Centerra Gold Inc. (“Centerra” or the “Company”) (TSX: CG) (NYSE:
CGAU) announces the results from its Thompson Creek feasibility
study, including a strategic, integrated business plan for its
Molybdenum Business Unit (“MBU”) consisting of a restart of the
Thompson Creek Mine (“Thompson Creek”) and a commercially optimized
plan for the Langeloth Metallurgical Facility (“Langeloth”),
collectively the US Molybdenum Operations (“US Moly”). Centerra
will host a conference call and webcast to discuss the strategic
plan for US Moly on Friday, September 13, 2024, at 9:00 am Eastern
Time. Details for the conference call and webcast are included at
the end of the news release.
President and CEO, Paul Tomory, commented, “Over
the last year, we have developed a value-enhancing strategy for
Centerra’s US molybdenum operations, centered around the vertical
integration of Thompson Creek and Langeloth, and supported by
strong molybdenum market fundamentals. The combined US Moly
business is expected to produce an after-tax net present value (8%)
(“NPV8%”) of $472 million. A key contributor to this value is
Langeloth, which at full capacity, integrated with Thompson Creek,
has the potential to generate robust annual EBITDA. Today, we
announce the decision to unlock significant value through the
restart of operations at Thompson Creek and a progressive ramp-up
of production at Langeloth. When Thompson Creek begins production,
currently targeted for the second half of 2027, it will provide
additional high-grade, high-quality feed to Langeloth, enabling a
ramp-up of production towards Langeloth’s full annual capacity of
40 million pounds while improving operational flexibility to meet
market demand.”
Paul Tomory continued, “We completed a
feasibility study at Thompson Creek that has confirmed the capital
estimate from the pre-feasibility study, while adding another year
of production. Following significant progress on permitting efforts
in the second quarter 2024, we have pivoted from a two-phased
approval to a single-phase capital investment of $397 million over
three years, from now through mid-2027. Our total project costs
guidance at Thompson Creek for the second half of 2024 is expected
to be $55 to $65 million. We will provide 2025 guidance for
Thompson Creek with our annual guidance that is expected to be
published early next year.”
Paul Tomory concluded, “We are continuing to
explore strategic options to unlock the full potential of our
molybdenum business, in line with Centerra’s strategy to maximize
the value of each asset in our portfolio. While Centerra expects to
remain a gold-focused company, we acknowledge the significant value
of our base metal assets.”
Integrated US Moly
Highlights
- Robust integrated economics
of Thompson Creek and Langeloth: Strong project economics
due to synergies with the high-quality concentrate blend that could
be achieved when Thompson Creek is vertically integrated with
Langeloth. Once Thompson Creek resumes full production, the US Moly
business is expected to generate sustainable strong annual cash
flows.
|
US
Moly(1)(Thompson
Creek +Langeloth) |
Thompson CreekOnly(3) |
Langeloth Only |
NPV8% |
$472M |
$185M |
$258M |
Internal Rate of Return (“IRR”) |
22% |
15% |
n.m. |
Additions to PP&E / Non-sustaining capital
expendituresNG(2) |
$397M |
$397M |
- |
(1) |
US
Moly includes an additional $29M of unattributed tax
synergies. |
(2) |
Additions to Property, Plant, and
Equipment (“PP&E”) are the same as Capital ExpendituresNG. |
(3) |
The economic assessment for
Thompson Creek in the FS (as defined below) has been prepared on a
stand-alone basis and does not include integration with Langeloth.
The economics for integrating Thompson Creek and Langeloth are
extrapolated from the Thompson Creek feasibility study.NOTE: See
“Assumptions” at the end of this news release. “n.m.” stand for not
meaningful. |
- Improved integrated economics compared to the
pre-feasibility study (“PFS”) in September 2023:
Integrated economics based on the FS have improved as compared to
the PFS, specifically the Thompson Creek updated life of mine
(“LOM”) plan has an additional 12 million pounds of molybdenum
being produced, one year of additional mine life, more concentrate
produced in the first four years, and a de-risked capital
estimate.
|
US Moly: Thompson Creek + Langeloth |
FS(1) |
PFS |
NPV8% |
$472M |
$218M |
NPV5% |
$692M |
$373M |
IRR |
22% |
16% |
LOM |
12 years |
11 years |
Thompson Creek Molybdenum Production |
146M lbs |
134M lbs |
Additions to PP&E / Non-sustaining capital
expendituresNG(2,3) |
$397M |
$350M - $400M |
(1) |
The economics for integrating Thompson Creek and Langeloth are
extrapolated from the Thompson Creek feasibility study. |
(2) |
Additions to PP&E are the
same as Capital ExpendituresNG. |
(3) |
Thompson Creek only; Langeloth
additions to PP&E are in the range of $3 to $4 million per year
and are considered sustaining capital. |
Langeloth Highlights
-
Phased ramp-up to full capacity: Langeloth plans
to ramp up production progressively over the next few years to
increase production towards its full capacity of 40 million pounds
per annum by 2028, which aligns with Thompson Creek’s first full
year of production. At full capacity, the molybdenum feed to
Langeloth is expected to consist of approximately one third
supplied by Thompson Creek and two thirds purchased from third
parties.
-
At full capacity, Langeloth is expected to generate
approximately $45 million in earnings from operations and $50
million of earnings before interest, taxes, depreciation and
amortization (“EBITDA”)NG annually.
Significant synergies and margin improvements are expected to
result from increased capacity utilization at Langeloth, including
improved blending flexibility and more higher margin molybdenum
products enabled by the high-quality feed from Thompson Creek.
-
Strategic geographic location: Langeloth is
strategically connected to the North American steel supply and
sales markets via efficient transportation networks and reliable
infrastructure. Being close to several major US east coast ports,
Langeloth is also well located for importing molybdenum
concentrates and exporting molybdenum products.
-
Flexible and agile operations: With six roasters,
the ability to produce a variety of finished molybdenum products
and a potential total capacity of approximately 40 million pounds,
Langeloth has flexibility to adapt to changing market and
commercial conditions. Langeloth has value-added production
capabilities, namely for ferromolybdenum and pure molybdenum oxide,
positioning the business for opportunities and growth.
-
Strong leadership and people: The Langeloth
management team and staff are highly experienced, dedicated and
committed to a strong culture of operational excellence and
innovation. With 100 years of experience in processing molybdenum,
the team at Langeloth has developed a strong commercial network and
constructive engagement with local regulators.
Thompson Creek FS
Highlights
-
Robust project economics: NPV8% of $185
million and after-tax IRR of 15% using an assumed flat
molybdenum price of $20 per pound for the LOM. The economic
assessment for Thompson Creek in the FS has been prepared on a
stand-alone basis and does not include the benefits of integration
with Langeloth.
-
De-risked capital costs: Initial capital
investment of approximately $397 million. The capital
expenditures needed to restart Thompson Creek are significantly
de-risked due to an existing pit, significantly advanced equipment
rebuilds and purchases and an existing process plant that requires
minimal upgrades and refurbishment. A majority of the anticipated
capital expenditures are focused on capitalized stripping, plant
refurbishment and mine mobile fleet upgrades.
-
Initial mine life of 12 years: Average annual
molybdenum production is estimated to be approximately 13 million
pounds after initial ramp-up. The average LOM operating costs are
$9.66 per molybdenum pound sold and LOM all-in sustaining costs
(“AISC”)NG are $12.46 per molybdenum pound sold.
-
Strong Reserve Base: The FS includes proven
and probable molybdenum reserves of 161 million pounds, measured
and indicated molybdenum resources of 63 million pounds and
inferred molybdenum resources of 17 million pounds, as of September
1, 2024. The average reserve grade is 0.065% molybdenum.
The Company expects to file a technical report
for Thompson Creek on its website at www.centerragold.com, on
SEDAR+ at www.sedarplus.ca and EDGAR at www.sec.gov/edgar.
US Moly Overview
US Moly, consisting of the Langeloth
metallurgical facility near Pittsburgh, Pennsylvania, and the
Thompson Creek mine in Idaho, is part of Centerra’s MBU. The
molybdenum assets were acquired by Centerra in 2016, along with the
Mount Milligan gold-copper mine.
Langeloth
Langeloth is one of three molybdenum conversion
facilities in the United States. Its facility and existing permits
make it a unique and strategic asset, given its proximity to the
North American steel market. Langeloth began commercial molybdenum
conversion operations in 1924 and has historically operated at
levels significantly higher than today. Over a two-year period
prior to the suspension of the Thompson Creek mine in December
2014, the volume of molybdenum roasted at Langeloth was around 37
million pounds per year.
Langeloth operates as a conversion facility of
molybdenum concentrate into metallurgical and chemical grade
products. These products are sold to steel, other metallurgical,
and chemical producers globally. Technical oxide is the main
product manufactured by Langeloth due to its role as a key input in
the manufacturing of high-performance steels. It can potentially be
further processed into value-added products that command a higher
margin. Langeloth can also produce ferromolybdenum and pure
molybdenum oxide, and it has the capability to produce byproducts
such as rhenium, with flexibility to adjust the product mix
depending on market demand and the quality of concentrates sourced.
The availability of high-quality Thompson Creek concentrate
provides significant commercial flexibility to the MBU.
Commercial Optimization of
Langeloth
Centerra has completed a commercial optimization
plan at Langeloth, geared at increasing profitability and
maximizing its future potential by increasing production levels,
achieved by a ramp-up in the purchase of third-party concentrates
and the restart of the Thompson Creek primary molybdenum mine.
Langeloth is well-positioned to capitalize on
the current supply deficit in the molybdenum market and grow the
business to meet the market demand. In the recent past Langeloth
has operated slightly below its annual breakeven capacity of
approximately 14 million pounds. The operation can be ramped up to
full capacity to enable production of approximately 40 million
pounds per year in a straightforward manner.
At full capacity, significant synergies and
margin improvements that will enhance future cash flow generation
and profitability from US Moly are expected to result from: (1)
ability to leverage fixed costs, related to increased capacity
utilization at Langeloth from the current level of approximately
one third; (2) ability to blend the high-quality Thompson Creek
concentrate with lower quality third-party concentrates; and (3)
the ability, enabled by the quality of the Thompson Creek
concentrate, to produce an increased volume of higher margin final
molybdenum products.
At full production capacity, integrated with
Thompson Creek, the molybdenum conversion facility at Langeloth has
the potential to generate annually approximately $50 million of
EBITDANG, $40 million in cash flow from operations and free cash
flowNG of $35 million.
As a result of the compelling value opportunity,
Centerra is initiating a progressive ramp-up at Langeloth to allow
for commercial optimization. Langeloth is expected to ramp up
production progressively towards its full capacity of 40 million
pounds per annum by 2028, which aligns with Thompson Creek’s
expected first full year of production. At full capacity, the
molybdenum feed processed at the Langeloth facility is expected to
consist of approximately one third supplied by Thompson Creek and
approximately two thirds purchased from third-party providers.
Further details on the restart of Thompson Creek are provided
below.
Based on an assumed flat price of $20 per pound
molybdenum, a working capital investment will be required over the
period from 2025 to 2028 to support the ramp-up to full capacity.
On a cash flow basis, this increase in working capital is expected
to be largely offset by cash flow generated by Langeloth during the
same period. The structure of commercial contracts at Langeloth
helps to mitigate molybdenum price volatility. Concentrates are
purchased at a discount to the prevailing market molybdenum price,
while final products are generally sold at prices at or above this
benchmark. As a result, the integrated operations of US Moly will
be better positioned to withstand future fluctuations in molybdenum
prices.
Reaching higher capacity utilization will depend
on several factors which are not fully in Centerra’s control,
including the ability to acquire third-party concentrates on
favourable commercial terms over a significant period of time.
Thompson Creek
The Thompson Creek mine is a large open-pit
primary molybdenum mine. It was a producing mine until it was
placed on care and maintenance in December 2014. It has an existing
open pit, as well as established site infrastructure, processing
facilities and equipment fleet.
Feasibility Study
The Company has completed a FS on the restart of
mining at Thompson Creek, with the objective of realizing value for
the US Moly business. A restart of Thompson Creek, on a stand-alone
basis, is expected to result in NPV8% of $185 million and IRR of
15%, based on an assumed flat molybdenum price of $20 per pound.
The FS includes an optimized mine plan with a 12-year mine life. A
summary of the FS production profile is included in the table
below.
Thompson Creek FS Production
Profile
|
Total Mined(M tons) |
Grade of Ore Processed(% Mo) |
Molybdenum
Production(3)(Mlb) |
2024(1) |
4.9 |
- |
- |
2025 |
50.0 |
- |
- |
2026 |
48.0 |
- |
- |
2027(2) |
52.0 |
0.05 |
4.7 |
2028 |
56.9 |
0.07 |
12.4 |
2029 |
51.0 |
0.08 |
14.5 |
2030 |
45.0 |
0.08 |
14.7 |
2031 |
37.0 |
0.07 |
13.7 |
2032 |
57.0 |
0.05 |
9.7 |
2033 |
40.0 |
0.04 |
7.8 |
2034 |
36.7 |
0.08 |
15.9 |
2035 |
24.2 |
0.10 |
19.3 |
2036 |
8.0 |
0.06 |
12.2 |
2037 |
- |
0.05 |
9.1 |
2038 |
- |
0.05 |
9.1 |
2039(2) |
- |
0.03 |
2.4 |
Total LOM |
510.7 |
0.06 |
145.6 |
(1) |
2024 figures
for the period from September 1, 2024 to December 31, 2024. |
(2) |
Production is expected for a part of this year. |
(3) |
It is estimated that approximately 4.7% of the recovered
molybdenum pounds will be further refined at Thompson Creek and
sold as high-performance molybdenum. |
NOTE: “Mo” stands for molybdenum, “M tons” stands
for millions of short (US) tons, “Mlb” stands for millions of
molybdenum pounds. Totals may not sum precisely due to
rounding. |
The cost profile associated with the FS is
largely driven by the grade profile. AISCNG per pound from 2028 to
2031 are expected to be lower than the LOM average due to higher
grades and more ore tons mined, which is expected to result in
stronger cash flows in these years. The average operating costs
over the LOM are detailed in the table below. These operating costs
exclude capitalized pre-production costs, which are included in
capital costs. Processing costs cover mill, tailings and water
management costs.
LOM average operating costs |
|
Mining |
$2.03 per ton mined |
Processing |
$4.85 per ton processed |
General and administrative (“G&A”) |
$1.67 per ton processed |
Capital
ExpendituresNG
Centerra is proceeding with a restart of
Thompson Creek, which is expected to require an investment of
approximately $397 million in total initial, non-sustaining capital
expendituresNG over three years, from September 2024 through
mid-2027. In the second quarter of 2024, following environmental
studies and regulatory reviews, Centerra obtained mine permit
authorizations for additional lands at Thompson Creek, which will
enable the proposed pit highwall layback included in the FS. As a
result of receiving these mine permit authorizations, a key first
step in the overall permitting process, the Company is moving away
from a two-phased capital approval previously disclosed to a
single-phase capital investment over three years. Thompson Creek is
proactively advancing environmental studies which should support
future permitting, which will not be required until several years
after first production.
Centerra’s capital investment at the Thompson
Creek mine is significantly de-risked due to an existing pit,
significantly advanced equipment rebuilds and purchases, and an
existing process plant that requires some refurbishment. Early
works to support the restart of operations at Thompson Creek are
underway, progressing on budget and on schedule. The majority of
the capital expenditures going forward are expected to be focused
on pre-stripping activities and mill refurbishment. Over the first
six months of 2024, capital spending at Thompson Creek was
primarily related to refurbishment of existing mining mobile
equipment and the purchase of additional mobile equipment,
stripping activities and technical studies.
Updated 2024 Guidance at Thompson
Creek
For the second half of 2024, total project costs
at Thompson Creek are expected to be $55 to $65 million, primarily
related to pre-production stripping and mine mobile fleet upgrades.
Approximately $10 million of these costs will be expensed for
accounting purposes, with the remainder treated as capital
expenditures. Including the actual amounts spent in the first six
months of 2024 of $20.9 million, full year 2024 project development
costs guidance at Thompson Creek is $75 to $85 million.
Sensitivity to Molybdenum
Prices
The Thompson Creek FS and integration of
Langeloth demonstrate strong economics at assumed flat molybdenum
prices of $20 per pound. Langeloth provides resilience to low
molybdenum prices in the cycle. The sensitivity to changes in
molybdenum prices is illustrated in the table below.
FS Economics (Thompson Creek
only)
|
Molybdenum Price ($/pound) |
$17.50 |
$20.00 (FS price) |
$22.50 |
$25.00 |
NPV8% |
($7M) |
$185M |
$370M |
$542M |
NPV5% |
$70M |
$307M |
$535M |
$744M |
IRR |
8% |
15% |
21% |
26% |
US Moly Integrated Economics (Thompson
Creek plus Langeloth)
|
Molybdenum Price ($/pound) |
$17.50 |
$20.00 (FS price) |
$22.50 |
$25.00 |
NPV8% |
$313M |
$472M |
$628M |
$782M |
NPV5% |
$496M |
$692M |
$885M |
$1,076M |
IRR |
18% |
22% |
26% |
29% |
Mineral Reserve and Mineral Resource
Estimates
Thompson Creek is an open pit operation that was
active until 2014 when management made the decision to cease
operations due to falling molybdenum prices. After approximately 10
years on care and maintenance, the historical mineral resource
model needed to be updated. The tables below outline the mineral
reserve and resources at Thompson Creek as of September 1,
2024.
Thompson Creek Mineral Molybdenum
Reserve and Resource Estimate (September 1, 2024)
|
Tons(M) |
MolybdenumGrade(%) |
Contained Molybdenum(Mlbs) |
Proven |
49 |
0.076 |
75 |
Probable |
75 |
0.057 |
86 |
Proven and Probable |
125 |
0.065 |
161 |
Measured |
6 |
0.059 |
7 |
Indicated |
50 |
0.057 |
57 |
Measured and Indicated |
55 |
0.057 |
63 |
Inferred |
12 |
0.072 |
17 |
NOTE: See “Reserve and Resource Notes” at the
end of this news release. Totals may not sum precisely due to
rounding.
Endako Project
Centerra has a 75% interest in the Endako mine
in northern British Columbia, Canada, which is part of the MBU. The
remaining 25% interest is held by Moon River Capital Ltd. Endako is
expected to remain in care and maintenance while the Company
focuses on the Thompson Creek restart. Endako is an important
primary molybdenum asset with a large defined resource in a
top-tier jurisdiction, with a modern processing plant, providing
longer-term optionality. Should Endako be restarted in the future,
it has the potential to provide approximately one third of the
molybdenum feed supplied to Langeloth, which could either
complement or replace the Thompson Creek feed.
Molybdenum Market
Molybdenum is an industrial metal principally
used for metallurgical applications such as a ferro-alloy in
engineered, stainless, and other speciality steels where high
strength, temperature-resistant or corrosion-resistant properties
are sought. The addition of molybdenum enhances the strength,
toughness and wear and corrosion-resistance in steels. Molybdenum
is used in major industries including chemical and petrochemical
processing, oil and gas for drilling and pipelines, power
generation, automotive and aerospace. It is also required for
several green energy applications, especially wind, geothermal and
nuclear. Higher purity molybdenum is also widely used in
non-metallurgical applications such as petroleum refining
catalysts, lubricants, flame-retardants in plastics, water
treatment and as a pigment.
According to the World Bank report “Minerals for
Climate Action: The Mineral Intensity of the Clean Energy
Transition” (2020), molybdenum is named one of the cross-cutting
minerals, like copper, needed across a range of low-carbon
technologies, especially wind and geothermal. The report estimates
that the cumulative molybdenum demand under the renewable energy
roadmap scenario from the International Renewable Energy Agency may
grow by 119% through 2050 from green technologies only. Based on
data from the International Molybdenum Association, the world used
around 630 million pounds of molybdenum in 2023, with the most used
in engineered steels (38%), stainless steels (25%) and chemicals
(13%). A variety of end uses and limited substitution ensures that
molybdenum is not dependent on specific industries, making the
demand for it relatively stable.
Conference Call to Discuss the Strategic
Plan for US Moly
Centerra will host a conference call and webcast
to discuss the strategic plan for US Moly on Friday, September 13,
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.
- An archive of the webcast will be
available for until end of day December 13, 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 by-pass 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
1-844-763-8274 or 647-484-8814. 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 end of
day October 13, 2024. The recording can be accessed by dialing
412-317-0088 or 1-877-344-7529 and using the passcode 1752426. In
addition, the webcast will be archived on Centerra’s website at:
www.centerragold.com.
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 Wilkinson Vice President, Investor
Relations & Corporate Communications (416)
204-3780 lisa.wilkinson@centerragold.com
Lana Pisarenko Senior Manager, Investor
Relations (416)
204-1957lana.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.
Reserve and Resource Notes
- Mineral Reserves
stated in the table above are the economic portion of the Measured
and Indicated Mineral Resource contained within the engineered pit
design following the selected ultimate Pseudoflow pit shell.
- Mineral Reserves
are stated in terms of in situ tons and grade before process
recovery is applied.
- Modifying
factors such as dilution and mining loss have been accounted
for.
- The economic
assumptions used for the Mineral Reserve estimate include: ore
mining cost of $2.17/ton; waste mining cost of $1.77/ton; mining
sustaining cost of $0.06/ton; G&A, processing, and sustaining
costs of $7.33/ton ore; and selling cost of $1,460/ton metal in
concentrate.
- Mineral Reserves
are based upon a 0.030% Mo internal cut-off grade with some
marginal material included, using a $16.00/lb Mo price with a
variable molybdenum recovery.
- Mineral
Resources are reported exclusive of Mineral Reserves; Mineral
Resources that are not Mineral Reserves do not have demonstrated
economic viability.
- Mineral
Resources are considered for open pit extraction.
- Resources are
reported using a 0.025% Mo cut-off grade within a conceptual pit
shell and are exclusive of Mineral Reserves. Economic parameters
for the determination of the resource cut-off grade include: (i)
Molybdenum price of US$18.50/lb; (ii) Mining cost of
$1.77-$2.17/ton and G&A and processing cost of $6.75/ton
processed. Sustaining costs were not included in the resource
cut-off grade calculation; (iii) At the cut-off grade an 82%
recovery was assumed.
- Mineral
Resources are classified and have been estimated in accordance with
CIM Definition Standards.
- As required by
reporting guidelines, rounding may result in apparent summation
differences between tons, grade, and metal content.
- Refer to the
full technical report for the Thompson Creek mine at
www.centerragold.com, on SEDAR+ at www.sedarplus.ca and EDGAR at
www.sec.gov/edgar.
Feasibility Study Qualified Persons
(“QPs”)
Lars Weiershäuser, PhD, P.Geo, and Centerra’s
Director, Geology, has reviewed and approved the scientific and
technical information included in this news release related to
mineral resource estimates. Dr. Weiershäuser is a Qualified Person
within the meaning of the Canadian Securities Administrators’
National Instrument 43-101, Standards of Disclosure for Mineral
Projects (“NI 43-101”).
Jean-Francois St-Onge, Professional Engineer,
member of the Professional Engineers of Ontario (PEO), has reviewed
and approved the scientific and technical information in this news
release related to mineral reserve estimates, operating and capital
costs. Mr. St-Onge is a Qualified Person within the meaning of NI
43-101. Mr. St-Onge was Centerra’s Senior Director, Technical
Services until May 31, 2024, and is now providing services to the
Company as an external consultant.
All other scientific and technical information
presented in this news release was reviewed and approved 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. Mr. Chawrun is a Qualified Person
within the meaning of NI 43-101.
For more information on the FS and the full list
of QPs, please refer to the full technical report for the Thompson
Creek mine at www.centerragold.com, on SEDAR+ at www.sedarplus.ca
and EDGAR at www.sec.gov/edgar.
Assumptions
The economic analysis of the project was
performed using the following assumptions and basis:
- Economic
assessment for Thompson Creek is prepared on a stand-alone basis
and does not include any integration with Langeloth.
- Pre-tax net cash
flows for Thompson Creek include all operating, transport,
treatment, capital and reclamation costs.
- Economic
assessment of the project uses a discounted cash flow approach.
Cash flows are taken to occur at the mid-year of each period. NPV
is calculated by applying no discounting to 2024 cash flows and by
discounting LOM cash flows from the year 2025 to the end of mine
life to January 1, 2025, using 8% discount rate.
- Project
economics are based on a valuation date of September 1, 2024.
- A price of
$20/lb of molybdenum is assumed throughout the LOM.
- All costs
presented are in constant US dollars as of Q2 2024 with no price
inflation or escalation factors applied.
- Ore production
is scheduled to begin in Q3 2027.
- Mine life is 16
years, including an initial four years of construction and waste
stripping from years 2024 to 2027 and 12 years of production
activities.
- Average annual
molybdenum production during production years is 12 million pounds
per year. All molybdenum produced by the mine is assumed to be sold
in the same year it is produced.
- Working capital
for Thompson Creek is assumed not to change significantly over the
LOM and is not modeled in this economic analysis.
- No salvage
values are assumed for the capital equipment at the end of mine
life.
- Reclamation and
closure costs for the site were estimated by an external consultant
at a total of $202 million. Reclamation and closure activities will
start progressively after the end of production in 2039, with the
bulk of reclamation work to be completed by 2045, followed by
ongoing tailings management costs and monitoring thereafter.
- Transportation
costs for molybdenite concentrate shipments to Langeloth are
estimated at $29 million over the LOM. Treatment costs at Langeloth
are estimated at $118 million over the LOM. These costs include all
processing and refining expenses necessary to convert the
molybdenite concentrate into molybdenum oxide and other marketable
products. The estimated costs for transportation to and treatment
at Langeloth are based on current trucking quotes and current
treatment costs at the facility, respectively.
Caution Regarding Forward-Looking
InformationInformation 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
"achieve", “advance”, “assume”, “anticipate”, “approach”,
“believe”, “budget”, “could”, “de-risk”, “develop”, “enhance”,
“estimate”, “expect”, “explore”, “focus”, “forecast”, “future”,
“generate”, “growth”, “in line”, “improve”, “may”, “maximize”,
“offset”, “optimize”, “plan”, "potential", “remaining”, “restart”,
“result”, “schedule”, “strategy”, “subject to”, “target”,
“understand”, “update”, “will”, and similar expressions identify
forward-looking information.
These forward-looking statements relate to,
among other things: statements regarding the Company’s strategic
plan; any synergies which may arise from, or are expected to arise
from, the vertical integration of Thompson Creek and Langeloth
including the Company’s ability to source and blend the concentrate
from Thompson Creek or third-parties at Langeloth; the proposed pit
highwall layback included in the Thompson Creek feasibility study;
projections regarding earnings, cash flow from operations, free
cash flow, internal rates of return and after-tax net present
values for Thompson Creek, Langeloth or US Moly; the 2024 guidance
for project spending at Thompson Creek related to capitalized
stripping, plant refurbishment, mine mobile fleet upgrades and
capital expenditure guidance; fluctuation of, sensitivity to, and
assumptions of molybdenum prices and the impact it may have on the
future supply and demand of molybdenum and steel; the expected
profile of US Moly’s future production and costs; updates to the
life of mine plan for Thompson Creek; the expected filing of a
technical report for Thompson Creek; Langeloth’s ability to
capitalize on growing demand in the molybdenum market; strategic
options for the entire MBU and US Moly; future cash flow generation
and profitability from Thompson Creek, Langeloth or US Moly;
evaluating external opportunities for growth; ongoing evaluations
of a restart of Thompson Creek, including integrating Langeloth,
its operating capacities and the use of the concentrate from
Thompson Creek or third-parties, the ability of the Company
successfully advance environmental studies that support future
permitting; the Company receiving all necessary permits and
authorizations required during the restart and production at
Thompson Creek; mineral reserve and mineral resource estimates from
Thompson Creek; the ability to ramp-up operations at Langeloth and
realizing its full annual capacity; the ability of the Company to
obtain the requisite supply to support full capacity at Langeloth
from third-parties; future prices of molybdenum including the
ability of the Company to purchase concentrate at a discount to the
market and being able to sell final products at or above this
benchmark; the future of Endako, its ability to supply Langeloth
with molybdenum feed if restarted and whether or not this
molybdenum feed could complement or replace that feed from Thompson
Creek; and the future exploration plans for the Company.
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 associated with the Company’s
operations, including; the management of external stakeholder
expectations; the impact of changes in, or to the more aggressive
enforcement of, laws, regulations and government practices; risks
that community activism may result in increased contributory
demands or business interruptions; potential defects of title in
the Company’s properties that are not known as of the date hereof;
the imprecision of the Company’s mineral reserves and resources
estimates and the assumptions they rely on, including
environmental, processing permitting, taxation, socioeconomic,
infill and exploration drilling and other factors; key assumptions,
parameters and methods used to estimate the mineral reserve and
mineral resource estimate in the Thompson Creek feasibility study;
Indigenous claims and consultative issues relating to the Company’s
properties which are in proximity to Indigenous communities; and
(B) risks related to operational matters and geotechnical issues
and the Company’s continued ability to successfully manage such
matters, including: the ability of the Company to achieve pit slope
design angles at Thompson Creek, particularly in the North Wall,
which will be based on future drilling and may be impacted by
stronger/weaker rock characteristics, favorable/unfavorable
geologic structure, and/or variations in pore pressures that could
result in an increase or decrease in required depressurization to
achieve these slope design angles; the ability of the Company to
achieve historical throughput rates at Thompson Creek; the Company
receiving the required authorizations and permits for the restart
of Thompson Creek; the ability of the Company to source and blend
concentrate from Thompson Creek or third-parties at Langeloth; the
stability of the pit walls at the Company’s operations, including
Thompson Creek; the integrity of tailings storage facilities and
the management thereof, including as to stability, seismic
activity, compliance with laws, regulations, licenses and permits,
controlling seepages and storage of water, where applicable and any
future capital expenditures required for active reclamation and
tailings storage facilities issues; changes to current remediation
plans due to tailings storage facilities structures; the ability of
the Company to achieve its commercial optimization plan at
Langeloth; 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, pandemics, or
other global events such as wars); risks related to future price of
molybdenum, inflation and interest rates; 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; 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; 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; . 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.sedarplus.com and EDGAR at www.sec.gov/edgar and the “Capital
and Operating Costs – Material Assumptions”, “Economic Analysis –
Assumptions”, “Interpretation and Conclusions - Risks and
Opportunities” sections of the technical report for Thompson Creek
which will be available on SEDAR+ at www.sedarplus.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 September 12, 2024. 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.
Non-GAAP Financial Measures
This document contains “specified financial
measures” within the meaning of NI 52-112, specifically the
non-GAAP financial measures and non-GAAP ratios 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 molybdenum,
understanding the economics of molybdenum 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 and non-GAAP ratios used in this document:
- EBITDA is a non-GAAP financial
measure that represents earnings before interest, taxes,
depreciation, and amortization. It is calculated by adjusting
earnings from operations as recorded in the consolidated statements
of earnings by depreciation and amortization. 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.
- Free cash flow (deficit) 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 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.
- 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 sustaining costs per
molybdenum pound sold is a non-GAAP financial measure that includes
all operating costs, comprising of all stripping costs, capital
costs and treatment costs. This measure incorporates costs incurred
during the production phase. 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.
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