Centerra Gold Records Net Earnings of $80.7 million or $0.27 per Common Share, Adjusted Net EarningsNG of $97.8 million or $0.33 per Common Share and Cash from Operations of $268.1 million; Increases Quarterly Dividend by 25%
NEWS RELEASE
Centerra Gold Records Net Earnings of $80.7 million or $0.27 per Common Share, Adjusted Net EarningsNG of $97.8 million or $0.33 per Common Share and Cash from Operations of $268.1 million; Increases Quarterly Dividend by 25%
All figures are in United States dollars and all production figures are on a 100% basis unless otherwise stated. This news release contains forward looking information regarding Centerra Gold’s business and operations. See “Caution Regarding Forward-Looking Information”.
Toronto, Canada, July 31, 2020: Centerra Gold Inc. (“Centerra” or the “Company”) (TSX: CG) today reported its second quarter 2020 results. Key events and operating results of the second quarter included:
- Net earnings of $80.7 million and adjusted net earningsNG of $97.8 million, $0.27 and $0.33 per common share (basic), respectively.
- Cash flow from operations was $268.1 million.
- Production totalled 219,692 ounces of gold and 19.1 million pounds of copper.
- Production costs per ounce of gold sold were $410 per ounce.
- Production costs per pound of copper sold were $1.20 per pound.
- All-in sustaining costs on a by-product basis per ounce soldNG were $804 per ounce.
- Cash position of $212 million at quarter end with total liquidity of $712 million. As at June 30, 2020, the Company’s $500 million corporate credit facility was undrawn.
- Commercial production achieved on May 31, 2020 at the Öksüt Mine which generated positive operating cash flow of $13.5 million and free cash flowNG of $5.0 million during the quarter.
- Robust spring melt at Mount Milligan resulting in stored water inventory in excess of 6 million cubic metres at the end of the second quarter.
- An updated Kumtor 43-101 technical report is expected to be released in the fall of 2020.
- No change to 2020 production and cost guidance and a modification to growth capitalNG guidance.
- Quarterly Dividend increased by 25% to C$0.05 per common share.
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.
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Commentary
Scott Perry, President and Chief Executive Officer of Centerra stated, “We continue to stay vigilant at all of our operations to prevent an outbreak and avoid the spread of the COVID-19 virus and to ensure the health, safety and well-being of our employees, contractors and communities. At our Öksüt operation, we have celebrated a recent safety milestone, when on July 19, 2020, Öksüt achieved 3 million work hours 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 continued into this quarter and our Öksüt Mine achieved commercial production during the quarter. Our operations in the quarter delivered consolidated gold production of 219,692 ounces at all-in sustaining costsNG on a by-product basis of $804 per ounce sold in the quarter. Kumtor had another strong quarter producing 173,245 ounces of gold at allin sustaining costsNG on a by-product basis of $696 per ounce sold. Mount Milligan produced 35,656 ounces of gold and 19.1 million pounds of copper at all-in sustaining costsNG on a by-product basis of $679 per ounce sold and Öksüt produced 10,791 ounces of gold, 5,619 ounces were commercial production. During the quarter, Öksüt’s all-in sustaining costsNG on a by-product basis was $537 per ounce, being our lowest cost mine in the quarter.”
“Financially, the Company generated $268.1 million of cash from operations for the second quarter of 2020, which includes $220.4 million from Kumtor, $41.6 million from Mount Milligan and $13.5 million from Öksüt. During the second quarter of 2020, Kumtor, Mount Milligan and Öksüt delivered free cash flowNG of $156.9 million, $34.4 million and $5.0 million, respectively. Company-wide, free cash flow NG in the second quarter of 2020 was $169.1 million and we finished the quarter with cash of $212.2 million and no debt outstanding after repaying our corporate revolving credit facility in the quarter.”
“The decision of Centerra’s Board to increase the quarterly dividend by 25% to C$0.05 per common share announced today and planned into the future was based on our strong operating performance and the higher gold price environment, both of which contributed to our growing free cash flow and a debt-free balance sheet as at June 30, 2020.”
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. 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, including activation of a global crisis management team, frequent communication with and compassionate support of all our people, travel restrictions, and the temporary closure of various administration offices including our head office in Toronto. Each Centerra site rapidly and successfully implemented proactive measures to minimize the impact of COVID-19 on operations, including strict protocols for access to operating sites, temperature checks and questioning upon entry, increased cleaning and hygiene protocols, modifications to work shifts and accommodation at site and an offsite quarantine facility established specifically for employees travelling to the Kumtor Mine site. In addition, our operating mine sites continue to assess the resiliency of their supply chain, are increasing mine site inventories of key materials and developing contingency plans to allow for continued operations.
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The Company completed a company-wide COVID-19 employee survey in June to obtain feedback from employees on Centerra’s response to the pandemic and most importantly, on whether the Company is keeping employees well-informed and providing adequate support both physically and emotionally. The responses company-wide were favorable and Centerra will continue to address concerns and adapt its practices as necessary throughout the stages of this crisis.
While the majority of Centerra’s operating sites are currently operating without significant interruption, there has been an increase in the infection rates of COVID-19 and other illnesses in the Kyrgyz Republic which is beginning to have an impact on the available workforce for the Kumtor Mine. While Kumtor’s performance during the second quarter was unaffected, the Company is putting in place measures to manage the reduced workforce at Kumtor by mining waste below capacity while maintaining gold production levels by processing stockpiles as planned for the year. For further details on the impact of COVID-19 on Centerra’s operating sites and development projects please see “Operating Mines and Facilities” and “Pre- Development Projects”.
The Company notes that the effects of COVID-19 on its business continue to change rapidly. The measures enacted to date 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.
Exploration Update
Exploration activities in the second quarter of 2020 included drilling, surface sampling, geological mapping and geophysical surveying at the Company’s various projects (including earn-in properties); targeting gold and copper mineralization in Canada, Mexico, Turkey, Finland, USA and the Kyrgyz Republic. The Company has expanded its 2020 exploration program when compared to 2019 and is primarily focused on brownfield exploration at Kumtor, Mount Milligan and Öksüt. Exploration expenditures totalled $6.6 million in the second quarter of 2020, which included the impact of delays associated with COVID-19, compared to $6.3 million in the same quarter of 2019.
Kumtor Mine
The 2020 planned drilling program at Kumtor includes 55,000 metres of exploration and 15,000 metres of infill drilling, which are focused on priority primary and potential targets. Primary targets include various zones of the Central, Southwest and Sarytor deposits (areas) based on enhanced geological modelling from the recently updated Kumtor resource block model, and positive drilling results from 2018 and 2019. In addition, the 2020 planned drilling program at Kumtor includes the underexplored segments of the Kumtor Gold Trend – the Northeast targets, Bordoo, Akbel and conceptual targets (Hope Zone and others). An exploration potential update will be included in an updated Kumtor 43-101 technical report expected to be released in the fall of 2020.
In April, due to COVID-19 preventive measures, exploration drilling at Kumtor was temporarily suspended, resuming in June 2020. Due to the delay, a certain portion of the planned drilling program could be deferred to 2021.
During the second quarter of 2020, exploration drilling programs continued with the completion of fifteen diamond drill holes for 4,663 metres. Exploration drilling focused on testing zones of sulfide and oxide mineralization along the corridor between the Central and Southwest pits (Kosholuu, Hope and Southwest Oxide Deep zones), on the periphery of the Sarytor Pit, Northeast targets and Muzdusuu area.
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Southwest Deposit (Area)
In the second quarter of 2020, a total of eleven diamond drill holes were completed in the Southwest area for a total of 2,902 metres.
Three drill holes have been completed between Southwest and Central pits in the Hope Zone for a total of 508 metres. Results from recent drilling have delineated a lens-shaped oxide gold mineralization. This mineralization extends along the hanging wall of the Kumtor Lower Thrust for more than 400 metres and is opened in both directions along the main NE strike.
Hole SW-20-319 intersected broad dispersed gold mineralization in Tertiary sediments.
Significant intersections are reported below:
| SW-20-313 | 9.0 metres @ 1.13 g/t Gold (“Au”), from 277.8 metres 4.3 metres @ 4.78 g/t Au from 289.2 metres |
| SW-20-319 | 39.0 metres @ 0.45 g/t Au from 19.6 metres Including 15.0 metres @ 0.92 g/t Au from 29.6 metres |
In the Kosholuu Zone, three drill holes were completed for a total of 708.2 metres. Selected best intercepts are listed below.
| SW-20-318 | 15.9 metres @ 1.65 g/t Au from 196.8 metres 10.4 metres @ 4.29 g/t Au from 221.7 metres |
| SW-20-320 | 18.3 metres @ 6.50 g/t Au from 225.0 metres Including 5.0 metres @ 13.08 g/t Au from 234.7 metres |
Five drill holes were completed for a total of 1,686.5 metres in the Hope Zone and tested inferred oxide mineralization. A selected best intercept is listed below:
SW-20-324 21.7 metres @ 6.09 g/t Au from 226.0 metres Including 3.0 metres @ 12.93 g/t Au from 238.0 metres
Sarytor Deposit (Area)
In the second quarter, drilling was not conducted at the Sarytor area, but results were obtained for the hole drilled in the first quarter. Significant intervals are shown below.
SR-20-244 66.4 metres @ 2.05 g/t Au from 262.3 metres Including 9.9 metres @ 4.77 g/t Au from 285.6 metres
Northeast Deposit (Area)
In the Northeast area, one diamond drill hole was completed during this quarter and results were obtained for previously completed reverse circulation (RC) drilling.
A few broad and low-grade intervals of sulfide and oxide mineralization were intersected. Oxide mineralization was identified in the northwestern part of the area, along the tectonic mélange zone.
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Muzdusuu Area Four diamond drill holes were completed in the Muzdusuu Area for a total of 1,040 metres. Results were also obtained for holes completed in the first quarter. Drilling in the Muzdusuu Area (outside Central Pit) is designed to explore for oxide and mixed gold mineralization along the Kumtor Lower Thrust. A few drill holes intersected broad intervals (up to 68 metres) of a mixed (oxide + sulfide) gold mineralization. Hole DM2067 has tested inferred dispersed gold mineralization target in the Tertiary sediments (Parking Lot target) and intersected broad interval of a low-grade mineralization.
Significant intervals are shown below.
| DM2059 | 68.8 metres @ 1.38 g/t Au from 120.7 metres Including 31.0m @ 2.75 g/t Au from 136.0 metres |
| DM2062 | 57.3 metres @ 1.02 g/t Au from 96.2 metres Including 25.2m @ 2.06 g/t Au from 127.6 metres |
| DM2067 | 234.6 metres @ 0.20 g/t Au from 78.6 metres Including 31.0m @ 0.39 g/t Au from 147.6 metres |
The above mineralized intercepts were calculated using a cut-off grade of 1.0 g/t Au for sulfide and 0.1 g/t Au for oxide mineralization, minimum interval of 4.0 metres and a maximum internal dilution interval of 5.0 metres. The true widths for sulfide mineralized intervals reported represent approximately 70 to 95% of the stated down hole interval. Significant assay intervals reported for oxide mineralization represent apparent widths due to the uncertainty of the nature of the mineralization at the time of reporting. Drill collar locations and associated graphics are available at the following link:
https://pr.globenewswire.com/FileDownloader/DownloadFile?source=ml&fileGuid=8e9ad544-6c3b-4ea5-b386- 8e57ddd0746d
A full listing of the drill results, drill hole locations and plan map (including the azimuth, dip of drill holes, and depth of the sample intervals) for the Kumtor Mine have been filed on the System for Electronic Document Analysis and Retrieval (“SEDAR”) at www.sedar.com and are available at the Company’s web site www.centerragold.com.
Mount Milligan Mine
The 2020 planned drilling program at Mount Milligan includes 17,500 metres (at approximately 40 drill sites) in five target zones of in-pit exploration, 10,000 metres of brownfield exploration and 3,000 metres of greenfield exploration. In March, due to COVID-19 preventive measures, exploration drilling at Mount Milligan was temporarily suspended and resumed in June 2020, with no impact to the planned drilling programs anticipated for the remainder of 2020. In the second quarter, two drill holes were completed in the Great Eastern Fault target area (20-1240, 20-2141), and one was in progress, totalling 1,274 metres drilled. Assay results were returned for two drill holes during the quarter and best weighted average intersections are reported below.
Saddle/66 Gap zone (In-Pit)
DDH 20-1237 and 20-1238 tested for an extension of mineralization into a gap in known reserves between the Saddle and 66 zones; and a deep geophysical target. DDH 20-1237 was abandoned at 26.8 metres for technical reasons. Significant pyrite mineralization in both drill holes is related to dykes (monzonite and
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trachyte) proximal to faults. The deep interval in 20-1238 was intersected in the immediate footwall of Harris fault.
| DDH 20- 1237 | 17.1 metres @ 0.62 g/t Au, 0.10% Copper (“Cu”) from 9.8 metres including 6.7 metres @ 1.07 g/t Au, 0.17% Cu from 20.1 metres |
| DDH 20- 1238 | 16.0 metres @ 1.19 g/t Au, 0.03% Cu from 82.0 metres including 3.6 metres @ 4.79 g/t Au, 0.05% Cu from 83.5 metres 76.1 metres @ 0.81 g/t Au, 0.03% Cu from 440.0 metres including 13.2 metres @ 1.57 g/t Au, 0.07% Cu from 449.8 metres and 2.0 metres @ 3.50 g/t Au, 0.05% Cu from 489.0 metres and 2.0 metres @ 3.20 g/t Au, 0.08% Cu from 496.8 metres and 2.0 metres @ 4.57 g/t Au, 0.02% Cu from 510.0 metres 13.0 metres @ 2.17 g/t Au, 0.02% Cu from 524.0 metres including 11.5 metres @ 2.41 g/t Au, 0.02% Cu from 524.0 metres. |
The above mineralized intercepts were calculated using a cut-off grade of 0.1 g/t Au and a maximum internal dilution interval of 4 metres. Significant assay intervals reported represent apparent widths due to the undefined geometry of mineralization in this zone, relationship between fault blocks, and conceptual nature of the exploration target. Drill collar locations and associated graphics are available at the following link:
https://pr.globenewswire.com/FileDownloader/DownloadFile?source=ml&fileGuid=8e9ad544-6c3b-4ea5-b386- 8e57ddd0746d
Greenfield exploration (MAX project)
The 2020 greenfield Phase-1 drilling program was completed in the second quarter of 2020 at the Max project. The Max project consists of a block of 12 mineral claims (4,869 ha) under option from Jama Holdings Inc., 21 kilometres south of the Mount Milligan mine processing facilities and adjoins the Mount Milligan property on the south. The program was supported by helicopter in June 2020, completing seven drill holes (3,573 metres) from five pads in two target areas. The prospect has similar geology, structure, geophysical and geochemical signature as the Mount Milligan MBX deposit. Assay results are pending.
| A full listing of the drill results, | drill hole locations and plan map (including the azimuth, dip of drill holes, |
| and depth of the sample intervals) for the Mount Milligan Mine have been filed on the System for Electronic | |
| Document Analysis and Retrieval (“SEDAR”) at www.sedar.com and are available at the Company’s web | |
| site www.centerragold.com. |
Öksüt Mine
The 2020 planned drilling program at Öksüt includes 20,000 metres of diamond drilling, focused on near pit resource expansion and other oxide gold targets. The 2020 diamond drilling program has been designed to:
- expand the oxide gold resources around the known deposits at Keltepe and Güneytepe as well as at Keltepe North and Keltepe North-West,
- further test the oxide gold potential at Yelibelen, Büyüktepe, Boztepe and other targets,
- further delineate the supergene copper mineralization at depth, and test other deeper targets.
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Drilling, which commenced towards the end of the second quarter of 2020 with one exploration hole being completed for 246 metres at the periphery of Güneytepe, will continue into the third quarter of 2020.
The 2020 planned drilling program has not been impacted by the COVID-19 preventive measures at the Öksüt mine site.
Assay results have been received for the completed drill hole. The highlights are:
ODD0391 9.6 metres @ 0.29 g/t Au from 81.1 metres 115.8 metres @ 0.60 g/t Au from 95.8 metres including 18.6 metres @ 1.28 g/t Au from 129.4 metres and 6.7 metres @ 1.01 g/t Au from 169.6 metres
The above mineralized intercepts were calculated using a cut-off grade of 0.2 g/t Au and a maximum internal dilution interval of 5 metres. The true widths of the mineralized intervals reported represent approximately 60 to 90% of the stated downhole interval. Drill collar locations and associated graphics are available at the following link:
https://pr.globenewswire.com/FileDownloader/DownloadFile?source=ml&fileGuid=8e9ad544-6c3b-4ea5-b386- 8e57ddd0746d
A full listing of the drill results, drill hole locations and plan map (including the azimuth, dip of drill holes, and depth of the sample intervals) for the Öksüt Gold Mine have been filed on the System for Electronic Document Analysis and Retrieval (“SEDAR”) at www.sedar.com and are available at the Company’s web site www.centerragold.com.
Kemess Project
The 2020 Kemess brownfield drilling program is focused on the Kemess North Trend and comprises three drill holes (2,700 metres) at the Nugget historic resource to test for mineralization up-dip of the 2019 drilling and up to three drill holes (2,000 metres) at the Kemess East resource to test for an extension of known mineralization. Drilling at Kemess East will attempt to reuse and extend 2017 drill holes, or alternatively, a single drill hole (2,000 metres) may be drilled from surface. In late June, crews mobilized to site and began preparations, but no drill core was produced. The program is expected to run until late August.
Other Projects
During the second quarter of 2020, greenfield exploration programs targeting gold and copper were ongoing in Canada, Turkey, Mexico, USA and Finland.
Qualified Person & QA/QC – Exploration
Exploration information and related scientific and technical information in this document regarding the Kumtor Mine were prepared in accordance with the standards of National Instrument 43-101 (“NI 43-101”) and were prepared, reviewed, verified and compiled by Boris Kotlyar, a member with the American Institute of Professional Geologists (AIPG), Chief Geologist, Global Exploration with Centerra, who is the qualified person for the purpose of NI 43-101. Sample preparation, analytical techniques, laboratories used, and quality assurance-quality control protocols used during the exploration drilling programs are done as
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described in the Kumtor Technical Report dated December 31, 2014. The Kumtor deposit is described in the 2019 Annual Information Form and the Kumtor Technical Report, which are both filed on SEDAR at www.sedar.com.
Exploration information and related scientific and technical information in this document regarding the Mount Milligan Mine were prepared in accordance with the standards of NI 43-101 and were prepared, reviewed, verified and compiled by C. Paul Jago, Member of the Engineers and Geoscientists British Columbia, Exploration Manager at Centerra’s Mount Milligan Mine, who is the qualified person for the purpose of NI 43-101. Sample preparation, analytical techniques, laboratories used, and quality assurance quality control protocols used during the exploration drilling programs are done consistent with industry standards and independent certified assay labs are used. The Mount Milligan deposit is described in the 2019 Annual Information Form and a technical report dated March 26, 2020 (with an effective date of December 31, 2019) prepared in accordance with NI 43-101, both of which are available on SEDAR at www.sedar.com.
Exploration information and related scientific and technical information in this document regarding the Öksüt Gold Mine were prepared, reviewed, verified and compiled in accordance with NI 43-101 by Mustafa Cihan, Member of the Australian Institute of Geoscientists (AIG), Exploration Manager Turkey at Centerra’s Turkish subsidiary Centerra Madencilik A.Ş., who is the qualified person for the purpose of NI 43-101. Sample preparation, analytical techniques, laboratories used, and quality assurance-quality control protocols used during the exploration drilling programs are done consistent with industry standards and independent certified assay labs are used. The Öksüt deposit is described in Centerra’s most recently filed Annual Information Form and in a technical report dated September 3, 2015 (with an effective date of June 30, 2015) prepared in accordance with NI 43-101, both of which are available on SEDAR at www.sedar.com.
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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 one of the largest Western-based gold producers in Central Asia. Centerra operates two flagship assets, the Kumtor Mine in the Kyrgyz Republic, the Mount Milligan Mine in British Columbia, Canada and has a third operating gold mine, the 100%-owned Öksüt Mine in Turkey. 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 2020 second quarter conference call on Friday, July 31, 2020 at 9:00 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) 926-9871. International participants may access the call at +1 (212) 231-2911. Results summary slides are available on Centerra Gold’s website at www.centerragold.com. Alternatively, an audio feed webcast will be broadcast live by Intrado 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 August 7, 2020 by calling (416) 626-4100 or (800) 558-5253 and using passcode 21965212.
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 June 30, 2020
This Management Discussion and Analysis (“MD&A”) has been prepared as of July 30, 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 six months ended June 30, 2020 in comparison with the corresponding period ended June 30, 2019. This discussion should be read in conjunction with the Company’s unaudited condensed consolidated interim financial statements and the notes thereto for the three and six months ended June 30, 2020 prepared in accordance with International Financial Reporting Standards (“IFRS”). This MD&A should also be read in conjunction with the Company’s audited annual consolidated financial statements for the years ended December 31, 2019 and 2018, the related MD&A and the Annual Information Form for the year ended December 31, 2019 (the “2019 Annual Information Form”). The Company’s unaudited condensed consolidated interim financial statements and the notes thereto for the three and six months ended June 30, 2020, 2019 Annual Report and 2019 Annual Information Form are available at www.centerragold.com and on the System for Electronic Document Analysis and Retrieval (“SEDAR”) at www.sedar.com. In addition, this discussion contains forward looking information regarding Centerra’s business and operations. Such forward-looking statements involve risks, uncertainties and other factors that could cause actual results to differ materially from those expressed or implied by such forward looking statements. See “Caution Regarding Forward-Looking Information” in this discussion. 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: the Company’s expectations regarding timing for an updated Kumtor Technical Report and the potential for expanding the Kumtor life of mine; possible impacts to its operations relating to COVID-19; planned exploration activities for the remainder of 2020; the achievement of 2020 guidance and the Company’s expectations at each of our operating sites; the Company’s expectations regarding having sufficient liquidity for 2020; the Company’s expectations regarding accessing water at its Mount Milligan Mine for the remainder of 2020 and its plans for a longer- term solution; time frame for completing the Öksüt Mine construction; future payments by Kumtor Gold Company to the Kyrgyz Republic Regional Fund and expectations regarding outstanding investigations and litigation involving the Company including the HRS litigation impacting the Mount Milligan Mine, and the litigation involving the Greenstone Gold Property.
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
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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, including: political risks associated with the Company’s operations in the Kyrgyz Republic, Turkey and Canada; the failure of the Kyrgyz Republic Government to comply with its continuing obligations under the Strategic Agreement, including the requirement that it comply at all times with its obligations under the Kumtor Project Agreements, allow for the continued operation of the Kumtor Mine by KGC and KOC and not take any expropriation action against the Kumtor Mine; actions by the Kyrgyz Republic Government or any state agency or the General Prosecutor's Office that serve to restrict or otherwise interfere with the payment of funds by KGC and KOC to Centerra; resource nationalism including the management of external stakeholder expectations; the impact of changes in, or to the more aggressive enforcement of, laws, regulations and government practices, including unjustified civil or criminal action against the Company, its affiliates or its current or former employees; risks that community activism may result in increased contributory demands or business interruptions; the risks related to outstanding litigation affecting the Company; the impact of the delay by relevant government agencies to provide required approvals, expertises and permits; potential impact on the Kumtor Project of investigations by Kyrgyz Republic instrumentalities; the impact of constitutional changes in Turkey; the impact of any sanctions imposed by Canada, the United States or other jurisdictions against various Russian and Turkish individuals and entities; potential defects of title in the Company’s properties that are not known as of the date hereof; the inability of the Company and its subsidiaries to enforce their legal rights in certain circumstances; the presence of a significant shareholder that is a state- owned company of the Kyrgyz Republic; risks related to anti-corruption legislation; risks related to the concentration of assets in Central Asia; Centerra not being able to replace mineral reserves; Indigenous claims and consultative issues relating to the Company’s properties which are in proximity to Indigenous communities; and potential risks related to kidnapping or acts of terrorism; (B) risks relating to financial matters, including: sensitivity of the Company’s business to the volatility of gold, copper and other mineral prices, the use of provisionally-priced sales contracts for production at Mount Milligan, reliance on a few key customers for the gold-copper concentrate at Mount Milligan, use of commodity derivatives, the imprecision of the Company’s mineral reserves and resources estimates and the assumptions they rely on, the accuracy of the Company’s production and cost estimates, the impact of restrictive covenants in the Company’s credit facilities which may, among other things, restrict the Company from pursuing certain business activities or making distributions from its subsidiaries, the Company’s ability to obtain future financing, the impact of global financial conditions, the impact of currency fluctuations, the effect of market conditions on the Company’s short-term investments, the Company’s ability to make payments including any payments of principal and interest on the Company’s debt facilities depends on the cash flow of its subsidiaries; and (C) risks related to operational matters and geotechnical issues and the Company’s continued ability to successfully manage such matters, including the movement of the Davidov Glacier, waste and ice movement and continued performance of the buttress at the Kumtor Project; the occurrence of further ground movements at the Kumtor Project and mechanical availability; the risk of having sufficient water to continue operations at Mount Milligan and achieve expected mill throughput; the success of the Company’s future exploration and development activities, including the financial and political risks inherent in carrying out exploration activities; inherent risks associated with the use of sodium cyanide in the mining operations; the adequacy of the Company’s insurance to mitigate operational risks; mechanical breakdowns; the Company’s ability to replace its mineral reserves; the occurrence of any labour unrest or disturbance and the ability of the Company to successfully re-negotiate collective agreements when required; the risk that Centerra’s workforce and operations may be exposed to widespread epidemic including, but not limited to, the COVID-19 pandemic; seismic activity in the vicinity of the Company’s properties; long lead times required for equipment and supplies given the remote location of some of the Company’s operating properties; reliance on a limited number of suppliers for certain consumables,
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equipment and components; the Company’s ability to accurately predict decommissioning and reclamation costs; the Company’s ability to attract and retain qualified personnel; competition for mineral acquisition opportunities; risks associated with the conduct of joint ventures/partnerships; and the Company’s ability to manage its projects effectively and to mitigate the potential lack of availability of contractors, budget and timing overruns and project resources. For additional risk factors, please see section titled “Risks Factors” in the Company’s most recently filed Annual Information Form available on SEDAR at www.sedar.com.
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 July 30, 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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