All figures are in United States dollars and all production figures are on a 100% basis unless otherwise stated.
Toronto, Canada, March 26, 2020: Centerra Gold Inc. (“Centerra” or the “Company”) (TSX: CG) today reported fourth quarter and full-year 2019 results. Key events and operating results of the fourth quarter and year included:
• Net loss for the quarter of $12.2 million, $0.04 per common share (basic) and net loss for the year of $93.5 million, $0.32 per common share (basic).
• Adjusted net earningsNG for the quarter of $22.3 million, $0.08 per common share (basic) and adjusted net earningsNG for the year of $181.5 million, $0.62 per common share (basic).
• Cash flow from operations for the quarter and year was $92.5 million and $334.1 million, respectively. Adjusted cash flow from operationsNG for the quarter and year was $92.5 million and $396.7 million, respectively.
• Gold Production for the quarter of 194,507 ounces and gold production for the year of 783,308 ounces, in excess of the high end of our full-year guidance of 765,000 ounces.
• Copper production for the quarter of 18.1 million pounds and copper production for the year of 71.1 million pounds, within our guidance range.
• Production costs per ounce of gold sold for the quarter and year were $455 per ounce and $465 per ounce, respectively.
• Production costs per pound of copper sold for the quarter and year were $1.50 per pound and $1.46 per pound, respectively.
• All-in sustaining costs per ounce soldNG for the quarter was $799 per ounce and $708 per ounce for the year, below the annual guidance range of $713 to $743 per ounce.
• Debt net of cash of $34.8 million at the end of 2019, includes cash of $42.7 million. On January 30, 2020, the Company cancelled the $150 million Öksüt Project finance facility and repaid the $78 million drawn balance which resulted in the release of $25 million in restricted cash.
• Proven and probable gold mineral reserves total an estimated 11.1 million ounces of contained gold (442 Mt at 0.78 g/t gold) at year-end, reflecting 2019 mining depletion and the impact of the updated Mount Milligan NI 43-101 technical report.
• Proven and probable copper mineral reserves total an estimated 1,589 million pounds of contained copper (298.4 Mt at 0.24% copper) at year-end, reflecting 2019 mining depletion and the impact of the updated Mount Milligan NI 43-101 technical report.
• In December 2019, the Kumtor Mine experienced a significant waste rock movement at the Lysii waste rock dump resulting in two employee fatalities.
Key events subsequent to year-end:
• In January 2020, the Company received all the necessary approvals and permits to recommence mining operations at the Kumtor Mine.
• In January 2020, the Company announced that first gold pour was achieved at the Öksüt Project. The Company completed first gold pour on time and under budget.
• In February 2020, a Kumtor employee succumbed to a fatal injury while operating an excavator near the edge of Petrov Lake.
• In March 2020, the Company filed an updated NI 43-101 technical report for the Mount Milligan Mine with an effective date of December 31, 2019.
• Dividend of CAD$0.04 per common share declared in March 2020.
All references in this document denoted with NG, indicate a non-GAAP term which is discussed under “Non-GAAP Measures” and reconciled to the most directly comparable GAAP measure.
Scott Perry, President and Chief Executive Officer of Centerra stated, “We are fully committed to understanding the circumstances that led to the troubling safety incidents at Kumtor in December 2019 and February 2020, so that we can take all necessary steps to prevent such incidents from happening in the future. We remain steadfast in our resolve to ensure that everyone who works at our operations can do so safely and will return home safely, each and every day. There is nothing more important.”
“In 2019, due to the strong operating performance at both operations, the Company exceeded its consolidated gold production and cost guidance, delivering more than 783,300 ounces of gold at an all-in sustaining costNG on a by-product basis of $708 per ounce sold, which was lower than the low-end of our all-in sustaining cost guidance. Kumtor had another strong year exceeding its revised production guidance in delivering 600,201 ounces of gold production at an all-in-sustaining cost on a by-product basis of $598 per ounce sold, which was lower than the low-end of its all-in-sustaining cost guidance. In 2019, Mount Milligan exceeded the upper end of its gold production guidance and achieved the mid-point of its copper production guidance, producing 183,107 ounces of gold and 71.1 million pounds of copper. All-in-sustaining cost on a by-product basis was above guidance at $828 per ounce sold.”
“Financially, the Company generated a meaningful $334.1 million of cash from operations for the year, Mount Milligan generated $62.2 million and Kumtor generated $376.2 million. In 2019, Kumtor generated $240 million of free cash flowNG and Mount Milligan generated $27 million which enabled the Company to aggressively pay down its debt over the year by approximately $111 million ending the year with debt net of cash of $34.8 million (excluding restricted cash).”
“Based on the Company’s financial position, recent strong operating results and cash flows, the Board approved on March 25, 2020 a dividend of Cdn$0.04 per share.”
“For 2020, we are estimating consolidated gold production to be in the range of 740,000 to 820,000 ounces combined with 80 million to 90 million pounds of payable copper production from Mount Milligan. Centerra’s consolidated all-in sustaining cost on a by-product basis per ounce soldNG for 2020 is expected to be in the range of $820 to $870 per ounce.”
“Our projected capital expenditures for 2020, excluding capitalized stripping, is estimated to be $169 million which includes $109 million of sustaining capital and $60 million of growth capital spending. Growth capital spending includes $29 million at the Öksüt Project in Turkey as we complete the construction of the site, $13 million at the Kemess Underground Project and $18 million at the Kumtor Mine. Total capitalized stripping for 2020 is estimated to be $236 million, including $215 million at the Kumtor Mine and $21 million at the Öksüt Project, with a total cash component of $193 million, including $173 million at the Kumtor Mine and $20 million at the Öksüt Project.” See “2020 Outlook” for further details.”
“At Kumtor over the past 18 months we have invested significantly in exploration drilling and at year-end we can see the results as Kumtor’s open pit measured and indicated gold mineral resources increased by 3.3 million contained ounces to 6.3 million contained ounces and open pit inferred gold mineral resources increased by 1.2 million contained ounces to 1.4 million contained ounces. We are now in the process of updating Kumtor’s life-of-mine plan and an updated technical report which we plan to release in the second half of 2020.”
Centerra continues to prioritize the health, safety and well-being of its employees, contractors, communities and other stakeholders, particularly during the current outbreak of COVID-19. To date, the Company has experienced no operating or production disruptions nor any supply chain interruptions or impact. However, the Company has decided to undertake a significant reduction of manpower and operations at the Öksüt Project on March 31, 2020 for an initial period of two weeks. This decision was taken in response to recent Turkish government initiatives aimed to reducing the spread of COVID-19. The reduction will result in a suspension of open pit mining activities, though limited crews will remain on site to place ore on the heap leach pad, to operate the ADR plant and to perform essential site services. Approximately 150,000 tonnes of crushed material is available at site for stacking (such volume represents approximately 15 days worth of stacking activity). Öksüt has prepared detailed plans in case a further reduction or cessation of operations becomes necessary or desirable. Kumtor and Mount Milligan operations continue for the time being and, in the case of Kumtor, with the support of the Kyrgyz Republic Government. Each site has implemented a number of proactive measures to prevent the spread of COVID-19 and ensure the safety of its employees, contractors, communities and other stakeholders. Both Kumtor and Mount Milligan have also made detailed plans in case a reduction or cessation in operations becomes necessary or desirable. Scott Perry, President and Chief Executive Officer, commented: “The safety of our employees remains our top priority during the outbreak of COVID-19 and we are taking action based on the best available information we have. We believe that the temporary reduction of operations at Öksüt is the most prudent course of action at this juncture. Kumtor and Mount Milligan remain in operation for the time being, but we will not hesitate to reduce or shut down operations at those sites if we believe it is required to responsibly protect people.” To ensure appropriate social distancing, the Company has temporarily closed its head office in Toronto and regional offices in Bishkek, Kyrgyz Republic, Prince George, British Columbia and Ankara, Turkey and has asked its workforce to operate remotely. To date, there are no confirmed cases of COVID-19 in the Issyk-Kul district of the Kyrgyz Republic, nor the Kayseri province of Turkey, where the Kumtor Mine and the Öksüt Mine are located, respectively, and from where they source their main workforce. To date, there has been a few reported cases in Prince George area of British Columbia from which the Mount Milligan Mine sources some of its workforce. The Company is continuously monitoring information published by the Public Health Agency of Canada, U.S. Centers for Disease Control and Prevention (CDC), the World Health Organization (WHO) and other guidance released from appropriate government agencies. Centerra has taken the following measures to provide its employees with accurate information, help prevent infection and reduce the potential transmission of COVID-19:
• Pandemic & Crisis Management: A global crisis management team was activated in early March. The team, comprised of executives and local site leaders, has been leading Centerra’s global response and has implemented a corporate pandemic response plan complemented by local site-specific crisis management plans.
• Health and Mental Well-being Support: Centerra continues to educate and raise awareness on COVID-19 facts and preventative actions through frequent communication with employees and is directing leaders to offer compassionate support for employees who are concerned about their wellbeing and the wellbeing of their families. Any employee who is feeling unwell or experiencing flu-like symptoms has been advised to stay home. The Company is conducting temperature checks using non-contact thermometers and asking health questions of all individuals entering any of its sites. A standard operating procedure has been implemented in case there is a need for individual isolation and subsequent transportation from site for any individual who exhibits COVID-19 related symptoms.
• Workplace Hygiene: All sites have increased daily cleaning of all common areas and spaces where there is frequent employee contact, including shared objects and any high-touch surfaces. Proper food hygiene and preparation practices have been reinforced at the Company’s mine sites which have onsite living quarters.
• Remote Working: As noted above, to promote social distancing practices, corporate and regional offices have been closed for the time being and flexible work arrangements have been implemented globally. Site employees who can work at home have been encouraged to do so. The Company has also moved to virtual meetings across the organization where possible or limited attendees at meetings while practicing prudent social distancing.
• Travel and Site Visit Restrictions: The Company has instituted a no-air travel policy. At the guidance of public health authorities, individuals who have recently returned from either business or non-business-related travel have entered a 14-day self-isolation period. In addition, a visitor ban has been instituted at all sites, including our operating mines, development projects and at our care and maintenance sites.
In addition to the above precautionary measures, operating mine sites have been actively assessing the resiliency of their supply chain, increasing mine site inventories of key materials and developing contingency plans to allow for continued operations.
The Company notes that the situation is fluid and has been changing rapidly. The measures enacted reflect the Company’s best assessment at this time but will remain flexible and be revised as necessary or advisable and/ or as recommended by the public health and governmental authorities.
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Centerra Gold Announces Dividend of C$0.04 per share
Toronto, Canada, March 26, 2020: Centerra Gold Inc. (“Centerra”) (TSX: CG) announced today that its Board of Directors has authorized a dividend of C$0.04 per common share or C$11,751,182 (approximately US$8.2 million at the current exchange rate). The dividend of C$0.04 per common share is payable on April 22, 2020 to shareholders of record on April 8, 2020. The ex-dividend date will be April 6, 2020. The dividend is an eligible dividend for Canadian income tax purposes.
Centerra continues to monitor closely and proactively the evolving situation relating to COVID-19 and how it may affect the Company’s business. The Company notes that going forward, in addition to the other factors that the Board of Directors normally considers in connection with the declaration of dividends, it will also need to carefully consider whether, and the extent to which, developments relating to COVID-19 may affect its dividend program. In accordance with Centerra’s dividend policy, the timing and quantum of dividends are to be determined by the Board of Directors from time to time based on, among other things, the Company’s operating results, cash flow and financial conditions, Centerra’s current and anticipated capital requirements, and general business conditions.