Centerra Gold Records Net Earnings of $33.4 Million or $0.11 Per Common Share (basic) on Revenues of $340.5 Million Generating Cash from Operations of $91.0 Million
NEWS RELEASE
Centerra Gold Records Net Earnings of $33.4 Million or $0.11 Per Common Share (basic) on Revenues of $340.5 Million Generating Cash from Operations of $91.0 Million
All figures are in United States dollars and all production figures are on a 100% basis, unless otherwise stated. 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.
Toronto, Canada, July 30, 2019: Centerra Gold Inc. (“Centerra”) (TSX: CG) today reported second quarter 2019 net earnings and adjusted earningsNG of $33.4 million ($0.11 per common share (basic)), compared to net earnings of $43.5 million ($0.15 per common share (basic)) and adjusted earningsNG of $1.0 million (nil per common share (basic)) in the same period of 2018, after adjusting for gains recognized on the sale the Company’s Mongolian operations and sale of a royalty portfolio in 2018. The Company generated cash from operations of $91.0 million and $30.7 million of free cash flowNG compared to cash from operations of $68.1 million and free cash flowNG of $(4.7) million in the second quarter of 2018.
2019 Second Quarter Highlights
- The Company reported net earnings of $33.4 million or $0.11 per common share (basic).
- Cash generated from operations was $91.0 million. Second quarter 2019 cash from operation included $92.7 million from Kumtor and $24.2 million from Mount Milligan, offset by costs incurred by the Molybdenum business and corporate costs.
- The Company produced 199,578 ounces of gold in the period, which includes 151,065 ounces at Kumtor and 48,513 ounces at Mount Milligan. Mount Milligan also produced 20.4 million pounds of copper.
- Mount Milligan, mill throughput averaged 53,500 tonnes per calendar day.
- Centerra has tightened the range and modestly increased Kumtor’s annual gold guidance to 550,000 – 575,000 ounces resulting in a revision to our 2019 consolidated gold production guidance to 705,000 – 750,000 ounces.
- The company’s full year gold and copper production guidance for Mount Milligan remains unchanged.
- Mount Milligan’s water capture from the 2019 spring melt runoff was less than anticipated, creating a risk to the level of production in early 2020 until the spring melt occurs, similar to 2019. The Company continues to explore for additional groundwater sources and to work towards a long-term water solution.
- Consolidated cost of sales increased in the second quarter of 2019 to $238.5 million.
- Consolidated all-in sustaining costs per ounce soldNG for the second quarter 2019 were $716, including $562 at Kumtor and $938 at Mount Milligan.
- Favourably revised 2019 consolidated all-in sustaining costs per ounce soldNG guidance to $713 - $743 and lowered Kumtor’s all-in sustaining costs per ounce soldNG guidance to $635 - $685 Mount Milligan’s all-in sustaining costs per ounce soldNG for 2019 remains unchanged.
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- Capitalized waste stripping guidance has been increased by $32 million as we mine the initial waste material on cut-back 20 at Kumtor. The change in mine plan, to defer mining of cut-back 19 East, where we were reaching ore, followed the identification of ground instability in the first quarter of 2019. No significant ground movement was identified in the second quarter 2019; we continue to study potential mitigation measures and the long-term impact on our mine plan and reserves of the deferral.
- Construction at the Öksüt Project in Turkey is now 64% complete and remains on schedule with first gold pour expected in January of 2020. The total construction cost is expected to be $20 million under budget.
- The revolving corporate credit facility was repaid in full during the quarter.
- Cash and cash equivalents available at June 30, 2019 were $140.0 million.
Subsequent to June 30, 2019, we agreed with the Government of the Kyrgyz Republic to extend the • long-stop date in connection with the Strategic Agreement to August 10, 2019.
Commentary
Scott Perry, President and Chief Executive Officer of Centerra stated, “We are very pleased to report that our contract workforce at the Kumtor Mine achieved a significant safety milestone during the quarter in attaining one year of lost time incident-free operations. This milestone demonstrates our workforce’s commitment to Centerra’s Work Safe – Home Safe program and our drive to zero harm within the workplace.”
“The operations produced a total of 199,578 ounces of gold and 20.4 million pounds of copper in the quarter. Kumtor had another strong quarter producing 151,065 ounces of gold which was attributable to milling higher grades and achieving higher recoveries as compared to the comparative period. The northwest pit wall where instability was noted in the first quarter has stabilized and no significant ground movement was identified in the second quarter 2019.”
“Mount Milligan achieved production of 48,513 ounces of gold and 20.4 million pounds of copper during the quarter, as the mill returned to targeted full capacity (55,000 tonnes per day) in early May due to increased water availability from the spring melt, even though we experienced a less robust spring melt than anticipated. We continue to explore for additional groundwater sources as we work towards a longterm water solution. During the quarter, mill throughput averaged 53,500 tonnes per calendar day.”
“Company-wide our all-in sustaining costs (before taxes)NG were $716 per ounce sold for the quarter reflecting Kumtor achieving all-in sustaining costs (before taxes)NG of $562 per ounce.”
“With our second quarter earnings release today, the Company tightened the range and modestly increased its gold production guidance for Kumtor for the year to 550,000 – 575,000 ounces and Company-wide gold production to 705,000 to 750,000 ounces from 535,000-565,000 ounces and 690,000-740,000 ounces, respectively. We have also favourably lowered our expected all-in sustaining costs on a by-product basis (before taxes)NG at Kumtor to $635 to $685 per ounce sold, which reduces the Company’s consolidated allin sustaining costs on a by-product basis (before taxes)NG to $713 to $743 per ounce sold. Mount Milligan’s production and cost guidance for 2019 remains unchanged.”
“Construction activity continued at the Öksüt Project in Turkey and the project is now 64% complete. The project remains on schedule with first gold pour now expected in January of 2020 and is projected to be $20 million under budget, including a $10 million reduction in contingencies.”
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“Financially, the business delivered $91 million of cash from operations in the quarter. Kumtor and Mount Milligan generated $106 million and $11 million respectively, before working capital changesNG. During the second quarter, Kumtor generated $65 million of free cash flowNG and Mount Milligan generated $18 million of free cash flowNG which enabled the Company to repay in full the corporate credit facility reducing its debt in the quarter by $70 million and ending the quarter with cash and cash equivalents of $140 million (excluding restricted cash).”
Exploration Update
Exploration activities in the second quarter of 2019 included drilling, surface sampling, geological mapping and geophysical surveying at the Company’s various projects targeting gold and copper mineralization in Turkey, Canada, Mexico, Sweden, Finland and Burkina Faso. Exploration expenditures totaled $6.3 million in the second quarter of 2019 compared to $4.8 million in the same quarter of 2018. The Company’s 2019 exploration program is primarily focused on brownfield exploration at Kumtor, Mount Milligan, Öksüt and Kemess.
Kyrgyz Republic Kumtor Mine
At Kumtor, planned exploration work is aimed at defining additional resources on the flanks of the Central Pit focusing on the Hockey Stick Zone and the SB Zone deep extension to add to the open pit mine life. Exploration drilling is also focused on testing zones of gold mineralization near the surface for additional open pit resources in the corridor between the Central and Southwest pits and on the flanks of the Northeast target area. During the second quarter of 2019, 67 diamond drill holes for 16,223 metres were completed, including 1,866 metres of infill drilling in the SB Zone (drilled below the current ultimate open pit).
Central Pit In the Hockey Stick Zone, 36 drill holes for 9,771 metres were completed. Results indicate that gold mineralization extends in a southwest direction and represents mineralization that may expand the area’s economic viability. The best intercepts are as follows:
D1873A: 13.1 metres @ 4.17 g/t Gold (“Au”) from 201.4 metres;
Includes 3.7 metres @ 8.63 g/t Au from 204.0 metres;
D1919A: 43.8 metres @ 5.26 g/t Au from 199.4 metres.
Includes 13.9 metres @ 11.66 g/t Au from 220.1 metres.
D1920: 15.4 metres @ 2.15 g/t Au from 161.9 metres.
Includes 3.3 metres @ 4.66 g/t Au from 161.9 metres.
Additional infill, geotechnical and metallurgical drilling (~20,000 metres of drilling, $6 million) was approved in the second quarter of 2019 to further delineate the Hockey Stick Zone to upgrade existing resources categories.
In the Northwest Wall, 10 drill holes were completed for a total 1,340 metres. The best intercept is as follows:
DW1887: 5.1 metres @ 2.34 g/t Au from 158.6 metres
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In SB Zone (below current open pit), infill drilling was carried out with the completion of eight drill holes for 1,866 metres. The best intercepts are as follows:
D1876A: 12.0 metres @ 11.48 g/t Au from 61.1 metres;
D1876B: 22.9 metres @ 8.45 g/t Au from 58.6 metres Includes 8.0 metres @ 17.32 g/t Au from 63.5 metres;
D1878: 41.1 metres @ 5.87 g/t Au from 36.2 metres Includes 8.0 metres @ 11.93 g/t Au from 47.3 metres Includes 5.0 metres @ 11.91 g/t Au from 64.3 metres;
D1881: 33.4 metres @ 6.68 g/t Au from 212.6 metres Includes 3.9 metres @ 14.05 g/t Au from 219.6 metres Includes 4.0 metres @ 14.11 g/t Au from 227.5 metres;
D1882: 67.5 metres @ 8.32 g/t Au from 322.5 metres;
29.5 metres @ 16.70 g/t Au from 357.0 metres;
D1897: 7.0 metres @ 18.06 g/t Au from 80.1 metres;
35.4 metres @ 8.12 g/t Au from 102.9 metres Includes 11.2 metres @ 16.67 g/t Au from 103.9 metres;
Southwest Area Three drill holes were completed between the Southwest and Central Pits for a total of 655 metres. The best intercepts are as follows:
SW-19-282A: 4.1 metres @ 3.69 g/t Au from 176.4 metres;
SW-19-284: 4.0 metres @ 1.36 g/t Au from 188.9 metres.
Northeast Area In Northeast area, 10 drill holes were completed for a total of 2,590 metres. The best intercepts are:
DN1900: 25.1 metres @ 3.23 g/t Au from 332.9 metres Includes 5.0 metres @ 6.46 g/t Au from 332.9 metres;
7.2 metres @ 5.37 g/t Au from 389.3 metres;
DN1911: 5.6 metres @ 2.87 g/t Au from 33.7 metres;
8.7 metres @ 2.09 g/t Au from 419.3 metres.
The above mineralized intercepts were calculated using a cut-off grade of 1.0 g/t Au, minimum interval of 4.0 metres and a maximum internal dilution interval of 5.0 metres. Drill collar locations and associated graphics are available at the following link:
http://ml.globenewswire.com/Resource/Download/ccf0f7d2-645c-4668-b75b-4d85179998ee
A complete listing of the drill results, drill hole locations and plan map 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.
Canada Mount Milligan Mine
At Mount Milligan, the 2019 exploration program is focused on initially expanding mineral resources to the west and at depth and other exploration targets adjacent to the mine lease. The 2019 near pit infill drilling program (22,500 metres planned) began in February. In the second quarter, a total of 8,896 metres
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in 24 drill holes were completed; including 16 holes (5,946 metres) in the Southern Star Zone and eight holes (2,950 metres) in the Saddle Zone. Year to date, a total of 10,936 metres have been drilled in the program. During the second quarter, assay results were received for 13 drill holes and the most significant intercepts are as follows:
Southern Star Zone 19-1133: 100.1 metres @ 0.57 g/t Au, 0.28% Cu from 18.9 metres 19-1133: 38.9 metres @ 0.52 g/t Au, 0.29% Cu from 198.0 metres;
19-1135: 123.0 metres @ 0.36 g/t Au, 0.37% Cu from 106.0 metres 19-1139: 57.6 metres @ 0.17 g/t Au, 0.15% Cu from 192.0 metres;
19-1139: 55.6 metres @ 0.18 g/t Au, 0.14% Cu from 254.3 metres;
19-1140: 149.3 metres @ 0.22 g/t Au, 0.13% Cu from 3.7 metres 19-1140: 77.3 metres @ 0.28 g/t Au, 0.26% Cu from 198.4 metres
Saddle Zone 19-1147: 40.1 metres @ 0.33 g/t Au, 0.14% Cu from 18.9 metres;
19-1147: 20.9 metres @ 0.34 g/t Au, 0.26% Cu from 183.4 metres;
19-1150: 39.2 metres @ 0.25 g/t Au, 0.16% Cu from 18.3 metres.
19-1150: 51.2 metres @ 0.23 g/t Au, 0.37% Cu from 62.5 metres.
19-1152: 10.0 metres @ 0.36 g/t Au, 0.23% Cu from 18.5 metres;
19-1152: 30.4 metres @ 0.33 g/t Au, 0.10% Cu from 315.5 metres.
The near pit infill program will continue until mid-September with drill holes planned in the Southern Star, Saddle, 66, Great Eastern Fault, MBX, and Oliver zones.
Brownfield exploration drilling The 2019 brownfield (within mine lease, but outside ultimate pit) exploration drilling program at Mount Milligan (8,500 metres planned) began on May 1st. A total of 4,719 metres in 11 drill holes was completed during the second quarter; including three holes (1,814 metres) in the North Slope Zone, five holes (2,111 metres) in the Goldmark Zone and three holes (794 m) in the Saddle West Zone. Selected best assay results from the one drill hole returned during the second quarter are reported below.
North Slope Zone 19-1138: 14.5 metres @ 1.13 g/t Au, 0.02% Cu from 342.0 metres;
19-1138: 59.7 metres @ 0.13 g/t Au, 0.22% Cu from 469.7 metres;
19-1138: 8.36 metres @ 0.26 g/t Au, 0.24% Cu from 538.6 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. Drill collar locations and associated graphics are available at the following link:
http://ml.globenewswire.com/Resource/Download/ccf0f7d2-645c-4668-b75b-4d85179998ee
A listing of the drill results, drill hole locations and plan map 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.
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Kemess Project
The 2019 Kemess exploration program ramped up in the second quarter focused on the Nugget target (1.5 km west of Kemess Underground (KUG) and KUG deep mineralization to delineate previously known copper/gold mineralization and to add to existing mineral resource inventory. Relogging of 12,128 metres of historic drill core from the Kemess Underground (KUG) deposit and Nugget Zone was completed in April and May. Drilling began in June with a total of 1,030 metres completed by June 30th (1,010 metres in the Nugget Zone and 20 metres in the KUG Zone). The program is expected to continue until late August with a total of approximately 6,200 metres of drilling in seven drill holes. No assay results from drilling have been returned yet.
Turkey Öksüt Gold Project
At the Öksüt Gold Project, the 2019 diamond drilling program is principally designed to expand existing oxide gold resources and to explore for new oxide gold mineralization around the known deposits (Keltepe and Güneytepe). During the second quarter of 2019 drilling commenced with three rigs at the Keltepe, Keltepe NW and Büyüktepe prospects. Five drill holes (ODD0330 to ODD0334) have been completed for an aggregate of 1,423 metres. Testing for deeper mineralization (below current planned open pit), including supergene copper (Keltepe and Keltepe NW) and porphyry-style copper-gold (Boztepe W) targets, will also be undertaken in the third quarter.
Drilling highlights are:
Keltepe (Testing for oxide gold resource expansion in the west and supergene copper to the northwest of the Keltepe pit)
ODD0332: 24.5 metres @ 0.43 g/t Au from 253 metres;
ODD0333: 54.5 metres @ 2.35% Cu from 314.5 metres including 20 metres @ 5.12% Cu from 314.5 metres.
In addition, in the second quarter an assessment of the 3D non-linear Induced Polarization (IP) geophysical survey, covering the Keltepe NW, Keltepe, Güneytepe and Yelibelen prospects, was completed. Assessment of the survey results has generated additional oxide gold targets for testing and confirmed deeper targets around the known deposits.
The above mineralized intercepts were calculated using a cut-off grade of 0.2 g/t Au and a maximum internal dilution interval of 5.0 metres. Drill collar locations and associated graphics are available at the following link:
http://ml.globenewswire.com/Resource/Download/ccf0f7d2-645c-4668-b75b-4d85179998ee
A listing of the drill results, drill hole locations and plan map for the Öksüt Gold Project 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.
Qualified Person & QA/QC
All mineral reserve and mineral resource estimates and other scientific and technical information in this news release were prepared in accordance with the standards of the Canadian Institute of Mining, Metallurgy and Petroleum and National Instrument 43-101 – Standards of Disclosure for Mineral Projects (“NI 43-101”) and (except as set out below) were prepared, reviewed, verified and compiled by Centerra’s 1 University Avenue, Suite 1500 6 geological and mining staff under the supervision of Gordon Reid, Professional Engineer and Centerra’s Vice-President and Chief Operating Officer, 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 drilling programs are consistent with industry standards and independent certified assay labs are used, with the exception of the Kumtor project as described in its technical report dated March 20, 2015.
Exploration information and other related scientific and technical information in this news release regarding the Kumtor Mine were prepared in accordance with the standards of 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 Gold Inc., 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 Kumtor deposit is described in Centerra’s most recently filed Annual Information Form and a technical report dated March 20, 2015 (with an effective date of December 31, 2014), which are both filed on SEDAR at www.sedar.com.
Exploration information and other related scientific and technical information in this news release 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 43101. 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 Centerra’s most recently filed Annual Information Form and a technical report dated March 22, 2017 (with an effective date of December 31, 2016) prepared in accordance win NI 43-101, both of which are available on SEDAR at www.sedar.com.
Exploration information and other related scientific and technical information in this news release regarding the Öksüt Project 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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TABLE OF CONTENTS
1. Overview .............................................................................................................................9
2. Consolidated Financial and Operational Highlights ....................................................10
3. Overview of Consolidated Results ..................................................................................11
4. 2019 Outlook.....................................................................................................................12
5. Financial Performance ....................................................................................................17
6. Balance Sheet Review ......................................................................................................19
7. Market Conditions ...........................................................................................................19
8. Financial Instruments ......................................................................................................20
9. Operating Mines and Facilities .......................................................................................21
10. Construction and Development Projects .......................................................................33
11. Quarterly Results – Previous Eight Quarters ...............................................................35
12. Contingencies....................................................................................................................36
13. Accounting Estimates, Policies and Changes ................................................................39
14. Disclosure Controls and Procedures/Internal Control Over Financial Reporting ....40
15. Non-GAAP Measures ......................................................................................................40
16. Caution Regarding Forward-Looking Information .....................................................48
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This Management Discussion and Analysis (“MD&A”) has been prepared as of July 30, 2019, 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, 2019 in comparison with the corresponding periods ended June 30, 2018. 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, 2019 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, 2018 and 2017, the related MD&A and the Annual Information Form for the year ended December 31, 2018 (the “2018 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, 2019, 2018 Annual Report and 2018 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 “Risk Factors” and “Caution Regarding Forward-Looking Information” in this discussion. All dollar amounts are expressed in United States dollars (“USD”), except as otherwise indicated.
Overview 1.
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 and the Mount Milligan Gold-Copper Mine located in British Columbia, Canada. The Company is currently constructing its next gold mine, the Öksüt Project in Turkey and is developing two properties in Canada, the Kemess Project and the Greenstone Gold Project (50% ownership), as well as options to acquire exploration joint ventures or properties in Canada, Finland, Mexico, Sweden, Turkey and the United States. The Company owns various assets included in its Molybdenum Business Unit being the Langeloth metallurgical processing facility and Thompson Creek Mine in the United States of America, and the Endako Mine in British Columbia, Canada. See “Operating Mines and Facilities”, “Development Projects” and “Contingencies” for further details.
Centerra’s common shares are listed for trading on the Toronto Stock Exchange under the symbol CG. As of July 30, 2019, there are 292,991,211 common shares issued and outstanding, options to acquire 5,006,030 common shares outstanding under its stock option plan and 1,260,039 units outstanding under its restricted share unit plan.
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2. Consolidated Financial and Operational Highlights
| Unaudited ($ millions, except as noted) | Three months ended June 30 | Six months ended June 30 | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Financial Highlights | 2019 | 2018 | % Change | 2019 | 2018 | % Change | ||||
| Revenue | $ | 340.5 | $ | 243.3 | 40% | $ | 674.5 | $ | 478.7 | 41% |
| Cost of sales | 238.5 | 187.4 | 27% | 461.9 | 340.2 | 36% | ||||
| Earnings from mine operations | 98.9 | 52.5 | 88% | 206.7 | 121.4 | 70% | ||||
| Net earnings | $ | 33.4 | $ | 43.5 | (23%) | $ | 83.8 | $ | 52.6 | 60% |
| Adjusted earnings (3) | $ | 33.4 | $ | 1.0 | 3613% | $ | 83.8 | $ | 14.5 | 484% |
| Cash provided by operations | 91.0 | 68.1 | 34% | 209.8 | 28.3 | 641% | ||||
| Cash provided by operations before changes in working capital (3) | 101.4 | 47.6 | 113% | 215.6 | 114.1 | 89% | ||||
| Capital expenditures (sustaining) (3) | 20.8 | 20.5 | 1% | 40.6 | 44.8 | (9%) | ||||
| Capital expenditures (growth and development projects) (3) | 37.7 | 64.0 | (41%) | 62.8 | 74.6 | (16%) | ||||
| Capital expenditures (stripping) | 15.6 | 47.8 | (67%) | 38.5 | 86.3 | (55%) | ||||
| Total assets | $ | 2,887.9 | $ | 2,850.5 | 1% | $ | 2,887.9 | $ | 2,850.5 | 1% |
| Long-term debt and lease obligation | 90.6 | 257.5 | (65%) | 90.6 | 257.5 | (65%) | ||||
| Cash, cash equivalents and restricted cash | 167.5 | 215.5 | (22%) | 167.5 | 215.5 | (22%) | ||||
| Per Share Data | ||||||||||
| Net earnings per common share - $ basic (1) | $ | 0.11 | $ | 0.15 | (24%) | $ | 0.29 | $ | 0.18 | 59% |
| Net earnings per common share - $ diluted (1) | $ | 0.11 | $ | 0.15 | (23%) | $ | 0.29 | $ | 0.18 | 59% |
| Adjusted earnings per common share - $ basic (1)(3) | $ | 0.11 | $ | - | 0% | $ | 0.29 | $ | 0.05 | 482% |
| Adjusted earnings per common share - $ diluted (1)(3) | $ | 0.11 | $ | - | 0% | $ | 0.29 | $ | 0.05 | 483% |
| Per Ounce Data (except as noted) | ||||||||||
| Average gold spot price - $/oz(2) | 1,309 | 1,306 | 0% | 1,307 | 1,318 | (1%) | ||||
| Average copper spot price - $/lbs(2) | 2.77 | 3.12 | (11%) | 2.80 | 3.14 | (11%) | ||||
| Average realized gold price (Kumtor) - $/oz(3) | 1,289 | 1,294 | (0%) | 1,293 | 1,302 | (1%) | ||||
| Average realized gold price (Mount Milligan - combined) - $/oz(3) (5) | 1,058 | 966 | 10% | 1,032 | 981 | 5% | ||||
| Average realized gold price (consolidated) - $/oz(3) (5) | 1,237 | 1,178 | 5% | 1,233 | 1,225 | 1% | ||||
| Average realized copper price (consolidated) - $/lbs(3) (5) | 1.94 | 2.23 | (13%) | 2.15 | 2.23 | (4%) | ||||
| Operating Highlights | ||||||||||
| Gold produced – ounces | 199,578 | 130,183 | 53% | 383,140 | 259,947 | 47% | ||||
| Gold sold – ounces | 198,287 | 140,427 | 41% | 394,738 | 272,859 | 45% | ||||
| Payable Copper Produced (000's lbs) | 20,397 | 16,449 | 24% | 31,837 | 22,591 | 41% | ||||
| Copper Sales (000's payable lbs) | 18,700 | 12,668 | 48% | 31,222 | 17,174 | 82% | ||||
| Unit Costs | ||||||||||
| Adjusted operating costs on a by-product basis - $/oz sold(3)(4) | $ | 476 | $ | 529 | (10%) | $ | 450 | $ | 489 | (8%) |
| Gold - All-in sustaining costs on a by-product basis – $/oz sold(3)(4) | $ | 716 | $ | 996 | (28%) | $ | 693 | $ | 963 | (28%) |
| Gold - All-in sustaining costs on a by-product basis (including taxes) – $/oz sold(3) (4) | $ | 861 | $ | 1,157 | (26%) | $ | 837 | $ | 1,128 | (26%) |
| Gold - All-in sustaining costs on a co-product basis (before taxes) – $/oz sold(3)(4) | $ | 712 | $ | 1,027 | (31%) | $ | 705 | $ | 967 | (27%) |
| Copper - All-in sustaining costs on a co-product basis (before taxes) – $/pound sold(3)(4) | $ | 1.97 | $ | 1.87 | 5% | $ | 2.01 | $ | 2.17 | (7%) |
(1) As at June 30, 2019, the Company had 292,464,324 common shares issued and outstanding (292,991,211 common shares as of July 30, 2019). As of July 30, 2019, Centerra had 5,006,030 share options outstanding under its share option plan with exercise prices ranging from US$2.83 per share to Cdn$22.28 per share, with expiry dates between 2019 and 2027 and 1,260,039 units outstanding under its restricted share unit plan.
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(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). This is a non-GAAP measure and is discussed under “Non-GAAP Measures”.
(3) Non-GAAP measure. See discussion under “Non-GAAP Measures”.
(4) Excludes Molybdenum business.
(5) Combines streamed and unstreamed amounts.
Overview of Consolidated Results 3.
Second quarter ended 2019 compared to Second Quarter 2018
The Company recorded net earnings of $33.4 million in the second quarter of 2019, compared to $43.5 million in the same period of 2018. Earnings in the second quarter of 2019 reflect a significant increase in ounces produced and sold at Kumtor, as a result of processing higher grade ore and achieving higher recoveries. At Mount Milligan throughput in the current quarter of 2019 improved with increased mill availability, resulting in increased production. The second quarter of 2018 included a pre-tax gain of $28.0 million as a result of the sale of the Company’s royalty portfolio and a gain of $9.4 million to recognize the final instalments to be paid on the sale of the Altan Tsagaan Ovoo (“ATO”) property in Mongolia. Excluding these gains, adjusted earnings for the second quarter of 2018 were $1.0 million reflecting lower gold production at both Kumtor and Mount Milligan. Adjusted earnings for the second quarter of 2019 were $33.4 million.
Cash provided by operations increased to $91.0 million in the second quarter of 2019, compared to $68.1 million in the comparative 2018 period, as a result of higher operating earnings and lower working capital levels in the current quarter. Comparing the second quarter of 2019 with the same period of 2018, Kumtor generated $92.7 million compared to $52.9 million, an increase mainly related to higher production. Mount Milligan’s cash flow from operations remained consistent with the comparative period at $24.2 million.
Cash and cash equivalents at June 30, 2019 was $140.0 million, as compared to $151.7 million at December 31, 2018. In the second quarter of 2019, the Company repaid its corporate credit facility (“Centerra Revolving Term Corporate Facility” or “Corporate Facility”) in full, leaving its $500 million Corporate Facility available as at June 30, 2019. The available balance on the Company’s $150 million five-year credit project financing facility for the Öksüt Project (“OMAS Facility”) at June 30, 2019 is $74.5 million.
Safety and Environment
Centerra had six reportable injuries in the second quarter of 2019, representing two lost-time injuries, two restricted work injuries and two medical aid injuries. On June 20, 2019, Kumtor achieved a milestone of one year without a lost time injury within its contractor workforce.
There were no reportable releases to the environment in the second quarter of 2019.
First Half 2019 compared to First Half 2018
The Company recorded net earnings of $83.8 million in the first half of 2019, compared to $52.6 million in the same period of 2018. Earnings in the first half of 2019 reflect increased production and sale at both Kumtor and Mount Milligan. At Kumtor, the significant increase in ounces produced and sold is as a result of processing higher grade ore and achieving higher recoveries. At Mount Milligan the increased production and sales levels reflect higher throughput, coupled with higher copper grades and gold recoveries. The first half of 2018 included a pre-tax gain of $28.0 million as a result of the sale of the Company’s royalty portfolio and a gain of $9.4 million to recognize the final instalments to be paid on the sale of the ATO property. Excluding these gains, adjusted earnings for the first half of 2018 were $14.5 million reflecting lower gold production at both Kumtor and Mount Milligan. Adjusted earnings for the first half of 2019 were $83.8 million.
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Cash provided by operations was $209.8 million in the first half of 2019, compared to $28.3 million in the comparative period, as a result of higher operating earnings and relatively lower working capital levels in the current period. Comparing the first half of 2019 with the same period of 2018, Kumtor generated $212.7 million compared to $95.9 million, an increase mainly related to higher production, while Mount Milligan generated $36.6 million compared to $17.0 million used in operations in the comparative period. The increase in the current year is mainly attributable to higher mill availability resulting in higher production levels.
Safety and Environment
Centerra had eight reportable injuries, representing two lost-time injuries, two restricted work injuries and four medical aid injuries, in the first half of 2019.
During the first half of 2019 there were no reportable release to the environment.
4. 2019 Outlook
See “Material Assumption and Risks” for material assumptions or factors used to forecast production and costs for 2019.
2019 Production Guidance
The Company is favourably revising its 2019 consolidated gold production guidance to 705,000-750,000 ounces which reflects an increase in its gold production guidance for Kumtor to 550,000-575,000 ounces due to the better than expected performance in the first half of 2019. This compares to initial guidance of 690,000-740,000 ounces (consolidated) and 535,000-565,000 ounces (Kumtor) respectively. During September, Kumtor is planning a 6-day scheduled maintenance shutdown to replace the SAG, ball mill and regrind mill liners which is expected to impact production levels compared to the first and second quarter performance with approximately 27% of the production still expected in the fourth quarter. The Company maintains its gold production guidance for Mount Milligan (streamed and unstreamed) of 155,000-175,000 ounces for the year.
Centerra expects consolidated copper production from Mount Milligan (streamed and unstreamed) to be 65-75 million pounds, unchanged from the previous guidance.
Centerra’s 2019 production is currently forecast as follows:
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