Centerra Gold Records Net Earnings of $33.4 Million or $0.11 Per Common Share (basic) on Revenues of $340.5 Million Generating Cash from Operations of $91.0 Million
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NEWS RELEASE
Centerra Gold Records Net Earnings of $33.4 Million or $0.11 Per Common Share (basic)
on Revenues of $340.5 Million Generating Cash from Operations of $91.0 Million
All figures are in United States dollars and all production figures are on a 100% basis, unless otherwise stated.
All references in this document denoted with NG, indicate a non- GAAP term which is discussed under “Non- GAAP
Measures” and reconciled to the most directly comparable GAAP measure.
Toronto, Canada, July 30, 2019: Centerra Gold Inc. (“Centerra”) (TSX: CG) today reported second
quarter 2019 net earnings and adjusted earningsNG of $33.4 million ($0.11 per common share (basic)),
compared to net earnings of $43.5 million ($0.15 per common share (basic)) and adjusted earningsNG of
$1.0 million (nil per common share (basic)) in the same period of 2018, after adjusting for gains recognized
on the sale the Company’s Mongolian operations and sale of a royalty portfolio in 2018. The Company
generated cash from operations of $91.0 million and $30.7 million of free cash flowNG compared to cash
from operations of $68.1 million and free cash flowNG of $(4.7) million in the second quarter of 2018.
2019 Second Quarter Highlights
• The Company reported net earnings of $33.4 million or $0.11 per common share (basic).
• Cash generated from operations was $91.0 million. Second quarter 2019 cash from operation
included $92.7 million from Kumtor and $24.2 million from Mount Milligan, offset by costs
incurred by the Molybdenum business and corporate costs.
• The Company produced 199,578 ounces of gold in the period, which includes 151,065 ounces at
Kumtor and 48,513 ounces at Mount Milligan. Mount Milligan also produced 20.4 million pounds
of copper.
• Mount Milligan, mill throughput averaged 53,500 tonnes per calendar day.
• Centerra has tightened the range and modestly increased Kumtor’s annual gold guidance to
550,000 – 575,000 ounces resulting in a revision to our 2019 consolidated gold production
guidance to 705,000 – 750,000 ounces.
• The company’s full year gold and copper production guidance for Mount Milligan remains
unchanged.
• Mount Milligan’s water capture from the 2019 spring melt runoff was less than anticipated, creating
a risk to the level of production in early 2020 until the spring melt occurs, similar to 2019. The
Company continues to explore for additional groundwater sources and to work towards a long-term
water solution.
• Consolidated cost of sales increased in the second quarter of 2019 to $238.5 million.
• Consolidated all-in sustaining costs per ounce soldNG for the second quarter 2019 were $716,
including $562 at Kumtor and $938 at Mount Milligan.
• Favourably revised 2019 consolidated all-in sustaining costs per ounce soldNG guidance to $713 -
$743 and lowered Kumtor’s all-in sustaining costs per ounce soldNG guidance to $635 - $685 Mount
Milligan’s all-in sustaining costs per ounce soldNG for 2019 remains unchanged.
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• Capitalized waste stripping guidance has been increased by $32 million as we mine the initial waste
material on cut-back 20 at Kumtor. The change in mine plan, to defer mining of cut-back 19 East,
where we were reaching ore, followed the identification of ground instability in the first quarter of
2019. No significant ground movement was identified in the second quarter 2019; we continue to
study potential mitigation measures and the long-term impact on our mine plan and reserves of the
deferral.
• Construction at the Öksüt Project in Turkey is now 64% complete and remains on schedule with
first gold pour expected in January of 2020. The total construction cost is expected to be $20
million under budget.
• The revolving corporate credit facility was repaid in full during the quarter.
• Cash and cash equivalents available at June 30, 2019 were $140.0 million.
• Subsequent to June 30, 2019, we agreed with the Government of the Kyrgyz Republic to extend the
long-stop date in connection with the Strategic Agreement to August 10, 2019.
Commentary
Scott Perry, President and Chief Executive Officer of Centerra stated, “We are very pleased to report that
our contract workforce at the Kumtor Mine achieved a significant safety milestone during the quarter in
attaining one year of lost time incident-free operations. This milestone demonstrates our workforce’s
commitment to Centerra’s Work Safe – Home Safe program and our drive to zero harm within the
workplace.”
“The operations produced a total of 199,578 ounces of gold and 20.4 million pounds of copper in the
quarter. Kumtor had another strong quarter producing 151,065 ounces of gold which was attributable to
milling higher grades and achieving higher recoveries as compared to the comparative period. The
northwest pit wall where instability was noted in the first quarter has stabilized and no significant ground
movement was identified in the second quarter 2019.”
“Mount Milligan achieved production of 48,513 ounces of gold and 20.4 million pounds of copper during
the quarter, as the mill returned to targeted full capacity (55,000 tonnes per day) in early May due to
increased water availability from the spring melt, even though we experienced a less robust spring melt
than anticipated. We continue to explore for additional groundwater sources as we work towards a long-
term water solution. During the quarter, mill throughput averaged 53,500 tonnes per calendar day.”
“Company-wide our all-in sustaining costs (before taxes)NG were $716 per ounce sold for the quarter
reflecting Kumtor achieving all-in sustaining costs (before taxes)NG of $562 per ounce.”
“With our second quarter earnings release today, the Company tightened the range and modestly increased
its gold production guidance for Kumtor for the year to 550,000 – 575,000 ounces and Company-wide gold
production to 705,000 to 750,000 ounces from 535,000-565,000 ounces and 690,000-740,000 ounces,
respectively. We have also favourably lowered our expected all-in sustaining costs on a by-product basis
(before taxes)NG at Kumtor to $635 to $685 per ounce sold, which reduces the Company’s consolidated all-
in sustaining costs on a by-product basis (before taxes)NG to $713 to $743 per ounce sold. Mount Milligan’s
production and cost guidance for 2019 remains unchanged.”
“Construction activity continued at the Öksüt Project in Turkey and the project is now 64% complete. The
project remains on schedule with first gold pour now expected in January of 2020 and is projected to be
$20 million under budget, including a $10 million reduction in contingencies.”
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“Financially, the business delivered $91 million of cash from operations in the quarter. Kumtor and Mount
Milligan generated $106 million and $11 million respectively, before working capital changesNG. During
the second quarter, Kumtor generated $65 million of free cash flowNG and Mount Milligan generated $18
million of free cash flowNG which enabled the Company to repay in full the corporate credit facility reducing
its debt in the quarter by $70 million and ending the quarter with cash and cash equivalents of $140 million
(excluding restricted cash).”
Exploration Update
Exploration activities in the second quarter of 2019 included drilling, surface sampling, geological mapping
and geophysical surveying at the Company’s various projects targeting gold and copper mineralization in
Turkey, Canada, Mexico, Sweden, Finland and Burkina Faso. Exploration expenditures totaled $6.3
million in the second quarter of 2019 compared to $4.8 million in the same quarter of 2018. The Company’s
2019 exploration program is primarily focused on brownfield exploration at Kumtor, Mount Milligan,
Öksüt and Kemess.
Kyrgyz Republic
Kumtor Mine
At Kumtor, planned exploration work is aimed at defining additional resources on the flanks of the Central
Pit focusing on the Hockey Stick Zone and the SB Zone deep extension to add to the open pit mine life.
Exploration drilling is also focused on testing zones of gold mineralization near the surface for additional
open pit resources in the corridor between the Central and Southwest pits and on the flanks of the Northeast
target area. During the second quarter of 2019, 67 diamond drill holes for 16,223 metres were completed,
including 1,866 metres of infill drilling in the SB Zone (drilled below the current ultimate open pit).
Central Pit
In the Hockey Stick Zone, 36 drill holes for 9,771 metres were completed. Results indicate that gold
mineralization extends in a southwest direction and represents mineralization that may expand the area’s
economic viability. The best intercepts are as follows:
D1873A: 13.1 metres @ 4.17 g/t Gold (“Au”) from 201.4 metres;
Includes 3.7 metres @ 8.63 g/t Au from 204.0 metres;
D1919A: 43.8 metres @ 5.26 g/t Au from 199.4 metres.
Includes 13.9 metres @ 11.66 g/t Au from 220.1 metres.
D1920: 15.4 metres @ 2.15 g/t Au from 161.9 metres.
Includes 3.3 metres @ 4.66 g/t Au from 161.9 metres.
Additional infill, geotechnical and metallurgical drilling (~20,000 metres of drilling, $6 million) was
approved in the second quarter of 2019 to further delineate the Hockey Stick Zone to upgrade existing
resources categories.
In the Northwest Wall, 10 drill holes were completed for a total 1,340 metres. The best intercept is as
follows:
DW1887: 5.1 metres @ 2.34 g/t Au from 158.6 metres
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In SB Zone (below current open pit), infill drilling was carried out with the completion of eight drill holes
for 1,866 metres. The best intercepts are as follows:
D1876A: 12.0 metres @ 11.48 g/t Au from 61.1 metres;
D1876B: 22.9 metres @ 8.45 g/t Au from 58.6 metres
Includes 8.0 metres @ 17.32 g/t Au from 63.5 metres;
D1878: 41.1 metres @ 5.87 g/t Au from 36.2 metres
Includes 8.0 metres @ 11.93 g/t Au from 47.3 metres
Includes 5.0 metres @ 11.91 g/t Au from 64.3 metres;
D1881: 33.4 metres @ 6.68 g/t Au from 212.6 metres
Includes 3.9 metres @ 14.05 g/t Au from 219.6 metres
Includes 4.0 metres @ 14.11 g/t Au from 227.5 metres;
D1882: 67.5 metres @ 8.32 g/t Au from 322.5 metres;
29.5 metres @ 16.70 g/t Au from 357.0 metres;
D1897: 7.0 metres @ 18.06 g/t Au from 80.1 metres;
35.4 metres @ 8.12 g/t Au from 102.9 metres
Includes 11.2 metres @ 16.67 g/t Au from 103.9 metres;
Southwest Area
Three drill holes were completed between the Southwest and Central Pits for a total of 655 metres. The best
intercepts are as follows:
SW-19-282A: 4.1 metres @ 3.69 g/t Au from 176.4 metres;
SW-19-284: 4.0 metres @ 1.36 g/t Au from 188.9 metres.
Northeast Area
In Northeast area, 10 drill holes were completed for a total of 2,590 metres. The best intercepts are:
DN1900:
25.1 metres @ 3.23 g/t Au from 332.9 metres
Includes 5.0 metres @ 6.46 g/t Au from 332.9 metres;
7.2 metres @ 5.37 g/t Au from 389.3 metres;
DN1911: 5.6 metres @ 2.87 g/t Au from 33.7 metres;
8.7 metres @ 2.09 g/t Au from 419.3 metres.
The above mineralized intercepts were calculated using a cut-off grade of 1.0 g/t Au, minimum interval of
4.0 metres and a maximum internal dilution interval of 5.0 metres. Drill collar locations and associated
graphics are available at the following link:
http://ml.globenewswire.com/Resource/Download/ccf0f7d2-645c-4668-b75b-4d85179998ee
A complete listing of the drill results, drill hole locations and plan map for the Kumtor Mine have been
filed on the System for Electronic Document Analysis and Retrieval (‘SEDAR’) at www.sedar.com and
are available at the Company’s web site www.centerragold.com.
Canada
Mount Milligan Mine
At Mount Milligan, the 2019 exploration program is focused on initially expanding mineral resources to
the west and at depth and other exploration targets adjacent to the mine lease. The 2019 near pit infill
drilling program (22,500 metres planned) began in February. In the second quarter, a total of 8,896 metres
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in 24 drill holes were completed; including 16 holes (5,946 metres) in the Southern Star Zone and eight
holes (2,950 metres) in the Saddle Zone. Year to date, a total of 10,936 metres have been drilled in the
program. During the second quarter, assay results were received for 13 drill holes and the most significant
intercepts are as follows:
Southern Star Zone
19-1133: 100.1 metres @ 0.57 g/t Au, 0.28% Cu from 18.9 metres
19-1133: 38.9 metres @ 0.52 g/t Au, 0.29% Cu from 198.0 metres;
19-1135: 123.0 metres @ 0.36 g/t Au, 0.37% Cu from 106.0 metres
19-1139: 57.6 metres @ 0.17 g/t Au, 0.15% Cu from 192.0 metres;
19-1139: 55.6 metres @ 0.18 g/t Au, 0.14% Cu from 254.3 metres;
19-1140: 149.3 metres @ 0.22 g/t Au, 0.13% Cu from 3.7 metres
19-1140: 77.3 metres @ 0.28 g/t Au, 0.26% Cu from 198.4 metres
Saddle Zone
19-1147: 40.1 metres @ 0.33 g/t Au, 0.14% Cu from 18.9 metres;
19-1147: 20.9 metres @ 0.34 g/t Au, 0.26% Cu from 183.4 metres;
19-1150: 39.2 metres @ 0.25 g/t Au, 0.16% Cu from 18.3 metres.
19-1150: 51.2 metres @ 0.23 g/t Au, 0.37% Cu from 62.5 metres.
19-1152: 10.0 metres @ 0.36 g/t Au, 0.23% Cu from 18.5 metres;
19-1152: 30.4 metres @ 0.33 g/t Au, 0.10% Cu from 315.5 metres.
The near pit infill program will continue until mid-September with drill holes planned in the Southern Star,
Saddle, 66, Great Eastern Fault, MBX, and Oliver zones.
Brownfield exploration drilling
The 2019 brownfield (within mine lease, but outside ultimate pit) exploration drilling program at Mount
Milligan (8,500 metres planned) began on May 1st. A total of 4,719 metres in 11 drill holes was completed
during the second quarter; including three holes (1,814 metres) in the North Slope Zone, five holes (2,111
metres) in the Goldmark Zone and three holes (794 m) in the Saddle West Zone. Selected best assay results
from the one drill hole returned during the second quarter are reported below.
North Slope Zone
19-1138: 14.5 metres @ 1.13 g/t Au, 0.02% Cu from 342.0 metres;
19-1138: 59.7 metres @ 0.13 g/t Au, 0.22% Cu from 469.7 metres;
19-1138: 8.36 metres @ 0.26 g/t Au, 0.24% Cu from 538.6 metres.
The above mineralized intercepts were calculated using a cut-off grade of 0.1 g/t Au and a maximum
internal dilution interval of 4 metres. Drill collar locations and associated graphics are available at the
following link:
http://ml.globenewswire.com/Resource/Download/ccf0f7d2-645c-4668-b75b-4d85179998ee
A listing of the drill results, drill hole locations and plan map for the Mount Milligan Mine have been filed
on the System for Electronic Document Analysis and Retrieval (‘SEDAR’) at www.sedar.com and are
available at the Company’s web site www.centerragold.com.
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Kemess Project
The 2019 Kemess exploration program ramped up in the second quarter focused on the Nugget target (1.5
km west of Kemess Underground (KUG) and KUG deep mineralization to delineate previously known
copper/gold mineralization and to add to existing mineral resource inventory. Relogging of 12,128 metres
of historic drill core from the Kemess Underground (KUG) deposit and Nugget Zone was completed in
April and May. Drilling began in June with a total of 1,030 metres completed by June 30th (1,010 metres in
the Nugget Zone and 20 metres in the KUG Zone). The program is expected to continue until late August
with a total of approximately 6,200 metres of drilling in seven drill holes. No assay results from drilling
have been returned yet.
Turkey
Öksüt Gold Project
At the Öksüt Gold Project, the 2019 diamond drilling program is principally designed to expand existing
oxide gold resources and to explore for new oxide gold mineralization around the known deposits (Keltepe
and Güneytepe). During the second quarter of 2019 drilling commenced with three rigs at the Keltepe,
Keltepe NW and Büyüktepe prospects. Five drill holes (ODD0330 to ODD0334) have been completed for
an aggregate of 1,423 metres. Testing for deeper mineralization (below current planned open pit), including
supergene copper (Keltepe and Keltepe NW) and porphyry-style copper-gold (Boztepe W) targets, will also
be undertaken in the third quarter.
Drilling highlights are:
Keltepe (Testing for oxide gold resource expansion in the west and supergene copper to the northwest
of the Keltepe pit)
ODD0332: 24.5 metres @ 0.43 g/t Au from 253 metres;
ODD0333: 54.5 metres @ 2.35% Cu from 314.5 metres
including 20 metres @ 5.12% Cu from 314.5 metres.
In addition, in the second quarter an assessment of the 3D non-linear Induced Polarization (IP) geophysical
survey, covering the Keltepe NW, Keltepe, Güneytepe and Yelibelen prospects, was completed.
Assessment of the survey results has generated additional oxide gold targets for testing and confirmed
deeper targets around the known deposits.
The above mineralized intercepts were calculated using a cut-off grade of 0.2 g/t Au and a maximum
internal dilution interval of 5.0 metres. Drill collar locations and associated graphics are available at the
following link:
http://ml.globenewswire.com/Resource/Download/ccf0f7d2-645c-4668-b75b-4d85179998ee
A listing of the drill results, drill hole locations and plan map for the Öksüt Gold Project have been filed on
the System for Electronic Document Analysis and Retrieval (‘SEDAR’) at www.sedar.com and are
available at the Company’s web site www.centerragold.com.
Qualified Person & QA/QC
All mineral reserve and mineral resource estimates and other scientific and technical information in this
news release were prepared in accordance with the standards of the Canadian Institute of Mining,
Metallurgy and Petroleum and National Instrument 43-101 – Standards of Disclosure for Mineral Projects
(“NI 43-101”) and (except as set out below) were prepared, reviewed, verified and compiled by Centerra’s
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geological and mining staff under the supervision of Gordon Reid, Professional Engineer and Centerra’s
Vice-President and Chief Operating Officer, who is the qualified person for the purpose of NI 43-101.
Sample preparation, analytical techniques, laboratories used and quality assurance-quality control protocols
used during the drilling programs are consistent with industry standards and independent certified assay
labs are used, with the exception of the Kumtor project as described in its technical report dated March 20,
2015.
Exploration information and other related scientific and technical information in this news release regarding
the Kumtor Mine were prepared in accordance with the standards of NI 43-101 and were prepared,
reviewed, verified and compiled by Boris Kotlyar, a member with the American Institute of Professional
Geologists (AIPG), Chief Geologist, Global Exploration with Centerra Gold Inc., who is the qualified
person for the purpose of NI 43-101. Sample preparation, analytical techniques, laboratories used and
quality assurance-quality control protocols used during the exploration drilling programs are done
consistent with industry standards and independent certified assay labs are used. The Kumtor deposit is
described in Centerra’s most recently filed Annual Information Form and a technical report dated March
20, 2015 (with an effective date of December 31, 2014), which are both filed on SEDAR at www.sedar.com.
Exploration information and other related scientific and technical information in this news release regarding
the Mount Milligan Mine were prepared in accordance with the standards of NI 43-101 and were prepared,
reviewed, verified and compiled by C. Paul Jago, Member of the Engineers and Geoscientists British
Columbia, Exploration Manager at Centerra’s Mount Milligan Mine, who is the qualified person for the
purpose of NI 43101. Sample preparation, analytical techniques, laboratories used and quality assurance
quality control protocols used during the exploration drilling programs are done consistent with industry
standards and independent certified assay labs are used. The Mount Milligan deposit is described in
Centerra’s most recently filed Annual Information Form and a technical report dated March 22, 2017 (with
an effective date of December 31, 2016) prepared in accordance win NI 43-101, both of which are available
on SEDAR at www.sedar.com.
Exploration information and other related scientific and technical information in this news release regarding
the Öksüt Project were prepared, reviewed, verified and compiled in accordance with NI 43-101 by Mustafa
Cihan, Member of the Australian Institute of Geoscientists (AIG), Exploration Manager Turkey at
Centerra’s Turkish subsidiary Centerra Madencilik A.Ş., who is the qualified person for the purpose of NI
43-101. Sample preparation, analytical techniques, laboratories used and quality assurance-quality control
protocols used during the exploration drilling programs are done consistent with industry standards and
independent certified assay labs are used. The Öksüt deposit is described in Centerra’s most recently filed
Annual Information Form and in a technical report dated September 3, 2015 (with an effective date of June
30, 2015) prepared in accordance with NI 43-101 both of which are available on SEDAR at
www.sedar.com.
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TABLE OF CONTENTS
1. Overview .............................................................................................................................9
2. Consolidated Financial and Operational Highlights ....................................................10
3. Overview of Consolidated Results ..................................................................................11
4. 2019 Outlook.....................................................................................................................12
5. Financial Performance ....................................................................................................17
6. Balance Sheet Review ......................................................................................................19
7. Market Conditions ...........................................................................................................19
8. Financial Instruments ......................................................................................................20
9. Operating Mines and Facilities .......................................................................................21
10. Construction and Development Projects .......................................................................33
11. Quarterly Results – Previous Eight Quarters ...............................................................35
12. Contingencies....................................................................................................................36
13. Accounting Estimates, Policies and Changes ................................................................39
14. Disclosure Controls and Procedures/Internal Control Over Financial Reporting ....40
15. Non-GAAP Measures ......................................................................................................40
16. Caution Regarding Forward-Looking Information .....................................................48