.29 |
) |
$ |
1.39 |
Diluted |
$ |
0.92 |
|
$ |
1.37 |
$ |
(1.29 |
) |
$ |
1.37 |
Cash dividends declared per common share (C$) |
$ |
0.07 |
|
$ |
0.05 |
$ |
0.24 |
|
$ |
0.18 |
Centerra Gold Inc.Consolidated
Statements of Cash Flows
|
|
Three months ended December 31, |
|
|
Year ended December 31, |
|
(Expressed in thousands of United States
dollars) |
|
2021 |
|
|
2020 |
|
|
2021 |
|
|
2020 |
|
Operating activities |
|
|
|
|
Net earnings from continuing operations |
$ |
274,880 |
|
$ |
31,578 |
|
$ |
446,949 |
|
$ |
16,140 |
|
Adjustments: |
|
|
|
|
Depreciation, depletion and amortization |
|
32,433 |
|
|
26,403 |
|
|
126,374 |
|
|
102,046 |
|
Reclamation expense |
|
24,260 |
|
|
9,216 |
|
|
23,347 |
|
|
53,581 |
|
Share-based compensation expense |
|
446 |
|
|
8,542 |
|
|
1,364 |
|
|
20,348 |
|
Finance costs |
|
760 |
|
|
6,108 |
|
|
4,762 |
|
|
13,818 |
|
Inventory impairment |
|
— |
|
|
— |
|
|
377 |
|
|
13,588 |
|
Gain on sale of Greenstone Partnership |
|
(25,000 |
) |
|
— |
|
|
(97,274 |
) |
|
— |
|
Income tax (recovery) expense |
|
(61,613 |
) |
|
2,905 |
|
|
(44,015 |
) |
|
7,709 |
|
Income taxes (paid) refunded |
|
(9,597 |
) |
|
(2,157 |
) |
|
(17,182 |
) |
|
18,490 |
|
Impairment reversal |
|
(160,000 |
) |
|
— |
|
|
(160,000 |
) |
|
— |
|
Other |
|
(3,392 |
) |
|
3,981 |
|
|
(1,023 |
) |
|
4,082 |
|
|
|
73,177 |
|
|
86,576 |
|
|
283,679 |
|
|
249,802 |
|
Changes in working capital |
|
(11,365 |
) |
|
(2,232 |
) |
|
(12,771 |
) |
|
22,588 |
|
Cash provided by operating activities from continuing
operations |
|
61,812 |
|
|
84,344 |
|
|
270,908 |
|
|
272,390 |
|
Cash provided by operating activities from discontinued
operations |
|
— |
|
|
97,622 |
|
|
143,853 |
|
|
657,625 |
|
Cash provided by operating activities |
|
61,812 |
|
|
181,966 |
|
|
414,761 |
|
|
930,015 |
|
Investing activities |
|
|
|
|
Property, plant and equipment additions |
|
(23,118 |
) |
|
(35,653 |
) |
|
(92,500 |
) |
|
(103,563 |
) |
Proceeds from sale of Greenstone Partnership |
|
— |
|
|
— |
|
|
210,291 |
|
|
— |
|
Proceeds from disposition of marketable securities |
|
— |
|
|
— |
|
|
— |
|
|
4,372 |
|
Proceeds from disposition of fixed assets |
|
9,980 |
|
|
— |
|
|
11,868 |
|
|
— |
|
Decrease in restricted cash |
|
— |
|
|
(8 |
) |
|
2,660 |
|
|
25,246 |
|
Decrease (increase) in other assets |
|
— |
|
|
(186 |
) |
|
188 |
|
|
(690 |
) |
Cash provided by (used in) investing activities from
continuing operations |
|
(13,138 |
) |
|
(35,847 |
) |
|
132,507 |
|
|
(74,635 |
) |
Cash used in investing activities from discontinued operations |
|
— |
|
|
(69,528 |
) |
|
(96,081 |
) |
|
(228,741 |
) |
Cash provided by (used in) investing
activities |
|
(13,138 |
) |
|
(105,375 |
) |
|
36,426 |
|
|
(303,376 |
) |
Financing activities |
|
|
|
|
Dividends paid |
|
(11,998 |
) |
|
(11,488 |
) |
|
(45,044 |
) |
|
(39,757 |
) |
Debt drawdown |
|
— |
|
|
— |
|
|
— |
|
|
250,000 |
|
Debt repayment |
|
— |
|
|
— |
|
|
— |
|
|
(327,472 |
) |
Payment of borrowing costs |
|
(561 |
) |
|
(2,653 |
) |
|
(2,654 |
) |
|
(8,515 |
) |
Repayment of lease obligations |
|
(1,585 |
) |
|
(1,601 |
) |
|
(6,476 |
) |
|
(6,037 |
) |
Proceeds from common shares issued |
|
998 |
|
|
333 |
|
|
5,037 |
|
|
7,793 |
|
Cash used in financing activities |
|
(13,146 |
) |
|
(15,409 |
) |
|
(49,137 |
) |
|
(123,988 |
) |
Increase in cash during the period |
|
35,528 |
|
|
61,182 |
|
|
402,050 |
|
|
502,651 |
|
Cash at beginning of the period |
|
911,702 |
|
|
484,186 |
|
|
545,180 |
|
|
42,717 |
|
Reclassified to assets held-for-sale |
|
— |
|
|
— |
|
|
— |
|
|
(188 |
) |
Cash at end of the period |
$ |
947,230 |
|
$ |
545,180 |
|
$ |
947,230 |
|
$ |
545,180 |
|
The audited financial statements and the notes
thereto for the year ended December 31, 2021 and 2020 and the
MD&A for the three and twelve months ended December 31, 2021
and 2020 have been filed on SEDAR at www.sedar.com and EDGAR at
www.sec.gov/edgar and are available on the Company’s website at:
www.centerragold.com. The interim consolidated financial statements
for the three months ended December 2021 and 2020 are
unaudited.
A PDF accompanying this announcement is
available
at: http://ml.globenewswire.com/Resource/Download/524e8d09-36d5-4edb-9f23-c1b78f345a48
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