Centerra Gold Exceeds 2018 Production Guidance with Gold Production of 729,556 Ounces and Announces 2019 Outlook
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NEWS RELEASE
Centerra Gold Exceeds 2018 Production Guidance with Gold Production of 729,556 Ounces
and Announces 2019 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.
All references in this document denoted with NG, indicate a non-GAAP term which is discussed under “Non-GAAP
Measures”.
Toronto, Canada, January 15, 2019 : Centerra Gold Inc. (“Centerra”) (TSX: CG) reports today that t h e
Company exceeded its 2018 annual gold production guidance of 66 5,000 to 705,000 ounces, achieving
consolidated gold production of 729,556 ounces for the full yea r. The Company’s 2018 gold production
included 534,563 ounces of gold from the Kumtor Mine, located i n the Kyrgyz Republic and 194,993 ounces
of gold from the Mount Milligan Mine, located in northern British Columbia, Canada. For the full year of 2018,
Mount Milligan also produced 47. 1 million pounds of copper, ach ieving the upper end of its guidance of 40
million to 47 million pounds of copper.
During the fourth quarter of 2018, Centerra’s gold production t otalled 288,367 ounces, including 228,096
ounces of gold produced by the Kumtor Mine and 60,271 ounces of gold produced by the Mount Milligan Mine.
At Mount Milligan, the mine produced 11.8 million pounds of copper during the fourth quarter of 2018.
Scott Perry, President and Chief Executive Officer of Centerra stated, “Both operations performed well during
the fourth quarter which led t o the Company exceeding its produ ction guidance. Kumtor had a strong fourth
quarter and another solid year delivering more than 534,000 oun ces of gold production, which exceeded the
upper end (510,000 ounces) of its gold production guidance. At Mount Milligan there were sufficient water
resources in the fourth quarter to enable us to run the mill pr ocessing facility at a higher than anticipated
throughput rate allowing the operation to achieve the upper end (195,000 ounces) of its gold production
guidance and the upper end (47 million pounds) of its copper gu idance. For 2019, we are estimating
consolidated gold production to be in the range of 690,000 to 7 40,000 ounces and 65 million to 75 million
pounds of payable copper produc tion from Mount Milligan. The g uidance assumes reduced mill throughput
for the first quarter of 2019 at Mount Milligan to properly manage its water balance until the spring melt runoff.
Gold production at Kumtor is expected to be evenly weighted for the first three quarters of the year with the
fourth quarter representing approximately 28% of the full year’ s production forecast. Centerra’s projected
consolidated all-in sustaining cost per ounce sold NG net of copper by-product for 2019 is expected to be in the
range of $723 to $775 per ounce.”
2019 Outlook
See “Material Assumption and Risks” for other material assumptions or factors used to forecast production and
costs for 2019.
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2019 Gold Production
Centerra’s 2019 gold production is expected to be between 690,0 00 to 740,000 ounces. Kumtor’s gold
production forecast is expected t o be in the range of 535,000 o unces to 565,000 ounces with approximately
28% of the production expected to be in the fourth quarter of 2 019. At Mount Milligan, mill throughput is
expected to be reduced during the remainder of the winter seaso n to properly manage the water balance until
the water flow increases in the spring, after which, mill throughput levels are expected to return to full capacity
once the spring melt has commenced, typically in April. In the second half of 2019, the Company expects to
achieve an average daily throughput of approximately 55,000 ton nes per calendar day. For the full year, the
Company expects Mount Milligan’s total (streamed and unstreamed) payable gold production to be in the range
of 155,000 to 175,000 ounces.
2019 Copper Production
Centerra expects total (streamed and unstreamed) payable copper production from the Mount Milligan Mine
to be in the range of 65 million pounds to 75 million pounds.
Centerra’s 2019 production is forecast as follows:
2019 Production Guidance Units Kumtor Mount
Milligan(1) Centerra
Gold(2)
Unstreamed Gold Payable Production (Koz) 535 – 565 101 – 114 636 – 679
Streamed Gold Payable Production(1) (Koz) – 54 – 61 54 – 61
Total Gold Payable Production(2) (Koz) 535 – 565 155 – 175 690 – 740
Copper(3)
Unstreamed Copper Payable Production (Mlb) – 53 – 61 53 – 61
Streamed Copper Payable Production(1) (Mlb) – 12 – 14 12 – 14
Total Copper Payable Production(3) (Mlb) – 65 – 75 65 – 75
1. Royal Gold streaming agreement entitles Royal Gold to 35% and 1 8.75% 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 81.6% recovery at Kumtor and 60.0% recovery at Mount Milligan.
3. Copper production assumes 81.8% recovery for copper at Mount Milligan.
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2019 All-in Sustaining Unit Costs NG
Centerra’s 2019 all-in sustaining costs per ounce sold NG are calculated on a by-product basis and are forecast
as follows:
2019 All-in Sustaining Unit Costs NG (4) Kumtor Mount Milligan (2) Centerra (2)
Ounces sold forecast 535,000 – 565,000 155,0 00 – 175,000 690,000-740,000
All-in sustaining costs on a by-product basis(1), (2) $666 - $703 $727 - $821 $723 – $775
Revenue-based tax(3) and taxes(3) 171 – 180 21 - 24 135 – 145
All-in sustaining costs on a by-product basis,
including taxes (1), (2), (3) $837 – $883 $748 – $845 $858 – $920
Gold - All-in sustaining costs on a co-product basis
($/ounce) (1),(2) $666 - $703 $803 - $906 $741 - $795
Copper - All-in sustaining costs on a co-product
basis ($/pound) (1),(2) – $1.93 - $2.23 $1.93 – $2.23
1) All-in sustaining costs per ounce sold, all-in sustaining costs per ounce sold on a by-product basis, all-in sustaining costs on a
by-product basis including taxes per ounce sold and all-in sust aining costs on a co-product basis (gold and copper) on a per
unit basis are non-GAAP measures and are discussed under “Non-GAAP Measures”.
2) Mount Milligan payable production and ounces sold are on a 100% basis (the Mount Milligan Streaming Arrangement entitles
Royal Gold 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 su staining costs and all-in sustaining costs plus taxes. The copp er
sales are based on a copper price assumption of $2.80 per pound sold for Centerra’s 81.25% share of copper production and
the remaining 18.75% of copper revenue at $0.42 per pound (15% of spot price, assuming spot at $2.80 per pound),
representing the Mount Milligan Streaming Arrangement. Payable production for copper and gold reflects estimated
metallurgical losses resulting from handling of the concentrate and payable metal deductions, subject to metal content, levied
by smelters.
3) Includes revenue-based tax at Kumtor and the British Columbia mineral tax at Mount Milligan based on a forecast gold price
assumption of $1,200 per ounce sold.
4) Results in chart may not add due to rounding.
2019 Exploration Expenditures
Planned exploration expenditures for 2019 are expected to be $30 million, including approximately $20 million
for brownfields exploration (Kumtor - $11 million, Mount Millig an - $3 million, Öksüt - $2.5 million and
Kemess - $2 million) and the balance for generative and other exploration programs.
2019 Capital Expenditures
Centerra’s projected capital expenditures for 2019, excluding c apitalized stripping, are estimated to be $275
million, including $91 million of sustaining capitalNG and $184 million of growth capitalNG.
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Projected capital expenditures (excluding capitalized stripping) include:
Projects 2019 Sustaining Capital(1)
($ millions)
2019 Growth Capital(1)
($ millions)
Kumtor Mine 45 14
Mount Milligan Mine 37 -
Öksüt Project - 123
Kemess Underground Project - 26
Greenstone Gold Property - 21
Other (Thompson Creek Mine, Endako
Mine (75%), Langeloth facility and
Corporate)
9 -
Consolidated Total $91 $184
(1) Sustaining capital and growth are non-GAAP measures and are discussed under “Non-GAAP Measures”.
Kumtor
At Kumtor, 2019 total capital expenditures, excluding capitaliz ed stripping, are forecast to be $59 million.
Spending on sustaining capital NG of $45 million relates primarily to major overhauls and replac ements of the
heavy-duty mine equipment ($39 million).
Growth capitalNG investment at Kumtor for 2019 is forecast at $14 million which includes capital expenditures
for tailings dam construction ($6 million), pit dewatering projects ($2 million) and other projects ($6 million).
The cash component of capitalized stripping costs related to th e development of the open pit is expected to be
$88 million of the $108 million total capitalized stripping estimated in 2019.
Mount Milligan
At Mount Milligan, 2019 sustaining capital expenditures are forecast to be $37 million and relates primarily to
tailing dam construction ($23 m illion), mine equipment rebuilds and replacements ($8 million) and water
supply improvement projects ($3 million) and other projects ($3 million).
Öksüt Project
At Öksüt, 2019 planned capital spending is expected to be appro ximately $123 million. The total cost of
construction is expected to be approximately $220 million (incl uding contingency) to first gold pour which is
anticipated in the first quarter of 2020. At December 31, 2018 construction activities at the Öksüt site are
approximately 38% complete; with the main access roads substant ially completed; haul road construction is
ongoing, heap leach phase 1 area stripping is completed, crusher equipment is onsite and placed on the concrete
foundations; ADR plant steel is erected; construction of the administration and truck shop campus, and electrical
substation is ongoing; and various earthworks activities for the heap leach pad, ore stockpiles and waste dumps
continue. In 2019, stripping is expected to commence in June and ore stockpiling in July.
Kemess Underground Project
In 2019, total spending at the Kemess Underground Project (KUG) is estimated at $40 million including $14
million for care and maintenance and $26 million on capitalized pre-construction activities. Most of the pre-
construction costs are related to the construction of a water t reatment plant and water discharge system. The
Company has substantially all permits and approvals in place af ter receiving the amended Mines Act Permit
and effluent discharge permit in 2018. In 2019, the Company pl ans to advance the water treatment plant and
water discharge system construction, continue to maintain the K emess site, progress detailed engineering and
complete optimization studies on the project.
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Greenstone Gold Property
Centerra’s guidance for 2019 expenditures relating to the Greenstone Gold Property (50-50 joint venture with
Premier Gold) including the Hardrock Project is approximately $ 41.6 million (Cdn$54 million), on a 100%
basis, to further validate the economics of the Hardrock Project and to continue to de-risk the project. The 2019
program includes detailed engin eering ($13 million) on higher r isk areas to confirm and optimize the capex,
operating costs and mine plan updates, infill drilling to further improve accuracy of the resource model, advance
and finalize long-term relationship agreements with local abori ginal groups including community relations
($8.3 million), environmental and permitting activities ($2.2 m illion) to complete the EA/EIA approvals and
project support, property acquisitions and administration ($15.5 million).
On December 10, 2018, the federal government approved the Hardr ock Project Environmental Assessment
(“EA”) and the Ontario provincia l approval of the Hardrock Proj ect EA is anticipated in the first quarter of
2019.
The forecast spending for 2019 will be fully funded by Centerra with 50% of spending accounted for as pre-
development project spending or e xploration and expensed throug h Centerra’s income statement. The
remaining 50% of spending will be capitalized on Centerra’s bal ance sheet and be accounted for as an
acquisition cost of the Greenstone Gold Property ($20.8 million).
2019 Corporate Administration
Corporate and administration expense for 2019 is forecast to be $31 million (including $6 million of stock-
based compensation expense).
2019 Depreciation, Depletion and Amortization
Consolidated depreciation, depletion and amortization (DD&A) expense included in costs of sales expense for
2019 is forecasted to be in the range of $220 million to $240 m illion including Kumtor’s DD&A expense of
$170 million to $180 million, Mount Milligan’s DD&A expense of $38 million to $45 million, and Langeloth
and other properties’ DD&A expense range of $12 million to $15 million.
Kumtor Strategic Agreement
The Company expects the Strategi c Agreement with the Kyrgyz Gov ernment to close in the first quarter of
2019 at which time the remaining payments associated with agreement are expected to be made.
2019 Taxes
Pursuant to the Restated Investment Agreement, Kumtor’s operations are not subject to corporate income taxes.
Instead, the Restated Investment Agreement imposes a tax of 13% on gross revenue (plus 1% for the Issyk-Kul
Oblast Development Fund).
The Mount Milligan operations are subject to corporate income t ax and British Columbia mineral tax.
Corporate income tax for 2019 is forecast to be nil, while British Columbia mineral tax is forecast to be between
$3.2 million and $4.2 million.
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Sensitivities
Centerra’s revenues, earnings a nd cash flows for 2019 are sensi tive to changes in certain key inputs or
currencies. The Company has est imated the impact of any such c hanges on revenues, net earnings and cash
from operations.
Change
Impact on
($ millions)
Impact on
($ per ounce sold)
Costs Revenues Cash flows
Net
Earnings
(after tax)
AISC(3) on by-
product basis
Gold price(1) $50/oz 5.4 – 6.0 32.5 – 34.5 26.7 – 28.7 26.7 – 28.7 2 - 2
Copper price(1) 10% 4.5 – 5.5 18.0 – 20.0 13.0 – 14.5 13.0 - 14.5 16 - 19
Diesel fuel 10% 8.9 – 10.4 - 8.9 – 10.4 8.9 – 10.4 12 – 14
Kyrgyz som(2) 1 som 1.2 – 1.7 - 1.2 – 1.7 1.2 – 1.7 2 - 2
Turkish Lira(2) 1 lira 12.5 – 14.0 - 12.5 – 14.0 - -
Canadian dollar(2) 10 cents 25.5 - 30.8 - 25.5 – 30.8 22.9 – 27.7 34 – 36
(1) Gold and copper price sensitivities include the impact of the hedging program set up to mitigate gold and copper price risks.
(2) Appreciation of currency against the U.S. dollar will result in higher costs and lower cash flow and earnings,
depreciation of currency against the U.S. dollar results in decreased costs and increased cash flow and earnings.
(3) Non-GAAP measure. See discussion under “Non-GAAP Measures”.
Material Assumptions and Risks
Material assumptions or factors used to forecast production and costs for 2019 include the following:
a gold price of $1,200 per ounce,
a copper price of $2.80 per pound,
a molybdenum price of $12 per pound,
exchange rates:
o $1USD:$1.30,
o $1USD:69.0 Kyrgyz som,
o $1USD:5.00 Turkish lira,
o $1USD:0.79 Euro,
diesel fuel price assumption:
o $0.54/litre at Kumtor,
o $0.87/litre (CAD$1.13/litre) at Mount Milligan.
The assumed diesel price of $0.54/litre at Kumtor assumes that no Russian export duty will be paid on the fuel
exports from Russia to the Kyrgyz Republic. Diesel fuel for Kumtor is sourced from separate Russian suppliers.
The diesel fuel price assumptions were made when the price of o il was approximately $60 per barrel. Crude
oil is a component of diesel fuel purchased by the Company, suc h that changes in the price of Brent crude oil
generally impacts diesel fuel prices. The Company established a hedging strategy to manage changes in diesel
fuel prices on the cost of operations at the Kumtor mine. The Company targets to hedge up to 50% of crude oil
component of monthly diesel purchases exposure.
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Other material assumptions were used in forecasting production and costs for 2019. These material assumptions
include the following:
The Mount Milligan processing facility continues to have access to sufficient water supplies to operate
year-round at the intended capacity. This includes management’ s expectations of annual average
precipitation, reduction in water losses/deferrals to the sands and gravels, that we continue to
successfully draw water from existing permitted water wells, id entify and access new water wells
available for permitting and capture permittable water sources from within the existing operations.
Guidance assumes that Mount Milligan will pump water from nearby Philip Lake, Rainbow Creek and
Meadows Creek after receiving approvals of amendments to the Mo unt Milligan’s Environmental
Assessment Certificate and related permits.
The Company and the Kyrgyz Republic Government (“Government”) continue to work constructively
to complete the Kumtor Strategic Agreement, the Government does not take any actions that are
contrary to the Strategic Agreement and/or the Kumtor Project A greement and which have a material
adverse impact on the Kumtor operations, and the Kyrgyz proceedings are not reinstated or progressed
contrary to the terms of the Strategic Agreement and/or the Kumtor Project Agreements.
The mine plans, expertises and related permits and authorizations at Kumtor which have been received
to date for 2019 are not withdrawn and that any further approvals are obtained in a timely manner from
relevant governmental agencies in the Kyrgyz Republic.
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 sanctions imposed on Russian entities do not have a negative effect on the costs or availability of
inputs or equipment to the Kumtor Project.
Any political issues in Turkey do not have a negative effect on the Öksüt Project.
The movement in the Central Valley Waste Dump at Kumtor, initia lly referred to in the Annual
Information Form for the year ended December 31, 2013, and in t he Lysii and Sarytor Waste Dumps,
does not accelerate and will be managed to ensure continued saf e operations, without impact to gold
production.
The buttress constructed at the bottom of the Davidov glacier continues to function as designed.
The Company can manage the risks associated with the increased height of the pit walls at Kumtor.
The dewatering program at Kumtor continues to produce the expec ted 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 reconcile as expected against production.
Grades and recoveries at Kumtor and Mount Milligan remain consistent with the 2019 production plan
to achieve the forecast gold and copper production.
The Kumtor mill and the Mount Milligan mill continues to operate as expected, including that there are
no unplanned suspension of operations due to (among other thing s), mechanical or technical
performance issues.
There are no changes to any existing agreements and relationshi ps with affected First Nations groups
which would materially and adversely impact our operations.
There are no unfavourable changes to concentrate sales arrangem ents at Mount Milligan and roasting
arrangements at the Langeloth facility.
There are no adverse regulatory changes affecting the Kumtor an d Mount Milligan operations and the
Company’s molybdenum assets.
Exchange rates, prices of key consumables, costs of power, wate r usage fees, and any other cost
assumptions at all operations and projects of the Company are n ot significantly higher than prices
assumed in planning.
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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.
Third party logistic providers can meet Centerra’s logistics needs.
The Company and its applicable subsidiaries throughout the year continue to meet the terms of their
respective credit facilities to maintain current borrowings and compliance with applicable financial
covenants.
The Company cannot give any assurances in regards to the above.
Production, cost and capital for ecasts for 2019 are forward-loo king information and are based on key
assumptions and subject to material risk factors that could cau se actual results to differ materially and which
are discussed herein under the headings “Material Assumptions & Risks” and “Caution Regarding Forward-
Looking Information” in this document and under the heading “Ri sks That Can Affect Our Business” in the
Company’s most recent Annual Information Form.
Qualified Person & QA/QC – Production Information
The production information and other scientific and technical information presented in this document, including
the production estimates were prepared in accordance with the s tandards of the Canadian Institute of Mining,
Metallurgy and Petroleum and NI 43-101 and were prepared, revie wed, verified and compiled by Centerra’s
geological and mining staff under the supervision of Gordon Reid, Professional Engineer and Centerra’s Vice-
President and Chief Operating O fficer, who is the qualified per son for the purpose of NI 43-101. Sample
preparation, analytical techniques, laboratories used and quality assurance-quality control protocols used during
the exploration drilling program s are done consistent with indu stry standards and independent certified assay
labs are used.
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 h i s t o r y , g e o l o g y a n d s t y l e o f g o l d
mineralization at the Kumtor deposit. Sample preparation, analytical techniques, laboratories used and quality
assurance-quality control protocols used are described in the technical report.
The Mount Milligan deposit is described in a NI 43-101 technica l report dated March 22, 2017 and filed on
SEDAR at www.sedar.com. The technical report describes the exp loration history, geology and style of gold
mineralization at the Mount Milligan deposit. Sample preparation, analytical techniques, laboratories used and
quality assurance-quality control protocols used during the exp loration drilling program s are done consistent
with industry standards and independent certified assay labs.
Non-GAAP Measures
This document 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 including taxes, and all-in
sustaining costs per ounce sold on a co-product basis. In addition, non-GAAP financial measures include capital
expenditures (sustaining) and cap ital expenditures (growth). Th ese financial measures do not have any
standardized meaning prescribed by GAAP and are therefore unlik ely to be comparable to similar measures
presented by other issuers, even as compared to other issuers w ho may be applying the World Gold Council
(“WGC”) guidelines, which can be found at http://www.gold.org.