Centerra Gold 2013 First Quarter Results (This news release contains forward-looking information that is subject to the risk factors and assumptions set out on page 24 and in our Cautionary Note Regarding Forward-looking Information on page 33. It should be read in
NEWS RELEASE
Centerra Gold 2013 First Quarter Results
(This news release contains forward-looking information that is subject to the risk factors and assumptions set out on page 24 and in our Cautionary Note Regarding Forward-looking Information on page 33. It should be read in conjunction with the Company’s unaudited interim consolidated financial statements and notes for the three-month periods ended March 31, 2013 and March 31, 2012 and associated Management’s Discussion and Analysis. The condensed interim financial statements of Centerra are prepared in accordance with International Accounting Standard 34, Interim Financial Reporting, as issued by the International Accounting Standards Board and the Company’s accounting policies as described in note 3 of its annual consolidated financial statements for the year ended December 31, 2012 and for the effect of the adoption of new accounting standards on January 1, 2013 as described in note 2 to the Company’s March 31, 2013 condensed interim financial statements. All figures are in United States dollars.)
To view Management’s Discussion and Analysis and the Financial Statements and Notes for the three-months ended March 31, 2013, please visit the following link: http://media3.marketwire.com/docs/CGQ1_MDAFS.pdf
Toronto, Canada, May 8, 2013: Centerra Gold Inc. (TSX: CG) today reported net earnings for the first quarter of 2013 of $51.4 million or $0.22 per common share reflecting higher gold sales due to the higher gold production at both operations during the period. For the same period in 2012, the Company recorded net earnings of $9.6 million or $0.04 per common share. The 2012 results were impacted by a 10-day work stoppage at Kumtor in February 2012 and the acceleration of ice and waste material at Kumtor which required a change in the mine plan. The 2012 results have been restated to reflect the retroactive adoption of a change in accounting for stripping costs under IFRIC 20.
2013 First Quarter Highlights
- Produced 115,220 ounces of gold in the quarter, including 89,618 ounces at Kumtor and 25,602 ounces at Boroo, compared to 72,555 ounces in the same period in 2012.
- Increased revenues to $192.3 million compared to $133.8 million in the same quarter of 2012.
- Cash provided by operations increased to $92.0 million compared to $32.0 million in the first quarter of 2012.
- Operating cash cost per ounce produced of $471 compared to $685 in the same period in 2012
- Reported all-in cash cost (pre-tax) for the quarter of $1,327 per ounce compared to $2,902 for the 2012 first quarter.
- Acquired the remaining 30% interest in the Öksüt project in Turkey.
- Achieved 3 million man-hours without a lost time injury (LTI) at the Boroo mine.
- Experienced accelerated movement in the Davidov Valley Waste-rock Dump at Kumtor.
Commentary
Ian Atkinson, President and CEO of Centerra Gold commented, “Operationally we are on track to achieve our production guidance for the year. Boroo had an excellent quarter producing almost 26,000 ounces of gold. Kumtor produced almost 90,000 ounces of gold, and mine production is on track to achieve the annual gold production forecast with over 50% of the gold production occurring in the fourth quarter. Financially, we reported over $51 million or $0.22 per share in net earnings and the operations generated $92 million or $0.39 per share of cash flow for the first quarter.”
“As expected at the Kumtor mine the waste-rock dump is experiencing movement as was disclosed in the KS-13 expansion plan. The movement has recently increased impacting the workshops and administration facilities ahead of the planned schedule. As a result, we have expedited the demolition of the buildings and relocation of other infrastructure sooner than had been planned to ensure continued safe operations. Planned gold production for 2013 has not been affected to date. Employees have been moved to temporary work locations until the planned new facilities are constructed.”
“Also regarding Kumtor, we are continuing to have discussions with the Kyrgyz authorities to resolve the issues concerning Kumtor to the benefit of all Centerra shareholders.”
“Recently we have seen tremendous volatility in the gold price. We are monitoring and assessing its impact on the operations and are reviewing spending plans for 2013. Exploration spending in 2013 at Kumtor has been reduced by $5 million and further reductions may be contemplated in other areas. The Company has a strong balance sheet and continuing good margins even in a lower gold price environment. Our all-in costs including all capital and taxes are forecast to be in the range of $1,247 to $1,360 per ounce of gold produced for the year.”
Waste-Rock Dump Movement
On May 3, 2013, the Company announced that a large section of Kumtor’s principal waste-rock dump, the Davidov Valley Waste-rock Dump (Central Valley Waste Dump), was experiencing a greater than anticipated rate of movement. Beginning in mid-March, the rate of movement of the waste-rock dump increased beyond the anticipated rate, requiring acceleration to the planned demolition of the administration and workshop buildings and the relocation of certain other infrastructure. Employees in the affected buildings were moved to temporary work locations while new planned facilities are constructed. The movement of the Davidov Valley Waste-rock Dump and the demolition of buildings and relocation of other affected infrastructure is described in the Kumtor Technical Report (December 20, 2012) and in the life-of-mine plan.
As a result of this increase in movement, the Company has discontinued deposition of waste-rock on the affected portion of the Davidov Valley Waste-rock Dump (Central Valley Waste Dump). In the short-term, the Company is placing waste-rock on permitted sites currently unaffected by the movement. An alternative long-term waste-rock dumping plan is being finalized. The Company is working with the Kyrgyz regulatory authorities and external engineering advisors to expedite approval of such a plan. Based on discussions with the authorities to date, the Company believes that such approvals are likely to be forthcoming; however no assurances can be provided.
The Government has established a special commission, which has visited the Kumtor mine site and inspected the waste-rock dump movement. The Company is fully cooperating with the commission.
While the Company expects that it will be able to develop alternative plans that will permit the mine to continue planned operations and that such alternative plans will receive prompt regulatory approval from the Kyrgyz authorities, the Company cannot give assurances in this regard. In the event that an alternative plan cannot be developed or approved promptly, the Company would expect a negative impact on its mine operations, production and financial results.
Financial and Operating Summary Highlights
| Three Months Ended March 31 | |||
|---|---|---|---|
| Financial Summary ($ millions, except as noted) | 2013 | 2012 Restated (5) | % Change |
| Revenue | $ 192.3 | $ 133.8 | 44% |
| Cost of sales | 91.1 | 79.1 | 15% |
| Abnormal mining costs | - | 0.7 | (100%) |
| Mine standby costs | - | 4.6 | (100%) |
| Regional office administration | 5.6 | 4.8 | 17% |
| Earnings from mine operations | 95.5 | 44.6 | 114% |
| Revenue-based taxes | 20.8 | 15.1 | 38% |
| Other operating expenses | 1.9 | 1.5 | 30% |
| Exploration and business development | 7.2 | 8.3 | (14%) |
| Corporate administration | 6.7 | 8.5 | (21%) |
| Earnings from operations | 58.9 | 11.2 | 424% |
| Other (income) and expenses | 1.3 | (0.8) | (260%) |
| Finance costs | 1.3 | 0.9 | 40% |
| Earnings before income taxes | 56.3 | 11.1 | 406% |
| Income tax expense | 4.9 | 1.5 | 228% |
| Net earnings | $ 51.4 | $ 9.6 | 434% |
| Earnings per common share - $ basic | $ 0.22 | $ 0.04 | 450% |
| Earnings per common share - $ diluted | $ 0.21 | $ 0.04 | 425% |
| Weighted average common shares outstanding - basic (thousands) | 236,376 | 236,354 | 0% |
| Weighted average common shares outstanding - diluted (thousands) | 236,964 | 237,030 | (0%) |
| Cash provided by (used in) operations | 92.0 | 32.0 | 188% |
| Capital expenditures (1) | 103.9 | 158.4 | (34%) |
| Operating Summary | |||
| Gold produced – ounces | 115,220 | 72,555 | 59% |
| Gold sold – ounces | 118,745 | 77,720 | 53% |
| Average realized gold price - $/oz | 1,619 | 1,721 | (6%) |
| Average gold spot price - $/oz (2) | 1,631 | 1,691 | (4%) |
| Cost of sales - $/oz sold (3) | 767 | 1,018 | (25%) |
| Operating cash costs - $/oz produced(3) (4) | 471 | 685 | (31%) |
| All-in cash costs (pre-tax) - $/oz produced(3) (4) | 1,327 | 2,902 | (54%) |
| All-in cash costs (including taxes) - $/oz produced(3) (4) | 1,552 | 3,130 | (50%) |
(1) Includes capitalized stripping of $74.3 million in first quarter of 2013 ($62.9 million in first quarter of 2012).
(2) Average for the period as reported by the London Bullion Market Association (US dollar Gold P.M. Fix Rate).
(3) Operating cash costs is comprised of mine operating costs such as mining, processing, regional office administration, royalties and production taxes (except at Kumtor where revenue-based taxes are excluded), but excludes depreciation, depletion and amortization, reclamation costs, capital investments, community investments, exploration expenses and corporate general and administration expenses. Operating cash costs and all-in cash costs per ounce produced, as well as cost of sales per ounce sold, are non-GAAP measures and are discussed under “Non-GAAP Measures”.
(4) All-in cash costs per ounce produced includes operating cash costs, sustaining and growth capital, corporate general and administrative expenses, global exploration expenses and community investments. The measure is presented pre or after tax, including or excluding revenue-based taxes at Kumtor and income taxes at Boroo.
(5) Restated for the change in accounting for deferred stripping under IFRIC 20 which was adopted retroactively in 2012 (see note 2 of the Company’s condensed consolidated interim financial statements for the period ending March 31, 2013).
Revenue for the first quarter of 2013, increased to $192.3 million from $133.8 million in the comparative quarter of 2012, primarily as a result of higher sales volumes (118,745 ounces sold in the first quarter of 2013 compared to 77,720 ounces sold in the first quarter of 2012). This was partially offset by a decrease in average realized gold prices at $1,619 per ounce compared to $1,721 per ounce in the same quarter of 2012. The higher sales volumes reflect the increase in gold production at both operations.
Total gold produced in the first quarter was 115,220 ounces compared to 72,555 ounces reported in the first quarter of 2012, a 59% increase year-over-year. The increased gold production was mainly due to the processing of higher grade ore at both Kumtor and at Boroo and the resumption of heap leach operations at Boroo which began in the fourth quarter of 2012. During the comparative period of 2012, Kumtor processed fewer tonnes due to the 10-day labour dispute.
Cost of sales was $91.1 million in the first quarter of 2013, compared to $79.1 million in the comparative period of 2012, mainly as a result of higher sales volumes. Operating costs in the first quarter of 2013 were higher than the comparative quarter reflecting higher labour costs, resulting from inflation adjustments from the collective agreements which were finalized in the second half of 2012, and the addition of heap leach costs at Boroo from the resumption of heap leach operations.
Depreciation, depletion and amortization associated with production increased to $40.8 million in the first quarter of 2013 from $20.3 million in the comparative quarter of 2012 as a result of the higher ounces sold, increased depreciation from the expanded mobile fleet at Kumtor and the higher amortization of deferred stripping costs at Kumtor.
Exploration expenditures in the first quarter of 2013 were $7.2 million compared to $7.8 million in the same quarter last year, with drilling programs at Kumtor and at the Öksüt project in Turkey as well as at the Company’s joint ventures in Russia.
Cash provided by operations was $92.0 million for the first quarter of 2013 compared to $32.0 million for the prior year first quarter, primarily reflecting the increased earnings in 2013 as a result of higher production and sales volumes and lower working capital levels.
Capital expenditures spent and accrued in the first quarter of 2013 amounted to $103.9 million which includes $13.4 million of sustaining capital, $16.2 million invested in growth capital and $74.3 million on capitalized stripping. Capital expenditures in the comparative quarter of 2012 totaled $158.4 million, consisting of $6.1 million of sustaining capital, $89.4 million invested in growth capital and $62.9 million of capitalized stripping.
Centerra’s cash and cash equivalents and short-term investments at the end of March 2013 decreased to $369.9 million from $382.1 million at December 31, 2012. At March 31, 2013, the Company had $76 million outstanding on its $150 million revolving credit facility with the European Bank for Reconstruction and Development (EBRD), leaving a balance of $74 million undrawn at March 31, 2013. The amount drawn is due to be repaid on August 8, 2013, or at the Company’s discretion repayment could be extended. Centerra believes, based on its current forecast, that it has sufficient cash and investments to carry out its business plan in 2013 (see “2013 Outlook”).
All-in cash costs – Consolidated (1)
| Three Months Ended March 31 | ||
|---|---|---|
| $ millions, except ounces poured | 2013 | 2012 (3) |
| All-in Cash Costs: | ||
| Operating cash costs | 54.2 | 49.7 |
| Capitalized stripping and ice unload - cash | 53.4 | 47.0 |
| Operating cash costs and capitalized stripping | 107.6 | 96.7 |
| Sustaining capital (cash) | 13.3 | 6.1 |
| Growth capital (cash) | 16.2 | 89.4 |
| Operating cash costs including capital | 137.1 | 192.2 |
| Corporate and other cash costs (2) | 15.8 | 18.3 |
| All-in Cash Costs - pre-tax | 152.9 | 210.5 |
| Revenue-based tax and income tax | 25.9 | 16.6 |
| All-in Cash Costs - including taxes | 178.8 | 227.1 |
| Ounces poured | 115,220 | 72,555 |
| Operating cash cost - $/oz produced | 471 | 685 |
| All-in Cash Costs (pre-tax) - $/oz produced | 1,327 | 2,902 |
| All-in Cash Costs (including taxes) - $/oz produced | 1,552 | 3,130 |
(1) All-in cash costs, capitalized stripping (cash) and sustaining and growth capital are non-GAAP Measures and are discussed under “Non-GAAP Measures”.
(2) Corporate and other cash costs include corporate general and administrative expenses, global exploration expenses, and community investments.
(3) Operating cash costs and capitalized stripping for 2012 were restated for the impact of the adoption of IFRIC 20.
Operating cash costs per ounce produced in the first quarter of 2013 decreased to $471 compared to $685 per ounce in the comparative period of 2012 (operating cash cost per ounce produced is a non-GAAP measure and is discussed under “Non-GAAP Measures”). The decrease in 2013 reflects the impact of higher production levels due to higher grades processed at both operations and increased recoveries at Kumtor.
On a pre-tax basis all-in cash costs per ounce produced for the first quarter of 2013 was $1,327, and includes all cash costs directly related to gold production. This compares to pre-tax all-in cash costs of $2,902 per ounce produced in the first quarter of 2012. The decrease is due to a combination of lower growth and sustaining capital spending and higher production in 2013. The cash costs for capitalized stripping and ice unload activities incurred in the first quarter of 2013 amounted to $53.4 million compared to $47.0 million in the comparative quarter of 2012, reflecting the increased focus on removing ice and waste from the high movement area at Kumtor the cost of which is treated as capital following the decision to expand the pit on November 7, 2012. Growth capital expenditures (excluding capitalized stripping) cash costs decreased from $89.4 million in the first quarter of 2012 to $16.2 million in the first quarter of 2013, reflecting the expansion of the mining fleet at Kumtor during 2012.
Including revenue-based taxes in the Kyrgyz Republic and income taxes in Mongolia, the Company’s all-in cash costs per ounce produced for the first quarter of 2013 was $1,552 compared to $3,130 in the comparative quarter of 2012.
Operations Update
| Three Months Ended March 31 | |||
|---|---|---|---|
| Kumtor Operating Results | 2013 | 2012 (6) | % Change |
| Gold sold – ounces | 91,617 | 62,196 | 147% |
| Average realized gold price – $/oz | 1,623 | 1,732 | 94% |
| Revenue - $ millions | 148.7 | 107.7 | 138% |
| Cost of sales - $ millions (1) | 66.3 | 62.8 | 106% |
| Cost of sales - $/oz sold (1) | 724 | 1,010 | 72% |
| Tonnes mined - 000s | 40,184 | 30,746 | 131% |
| Tonnes ore mined – 000s | 209 | 63 | 332% |
| Average mining grade - g/t (2) | 2.45 | 1.33 | 184% |
| Tonnes milled - 000s | 1,473 | 1,252 | 118% |
| Average mill head grade - g/t (2) | 2.69 | 1.98 | 136% |
| Recovery - % | 74.1 | 72.6 | 102% |
| Gold produced – ounces | 89,618 | 60,707 | 148% |
| Operating cash cost - $/oz produced (3) | 452 | 642 | 70% |
| All-in cash cost (pre-tax) - $/oz produced (4) | 1,359 | 2,934 | 46% |
| All-in cash cost including tax - $/oz | 1,591 | 3,183 | 50% |
| Capital expenditures - $ millions (5) | 102.2 | 126.2 | 81% |
| Boroo Operating Results | |||
| Gold sold – ounces | 27,128 | 15,524 | 175% |
| Average realized gold price - $/oz | 1,606 | 1,676 | 96% |
| Revenue - $ millions | 43.6 | 26.0 | 167% |
| Cost of sales - $ millions (1) | 24.9 | 16.3 | 153% |
| Cost of sales - $/oz sold (1) | 918 | 1,050 | 87% |
| Total tonnes mined - 000s | - | 1,920 | - |
| Tonnes mined heap leach - 000s | - | - | - |
| Tonnes stacked heap leach - 000s | 268 | - | - |
| Tonnes under leach - 000s | 1,803 | - | - |
| Tonnes ore mined direct mill feed - 000’s | - | - | - |
| Tonnes ore milled - 000s | 572 | 590 | 97% |
| Average mill head grade - g/t (2) | 1.54 | 0.77 | 200% |
| Recovery - % | 54.0 | 79.2 | 68% |
| Gold produced – ounces | 25,602 | 11,848 | 216% |
| Operating cash cost - $/oz produced (3) | 535 | 905 | 59% |
| All-in cash cost (pre-tax) - $/oz produced (4) | 582 | 1,179 | 49% |
| All-in cash cost including tax - $/oz | 782 | 1,311 | 60% |
| Capital expenditures - $ millions (Boroo) (5) | 1.2 | 3.7 | 33% |
| Capital expenditures - $ millions (Gatsuurt) | 0.1 | 0.1 | 93% |
(1)
Cost of sales excludes regional office administration.
(2)
g/t means grams of gold per tonne.
(3)
Operating cash cost is comprised of mine operating costs such as mining, processing, regional office administration, royalties and production taxes (except at Kumtor where revenue-based taxes are excluded), but excludes depreciation, depletion and amortization, reclamation costs, capital investments, community investments, exploration expenses and corporate general and administration expenses. Operating cash cost, total production cost and all-in (pre-tax) cost produced as well as cost of sales per ounce sold are non-GAAP Measures and are discussed under “Non- GAAP Measures”.
(4)
All-in cash cost (pre-tax) per ounce produced for Kumtor and Boroo includes operating cash cost, sustaining and growth capital, but excludes corporate general and administrative expenses, global exploration expenses, and community investments (which are reflected with the all-in cash cost amounts reported at the consolidated level), revenue-based taxes at Kumtor and income taxes at Boroo.
(5) Includes capitalized stripping of $74.3 million in first quarter of 2013 ($59.6 million at Kumtor and $3.3 million at Boroo in first quarter of 2012).
(6) Operating cash costs and capitalized stripping for 2012 were restated to reflect the retroactive adoption of IFRIC 20.
All-in cash costs
| All-in cash costs - Kumtor | 2013 | 2012 (3) | ||
| $ millions | ($ per ounce produced) | $ millions | ($ per ounce produced) | |
| All-in Cash Costs (1): | ||||
| Operating cash costs | 40.5 | $452 | 39.0 | $642 |
| Capitalized stripping and ice unload - cash (1) | 53.4 | $596 | 44.2 | $728 |
| Operating cash costs and capitalized stripping | 93.9 | $1,048 | 83.2 | $1,370 |
| Sustaining capital (cash) | 11.7 | $131 | 5.5 | $91 |
| Growth capital (cash) | 16.1 | $180 | 89.4 | $1,473 |
| Operating cash costs including capital (1) | 121.7 | $1,359 | 178.1 | $2,934 |
| Corporate and other cash costs (2) | - | - | - | - |
| All-in Cash Costs (pre-tax) (1) | 121.7 | $1,359 | 178.1 | $2,934 |
| Revenue-based tax | 20.8 | $232 | 15.1 | $248 |
| All-in Cash Costs (including taxes) (1) | 142.5 | $1,591 | 193.2 | $3,183 |
| All-in cash costs - Boroo | Three months ended March 31 | |||
|---|---|---|---|---|
| 2013 | 2012 | |||
| $ millions | ($ per ounce produced) | $ millions | ($ per ounce produced) | |
| All-in Cash Costs (1): | ||||
| Operating cash costs | 13.7 | $535 | 10.7 | $905 |
| Capitalized stripping - cash (1) | - | - | 2.8 | $234 |
| Operating cash costs and capitalized stripping | 13.7 | $535 | 13.5 | $1,139 |
| Sustaining capital (cash) | 1.2 | $47 | 0.5 | $40 |
| Growth capital (cash) | - | - | - | - |
| Operating cash costs including capital (1) | 14.9 | $582 | 14.0 | $1,179 |
| Corporate and other cash costs (2) | - | - | - | - |
| All-in Cash Costs (pre-tax) (1) | 14.9 | $582 | 14.0 | $1,179 |
| Income tax | 5.1 | $200 | 1.6 | $132 |
| All-in Cash Costs (including taxes) (1) | 20.0 | $782 | 15.5 | $1,311 |
(1) All-in cash costs, capitalized stripping –cash and total capital are non-GAAP Measures and are discussed under “Non-GAAP Measures”.
(2) Corporate and other cash costs include corporate general and administrative expenses, global exploration expenses and community investments and are reflected with the all-in cash cost amounts reported at the consolidated level.
(3) Operating cash costs and capitalized stripping for 2012 were restated to reflect the retroactive adoption of IFRIC 20.
Kumtor
At the Kumtor mine in the Kyrgyz Republic, gold production in the first quarter of 2013 was 89,618 ounces of gold compared to 60,707 ounces of gold in the comparative quarter of 2012. The increase in ounces poured was mainly due to processing of higher grade ore that was mined and stockpiled during the fourth quarter of 2012. During the first quarter of 2013, Kumtor’s mill head grade averaged 2.69 g/t with a recovery of 74.1%, compared with 1.98 g/t and a recovery of 72.6% for the same quarter in 2012. Tonnes processed were approximately 1.5 million for the first quarter of 2013, 18% higher than the comparative period in 2012 which was impacted by lower mill operating time due to the 10-day work stoppage and resulting re-start period.
Beginning in mid-March, the rate of movement of the Davidov Valley Waste-rock Dump (Central Valley Waste Dump) increased beyond the anticipated rate, requiring acceleration to the planned demolition of the administration and workshop buildings and relocation of certain other infrastructure. Employees in the affected buildings have been moved to temporary work locations until new facilities are constructed. Planned gold production has not been affected. The rate of acceleration is being monitored and an alternative long-term waste-rock dumping plan is being finalized.
Operating cash cost per ounce produced in the first quarter of 2013 decreased to $452 compared to $642 per ounce in the comparative period of 2012. The decrease in 2013 reflects the impact of higher production levels, as a result of processing material with higher mill head grades and recoveries. This was partially offset by higher operating costs described below. Operating cash costs per ounce produced is a non-GAAP measure and is discussed under “Non-GAAP Measures”.
In the first quarter of 2013, operating cash costs including capitalized stripping and ice unloading at Kumtor (see “Non-GAAP Measures”) increased by $10.7 million due to higher mining costs, which increased by $9.6 million. Higher mining costs in the first quarter of 2013 were the result of increased operating days, which resulted in increased consumption of consumables such as diesel, tires and maintenance, as compared to the same period in 2012 which was effected by a 10-day work stoppage. Labour costs in the first quarter 2013 increased as a result of the new 2-year Collective Bargaining Agreement which was ratified in December 2012.
All-in cash costs per ounce produced pre-tax were $1,359 in the first quarter of 2013 compared to $2,934 in the same quarter of 2012. The decrease is due to both higher production and a reduction in growth capital spending. During the comparative period in 2012 Kumtor expanded the mining fleet at a cost of $77.1 million or $1,270 per ounce produced. The impact of the expanded mining fleet in 2012 was partially offset by lower operating costs and capitalized stripping as the operating time in 2012 was reduced by ten days due to the work stoppage.
Including revenue-based taxes, Kumtor’s all-in cash costs per ounce produced for the first quarter of 2013 was $1,591 compared to $3,183 in the comparative quarter of 2012. All-in cash cost per ounce produced is a non-GAAP measure and is discussed under “Non-GAAP Measures”.
Exploration expenditures totaled $2.4 million for the first quarter of 2013, compared to $2.2 million reported in the first quarter 2012.
Capital expenditures spent and accrued in the first quarter of 2013 at Kumtor amounted to $102.2 million which includes $11.7 million of sustaining capital, $16.1 million invested in growth capital primarily for the fleet expansion ($13 million) and $74.3 million for capitalized stripping. Capital expenditures in the comparative quarter of 2012 totaled $126.2 million, consisting of $5.5 million of sustaining capital and $120.7 million of growth capital including $33.4 million of capitalized stripping.
Boroo/Gatsuurt
At the Boroo mine in Mongolia, gold production was 25,602 ounces of gold in the first quarter of 2013 compared to 11,848 ounces of gold in the first quarter of 2012. The gold production increase of 13,754 ounces was mainly due to the resumption of activities at the heap leach operation, which contributed 10,372 ounces, and the processing of higher grades of ore through the mill, which contributed 15,230 ounces, partially offset by lower recoveries in 2013. Mill head grades averaged 1.54 g/t with a recovery of 54% in 2013, compared to 0.77 g/t with a recovery of 79% in the first quarter of 2012.
The Boroo mill processed stockpiled ore in the first quarter of 2013 which was refractory in nature, resulting in lower recoveries (54% compared to 79.2%) than during the same period of 2012 when the mill processed non-refractory lower grade ore.
Operating cash costs at Boroo (see “Non-GAAP Measures”) increased by $3 million in the first three months of 2013 compared to the same period in 2012 due to the $2.5 million of costs associated with the heap leach operations which re-commenced in October 2012, as well as increased production taxes and royalties as a result of higher gold sales revenues.
Operating cash costs per ounce produced in the first quarter of 2013 was $535 compared to $905 per ounce in the same period of 2012. The decrease of 41% was a result of a 116% increase in production partially offset by higher operating costs resulting primarily by the resumption of heap leaching operations. Total operating cash costs per ounce produced is a non-GAAP measure and is discussed under “Non-GAAP Measures”.
Boroo’s all-in cash costs per ounce produced (pre-tax) for the first quarter of 2013 was $582 and included all costs directly related to gold production except for income tax paid in Mongolia. The same all-in cash costs measure for the first quarter of 2012 was $1,179 per ounce produced. The decrease in the all-in cash costs was primarily the result of the increase in production, reflecting the resumption of heap leaching operations and no mining activity in the first quarter of 2013. In the comparative quarter of 2012, mining costs accounted for $234 per ounce produced.
Including income tax, Boroo’s all-in cash costs per ounce produced for the first quarter of 2013 was $782 compared to $1,311 in the comparative quarter of 2012. All-in cash cost per ounce produced is a non-GAAP measure and is discussed under “Non-GAAP Measures”.
During the first quarter of 2013, exploration expenditures in Mongolia were $1 million down from $2.1 million in the same period of 2012.
Capital expenditures spent and accrued at Boroo in the first quarter of 2013 decreased to $1.2 million compared to $3.7 million in the same period of 2012. 2013 capital primarily relates to tailings dam construction ($0.3 million) and mobile component change outs ($0.4 million), whereas in the first quarter of 2012, $3.3 million was related to capitalized stripping of Pit 6.
The Gatsuurt project remained under care and maintenance in the first quarter of 2013 due to continued delays in permitting resulting from the Water and Forest Law which prohibits mining and exploration activities in water basin and forested areas. Further development of the project is subject to resolution of the impact of the Water and Forest Law on the Gatsuurt project, and receiving all required approvals and regulatory commissioning from the Mongolian Government. See “Other Corporate Developments- Mongolia”.
Exploration Update
To view the graphics, maps/drill sections and complete drill results discussed in this news release, please visit the following link: http://media3.marketwire.com/docs/Q1-2013_CG_exploration.pdf or visit the Company’s web site at: www.centerragold.com.
Kyrgyz Republic
During the first quarter of 2013, exploration drilling was confined to the Central Pit.
For the discussion on the quality assurance program, please see “Qualified Person & QA/QC” elsewhere in this news release.
Kumtor Pit
In the Central Pit, 14 drill holes were completed during the first quarter. Drilling focused on infilling portions of the SB Zone inferred resource below the planned KS-13 pit bottom on Sections 18, 30 and 38, and on extending the limits of the “Hockey Stick” Zone on Sections -42, -46 and -50.
Three holes were drilled to infill the SB Zone inferred underground resource on Sections 30, 18 and 38, respectively. All three holes intersected broad zones of mineralization below the KS-13 pit design. D1695 intersected mineralization on Section 30 approximately 200 metres below the bottom of the KS-13 pit design. Better results include:
D1695 4.7 g/t gold over 15.8 metres and 3.3 g/t gold over 48.9 metres D1696 4.3 g/t gold over 58.3 metres (including 14.6 g/t gold over 6.6 metres)
D1698 3.5 g/t gold over 55.8 metres
Three holes were drilled on Section -42 in the “Hockey Stick” Zone, a separate ore zone west of the SB Zone. D1702 intersected 7.9 g/t gold over 20.4 metres, including 18.8 g/t gold over 5.6 metres, approximately 50 metres below the KS13 pit design. D1707 encountered 4.4 g/t gold over 24.7 metres approximately fifty metres down dip from D1702, and D1710 intersected 5.3 g/t gold over 45.1 metres, including 12.0 g/t gold over 5 metres at the base of the KS-13 pit design.
Further west on Section -46, D1700 intersected 1.7 g/t gold over 14.3 metres and 4.8 g/t gold over 5.8 metres near the bottom of the KS-13 pit design. Forty metres down dip and below the pit design, D1704 intersected 3.6 g/t gold over 9.3 metres, 2.0 g/t gold over 10.7 metres, 9.8 g/t gold over 5.5 metres, and 4.6 g/t gold over 3.3 metres. Eighty metres further down dip, D1711 intersected 2.9 g/t gold over 26 metres.
Four holes were completed on Section -50, the western limit of drilling from within the Central Pit. D1699 returned 3.0 g/t gold over 6.9 metres and 11.2 g/t gold over 3.1 metres at the bottom of the KS-13 pit design. Approximately forty metres below the pit design, D1703 intersected 2.4 g/t gold over 11.2 metres, 1.9 g/t gold over 7.8 metres and 2.3 g/t gold over 5 metres. Fifty metres further down dip, D1705 returned several intercepts of 1-2 g/t gold over drilled intervals of 3 to 13 metres. D1709 intersected 7.0 g/t gold over 11.1 metres approximately 150 metres below the KS-13 pit bottom.
The infill drilling of the SB Zone inferred underground resource will not materially impact the current resource estimate. Results from the Hockey Stick Zone on Sections -42, -46 and -50 extend the known limits of mineralization and will have a modest positive impact on future resource estimates.
True widths for the mineralized zones are typically from 70% to 95% of the stated intercept.
A complete listing of the drill results and supporting maps for the Kumtor pit 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.
Turkey Öksüt Project
Nine drill holes were completed before shutting down the drill program in early February due to winter weather conditions. Seven of the nine holes were completed at Ortaçam North to infill widespaced drilling, and two holes were drilled at the smaller Ortaçam deposit. Better results received during the quarter include:
ODD95 (infill): 0.9 g/t gold over 82.4 metres ODD97 (infill): 1.2 g/t gold over 259.0 metres ODD98 (infill): 1.0 g/t gold over 150.8 metres ODD99 (Ortaçam): 1.4 g/t gold over 39.0 metres and 2.2 g/t gold over 12.6 metres (EOH) ODD100 (infill): 2.4 g/t gold over 176.0 metres ODD101 (infill): 0.5 g/t gold over 78.0 metres (EOH)
ODD102 (infill): 0.6 g/t gold over 128.0 metres ODD103 (infill): 0.8 g/t gold over 51.0 metres and 0.8 g/t gold over 68.0 metres ODD104 (infill): 1.4 g/t gold over 10.7 metres and 0.7 g/t gold over 66.0 metres
The infill drilling at the Ortaçam North and Ortaçam deposits agree well with the Öksüt resource model developed at year-end 2012 and announced in February 2013.