Centerra Gold Records Net Earnings from Continuing Operations of $33.0 million or $0.11 per Common Share, Adjusted Net Earnings from Continuing Operations NG of $49.9 million or $0.17 per Common Share, Net Loss of $851.7 million or $2.87 per Common Share, Adjusted Net
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NEWS RELEASE
Centerra Gold Records Net Earnings from Continuing Operations of $33.0 million or $0.11 per
Common Share, Adjusted Net Earnings from Continuing Operations NG of $49.9 million or $0.17
per Common Share, Net Loss of $851.7 million or $2.87 per Common Share, Adjusted Net
EarningsNG of $78.3 million or $0.26 per Common Share, Cash provided by Operating Activities
from Continuing Operations of $60.3 million and Free Cash Flow from Continuing OperationsNG of
$30.7 million.
All figures are in United States dollars and all production figures are on a 100% basis and continuing
operations basis unless otherwise stated. This news release contains forward looking information
regarding Centerra Gold’s business and operations. See “Caution Regarding Forward-Looking
Information”. 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, August 10, 2021: Centerra Gold Inc. (“Centerra” or the “Company”) (TSX: CG and
NYSE: CGAU) today reported its second quarter 2021 results. As a result of the seizure of the Kumtor
Mine and the continuing actions by the Kyrgyz Republic, the Company has recognized a loss on the change
of control and included the Kumtor Mine in discontinued operations. The Company’s results from
continuing operations include the Mount Milligan Mine, the Öksüt Mine and the Molybdenum Business
Unit.
Significant financial and operating highlights of the second quarter include:
• Earnings from continuing operations and adjusted net earnings from continuing operationsNG
of $33.0 million or $0.11 per common share (basic), and $49.9 million or $0.17 per common share
(basic), respectively.
• Net loss and adjusted net earningsNG of $851.7 million or $2.87 loss per common share (basic),
and $78.3 million or $0.26 per common share (basic), respectively. Net loss includes net loss from
discontinued operations of $884.7 million.
• Cash flow provided by operating activities from continuing operations and free cash flow
from continuing operationsNG of $60.3 million and $30.7 million, respectively. Cash provided by
operating activities from discontinued operations and net cash flow from discontinued operations
were $77.1 million and $49.7 million, respectively.
• Cash position at quarter-end of $882.9 million with total liquidity of $1,282.9 million.
• Consolidated production from continuing operations of 69,854 ounces of gold and 19.8 million
pounds of copper.
• Kumtor Mine was seized by the Kyrgyz Republic Government on May 15, 2021 under the
pretext of groundless corruption, tax, environmental and other claims. These unjustified actions by
the Kyrgyz Republic government, including the appointment of external manager, continued during
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the quarter. In response, the Company and its Kumtor subsidiaries have commenced legal
proceedings against the Kyrgyz Republic, Kyrgyzaltyn JSC (“Kyrgyzaltyn”) and others, including
international arbitration, Chapter 11 proceedings before the U.S. Bankruptcy Court and a
proceeding in the Ontario Superior Court of Justice.
• Mount Milligan process plant achieved record throughput of 5.6 million tonnes, or 61,848
tonnes per day in the second quarter.
• Gold production costs and copper production costs from continuing operations were $593 per
ounce and $1.41 per pound, respectively.
• All-in sustaining costs on a by-product basisNG from continuing operations and All-in costs on
a by-product basisNG from continuing operations were $676 per ounce and $851 per ounce,
respectively.
• Continuing focus on safety of our employees, contractors and local communities. The Öksüt Mine
achieved one million work hours without a Lost Time Injury. Vaccination clinics have been set up
for employees and contractors at the Mount Milligan Mine and Öksüt Mine, with second
vaccination doses provided to 64% and 55% of site employees, respectively.
• On track to achieve 2021 production and cost guidance at the Mount Milligan Mine and the
Öksüt Mine with the revised consolidated free cash flow guidance of $125 to $175 million,
including free cashflow from continuing operations NG of $30.7 million in the second quarter of
2021.
• Quarterly Dividend declared of CAD$0.07 per common share.
As a result of the seizure of the Kumtor Mine by the Kyrgyz Republic Government on May 15, 2021, and
the continuing actions by the Kyrgyz Republic, the Company has updated its consolidated full -year 2021
guidance and three -year outlook to exclude the Kumtor Mine. Highlights of the Company’s revised
consolidated guidance include:
• Gold production:
• 2021: 270,000 to 310,000 ounces.
• 2022: 380,000 to 430,000 ounces.
• 2023: 380,000 to 430,000 ounces.
• Copper production:
• 2021: 70 to 80 million pounds.
• 2022: 90 to 100 million pounds.
• 2023: 70 to 80 million pounds.
• Gold production costs per ounce:
• 2021: $625 to $675 per ounce
• 2022: $550 to $600 per ounce
• 2023: $575 to $625 per ounce
• All-in sustaining costs on by-product basisNG per ounce:
• 2021: $750 to $800 per ounce
• 2022: $450 to $500 per ounce
• 2023: $525 to $550 per ounce
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Commentary
Scott Perry, President and Chief Executive Officer of Centerra stated, “During the second quarter we
continued to demonstrate positive safety performance as the Öksüt mine achieved one million work hours
without a Lost Time Injury. Across the organization we continue to stay vigilant with respect to the
COVID-19 virus. At both our Mount Milligan and Öksüt Mines vaccination clinics have been set up for
employees and contractors, with second vaccination doses having been provided to 64% and 55% of site
employees, respectively, through the Company’s vaccination program. We are proactively maintaining our
rigorous safety protocols across the organization to prevent any outbreaks and reduce the spread of the
COVID-19 virus for the health and safety of our employees, contractors, communities and other
stakeholders.”
“As we have previously disclosed, the Kyrgyz Republic Government seized control of the Kumtor Mine
based on false and misleading allegations. While the Company remains the rightful owner of Kumtor Gold
Company (“KGC”), our 100% owned subsidiary that holds the Kumtor mine, we cannot effectively exercise
power over any relevant activities or affect the returns of the Kumtor Mine. Therefore, in the second quarter
we have derecognized the assets and liabilities of KGC in the statement of financial position and recorded
a loss on the change of control of $926.4 million in the Statement of Earnings. The results from the Kumtor
Mine are presented as a discontinued operation and the Company’s consolidated results exclude the Kumtor
Mine’s.”
“The situation involving our Kumtor asset does not impact Centerra’s other operations and businesses. In
the second quarter Company-wide gold production from continuing operations was 69,854 ounces at all-in
sustaining costsNG on a by-product basis of $676 per ounce. The Mount Milligan Mine achieved record
throughput of 5.6 million tonnes, or 61,848 tonnes per day, producing 54,675 ounces of gold and 19.8
million pounds of copper at all-in sustaining costsNG on a by-product basis of $486 per ounce, making it
our lowest cost producer in the quarter. The Öksüt Mine produced 15,179 ounces of gold at all-in sustaining
costsNG on a by-product basis of $947 per ounce.”
“Financially, the Company generated $60.3 million of cash from continuing operations Company-wide for
the second quarter of 2021, which includes $73.6 million from the Mount Milligan Mine and $8.1 million
from the Öksüt Mine. Company-wide free cash flow from continuing operationsNG in the second quarter of
2021 totalled $30.7 million, including $50.4 million from the Mount Milligan Mine and $1.6 million from
the Öksüt Mine. Cash provided by operating activities from discontinued operations of $77.1 million and
net cash flow from discontinued operations of $49.7 million. We finished the quarter with a debt free
balance sheet and a cash position of $882.9 million.”
“Based on the Company’s financial position, strong operating results and cash flows, the Board approved
on August 9, 2021, a quarterly dividend of CAD$0.07 per share.”
“As a result of the seizure of the Kumtor Mine by the Kyrgyz Republic Government, the Company has
updated its consolidated full-year 2021 guidance and three-year outlook to exclude the Kumtor Mine. For
2021, we are estimating consolidated gold production to be in the range of 270,000 to 310,000 ounces and
70 to 80 million pounds of copper production. Centerra’s consolidated all-in sustaining cost on a by-product
basisNG for 2021 is expected to be in the range of $750 to $800 per ounce . In our three -year outlook, the
gold production profile in 2022 and 2023 increases to 380,000 to 430,000 ounces, respectively, with all-in
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sustaining cost on a by-product basisNG for 2022 expected to be in the range of $450 to $500 per ounce and
in 2023 expected to be in the range of $525 to $550 per ounce.”
“While we continue to seek resolution to the Kumtor Mine dispute, our Company continues to be financially
and operationally strong. We remain on track to achieve 2021 production and cost guidance at our Mount
Milligan and Öksüt M ines, and the Company is expected to generate consolidated free cash flow from
continuing operations of $125 to $175 million in 2021. The Company’s guidance for consolidated free cash
flow from continuing operations excludes net cash flow from discontinued operations. Net cash flow from
discontinued operations was $47.8 million for the first half of 2021.”
“Although we continue to pursue all measures necessary to protect the Company’s rights related to the
Kumtor Mine, in arbitration and in other legal proceedings, the Company has consistently stated that it
remains willing and available to engage with the Kyrgyz Government in a constructive dialogue on the
matters it considers to be the subject of dispute.”
Kyrgyz Republic Update
In February 2021, the Kyrgyz Republic Parliament established the State Commission to, among other
things, review the performance of the Kumtor Mine and to review the results of a prev ious 2012 Kyrgyz
Republic state commission. The State Commission made voluminous and urgent document requests and
inquiries of Kumtor to which the Company dutifully responded. While the work of the State Commission
was ongoing and causing an enormous adm inistrative burden on the Company and putting pressure and
stress on its employees, the Kyrgyz Republic took a series of actions to undermine the basis on which the
Kumtor Mine had been operated (further described below) in an attempt to create a pretext for its subsequent
seizure of the Kumtor Mine.
In early March 2021, the Government of the Kyrgyz Republic resurrected a number of historical tax claims
relating to Kumtor, each of which was resolved years ago either through previous settlements or Kyrgyz
court decisions. When the Company disclosed such claims in March 2021, the amounts claimed by the
Kyrgyz Republic were estimated to be approximately $352 million, including taxes, interest and penalties.
However, the Company’s understanding is now that the Kyrgyz officials may have subsequently increased
the amounts claimed to over $1 billion.
On May 7, 2021, a Kyrgyz Republic court ruled against KGC in a civil case brought by four Kyrgyz
Republic private citizens seeking a determination that KGC’s past practice of placing waste rock on glaciers
was illegal. The court awarded damages of over $3 billion in favour of the Kyrgyz Republic.
In early May 2021, the Kyrgyz Republic Parliament passed a temporary management law that would allow
the Kyrgyz Republic to assume management authority over KGC in certain circumstances. On May 15,
2021, the Kyrgyz Government effectively seized control of the Kumtor Mine by sending state security
services to the mine, KGC’s office in Bishkek and the homes of several KGC employees. The seizure was
formalized on May 17, 2021 when the Kyrgyz Government appointed an external manager for the Kumtor
Mine following an extraordinary session of the Kyrgyz Republic Parliament. During that session, the State
Commission provided its preliminary report and made a number of false and meritless allegations against
KGC, including claims related to corruption, environmental damage and taxation payments, and the Kyrgyz
Parliament recommended the Kyrgyz Government appoint an external manager under the temporary
management law. The Kyrgyz Government subsequently appointed Mr. Tengiz Bolturuk as the external
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manager of the Kumtor Mine later that day. Consequently, Centerra is no longer in control of the Kumtor
Mine and can no longer ensure the safety of the mine’s employees or operations.
Centerra and its Kumtor-related subsidiaries have taken a number of measures in response to the Kyrgyz
Republic’s unjustified and illegal seizure of the Kumtor Mine, including but not limited to:
• Initiating binding arbitration against the Kyrgyz Republic and Kyrgyzaltyn, the state-owned mining
company and gold refining monopoly, to enforce Centerra’s rights under longstanding agreements
governing the Kumtor Mine and to, among other things, hold the Kyrgyz Republic Government
and Kyrgyzaltyn accountable for any and all losses and damage that result from its actions against
KGC and the Kumtor Mine.
• Restricted Kyrgyzaltyn from transferring or encumbering any common shares of the Company or
exercising any voting rights or dissent rights attached to Centerra common shares. In addition,
dividends or distributions on Centerra common shares that would o therwise be payable to
Kyrgyzaltyn or its affiliates are waived and will be donated to the Company to the extent such
dividends or distributions can be attributed reasonably to KGC (or the Kumtor Mine’s assets or
operations) or distributions from KGC.
• Initiating proceedings in the Ontario Superior Court of Justice against Centerra’s former director,
Tengiz Bolturuk, who resigned from the Company’s Board to assume control of the Kumtor Mine
on behalf of the Kyrgyz Republic as external manager in breach of his fiduciary duties to the
Company.
• Filed for protection under Chapter 11 of the federal U.S. Bankruptcy Code in the Southern District
of New York (KGC and Kumtor Operating Company (“KOC”)). The court -supervised process
provides, among other things, for a worldwide automatic stay of all claims against KGC and KOC,
which the Company hopes will deter the Kyrgyz Republic from taking further precipitous action
against KGC, its assets and its creditors and other stakeholders, including actions to enforce the
meritless Kyrgyz court judgments in respect of “environmental” damages and tax claims.
• Continued outreach through various avenues to encourage the leadership of the Kyrgyz Republic
to engage in a dialogue to attempt to resolve these disputes.
The Company believes that the actions of the Kyrgyz Republic authorities described above were part of a
concerted effort to coerce Centerra to give up economic value in or ownership of the Kumtor Mine and to
falsely justify a nationalization of the Kumtor Mine.
As the Company has noted many times, the 2009 Kumtor Project Agreements provide a solid foundation
for Kumtor’s operations and were approved by the Kyrgyz Republic Parliament and Constitutional Court
in 2009. Those agreements were re -affirmed by the Government of the Kyrgyz Republic in 2017 when it
entered into the Strategic Agreement which was completed and became fully effective in 2019. Until the
seizure of the mine by the Kyrgyz Government in May 2021, KGC’s operations and activities had always
carefully adhered to those agreements and applicable laws, including with regard to the annual mine plans
approved by (among others) Kyrgyz state agencies responsible for environment and safety. Furthermore,
the Strategic Agreement included a release of th e Company and KGC by the Kyrgyz Government of all
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outstanding claims at such time, including damages for harm allegedly caused to the environment from
storing production tails (e.g. waste rock) on glaciers.
The Kumtor Mine’s environmental performance prior to its seizure by the Kyrgyz Government adhered to
international standards, including those of the European Bank for Reconstruction and Development, and
had been audited multiple times by, among others, the Kyrgyz Government’s own environmental
consultant, AMEC Foster Wheeler.
While Centerra will continue to pursue all measures necessary to protect its rights in arbitration and in other
legal proceedings, the Company has consistently stated that it remains willing and available to engage with
the Kyrgyz Government in a constructive dialogue on the matters it considers to be the subject of dispute.
Unfortunately, the Kyrgyz Government has provided no official response to the Company’s direct and
indirect outreach. No assurances can be given that Centerra will be successful in any of the foregoing legal
proceedings or that the Company will be able to negotiate a solution that will not have a material impact on
Centerra. There remains the further risk that additional regulatory, tax, or civil claims will be commenced
against KGC or the Company.
Although the Company remains the rightful legal owner of KGC, it cannot effectively exercise power over
any relevant activities or affect the returns of the Kumtor Mine. As a result of the loss of control, the
Company has deconsolidated the results of the Kumtor Mine, recognizing a loss on the change of control
of $926.4 million in the second quarter of 2021, ascribed no value to the Company’s interest in KGC and
is accounting for the Kumtor Mine as a discontinued operation. Accordingly, the consolidated results from
the Company’s continuing operations exclude Kumtor Mine’s operations for all periods presented
(including comparative periods), unless otherwise noted.
The figures related to the Kumtor and Kyrgyzalt yn presented in this document (including Centerra’s
management’s discussion and analysis for the three and six months ended June 30, 2021) and Centerra’s
condensed consolidated interim financial statements and the notes thereto for the three and six months
ended June 30, 2021 (“Interim Financial Statements”) are accounting figures and do not represent the
potentially recoverable damages based on legal claims asserted by the Company and certain subsidiaries
arising from the loss of control of the Kumtor Mine . Nothing in this document or the Interim Financial
Statements shall act as a waiver of any rights or claims the Company and its subsidiaries may have in
connection with the Kumtor Mine.
British Columbia, Canada (“BC”) Fires Update
Recent record high temperatures and dry conditions in BC have led to an increase in forest fires in the
province, which may pose a risk to the health and safety of our employees, contractors and the communities
in which we operate. Such conditions have pot ential to disrupt shipments of supplies to the mine site,
operation of the mine and transportation of concentrate from the Mount Milligan Mine. To date, the only
disruption experienced is related to the movement of concentrate via rail through the province of BC. The
Company is working with the Canadian National Railway (“CN”) to try to mitigate the impact of any such
delays.
The CN truss bridge near the town of Lytton, BC, a key route for the Mount Milligan Mine’s concentrate
shipments, sustained fire d amage which affected traffic on the route. CN has since repaired the damage.
Despite some disruption to rail traffic, nineteen railcars of the Mount Milligan Mine’s concentrate were
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released and arrived in the Port of Vancouver in mid -July and were subsequ ently loaded on a vessel as
planned.
There are currently no highly visible forest fires in the vicinity of the mine and the Company does not
believe the forest fires pose a risk of disruption to the mine at this time. However, for the health and safety
of our employees and contractors, the Company has an evacuation strategy in place, including four buses
that remain on standby for evacuation purposes and 40 mine rescue team members trained in wildland
firefighting techniques. The Mount Milligan Mine also has a weather station on site and receives regular
updates from the BC Wildfire Service to monitor this evolving situation closely.
As of date of this release, the Company does not expect an impact on the 2021 production or cost guidance
for the Mount Milligan Mine as a result of the fires, however this is subject to change pending any change
in the status of the forest fires and their potential to disrupt the logistics of our operations.
COVID-19 Update
Centerra continues to prioritize the health, safety and well -being of its employees, contractors,
communities, and other stakeholders during the current outbreak of COVID -19 and to take steps to
minimize the effect of the pandemic on its business. The Company has established strict COVID -19
protocols at it s mine sites to help prevent infection and reduce the potential transmission of COVID -19.
Vaccination clinics have been set up for employees and contractors at the Mount Milligan Mine and the
Öksüt Mine, with second vaccination doses provided to 64% and 55 % of site employees, respectively.
COVID-19 vaccination rates continue to rise in the communities and countries in which the Company
operates with significant portions of the population in Canada and Turkey having received two vaccination
doses. Although immunization rates continue to climb, the Company, its mine sites and offices are currently
maintaining their COVID-19 protocols.
Centerra continues to assess the resiliency of its supply chains, maintaining increased mine site inventories
of key materials. The Company implemented travel restrictions and temporarily closed or limited office
capacity at its various administration offices, including its head office in Toronto. The Company is planning
to open its head office in Toronto in September 2021 for those employees who want to return to the office
and is currently developing a hybrid workplace policy (work from office and home) for implementation in
2022. Other offices and various administration offices at the mine sites are open with office capacity limits
in place and remain flexible and empathetic to the needs of employees to ensure that the health, safety and
wellness of our employees remain top priorities.
Neither the Mount Milligan Mine nor the Öksüt Mine has been materially affected by C OVID-19 as
employee absences due to COVID -19 and other illnesses have so far been successfully managed. The
Company notes that the effects of COVID -19 on its business continue to change rapidly. All measures
enacted to date reflect the Company’s best assessment at this time but will remain flexible and will be
revised as necessary or advisable and/or as recommended by public health and governmental authorities.
Exploration Update
Exploration activities in the second quarter of 2021 included drilling, surface sampling, geological mapping
and geophysical surveying at the Company’s various projects and earn-in properties, targeting gold and
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copper mineralization in Canada, Turkey, Finland and USA . Until May 15, 2021, the Company also
conducted exploration activities in the Kyrgyz Republic.
New projects have been initiated in Turkey at the 100% Centerra owned Karataş Project in eastern Turkey
and in the Nechako Plateau area of northcentral British Columbia at the 100% Centerra owned Lucas North
Project.
Exploration expenditures at the Company’s continuing operations were $7.6 million in the second quarter
of 2021 compared to $4.1 million in the same quarter of 2020. The increase in exploration expenditures
was primarily due to expanded drilling programs at the Mount Milligan Mine in Canada, the Öksüt Mine
and the Sivritepe Project in Turkey, and drilling activities performed at our U.S joint ventures.
Selected drill program results and intercepts are highlighted in the supplementary data at the end of this
news release. The drill collar locations and associated graphics are available at the following link:
http://ml.globenewswire.com/Resource/Download/2d207407-3f8e-4fca-a118-837afc222be2
About Centerra Gold
Centerra Gold Inc. is a Canadian-based gold mining company focused on operating, developing, exploring
and acquiring gold properties in North America, Asia and other markets worldwide. Centerra operates two
mines, the Mount Milligan M ine in British Columbi a, Canada, the Öksüt Mine in Turkey and the
Molybdenum Business Unit in the United States. The Company owns the Kumtor M ine in the Kyrgyz
Republic, which is currently not under the Company’s control. Centerra's shares trade on the Toronto Stock
Exchange (TSX) under the symbol CG and on the New York Stock Exchange (NYSE) under the symbol
CGAU. The Company is based in Toronto, Ontario, Canada.
Conference Call
Centerra invites you to join its 2021 second quarter conference call on Tuesday, August 10, 2021 at 9:00
AM Eastern Time. The call is open to all investors and the media. To join the call, please dial toll -free in
North America: +1 (877)-329-6284. International participants may access the call at: : +1 (212)-231-2903.
Results summary presentation slides are available on Centerra Gold’s website at www.centerragold.com.
Alternatively, an audio feed webcast will be broadcast live by Intrado and can be accessed live at Centerra
Gold’s website at www.centerragold.com . A recording of the call will be available on
www.centerragold.com shortly after the call and via telephone until midnight Eastern Time on August 17,
2021 by calling: +1 (416) 626-4100 or 1 (800) 558-5253 and using passcode 21995606.
For more information:
John W. Pearson
Vice President, Investor Relations
Centerra Gold Inc.
(416) 204-1953
Additional information on Centerra Gold is available on the Company’s web site at
www.centerragold.com and at SEDAR at www.sedar.com and EDGAR at www.sec.gov/edgar.