Centerra Gold Inc. (“Centerra” or the “Company”) (TSX: CG and NYSE:
CGAU) today reported its first quarter of 2022 results.
Significant financial and operating results of
the first quarter ended March 31, 2022 included:
- Net
earnings for the quarter of $89.4 million or $0.30 per
common share (basic).
- Adjusted
net earningsNG for the quarter of $56.4
million or $0.19 per common share (basic).
- Cash
provided by operating activities for the quarter of $28.3
million.
- Free cash
flowNG for the quarter of $9.1
million.
- Gold
production for the quarter of 93,784 ounces.
- Copper
production for the quarter of 20.6 million pounds.
- Gold
production costs for the quarter of $497 per ounce.
- Copper
production costs for the quarter of $1.68 per pound.
- All-in
sustaining costs on a by-product basisNG
for the quarter of $395 per ounce.
- All-in
costs on a by-product basisNG for the
quarter of $516 per ounce.
- Strong
balance sheet with cash position at the quarter-end of
$768.4 million.
- Centerra
completed the acquisition of the Goldfield Project on
February 28.
-
The ADR plant
at the Öksüt
Mine remains on
a shutdown since
early March due to mercury
detected in the gold room. Mining, crushing, stacking and heap
leaching activities continue at the site while the Company is
evaluating different options to address the issue.
- The
Company’s full-year 2022 guidance for the Öksüt Mine and
consolidated Centerra remain under review while guidance
for the Mount Milligan Mine is unchanged since the last
update.
- The
impact of the COVID-19 pandemic on its business continues to be
minimal as employee absences due to COVID-19, or any other
illnesses have been successfully managed.
- Centerra
entered into a global arrangement agreement with Kyrgyzaltyn JSC
(“Kyrgyzaltyn”) and the government of Kyrgyz Republic on
April 4, 2022 to effect a clean separation of Centerra from
Kyrgyzaltyn and Kyrgyz Republic, including through the disposition
of Centerra’s ownership in the Kumtor Mine and investment in the
Kyrgyz Republic, the purchase for cancellation by Centerra of all
of Kyrgyzaltyn’s 77.4 million Centerra common shares, the
termination of Kyrgyzaltyn’s involvement in the Company, and the
resolution of their disputes, among other provisions.
-
Quarterly Dividend declared of CAD$0.07 per common
share.
Commentary
Scott Perry, President and Chief Executive
Officer of Centerra stated, “In the first quarter, we continued to
demonstrate that safety remains Centerra’s top priority, as the
Öksüt Mine once again achieved one million consecutive hours of
work without a lost time injury. We continue with renewed focus on
our safety journey at the Mount Milligan Mine.”
“In the first quarter of 2022, our operating
mines continued to deliver strong performance, producing 93,784
ounces of gold and 20.6 million pounds of copper, at gold
production costs of $497 per ounce sold and all-in sustaining costs
on a by-product basisNG of $395 per ounce sold. Although the ADR
plant at the Öksüt Mine was placed on a shutdown in early March,
the Company was able to produce 54,691 ounces from the mine in the
first quarter at gold production costs and all-in-sustaining cost
on a by-product basisNG of $386 and $451 per ounce sold,
respectively. The Mount Milligan Mine started the year strong,
continuing to demonstrate its reputation as a low cost operator,
producing 39,093 ounces of gold, in addition to 20.6 million pounds
of copper at gold production costs and all-in-sustaining cost on a
by-product basisNG of $647 and $15 per ounce sold, respectively.
While the all-in-sustaining cost on a by-product basisNG of $15 per
ounce sold at the Mount Milligan Mine was positively impacted by
by-product credits, the all-in-sustaining cost on a co- product
basisNG was $819 per ounce sold. Financially, the Company generated
cash provided by operating activities of $28.3 million,
including $63.6 million generated at the Öksüt Mine and $20.8
million from the Mount Milligan Mine. The Mount Milligan Mine’s
cash generation was impacted by the timing of cash collection on
the gold and copper concentrate sale of $42 million occurring late
in the quarter with cash not received until the second quarter of
2022. After closing the acquisition of the Goldfield Project, the
Company ended the quarter with a cash balance of $768.4
million.”
“In 2022, we continue to expect strong
operational performance at the Mount Milligan Mine, with full-year
guidance unchanged from the last update. The Öksüt Mine 2022 gold
doré bar production guidance remains under review. While the ADR
plant at the Öksüt Mine remains currently on a shutdown, mining,
crushing, stacking, and leaching activities continue according to
plan up to the stage of loading gold onto carbon. The Company
continues to evaluate options to remediate the issue at the ADR
plant while undertaking an analysis to determine alternative means
of monetizing gold in carbon material which could provide a
temporary solution until gold doré bar production is restarted at
site or over the life of mine with minimal equipment
required at the ADR plant.”
“Subsequent to quarter-end, we announced that we
had entered into a global arrangement agreement with Kyrgyzaltyn
and the Kyrgyz Republic, with the hopes to close the agreement in
the coming months. This agreement allows Centerra to move forward
with a renewed focus on our core operations. 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. Following the closing of the Goldfield project’s
acquisition, we initiated planning of drilling programs as well as
permitting, community outreach, regulatory compliance and land
management activities. We continue the work on the new Mount
Milligan Mine technical report which is expected to be released in
the second quarter of 2022.”
“Based on the Company’s continued strong
financial position, operating results and cash flows, the Board
approved a quarterly dividend of CAD$0.07 per share on May 3, 2022
to shareholders of record on May 18, 2022.”
“We expect 2022 to be a transformative year for
Centerra and we expect to see continued strong performance from our
operating mines, advancement of the Goldfield Project, and
meaningful generation of cash provided by operating activities and
free cash flowNG.”
Board and Management
Changes
Centerra is pleased to announce the appointment
of Wendy Kei to its Board of Directors. Ms. Kei is an accomplished
finance executive with over 25 years of business experience in a
variety of industries, including mining sector. She brings a strong
focus on corporate governance, finance, risk management and
significant expertise in executing complex mergers and
acquisitions. Ms. Kei is a Chartered Professional Accountant and
previously served as Chief Financial Officer of Dominion Diamond
Corporation (formerly Harry Winston Diamond Corporation and Aber
Diamond Corporation). Ms. Kei is a member of the Chartered
Professional Accountants of Ontario, holds an ICD.D designation
from the Institute of Corporate Directors and holds a Bachelor of
Mathematics from the University of Waterloo. Ms. Kei was selected
as a 2016 Diversity 50 Candidate by the Canadian Board Diversity
Council.
Centerra also announces that Dan Desjardins has
retired as the Company’s Vice President and Chief Operating
Officer. The Company offers its sincere thanks and gratitude to Dan
for his dedication, leadership and contributions to the strategic
direction of Centerra during his many years of service since
joining the Company in 2015. Under Mr. Desjardins’ leadership,
first as President of Kumtor Gold Company and subsequently as Vice
President and Chief Operating Officer, and through his enduring
passion for continuous improvement, the Kumtor Mine was elevated to
world-class status and the construction of the Öksüt Mine was
delivered on time and under budget and has since fully repaid its
upfront investment within its first two years of commercial
production. The Company thanks Mr. Desjardins for his contributions
to Centerra over the many years and wishes Dan all the best in his
retirement.
Exploration Update
Exploration activities in the first quarter of
2022 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 for the first quarter
of 2022 were $8.2 million. The activities were primarily focused on
expanded drilling programs at the Mount Milligan Mine and the Öksüt
Mine.
In the first quarter of 2022, 18 drill holes
totalling 11,320 metres of diamond drilling were completed at the
Mount Milligan Mine, including exploration drilling (3,803 metres
in 7 drill holes) and resource expansion drilling (7,517 metres in
11 drill holes). 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.
In the first quarter of 2022, exploration
activities at the Öksüt Mine comprised diamond drilling (2,344
metres in ten drill holes). Exploration drilling activities were
mainly focused on testing the potential for further oxide gold
mineralization at the Keltepe Northwest and Keltepe North-Northwest
deposits. In the second quarter of 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 as well as testing the potential for new
oxide gold mineralization at targets peripheral to the known
deposits.
The Goldfield Project in Nevada has three known
deposits, Gemfield, Goldfield Main and McMahon Ridge, as well as
large areas of underexplored and highly prospective tenure. Initial
exploration activities involved review and assessment of the
geological, geophysical, geochemical, and drilling data, geological
modelling and interpretation, planning of geophysical surveys, and
the design of exploration and infill/resource expansion drilling
programs. Airborne and ground geophysical surveys and reverse
circulation drilling programs are planned to commence in the second
quarter of 2022.
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: http://ml.globenewswire.com/Resource/Download/9fed935b-5a71-4650-88dc-16d4481be14e
About Centerra
Centerra Gold Inc. is a Canadian-based mining
company focused on operating, developing, exploring and acquiring
gold and copper 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 Goldfield District Project in Nevada,
United States, the Kemess Underground Project in British Columbia,
Canada, and owns and operates the Molybdenum Business Unit in the
United States and Canada. 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 2022 first
quarter conference call on Wednesday, May 4, 2022 at 9:30 AM
Eastern Time. The call is open to all investors and the media. To
join the call, please dial toll-free in North America 1 (877)
758-1913. International participants may access the call at +1
(416) 641-6202. 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 May 18,
2022 by calling +1 (416) 626-4100 or (800) 558-5253 and using
passcode 22018170.
For more information:
Toby
Caron |
Shae
Frosst |
Treasurer and Director, Investor Relations |
Manager, Investor Relations |
(416) 204-1694 |
(416) 204-2159 |
toby.caron@centerragold.com |
shae.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 Three Months Ended March 31, 2022 and
2021
This Management’s Discussion and Analysis
(“MD&A”) has been prepared as of May 3, 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 months ended March 31, 2022 in comparison with the
corresponding period ended March 31, 2021. This discussion should
be read in conjunction with the Company’s unaudited condensed
consolidated interim financial statements and the notes thereto for
the three months ended March 31, 2022 prepared in accordance with
International Financial Reporting Standards (“IFRS”). The Company’s
unaudited condensed consolidated interim financial statements and
the notes thereto for the three months ended March 31, 2022, 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 by the Kyrgyz Republic in
May 2021 on the Company’s other operations and businesses; the
expected benefits of the Arrangement Agreement (as defined herein);
the expected timing to close the Arrangement (as defined herein);
the expected timing to suspend and terminate the various
proceedings contemplated by the Arrangement, including the
withdrawal or termination of the Kyrgyz Proceedings (as defined
herein); and the timing of Centerra’s special meeting of
shareholders to consider and vote on the Plan of Arrangement
contemplated by the Arrangement Agreement (as defined herein); and
matters related thereto; the outcome of arbitration and other
proceedings initiated by the Company regarding the unlawful seizure
by the Kyrgyz Republic 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; 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; expectations in respect of the acquisition of
the Goldfield District Project (the “Goldfield Project”), including
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; plans to reduce working capital balance at the Molybdenum
Business Unit and plans related to potential restart or divestment
of the Thomson Creek Mine or the Endako Mine; 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; risks that any of the conditions
precedent to the Arrangement will not be satisfied in a timely
manner or at all; the impact of any actions taken by the Kyrgyz
Republic Parliament or the Kyrgyz Republic, or any of its
instrumentalities, prior to the completion of the Arrangement,
including the failure of the Kyrgyz Government and/or Kyrgyzaltyn
to comply with their respective obligations under the Arrangement
Agreement; risks related to the continued imposition by the Kyrgyz
Republic 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 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 prior
to the Completion of the Arrangement; risks that the Kyrgyz
Republic undertake further unjustified civil or criminal action
against the Company, its affiliates, or its current or former
employees; the uncertainty of potential outcomes in the Kyrgyz
Proceedings (as defined herein), the arbitration process (including
risks that an arbitrator will reject the Company’s claims against
the Kyrgyz Republic and/or Kyrgyzaltyn or that such claims may not
be practically enforceable against the Kyrgyz Republic and/or
Kyrgyzaltyn), the Chapter 11 proceedings, or the proceedings before
the Ontario court against Tengiz Bolturuk; 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 the Company’s
supply chain and 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, wildfires, COVID-19, or
other global events such as wars); 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 and
disruptions caused by global events and disruptions caused by
global events; 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 May 3, 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 |
2 |
Overview of Consolidated Results |
3 |
Outlook |
4 |
Recent Events and Developments |
4 |
Financial Performance |
7 |
Financial Instruments |
9 |
Balance Sheet Review |
10 |
Liquidity and Capital Resources |
10 |
Operating Mines and Facilities |
11 |
Discontinued Operations |
20 |
Quarterly Results – Previous Eight Quarters |
21 |
Related Party Transactions |
21 |
Accounting Estimates, Policies and Changes |
22 |
Disclosure Controls and Procedures and Internal Control
Over Financial Reporting |
22 |
Non-GAAP and Other Financial Measures |
23 |
Qualified Person & QA/QC – Production, Mineral Reserves
and Mineral Resources |
28 |
Overview
Centerra’s Business
Centerra is a Canadian-based mining company
focused on operating, developing, exploring and acquiring gold and
copper 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 Goldfield District
Project (the “Goldfield Project”) in Nevada, United States, the
Kemess Underground 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 on
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 actions of the Kyrgyz
Republic and Kyrgyzaltyn JSC (“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. The Company has entered into a global arrangement
agreement (“Arrangement Agreement”) dated April 4, 2022 with, among
others, Kyrgyzaltyn and the Kyrgyz Republic to effect a separation
of the parties, including through the disposition of Centerra’s
ownership of the Kumtor Mine and investment in the Kyrgyz Republic,
the purchase for cancellation by Centerra of Kyrgyzaltyn’s Centerra
common shares, the termination of Kyrgyzaltyn’s involvement in the
Company, and the resolution of all disputes. The transactions
contemplated by the Arrangement Agreement have not been recognized
in the Company’s condensed consolidated interim financial
statements for the three months ended March 31, 2022.
As of March 31, 2022, 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% |
Gemfield Resources LLC |
Goldfield Project - USA |
Advanced exploration |
100% |
AuRico Metals Inc. |
Kemess Project - Canada |
Advanced exploration |
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 May 3, 2022, there are 297,440,601
common shares issued and outstanding, options to
acquire 2,837,604 common shares outstanding under the
Company’s stock option plan, and 915,944 restricted share
units outstanding under the Company’s restricted share unit plan
(exercisable on a 1:1 basis for common shares).
Overview of Consolidated Financial and Operating
Highlights
($millions,
except as noted) |
Three months ended March31, |
|
|
2022 |
2021 |
|
% Change |
|
Financial Highlights
(continuing operations basis, except as noted) |
|
|
|
|
Revenue |
295.2 |
226.2 |
|
31 |
% |
Production costs |
144.2 |
121.4 |
|
19 |
% |
Depreciation, depletion, and amortization |
37.5 |
34.4 |
|
9 |
% |
Earnings from mine operations |
113.5 |
70.5 |
|
61 |
% |
Net earnings from continuing
operations |
89.4 |
111.4 |
|
(20 |
)% |
Adjusted net earnings from
continuing operations(1) |
56.4 |
28.2 |
|
100 |
% |
Net earnings from discontinued
operations |
— |
56.0 |
|
(100 |
)% |
Net earnings(2) |
89.4 |
167.4 |
|
47 |
% |
Adjusted net earnings(1)(2) |
56.4 |
84.2 |
|
(33 |
)% |
Cash provided by operating
activities from continuing operations |
28.3 |
86.4 |
|
(67 |
)% |
Free cash flow from continuing
operations(1) |
9.1 |
68.0 |
|
(87 |
)% |
Adjusted free cash flow from
continuing operations(1) |
19.1 |
68.0 |
|
(72 |
)% |
Cash provided by operating
activities from discontinued operations |
— |
66.7 |
|
(100 |
)% |
Net cash flow deficit from
discontinued operations(3) |
— |
(1.9 |
) |
(100 |
)% |
Additions to property, plant and
equipment (“PP&E”) |
210.2 |
15.9 |
|
1222 |
% |
Capital expenditures -
total(1) |
16.0 |
18.0 |
|
(11 |
)% |
Sustaining capital expenditures(1) |
15.1 |
17.5 |
|
(14 |
)% |
Non-sustaining capital expenditures(1) |
0.9 |
0.5 |
|
69 |
% |
Net earnings from continuing
operations per common share - basic(4) |
0.30 |
0.38 |
|
(20 |
)% |
Net earnings per common share -
$/share basic(2)(4) |
0.30 |
0.57 |
|
(47 |
)% |
Adjusted net earnings from
continuing operations per common share - basic(1)(4) |
0.19 |
0.10 |
|
99 |
% |
Adjusted net earnings per common share - $/share
basic(1)(2)(4) |
0.19 |
0.28 |
|
(33 |
)% |
Operating highlights (continuing operations
basis) |
|
|
|
Gold produced (oz) |
93,784 |
70,177 |
|
34 |
% |
Gold sold (oz) |
94,908 |
82,082 |
|
16 |
% |
Average market gold price
($/oz) |
1,879 |
1,797 |
|
5 |
% |
Average realized gold price ($/oz
)(5) |
1,687 |
1,465 |
|
15 |
% |
Copper produced (000s lbs) |
20,558 |
18,609 |
|
10 |
% |
Copper sold (000s lbs) |
19,449 |
22,783 |
|
(15 |
)% |
Average market copper price
($/lb) |
4.53 |
3.86 |
|
17 |
% |
Average realized copper price
($/lb)(5) |
3.77 |
2.72 |
|
39 |
% |
Molybdenum sold (000s lbs) |
2,887 |
3,309 |
|
(13 |
)% |
Average market molybdenum price ($/lb) |
19.08 |
11.29 |
|
78 |
% |
Unit costs (continuing operations basis) |
|
|
|
Gold production costs ($/oz) |
497 |
644 |
|
(23 |
)% |
All-in sustaining costs on a
by-product basis ($/oz)(1) |
395 |
575 |
|
(31 |
)% |
All-in costs on a by-product
basis ($/oz)(1) |
516 |
724 |
|
(29 |
)% |
Gold - All-in sustaining costs on
a co-product basis($/oz)(1) |
735 |
863 |
|
(15 |
)% |
Copper production costs
($/lb) |
1.68 |
1.42 |
|
18 |
% |
Copper - All-in sustaining costs
on a co-product basis – ($/lb)(1) |
2.11 |
1.68 |
|
26 |
% |
(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
March 31, 2022, the Company had 297,387,727 common shares issued
and outstanding, of which 26.1% were held by Kyrgyzaltyn.(5) 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 related
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 ended March 31, 2021. As a result,
the Company’s consolidated results from continuing operations
discussed in this MD&A exclude the Kumtor Mine’s operations,
unless otherwise noted. The impact of the Arrangement Agreement
signed on April 4, 2022 has not been yet recognized in the
financial statements presented.
First Quarter 2022 compared to First Quarter
2021
Net earnings of $89.4 million were recognized in
the first quarter of 2022, compared to net earnings of $167.4
million in the first quarter of 2021. The decrease in net earnings
was primarily due to a $72.3 million gain recognized on the sale of
the Company’s interest in the Greenstone Gold Mines Partnership
(“Greenstone Partnership”) in the first quarter of 2021 and higher
current income tax expense related to the Öksüt Mine in the first
quarter of 2022. In addition, there were higher corporate
administration costs in the first quarter of 2022 primarily due to
the effect of the increase in the Company’s share price on the
provision for share-based compensation, an increase in consulting
costs from various information technology projects and an increase
in insurance expenses and costs associated with the NYSE
listing.
The decrease in net earnings was partially
offset by higher earnings from mine operations of $113.5 million in
the first quarter of 2022 compared to $70.5 million in the first
quarter of 2021 primarily due to an increase in ounces of gold sold
at the Öksüt Mine and higher average realized gold, copper and
molybdenum prices, partially offset by higher production costs in
the Molybdenum BU. In addition, there was a higher reclamation
provision revaluation recovery of $42.0 million in the first
quarter of 2022 compared to $10.9 million in the first quarter of
2021 primarily attributable to an increase in the risk-free
interest rates applied to discount the estimated future cash flows
at sites on care and maintenance in the Molybdenum BU. The Company
did not report any earnings related to discontinued operations in
the first quarter of 2022. Net earnings from discontinued
operations were $56.0 million in the first quarter of 2021.
Adjusted net earningsNG of $56.4 million were
recognized in the first quarter of 2022, compared to adjusted net
earningsNG from continuing operations of $28.2 million in the first
quarter of 2021. The increase in adjusted net earningsNG was
primarily due to an increase in ounces of gold sold at the Öksüt
Mine and higher average realized gold, copper and molybdenum
prices, partially offset by a decrease in ounces of gold and pounds
of copper sold at the Mount Milligan Mine and pounds of molybdenum
sold at the Molybdenum BU. The increase was partially offset by
higher corporate administration costs and higher current income tax
expense related to the Öksüt Mine.
The most significant adjusting items to net earnings in the
first quarter of 2022 were:
- $42.0 million reclamation provision
revaluation recovery at sites on care and maintenance in the
Molybdenum BU primarily attributable to an increase in the
risk-free interest rates applied to discount the estimated future
reclamation cash flows.
- $6.5 million in legal and other
costs directly related to the seizure of the Kumtor Mine.
- $2.5 million of
income tax adjustments resulting from foreign currency exchange
rate impact on the deferred income taxes related to the Öksüt
Mine.
The most significant adjusting items to net
earnings from continuing operations in the first quarter of 2021
were the$72.3 million gain on the sale of Greenstone project and
the $10.9 million reclamation recovery resulting from the reduction
in the reclamation provision due to an increase in the risk-free
interest rates applied to discount the estimated future reclamation
cash flows.
Cash provided by operating activities from
continuing operations was $28.3 million in the first quarter of
2022, compared to $86.4 million in the first quarter of 2021. The
decrease in cash provided by operating activities was primarily due
to an increase in income taxes paid of $21.8 million, related to
the Öksüt Mine and an unfavourable working capital change at the
Mount Milligan Mine as a result of timing of cash collection on
concentrate sales and timing of vendor payments made in the period.
In addition, there was an unfavourable working capital change at
the Molybdenum BU from an increase in product inventory held at a
higher average molybdenum prices and timing of cash collection on
sales in the period. Cash provided by operating activities from
discontinued operations was $66.7 million in the first quarter of
2021.
Free cash flowNG of $9.1 million was recognized
in the first quarter of 2022, compared to free cash flowNG from
continuing operations of $68.0 million in the first quarter of
2021. The decrease in free cash flowNG was primarily due to lower
cash provided by operating activities, partially offset by slightly
lower sustaining capital expendituresNG.
2022 Outlook
The Company’s 2022 outlook was disclosed in the
MD&A for the year ended December 31, 2021 and 2020 filed on
SEDAR at www.sedar.com and EDGAR at www.sec.gov/edgar. In March
2022, the Company announced that mercury was detected at the
adsorption-desorption recovery (“ADR”) plant at the Öksüt Mine and
the gold doré bar production was suspended. The outlook for the
Öksüt Mine and consolidated Centerra are currently under review
while the rest of the outlook that was previously communicated,
including the Mount Milligan Mine, remains unchanged. Following a
thorough review, the Company expects to provide an update in the
second quarter of 2022. Refer to Recent Events and Developments
section in this MD&A for further details on the Öksüt Mine.
Recent Events and Developments
Kumtor Mine
On April 4, 2022, Centerra announced that it had
entered into a global arrangement agreement with, among others,
Kyrgyzaltyn and the Kyrgyz Republic (the “Arrangement Agreement”)
to effect a clean separation of the parties, including through the
disposition of Centerra’s ownership of the Kumtor Mine and
investment in the Kyrgyz Republic, the purchase for cancellation by
Centerra of Kyrgyzaltyn’s 77.4 million Centerra common shares, the
termination of Kyrgyzaltyn’s involvement in the Company, and the
resolution of all disputes. The Arrangement Agreement contemplates
the following principal elements:
- Kyrgyzaltyn transferring to
Centerra all of its 77.4 million Centerra common shares for
cancellation, representing an approximate 26.0% equity interest in
Centerra, for an aggregate purchase price of approximately C$972
million (based on the closing price of C$12.56 per Centerra common
share on the TSX on April 1, 2022). In satisfaction of the purchase
price for the Centerra common shares owned by Kyrgyzaltyn,
Kyrgyzaltyn will receive from Centerra the 100% equity interest in
its two Kyrgyz subsidiaries, KGC and Kumtor Operating Company CJSC
(“KOC”), and, indirectly, the Kumtor Mine (with Kyrgyzaltyn and the
Kyrgyz Republic assuming all responsibility for the Kumtor Mine,
including all reclamation and environmental obligations), plus a
cash payment of approximately $36 million, a portion of which will
be withheld on account of Canadian withholding taxes payable by
Kyrgyzaltyn upon the purchase for cancellation of its Centerra
shares (the “Share Exchange” and, together with the other
transactions contemplated by the Arrangement Agreement, the
“Arrangement”).
- Full and final
releases of all past, present and future claims of the
parties.
- Termination of
all legal proceedings involving the parties in all jurisdictions
with no admissions of liability. This includes:
- Any and all
cases, proceedings, investigations, inquiries or other actions by
the Kyrgyz Republic, Kyrgyzaltyn or any other Kyrgyz governmental
entity or any person acting on behalf of and/or for the benefit of
any such person against Centerra and the other persons and entities
released under the Arrangement Agreement (the “Kyrgyz Proceedings”)
are to be withdrawn and terminated to Centerra’s sole satisfaction
within 45 days of the date of the Arrangement Agreement;
- Binding
international arbitration proceedings that were previously
commenced by the Company, KGC and KOC against the Kyrgyz Republic
and Kyrgyzaltyn have been suspended and are to be terminated within
two business days of the closing of the Arrangement;
- No further steps
are to be taken by the Kyrgyz Republic or Centerra in relation to
the proceedings commenced by the Company in the Ontario Superior
Court of Justice against Tengiz Bolturuk, a former member of the
Centerra’s Board of Directors, from the date of the Arrangement
Agreement. From the closing of the Arrangement, Centerra will
consent to an order setting aside the judgement issued in the
Ontario Superior Court of Justice against Mr. Bolturuk on February
15, 2022; and
- Subject to
certain conditions and following the withdrawal and termination of
the Kyrgyz Proceedings, KGC and KOC will work together with the
Kyrgyz Republic to voluntarily dismiss the Chapter 11 proceedings
in U.S. Bankruptcy Court for the Southern District of New York,
effective as of the closing of the Arrangement.
- Centerra
repaying the inter-company balance between Centerra and KGC by
paying $50 million to KGC on closing of the Arrangement and, as to
the balance, by way of set off against an offsetting dividend to be
declared by KGC immediately prior to closing of the
Arrangement.
- The resignation
from Centerra’s Board of Directors of Kyrgyzaltyn’s two nominees
and the termination of the shareholders agreement between, among
others, Centerra and Kyrgyzaltyn.
- Termination of
all agreements entered into by Centerra in respect of the Kumtor
Mine vis-à-vis Centerra’s rights and obligations.
- The transfer of
the Kumtor reclamation trust funds, which were being held in trust
to fund ongoing reclamation activities at the Kumtor Mine, to a
Kyrgyz reclamation account held by KGC.
Certain aspects of the Arrangement will be
implemented by way of a court-approved plan of arrangement (the
“Plan of Arrangement”) under the Canada Business Corporations Act,
including the Share Exchange, the resignation of Kyrgyzaltyn’s
nominees from the Board, repayment by Centerra of cash amounts to
KGC and the repayment of the intercompany balance owning by
Centerra to KGC. In addition, the Plan of Arrangement will
implement certain related ancillary matters which include: (i) the
termination of Centerra’s Insurance Risk Rights Plan dated as of
June 21, 2004; (ii) the elimination of the Class A non-voting
shares as authorized shares in the capital of Centerra such that,
following such amendment, Centerra would be authorized to issue
common shares and preference shares, each having unamended rights,
privileges, restrictions and conditions; and (iii) releases and
waivers in favour of Centerra and each of its then affiliates and
each of its representatives.
In order for Centerra to proceed with the
Arrangement and the Plan of Arrangement, a special resolution of
Centerra shareholders authorizing the Plan of Arrangement must be
approved by (i) at least a majority of the votes cast by Centerra
shareholders (excluding for this purpose votes attached to Centerra
common shares held by Kyrgyzaltyn and any other persons required to
be excluded under applicable Canadian law) and (ii) at least
two-thirds of the votes cast by all Centerra shareholders, in each
case represented in person or by proxy at a special meeting of
Centerra shareholders. In addition to such Centerra shareholder and
Ontario court approvals and the principal elements of the
Arrangement described above, the Arrangement is subject to a number
of customary conditions precedent.
Full details of the Arrangement Agreement, the
Arrangement and the transactions contemplated thereby, the
background to the Arrangement, the rationale for the Arrangement
and the risks related thereto, among other matters, will be
included in the management information circular mailed to Centerra
shareholders in connection with the special meeting of Centerra
shareholders to consider and approve the Arrangement. Centerra
currently expects to hold a special meeting of Centerra
shareholders to consider and, if deemed advisable, approve the Plan
of Arrangement in the second quarter of 2022.
Despite the entering into of the Arrangement
Agreement, several risks remain to completion. There can be no
assurance that Kyrgyzaltyn or the Kyrgyz Republic will not take
unilateral actions which are inconsistent with their obligations
under the Arrangement Agreement or that the conditions precedent to
the Arrangement (including the termination or withdrawal of Kyrgyz
Proceedings to the satisfaction of Centerra) will be satisfied in a
timely manner or at all. There can similarly be no assurance that
the Arrangement will be approved by Centerra shareholders or the
Ontario court, as described above, or that the Arrangement will not
be challenged by third parties. If Centerra is unable to complete
the Arrangement in a manner that provides for a clean separation
from Kyrgyzaltyn and the Kyrgyz Republic, including the termination
or withdrawal of Kyrgyz Proceedings to its satisfaction, the
Arrangement may not close. Accordingly, there can be no assurance
that the Arrangement will be consummated in accordance with the
Arrangement Agreement or at all.
For more information regarding the events
surrounding the seizure of the Kumtor Mine in May 2021, including
the measures taken by Centerra KGC and KOC in response thereto,
please refer to the Company’s Annual Information Form and M&DA
for the year ended December 31, 2021 and 2020 filed on SEDAR at
www.sedar.com and EDGAR at www.sec.gov/edgar.
Suspension of gold doré bar production at the Öksüt
Mine
On March 18, 2022, Centerra announced that it
had suspended gold doré bar production at the Öksüt Mine due to
mercury detected in the gold room of the ADR plant. Centerra has
taken several initial actions in response, including initially
cleaning mercury from affected areas, taking steps to mitigate and
prevent exposure, implementing the necessary safety protocols and
providing protective equipment to ensure health and safety of
employees and contractors as well as taking all necessary
regulatory reporting steps.
Mining, stockpiling, crushing, stacking and
leaching activities continue at the Öksüt Mine while the work is
underway to assess and potentially procure equipment necessary to
safely remove the mercury in the gold recovery process. Ore
continues to be processed within the ADR plant into a
gold-in-carbon form. The Company has engaged international experts
to propose modifications to the sections of the ADR plant,
including the gold room, to process mercury-bearing ore. The
Company is also evaluating several potential technical solutions to
remove the mercury in the gold recovery process, including a retort
and scrubbing system in the ADR plant and has engaged external
consultants to prepare an execution plan. Centerra is also
undertaking an analysis to determine alternative means of
monetizing gold in carbon material which could provide a temporary
solution until gold doré bar production is restarted at site or
over the life of mine with minimal equipment required within the
ADR plant.
Acquisition of Goldfield Project
On February 28, 2022, Centerra announced the
completion of the acquisition of Gemfield Resources LLC, owner of
the Goldfield Project, from Waterton Nevada Splitter, LLC. The
final purchase consideration comprised $176.7 million in cash paid
at closing, including reimbursement of $1.7 million incurred by the
seller for the construction of a water supply infrastructure, 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 approved by its Board of Directors with
respect to the project, among other things.
Goldfield Project is a conventional open-pit,
heap leach project located in Nevada, USA, a Tier 1 mining
jurisdiction, and contains three known deposits. The Company
believes that the project has 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. Following the transaction
closing, we initiated planning of drilling programs as well as
permitting, community outreach, regulatory compliance and land
management activities. Airborne and ground geophysical surveys and
reverse circulation drilling programs are planned to commence in
the second quarter of 2022.
COVID-19 and Global Supply Chain Disruption
Centerra continues to take steps to minimize the
effect of the COVID-19 pandemic on its business. 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. The Mount Milligan Mine, the Öksüt Mine and or any of
the Company’s other operations have not 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. The Company also continues to monitor for any adverse
impact on the global supply chain or other consequences from the
Russian invasion in Ukraine; however, the supply of critical
consumables and reagents to the Company’s sites has not been
affected to date.
Employee Health and Safety
The Company recognized the following notable developments in the
course of the first quarter of 2022:
- The Kemess Project
achieved three years without a lost-time injury.
- Endako Mine achieved
seven years without a reportable injury.
- The Öksüt Mine
achieved one million work hours without a lost-time injury.
- There were four
reportable injuries company-wide, including one lost-time injury,
two medical aid injuries, and one restricted work injury.
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.
First Quarter 2022 compared to First Quarter
2021
Revenue of $295.2 million was recognized in the
first quarter of 2022 compared to $226.2 million in the first
quarter of 2021. The increase in revenue was primarily due to an
increase in ounces of gold sold at the Öksüt Mine and higher
average realized gold, copper and molybdenum prices, partially
offset by a decrease in ounces of gold and pounds of copper sold at
the Mount Milligan Mine and pounds of molybdenum sold at the
Molybdenum BU.
Gold production was 93,784 ounces in the first
quarter of 2022 compared to 70,178 ounces in the first quarter of
2021. Gold production in the first quarter of 2022 included 54,691
ounces of gold from the Öksüt Mine due to higher ore tonnes stacked
on the heap leach and higher grade of tonnes stacked. The Mount
Milligan Mine produced 39,093 ounces of gold in the first quarter
of 2022 compared to 42,576 ounces in the first quarter of 2021
primarily due to lower gold grades, partially offset by higher
recoveries and higher mill throughput.
Copper production at the Mount Milligan Mine was
20.6 million pounds in the first quarter of 2022 compared to 18.6
million pounds in the first quarter of 2021. The increase was
primarily due to higher recoveries and higher mill throughput,
partially offset by lower copper grades.
The Langeloth Facility roasted and sold 1.1
million pounds and 2.9 million pounds of molybdenum, respectively,
in the first quarter of 2022, compared to 2.7 million pounds and
3.3 million pounds, respectively in the first quarter of 2021. This
decrease in the molybdenum roasted and sold was primarily due to an
unplanned acid plant shutdown that impacted the Facility’s ability
to roast purchased molybdenum.
Cost of sales of $181.7 million was recognized
in the first quarter of 2022 compared to $155.8 million in the
first quarter of 2021. The increase was primarily due to higher
gold ounces sold resulting in higher production costs at the Öksüt
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, higher maintenance costs associated with
an unplanned acid plant shutdown and the effect of higher unit
costs from the mix of products sold in the period.
Gold production costs were $497 per ounce in the
first quarter of 2022 compared to $644 per ounce in the first
quarter of 2021. The decrease was primarily due to a higher
allocation of costs to copper production costs at the Mount
Milligan Mine due to the changes in the relative market prices of
gold and copper. Partially offsetting the decrease in gold
production costs per ounce was an increase in production costs at
the Öksüt Mine primarily due to higher royalty costs from an
increase in average realized gold prices and the royalty rate used
in the calculation of royalties payable and higher site
administrative expenses resulting from various corporate social
responsibility and information technology projects.
All-in sustaining costs on a by-product basisNG
from continuing operations were $395 per ounce in the first quarter
of 2022 compared to $575 per ounce in the first quarter of 2021.
The decrease in all-in sustaining costs on a by-product basisNG was
primarily due to higher average realized copper prices, partially
offset by an increase in production costs and corporate, general
and administrative costs.
All-in costs on a by-product basisNG from
continuing operations were $516 per ounce in the first quarter of
2022 compared to $724 per ounce in the first quarter of 2021. The
decrease was primarily due to lower all-in sustaining costs on a
by-product basisNG as noted above, partially offset by higher
exploration costs.
Corporate administration costs of $12.3 million
were recognized in the first quarter of 2022 compared to $4.9
million in the first quarter of 2021. The increase was primarily
due to the effect of the increase in the Company’s share price on
the provision for share-based compensation, an increase in
consulting costs for various information technology projects and an
increase in insurance expenses and costs associated with the NYSE
listing.
Reclamation recovery was $42.0 million in the
first quarter of 2022 compared to $10.9 million in the first
quarter of 2021. The $42.0 million reclamation provision
revaluation recovery at sites on care and maintenance in the
Molybdenum BU primarily attributable to an increase in the
risk-free interest rates applied to discount the estimated future
reclamation cash flows.
A gain on sale of $72.3 million (excluding
contingent receivable consideration) was recognized in the first
quarter of 2021 on the disposal of the Company’s 50% interest in
the Greenstone Partnership.
The company recognized income tax expense of
$29.2 million in the first quarter of 2022, comprising current
income tax expense of $37.5 million and deferred income tax
recovery of $8.3 million, compared to income tax expense of $19.6
million in the first quarter of 2021, comprising current income tax
expense of $15.6 million and deferred income tax expense of $4.0
million. The increase in income tax expense was primarily due to
the taxation of the Öksüt Mine’s income at the full statutory
income tax rate from the full utilization of Oksut’s Investment
Incentive Certificate as of the end of 2021, and from the net
impact of foreign exchange fluctuation on monetary assets and
liabilities.
Financial Instruments
The Company seeks to manage its exposure to
fluctuations in diesel fuel prices, commodity prices and foreign
exchange rates by entering into derivative financial instruments
from time-to-time. The hedge positions for each of these programs
as at March 31, 2022 are summarized as follows:
|
|
|
Average Strike Price |
Settlements(% of exposure
hedged) |
As at March 31, 2022 |
Instrument |
Unit |
Type |
Q2 - Q4 2022 |
2023 |
2024 |
Q2 - Q4 2022 |
2023 |
2024 |
Total position(2) |
Fair value ($'000's) |
|
|
|
|
|
|
|
|
|
|
|
FX
Hedges |
|
|
|
|
|
|
|
|
|
|
USD/CAD zero-cost collars |
CAD |
Fixed |
$1.28/$1.35 |
$1.24/$1.30 |
$1.25/$1.32 |
$187.0 M (40%) |
$146.0 M |
$72.0 M |
$405.0 M |
6,886 |
|
USD/CAD forward contracts |
CAD |
Fixed |
1.29 |
1.27 |
1.29 |
$137.0 M (28%) |
$116.0 M |
$24.0 M |
$277.0 M |
4,889 |
|
Total |
|
|
|
|
|
$324.0 M (68%) |
$262.0 M |
$96.0 M |
$682.0 M |
11,775 |
|
|
|
|
|
|
|
|
|
|
|
|
Fuel
Hedges |
|
|
|
|
|
|
|
|
|
|
ULSD zero-cost collars |
Barrels |
Fixed |
$63/$69 |
$73/$78 |
N/A |
30,100 (26%) |
13,500 |
N/A |
43,600 |
2,403 |
|
ULSD
swap contracts |
Barrels |
Fixed |
$62 |
$79 |
$82 |
48,500 (42%) |
44,000 |
15,600 |
108,100 |
5,000 |
|
Total |
|
|
|
|
|
78,600 (68%) |
57,500 |
15,600 |
151,700 |
7,403 |
|
|
|
|
|
|
|
|
|
|
|
|
Copper
Hedges(1): |
|
|
|
|
|
|
|
|
|
Copper
zero-cost collars |
Pounds |
Fixed |
$3.66/$4.82 |
$4.00/$4.91 |
$4.00/$5.06 |
31.9 M (65%) |
22.8 M |
9.9 M |
64.6 M |
(11,795 |
) |
|
|
|
|
|
|
|
|
|
|
|
Gold/Copper Hedges (Royal Gold deliverables): |
|
|
|
|
|
|
|
Gold forward contracts |
Ounces |
Float |
N/A |
N/A |
N/A |
25,210 |
N/A |
N/A |
25,210 |
936 |
|
Copper
forward contracts |
Pounds |
Float |
N/A |
N/A |
N/A |
2.3M |
N/A |
N/A |
2.3 M |
222 |
|
(1) The copper hedge ratio is based on the forecasted copper
sales production, net of the streaming arrangement with Royal
Gold.(2) Royal Gold hedging program with a market price determined
on closing of the contract.
The realized gain (loss) recorded in the consolidated statements
of earnings was as follows:
|
Three Months Ended March 31, |
($millions) |
2022 |
2021 |
|
% Change |
Foreign exchange hedges |
2,069 |
3,662 |
|
(44 |
)% |
Fuel hedges |
1,883 |
2,252 |
|
(16 |
)% |
Copper hedges |
— |
(9,026 |
) |
(100 |
)% |
As at March 31, 2022, 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) |
March 31,2022 |
December 31,2021 |
% Change |
Total Assets |
2,733.0 |
2,676.6 |
2 |
% |
Total Liabilities |
611.7 |
633.0 |
(3 |
)% |
Total Equity |
2,121.3 |
2,043.6 |
4 |
% |
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. The assets and liabilities presented as at
March 31, 2022 and December 31, 2021 do not include the Kumtor
Mine.
Cash as at March 31, 2022 was $768.4 million
compared to $947.2 million as at December 31, 2021. The decrease
was primarily due to cash consideration of $176.7 million paid on
closing for the acquisition of Goldfield Project and dividends paid
of $12.3 million in 2022. The decrease was partially offset by free
cash flowNG from continuing operations of $9.1 million for the
first quarter of 2022.
Amounts receivable as at March 31, 2022 were
$141.8 million compared to $76.8 million at December 31, 2021. The
increase was primarily due to a shipment of concentrate from the
Mount Milligan Mine in late March 2022, for which the funds were
not collected until the second quarter of 2022 and an increase in
accounts receivable balance due to timing of cash collection from
molybdenum sales.
The carrying value of property, plant and
equipment as at March 31, 2022 was $1.44 billion compared to $1.27
billion as at December 31, 2021. The increase was primarily due to
additions of $208.2 million of property, plant and equipment
resulting from the acquisition of the Goldfield Project, partially
offset by depreciation, depletion and amortization of property,
plant and equipment in the normal course of operations during the
period.
Deferred income tax assets as at March 31, 2022
were $88.8 million compared to $101.3 million as at December 31,
2021. The decrease reflects the expected utilization of these
assets to reduce current income tax expense at the Mount Milligan
Mine in 2022.
Income tax payable as at March 31, 2022 was
$37.6 million compared to $25.3 million at December 31, 2021. The
increase was primarily due to the increase in current income taxes
on income from the Öksüt Mine, partially offset by tax payments
made during the period.
Deferred income tax liabilities as at March 31,
2022 were $33.4 million compared to $54.9 million at December 31,
2021. The decrease was primarily due to the tax effects of reversal
of temporary differences between accounting and tax basis of the
balances related to the Öksüt Mine, including the impact of foreign
exchange rate changes on the temporary differences.
The long-term portion of the provision for
reclamation as at March 31, 2022 was $277.4 million compared to
$331.3 million at December 31, 2021. The decrease was primarily due
to an increase in the risk-free interest rates applied to the
future cash flows at all the sites.
The other non-current liabilities as at March
31, 2022 were $51.0 million compared to $19.4 million at December
31, 2021. The increase was primarily due to a deferred milestone
payment of $30.1 million related to the acquisition of the
Goldfield Project.
Liquidity and Capital
Resources
The Company’s total liquidity position as at
March 31, 2022 was $1,168.4 million, representing a cash balance of
$768.4 million and $400 million available under a corporate credit
facility.
As a result of the loss of control of the Kumtor
Mine in the second quarter of 2021, 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 first quarter of 2021. 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.
First Quarter 2022 compared to First Quarter
2021
Cash provided by operating activities from
continuing operations was $28.3 million in the first quarter of
2022, compared to $86.4 million in the first quarter of 2021. The
decrease in cash provided by operating activities was primarily due
to an increase in income taxes paid of $21.8 million related to the
Öksüt Mine and an unfavourable working capital change at the Mount
Milligan Mine as a result of timing of cash collection from
concentrate shipments and timing of vendor payments made in the
period. In addition, there was an unfavourable working capital
change at the Molybdenum BU from an increase in accounts receivable
from the timing of cash collection on molybdenum sales and timing
of vendor payments.
Cash used in investing activities from
continuing operations of $194.0 million was recognized in the first
quarter of 2022 compared to cash provided by investing activities
of $194.1 million in the first quarter of 2021. Cash used in first
quarter of 2022 is primarily related to the acquisition of the
Goldfield Project of $176.7 million. Cash provided in the first
quarter of 2021 was primarily due to proceeds received from the
sale of the Company’s 50% interest in the Greenstone Partnership of
$210.3 million.
Cash used in financing activities during the
first quarter of 2022 was $13.1 million compared to $0.6 million in
the first quarter of 2021. The increase was primarily due to
dividends paid of $12.3 million in the first quarter of 2022.
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 $435 per ounce
of gold delivered and 15% of the spot price per metric tonne of
copper delivered. To satisfy its obligations under the Mount
Milligan Streaming Arrangement, the Company purchases refined gold
ounces and copper warrants and arranges for delivery to Royal Gold.
The difference between the cost of the purchases of refined gold
ounces and copper warrants and the corresponding amounts payable to
the Company under the Mount Milligan Streaming Arrangement is
recorded as a reduction of revenue and not a cost of operating the
mine.
Water Update
Stored water inventory at the Mount Milligan
Mine’s Tailings Storage facility (“TSF”) is critical to the mine’s
ability to process ore through the process plant on a sustainable
basis. In the first quarter of 2022, the Mount Milligan Mine
accessed water from groundwater wells near the TSF. The stored
water as at March 31, 2022 combined with the incoming freshet in
the second quarter of 2022 is expected to replenish the TSF stored
water to secure continued operations for a period of twelve months
or longer.
In January 2022, after discussions and
consultation with British Columbia regulators, First Nations
partners and other stakeholders, the Company obtained an amendment
to the Mount Milligan Mine’s environmental assessment (“EA”)
certificate which will allow access to long-term surface water
sources for the life of the project, subject to the receipt of
ordinary course permits.
Mount Milligan Mine Financial and Operating Results
|
Three months ended March 31 |
|
($millions, except as noted) |
2022 |
|
2021 |
|
% Change |
|
Financial Highlights: |
|
|
|
Gold revenue |
58.5 |
|
70.3 |
|
(17 |
)% |
Copper revenue |
73.3 |
|
61.9 |
|
18 |
% |
Other by-product revenue |
2.3 |
|
3.3 |
|
(30 |
)% |
Total revenue |
134.1 |
|
135.5 |
|
(1 |
)% |
Production costs |
58.6 |
|
69.1 |
|
(15 |
)% |
Depreciation, depletion and
amortization |
23.5 |
|
22.9 |
|
3 |
% |
Earnings from mine
operations |
52.0 |
|
43.5 |
|
20 |
% |
Earnings from operations(1) |
45.6 |
|
39.7 |
|
15 |
% |
Cash provided by mine
operations |
20.8 |
|
89.7 |
|
(77 |
)% |
Free cash flow from mine
operations(2) |
6.4 |
|
76.9 |
|
(92 |
)% |
Additions to property, plant and
equipment |
9.7 |
|
12.1 |
|
(19 |
)% |
Capital expenditures -
total(2) |
13.4 |
|
11.4 |
|
18 |
% |
Sustaining capital expenditures(2) |
12.5 |
|
11.3 |
|
11 |
% |
Non-sustaining capital expenditures(2) |
0.9 |
|
0.1 |
|
100 |
% |
Operating Highlights: |
|
|
|
Tonnes mined (000s) |
10,651 |
|
10,673 |
|
0 |
% |
Tonnes ore mined (000s) |
4,992 |
|
5,122 |
|
(3 |
)% |
Tonnes processed (000s) |
5,251 |
|
4,770 |
|
10 |
% |
Process plant head grade gold
(g/t) |
0.35 |
|
0.43 |
|
(19 |
)% |
Process plant head grade copper
(%) |
0.23 |
% |
0.23 |
% |
(2 |
)% |
Gold recovery (%) |
67.9 |
% |
66.2 |
% |
2 |
% |
Copper recovery (%) |
81.9 |
% |
80.0 |
% |
2 |
% |
Concentrate produced (dmt) |
44,932 |
|
41,904 |
|
7 |
% |
Gold produced (oz) (3) |
39,093 |
|
42,576 |
|
(8 |
)% |
Gold sold (oz)(3) |
40,204 |
|
54,498 |
|
(26 |
)% |
Average realized gold price -
combined ($/oz)(3)(4) |
1,456 |
|
1,291 |
|
13 |
% |
Copper produced (000s
lbs)(3) |
20,558 |
|
18,609 |
|
10 |
% |
Copper sold (000s lbs)(3) |
19,449 |
|
22,783 |
|
(15 |
)% |
Average realized copper price - combined ($/lb)(3)(4) |
3.77 |
|
2.72 |
|
39 |
% |
Unit Costs: |
|
|
|
Gold production costs ($/oz) |
647 |
|
675 |
|
(4 |
)% |
All-in sustaining costs on a
by-product basis ($/oz)(2) |
15 |
|
367 |
|
(96 |
)% |
All-in costs on a by-product
basis ($/oz)(2)(5) |
121 |
|
386 |
|
(69 |
)% |
Gold - All-in sustaining costs on
a co-product basis ($/oz)(2) |
819 |
|
802 |
|
2 |
% |
Copper production costs
($/lb) |
1.68 |
|
1.42 |
|
18 |
% |
Copper - All-in sustaining costs
on a co-product basis ($/lb)(2) |
2.11 |
|
1.68 |
|
26 |
% |
(1) Includes exploration costs and marketing and
selling costs.(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 sold and 18.75% of copper sold. 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 financialstatements and units of metal
sold.(5) Includes the impact from the Mount Milligan Streaming
Arrangement and the impact of copper hedges.
First Quarter 2022 compared to First
Quarter 2021
Earnings from mine operations of $52.0 million
were recognized in the first quarter of 2022 compared to $43.5
million in the first quarter of 2021. The increase was primarily
due to higher average realized gold and copper prices, and lower
production costs, partially offset by an increase in exploration
costs and lower gold ounces and copper pounds sold.
Mount Milligan Q1 cash provided by mine operations ($
millions)
- https://www.globenewswire.com/NewsRoom/AttachmentNg/9901d7f2-518f-4a35-b4b9-f313d1a27947
Cash provided by mine operations of $20.8
million was recognized in the first quarter of 2022 compared to
$89.7 million in the first quarter of 2021. The decrease was
primarily due to lower gold ounces and copper pounds sold, an
unfavourable working capital change, partially offset by higher
average realized gold and copper prices and lower production costs.
Working capital levels increased in the first quarter of 2022 as a
result of timing of cash collection on concentrate shipments made
in the period and timing of vendor payments.
Free cash flowNG from mine operations of $6.4
million was recognized in the first quarter of 2022 compared to
$76.9 million in the first quarter of 2021, primarily due to a
decrease in cash provided by mine operations and an increase in
sustaining capital expenditures related to the implementation of a
tailings pumping system which will replace the gravity system.
During the first quarter of 2022, mining
activities were carried out in phases 4, 7, 8, and 9 of the open
pit. Total tonnes mined were 10.7 million tonnes in the first
quarter of 2022 and in the first quarter of 2021.
Total process plant throughput for the first
quarter of 2022 was 5.3 million tonnes, averaging 58,346 tonnes per
calendar day, compared to 4.8 million tonnes, averaging 53,002
tonnes per calendar day in the first quarter of 2021. The increase
in throughput in the first quarter of 2022 was a result of
additional SAG mill runtime and grinding circuit advance process
controls which were implemented in the second half of 2021.
Gold production was 39,093 ounces in the first
quarter of 2022 compared to 42,576 ounces in the first quarter of
2021 due to lower gold grades, partially offset by higher
recoveries and higher mill throughput. During the first quarter of
2022, the average gold grade and recoveries were 0.35 g/t and 68%,
compared to 0.43 g/t and 66% in the first quarter of 2021. Total
copper production was 20.6 million pounds in the first quarter of
2022 compared to 18.6 million pounds in the first quarter of 2021.
The increase was primarily due to higher recoveries and higher mill
throughput, partially offset by lower copper grades.
Gold production costs were $647 per ounce in the
first quarter of 2022 compared to $675 per ounce in first quarter
of 2021. The decrease was due to lower production costs and a
higher allocation of costs to copper, due to the changes in the
relative market prices of gold and copper, partially offset by a
decrease in gold ounces sold. The lower production costs were
primarily due to a decrease in gold ounces and copper pounds sold
and lower milling costs. Lower milling costs were primarily due to
lower contractors costs associated with the general mill shutdown
which was performed in the first quarter of 2021 but not executed
in the first quarter of 2022. Partially offsetting the lower
production costs were higher site administrative costs primarily
due to an increase in salaries and wages from higher inflation, an
increase in recruiting and insurance costs and higher consulting
costs related to various information technology and environmental
projects. In the first quarter of 2022, the Company was able to
reduce 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 initially 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 $1.68 per pound in
the first quarter of 2022 compared to $1.42 per pound in the first
quarter of 2021. The increase was primarily due to a decrease in
copper sold and a higher allocation of production costs to copper,
due to the changes in the relative market prices of gold and
copper. This was partially offset by lower production costs as
outlined above.
Mount Milligan Q1 All-in sustaining costs
on a by-product basis per ounceNG
($/oz)
- https://www.globenewswire.com/NewsRoom/AttachmentNg/bb609b9e-1f51-4cbe-aae9-bc4fa71dca6e
All-in sustaining costs on a by-product basisNG
were $15 per ounce in the first quarter of 2022 compared to $367
per ounce in the first quarter of 2021. The decrease was primarily
due to lower production costs and higher average realized copper
prices, partially offset by lower pounds of copper and ounces of
gold sold and higher sustaining capital expenditures related to the
installation of a tailings pumping system.
All-in costs on a by-product basisNG were $121
per ounce in the first quarter of 2022 compared to $386 per ounce
in the first quarter of 2021. The decrease was due to lower
all-in-sustaining costs as noted above, partially offset by an
increase in exploration expenses.
Öksüt Mine
The Öksüt Mine is located in Turkey
approximately 300 kilometres southeast of Ankara and 48 kilometres
south of Kayseri, the provincial capital. The nearest
administrative centre is at Develi, located approximately 10
kilometres north of the mine site. The Öksüt Mine achieved
commercial production on May 31, 2020.
As outlined in the Recent Events and
Developments section in this MD&A above, the Öksüt Mine
suspended gold doré bar production at the Öksüt Mine in early March
2022 due to mercury having been detected in the gold room of the
ADR plant. As the production of gold doré bars was already
significantly advanced in the first quarter of 2022, this shutdown
did not have a significant impact on the results of operations in
the first quarter of 2022, as described below.
Öksüt Mine Financial and Operating Results
|
Three months ended March 31 |
($millions, except as noted) |
2022 |
|
2021 |
% Change |
Financial Highlights: |
|
|
|
Revenue |
101.6 |
|
49.9 |
104 |
% |
Production costs |
21.1 |
|
16.1 |
31 |
% |
Depreciation, depletion and
amortization |
12.6 |
|
9.7 |
30 |
% |
Earnings from mine
operations |
67.9 |
|
24.1 |
182 |
% |
Earnings from operations(1) |
67.4 |
|
23.7 |
184 |
% |
Cash provided by mine
operations |
63.6 |
|
32.0 |
99 |
% |
Free cash flow from mine
operations(2) |
61.4 |
|
26.2 |
134 |
% |
Additions to property, plant and
equipment |
(0.5 |
) |
5.8 |
(109 |
)% |
Capital expenditures -
total(2) |
2.1 |
|
5.8 |
(64 |
)% |
Sustaining capital expenditures(2) |
2.1 |
|
5.5 |
(62 |
)% |
Non-sustaining capital expenditures(2) |
— |
|
0.3 |
(100 |
)% |
Operating Highlights: |
|
|
|
Tonnes mined (000s) |
2,800 |
|
3,280 |
(15 |
)% |
Tonnes ore mined (000s) |
1,566 |
|
503 |
211 |
% |
Ore mined - grade (g/t) |
1.63 |
|
0.85 |
92 |
% |
Ore crushed (000s) |
911 |
|
525 |
73 |
% |
Tonnes of ore stacked (000s) |
963 |
|
525 |
83 |
% |
Heap leach grade (g/t) |
1.59 |
|
0.83 |
92 |
% |
Heap leach contained ounces
stacked |
49,111 |
|
14,064 |
249 |
% |
Gold produced (oz) |
54,691 |
|
27,601 |
98 |
% |
Gold sold (oz) |
54,704 |
|
27,584 |
98 |
% |
Average realized gold price ($/oz)(3) |
1,857 |
|
1,809 |
3 |
% |
Unit Costs: |
|
|
|
Gold production costs ($/oz) |
386 |
|
584 |
(34 |
)% |
All-in sustaining costs on a
by-product basis ($/oz)(2) |
451 |
|
804 |
(44 |
)% |
All-in costs on a by-product
basis ($/oz)(2) |
459 |
|
827 |
(44 |
)% |
(1) Includes exploration costs.(2) Non-GAAP
financial measure. See discussion under “Non-GAAP and Other
Financial Measures”.(3) 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.
First Quarter 2022 compared to First
Quarter 2021
Earnings from mine operations were $67.9 million
in the first quarter of 2022, compared to $24.1 million in the
first quarter of 2021. The increase was primarily due to much
higher gold sales and higher average realized gold prices,
partially offset by higher production costs and higher
depreciation, depletion and amortization. The increase in
depreciation, depletion and amortization was primarily due to
higher contained ounces stacked on the heap leach.
Öksüt Mine Q1 cash provided by mine operations ($
millions)
- https://www.globenewswire.com/NewsRoom/AttachmentNg/acd4130a-721a-47f8-b1e8-c8f41938e963
Cash provided by mine operations of $63.6
million was recognized in the first quarter of 2022, compared to
$32.0 million in the first quarter of 2021. The increase was
primarily due to an increase in gold ounces sold, partially offset
by higher cash taxes paid. The higher cash taxes paid were
primarily due to taxation at the full statutory income tax rate,
due to the full utilization of Öksüt’s Investment Incentive
Certificate as of the end of 2021 and the recognition of taxable
gains from the effect of foreign exchange rate changes on monetary
assets and liabilities in the taxable income.
Free cash flowNG from mine operations of $61.4
million was recognized in the first quarter of 2022, compared to
$26.2 million in the first quarter of 2021. The increase was
primarily due to an increase in cash provided by mine operations
and lower sustaining capital expendituresNG from a decrease in
capitalized stripping costs.
Mining activities in the first quarter of 2022
were carried out in phase 4 of the Keltepe pit. Total tonnes mined
were 2.8 million tonnes in the first quarter of 2022 compared to
3.3 million tonnes in the first quarter of 2021. The decrease in
tonnes mined was primarily due to higher downtime in the pit from
unfavorable weather conditions, including heavy fog, poor
visibility and snow.
Processing activities in the first quarter of
2022 were focused on the preparation, stacking and irrigation of
the heap leach pad. In the first quarter of 2022 the Öksüt Mine
stacked 1.0 million tonnes at an average grade of 1.59 g/t,
containing 49,111 ounces of gold, compared to 0.5 million tonnes
stacked at an average grade of 0.83 g/t, containing 14,064 ounces
of gold in the first quarter of 2021. The increase in ore tonnes
and contained ounces stacked in the first quarter of 2022 was
primarily due to the lower strip ratio, resulting in a higher
number of tonnes of ore mined and stacked. In addition, tonnes of
ore stacked in the first quarter of 2022 were sourced from a
portion of the Keltepe pit with higher grade mineralization.
Gold production was 54,691 ounces in the first
quarter of 2022 compared to 27,601 ounces in the first quarter of
2021, primarily due to higher grades and higher tonnes of ore
stacked on the heap leach in the first quarter of 2022.
Gold production costs were $386 per ounce in the
first quarter of 2022 compared to $584 per ounce in the first
quarter of 2021. The decrease was primarily due to an increase in
ounces of gold sold, partially offset by higher production costs.
The increase in production costs was primarily due to higher
royalty costs from an increase in average realized gold prices and
the royalty rate used in the calculation of royalties payable. The
increase was partially offset by the weakening of the Turkish lira
relative to the US dollar. In the first quarter of 2022, the
Company did not experience significant impact on the operation of
the Öksüt Mine from the Russian invasion in Ukraine as the supply
of critical consumables and reagents such as natural gas and
cyanide has not been affected to date.
Öksüt Mine Q1 All-in sustaining costs on a by-product
basis per ounceNG ($/oz)
- https://www.globenewswire.com/NewsRoom/AttachmentNg/3815d719-61c5-4325-a0ac-6b1f1f87c590
All-in sustaining costs on a by-product basisNG
were $451 per ounce in the first quarter of 2022 compared to $804
per ounce in the first quarter of 2021. The decrease was primarily
due to higher ounces of gold sold and lower sustaining capital
expendituresNG, partially offset by higher royalty costs from an
increase in average realized gold prices and the royalty rate used
in the calculation of royalties payable.
All-in costs on a by-product basisNG were $459
per ounce in the first quarter of 2022 compared to $827 per ounce
in the first quarter of 2021. The decrease was primarily due to
lower all-in sustaining costs on a by-product basisNG.
Molybdenum Business Unit
The Molybdenum BU includes the Langeloth
Facility in Pennsylvania and two North American molybdenum mines
that are currently on care and maintenance: the Thompson Creek Mine
in Idaho and the 75%-owned Endako Mine in British Columbia. The
Thompson Creek Mine operates a molybdenum beneficiation circuit to
treat molybdenum concentrates to supplement the concentrate feed
sourced directly for the Langeloth Facility. This beneficiation
process allows the Company to upgrade high copper content
molybdenum concentrate, purchased from third parties, into upgraded
products which are then sold in the metallurgical and chemical
markets.
Molybdenum BU Financial and Operating
Results
|
Three months ended March 31 |
($millions, except as noted) |
2022 |
|
2021 |
|
% Change |
Financial Highlights: |
|
|
|
Molybdenum revenue |
58.2 |
|
38.7 |
|
50 |
% |
Other revenue |
1.4 |
|
2.1 |
|
(33 |
)% |
Total revenue |
59.6 |
|
40.8 |
|
46 |
% |
Production costs |
64.5 |
|
36.1 |
|
79 |
% |
Depreciation, depletion and
amortization |
1.5 |
|
1.7 |
|
(16 |
)% |
(Loss) earnings from mine
operations |
(6.4 |
) |
3.0 |
|
(312 |
)% |
Care and maintenance costs -
Molybdenum mines |
3.7 |
|
3.2 |
|
15 |
% |
Reclamation recovery |
(42.0 |
) |
(10.9 |
) |
285 |
% |
Other operating expenses |
0.4 |
|
0.9 |
|
(58 |
)% |
Net earnings from operations |
31.4 |
|
9.8 |
|
220 |
% |
Cash used in operations |
(19.8 |
) |
(6.8 |
) |
(191 |
)% |
Free cash flow (deficit) from
operations(1) |
(20.1 |
) |
(7.5 |
) |
(168 |
)% |
Additions to property, plant and
equipment |
0.2 |
|
0.7 |
|
(67 |
)% |
Total capital expenditures(1) |
0.4 |
|
0.7 |
|
(42 |
)% |
Operating Highlights: |
|
|
|
Mo purchased (lbs) |
3,023 |
|
2,795 |
|
8 |
% |
Mo roasted (lbs) |
1,138 |
|
2,659 |
|
(57 |
)% |
Mo sold (lbs) |
2,887 |
|
3,309 |
|
(13 |
)% |
Average market Mo price
($/lb) |
19.08 |
|
11.29 |
|
69 |
% |
(1) Non-GAAP financial measure. See discussion
under “Non-GAAP and Other Financial Measures”.
First Quarter 2022 compared to First
Quarter 2021
Net earnings from operations of $31.4 million
was recognized in the first quarter of 2022 compared to net
earnings of $9.8 million in the first quarter of 2021. The
increase in the first quarter of 2022 was mainly from an increase
in reclamation recovery primarily due to an increase in the
risk-free interest rates applied to the underlying future
reclamation cash flows, partially offset by loss from mine
operations. The loss from mine operations was primarily due to
higher average molybdenum prices paid to obtain product inventory
to be processed, higher maintenance costs associated with an
unplanned acid plant shutdown extending for longer than one month
and the effect of higher unit costs from the mix of products sold
in the period.
Cash used in operations of $19.8 million was
recognized in the first quarter of 2022, compared to cash used in
operations of $6.8 million in the first quarter of 2021. The
increase in cash used in operations is primarily due to the loss
from operations and an unfavourable working capital change from an
increase in accounts receivable as a result of timing of cash
collection on molybdenum sales made in the period and timing of
vendor payments. The total working capital balance of the
Molybdenum BU increased from $126.2 million as at December 31, 2021
to $139.7 million as at March 31, 2022. During the first quarter of
2022, a review of the existing Molybdenum BU operations was
undertaken with a plan established to significantly reduce working
capital balances and eliminate up to approximately $8.0 million in
annual costs. During the first quarter of 2022, the average market
molybdenum price remained high at $19.08 per pound. The Company
continues to evaluate the Thompson Creek Mine and the Endako Mine
for potential restart or divestment.
Free cash flow deficit from operationsNG of
$20.1 million was recognized in the first quarter of 2022, compared
to free cash flow deficit of $7.6 million in the first quarter of
2021. The increased deficit was primarily due to higher cash used
in operations as noted above.
The Langeloth Facility roasted and sold 1.1
million pounds and 2.9 million pounds of molybdenum, respectively,
in the first quarter of 2022, compared to 2.7 million pounds and
3.3 million pounds, respectively in the first quarter of 2021. This
decrease in the molybdenum roasted was primarily due to an
unplanned acid plant shutdown that impacted the Facility’s ability
to roast purchased molybdenum. The decrease in the molybdenum sold
was primarily due to a decline in molybdenum concentrate available
for roasting due to the acid plant shutdown and lower planned sales
from a change in customer base and the sales mix.
Moly Oxide Pricing $USD/lb (Jan 2020 - Mar 2022)
- https://www.globenewswire.com/NewsRoom/AttachmentNg/f894edb9-f5c4-41e3-9936-71857f92b005
Discontinued Operations
Kumtor Mine
As a result of the loss of control, the Kumtor
Mine was reclassified as a discontinued operation in the second
quarter of 2021. Consequently, the Company is presenting no
financial and operating results pertaining to the first quarter of
2022.
Kumtor Mine Financial and Operating Results
($millions, except as
noted) |
|
Three months ended March 31, |
|
|
|
2022 |
2021 |
|
Financial Highlights: |
|
|
|
Revenue |
|
— |
175.6 |
|
Production costs |
|
— |
48.3 |
|
Depreciation, depletion and
amortization |
|
— |
38.5 |
|
Earnings from mine
operations |
|
— |
88.8 |
|
Net earnings from discontinued
operations |
|
— |
56.1 |
|
Cash provided by operating
activities from discontinued operations |
|
— |
66.7 |
|
Cash used in investing activities
from discontinued operations |
|
— |
68.7 |
|
Net cash flow from discontinued
operations |
|
— |
(1.9 |
) |
Free cash flow from discontinued operations(1) |
|
— |
4.0 |
|
Operating Highlights: |
|
|
|
Tonnes mined (000s) |
|
— |
49,210 |
|
Tonnes ore mined (000s) |
|
— |
885 |
|
Tonnes processed (000s) |
|
— |
1,595 |
|
Process plant head grade
(g/t) |
|
— |
2.41 |
|
Recovery (%)(2) |
|
— |
71.3 |
% |
Gold produced (oz) |
|
— |
90,169 |
|
Gold sold (oz) |
|
— |
98,437 |
|
Unit Costs: |
|
|
|
Gold production costs ($/oz) |
|
— |
492 |
|
All-in sustaining costs on a
by-product basis ($/oz)(1) |
|
— |
888 |
|
All-in costs on a by-product
basis ($/oz)(1) |
|
— |
1,417 |
|
(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 Resource Partners (USA) LP and
Premier Gold Mines Limited, the Company was entitled to receive
further contingent consideration, payable no later than 24 months
after the construction decision on the Greenstone project and upon
the project 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 sales of its interest
in the 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. The Company did not attribute any
value to these contingent payments as of March 31, 2022 due to
significant uncertainty associated with the Greenstone project.
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 |
2022 |
2021 |
2020 |
|
quarterly data unaudited |
Q1 |
Q4 |
Q3 |
Q2 |
Q1 |
Q4 |
Q3 |
Q2 |
Revenue |
295 |
251 |
221 |
202 |
|
226 |
212 |
251 |
130 |
|
Net earnings (loss) from continuing operations(1) |
89 |
275 |
28 |
33 |
|
111 |
31 |
82 |
(39 |
) |
Basic earnings (loss) per share - continuing operations |
0.30 |
0.93 |
0.09 |
0.11 |
|
0.37 |
0.10 |
0.28 |
(0.13 |
) |
Diluted earnings (loss) per share - continuing operations |
0.30 |
0.92 |
0.09 |
0.10 |
|
0.36 |
0.10 |
0.26 |
(0.13 |
) |
Net earnings (loss)(2) |
89 |
275 |
28 |
(852 |
) |
167 |
95 |
206 |
81 |
|
Basic earnings (loss) per share(2) |
0.30 |
0.93 |
0.09 |
(2.87 |
) |
0.57 |
0.32 |
0.70 |
0.27 |
|
Diluted earnings (loss) per share(2) |
0.30 |
0.92 |
0.09 |
(2.87 |
) |
0.55 |
0.32 |
0.68 |
0.27 |
|
(1) Net earnings from continuing operations in Q4 2021 reflects
the impact of impairment reversal at the Mount Milligan Mine.(2)
Net loss in Q2 2021 reflects the impact of derecognition of the
Kumtor Mine as described above.
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:
|
Three months endedMarch 31, |
|
|
2022 |
|
|
2021 |
|
Gross gold and silver sales to Kyrgyzaltyn |
$ |
— |
|
$ |
176,561 |
|
Deduct:
refinery and financing charges |
|
— |
|
|
(941 |
) |
Net revenue received from
Kyrgyzaltyn(1) |
$ |
— |
|
$ |
175,620 |
|
(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:
|
|
Three months ended March 31, |
|
|
|
2022 |
|
|
2021 |
|
Sales to Sojitz |
$ |
2,198 |
|
$ |
3,099 |
|
Deduct: commission charges |
|
(22 |
) |
|
(57 |
) |
Revenue(1) |
$ |
2,176 |
|
$ |
3,042 |
|
(1) Amount receivable from Sojitz as at March 31, 2022 was $0.2
million (December 31, 2021 - $2.6 million).
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. The
critical estimates and judgments applied in the preparation of the
Company’s condensed consolidated interim financial statements for
the three months ended March 31, 2022 are consistent with those
used in the Company’s consolidated financial statements for the
year ended December 31, 2021.
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
earnings are outlined in Note 4 of the consolidated financial
statements for the year ended December 31, 2021.
Accounting Policies and Changes
The accounting policies applied in the condensed
consolidated interim financial statements for the three months
ended March 31, 2022 are consistent with those used in the
Company's consolidated financial statements for the year ended
December 31, 2021, with the exception of those disclosed in note 3
of the condensed consolidated interim financial statements for the
three months ended March 31, 2022
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 2022 that has materially affected,
or is reasonably likely to materially affect, the Company’s
internal controls over financial reporting.
The evaluation of DC&P and ICFR was carried
out under the supervision of and with the participation of
management, including Centerra’s CEO and CFO. Based on these
evaluations, the CEO and the CFO concluded that the design of these
DC&P and ICFR was effective throughout the first quarter of
2022.
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, some employees 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 period ended March 31, 2022
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
other 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 earnings, refining
and transport costs, the 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 hedges of by-product
sales revenue (added in the current period and applied
retrospectively to the previous period). 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 first
quarter ended March 31, 2022, 386 pounds, 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 earnings as recorded in the consolidated statements of earnings
and comprehensive 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 earnings from continuing operations as
recorded in the consolidated statements of earnings and
comprehensive 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
(deficit) 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 (deficit) 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:
|
Three months ended March 31, |
|
Consolidated(2) |
Mount Milligan |
Öksüt |
|
Kumtor(3) |
(Unaudited - $millions, unless otherwise specified) |
2022 |
|
2021 |
|
2022 |
|
2021 |
|
2022 |
2021 |
|
2022 |
2021 |
|
Production costs attributable to gold |
47.1 |
|
52.9 |
|
26.0 |
|
36.8 |
|
21.1 |
16.1 |
|
— |
48.4 |
|
Production costs attributable to copper |
32.6 |
|
32.3 |
|
32.6 |
|
32.3 |
|
— |
— |
|
— |
— |
|
Total production costs excluding molybdenum segment, as
reported |
79.7 |
|
85.2 |
|
58.6 |
|
69.1 |
|
21.1 |
16.1 |
|
— |
48.4 |
|
Adjust for: |
|
|
|
|
|
|
|
|
|
Third party smelting, refining and transport costs |
3.2 |
|
2.8 |
|
3.0 |
|
2.8 |
|
0.2 |
— |
|
— |
0.9 |
|
By-product and co-product credits |
(75.50 |
) |
(65.10 |
) |
(75.50 |
) |
(65.10 |
) |
— |
— |
|
— |
(2.10 |
) |
Community costs related to current operations |
— |
|
— |
|
— |
|
— |
|
— |
— |
|
— |
1.8 |
|
Adjusted production costs |
7.4 |
|
22.9 |
|
(13.90 |
) |
6.8 |
|
21.3 |
16.1 |
|
— |
49.0 |
|
Corporate general administrative and other costs |
12.3 |
|
5.3 |
|
0.1 |
|
0.3 |
|
— |
— |
|
— |
— |
|
Reclamation and remediation - accretion (operating sites) |
1.6 |
|
1.0 |
|
0.5 |
|
0.5 |
|
1.1 |
0.5 |
|
— |
0.2 |
|
Sustaining capital expenditures |
14.7 |
|
16.8 |
|
12.6 |
|
11.3 |
|
2.1 |
5.5 |
|
— |
38.2 |
|
Sustaining lease payments |
1.5 |
|
1.2 |
|
1.3 |
|
1.1 |
|
0.2 |
0.1 |
|
— |
— |
|
All-in sustaining costs on a by-product basis |
37.5 |
|
47.2 |
|
0.6 |
|
20.0 |
|
24.7 |
22.2 |
|
— |
87.4 |
|
Revenue-based taxes |
— |
|
— |
|
— |
|
— |
|
— |
— |
|
— |
24.6 |
|
Exploration and study costs |
8.2 |
|
9.3 |
|
3.4 |
|
0.9 |
|
0.4 |
0.3 |
|
— |
5.8 |
|
Non-sustaining capital expenditures(1) |
0.9 |
|
0.5 |
|
0.9 |
|
0.1 |
|
— |
0.3 |
|
— |
21.6 |
|
Care and maintenance costs and pre-development costs |
2.4 |
|
2.4 |
|
— |
|
— |
|
— |
— |
|
— |
— |
|
All-in costs on a by-product basis |
49.0 |
|
59.4 |
|
4.9 |
|
21.0 |
|
25.1 |
22.8 |
|
— |
139.4 |
|
Ounces sold (000s) |
94.9 |
|
82.1 |
|
40.2 |
|
54.5 |
|
54.7 |
27.6 |
|
— |
98.4 |
|
Pounds sold (millions) |
19.4 |
|
22.8 |
|
19.4 |
|
22.8 |
|
— |
— |
|
— |
— |
|
Gold production costs ($/oz) |
497 |
|
644 |
|
647 |
|
675 |
|
386 |
584 |
|
— |
492 |
|
All-in sustaining costs on a by-product basis ($/oz) |
395 |
|
575 |
|
15 |
|
367 |
|
451 |
804 |
|
— |
888 |
|
All-in costs on a by-product basis ($/oz) |
516 |
|
724 |
|
121 |
|
386 |
|
459 |
827 |
|
— |
1,417 |
|
Gold - All-in sustaining costs on a co-product basis ($/oz) |
735 |
|
863 |
|
819 |
|
802 |
|
451 |
804 |
|
— |
888 |
|
Copper production costs ($/pound) |
1.68 |
|
1.42 |
|
1.68 |
|
1.42 |
|
n/a |
n/a |
|
n/a |
n/a |
|
Copper - All-in sustaining costs on a co-product basis
($/pound) |
2.11 |
|
1.68 |
|
2.11 |
|
1.68 |
|
n/a |
n/a |
|
n/a |
n/a |
|
(1) Non-sustaining capital expenditures are
distinct projects designed to have a significant increase in the
net present value of the mine. In the current quarter,
non-sustaining capital expenditures include costs related to the
installation of the staged flotation reactors at the Mount Milligan
Mine.
(2) Presented on a continuing operations basis,
excluding the results from the Kumtor Mine.
(3) Results from the period ended March 31,
2021 from the Kumtor Mine are prior to the seizure of the mine on
May 15, 2021.
Adjusted net earnings is a non-GAAP financial measure
and can be reconciled as follows:
|
Three months ended March 31, |
($millions, except as noted) |
|
2022 |
|
|
2021 |
|
Net earnings |
$ |
89.4 |
|
$ |
167.4 |
|
Adjust for items not associated with ongoing operations: |
|
|
Kumtor Mine legal costs and other related costs |
|
6.5 |
|
|
— |
|
Gain on the sale of Greenstone property |
|
— |
|
|
(72.3 |
) |
Reclamation provision revaluation at sites on care and
maintenance |
|
(42.0 |
) |
|
(10.9 |
) |
Income tax adjustments(1) |
|
2.5 |
|
|
— |
|
Adjusted net earnings |
$ |
56.4 |
|
$ |
84.2 |
|
Net earnings per share - basic |
$ |
0.30 |
|
$ |
0.57 |
|
Net earnings per share - diluted |
$ |
0.30 |
|
$ |
0.55 |
|
Adjusted net earnings per share - basic |
$ |
0.19 |
|
$ |
0.28 |
|
Adjusted net earnings per share - diluted |
$ |
0.19 |
|
$ |
0.28 |
|
(1) Income tax adjustments reflect the impact of foreign
currency translation on deferred income taxes.
Adjusted net earnings from continuing operations is a
non-GAAP financial measure and can be reconciled as
follows:
|
Three months ended March 31, |
($millions, except as noted) |
|
2022 |
|
|
2021 |
|
Net earnings from continuing operations |
$ |
89.4 |
|
$ |
111.4 |
|
Adjust for items not associated with ongoing operations: |
|
|
Kumtor Mine litigation and other related costs |
|
6.5 |
|
|
— |
|
Gain on the sale of Greenstone property |
|
— |
|
|
(72.3 |
) |
Reclamation provision revaluation at sites on care and
maintenance |
|
(42.0 |
) |
|
(10.9 |
) |
Income tax adjustments(1) |
|
2.5 |
|
|
— |
|
Adjusted net earnings from continuing
operations |
$ |
56.4 |
|
$ |
28.2 |
|
Net earnings from continuing operations per share -
basic |
$ |
0.30 |
|
$ |
0.38 |
|
Net earnings from continuing operations per share -
diluted |
$ |
0.30 |
|
$ |
0.37 |
|
Adjusted net earnings from continuing operations per share
- basic |
$ |
0.19 |
|
$ |
0.10 |
|
Adjusted net earnings from continuing operations per share
- diluted |
$ |
0.19 |
|
$ |
0.10 |
|
(1) Income tax adjustments reflect the impact of foreign
currency translation on deferred income taxes.
Free cash flow (deficit) from continuing operations and
adjusted free cash flow (deficit) from continuing operations are
non-GAAP financial measures and can be reconciled as
follows:
|
Three months ended March 31, |
|
Consolidated |
Mount Milligan |
Öksüt |
Molybdenum |
Other |
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
|
2021 |
|
Cash provided by (used in) operating activities from
continuing operations(1) |
$ |
28.3 |
|
$ |
86.4 |
|
$ |
20.8 |
|
$ |
89.7 |
|
$ |
63.6 |
|
$ |
32.0 |
|
$ |
(19.8 |
) |
$ |
(6.8 |
) |
$ |
(36.3 |
) |
$ |
(28.5 |
) |
Adjust
for: |
|
|
|
|
|
|
|
|
|
|
Additions to property, plant & equipment from continuing
operations(1) |
|
(19.2 |
) |
|
(18.4 |
) |
|
(14.4 |
) |
|
(12.8 |
) |
|
(2.2 |
) |
|
(5.8 |
) |
|
(0.3 |
) |
|
(0.7 |
) |
|
(2.3 |
) |
|
0.9 |
|
Free cash flow (deficit) from continuing
operations |
$ |
9.1 |
|
$ |
68.0 |
|
$ |
6.4 |
|
$ |
76.9 |
|
$ |
61.4 |
|
$ |
26.2 |
|
$ |
(20.1 |
) |
$ |
(7.5 |
) |
$ |
(38.6 |
) |
$ |
(27.6 |
) |
Adjust
for: |
|
|
|
|
|
|
|
|
|
|
Kumtor Mine legal and other related costs |
|
10.0 |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
10.0 |
|
|
— |
|
Adjusted free cash flow (deficit) from continuing
operations |
$ |
19.1 |
|
$ |
68.0 |
|
$ |
6.4 |
|
$ |
76.9 |
|
$ |
61.4 |
|
$ |
26.2 |
|
$ |
(20.1 |
) |
$ |
(7.5 |
) |
$ |
(28.6 |
) |
$ |
(27.6 |
) |
(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 March 31, |
|
|
2022 |
|
2021 |
|
Cash provided by operating activities from discontinued
operations(1) |
$ |
— |
$ |
66.7 |
|
Adjust for: |
|
|
Additions to property, plant & equipment from discontinued
operations(1) |
|
— |
|
(62.7 |
) |
Free cash flow from discontinued operations |
$ |
— |
$ |
4.0 |
|
(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 March 31 |
|
Consolidated |
Mount Milligan |
Öksüt |
Molybdenum |
Other |
|
|
2022 |
|
|
2021 |
|
|
2022 |
|
2021 |
|
|
2022 |
|
|
2021 |
|
2022 |
|
2021 |
|
2022 |
|
|
2021 |
|
Additions to PP&E(1) |
$ |
210.2 |
|
$ |
15.9 |
|
$ |
9.7 |
$ |
12.1 |
|
$ |
(0.5 |
) |
$ |
5.8 |
$ |
0.2 |
$ |
0.7 |
$ |
200.7 |
|
$ |
(2.6 |
) |
Adjust
for: |
|
|
|
|
|
|
|
|
|
|
Costs capitalized to the ARO assets |
|
13.4 |
|
|
3.5 |
|
|
3.7 |
|
0.8 |
|
|
1.9 |
|
|
— |
|
— |
|
— |
|
7.7 |
|
|
2.7 |
|
Costs capitalized to the ROU assets |
|
(0.2 |
) |
|
(0.7 |
) |
|
— |
|
(0.7 |
) |
|
(0.2 |
) |
|
— |
|
— |
|
— |
|
— |
|
|
— |
|
Costs relating to the acquisition of Goldfield Project |
|
(208.2 |
) |
|
— |
|
|
— |
|
— |
|
|
— |
|
|
— |
|
— |
|
— |
|
(208.2 |
) |
|
— |
|
Other(2) |
|
0.8 |
|
|
(0.7 |
) |
|
— |
|
(0.8 |
) |
|
0.9 |
|
|
— |
|
0.2 |
|
— |
|
(0.2 |
) |
|
— |
|
Capital expenditures |
$ |
16.0 |
|
$ |
18.0 |
|
$ |
13.4 |
$ |
11.4 |
|
$ |
2.1 |
|
$ |
5.8 |
$ |
0.4 |
$ |
0.7 |
$ |
0.1 |
|
$ |
0.1 |
|
Sustaining capital expenditures |
|
15.1 |
|
|
17.5 |
|
|
12.5 |
|
11.3 |
|
|
2.1 |
|
|
5.5 |
|
0.4 |
|
0.7 |
|
0.1 |
|
|
— |
|
Non-sustaining capital expenditures |
|
0.9 |
|
|
0.5 |
|
|
0.9 |
|
0.1 |
|
|
— |
|
|
0.3 |
|
— |
|
— |
|
— |
|
|
0.1 |
|
(1) As presented in the note 19 of the Company’s condensed
consolidated interim financial statements.(2) Includes
reclassification of insurance and capital spares from supplies
inventory to PP&E.
Qualified Person & QA/QC –
Non-Exploration (including Production information)
The production information and other scientific
and technical information presented in this document, including the
production estimates, were prepared in accordance with the
standards of the Canadian Institute of Mining, Metallurgy and
Petroleum and NI 43-101 and were prepared, reviewed, verified, and
compiled by Centerra’s geological and mining staff under the
supervision of Anna Malevich, Professional Engineer, member of the
Professional Engineers of Ontario (PEO) and Centerra’s Senior
Director, Projects and Andrey Shabunin, Professional Engineer,
member of the Professional Engineers of Ontario (PEO) and
Centerra’s Director of Mining, who are both qualified persons 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 Mount Milligan Mine 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 Mine 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.
Centerra Gold
Inc.Condensed Consolidated Interim Statements of
Financial Position |
|
March31,2022 |
December31,2021 |
(Expressed in thousands of United States
dollars) |
|
|
Assets |
|
|
Current assets |
|
|
Cash and cash equivalents |
$ |
768,436 |
$ |
947,230 |
Amounts receivable |
|
141,827 |
|
76,841 |
Inventories |
|
229,227 |
|
221,220 |
Other current assets |
|
26,239 |
|
25,802 |
|
|
1,165,729 |
|
1,271,093 |
Property, plant and
equipment |
|
1,442,985 |
|
1,272,091 |
Deferred income tax assets |
|
88,814 |
|
101,300 |
Other non-current assets |
|
35,434 |
|
32,084 |
|
|
1,567,233 |
|
1,405,475 |
Total
assets |
$ |
2,732,962 |
$ |
2,676,568 |
|
|
|
Liabilities and
shareholders' equity |
|
|
Current liabilities |
|
|
Accounts payable and accrued liabilities |
$ |
188,838 |
$ |
186,820 |
Income tax payable |
|
37,577 |
|
25,253 |
Other current liabilities |
|
23,445 |
|
15,281 |
|
|
249,860 |
|
227,354 |
Deferred income tax
liabilities |
|
33,376 |
|
54,861 |
Provision for reclamation |
|
277,405 |
|
331,312 |
Other non-current
liabilities |
|
51,047 |
|
19,425 |
|
|
361,828 |
|
405,598 |
Shareholders'
equity |
|
|
Share capital |
|
986,393 |
|
984,095 |
Contributed surplus |
|
30,796 |
|
30,809 |
Accumulated other comprehensive income |
|
5,074 |
|
6,829 |
Retained earnings |
|
1,099,011 |
|
1,021,883 |
|
|
2,121,274 |
|
2,043,616 |
Total liabilities and
shareholders' equity |
$ |
2,732,962 |
$ |
2,676,568 |
Centerra Gold
Inc.Condensed Consolidated Interim Statements of Earnings
and Comprehensive Income |
|
|
|
Three months endedMarch 31, |
|
(Expressed in thousands of United States
dollars) |
|
2022 |
|
|
2021 |
|
Revenue |
$ |
295,223 |
|
$ |
226,233 |
|
|
|
|
Cost of sales |
|
|
Production costs |
|
144,225 |
|
|
121,369 |
|
Depreciation, depletion and amortization |
|
37,489 |
|
|
34,392 |
|
Earnings from mine
operations |
|
113,509 |
|
|
70,472 |
|
|
|
|
|
|
|
|
Exploration and development
costs |
|
8,160 |
|
|
3,462 |
|
Corporate administration |
|
12,278 |
|
|
4,947 |
|
Care and maintenance expense |
|
6,759 |
|
|
6,432 |
|
Reclamation recovery |
|
(41,964 |
) |
|
(10,867 |
) |
Other operating expenses |
|
3,494 |
|
|
3,626 |
|
Earnings from
operations |
|
124,782 |
|
|
62,872 |
|
|
|
|
|
|
|
|
Gain on sale of Greenstone
Partnership |
|
— |
|
|
(72,274 |
) |
Other non-operating expenses |
|
5,323 |
|
|
2,384 |
|
Finance costs |
|
892 |
|
|
1,725 |
|
Earnings before income
tax |
|
118,567 |
|
|
131,037 |
|
Income tax expense |
|
29,167 |
|
|
19,600 |
|
Net earnings from
continuing operations |
|
89,400 |
|
|
111,437 |
|
Net earnings from discontinued
operations |
|
— |
|
|
55,990 |
|
Net earnings |
$ |
89,400 |
|
$ |
167,427 |
|
|
|
|
Other Comprehensive
Loss |
|
|
|
|
|
Items that may be
subsequently reclassified to earnings: |
|
|
Net gain on translation of
foreign operation |
$ |
— |
|
$ |
31 |
|
Net loss on derivative
instruments |
|
(1,755 |
) |
|
(1,678 |
) |
Other comprehensive
loss |
|
(1,755 |
) |
|
(1,647 |
) |
Total comprehensive
income |
$ |
87,645 |
|
$ |
165,780 |
|
|
|
|
Earnings per share -
continuing operations: |
|
|
Basic |
$ |
0.30 |
|
$ |
0.38 |
|
Diluted |
$ |
0.30 |
|
$ |
0.37 |
|
Earnings per
share: |
|
|
Basic |
$ |
0.30 |
|
$ |
0.57 |
|
Diluted |
$ |
0.30 |
|
$ |
0.55 |
|
|
|
|
|
|
|
|
Cash dividends declared
per common share (C$) |
$ |
0.07 |
|
$ |
0.05 |
|
Centerra Gold
Inc.Condensed Consolidated Interim Statements of
Cash Flows |
|
|
Three months ended March 31, |
|
(Expressed in thousands of United States
dollars) |
|
2022 |
|
|
2021 |
|
|
|
|
Operating
activities |
|
|
Net earnings from continuing
operations |
$ |
89,400 |
|
$ |
111,437 |
|
|
|
|
Adjustments: |
|
|
Depreciation, depletion and amortization |
|
38,793 |
|
|
35,872 |
|
Reclamation recovery |
|
(41,964 |
) |
|
(10,867 |
) |
Share-based compensation |
|
2,281 |
|
|
(3,116 |
) |
Finance costs |
|
891 |
|
|
1,765 |
|
Income tax expense |
|
29,167 |
|
|
19,600 |
|
Income taxes paid |
|
(24,423 |
) |
|
(1,025 |
) |
Gain on sale of Greenstone Partnership |
|
— |
|
|
(72,274 |
) |
Other |
|
(1,032 |
) |
|
2,330 |
|
|
|
93,113 |
|
|
83,722 |
|
Changes in working capital |
|
(64,829 |
) |
|
2,718 |
|
Cash provided by
operating activities from continuing operations |
|
28,284 |
|
|
86,440 |
|
Cash provided by operating activities from discontinued
operations |
|
— |
|
|
66,708 |
|
Cash provided by
operating activities |
|
28,284 |
|
|
153,148 |
|
|
|
|
Investing
activities |
|
|
Property, plant and equipment additions |
|
(19,158 |
) |
|
(18,393 |
) |
Acquisition of Goldfield Project |
|
(176,737 |
) |
|
— |
|
Proceeds from sale of Greenstone Partnership |
|
— |
|
|
210,291 |
|
Proceeds from disposition of property, plant and equipment |
|
1,905 |
|
|
— |
|
Decrease in other assets |
|
— |
|
|
2,224 |
|
Cash (used in) provided
by investing activities from continuing operations |
|
(193,990 |
) |
|
194,122 |
|
Cash used in investing activities from discontinued operations |
|
— |
|
|
(68,650 |
) |
Cash (used in) provided
by investing activities |
|
(193,990 |
) |
|
125,472 |
|
|
|
|
Financing
activities |
|
|
Dividends paid |
|
(12,272 |
) |
|
— |
|
Payment of borrowing costs |
|
(623 |
) |
|
(691 |
) |
Repayment of lease obligations |
|
(1,713 |
) |
|
(2,383 |
) |
Proceeds from common shares issued |
|
1,520 |
|
|
2,507 |
|
Cash used in financing
activities |
|
(13,088 |
) |
|
(567 |
) |
(Decrease) increase in cash
during the period |
$ |
(178,794 |
) |
$ |
278,053 |
|
Cash at beginning of the
period |
|
947,230 |
|
|
545,180 |
|
Cash at end of the
period |
$ |
768,436 |
|
$ |
823,233 |
|
The interim consolidated financial statements
for the three months ended March 31, 2022 and 2021 and the MD&A
for the three months ended March 31, 2022 and 2021 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.
Supplementary Information: First Quarter 2022
Exploration Update
Mount Milligan Mine
The 2022 planned diamond drilling programs at
the Mount Milligan Mine total 49,500 metres in 75 drill holes.
Resource expansion and brownfield exploration targets included
zones on the western margin of the open-pit, i.e., Goldmark and
DWBX, and on the eastern margin of the open-pit, i.e., Great
Eastern Fault (“GEF”) zone, where positive drilling results were
returned in previous drilling campaigns from 2018-2021. The 2021
diamond drilling programs 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).
Mount Milligan Brownfield Drilling and Exploration
Exploration and resource expansion drilling
began in the first quarter of 2022 with the completion of 18
diamond drill holes totalling 11,320 metres. Ten drill holes,
totalling 6,917 metres, were completed in the Goldmark and DWBX
zones, as well as one drill hole in the Saddle zone, totalling 600
metres, planned for both shallow and deep resource expansion on the
western margins of the ultimate pit boundary. Seven drill holes,
totalling 3,803 metres, were completed in the Great Eastern zones,
testing for both shallow mineralization associated with the GEF,
and deeper porphyry mineralization associated with the underlying
Great Eastern stock.
Throughout the first quarter of 2022, complete
or partial assay results were returned for 12 drill holes,
including results from 8 holes drilled in the fourth quarter of
2021, and 4 holes drilled in the first quarter of 2022. These
include potential significant mineralization from below the
ultimate open-pit boundary in the MBX and WBX Deep zones, along the
western margin of the open-pit in the DWBX zone, and along the
eastern margin of the open-pit in the Great Eastern zones.
Selected significant intersections are reported below:
MBX and WBX Deep Zones (central portion of the open-pit)
21-1358* |
63.4 metres @ 0.64 g/t Gold (“Au”), 0.51% Copper (“Cu”) from 16.4
metres including 4.0 metres @ 1.37 g/t Au, 0.83%
Cu from 22.0 metres35.3 metres @ 0.22 g/t Au, 0.17% Cu from 156.0
metres23.9 metres @ 0.38 g/t Au, 0.11% Cu from 249.1 metres27.2
metres @ 0.52 g/t Au, 0.46% Cu from 437.8 metres
including 6.0 metres @ 1.13 g/t Au, 1.00% Cu from 445.8
metres |
21-1361* |
40.9 metres @ 0.47 g/t Au, 0.36% Cu from 5.0 metres57.5 metres @
0.58 g/t Au, 0.11% Cu from 55.0 metres36.6 metres @ 0.25 g/t Au,
0.15% Cu from 118.0 metres |
21-1363* |
22.2 metres @ 0.21 g/t Au, 0.21% Cu from 30.8 metres84.5 metres @
0.26 g/t Au, 0.23% Cu from 70.0 metres10.0 metres @ 0.57 g/t Au,
0.49% Cu from 179.0 metres |
DWBX Zone (western margin of the open-pit)
21-1346*(outstanding 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 metres
including 22.6 metres @ 1.96 g/t Au, 0.11% Cu from 239.4
metres72.0 metres @ 0.40 g/t Au, 0.08% Cu from 278.0 metres56.0
metres @ 0.16 g/t Au, 0.11% Cu from 380.0 metres |
Great Eastern Zones (eastern margin of the
open-pit)
21-1357* |
80.7 metres @ 0.13 g/t Au, 0.16% Cu from 312.7 metres |
21-1359* |
51.0 metres @ 0.23 g/t Au, 0.12% Cu from 127.1 metres |
21-1364* |
57.3 metres @ 0.07 g/t Au, 0.12% Cu from 501.7 metres115.2 metres @
0.13 g/t Au, 0.20% Cu from 597.8 metres |
22-1367 |
143.0 metres @ 0.46 g/t Au, 0.26% Cu from 306.0 metres
including 18.0 metres @ 1.35 g/t Au, 0.42% Cu from 390.0
metres80.7 metres @ 0.27 g/t Au, 0.12% Cu from 459.3 metres101.0
metres @ 0.40 g/t Au, 0.26% Cu from 564.0 metres
including 8.0 metres @ 2.11 g/t Au, 0.28% Cu from 645.0
metres |
22-1369 |
20.0 metres @ 0.48 g/t Au, 0.07% Cu from 272.0 metres
including 2.0 metres @ 3.12 g/t Au, 0.03% Cu from 276.0
metres32.7 metres @ 0.12 g/t Au, 0.16% Cu from 339.0 metres27.0
metres @ 0.22 g/t Au, 0.25% Cu from 401.0 metres20.7 metres @ 0.20
g/t Au, 0.11% Cu from 434.0 metres52.0 metres @ 0.30 g/t Au, 0.25%
Cu from 515.0 metres39.9 metres @ 0.48 g/t Au, 0.36% Cu from 627.2
metres including 2.0 metres @ 1.53 g/t Au, 0.37%
Cu from 650.0 metres and 2.0
metres @ 1.21 g/t Au, 0.75% Cu from 656.0 metres |
22-1370 |
50.5 metres @ 0.28 g/t Au, 0.30% Cu from 353.0 metres76.5 metres @
0.20 g/t Au, 0.15% Cu from 484.0 metres |
Assay results returned from the MBX and WBX Deep
zones during the first quarter of 2022 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/WBX
monzonite porphyry stocks. 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.
Assays returned from the DWBX zone throughout
the first quarter of 2022 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 from holes drilled
in the DWBX zone in 2021 show potential for resource expansion to
the west of the current ultimate pit boundary.
Drilling in the Great Eastern zones throughout
2019-2022 continued to define two targets, a shallow target
associated with the Great Eastern Fault (GEF), and an underlying
gold and copper porphyry target associated with the recently
discovered Great Eastern stock. Shallow drilling has defined a
tabular body along the hanging wall of the GEF, with dimensions of
approximately 400 metres (north-northwest to south-southeast along
strike) by 230 metres (east to west) with an average width of 25
metres for significant intervals. Assay results returned from the
underlying Great Eastern stock zone in 2021-2022 show wide runs of
significant mineralization in the hanging wall and footwall margins
of the composite potassic altered monzonite porphyry stock and
surrounding potassic altered volcanic-volcaniclastic units. To
date, the east-west and north-south dimensions of the Great Eastern
stock defined by drilling are approximately 300 metres by 300
metres, with room to extend up-dip to the southeast.
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. “*”
Indicates a drill hole completed in previous quarter, assay results
returned in current quarter. Drill collar locations and associated
graphics are available at the following
link: http://ml.globenewswire.com/Resource/Download/9fed935b-5a71-4650-88dc-16d4481be14e
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
In the first quarter of 2022, exploration
activities comprised diamond drilling (2,344 metres in ten drill
holes) at the Öksüt Mine. Exploration drilling activities were
mainly focused on testing the potential for further oxide gold
mineralization at the Keltepe Northwest and Keltepe North-Northwest
deposits.
During the quarter, the remaining outstanding
assay results were received for holes drilled during Q4 2021. Only
limited assays were received from the 2022 drilling program.
Selected significant intersections are reported below:
Büyüktepe Prospect (oxide gold)
ODD0592* |
10.5 metres @ 0.45 g/t Au from 63.5 metres |
ODD0607* |
10.9 metres @ 1.04 g/t Au from 93.1 metres |
Keltepe North-Northwest (oxide gold)
ODD0630 |
5.0 metres @ 0.25 g/t Au from 156.8 metres50.6 metres @ 0.56 g/t Au
from 197.4 metres Including 2.9 metres @ 1.08
g/t Au from 231 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. “*” Indicates a drill hole completed in previous
quarter, assay results returned in current quarter. Drill collar
locations and associated graphics are available at the following
link: http://ml.globenewswire.com/Resource/Download/9fed935b-5a71-4650-88dc-16d4481be14e
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 USA
The Goldfield Project in Nevada was acquired in
late February 2022. Following the receipt of the extensive
exploration dataset, detailed analysis of the geological,
geophysical, geochemical, and drilling data was undertaken.
Reassessment of the geophysical and geochemical data, along with
geological modelling and interpretation, has identified targets
worthy of immediate follow-up. Airborne and ground geophysical
surveys have been planned to further refine these targets prior to
the commencement of exploration and infill/resource expansion RC
drilling programs in mid to late second quarter. Up to 40,000
meters of RC diamond drilling is planned for 2022 to test
exploration targets and to infill and expand the resources in the
vicinity of the Gemfield, Goldfield Main and McMahon Ridge
deposits.
Other Projects Turkey
Sivritepe Project
A planned 20,000 metre 2022 diamond drilling
program will commence in the second quarter at the Sivritepe
Project. Drilling will mainly target gold-in-soil geochemical
anomalism at the five main prospects - Sivritepe West, Sivritepe
East, Kızılçıbık, Karaburun and Soğukpınar.
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 2021 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 Malcolm
Stallman, Member of the Australian Institute of Geoscientists and
Vice President, Exploration at Centerra Gold Inc., 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 2021 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.
A PDF accompanying this announcement is available
at: http://ml.globenewswire.com/Resource/Download/ba997cd8-e3e3-4979-92f3-310c1c78262c
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