Centerra Gold Reports Third Quarter Results, Net Earnings of $84 million or $0.35 per Share
NEWS RELEASE
Centerra Gold Reports Third Quarter Results, Net Earnings of $84 million or $0.35 per Share
This news release contains forward-looking information that is subject to the risk factors and assumptions set out on page 18 and in our Cautionary Note Regarding Forward-looking Information on page 26. The financial figures in this news release are presented under International Financial Reporting Standards (“IFRS”) see “Conversion to IFRS” on page 20. All figures are in United States dollars.
To view the Management’s Discussion and Analysis and the Financial Statements and Notes for the three and nine month periods ended September 30, 2011, please visit the following link:
http://media3.marketwire.com/docs/2011CG+MDA+FS.pdf
Toronto, Canada, November 3, 2011: Centerra Gold Inc. (TSX: CG) today reported 2011 third quarter net earnings of $83.8 million or $0.35 per common share, which includes a $10.0 million ($0.04 per share) contribution by Kumtor for the construction and repair of twenty seven schools throughout the Kyrgyz Republic and a $8.3 million ($0.04 per share) increase in the settlement regarding the Kyrgyz Social Fund. This compares to net earnings of $16.9 million or $0.07 per common share, which included a $34.9 million net gain on the sale of the Company’s REN project in the same quarter of 2010.
Revenue in the third quarter of 2011 increased to $278.4 million from $119.9 million in the same period last year reflecting higher realized gold prices and more ounces sold. Centerra realized an average gold price of $1,705 per ounce for the third quarter of 2011, an increase from the $1,237 per ounce realized in the same quarter of 2010.
Consolidated gold production for the third quarter of 2011 was in line with the Company’s guidance and totaled 154,936 ounces at a total cash cost of $556 per ounce produced compared to 96,308 ounces at a total cash cost of $798 per ounce produced in the corresponding quarter of 2010. (Total cash cost per ounce produced is a non-GAAP measure and is discussed under “Non-GAAP Measures” in this news release.) During the third quarter of 2011, cash provided by operations, net of working capital changes, was $106.1 million compared to cash used by operations of $19.2 million in the third quarter of 2010.
Third Quarter Highlights
- Consolidated gold production of 154,936 ounces
- Cash flow generated by operations $106 million or $0.45 per share
1 University Avenue, Suite 1500 Toronto, ON M5J 2P1 tel 416-204-1953 fax 416-204-1954 www.centerragold.com
- Kumtor has achieved a continuous mining rate of 500,000 tonnes per day as planned
- Gold production guidance increased at Kumtor to a range of 580,000 to 600,000 ounces from 550,000 to 600,000 ounces
- Consolidated gold production guidance increased to a range of 640,000 to 660,000 ounces from 600,000 to 650,000 ounces
- Centerra becomes a supporting company of the Extractive Industries Transparency Initiative (“EITI”)
- ATO project in Eastern Mongolia, additional 26 holes completed
- Strong cash balances and no debt while continuing to fund capital programs
Commentary
Steve Lang, President and CEO of Centerra stated, “After another solid quarter of operating performance at our mines, we are increasing our gold production guidance for 2011 to 640,000 to 660,000 ounces. At the Kumtor mine, we are increasing our gold production guidance to 580,000 to 600,000 ounces and at the Boroo mine, we are forecasting approximately 60,000 ounces of production for the year. As well, I am pleased to announce that Centerra’s first corporate responsibility report is now available. The report follows the Global Reporting Initiative’s guidelines for a Level “C” report and is available on our website.”
“As part of our evolving corporate responsibility efforts, Kumtor contributed $10 million during the quarter for the construction and repair of twenty-seven schools throughout the Kyrgyz Republic. In addition, we have reached a settlement with the Kyrgyz Social Fund to voluntarily pay $14.1 million covering the 2010 year and the first nine months of 2011. Going forward, Kumtor has agreed to make contributions to the Social Fund in respect of the high-altitude premium, a portion of which will be paid by the employer and a portion of which will be paid by the employees,” he concluded.
Financial and Operating Summary
| Three Months Ended Sept 30 | Nine Months Ended Sept 30 | |||||
|---|---|---|---|---|---|---|
| Financial and Operating Summary | 2011 | 2010 | % Change | 2011 | 2010 | % Change |
| Revenue - $ millions | 278.4 | 119.9 | 132% | 772.4 | 527.5 | 46% |
| Cost of sales - $ millions (1) | 110.5 | 94.4 | 17% | 278.2 | 252.6 | 10% |
| Net earnings - $ millions | 83.8 | 16.9 | 396% | 291.5 | 171.5 | 70% |
| Earnings per common share - $ basic and diluted | 0.35 | 0.07 | 400% | 1.23 | 0.73 | 68% |
| Cash provided by operations - $ millions | 106.1 | (19.2) | 653% | 367.2 | 139.6 | 163% |
| Capital expenditures - $ millions | 37.2 | 72.8 | (49%) | 158.0 | 156.6 | 1% |
| Weighted average common shares outstanding - basic (thousands) | 236,126 | 235,406 | 0% | 236,009 | 235,088 | 0% |
| Weighted average common shares outstanding - diluted (thousands) | 236,413 | 235,793 | 0% | 236,263 | 235,431 | 0% |
| Average gold spot price - $/oz | 1,702 | 1,227 | 39% | 1,535 | 1,178 | 30% |
| Average realized gold price - $/oz | 1,705 | 1,237 | 38% | 1,534 | 1,163 | 32% |
| Gold sold – ounces | 163,283 | 96,922 | 68% | 503,554 | 453,558 | 11% |
| Cost of sales - $/oz sold (1) | 677 | 974 | (31%) | 552 | 557 | (1%) |
| Gold produced – ounces | 154,936 | 96,308 | 61% | 490,818 | 429,075 | 14% |
| Total cash cost - $/oz produced(2) (3) | 556 | 798 | (30%) | 474 | 521 | (9%) |
| Total production cost - $/oz produced(2) (3) | 857 | 964 | (11%) | 649 | 648 | 0% |
(1) As a result of the IFRS conversion, cost of sales for 2011 and its comparative year now include depreciation, depletion and amortization related to operations.
(2) Total cash cost and total production cost are non-GAAP measures and are discussed under “Non-GAAP Measures”.
(3) As a result of Kumtor’s Restated Investment Agreement signed in 2009, total cash cost and total production cost per ounce measures for both years exclude production-based and revenue-based taxes.
Revenues for the third quarter of 2011 increased to $278.4 million compared to $119.9 million during the same period one year ago. Third quarter 2011 revenue reflects a 68% increase in ounces sold (163,283 ounces versus 96,922 ounces) and a 38% increase in realized gold price ($1,705 per ounce in the third quarter of 2011 versus $1,234 per ounce in the third quarter of 2010) in the period.
Gold production for the third quarter of 2011 was 154,936 ounces compared to 96,308 ounces in the third quarter of 2010. The increase in gold production reflects 105% higher gold production at the Kumtor mine. At Kumtor, the increase in production was the result of higher throughput, lower waste movement and the processing of higher grade material with the associated higher recoveries. Gold production at Boroo was lower in the third quarter 2011 due to processing low-grade stockpiled ore with lower recoveries as mining operations ceased at the end of November 2010. The heap leach operation at Boroo remained idle during the quarter.
Centerra’s total cash cost per ounce of gold produced was $556 in the third quarter of 2011 compared to $798 in the third quarter of 2010. The year-over-year decrease in unit cash costs was primarily due to 105% higher gold production at Kumtor, partially offset by higher operating costs at Kumtor and reduced operating levels at Boroo (see “Operations Update”). The settlement with the Kyrgyz Social Fund is not included in the cash cost per ounce calculation for the current quarter of 2011, however the revised basis for the social fund calculation will increase the regular payments going forward which are part of operating costs and the cash cost per ounce calculation. Total cash cost is a non-GAAP measure and is discussed under “Non-GAAP Measures” in this news release.
Cash provided by operations was $106.1 million or $0.45 per share for the third quarter of 2011 compared to a use of cash from operations of $19.2 million for the prior year third quarter. The increase reflects increased earnings as a result of higher gold sales volumes and higher average realized gold prices.
Capital expenditures spent and accrued of $37.2 million in the third quarter of 2011 included $9.9 million of sustaining capital and $27.3 million invested in growth capital. Growth capital at Kumtor totaled $25.1 million including spending on the SB Zone underground development ($11.4 million), the capitalization of pre-stripping activities ($9.0 million), the commissioning of haul trucks ($1.5 million) and the purchase of drilling equipment and light vehicles ($1.3 million), while at Boroo $2.1 million was spent on raising the tailings dam. Capital expenditures in the comparative quarter of 2010 totaled $34.3 million, consisting of $9.3 million of sustaining capital and $25.0 million of growth capital.
Exploration costs in the third quarter of 2011 increased to $9.1 million from $8.0 million in the same quarter of 2010 mainly reflecting increased drilling activity in Mongolia at the Altan Tsagaan Ovoo (ATO) property and at the Company’s other advanced projects. Refer to the Company’s July 11, 2011 and July 28, 2011 news releases for further details on the Company’s drilling activity and results at the ATO property.
Net earnings for the third quarter of 2011 was $83.8 million, or $0.35 per share, reflects higher realized gold prices and higher ounces sold and produced at Kumtor, partially offset by lower volumes at Boroo. The 2011 third quarter results includes a $10.0 million contribution by Kumtor for the construction and repair of twenty seven schools throughout the Kyrgyz Republic and a $8.3 million increase in the settlement between Kumtor and the Kyrgyz Social Fund, as well as the impact of currency movements in the quarter (expense of $2.4 million in the third quarter of 2011 compared to income of $1.7 million in the same quarter of 2010). This compares to $16.9 million or $0.07 per share for the same period in 2010, which includes a net gain of $34.9 million recorded in the third quarter of 2010 as a result of the Company completing the sale of the REN project.
Centerra’s cash and cash equivalents and short-term investments were $537.4 million at September 30, 2011, compared to cash and cash equivalents and short-term investments of $413.0 million at December 31, 2010. As at September 30, 2011, the Company had an undrawn revolving credit facility of $150.0 million.
Operations Update
| Three Months Ended Sept 30 | Nine Months Ended Sept 30 | |||||
|---|---|---|---|---|---|---|
| Kumtor Operating Results | 2011 | 2010 | % Change | 2011 | 2010 | % Change |
| Gold sold – ounces | 146,765 | 66,490 | 121% | 457,597 | 358,461 | 28% |
| Revenue - $ millions | 250.3 | 82.2 | 205% | 701.4 | 415.3 | 69% |
| Average realized gold price – $/oz | 1,705 | 1,237 | 38% | 1,533 | 1,159 | 32% |
| Cost of sales - $ millions (1) | 94.6 | 76.5 | 24% | 235.8 | 200.3 | 18% |
| Cost of sales - $/oz sold (1) | 645 | 1,151 | (44%) | 515 | 559 | (8%) |
| Tonnes mined - 000s | 38,702 | 30,714 | 26% | 113,480 | 86,905 | 31% |
| Tonnes ore mined – 000s | 2,889 | 774 | 273% | 4,925 | 2,953 | 67% |
| Average mining grade - g/t (2) | 3.05 | 1.89 | 61% | 3.43 | 3.51 | (2%) |
| Tonnes milled - 000s | 1,429 | 1,390 | 3% | 4,365 | 4,290 | 2% |
| Average mill head grade - g/t (2) | 4.01 | 1.57 | 155% | 3.79 | 3.10 | 22% |
| Recovery - % | 80.2 | 73.4 | 9% | 81.8 | 76.4 | 7% |
| Gold produced – ounces | 141,217 | 68,757 | 105% | 444,460 | 339,369 | 31% |
| Total cash cost - $/oz produced (3) (4) | 533 | 887 | (40%) | 454 | 512 | (11%) |
| Total production cost - $/oz produced (3) (4) | 850 | 1,065 | (20%) | 632 | 626 | 1% |
| Capital expenditures - $ millions | 34.4 | 70.3 | (51%) | 152.3 | 133.2 | 14% |
| Boroo Operating Results | ||||||
| Gold sold – ounces | 16,518 | 30,432 | (46%) | 45,957 | 95,097 | (52%) |
| Revenue - $ millions | 28.1 | 37.7 | (25%) | 71.0 | 112.2 | (37%) |
| Average realized gold price - $/oz | 1,702 | 1,237 | 38% | 1,545 | 1,180 | 31% |
| Cost of sales - $ millions (1) | 15.9 | 17.9 | (11%) | 42.5 | 52.2 | (19%) |
| Cost of sales - $/oz sold (1) | 963 | 588 | 64% | 925 | 549 | 68% |
| Total Tonnes mined - 000s | - | 2,578 | (100%) | - | 9,641 | (100%) |
| Average mining grade (non heap leach material) g/t (2) | - - | 1.47 | (100%) | - | 1.32 | (100%) |
| Tonnes mined heap leach – 000s | - | 143 | (100%) | - | 1,498 | (100%) |
| Tonnes ore mined direct mill feed -000’s | - | 201 | (100%) | - | 2,074 | (100%) |
| Tonnes ore milled - 000s | 605 | 594 | 2% | 1,711 | 1,832 | (7%) |
| Average mill head grade - g/t (2) | 0.95 | 1.97 | (52%) | 1.20 | 1.98 | (39%) |
| Recovery - % | 72.8 | 69.8 | 4% | 67.9 | 72.6 | (6%) |
| Gold produced – ounces | 13,719 | 27,551 | (50%) | 46,358 | 89,706 | (48%) |
| Total cash cost - $/oz produced (3) | 798 | 575 | 39% | 664 | 558 | 19% |
| Total production cost - $/oz produced (3) | 927 | 715 | 30% | 807 | 732 | 10% |
| Capital expenditures - $ millions (Boroo) | 2.7 | 3.5 | (23%) | 5.2 | 6.9 | (25%) |
| Capital expenditures - $ millions (Gatsuurt) | 0.1 | 1.3 | (92%) | 0.3 | 16.3 | (98%) |
(1) As a result of the IFRS conversion, cost of sales for 2011 and its comparative year now include depreciation, depletion and amortization related to operations.
(2) g/t means grams of gold per tonne.
(3) Total cash cost and total production cost are non-GAAP Measures and are discussed under “Non-GAAP Measures”.
(4) As a result of Kumtor’s Restated Investment Agreement signed in 2009, total cash cost and total production cost per ounce measures for both years are shown excluding operating and revenue-based taxes.
Kumtor
At the Kumtor mine in the Kyrgyz Republic, gold production was 141,217 ounces in the third quarter of 2011 representing a 105% increase from the same quarter in 2010. The increase in gold production was the result of higher grades (3.05 g/t versus 1.89 g/t) and higher recoveries (80.2% versus 73.4%) in the third quarter of 2011. During the quarter, the majority of the mill feed processed was ore sourced from cut-back 12B which resulted in the higher head grade and recovery for the quarter. As a result of the larger mining fleet (36 new CAT 789 trucks as of the end of September, seven acquired this year plus four Liebherr shovels), total tonnes mined increased in the third quarter of 2011 to 38.7 million tonnes compared to 30.7 million tonnes in the comparative quarter of 2010. The amount of waste material moved increased by 5.9 million tonnes (20%), while ore mined increased by 2.1 million tonnes (273%). This represents an additional 8.0 million tonnes (26%) of ore and waste moved compared to the same quarter in 2010. Ore tonnage processed increased 2.8% to 1.4 million tonnes in the quarter compared to the same period in 2010.
Total cash cost per ounce, a non-GAAP measure of production efficiency, was $533 in the third quarter of 2011 down from $887 in the third quarter of 2010. The quarter-over-quarter decrease in unit cash costs reflects 105% higher gold production, which decreased cash costs by $562 per ounce, partially offset by the higher operating costs reflecting rising cost pressure for fuel and labour, which increased cash costs by $208 per ounce. The Company’s production in the comparative period of 2010 was significantly lower due to processing low-grade stockpiles as mining focused on concluding the waste stripping and exposing the ore in cutback 12A. The settlement with the Kyrgyz Social Fund is not included in the cash cost per ounce calculation for the current quarter of 2011, however the revised basis for the social fund calculation will increase the regular payments going forward which are part of operating costs and the cash cost per ounce calculation.
The total cash costs were $75.2 million in the third quarter of 2011 compared to $61.0 million in the same period of 2010. The cost increase reflects the higher mining rate achieved during the third quarter of 2011 where 26% more tonnes of waste and ore were moved with Kumtor’s expanded mining fleet. This also reflects higher operating costs due to an increase of $6.7 million in labour costs as a result of the new collective agreement with the unionized workforce signed in October 2010, an increase of $2.7 million in maintenance labour costs and higher consumable costs, in particular, a $4.6 million increase in diesel costs and a $2.3 million increase in reagent costs, partially offset by higher by-product revenue from silver sales of $1.5 million. (Total cash cost per ounce produced is a non-GAAP measure and is discussed under “Non-GAAP Measures”.)
Exploration expenditures totaled $3.1 million for the third quarter of 2011, comparable to the same quarter in 2010. Exploration activity in the quarter focused on regional surface work and drilling within the Central Pit, Northeast, Sarytor, Southwest and Akbel areas and regional exploration.
Capital expenditures spent and accrued in the third quarter of 2011 were $34.3 million compared to $70.3 million in the same quarter of 2010. The current quarter 2011 expenditure consisted of $9.3 million of sustaining capital, predominantly spent for the major overhaul program for heavy duty equipment ($4.7 million), the tailings dam lift ($2.7 million) and numerous other projects ($1.9 million). Growth capital investment totaled $25.0 million which was mainly spent on underground development ($11.4 million), pre-stripping capitalization ($9.0 million), commissioning of new CAT 789 haul trucks ($1.5 million), purchase of drilling equipment ($0.7 million), purchase of light vehicles ($0.6 million), dewatering pumps for the underground ($0.6 million), Stockwork delineation drilling ($0.4 million) and numerous other projects ($0.8 million).
The underground development at Kumtor continued in the third quarter of 2011 with a total advance of 503 metres. Year-to-date total development advance is 1,394 metres. Decline #1 (SB Zone decline) advanced 260 metres in the third quarter and is now approximately 1.7 kilometres in length out of a total planned development of 2.6 kilometres. Decline #2 advanced 157 metres in the third quarter towards the SB Zone and totals 964 metres in length out of a total planned development of 1.8 kilometres. The Stockwork Drive advanced 86 metres in the third quarter to a total length of 515 metres enabling further delineation drilling.
Boroo/Gatsuurt
At the Boroo mine in Mongolia, gold production was 13,719 ounces in the third quarter of 2011 compared to 27,551 ounces in the third quarter of 2010. The lower gold production is the result of processing low-grade and low-recovery stockpiled ore as mining operations ceased at the end of November 2010. The heap leach operation remained idle during the third quarter 2011 awaiting issuance of the final operating permit from the Mongolian Government. The milling ore grade averaged 0.95 g/t with a recovery of 72.8% in the third quarter of 2011, compared to 1.97 g/t with a recovery of 69.8% in the same quarter of 2010.
Total cash cost per ounce produced, a non-GAAP measure of production efficiency, was $798 in the third quarter of 2011 compared to $575 in the third quarter of 2010 due to the lower gold production which was partially offset by lower operating costs. Operating costs decreased in the quarter by $4.5 million primarily due to a $3.4 million reduction in mining costs as mining operations ceased at the end of November 2010.
During the third quarter of 2011, exploration expenditures in Mongolia increased to $2.3 million from $2.2 million in the same period of 2010, reflecting additional drilling on the ATO property in northeast Mongolia. Capital expenditures spent and accrued at Boroo in the third quarter of 2011 were $2.7 million compared to $3.5 million the same quarter of 2010. This consisted of $0.2 million of sustaining capital and $2.1 million of growth capital investment spent on raising the tailings dam.
Exploration Update
To view the graphics, maps/drill sections and complete drill results discussed in this news release, please visit the following link:
http://file.marketwire.com/release/CGQ3-2011Exploration1103.pdf or visit the Company’s web site at: www.centerragold.com.
KYRGYZ REPUBLIC
During the third quarter of 2011, exploration drilling programs continued in the Kumtor Central Pit and on the Kumtor concession at the Northeast, Southwest, Sarytor, Bordoo and Akbel areas. Surface exploration and road building continued on the Karasay and Koendy projects.
Kumtor Pit
In the third quarter of 2011, twelve drill holes were completed and a further three holes are in progress at the end of the quarter to test the extent and grade of mineralization within and below the KS11 open pit design and also at deeper elevations in the Saddle and SB Zones.
Two holes were drilled to test the SW Extension of the SB Zone below the KS 11 pit. Holes D1560A and D1568 were drilled on Section (-38) and both intersected significant mineralization immediately below the KS 11 pit design. Hole D1560A intersected 5.6 g/t Au over 29.8 metres (including 11.7 g/t Au over 9.0 metres) and 1.5 g/t Au over 6.8 metres. Hole D1568 hole intersected 8.2 g/t Au over 20.9 metres (including 31.0 g/t Au over 3.7 metres) and 2.8 g/t Au over 11.4 metres. Additional drilling to test the SW Extension of the SB Zone will be carried out in the fourth quarter when access becomes available in this active mining area.
A deep hole D1411E hole was drilled on Section (-2) to test the down dip extension of the SB Zone at the 3,000 metre elevation. The hole intersected the Kumtor structure 500 metres down dip from the closest drill hole and returned encouraging results with intercepts of 4.2 g/t Au over 2.1 metres and 4.1 g/t Au over 24.0 metres (including 12.9 g/t Au over 3.0 metres). This is one of two deep holes that have tested the down dip extension of the SB Zone at the 3,000 metre elevation.
Hole D1567B hole was drilled on Section 102 to test the down dip extension of the Saddle Zone at the 3,300 metre elevation. The hole intersected significant mineralization with intercepts of 5.8 g/t Au over 22.8 metres (including 11.9 g/t Au over 5.7 metres), 4.2 g/t Au over 5.9 metres and 1.9 g/t over 8.5 metres.
Drilling of the deeper down dip extensions of the Saddle and SB Zones will continue in the fourth quarter of 2011.
Decline Exploration
In the third quarter of 2011 two exploration drill holes were completed from Decline 1 to test the Kumtor structure below Davidov glacier. One hole intersected the Kumtor structure with no significant assays and the second hole was abandoned before reaching the target.
Exploration drilling from Decline 1 to test below the Davidov glacier will continue in the fourth quarter of 2011 whenever drill access becomes available.
Resource Delineation Drilling
Two holes were completed as part of the Stockwork Zone resource delineation program that commenced in the second quarter of 2011. Three holes were stopped before reaching the target due to technical difficulties and one drill hole is currently in progress. Hole UD1556A intersected the Stockwork mineralization returning grades of 3.3 g/t Au over 17.8 metres and hole UD1571 intersected 1.7 g/t Au over 5.0 metres and 3.7 g/t Au over 9.1 metres. Drilling in the Stockwork Zone will continue in the fourth quarter with the addition of a second drill.
Regional Exploration
Regional exploration drilling continued in the third quarter of 2011 with up to four drills rigs active testing targets in the Northeast, Sarytor, Southwest, Bordoo and Akbel areas.
Northeast Area
Five holes were completed in the third quarter and one drill hole is currently in progress on the northeast end of the Northeast prospect. All drill holes were designed to test for the extension of the high grade mineralization identified 150-200 metres below surface on the northeast end of the structure in this area.
Hole D1562 intersected 3.6 g/t Au over 18.8 metres and 8.1 g/t Au over 2.8 metres, hole D1566 returned the grades of 1.8 g/t Au over 10.2 metres and 23.4 g/t Au over 9.0 metres. The results indicate the potential for high-grade mineralization to the northeast of the known mineralization. Further drilling is planned in the fourth quarter of 2011.
Sarytor Area
Two holes were completed during the third quarter and two holes are in progress. The drill holes were designed to test for down dip extensions of the Sarytor mineralization. Hole SR-11-197 intersected a wide zone of weak mineralization associated with assays of 1.0 g/t over 5.9 metres and 2.3 g/t over 26.6 metres. Hole SR-11-198 intersected a thick zone of alteration which returned assays of 2.6 g/t Au over 2.0 metres and 1.0 g/t Au over 9.9 metres.
Southwest Area
Four drill holes were completed in the third quarter and one is in progress. The holes were designed to follow up on encouraging sample results from trenching. Three drill holes intersected oxidised mineralisation in a mélange zone and returned intercepts of: 3.5 g/t Au over 2.4 metres in hole SW- 11-244, 4.7 g/t Au over 10.2 metres and 10.3 g/t Au over 3.4 metres in hole SW-11-244A and 8.5 g/t Au over 11.0 metres and 20.8 g/t Au over 4.0 metres in hole SW-11-246. Further drilling is planned in the fourth quarter of 2011.
Bordoo Area
Two drill holes were completed during the third quarter to test geophysical targets and no significant alteration or mineralization was intersected.
Akbel Area
Three holes were drilled in the third quarter to test geophysical targets and no significant alteration or mineralization was intersected.
Karasay and Koendy Projects
During the third quarter of 2011 exploration continued with trenching, prospecting, geological mapping and the collection of geochemical, grab, chip and channel samples. Drill targets have been identified on both licences and road construction is in progress.
A complete listing of the drill results and supporting maps for the Kumtor pit and Northeast area 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 at: www.centerragold.com.
MONGOLIA
Field activities in Mongolia in the third quarter were focused on the ATO prospect and in the district and included resource delineation drilling as well as trenching, mapping, geochemical and geophysical surveys.
At the ATO prospect an additional 26 holes were completed in the third quarter and the initial delineation drilling has now been completed on the three mineralized pipes that have been identified. Some of the better intercepts from the drilling completed in the third quarter of 2011 are:
Centerra Gold Inc. - ATO 2011 Drilling Results Results from July 1st, 2011 to September 30th, 2011
| Section | Location | Drill Hole | From (m) | To (m) | Core Length (m) | Au (g/t) | Ag (g/t) | Pb % | Zn % |
|---|---|---|---|---|---|---|---|---|---|
| 11 SE | PIPE 1 | ATO-179 | 0.00 | 68.45 | 68.45 | 0.33 | 3.75 | 0.33 | 0.64 |
| 182.10 | 199.95 | 17.85 | 0.34 | 3.25 | 0.69 | 1.68 | |||
| 205.75 | 265.05 | 59.30 | 1.80 | 8.13 | 1.97 | 2.81 | |||
| includes 207.75 | 239.75 | 32.00 | 2.87 | 10.73 | 2.53 | 3.26 | |||
| PIPE 4 | ATO-170 | 6.00 | 29.10 | 23.10 | 3.88 | 79.18 | 0.18 | 0.19 | |
| includes 7.40 | 28.00 | 20.60 | 4.27 | 85.06 | 0.18 | 0.17 | |||
| 35.15 | 75.60 | 40.45 | 1.11 | 65.68 | 0.04 | 0.09 | |||
| 13 SE | PIPE 4 | ATO-171 | 7.20 | 120.85 | 113.65 | 1.08 | 30.19 | 0.06 | 0.07 |
| 15 SE | PIPE 4 | ATO-167 | 57.20 | 81.20 | 24.00 | 0.46 | 85.26 | 0.01 | 0.03 |
| 73.10 | 123.00 | 49.90 | 0.57 | 7.05 | 0.08 | 0.15 | |||
| 17 SE | PIPE 4 | ATO-169 | 98.10 | 113.70 | 15.60 | 0.86 | 17.16 | 0.01 | 0.03 |
| 118.85 | 124.80 | 5.95 | 0.54 | 44.31 | 0.05 | 0.11 | |||
| ATO-174 | 97.00 | 144.15 | 47.15 | 1.69 | 4.64 | 1.13 | 1.56 | ||
| 153.85 | 226.50 | 72.65 | 1.31 | 6.29 | 1.06 | 1.96 |
Notes: Mineralized intervals are greater than 0.10 g/t Au.
Higher grade sub-intervals are greater than 1.00 g/t Au.
Individual assays are top cut to 30 g/t Au prior to composite calculation.
True widths for mineralized zones are about 20% to 50% of stated down hole interval.
This information should be read together with our news release of November 3rd, 2011.
Ian Atkinson, a Certified Professional Geologist, is Centerra’s qualified person for the purpose of National Instrument 43-101.
Tables are current to September 30th, 2011.
Drilling on Pipe #1 has been completed on a 30 by 30 metre grid with a total of 97 drill holes totalling 17,060 metres. Pipe #1 has an oval shape surface projection of approximately 200 by 300 metres oriented NE - SW. It has been drilled to a depth of 200-250 metres below surface (elevation 850 metres) where the pipe has a similar length and slightly less width. Vertically Pipe #1 has slightly asymmetric mushroom shape, where the upper branch extends SE. Pipe #1 has primarily Pb mineralization in the upper portion and Pb+Zn mineralization at depth. The gold distribution is consistent from surface down to the 850 metre elevation.
Drilling has been completed at Pipe #2 on a 30 by 60 metre grid with a total of 36 holes totalling 5,928 metres of drilling. Pipe #2 is also ovoid in shape but is smaller than Pipe #1 and is approximately 120 by 270 metres on surface. It is also oriented NE - SW and somewhat narrower at depth with base metal mineralization forming a high grade +5% zone at depth.
Drilling in the third quarter of 2011 on Pipe #4 has extended the pipe a further 180 metres to the northeast. Pipe #4 has been drilled on a 30 by 60 metre grid with a total of 47 holes and 8,091 metres of drilling completed to the end of the third quarter. Pipe #4 has similar geometry of 150 to 300 metres on surface oriented NE – SW and it narrows at depth.
Significant trenching, mapping, sampling, geochemical and geophysical surveys were carried on targets being developed on the large ATO land package. Drilling to test the targets being identified will start in the fourth quarter of 2011.
The most encouraging results to date are from trenches completed in the Apricot prospect, an emerging target located approximately 2.5 kilometres to the SSW of the ATO deposit. The Apricot prospect is comprised of andesite and mainly rhyolite porphyry and underlined by volcanoclastic material. These rocks are cut by narrow quartz – sulphide veinlets from few cm to 1.5 metres and veinlets zones roughly oriented W-E and dipping steeply N. These zones commonly have Au; base metals are up to 1%, As up to 1,000 ppm and Sb – up to 100 ppm. The Apricot narrow veining could represent distal Au-Ag-Sb-As veins outside of the ATO pipes.
The compilation of data for the Mongolian Reserve and Resource Report (RRR) has been initiated. Completion and submission of the combined RRR to the Mongolian Mineral Authorities is targeted for the end of 2011.
RUSSIA
Kara Beldyr JV
Drilling continued in the third quarter of 2011 with holes completed on the Gord, Ezen and Camp Zones.
Gord Zone
Drilling was carried out on a 25 by 50 metre grid in the centre of the Gord Zone to fulfill Russian Mineral Authorities Reserve and Resource report requirements. Six holes were drilled to a depth of ~120 metres, for a total of 769 metres. Drill holes intersected quartz – sericite alteration at the expected depth. Assay results are pending.
Ezen Zone
Third quarter drilling targeted previously identified mineralization at the Ezen prospect, where five holes were completed. Following are some of the better intersections from the Ezen Zone drilling:
- KB-084 - 15.5 g/t Au over 2.1 metres, including 25.5 g/t Au over 1.1 metres
- 5.3 g/t Au over 10.7 metres, including 21.2 g/t Au over 2.3 metres
- 1.8 g/t Au over 10.2 metres
- 1.6 g/t Au over 5.0metres
- KB-085 - 7.7 g/t Au over 2.1 metres
- KB-088 - 2.3 g/t Au over 4.0 metres
- 9.6 g/t Au over 5.8 metres including 50.3 g/t Au over 1 .0 metres
Drilling at the Ezen prospect will continue in the fourth quarter of 2011.
Camp Zone
Fifteen holes were completed to follow up on mineralization first identified in drilling completed in 2010.
The drilling to date has returned results similar to the 2010 drilling and assay results with high Au grades (up to 100 – 200 g/t Au) over narrow intervals (1-2 metres). The main fault zone was traced and intersected in all fences. The alteration zones vary from 2 to 18 metres and are quartz – sericite
- carbonate-pyrite assemblages – typical of the Kara Beldyr prospect. Visible gold was recorded in
50% holes on more than one horizon.
Following are some of the better intercepts from the Camp Zone:
- KB-090 - 157.4 g/t Au over 2.1 metre including 299.9 g/t Au over 1.1 metres
- 15.9 g/t Au over 10.7 metres including 36.0 g/t Au over 1.4metres
- 31.5 g/t Au over 2.0 metres
- KB-091 - 4.4 g/t Au over 17.7 metres
- 8.9 g/t Au over 3.0 metres
- 23.7 g/t Au over 0.9 metres
- 5.4 g/t Au over 2.0 metres
- 1.7 g/t Au over 11.7 metres
- 8.9 g/t Au over 3.0 metres
- KB-092 - 3.3 g/t Au over 9.5 metres
The Camp Zone is open in both directions to the NE and SW; where there are Au anomalies in both soil and grab samples. Additional drilling is planned to test the potential extensions of the zone.
Dvoinoy JV
A joint venture agreement was signed with Evraz Investments and Sakhtakhan at the end of the second quarter of 2011 covering the Dvoinoy project located in the Amur region of eastern Russia. Exploration was started in the third quarter with reconnaissance mapping, soil sampling and prospecting and ground magnetic and D-D IP surveys. Most assay results are pending.
The objectives of this initial exploration program are to refine the drill targets for the initial round of drilling in the fourth quarter of 2011 and also to evaluate entire license area (~100 sq. km) for its potential to host nested porphyries.
To view the graphics, maps/drill sections and complete drill results discussed in this news release, please visit the following link:
http://file.marketwire.com/release/CGQ3-2011Exploration1103.pdf or visit the Company’s web site at: www.centerragold.com.
Other Corporate Developments
The following is a summary of current matters affecting the Company and its subsidiaries in the Kyrgyz Republic, Mongolia and Canada. Except for the Kyrgyz Republic Social Fund matter (as discussed below), no significant changes have occurred on these matters since the Company’s most recent interim disclosure documents published on July 28, 2011.