Centerra Gold Inc. (“Centerra” or the “Company”) (TSX: CG) (NYSE:
CGAU) announces preliminary production results for the fourth
quarter and full year ended December 31, 2023, and issues 2024
guidance. Centerra will release its fourth quarter and full year
2023 operating and financial results after the market closes on
Thursday February 22, 2024. The Company will host a conference call
and webcast to discuss the results on Friday February 23, 2024, at
9:00 am Eastern Time. Details for the conference call and webcast
are included at the end of this news release.
2023 Fourth Quarter and Full Year
Highlights
- Fourth quarter 2023 gold production
was 129,259 ounces.
- Full year 2023 gold production was
350,317 ounces, which was near the midpoint of the 2023 gold
production guidance range of 340,000 to 360,000 ounces, as
published on July 31, 2023.
- Copper production was 19.7 million
pounds in the fourth quarter 2023, and 61.9 million pounds for the
full year 2023, in line with the 2023 copper production guidance
range of 60 to 70 million pounds, as published on January 16,
2023.
- As at December 31, 2023, unaudited
preliminary cash and cash equivalents was $613 million.
- Consolidated full year 2023
production costs and all-in sustaining costs (“AISC”) on a
by-product basisNG are expected to be near the midpoint of the
previously disclosed guidance ranges of $700 to $750 per ounce and
$1,000 to $1,050 per ounce, respectively.
2024 Guidance Highlights
- 2024 gold production guidance of
370,000 to 410,000 ounces, an 11% increase from the midpoint of
guidance year-over-year.
- 2024 copper production guidance of
55 to 65 million pounds.
- 2024 gold production cost guidance
of $800 to $900 per ounce and AISC on a by-product basisNG guidance
of $1,075 to $1,175 per ounce.
- 2024 sustaining capitalNG guidance
of $100 to $125 million and non-sustaining capitalNG guidance of $8
to $15 million.
- 2024 exploration guidance of $35 to
$45 million, including $17 to $22 million of brownfield
exploration, and $18 to $23 million of greenfield and generative
exploration programs.
President and CEO, Paul Tomory, commented, “We
ended the year with strong operating performance from Öksüt and
Mount Milligan, which allowed us to achieve our production guidance
for both gold and copper for the year. We generated strong free
cash flow for a second consecutive quarter, with our cash and cash
equivalents exceeding $600 million. Looking ahead to 2024, we are
forecasting higher gold production compared to last year, and we
expect to continue to generate strong cash flow from
operations.”
“Our team is focused on several key areas in
2024, including the completion of Mount Milligan’s site-wide
optimization program in the second half of the year, which is
focused on assessments of safety, productivity, and cost efficiency
opportunities. We will be initiating a Preliminary Economic
Assessment at Mount Milligan to evaluate the substantial resources
with the goal to unlock value beyond the current 2035 mine life,
targeted for the first half of 2025. We are also expecting to
complete a feasibility study for the Thompson Creek molybdenum mine
restart in mid-2024, as well as an initial resource estimate at the
Goldfield Project by the end of 2024. In the year ahead, we expect
to continue to deliver on our strategic plan that will drive future
value and growth for Centerra.”
2023 Preliminary Production
Results
|
Q4 2023 |
Full Year 2023 |
2023 Full Year Guidance(1) |
Total Gold Production (oz) |
129,259 |
350,317 |
340,000 - 360,000 |
Mount Milligan (oz) |
40,503 |
154,391 |
150,000 - 160,000 |
Öksüt (oz) |
88,756 |
195,926 |
190,000 - 200,000 |
Total Copper Production (Mlbs) |
19.7 |
61.9 |
60 - 70 |
(1) As disclosed with the Q3 2023 financial
results on October 31, 2023 (LINK).
2024 Guidance
|
2024 Guidance |
2023 Consolidated Actuals |
Mount Milligan(5,6) |
Öksüt(6) |
Consolidated |
Q3 2023 YTD(2) |
Q4 2023(3) |
FY 2023(4) |
Production |
|
Total Gold Production (koz) |
180 – 200 |
190 – 210 |
370 – 410 |
221 |
129 |
350 |
Total Copper Production (Mlbs) |
55 - 65 |
n/a |
55 - 65 |
42 |
20 |
62 |
Costs |
|
Gold Production Cost ($/oz) |
950 – 1,050 |
650 – 750 |
800 – 900 |
820 |
- |
- |
AISC on a by-product basisNG ($/oz) |
1,075 – 1,175 |
900 – 1,000 |
1,075 – 1,175 |
1,122 |
- |
- |
Capital Expenditures |
|
Additions to PP&E |
55 – 65 |
40 – 50 |
108 – 140 |
54 |
- |
- |
Total capital expenditures |
55 – 65 |
40 – 50 |
108 – 140 |
52 |
|
|
Sustaining capital expendituresNG ($M) |
55 – 65 |
40 – 50 |
100 – 125 |
49 |
- |
- |
Non-sustaining capital expendituresNG ($M) |
0 |
0 |
8 – 15 |
3 |
- |
- |
Other Items |
|
Depreciation and amortization ($M) |
90 – 100 |
45 – 55 |
140 – 165 |
84 |
- |
- |
Current income tax paid ($M) |
1 – 5 |
85 - 95 |
86 – 100 |
9 |
- |
- |
General and administrative expenses ($M) |
n/a |
n/a |
37 –
42(1) |
33 |
- |
- |
(1) |
General and administrative expenses include $8 to $10 million of
stock-based compensation. |
(2) |
Nine months ended September 30, 2023. |
(3) |
Three months ended December 31, 2023. |
(4) |
Twelve months ended December 31, 2023. |
(5) |
The Mount Milligan Mine is subject to an arrangement with RGLD Gold
AG and Royal Gold, Inc. (together, “Royal Gold”) which entitles
Royal Gold to purchase 35% and 18.75% of gold and copper produced,
respectively, and requires Royal Gold to pay $435 per ounce of gold
and 15% of the spot price per metric tonne of copper delivered
(“Mount Milligan Streaming Arrangement”) in the presented periods.
Using an assumed market gold price of $1,850 per ounce and a
blended copper price of $3.50 per pound for 2024, Mount Milligan
Mine’s average realized gold and copper price for 2024 would be
$1,355 per ounce and $2.94 per pound, respectively, compared to
average realized prices of $1,431 per ounce and $3.01 per pound in
2023, when factoring in the Mount Milligan Streaming Arrangement
and concentrate refining and treatment costs. The blended copper
price of $3.50 per pound factors in copper hedges in place as of
December 31, 2023. |
(6) |
In 2024, gold and copper production at the Mount Milligan Mine is
projected with recoveries estimated at 64% and 78%, respectively.
Gold production at the Öksüt Mine assumes recoveries of
approximately 76%. Unit costs include a credit for forecasted
copper sales treated as by-product for all-in sustaining costsNG
and all-in costsNG. Production for copper and gold reflects
estimated metallurgical losses resulting from handling of the
concentrate and metal deductions levied by smelters. |
Mount Milligan
Mount Milligan’s 2024 gold production is
expected to be in the range of 180,000 to 200,000 ounces, a 22%
increase of the midpoint year-over-year, driven by mine sequencing
and higher gold grades. Copper production is expected to be 55 to
65 million pounds in 2024. As previously disclosed with the third
quarter 2023 financial results on October 31, 2023, the Company
deferred processing a portion of the elevated pyrite bearing
high-grade gold, low-grade copper ore mined in Phase 7 to 2024, for
blending purposes. This is expected to result in overall higher
gold grades this year. In 2024, gold and copper recoveries are
expected to be similar to those achieved in 2023. Additional
metallurgical reviews are ongoing, aimed at increasing gold and
copper recoveries. Both gold and copper production are expected to
be evenly weighted throughout the year, however gold and copper
sales will be weighted more towards the second half of 2024,
resulting in lower AISC on a by-product basisNG in this period.
In 2024, gold production costs at Mount Milligan
are expected to be $950 to $1,050 per ounce and AISC on a
by-product basisNG is expected to be $1,075 to $1,175 per ounce. In
the fourth quarter of 2023, Centerra embarked on a site-wide
optimization program at Mount Milligan, focused on a holistic
assessment of occupational health and safety, as well as
improvements in mine and plant operations. This program is focused
on all aspects of the operation to maximize the potential of the
orebody, setting up Mount Milligan for long-term success to 2035
and beyond. Some examples of initiatives include:
- Occupational health and
safety: improvements through a complete engagement of the
operating team, with a focus on improving employee retention and
reduced turnover.
- Mine: improvements
of the load/haul cycle, productivity, enhanced mine maintenance
practices and refinement of the geology-metallurgy model; working
towards seamless integration of mine and plant operations.
- Plant: continuous
improvement in the overall operability of the plant, flotation
circuit, consumables, materials handling systems, and blending
consistency of feed to the plant. The Company expects these actions
to enhance plant throughput and recovery.
The Company is encouraged by the preliminary
cash flow improvement estimates from the first phases of work on
the program. Estimates of the potential cost savings from the asset
optimization review are still being developed and are not included
in Mount Milligan’s 2024 cost guidance ranges.
In 2024, Mount Milligan is expected to have
between $55 and $65 million in additions to plant, property, and
equipment, all of which are sustaining capitalNG. This includes
capital carried over from 2023, equipment rebuilds, and annual
capital related to the tailings storage facility (“TSF”).
Öksüt
At Öksüt, 2024 gold production is expected to be
in the range of 190,000 to 210,000 ounces, which is unchanged from
the previously disclosed life of mine (“LOM”) plan, published on
September 18, 2023 (LINK). Gold production is expected to be
weighted more towards the first half of 2024, as the elevated leach
pad inventories and stockpiles are processed through the
adsorption, desorption, and recovery (“ADR”) plant.
In 2024, gold production costs at Öksüt are
expected to be $650 to $750 per ounce and AISC on a by-product
basisNG is expected to be $900 to $1,000 per ounce, $50 per ounce
higher, and $100 per ounce higher, than previously disclosed in the
LOM plan. The increase is related to higher royalty rates based on
the current elevated gold price environment, a slight increase in
sustaining capital, and a new multi-year contract with the existing
mining and hauling services provider.
In 2024, Öksüt is expected to have between $40
and $50 million in additions to plant, property, and equipment, all
of which is sustaining capitalNG. This includes capital stripping,
heap leach construction, and equipment purchases. The increase in
sustaining capital compared to the previously disclosed LOM plan is
related to deferred stripping as a result of the new mining and
hauling services contract.
The Turkish corporate income tax rate applicable
to Öksüt is 25%. In 2024, Öksüt’s current income tax paid is
expected to be between $85 and $95 million, which includes
withholding tax related to repatriation of earnings. Income tax
payments in Türkiye are typically paid in cash on a one-quarter lag
and the Turkish Government State royalty payment is made in the
second quarter on an annual basis. In 2024, tax payments for the
fourth quarter 2023 and the first quarter 2024 will both be paid in
the second quarter of 2024. As a result, cash flows at Öksüt in the
second quarter of 2024 will be impacted by the tax and royalty
payments.
Molybdenum Business Unit
In 2024, the care and maintenance and
reclamation expenditures for the Molybdenum Business Unit (“MBU”)
are expected to be between $21 and $28 million. This includes $15
to $18 million of reclamation expenditures at the Endako Mine
(“Endako”), $5 to $7 million of care and maintenance costs at
Endako, and $1 to $3 million of care and maintenance costs for the
first six months of 2024 at the Thompson Creek Mine (“Thompson
Creek”). Substantially all reclamation costs planned in 2024 have
been included in the reclamation provision as at December 31,
2023.
For the first six months of 2024, project
development costs at Thompson Creek are expected to be $17 to $20
million of expensed costs related to stripping and general and
administrative expenses, and $7 to $12 million of non-sustaining
capitalized costsNG related to equipment purchases and
refurbishments. The Company continues to progress work on the
Thompson Creek feasibility study (“FS”), which is expected to be
completed by mid-2024. Upon completion of the FS, the Company will
update the Thompson Creek guidance as necessary.
In 2024, cash from operations at the Langeloth
Metallurgical Facility (“Langeloth”) is expected to be between
positive $20 million and negative $25 million, with movements in
working capital dependent on market molybdenum prices. Sustaining
capital expendituresNG at Langeloth in 2024 are expected to be $5
to $10 million and are related to a planned acid plant maintenance
shutdown that routinely occurs every several years.
Goldfield Project
In 2024, Goldfield Project development costs are
expected to be $9 to $13 million related to exploration drilling
and metallurgical test work. The Company is focused on exploration
programs on the large land package with a focus on oxide and
transition material. Contingent on exploration success and
metallurgical testwork results throughout the year, the Company
expects an initial resource estimate at the Goldfield Project by
the end of 2024.
Kemess Project
In 2024, the Kemess Project will continue to be
on care and maintenance. Care and maintenance costs are expected to
be $12 to $14 million and reclamation costs are expected to range
from $12 to $16 million. Reclamation activities are expected to be
focused on decommissioning of the Kemess South TSF sedimentation
pond and associated works. These activities were originally planned
for 2023, but were deferred to 2024 due to the high occurrence of
wildfires in British Columbia last year. Substantially all
reclamation costs planned in 2024 have been included in the
reclamation provision as at December 31, 2023.
Exploration Expenditures
In 2024, exploration expenditures are expected
to be $35 to $45 million, including $17 to $22 million of
brownfield exploration and $18 to $23 million of greenfield and
generative exploration programs. The exploration targets for
brownfield projects include further drilling and testing work at
Mount Milligan, as well as Goldfield and Oakley Projects.
2024 Material Assumptions
Material assumptions or factors used to forecast
production and costs for 2024, after giving effect to the hedges in
place as at December 31, 2023, include the following:
- A market gold price of $1,850 per
ounce and an average realized gold price at Mount Milligan of
$1,355 per ounce after reflecting the streaming arrangement with
Royal Gold (35% of Mount Milligan’s gold at $435 per ounce).
- A market price of $3.50 per pound
for the unhedged portion of copper production. This equates to a
blended copper price of $3.50 per pound, reflecting a minimum
projected impact of a reduced volume of copper hedges in place for
2024. Realized copper price at the Mount Milligan Mine is estimated
to average to $2.94 per pound after reflecting the Mount Milligan
Streaming Arrangement (18.75% of the Mount Milligan Mine’s copper
is sold at 15% of the spot price per metric tonne), and copper
treatment and refining costs.
- A molybdenum price of $20.00 per
pound.
- Exchange rates: $1USD:$1.33
Canadian dollar; $1USD:30.00 Turkish lira.
- Diesel fuel price assumption: $1.06
per litre (CAD$1.41 per litre) at Mount Milligan.
Other Material Assumptions
Other material assumptions used in forecasting
production and costs for 2024 can be found under the heading
“Caution Regarding Forward-Looking Information” in this document.
Production, cost, and capital forecasts for 2024 are
forward-looking information and are based on key assumptions and
subject to material risk factors that could cause actual results to
differ materially, and which are discussed under the heading “Risk
Factors” in the Company’s most recent Annual Information Form.
2024 Sensitivities
|
Impact on($ millions) |
Impact on ($ per ounce sold) |
Production Costs & Taxes |
Capital Costs |
Revenues |
Cash Flows |
AISC on a by-product basis per
ounceNG |
Gold price(1) |
-$50/oz+$50/oz |
8.5 - 10.58.5 - 10.5 |
-- |
15.5 - 17.015.5 - 17.0 |
7.0 - 8.57.0 - 8.5 |
10 - 1210 - 12 |
Copper price(1) |
-10%+10% |
0.3 - 0.50.3 – 1.0 |
-- |
8.5 - 11.018.0 - 21.0 |
8.0 - 11.017.5 - 20.5 |
20 - 3045 – 55 |
Diesel fuel(1) |
10 |
% |
1.0 - 1.5 |
0.5 – 1.0 |
- |
1.5 – 2.5 |
4 – 6 |
Canadian dollar(1) (2) |
10 cents |
18.5 - 20.0 |
0.1 – 0.2 |
- |
18.5 - 20.0 |
45 – 55 |
Turkish lira(3) |
1 lira |
0.2 - 0.5 |
0.1 - 0.2 |
- |
0.3 - 0.7 |
1 – 2 |
(1) Includes the effect of the Company’s copper,
diesel fuel and Canadian dollar hedging programs, with current
exposure coverage as of December 31, 2023 of approximately 20%, 51%
and 78%, respectively. (2) Appreciation of the currency against the
US dollar results in higher costs and lower cash flow and earnings,
depreciation of the currency against the US dollar results in
decreased costs and increased cash flow and earnings. (3) Assumes
an increase in the Turkish Lira will be partially offset by
inflation.
Fourth Quarter and Full Year 2023
Operating and Financial Results and Conference Call
Centerra will release its fourth quarter and
full year 2023 operating and financial results after the market
closes on Thursday February 22, 2024. The Company will host a
conference call and webcast to discuss the results on Friday
February 23, 2024, at 9:00 am Eastern Time. Details for the
conference call and webcast are included below.
Webcast
- Participants can access the webcast
at the following
link:https://services.choruscall.ca/links/centerragold2023q4.html
- An archive of the webcast will be
available until the end of day on May 23, 2024.
Conference Call
- Participants can register for the
conference call at the following registration link. Upon
registering, you will receive the dial-in details and a unique PIN
to access the call. This process will bypass the live operator and
avoid the queue. Registration will remain open until the end of the
live conference call.
- Participants who prefer to dial in
and speak with a live operator can access the call by dialing
1-800-319-4610 or 604-638-5340. It is recommended that you call 10
minutes before the scheduled start time.
- After the call, an audio recording
will be made available via telephone for one month, until the end
of day March 23, 2024. The recording can be accessed by dialing
412-317-0088 or 1-855-669-9658 and using the passcode 0641. In
addition, the webcast will be archived on Centerra’s website at:
www.centerragold.com/investor/events-presentations.
Qualified Person
The scientific and technical information
presented in this document, including the production estimates,
were prepared in accordance with the standards of the Canadian
Institute of Mining, Metallurgy and Petroleum and National
Instrument 43-101 Standards of Disclosure for Mineral Projects (“NI
43-101”) and were prepared, reviewed, verified, and compiled by
Centerra’s geological and mining staff under the supervision of
Paul Chawrun, P.Eng., who is a member of the Professional Engineers
Ontario and Centerra’s Executive Vice President and Chief Operating
Officer, who is a qualified person for the purpose of NI
43-101.
About Centerra Gold
Centerra Gold Inc. is a Canadian-based gold
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 District 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 WilkinsonVice President, Investor Relations & Corporate
Communications(416)
204-3780lisa.wilkinson@centerragold.com
Lana PisarenkoSenior Manager, Investor Relations
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.
Caution Regarding Forward-Looking
Information
This news release 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 “aimed at”, “assume”, “believe”, “contingent”,
“continue”, “expect”, “forecast”, “goal”, “near”, “ongoing”,
“potential”, “preliminary”, “project”, “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: preliminary production results for the fourth quarter and the
full year ended December 31, 2023; achieving 2023 annual guidance;
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; a
Preliminary Economic Assessment at Mount Milligan and any related
evaluation of resources or a LOM beyond 2035; a feasibility study
regarding a potential restart of the Thompson Creek molybdenum
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 in 2024; the new multi-year contract with the
existing mining and hauling services provider at Öksüt; royalty
rates and taxes, including withholding taxes related to
repatriation of earnings from Türkiye; project development costs at
Thompson Creek 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 news release 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 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: labour action, flooding, wildfires,
earthquakes, 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 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; 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; 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 news release 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 news release.
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.
DefinitionsThe following is a
description of the non-GAAP financial measures, non-GAAP ratios and
supplementary financial measures used in this document:
- 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 condensed consolidated statements of (loss)
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. 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. 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.
- 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.
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:
|
Nine months ended September 30, |
|
Consolidated |
Mount Milligan |
Öksüt |
(Unaudited - $millions, unless otherwise
specified) |
2023 |
|
2022 |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
Production costs attributable to gold |
178.8 |
|
125.9 |
|
135.3 |
|
104.8 |
|
43.5 |
|
21.1 |
Production costs attributable to copper |
106.0 |
|
94.3 |
|
106.0 |
|
94.3 |
|
— |
|
— |
Total production costs excluding molybdenum segment, as
reported |
284.8 |
|
220.2 |
|
241.3 |
|
199.1 |
|
43.5 |
|
21.1 |
Adjust for: |
|
|
|
|
|
|
Third party smelting, refining and transport costs |
7.8 |
|
8.6 |
|
7.4 |
|
8.4 |
|
0.4 |
|
0.2 |
By-product and co-product credits |
(137.5 |
) |
(169.5 |
) |
(137.2 |
) |
(169.5 |
) |
(0.3 |
) |
— |
Adjusted production costs |
155.1 |
|
59.3 |
|
111.5 |
|
38.0 |
|
43.6 |
|
21.3 |
Corporate general administrative and other costs |
32.8 |
|
35.7 |
|
0.1 |
|
0.6 |
|
— |
|
— |
Reclamation and remediation - accretion (operating sites) |
4.3 |
|
5.4 |
|
1.8 |
|
1.3 |
|
2.5 |
|
4.1 |
Sustaining capital expenditures |
48.1 |
|
54.6 |
|
27.6 |
|
43.2 |
|
20.5 |
|
11.4 |
Sustaining lease payments |
4.3 |
|
4.3 |
|
3.8 |
|
3.9 |
|
0.5 |
|
0.4 |
All-in sustaining costs on a by-product basis |
244.6 |
|
159.3 |
|
144.8 |
|
87.0 |
|
67.1 |
|
37.2 |
Exploration and study costs |
50.4 |
|
42.6 |
|
4.2 |
|
10.1 |
|
1.3 |
|
2.5 |
Non-sustaining capital expenditures |
2.9 |
|
2.0 |
|
— |
|
1.5 |
|
— |
|
— |
Care and maintenance and other costs |
23.0 |
|
9.1 |
|
— |
|
— |
|
14.2 |
|
0.4 |
All-in costs on a by-product basis |
320.9 |
|
213.0 |
|
149.0 |
|
98.6 |
|
82.6 |
|
40.1 |
Ounces sold (000s) |
218.1 |
|
192.7 |
|
119.3 |
|
138.0 |
|
98.8 |
|
54.7 |
Pounds sold (millions) |
43.5 |
|
58.0 |
|
43.5 |
|
58.0 |
|
— |
|
— |
Gold production costs ($/oz) |
820 |
|
653 |
|
1,134 |
|
759 |
|
440 |
|
386 |
All-in sustaining costs on a by-product basis ($/oz) |
1,122 |
|
826 |
|
1,214 |
|
629 |
|
679 |
|
680 |
All-in costs on a by-product basis ($/oz) |
1,471 |
|
1,105 |
|
1,249 |
|
713 |
|
836 |
|
732 |
Gold - All-in sustaining costs on a co-product basis ($/oz) |
1,168 |
|
1,062 |
|
1,300 |
|
958 |
|
679 |
|
680 |
Copper production costs ($/pound) |
2.43 |
|
1.63 |
|
2.43 |
|
1.63 |
|
n/a |
n/a |
Copper - All-in sustaining costs on a co-product basis
($/pound) |
2.78 |
|
2.04 |
|
2.78 |
|
2.04 |
|
n/a |
n/a |
Sustaining capital expenditures and
non-sustaining capital expenditures are non-GAAP measures and can
be reconciled as follows:
|
Nine months ended September 30, |
|
Consolidated |
Mount Milligan |
Öksüt |
Molybdenum |
Other |
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
2023 |
|
|
2022 |
|
|
2023 |
|
2022 |
|
2023 |
|
|
2022 |
|
Additions to PP&E(1) |
$ |
53.8 |
|
$ |
247.2 |
|
$ |
25.4 |
|
$ |
34.6 |
$ |
23.4 |
|
$ |
9.1 |
|
$ |
0.6 |
$ |
1.0 |
$ |
4.4 |
|
$ |
202.5 |
|
Adjust for: |
|
|
|
|
|
|
|
|
|
|
Costs capitalized to the ARO assets |
|
1.0 |
|
|
18.1 |
|
|
2.5 |
|
|
9.9 |
|
(1.5 |
) |
|
1.90 |
|
|
— |
|
— |
|
— |
|
|
6.3 |
|
Costs capitalized to the ROU assets |
|
(2.7 |
) |
|
(0.2 |
) |
|
(0.1 |
) |
|
— |
|
(1.2 |
) |
|
(0.2 |
) |
|
— |
|
— |
|
(1.4 |
) |
|
— |
|
Costs relating to the acquisition of Goldfield Project |
|
— |
|
|
(208.2 |
) |
|
— |
|
|
— |
|
— |
|
|
— |
|
|
— |
|
— |
|
— |
|
|
(208.2 |
) |
Other(2) |
|
(0.2 |
) |
|
0.9 |
|
|
(0.2 |
) |
|
0.2 |
|
(0.2 |
) |
|
0.6 |
|
|
— |
|
0.1 |
|
0.2 |
|
|
— |
|
Capital expenditures |
$ |
51.9 |
|
$ |
57.8 |
|
$ |
27.6 |
|
$ |
44.7 |
$ |
20.5 |
|
$ |
11.4 |
|
$ |
0.6 |
$ |
1.1 |
$ |
3.2 |
|
$ |
0.6 |
|
Sustaining capital expenditures |
|
49.0 |
|
|
55.8 |
|
|
27.6 |
|
|
43.2 |
|
20.5 |
|
|
11.4 |
|
|
0.6 |
|
1.1 |
|
0.3 |
|
|
0.1 |
|
Non-sustaining capital expenditures |
|
2.9 |
|
|
2.0 |
|
|
— |
|
|
1.5 |
|
— |
|
|
— |
|
|
— |
|
— |
|
2.9 |
|
|
0.5 |
|
(1) |
As presented in note 14 of the Company’s condensed consolidated
financial statements. |
(2) |
Includes reclassification of insurance and capital spares from
supplies inventory to PP&E. |
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