Centerra Gold Records Net Loss for 2019 of $94 million or $0.32 per Common Share Adjusted Net EarningsNG of $182 million or $0.62 per Common Share; Declares Dividend of CAD$0.04 per Common Share; Provides COVID-19 Update
NEWS RELEASE
Centerra Gold Records Net Loss for 2019 of $94 million or $0.32 per Common Share Adjusted Net EarningsNG of $182 million or $0.62 per Common Share;
Declares Dividend of CAD$0.04 per Common Share; Provides COVID-19 Update
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.
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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.
Commentary
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-insustaining 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.”
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“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.”
COVID-19 Update
| 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 |
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| 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 sitespecific 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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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 Öksüt 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.
Conference Call
Centerra invites you to join its 2019 conference call on Thursday, March 26, 2020 at 10:00 AM Eastern Time. The call is open to all investors and the media. To join the call, please dial toll-free in North America 1-800-952-1797. International participants may access the call at +1 416-641-6701. Results summary slides are available on Centerra Gold’s website at www.centerragold.com. Alternatively, an audio feed webcast will be broadcast live by Nasdaq Corporate Solutions and can be accessed live at Centerra Gold’s website at www.centerragold.com. A recording of the call will be available on www.centerragold.com shortly after the call and via telephone until midnight Eastern Time on April 2, 2020 by calling (416) 626-4100 or (800) 558-5253 and using passcode 21953022.
For more information:
John W. Pearson Vice President, Investor Relations Centerra Gold Inc.
(416) 204-1953 [email protected]
Additional information on Centerra is available on the Company’s web site at
www.centerragold.com and at SEDAR at www.sedar.com.
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Management’s Discussion and Analysis For the Period Ended December 31, 2019
This Management Discussion and Analysis (“MD&A”) has been prepared as of March 25, 2020, and is intended to provide a review of the financial position and results of operations of Centerra Gold Inc. (“Centerra” or the “Company”) for the three and twelve months ended December 31, 2019 in comparison with the corresponding periods ended December 31, 2018. This discussion should be read in conjunction with the Company’s audited financial statements and the notes thereto for the year ended December 31, 2019 prepared in accordance with International Financial Reporting Standards (“IFRS”). The Company’s audited financial statements and the notes thereto for year ended December 31, 2019, are available at www.centerragold.com and on the System for Electronic Document Analysis and Retrieval (“SEDAR”) at www.sedar.com. 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. All dollar amounts are expressed in United States dollars (“USD”), except as otherwise indicated.
Caution Regarding Forward-Looking Information
Information contained in this document which are not statements of historical facts, and the documents incorporated by reference herein, may be “forward-looking information” for the purposes of Canadian securities laws. 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 “believe”, “expect”, “anticipate”, “contemplate”, “plan”, “intends”, “continue”, “budget”, “estimate”, “may”, “will”, “schedule”, “understand” and similar expressions identify forward-looking information. These forward-looking statements relate to, among other things: statements under the heading “2020 Outlook” including expected gold and copper production in 2020, expectations regarding throughput rates per calendar day at the Mount Milligan mill, plans for maintenance work at our mines which will impact production, expectations for ramping up gold production at the Öksüt Project, production costs and all-in sustaining costs, capital spending and other expenditures expected for 2020, and expectations about the molybdenum business unit in 2020; our estimates for asset retirement obligations; the Company’s expectations regarding having sufficient liquidity for 2020; the Company’s expectations of extending the term of permits received for pumping from a wellfield; expectations regarding having sufficient water in the tailings storage facility for 2020; the Company’s plans and timing for developing and submitting requests to implement a long-term solution to the Mount Milligan water sufficiency issues, including consultations with potentially affected Indigenous groups and regulators; expectations regarding the construction completion of the Öksüt Project and timing of ramp up of operations; the expectations that the Kyrgyz Government will continue to comply with the terms of the Strategic Agreement; the outcome of the litigation involving the Company, the Greenstone Managing Partner, Premier Gold and its nominees to the Greenstone Managing Partner board of directors; the Company’s planned exploration activities; the Company’s cash on hand, working capital, future cash flows and existing credit facilities being sufficient to fund anticipated operating cash requirements and statements found under the heading “2020 Outlook”, including forecast 2020 production figures and costs, capital spending (growth and sustaining) and exploration expenditures and taxes; expectations of not needing to slow production at Mount Milligan to conserve water; and the Company will achieve Mount Milligan production and costs estimates as detailed in the updated NI 43-101 technical report for Mount Milligan.
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Forward-looking information is necessarily based upon a number of estimates and assumptions that, while considered reasonable by Centerra, are inherently subject to significant 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. For a list of known risk factors, please see “Risks That Can Affect our Business”.
Furthermore, market price fluctuations in gold and copper, as well as increased capital or production costs or reduced recovery rates may render ore reserves containing lower grades of mineralization uneconomic and may ultimately result in a restatement of reserves. The extent to which resources may ultimately be reclassified as proven or probable reserves is dependent upon the demonstration of their profitable recovery. Economic and technological factors which may change over time always influence the evaluation of reserves or resources. Centerra has not adjusted mineral resource figures in consideration of these risks and, therefore, Centerra can give no assurances that any mineral resource estimate will ultimately be reclassified as proven and probable reserves.
Mineral resources are not mineral reserves, and do not have demonstrated economic viability, but do have reasonable prospects for economic extraction. Measured and indicated resources are sufficiently well defined to allow geological and grade continuity to be reasonably assumed and permit the application of technical and economic parameters in assessing the economic viability of the resource. Inferred resources are estimated on limited information not sufficient to verify geological and grade continuity or to allow technical and economic parameters to be applied. Inferred resources are too speculative geologically to have economic considerations applied to them to enable them to be categorized as mineral reserves. There is no certainty that mineral resources of any category can be upgraded to mineral reserves through continued exploration.
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 March 25, 2020. 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.
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TABLE OF CONTENTS
Overview ...................................................................................................................................................... 9 Consolidated Financial and Operational Highlights ............................................................................. 10 Overview of Consolidated Results ........................................................................................................... 11 2020 Outlook.............................................................................................................................................. 12 Risks That Can Affect Our Business ....................................................................................................... 18 Financial Performance ............................................................................................................................. 20 Balance Sheet Review ............................................................................................................................... 23 Market Conditions .................................................................................................................................... 24 Financial Instruments ............................................................................................................................... 27 Operating Mines and Facilities ................................................................................................................ 27 Construction and Development Projects ................................................................................................ 43 Quarterly Results – Previous Eight Quarters ........................................................................................ 45 Related party transactions ....................................................................................................................... 45 Contingencies............................................................................................................................................. 47 Contractual Obligations ........................................................................................................................... 52 Accounting Estimates, Policies and Changes ......................................................................................... 52 Disclosure Controls and Procedures and Internal Control Over Financial Reporting ...................... 53 Non-GAAP Measures ............................................................................................................................... 53 Qualified Person & QA/QC – Production Information......................................................................... 58 Qualified Person & QA/QC – Mineral Reserves and Mineral Resources ........................................... 58 Mineral Reserves and Mineral Resources .............................................................................................. 59
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Overview
Centerra is a Canadian-based gold mining company focused on operating, developing, exploring and acquiring gold properties worldwide and is one of the largest Western-based gold producers in Central Asia. Centerra’s principal operations are the Kumtor Gold Mine located in the Kyrgyz Republic, the Mount Milligan Gold-Copper Mine located in British Columbia, Canada, and the Öksüt Gold Mine in Turkey, which began production in January 2020. The Company has two properties in Canada in the predevelopment stage, the Kemess Underground Gold Property and the Greenstone Gold Project (50% ownership), owns exploration properties in Canada, the United States of America and Turkey and has options to acquire exploration joint venture properties in Canada, Finland, Mexico and Turkey. The Company owns various assets included in its Molybdenum Business Unit consisting of the Langeloth metallurgical processing facility and two mines currently on care and maintenance, Thompson Creek Mine in the United States of America, and the Endako Mine in British Columbia, Canada (75% ownership).
As of December 31, 2019, Centerra’s significant subsidiaries are as follows:
Current Property Entity Property - Location Status Ownership
Kumtor Gold Company (“KGC”) Kumtor Mine - Kyrgyz Republic Operation 100%
Thompson Creek Metals Company Inc. Mount Milligan Mine - Canada Operation 100%
Öksüt Madencilik A.S. (“OMAS”) Öksüt Project - Turkey Development / 100% Commissioning(1)
Langeloth Metallurgical Company LLC Langeloth - United States Operation 100%
Pre-development 100% AuRico Metals Inc. Kemess Project - Canada
Greenstone Gold Mines LP Greenstone Gold Property - Canada Pre-development 50%
Thompson Creek Mining Co. Thompson Creek Mine - United Care and 100% States Maintenance Thompson Creek Metals Company Inc. Endako Mine - Canada Care and 75% Maintenance
Commenced production in January 2020 (1)
Centerra’s common shares are listed for trading on the Toronto Stock Exchange under the symbol CG. As of March 25, 2020, there are 293,814,618 common shares issued and outstanding, options to acquire 4,142,782 common shares outstanding under its stock option plan and 1,029,201 units outstanding under its restricted share unit plan (exercisable on a 1:1 basis for common shares).
The Company reports the results of its operations in U.S. dollars, however not all of its costs are incurred in U.S. dollars. As such, the movement in exchange rates between currencies in which the Company incurs costs and the U.S. dollar also impact reported costs of the Company.
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Consolidated Financial and Operational Highlights
| Unaudited ($ millions, except as noted) | Three months ended December 31 | Twelve months ended December 31 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| % Change | |||||||||||
| Financial Highlights | 2019 | 2018 | % Change | 2019 | 2018 | 2017 | 2019 vs 2018 | ||||
| Revenue | $ | 312.5 | $ | 391.5 | (20%) | $ | 1,375.3 | $ | 1,129.3 | 1,199.0 | 22% |
| Production costs | 149.4 | 172.5 | (13%) | 676.6 | 578.2 | 505.3 | 17% | ||||
| Standby costs | 9.1 | - | 100% | 9.1 | 10.8 | - | (16%) | ||||
| Depreciation, depletion and amortization | 59.3 | 63.7 | (7%) | 239.5 | 196.9 | 195.0 | 22% | ||||
| Earnings from mine operations | 94.7 | 155.3 | (39%) | 450.1 | 343.4 | 498.7 | 31% | ||||
| Net (loss) earnings | $ | (12.2) | $ | 49.0 | (125%) | $ | (93.5) | $ | 107.5 | 209.5 | (187%) |
| Adjusting items | |||||||||||
| - ARO revaluation at sites on Care and Maintenance | 34.5 | 41.8 | (17%) | 34.5 | 40.4 | - | (15%) | ||||
| - Asset Impairment - Mount Milligan | - | - | 0% | 230.5 | - | - | 100% | ||||
| - Kyrgyz Republic settlement | - | - | 0% | 10.0 | - | 60.0 | 100% | ||||
| - Gain on sale of ATO | - | - | 0% | - | (28.0) | - | (100%) | ||||
| - Other adjusting items | - | - | 0% | - | (1.8) | 11.5 | (100%) | ||||
| Adjusted net earnings (3) | $ | 22.3 | $ | 90.8 | (75%) | $ | 181.5 | $ | 118.1 | 281.0 | 54% |
| Cash provided by operations | 92.5 | 151.6 | (39%) | 334.1 | 217.5 | 500.9 | 54% | ||||
| Adjusted cash provided by operations(3) | 92.5 | 151.6 | (39%) | 396.7 | 221.9 | 500.9 | 79% | ||||
| Free cash flow (deficit) (3) | (0.4) | 65.5 | (101%) | 34.7 | (68.4) | 222.9 | 151% | ||||
| Adjusted free cash flow (deficit)(3) | (0.4) | 65.5 | (101%) | 97.3 | (64.0) | 222.9 | 252% | ||||
| Capital expenditures - sustaining | 17.8 | 23.6 | (24%) | 79.6 | 88.5 | 91.8 | (10%) | ||||
| Capital expenditures - growth and development projects | 42.4 | 34.3 | 23% | 148.9 | 101.5 | 32.0 | 47% | ||||
| Capital expenditures - stripping | 35.1 | 36.0 | (3%) | 97.2 | 138.8 | 200.2 | (30%) | ||||
| Total assets | $ | 2,701.7 | $ | 2,826.7 | (4%) | $ | 2,701.7 | $ | 2,826.7 | 2,772.2 | (4%) |
| Long-term debt and lease obligation | 88.3 | 183.5 | (52%) | 88.3 | 183.5 | 211.6 | (52%) | ||||
| Cash, cash equivalents and restricted cash | 70.7 | 179.2 | (61%) | 70.7 | 179.2 | 416.6 | (61%) | ||||
| Per Share Data | |||||||||||
| (Loss) earnings per common share - $ basic (1) | $ | (0.04) | $ | 0.17 | (124%) | $ | (0.32) | $ | 0.37 | 0.72 | (186%) |
| Adjusted net earnings per common share - $ basic (1)(3) | $ | 0.08 | $ | 0.31 | (74%) | $ | 0.62 | $ | 0.40 | 0.96 | 55% |
| Per Ounce Data (except as noted) | |||||||||||
| Average gold spot price ($/oz)(2) | 1,483 | 1,229 | 21% | 1,393 | 1,269 | 1,258 | 10% | ||||
| Average realized gold price ($/oz)(3)(4) | 1,403 | 1,158 | 21% | 1,309 | 1,175 | 1,171 | 11% | ||||
| Average copper spot price ($/lb)(2) | 2.68 | 2.79 | (4%) | 2.73 | 2.96 | 2.61 | (8%) | ||||
| Average realized copper price ($/lb)(3)(4) | 2.23 | 1.76 | 27% | 2.09 | 2.02 | 2.11 | 3% | ||||
| Operating Highlights | |||||||||||
| Gold produced (oz's) | 194,507 | 288,367 | (33%) | 783,308 | 729,556 | 785,316 | 7% | ||||
| Gold sold (oz's) | 169,892 | 269,754 | (37%) | 780,654 | 709,330 | 792,466 | 10% | ||||
| Payable Copper Produced (000's lbs) | 18,079 | 11,796 | 53% | 71,146 | 47,091 | 53,596 | 51% | ||||
| Copper Sales (000's payable lbs) | 14,301 | 13,591 | 5% | 67,430 | 44,370 | 59,719 | 52% | ||||
| Unit Costs | |||||||||||
| Production costs per ounce of gold sold (4) | $ | 455 | $ | 375 | 21% | $ | 465 | $ | 464 | 360 | 0% |
| Gold - All-in sustaining costs on a by-product basis ($/oz sold)(3)(4) | $ | 799 | $ | 576 | 39% | $ | 708 | $ | 754 | 687 | (6%) |
| Gold - All-in sustaining costs on a by-product basis (including | |||||||||||
| taxes) ($/oz sold)(3) (4) | $ | 969 | $ | 709 | 37% | $ | 862 | $ | 889 | 815 | (3%) |
| Gold - All-in sustaining costs on a co-product basis (before taxes) – | |||||||||||
| ($/oz sold)(3)(4) | $ | 829 | $ | 573 | 45% | $ | 737 | $ | 750 | 737 | (2%) |
| Production costs per pound of copper sold (4) | 1.50 | 1.33 | 13% | 1.46 | 1.26 | 1.48 | 16% | ||||
| Copper - All-in sustaining costs on a co-product basis (before taxes) | |||||||||||
| – ($/pound sold)(3)(4) | $ | 2.28 | $ | 1.53 | 49% | $ | 1.85 | $ | 1.77 | 1.47 | 5% |
(1) As at December 31, 2019, the Company had 293,690,456 common shares issued and outstanding.
(2) Average for the period as reported by the London Bullion Market Association (US dollar Gold P.M. Fix Rate) and London Metal Exchange (LME).
(3) Non-GAAP measure. See discussion under “Non-GAAP Measures”.
(4) Combines streamed and unstreamed amounts.
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Overview of Consolidated Results
Fourth Quarter 2019 compared to Fourth Quarter 2018
Net loss of $12.2 million and adjusted net earningsNG of $22.3 million in the fourth quarter of 2019, compared to net earnings and adjusted net earningsNG of $49.0 million and $90.8 million, respectively, in the fourth quarter of 2018. The decrease in adjusted net earningsNG in the fourth quarter of 2019 was due to lower gold grades at Kumtor and Mount Milligan and costs related to the significant waste rock movement at Kumtor’s Lysii waste rock dump, partially offset by higher average gold prices in 2019 together with higher copper grades processed at the Mount Milligan Mine.
Significant adjusting items to the net loss in the fourth quarter of 2019 include:
- $34.5 million asset retirement obligation (“ARO”) expense at the Company’s non-operating sites, due primarily to a change in discount rates.
Significant adjusting items to net earnings in the fourth quarter of 2018 include:
- $40.4 million ARO expense at the Company’s non-operating sites, due primarily to a change in the underlying closure plan at the Thompson Creek Mine.
Cash provided by operations was $92.5 million in the fourth quarter of 2019, compared to $151.6 million in the same prior year period, due to the decrease in adjusted net earningsNG, increase in inventory and decrease in accounts payable at Mount Milligan, partially offset by an increase in accounts payable at Kumtor. Negative free cash flow NG of $0.4 million in the fourth quarter of 2019 compared to positive free cash flowNG of $65.5 million in the same period of 2018, consistent with the change in adjusted net earningsNG.
Year ended December 31, 2019 compared to 2018
Net loss of $93.5 million and adjusted net earningsNG of $181.5 million in 2019, compared to net earnings and adjusted net earningsNG of $107.5 million and $118.1 million, respectively, in 2018.
The increase in adjusted net earningsNG in the current year was due to increased gold sales at Kumtor and Mount Milligan, increased copper sales at Mount Milligan and higher realized gold prices. At Kumtor, the increase in gold sold was as a result of processing higher grade ore and achieving higher recoveries. At Mount Milligan the increased sales levels reflect additional concentrate shipments during the year due to higher mill availability and throughput, coupled with higher copper grades and higher gold recoveries.
Significant adjusting items to the net loss in 2019 include:
- $230.5 million impairment charge on the assets at the Mount Milligan Mine,
- $34.5 million ARO expense at the non-operating sites due to a significant change in the discount rate assumption, and
- $10.0 million charge relating to the completion of the Strategic Agreement with the Kyrgyz Government.
Significant adjusting items to net earnings in 2018 include:
- $40.4 million ARO expense at the non-operating sites due to changes in the underlying closure models, partially offset by,
- $28.0 million gain on the sale of the Company’s royalty portfolio that was acquired as part of the AuRico Metals Inc. acquisition.
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Cash provided by operations was $334.1 million in 2019, which included the Kyrgyz Republic settlement payment of $62.6 million, compared to $217.5 million in the same prior year period. Excluding this payment, adjusted cash provided by operationsNG for 2019 was $396.7 million compared to $221.9 million in 2018 due to higher revenue as a result of increased gold sold at Kumtor, increased copper sold at Mount Milligan and higher realized gold prices. There was also an increase in cash from working capital due to a larger increase in accounts payable balances at Kumtor, Mount Milligan and the corporate office in 2019 compared to 2018, partially offset by a larger increase in the accounts receivable balance at Mount Milligan, due to the timing of shipments in 2019 compared to 2018. The increase in adjusted free cash flow NG of $97.3 million in 2019 compared to negative adjusted free cash flow NG of $64.0 million in 2018 is due to an increase in cash provided by operations and decrease in capitalized stripping at Kumtor, partially offset by an increase in capital expenditures at Öksüt. The negative adjusted free cashflowNG of $64.0 million in 2018 was primarily due to lower sales and earnings at Kumtor and Mount Milligan.
Safety and Environment
On December 1, 2019, a significant waste rock movement occurred at Kumtor’s Lysii waste rock dump resulting in two employee fatalities. After six weeks of continuous search efforts and with the consent of the families and the relevant Kyrgyz state agencies, the search was concluded. Investigations involving the Kyrgyz State Inspectorate for Environmental and Technical Safety as well as internal investigations by Centerra Gold are currently underway. Including these two fatalities, Centerra incurred fourteen reportable injuries in the fourth quarter of 2019, including six lost time injuries, six medical aid injuries and two restricted work injuries.
On February 15, 2020, a Kumtor employee succumbed to a fatal injury while operating an excavator, which tipped and then slipped down into a water-filled basin near the edge of Petrov Lake. An internal investigation has commenced, and management is working closely with the Kyrgyz regulators and other state authorities to ascertain the cause of the incident.
There were no reportable releases to the environment in the fourth quarter and for the 2019 year.
2020 Outlook
The Company has been monitoring closely developments relating to COVID19 and has taken a number of proactive measures to ensure the safety of its employees and the continuity of its business. 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. This short-term cessation of mining is not expected to impact 2020 production guidance as estimated at December 31, 2019.
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