TORONTO - Centerra Gold Inc. ('Centerra' or the 'Company') (TSX: CG) today reported first quarter 2020 results.
Key events and operating results of the first quarter included: Net earnings of $20.0 million and adjusted net earningsNG of $46.4 million, $0.07 and $0.16 per common share, respectively.
Cash flow from operations was $121.1 million.
Production totalled 190,474 ounces of gold, including pre-commercial ounces from Oksut, and 20.1 million pounds of copper.
Production costs per ounce of gold sold were $423 per ounce.
Production costs per pound of copper sold were $1.34 per pound.
All-in sustaining costs on a by-product basis per ounce soldNG were $712 per ounce.
Cash net of debt position of $57.8 million at quarter end, includes cash of $193.8 million. As at March 31, 2020, the Company had $136 million drawn on its Corporate credit facility with total liquidity of $557.8 million.
COVID-19 update: Kumtor operating at targeted levels for both mill and mining production, Oksut open pit mining recommenced mid-April after a two-week period of reduced manpower, Mount Milligan expected to return to targeted levels in the first half of May after reducing manpower on April 6 and completing a scheduled two-week shutdown for process plant maintenance. The Company continues to comply with government regulations relating to COVID-19 as well as take steps to ensure safety of personnel and continuity of operations, including supply chains.
No change to 2020 guidance. To date the COVID-19 pandemic has not resulted in any material impact on Centerra's operations and the Company currently does not expect it will impact its 2020 production. However, the potential effects of COVID-19 are unpredictable, and the Company continues to monitor the situation at each of its sites and take steps to prevent or minimize any effects the pandemic may have.
Dividend of C$0.04 per common share approved April 30, 2020, payable on June 4, 2020 to shareholders of record on May 21, 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.
Commentary
Scott Perry, President and Chief Executive Officer of Centerra stated, 'During the current outbreak of COVID-19, we are consciously taking the necessary precautionary measures to prevent the spread and ensure the health, safety and well-being of our employees, contractors and communities. We have also celebrated a recent safety milestone, when on April 19, 2020, Oksut achieved one year without a lost time injury. Our continued commitment to Work Safe Home Safe is a driving force behind achieving such milestones.'
'The strong operating performance at Kumtor and Mount Milligan in the fourth quarter of 2019 has carried over into the first quarter of 2020. These two operations delivered consolidated gold production of 185,988 ounces at all-in sustaining costsNG on a by-product basis of $712 per ounce sold in the quarter. Kumtor had another strong quarter producing 152,307 ounces of gold production at all-in-sustaining costsNG on a by-product basis of $644 per ounce sold. Mount Milligan produced 33,681 ounces of gold and 20.1 million pounds of copper at all-in-sustaining costsNG on a by-product basis of $901 per ounce sold. Oksut poured its first gold in January and produced 4,486 ounces in the quarter as it transitioned from construction into operations. In aggregate our three operations delivered consolidated gold production of 190,474 ounces.'
'During the quarter, Kumtor continued to operate at its planned production rates, with the process plant continuing to operate at approximately 18,000 tonnes per day processing stockpiled ore. In response to COVID-19, the site has extended the crew rotation schedule from the usual two-week rotation up to four weeks, replacement crews are brought in early and segregated; they are thoroughly screened prior to a crew change and the various crews are separated by department when on site.'
'At Mount Milligan, we did announce a two-week reduction in process plant throughput with a significant reduction in manpower related to mining activities as a precautionary action related to preventing the spread of COVID-19. The process plant continued to process stockpiled material before we commenced a scheduled two-week maintenance shutdown of the process plant. We have completed the scheduled mill maintenance and are ramping back up to full capacity. The spring melt has now commenced which will facilitate a significant water draw and is expected to provide more than sufficient levels of water to run at full capacity through the year as planned.'
'In Turkey, at Oksut, we ceased mining activities on March 31, 2020, in response to the Turkish Government initiatives aimed at reducing the spread of COVID-19. During that time, we continued to stack ore onto the heap leach pad, continued to irrigate the pad and operated the ADR plant. After a two-week period, in compliance with Turkish Government requirements, we brought back the mining crew to re-commence mining and to continue ramping-up the site to full operations.'
'Presently, we are experiencing favourable currency exchange rates in the countries we operate in, as well as low diesel prices which are expected to benefit the cost structure at our operations. In late April 2020, the hedging committee approved an expansion of the Company's hedging policies for both diesel and Canadian dollar hedging for a period up to 24 months, previously limited to a 12-month period. This increased coverage will enable our Kumtor and Mount Milligan operations to continue to benefit in the medium term from current diesel prices and the Canadian exchange rate.'
'Financially, the Company generated $121.1 million of cash from operations for the first three months of 2020, which includes $134.3 million from Kumtor and $27.2 million from Mount Milligan. During the first three months of 2020, Kumtor and Mount Milligan delivered free cash flowNG of $96 million and $22 million, respectively. Company-wide, free cash flow NG in the first quarter of 2020 was $77 million and we finished the quarter with a cash net of debt position of $57.8 million and liquidity of $557.8 million.'
'Based on the Company's financial position, recent strong operating results and cash flows, the Board approved on April 30, 2020 a dividend of C$0.04 per share.'
COVID-19 Update
Centerra continues to prioritize the health, safety and well-being of its employees, contractors, communities, and other stakeholders during the current outbreak of COVID-19 and to take steps to minimize the effect of the pandemic on its business.
The Company undertook a significant reduction of manpower and operations at the Oksut Project on March 31, 2020 for a two-week period. This decision was taken in response to Turkish government initiatives aimed at reducing the spread of COVID-19. The reduction resulted in the suspension of open pit mining activities, though limited crews remained on site to place ore on the heap leach pad, to operate the Adsorption-Desorption-Recovery ('ADR') plant and to perform essential site services. Mining operations recommenced in mid-April 2020, though operating on the weekend is subject to weekly approvals (which have been obtained to date).
At Mount Milligan, as a precautionary measure, the mine reduced its activities and subsequently the process plant undertook a two-week planned maintenance shutdown. Operations of the process plant restarted in late April and mine operations are expected to ramp up production in mid-May.
Kumtor operations have continued with the support of the Kyrgyz Republic Government. Kumtor has implemented a number of proactive measures to prevent the spread of COVID-19 such as extending mine site crew rotations to four-weeks compared to two-weeks and separating key process plant personnel from mining crews.
All other sites have also implemented a number of measures to prevent the spread of COVID-19 and ensure the safety of their respective employees, contractors, communities and other stakeholders, including developing detailed plans in case a reduction in or cessation of operations becomes necessary. Centerra's sites are complying with all government regulation relating to COVID-19.
On April 28, 2020, a Kemess employee informed the Company they had tested positive for COVID-19 while on break from site. The employee was last present at the Kemess site on April 16, 2020. As an immediate measure, Kemess employees and relevant health authorities, including the Northern Health Authority of British Columbia, have been informed and the Company has activated protocols to limit the spread of the virus. The Company is also investigating when the employee may have contracted the virus and whether other individuals may have been exposed. To date, there are limited confirmed cases of COVID-19 in the Issyk-Kul district of the Kyrgyz Republic, and the Kayseri province of Turkey, where the Kumtor Mine and the Oksut Mine are located, and from where they source their main workforce. To date, there have been limited reported cases in the Prince George area of British Columbia from which the Mount Milligan Mine sources some of its workforce. To ensure appropriate social distancing, the Company has temporarily closed its head office in Toronto, Ontario and regional offices in Bishkek, Kyrgyz Republic, Prince George, British Columbia and Ankara, Turkey and has asked its workforce to operate remotely. 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 relevant government agencies.
In addition, Centerra has taken a series of measures to provide its employees with accurate information, help prevent infection and reduce the potential transmission of COVID-19. These include activation of a global crisis management team, frequent communication with and compassionate support of all our people, a complete prohibition on employee travel, strict protocols for access to and from work at operating sites, including temperature checks and interviews upon entry, increased cleaning and hygiene protocols, modifications to work shifts and accommodations at site.
In addition to the above precautionary measures, operating mine sites continue to assess the resiliency of their supply chains, 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. There can be no assurance that future events or circumstances relating to COVID-19 will not disrupt ongoing operations or affect 2020 guidance.
About Centerra
Centerra Gold Inc. is a Canadian-based gold mining company focused on operating, developing, exploring and acquiring gold properties in North America, Asia and other markets worldwide and is the largest Western-based gold producer in Central Asia. Centerra operates two flagship assets, the Kumtor Mine in the Kyrgyz Republic, the Mount Milligan Mine in British Columbia, Canada and now has a third operating gold mine, the 100%-owned Oksut Mine in Turkey, which began production in January 2020. Centerra's shares trade on the Toronto Stock Exchange (TSX) under the symbol CG. The Company is based in Toronto, Ontario, Canada.
Contact:
John W. Pearson
Tel: (416) 204-1953
Email: john.pearson@centerragold.com
CENTERRA GOLD INC. 
