CG.TO · 2017-01-16 12:00:00

Centerra Gold Announces 2016 Gold Production of 598,677 Ounces and 2017 Outlook

Production Results Shareholder Letters & Outlook

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NEWS RELEASE

Centerra Gold Announces 2016 Gold Production of 598,677 Ounces and

2017 Outlook

All figures are in United States dollars unless otherwise stated. This news release contains forward-looking information

that is subject to risk factors and assumptions set out under the heading “Material Assumptions and Risks” and in the

note Caution Regarding Forward-looking Information.

All production figures are on a 100% basis.

Toronto, Canada, January 16, 2017 : Centerra Gold Inc. (TSX: CG) announced today that 2016

consolidated gold production totalled 598,677 ounc es of gold, which includes gold production from the

Mount Milligan mine for the period October 20, 2016 (acqui sition date) to December 31, 2016. This includes

550,960 ounces of gold from the Kumtor mine, located in the Kyrgyz Republic and 47,717 ounces of gold

from the Mount Milligan mine, located in northern British Columbia, Canada.

During the fourth quarter of 2016, Centerra’s gold production was 248,479 ounces, including 200,762 ounces

of gold produced by the Kumtor mine and 47,717 ounces of gold produced by the Mount Milligan mine from

October 20, 2016 to December 31, 2016. Centerra ’s copper production from Mount Milligan was 10.4

million pounds for the period October 20, 2016 to December 31, 2016.

At the Mount Milligan mine, for the full year of 20 16, the mine produced 204,542 ounces of gold and 58.5

million pounds of copper. During the full fourth quar ter of 2016, Mount Milligan produced 54,725 ounces of

gold and 12.6 million pounds of copper.

Scott Perry, Chief Executive Officer of Centerra stat ed, “Kumtor had another strong year delivering more

than 550,000 ounces of gold production, which exceeded the mid-point (540,000 ounces) of Centerra’s

favourably revised gold production outlook issued after last year’s third quarter. For 2017, we are estimating

consolidated gold production to be in the range of 715,000 to 795,000 oun ces, which includes a full year of

production from the Mount Milligan mine. Additionally, we are expecting 55 million to 65 million pounds of

payable copper production from Mount Milligan for the year . At both operations this year, we are expecting

gold production to be weighted more towards the fourth quarter, 30% at Kumtor and 35% at Mount Milligan.

Centerra’s projected consolidated all-in sustaining cost per ounce sold 1 net of copper by-product for 2017 is

expected to be in the range of $743 to $824 per ounce.”

2017 Outlook

See “Material Assumption and Risks” for other material assumptions or factors used to forecast production

and costs for 2017.

2017 Gold Production

Centerra’s 2017 gold production is expected to be between 715,000 to 795,000 ounces. Kumtor’s production

forecast is expected to be in the range of 455, 000 ounces to 505,000 ounces with 30% of the production

1 Non-GAAP measure, see discussion under “Non-GAAP Measures”.

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expected to be in the fourth quarter. At Mount M illigan, the Company expects payable gold production to be

in the range of 260,000 to 290,000 ounces with approximately 35% of the ounces expected to be produced in

the fourth quarter.

The Mongolian operations will continue with care a nd maintenance activities at the Boroo mine mainly

focusing on reclamation work. Any revenue from Boroo gold production from the rinsing of the heap leach

pad will be offset against care and maintenance co sts. The 2017 production forecast assumes no gold

production from Boroo, Gatsuurt or Öksüt.

2017 Copper Production

Centerra expects concentrate production from the Mount Milligan mine to be in the range of 125,000 to

135,000 dry tonnes for 2017. Payable copper production is expected to be in the range of 55 million pounds

to 65 million pounds.

Centerra’s 2017 production is forecast as follows:

2017 Production Guidance Units Kumtor Mount

Milligan(1) Centerra

Gold

Unstreamed Gold Payable Production (Koz) 455 – 505 169 – 189 624 – 694

Streamed Gold Payable Production(1) (Koz) – 91 – 101 91 – 101

Total Gold Payable Production(2) (Koz) 455 – 505 260 – 290 715 – 795

Copper

Unstreamed Copper Payable Production (Mlb) – 45 – 53 45 – 53

Streamed Copper Payable Production(1) (Mlb) – 10 – 12 10 – 12

Total Copper Payable Production(3) (Mlb) – 55 – 65 55 – 65

Concentrate production in dry tonnes (Kt) – 125 – 135 125 – 135

1. Royal Gold streaming agreement entitles Royal Gold to 35% and 18 .75% of gold and copper sales, respectively, from the Mount

Milligan mine. Under the stream arrangement, Royal Gold will pay $435 per ounce of gold delivered and 15% of the spot price per

metric tonne of copper delivered.

2. Gold production assumes 78.8% recovery at Kumtor and 62.5% recovery at Mount Milligan.

3. Copper production assumes 75.5% recovery for copper at Mount Milligan.

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2017 All-in Sustaining Unit Costs1

Centerra’s 2017 all-in sustaining costs per ounce sold 1 are calculated on a by-product basis and are forecast as

follows:

Kumtor Mount Milligan (2) Centerra (2)

Ounces sold forecast 455,000 – 505,000 260,000 – 290,000 715,000-795,000

US $ / gold ounce sold

Operating costs 288 – 319 748 – 834 456 – 507

Changes in inventory 35 – 39 35 – 39 35 – 39

Operating costs (on a sales basis)(3) $323 - $358 $783 - $873 $491 – $546

Selling & marketing - 18 – 20 6 – 7

Regional office administration 31 – 34 - 20 – 22

Social development costs 5 - 3

Treatment & refining charges 6 – 7 71 – 79 30 – 33

Copper credits(2) - (484) – (540) (177) – (196)

Silver credits (6) – (7) (23) – (26) (12) – (14)

Subtotal (Adjusted operating costs)(1), (2) $359 - $397 $365 - $406 $361 – $401

Accretion expense 2 1 2

Capitalized stripping costs (cash) 340 – 377 - 216 – 240

Sustaining capital expenditures(1) 135 – 149 91 – 101 120 – 133

Corporate general and administrative costs - - 44 – 48

All-in sustaining costs on a by-product basis(1), (2) $836 - $925 $457 - $508 $743 - $824

Revenue-based tax(4) and taxes(4) 166 – 184 19 - 21 113 – 125

All-in sustaining costs on a by-product basis

plus taxes (1), (2), (4) $1,002 – $1,109 $476 - $529 $856 - $949

All-in sustaining costs on a co-product

basis(1),(2),(5) $836 - $925 $575 - $640 $786 - $873

(1) Adjusted operating costs per ounce sold, all-in sustaining costs per ounce sold on a by-product basis, all-in sustaining costs per

ounce on a by-product basis plus taxes, all-in sustaining cost s per ounce sold on a co-product basis and sustaining capital

expenditures are non-GAAP measures and are discussed under “Non-GAAP Measures”.

(2) Mount Milligan payable production and ounces sold are on a 100% basis (Royal Gold streaming agreement entitles it to 35% and

18.75% of gold and copper sales, respectively). Unit costs and consolidated unit costs include a credit for forecasted copper sales

treated as by-product for all-in sustaining costs and all-in sust aining costs plus taxes. The copper sales are based on a coppe r price

assumption of $2.50 per pound sold for Centerra’s 81.25% share of copper production and the remaining 18.75% of copper revenue

at $0.375 per pound (15% of spot price, assuming spot at $2.50 per pound), repres enting the Royal Gold copper stream

arrangement. Payable production for copper and gold reflects estimated metallurgical losses resulting from handling of the

concentrate and payable metal deductions, subject to metal conten t, levied by smelters. The current payable percentage applied is

approximately 95.0% for copper and 96.5% for gold, which may be revised on a prospective basis after sufficient history of payable

amounts is determined.

(3) Operating costs (on a sales basis) are comprised of mine operati ng costs such as mining, processing, regional office administration,

royalties and production taxes (except at Kumtor where revenue-b ased taxes are excluded), but excludes reclamation costs and

depreciation, depletion and amortization. Operating costs (on a sales basis) represents the cash component of cost of sales

associated with the ounces sold in the period.

(4) Includes revenue-based tax at Kumtor that reflects a forecast gold price assumption of $1,200 per ounce sold and at Mount Milligan

the British Columbia mineral tax.

(5) All-in sustaining costs per ounce sold on a co-product basis is defined in “Non-GAAP Measures”.

Results in chart may not add due to rounding.

2017 Exploration Expenditures

Planned exploration expenditures for 2017 totals $9 million. The 2017 exploration plan includes $6.4 million to

fund ongoing projects (excluding Greenstone) and $2.6 million for generative and other exploration programs. See

1 Non-GAAP measure, see discussion under “Non-GAAP Measures”.

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also 2017 Greenstone Gold Property.

2017 Capital Expenditures

Centerra’s projected capital expenditures for 2017, excluding capitalized stripping, are estimated to be $148

million, including $96 million of sustaining capital1 and $52 million of growth capital1.

Projected capital expenditures (excluding capitalized stripping) include:

Projects 2017 Sustaining Capital1

($ millions)

2017 Growth Capital1

($ millions)

Kumtor mine 68 28

Mount Milligan mine 26 -

Öksüt project - 11

Greenstone Gold property - 8

Mongolia - 5

Other (Thompson Creek mine, Endako

mine (75%), Langeloth facility and

Corporate)

2 -

Consolidated Total $96 $52

Kumtor

At Kumtor, 2017 total capital expendit ures, excluding capitalized stripping, are forecast to be $96 million.

Spending on sustaining capital 1 of $68 million relates primarily to majo r overhauls and replacements of the heavy

duty mine equipment ($58 million), major overhauls and replacements of mill equipment ($3 million) and other

items ($7 million).

Growth capital 1 investment at Kumtor for 2017 is forecast at $28 million and includes the relocation of certain

infrastructure at Kumtor related to the life-of-mine expansion plan amounting to $9 million, tailings dam

construction ($11 million), purchase of new mining equipm ent ($4 million), dewatering projects ($2 million) and

other items ($2 million). The tailings dam construction in 2017 is the first such construction required to contain the

additional 3.6 million ounces of gold reserves that resulted from the KS-13 pit expansion. As such, it is classified

as growth capital 1. This initial raise is the start of a 3-year pr ogram that will not be completed until 2019 (total

estimated cost of $32 million). All tailings dam constructi on prior to 2017 was related to containing tailings that

were generated from the approved ore reserve prior to approval of the KS13 pit expansion.

The cash component of capitalized stripping costs related to the development of the open pit is expected to be $172

million of the $234 million total capitalized stripping in 2017.

Mount Milligan

At Mount Milligan, 2017 sustaining capital expenditures are forecast to be $26 million. Spending on sustaining

capital1 of $26 million relates primarily to tailing dam construction ($20 million), purchases of the heavy duty mine

equipment ($3 million), and other items ($3 million).

Mongolia (Boroo and Gatsuurt)

In Mongolia 2017 sustaining capital1 expenditures are expected to be minimal and growth capital1 expenditures are

estimated at $5 million which covers costs for additional studies and capitalized project support and administration

costs related to the Gatsuurt Project.

1 Non-GAAP measure, see discussion under “Non-GAAP Measures”.

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Öksüt Project

The Company expects to spend $11 million at the Öksüt property in 2017. The total planned spending of $11

million includes detailed engineering, powerline, and ca pitalized project support and administration costs.

Expected capital expenditures at Öksüt in 2017 will be re-assessed upon the Company obtaining all required

permits for construction from local authorities.

Greenstone Gold Property

Centerra’s guidance for 2017 expenditures in connection with the Greenstone Gold Property is approximately $8

million (C$11 million) and represents costs forecast to be spent for capitalized project support and administration

costs and other capital expenditures for the project. During 2017, Greenstone Gold Mines expects to evaluate

programs to minimize the risk profile of the Hardrock Project including advancing permitting, First Nation

discussions and completing and submitting the Environmental Assessments based on the Feasibility Study which

would incorporate comments already received from the agencies and impacted stakeholders.

Other sites and Corporate

At the Thompson Creek mine, Endako mine (75% share) and Langeloth metallurgical processing facility, 2017

sustaining capital1 expenditures are expected to be approximately $1 million. Sustaining capital 1 expenditures for

2017 at the corporate office are expected to be approximately $1 million.

2017 Corporate Administration and Community Investment

Corporate and administration expense for 2017 is forecast to be $40 million, which includes $35 million (including

$8 million of stock-based compensation expense) for corporate and administration costs, and $5 million for

community investment activities.

2017 Depreciation, Depletion and Amortization

Consolidated depreciation, depletion and amortization (DD&A) expense included in costs of sales expense for

2017 is forecasted to be in the range of $245 million to $271 million including Kumtor’s DD&A expense of $153

million to $169 million, Mount Milligan’s DD&A expense of $84 million to $93 million, and Langeloth’s DD&A

expense range of $8 million to $9 million.

2017 Taxes

Pursuant to the Restated Investment Agreement, Kumtor’s operations are not subject to corporate income taxes.

The agreement assesses tax at 13% on gross revenue (plus 1% for the Issyk-Kul Oblast Development Fund).

The Mount Milligan operations are subject to corporate income tax and British Columbia mineral tax. Corporate

income tax for 2017 is forecast to be nil, while British Columbia mineral tax is forecast to be between $4.7 million

and $5.4.

Sensitivities

Centerra’s revenues, earnings and cash flows for 2017 are sensitive to changes in certain key inputs or currencies.

The Company has estimated the impact of any such changes on revenues, net earnings and cash from operations.

Change

Impact on Impact on

($ millions) ($ per ounce sold)

Costs Revenues Cash flows Net Earnings

(after tax)

AISC(2) on by-

product basis

Gold Price $50/oz 3.4 - 3.8 31.2 – 34.7 27.7 - 30.7 27.7 - 30.7 1.0

Copper Price 10% 0.2 – 0.3 11.6 – 13.7 11.0 – 13.1 11.0 – 13.1 15.8 – 16.8

Diesel Fuel 10% 3.5 - 8.3 3.5 10.4 – 11.6

Kyrgyz som(1) 1 som 0.9 - 1.4 0.9 1.8 – 2.0

Canadian

dollar(1) 10 cents 21.0 - 22.7 21.0 28.5 – 31.7

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(1) Appreciation of currency against the US dollar will result in higher costs and lower cash flow and earnings, depreciation of

currency against the US dollar results in decreased costs and increased cash flow and earnings.

(2) All-in sustaining costs per ounce sold (“AISC”) on a by-product basis is a non-GAAP measure and is discussed under “Non-GAAP

Measures”

Material Assumptions and Risks

Material assumptions or factors used to forecast production and costs for 2017 include the following:

 a gold price of $1,200 per ounce,

 a copper price of $2.50 per pound,

 a molybdenum price of $7.35 per pound,

 exchange rates:

o $1USD:$1.32 CAD

o $1USD:67.0 Kyrgyz som

o $1USD:0.90 Euro

 diesel fuel price assumption:

o $0.50/litre at Kumtor

o $0.65/litre at Mount Milligan

The assumed diesel price of $0.50/litre at Kumtor assumes that no Russian export duty will be paid on the fuel

exports from Russia to the Kyrgyz Republic. Diesel fuel is sourced from separate Russian suppliers for both sites

and only loosely correlates with world oil prices. The dies el fuel price assumptions were made when the price of

oil was approximately $45 per barrel. Crude oil is a component of diesel fuel purchased by the Company, such that

changes in the price of Brent crude oil generally impact s diesel fuel prices. The Company established a hedging

strategy to manage changes in diesel fu el prices on the cost of operations at the Kumtor mine. The diesel fuel

hedging program is a 24-month rolling program. The Company targets to hedge up to 70% of crude oil component

of monthly diesel purchases for the first 12 months and 50% of the 13 through 24 month exposure.

Other material assumptions were used in forecast ing production and costs for 2017. These material

assumptions include the following:

 That the Company has sufficient cash on hand or avai lable to it in order to fund anticipated operating

and development costs.

 The Company and its applicable subsidiaries throughout the year continue to meet the terms of the

Thompson Creek Metals credit facility and the EBRD credit facility in order to maintain current

borrowings and compliance with the facilities financial covenants.

 That any discussions between the Government of the Kyrgyz Republic and Centerra regarding the

resolution of all outstanding matters affecting the Kumtor mine are satisfactory to Centerra, fair to all

of Centerra’s shareholders, and that any such resolution will receive all necessary legal and regulatory

approvals under Kyrgyz law and/or Canadian law.

 All mine plans, expertises and related permits and authorizations at Kumtor, including permits to

allow the raising of the tailings dam, receive time ly approval from all relevant governmental agencies

in the Kyrgyz Republic and are not subsequently withdrawn.

 Any recurrence of political or civil unrest in the Kyrgyz Republic will not impact operations,

including movement of people, supplies and gold shipments to and from the Kumtor mine and/or

power to the mine site.

 Any actions taken by the Kyrgyz Republic Parliame nt and Government do not have a material impact

on operations or financial results. This includes an y actions (i) being taken by the Parliament or

Government to cancel the Kumtor Project Agreements; (ii) which are not consistent with the rights of

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Centerra and KGC under the Kumtor Project Agreemen ts; or (iii) that cause any disruptions to the

operation and management of KGC and / or the Kumtor Project.

 The previously disclosed claims received from the Kyrgyz regulatory authorities (SIETS and SAEPF)

and related Kyrgyz Republic court decisions, the claims of the Kyrgyz Republic’s General

Prosecutor’s Office purporting to invalidate land use rights and/or seize land at Kumtor and to unwind

the $200 million inter-company dividend declared an d paid by KGC to Centerra in December 2013,

criminal and other investigations initiated by the GPO in connection with loans and dividends made

by KGC and the alleged misuse of funds or other property at KGC and any further claims by Kyrgyz

authorities, whether environmental allegations or othe rwise, are resolved without material impact on

Centerra’s operations or financial results.

 Any sanctions imposed on Russian entities do not have a negative effect on the costs or availability of

inputs or equipment to the Kumtor Project.

 The movement in the Central Valley Waste Dump at Kumtor, initially referred to in the Annual

Information Form for the year ended December 31, 2013, and in the Lysii and Sarytor Waste Dumps,

do not accelerate and will be managed to ensure c ontinued safe operations, without impact to gold

production.

 The buttress constructed at the bottom of the Davidov glacier continues to function as planned.

 The Company is able to manage the risks associated with the increased height of the pit walls at

Kumtor.

 The dewatering program at Kumtor continues to produce the expected results and the water

management system works as planned.

 The pit walls at Kumtor and Mount Milligan remain stable.

 The resource block model at Kumtor and Mount Milligan reconciles as expected against production.

 Grades and recoveries at Kumtor and Mount Mi lligan will remain consistent with the 2017

production plan to achieve the forecast gold and copper production.

 The Kumtor mill and the Mount Milligan processing plant continues to operate as expected.

 Commissioning of the permanent secondary crushing plant at Mount Milligan continues within

schedule and budget, and performs as designed.

 The Mount Milligan processing facility continues to have access to sufficient water supplies to

operate year round.

 There are no unfavourable changes to concentrate sales arrangements at Mount Milligan and roasting

arrangements at the Langeloth facility.

 There are no adverse regulatory changes affe cting Mount Milligan operations and acquired

molybdenum assets.

 Exchange rates, prices of key consumables, cost s of power, water usage fees, and any other cost

assumptions at all operations and projects of the Company are not significantly higher than prices

assumed in planning.

 No unplanned delays in or interruption of scheduled production from our mines, including due to

climate/weather conditions, political or civil unrest, natural phenomena, regulatory or political

disputes, equipment breakdown or other developmental and operational risks.

The Company cannot give any assurances in this regard.

Production, cost and capital forecasts for 2017 are forward-looking information and are based on key

assumptions and subject to material risk factors that could cause actual results to differ materially and which

are discussed herein under the headings “Material A ssumptions & Risks” and “Cautionary Note Regarding

Forward-Looking Information” in this news release a nd under the heading “Risk Factors” in the Company’s

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third quarter 2016 MD&A and in the Company’s Annual In formation Form for the year ended December 31,

2015.

Qualified Person & QA/QC

The scientific and technical information in this news rel ease, including the production estimates were prepared in

accordance with the standards of the Canadian Institute of Mining, Metallurgy and Petroleum and National

Instrument 43-101 and were prepared, reviewed, verified and compiled by Centerra’s technical 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.

The Kumtor deposit is described in a NI 43-101 technical report dated March 20, 2015 and filed on SEDAR at

www.sedar.com. The technical report describes the exploration history, geology and style of gold mineralization at

the Kumtor deposit. Sample preparation, analytical techniques, laboratories used and quality assurance-quality

control protocols used during the drilling programs at th e Kumtor site prior to April 2013 are described in the

technical report.

The Mount Milligan deposit is described in a NI 43- 101 technical report dated Ja nuary 21, 2015 and filed on

SEDAR at www.sedar.com. The technical report describes the exploration history, geology and style of gold

mineralization at the Mount Milligan deposit. Sample pr eparation, 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.

Non-GAAP Measures

This news release contains the following non-GAAP financial measures: all-in sustaining costs per ounce sold

on a by-product basis, all-in sustaining costs per ounce sold on a by-product basis plus taxes, and all-in

sustaining costs per ounce sold on a co-product basis. In addition, non-GAAP financial measures include

adjusted operating costs in dollars (millions) and pe r ounce sold, as well as cost of sales per ounce sold,

capital expenditures (sustaining) and capital expenditures (growth). These financial measures do not have any

standardized meaning prescribed by GAAP and are theref ore unlikely to be comparable to similar measures

presented by other issuers, even as compared to othe r issuers who may be applying the World Gold Council

(“WGC”) guidelines, which can be found at http://www.gold.org.

Management believes that the use of these non-GAAP measures will assist analysts, investors and other

stakeholders of the Company in understanding the co sts associated with produc ing gold, understanding the

economics of gold mining, assessing our operating performan ce, our ability to generate free cash flow from

current operations and to generate free cash flow on an overall Company basis, and for planning and

forecasting of future periods. However, the measures do have limitations as analytical tools as they may be

influenced by the point in the life cycle of a specif ic mine and the level of additional exploration or

expenditures a company has to make to fully develop its properties. Accordingly, these non-GAAP measures

should not be considered in isolation, or as a substitute for, analysis of our results as reported under GAAP.

Definitions

The following is a description of the non-GAAP measures us ed in this news release. The definitions are

similar to the WGC’s Guidance Note on these non-GAAP measures:

 Production costs represent operating costs associated with the mining, milling and site administration

activities at the Company’s operating sites, excl uding costs unrelated to production such as mine

standby and community costs related to current operations.

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