All figures are in United States dollars. All production figures reflect payable metal quantities and are on a 100% basis, unless otherwise stated. For references denoted with NG, refer to the “Non-GAAP and Other Financial Measures” disclosure at the end of this news release for a description of these measures.
TORONTO, Aug. 01, 2024 (GLOBE NEWSWIRE) — Centerra Gold Inc. (“Centerra” or the “Company”) (TSX: CG and NYSE: CGAU) today reported its second quarter 2024 operating and financial results.
President and CEO, Paul Tomory, commented, “Centerra delivered another quarter of solid operating performance and maintained consistent cash flow from operations before changes in working capital and income taxes paid, with year-to-date production and costs in line with our guidance. We ended the second quarter with cash and cash equivalents of $592 million after making routine statutory tax and royalty payments in Türkiye totalling $105 million. We remained active on share buybacks and declared a quarterly dividend, delivering on our disciplined approach of returning capital to shareholders.
“Looking ahead, later this summer we expect to announce our integrated strategy for the Molybdenum Business Unit, including results of a feasibility study on the restart of the Thompson Creek mine and the details of an optimized commercial model at Langeloth. Additionally, we expect to publish an initial resource estimate at Goldfield by the end of 2024 and a preliminary economic assessment in the first half of 2025 illustrating future potential at Mount Milligan. Our production, cost and capital expenditure guidance for 2024 is unchanged. We continue to deliver on our value maximizing strategy, focused on realizing the full potential of each of Centerra’s assets,” concluded Mr. Tomory.
Second Quarter 2024 Highlights
Operations
Financial
Other
Highlights Subsequent to Quarter End
Table 1 – Overview of Consolidated Financial and Operating Highlights
2 024 Outlook
There has been no change to the Company’s 2024 guidance metrics except the expected Öksüt Mine current income taxes were increased from a range of $54 to $60 million to a range of $64 to $70 million reflecting higher gold prices expected for the year. The Company’s full year 2024 outlook, as adjusted, and comparative actual results for the six months ended June 30, 2024 are set out in the following table:
Molybdenum Business Unit
Project Evaluation, Exploration, and Other Costs
The Company’s 2024 outlook for the Goldfield Project, Kemess Project, corporate administration, and other exploration projects and comparative actual results for the six months ended June 30, 2024 are set out in the following table:
Mount Milligan
Mount Milligan produced 38,609 ounces of gold and 13.5 million pounds of copper in the second quarter of 2024. Mining activities were carried out in phases 5, 6, 7, and 9 of the open pit. A total of 12.3 million tonnes were mined in the second quarter of 2024. Process plant throughput for the second quarter of 2024 was 5.3 million tonnes, averaging 58,520 tonnes per day. Gold sales were down 30% and copper sales were down 25% compared to last quarter. As previously disclosed, the lower sales volumes were anticipated due to the timing of shipments. Both gold and copper sales are expected to increase in the second half of 2024, contributing approximately 60% of annual sales. 2024 guidance metrics at Mount Milligan remain unchanged.
Gold production costs in the second quarter 2024 were $1,102 per ounce. AISC on a by-product basis NG was $1,234 per ounce, higher than last quarter due to lower sales (as noted above) and higher sustaining capital expenditures.
In the second quarter 2024, sustaining capital expenditures at Mount Milligan were $17.4 million, focused on the tailings storage facility, equipment overhauls, projects related to water sourcing and access, and in-pit capital exploration.
Centerra continued to execute on its site-wide optimization program at Mount Milligan, initially launched in the fourth quarter 2023. The program is focused on a holistic assessment of occupational health and safety, as well as improvements in mine and plant operations. This program covers all aspects of the operation to maximize the potential of the orebody, setting up Mount Milligan for long-term success to 2035 and beyond. While the optimization program is still ongoing, year-to-date the Company has started to see productivity improvements in the load-haul cycle at the mine, as well as the unit processing costs related to recycling grinding media and maintenance efficiencies. In the first six months of 2024, milling costs were $5.60 per tonne processed, 12% lower than the first six months of last year. Due to the longer-term nature of the mining optimization initiatives, the Company expects to see improvements in mining costs per tonne in 2025.
In February 2024, Centerra announced that the Company has entered into an additional agreement with Royal Gold relating to Mount Milligan, which has resulted in a life of mine extension to 2035 and established favourable parameters for potential future mine life extensions. Work is progressing on a preliminary economic assessment (“PEA”) to evaluate the substantial mineral resources at the Mount Milligan mine with a goal to unlock additional value beyond its current 2035 mine life. The PEA is expected to be completed in the first half of 2025.
Öksüt
Öksüt produced 51,219 ounces of gold in the second quarter of 2024. Production was lower than last quarter due to processing most of the gold inventory that had accumulated in the previous year and seasonally significant precipitation leading to a minor amount of dilution to the pregnant gold solution which negatively affected gold recoveries. Mining activities were focused on phase 5 and phase 6 of the Keltepe pit and in phase 2 of the Güneytepe pit. A total of 3.9 million tonnes were mined and 1.1 million tonnes were stacked at an average grade of 1.12 g/t. The 2024 production guidance at Öksüt is unchanged, with approximately 40% to 45% of the annual production weighted to the second half of the year.
Gold production costs and AISC on a by-product basis NG for the second quarter 2024 at Öksüt were $729 per ounce and $943 per ounce, respectively. These costs were higher compared to last quarter primarily due to lower sales and higher royalty costs resulting from higher average realized gold prices. Öksüt’s gold production costs guidance and AISC on a by-product basis NG guidance for 2024 is unchanged. However, AISC on a by-product basis NG could exceed the guidance range if gold prices remain at current levels, due to resulting higher royalty rates.
In the second quarter 2024, sustaining capital expenditures at Öksüt were $8.8 million, focused on capitalized stripping, heap leach pad expansion and waste rock dump expansion.
In the second quarter of 2024, the Company made an annual royalty payment of $28.6 million and tax payments of $76.4 million to the Turkish government. However, cash flow from operations at Öksüt before statutory payments for tax and royalty remained consistent quarter-over-quarter.
In the second quarter 2024, the Molybdenum Business Unit sold 2.7 million pounds of molybdenum, generating revenue of $61.2 million with an average realized price of $22.10 per pound. As part of Centerra’s previously disclosed 2024 guidance, Langeloth underwent an acid plant maintenance shutdown in the second quarter 2024, which was completed on time and on budget. The site has returned to normal operations.
As part of Centerra’s strategy to maximize the value for each asset in its portfolio, the Company has recently completed a commercial optimization plan at Langeloth, geared at increasing profitability and evaluating its future potential. Details of the commercial optimization plan and the value potential at Langeloth will be announced in conjunction with the Thompson Creek Mine feasibility study in late summer of 2024.
In the second quarter of 2024, Thompson Creek continued early works in the main open pit area that are expected to continue through 2024. The costs of these activities are expected to be expensed until a limited notice to proceed is authorized by the Board of Directors, a matter to be considered following completion of the feasibility study.
While the current Thompson Creek mine permit authorizations support early works and certain activities defined under the limited notice to proceed, Centerra is advancing discussions with an inter-agency task force to obtain permit modifications for the full scope of an optimized mine plan, which includes additional land for the pit highwall layback under the jurisdiction of the U.S. Forest Service. This permitting work is building on the historical permits already in place. In the second quarter of 2024, following environmental studies and regulatory reviews Centerra obtained authorizations for additional lands at Thompson Creek, which will enable a proposed pit highwall layback. Due to strong collaboration and proactive support from federal and Idaho state regulatory agencies, Centerra received authorizations, subject to a minor update to the reclamation plan. This is a key first step in the overall permitting process. Thompson Creek is also proactively progressing environmental studies which should support future permitting of a second mine plan modification for additional waste rock quantities which is not required for several years.
Second Quarter 2024 Operating and Financial Results Webcast and Conference Call
Centerra invites you to join its 2024 second quarter conference call on Friday, August 2, 2024, at 9:00 a.m. Eastern Time. Details for the webcast and conference call are included below.
Webcast
Conference Call
For detailed information on the results contained within this release, please refer to the Company’s Management’s Discussion and Analysis (“MD&A”) and financial statements for the quarter ended June 30, 2024, that are available on the Company’s website www.centerragold.com or SEDAR+ at www.sedarplus.ca .
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, Türkiye, and other markets worldwide. Centerra operates two mines: the Mount Milligan Mine in British Columbia, Canada, and the Öksüt Mine in Türkiye. The Company also owns the Goldfield Project in Nevada, United States, the Kemess 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.
For more information:
Lisa Wilkinson Vice President, Investor Relations & Corporate Communications (416) 204-3780 lisa.wilkinson@centerragold.com
Lana Pisarenko Senior Manager, Investor Relations (416) 204-1957 lana.pisarenko@centerragold.com
Additional information on Centerra is available on the Company’s website at www.centerragold.com , on SEDAR+ at www.sedarplus.ca and EDGAR at www.sec.gov/edgar .
Qualified Person
All scientific and technical information presented in this document has been prepared in accordance with the standards of the Canadian Institute of Mining, Metallurgy and Petroleum and National Instrument 43-101 and has been reviewed, verified, and compiled by Centerra’s geological and mining staff under the supervision of W. Paul Chawrun, Professional Engineer, member of the Professional Engineers of Ontario (PEO) and Centerra’s Executive Vice President and Chief Operating Officer, the qualified person for the purpose of National Instrument 43-101.
Caution Regarding Forward-Looking Information
This document contains or incorporates by reference “forward-looking statements” and “forward-looking information” as defined under applicable Canadian and U.S. securities legislation. All statements, other than statements of historical fact, which address events, results, outcomes or developments that the Company expects to occur are, or may be deemed to be, forward-looking statements. 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. Forward-looking statements are generally, but not always, identified by the use of forward-looking terminology such as “believe”, “continue”, “expect”, “evaluate”, “finalizing”, “forecast”, “goal”, “ongoing”, “plan”, “potential”, “preliminary”, “project”, “restart”, “target” or “update”, or variations of such words and phrases and similar expressions or statements that certain actions, events or results “may”, “could”, “would” or “will” be taken, occur or be achieved or the negative connotation of such terms.
Such statements include, but may not be limited to: statements regarding 2024 guidance, outlook and expectations, including production, cash flow, costs including care and maintenance and reclamation costs, capital expenditures, depreciation, depletion and amortization, taxes and cash flows; exploration potential, budgets, focuses, programs, targets and projected exploration results; gold and copper prices; the timing and amount of future benefits and obligations in connection with the Additional Royal Gold Agreement; a Preliminary Economic Assessment at Mount Milligan Mine and any related evaluation of resources or a life of mine beyond 2035; a feasibility study regarding a potential restart of the Thompson Creek Mine; an initial resource estimate at the Goldfield Project including the success of exploration programs or metallurgical testwork; the Company’s strategic plan; increased gold production at Mount Milligan and the success of any metallurgical reviews including the blending of elevated pyrite bearing high-grade gold, low-grade copper ore and any recoveries thereof; the optimization program at Mount Milligan including any improvements to occupational health and safety, the mine and the plant and any potential costs savings resulting from the same; the expected gold production at Öksüt Mine in 2024; the new multi-year contract with the existing mining and hauling services provider at Öksüt Mine; royalty rates and taxes, including withholding taxes related to repatriation of earnings from Türkiye; project development costs at Thompson Creek Mine and the Goldfield Project; the decommissioning of the Kemess South TSF sedimentation pond and associated works; financial hedges; and other statements that express management’s expectations or estimates of future plans and performance, operational, geological or financial results, estimates or amounts not yet determinable and assumptions of management.
The Company cautions that forward-looking statements are necessarily based upon a number of factors and assumptions that, while considered reasonable by the Company at the time of making such statements, are inherently subject to significant business, economic, technical, legal, political and competitive uncertainties and contingencies. Known and unknown factors could cause actual results to differ materially from those projected in the forward-looking statements and undue reliance should not be placed on such statements and information.
Risk factors that may affect the Company’s ability to achieve the expectations set forth in the forward-looking statements in this document include, but are not limited to: (A) strategic, legal, planning and other risks, including: political risks associated with the Company’s operations in Türkiye, 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; 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; 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; (B) risks relating to financial matters, including: sensitivity of the Company’s business to the volatility of gold, copper, molybdenum 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; persistent inflationary pressures on key input prices; 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; sensitivity to fuel price volatility; 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; the ability to obtain adequate insurance coverage; changes to taxation laws in the jurisdictions where the Company operates and (C) unanticipated ground and water conditions; 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 leading to structural cave-ins, wall failures or rock-slides; 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; periodic interruptions due to inclement or hazardous weather conditions or operating conditions and other force majeure events; 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: labour action, flooding, landslides, seismic activity, wildfires, earthquakes, COVID-19, or other global events such as wars); lower than expected ore grades or recovery rates; 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 or pandemic; seismic activity, including earthquakes; 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; 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; regulations regarding greenhouse gas emissions and climate change; significant volatility of molybdenum prices resulting in material working capital changes and unfavourable pressure on viability of the molybdenum business; the Company’s ability to accurately predict decommissioning and reclamation costs and the assumptions they rely upon; the Company’s ability to attract and retain qualified personnel; competition for mineral acquisition opportunities; risks associated with the conduct of joint ventures/partnerships; risk of cyber incidents such as cybercrime, malware or ransomware, data breaches, fines and penalties; 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.
Additional risk factors and details with respect to risk factors that may affect the Company’s ability to achieve the expectations set forth in the forward-looking statements contained in this document are set out in the Company’s latest 40-F/Annual Information Form and Management’s Discussion and Analysis, each under the heading “Risk Factors”, which are available on SEDAR+ ( www.sedarplus.ca ) or on EDGAR ( www.sec.gov/edgar ). The foregoing should be reviewed in conjunction with the information, risk factors and assumptions found in this document.
The Company disclaims any intention or obligation to update or revise any forward-looking statements, whether written or oral, or whether as a result of new information, future events or otherwise, except as required by applicable law.
Non-GAAP and Other Financial Measures
This document 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 document 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
The following is a description of the non-GAAP financial measures, non-GAAP ratios and supplementary financial measures used in this document:
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:
Adjusted net earnings (loss) is a non-GAAP financial measure and can be reconciled as follows:
Free cash flow (deficit) is a non-GAAP financial measure and can be reconciled as follows:
Sustaining capital expenditures and non-sustaining capital expenditures are non-GAAP measures and can be reconciled as follows:
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