CG.TO · 2016-12-31 12:00:00

Centerra Gold Reports Fourth Quarter and 2016 Year-end Results

Financials

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NEWS RELEASE

Centerra Gold Reports Fourth Quarter and 2016 Year-end Results

All figures are in United States dollars and all production figures are on a 100% basis unless otherwise stated. This

news release contains forward-looking information that is subject to risk factors and assumptions set out on page 26 and

in the note Caution Regarding Forward-looking Information on page 40 in this news release. It should be read in

conjunction with the Company’s audited financial statements and notes for the year ended December 31, 2016 and

associated Management’s Discussion and Analysis. The consolidated financial statements of Centerra are prepared in

accordance with International Financial Reporting Standards (“IFRS”).

To view Management’s Discussion and Analysis and the Audited Consolidated Financial Statements and Notes

for the year ended December 31, 2016, please visit the following link:

http://media3.marketwire.com/docs/CGQ42016MDAFS.pdf

Toronto, Canada, February 23, 2017: Centerra Gold Inc. (TSX: CG) t oday reported net earnings of $63.6

million or $0.23 per common share (basic) in the fourth quarter of 2016 compared to a net loss of $2.9 million

or $0.01 per common share (basic) in the fourth quarter of 2015. Results in the fourth quarter of 2015

included a $27.2 million or $0.11 per share (basic) inventory impairment at the Kumtor mine.

For 2016, the Company recorded net earnings of $151.5 million or $0.60 per share (basic) compared to $41.6

million or $0.18 per share (basic) in 2015. The increas e in earnings in 2016 reflects higher metal prices,

additional gold production at Kumtor due to improvement s in mill throughput and lower operating costs as a

result of the continued focus on cost reduction and lowe r cost of consumables in particular diesel fuel.

Results for 2016 also benefitted from the reversal of an inventory impairment charge at Kumtor of $27.2

million which was originally recorded in 2015. Ne t earnings provided by the Thompson Creek operations,

including the Mount Milligan mine were $11.6 million from October 20, 2016, the date of the acquisition.

Results in 2015 were negatively impacted by a non- cash impairment charge of Kumtor goodwill of $18.7

million ($0.08 per share (basic)) recorded in the thir d quarter of 2015. Excluding the goodwill impairment

charge, earnings in 2015 would have been $60.3 million ($0.26 per share (basic)).

2016 Fourth Quarter and Full Year Highlights

 Completed the acquisition of Thompson Creek Metals Company Inc.

 Exceeded at Kumtor the mid-point of the Comp any’s favourably revised gold production guidance

and achieved lower unit costs than the Company’s revised unit cost guidance.

 Increased Centerra’s estimated gold mineral rese rves to 16 million contained ounces of gold (673.5

Mt at 0.7 g/t gold) at year-end, primarily as a re sult of the acquisition of Thompson Creek. Estimated

copper mineral reserves total 2,049 million pounds of contained copper (496.2 Mt at 0.187% copper).

Mineral reserves are described in the Company’s news release of February 23, 2017.

 Achieved Company-wide all-in sustaining costs on a by-product basis per ounce sold1 for the fourth

quarter of $586 and $682 for the full year.

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

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 Generated at Kumtor $237 million in cash for the year after all capital expenditures and taxes in 2016,

after achieving all-in sustaining costs1 of $640 per ounce sold for the year.

 Completed the feasibility study on the Hardrock Project and filed the technical report on SEDAR.

 Received at Kumtor the necessary permits and appr ovals for its 2017 mine plan. The approvals and

permits are valid for the full year.

 Cash provided by operations totalled $371.4 million for the year.

 Cash, cash equivalents and short-term investme nts total $408.8 million at December 31, 2016, which

includes $247.8 million of cash that can only be used for Centerra’s Kumtor subsidiary purposes.

 Commenced arbitration against the Kyrgyz Republic and Kyrgyzaltyn in relation with certain ongoing

disputes relating to the Kumtor Project.

 In light of the continued inability of the Compan y to access cash generated by the Kumtor Project,

including as a result of the denial by the Kyrgyz Republic Supreme Court of KGC’s appeal of the

interim order, the Company has suspended the payment of dividends.

In 2016, Centerra generated cash of $47.2 million, consis ting of cash inflows from the Kumtor operations of

$237.0 million and $8.0 million from Mount Milligan a nd corporate activity of $166.1 million (redemption of

investments net of corporate administration and other costs), partially offset by cash outflows for the

acquisition of Thompson Creek Metals Inc. of $350.9 million (net of proceeds from debt, equity offering and

cash received from Thompson Creek Metals Inc.) and exploration and business development of $13.0 million.

Cash and cash equivalents at December 31, 2016 was $160.1 million, excluding cash of $247.8 million

required to be retained in Centerra’s wholly-owned Kumtor subsidiary. The cash and cash equivalents

balance comprises $99.8 million held in Centerra Gold In c., $51.6 million held in Centerra B.C Holdings and

the remaining $8.7 million in other Company subsidiaries. Of the funds held in Centerra Gold Inc. $50

million can only be used for Mongolian purposes. The funds held in Centerra B.C. Holdings can only be used

for expenditures on Centerra B.C. Holdings subsidia ries including the Mount Milligan mine. Cash dividends

declared by Centerra B.C. Holdings for distribution to Centerra Gold Inc. will require a matching early

repayment to the lender of the Centerra B.C. Holdings Credit Facility.

As previously disclosed, Centerra’s Kyrgyz Republic subsidiary, Kumtor Gold Company (“KGC”) is subject

to an interim order of a Kyrgyz Republic court prohi biting KGC from taking any ac tions relating to certain

financial transactions, including transferring property or assets, declaring or paying dividends or making loans

to Centerra. While such order does not prohibit KGC fro m continuing to use its cash resources to operate the

Kumtor mine, cash generated from the Kumtor mine conti nues to be held in KGC and is not being distributed

to Centerra.

On January 12, 2017, Centerra filed an application in its international arbitration for partial award, or in the

alternative, interim measures against the Kyrgyz Republic. The Company is seeking an award ordering that

the Kyrgyz Republic withdraw or to stay (suspend) its claims relating to previously disclosed environmental,

dividend and land use claims, and related decisions and court orders, including the interim court order

discussed above. See “Other Corporate Developments” for further discussion.

At December 31, 2016, the Company had fully drawn its revolving and term credit facilities with its syndicate

of lenders, in the aggregate amount of $325 million (used for the acquisition of Thompson Creek Metals Inc.).

In January 2017, the covenants for this facility in 2017 were amended to refl ect the planned 2017 production

profile at the Mount Milligan mine. In addition, th e Company had fully drawn on its corporate revolving

credit facility with EBRD in the amount of $150 million. Subsequent to this, in February 2017 the Company

repaid $25 million of the corporate revolving credit fac ility with EBRD. The $150 million credit facility with

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UniCredit Bank AG and EBRD for the development of th e Öksüt Project remains undrawn and is subject to

the satisfaction of certain conditions, including the receipt of a pastureland permit.

It is expected that all planned capital and operating e xpenditures of the Company for 2017 can be funded out

of cash, short-term investment and cash generated fro m the Mount Milligan mine, although there can be no

assurance of this. Absent access to cash held by KGC due to the Kyrgyz Interim Court Order, the Company

expects that it will be required to raise financing in order to fund construction and development expenditures

on its development properties or to de fer such expenditures. Although KGC’s cash is currently restricted due

to the Kyrgyz Interim Court Order, such cash can be used to fund Kumtor operations. See “Caution

Regarding Forward-Looking Information”.

Commentary

Scott Perry, Chief Executive Officer of Centerra stated , “Regrettably 2016 got off to an unfortunate start

when a mill employee at Kumtor was fatally injured. W ith this tragic event the Company is rolling out a new

Company-wide safety leadership program called Work Safe – Home Safe. On the operational front, as we

disclosed earlier, Kumtor had another strong year and we exceeded the mid-point (540,000 ounces) of

Centerra’s favourably revised gol d production guidance for 2016. With the addition of production from

Mount Milligan, the Company produced 598,677 ounces of gold in 2016 and 10.4 m illion pounds of copper.

I am pleased to report that we also significantly beat our unit cost guidance for the year as our all-in

sustaining costs were $682 per ounce sold 1. Our lower costs reflect Kumtor favourably exceeding its cost

guidance with all-in sustaining costs 1 of $639 per ounce sold for the year. Kumtor successfully implemented

various continuous improvement initiatives throughout the year resulting in higher throughput in the mill and

lower unit costs. Kumtor once again generated a signi ficant amount of cash, after all capital expenditures and

taxes -- it generated $237 million in 2016. The Company continues its discussions with the Government of

the Kyrgyz Republic to resolve all outstanding issues affec ting the Kumtor Project in a manner that is fair to

all of its stakeholders.”

“At Mount Milligan construction of the permanent secondary crushing circuit was completed and began

operations during the fourth quarter of 2016. Work continues to optimize the crushing and grinding

equipment and to make adjustments in the mill to maximize the value of the new crushing circuit.”

“At the Öksüt Project in Turkey we received the fo restry usage permit and the operation permit for the

forestry area last summer and we are continuing to work with the relevant agencies to obtain the key

pastureland permit.”

“In Mongolia, the Government recently established new working groups to negotiate definitive agreements

relating to the Gatsuurt Project and we expect to con tinue such negotiations in 2017. Concurrent with the

negotiations we are continuing to update the existing technical and economic studies on the project.”

“Lastly, with the addition of the Mount Milligan and our share of the Hardrock Project gold mineral reserves,

the Company’s gold mineral reserve estimate increased to 16 million ounces of contained gold (673.5 Mt at

0.7 g/t gold). In addition the Company has 2.0 bil lion pounds of contained copper (496.2Mt at 0.187%

copper grade),” Mr. Perry concluded.

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

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Consolidated Financial and Operating Summary

Unaudited ($ millions, except as noted)(9) Quarter ended December 31, (7) Year ended December 31, (7)

Financial Highlights 2016 2015 Variance(%) 2016 2015 Variance(%)

Revenue $ 305.7 $ 148.3 106% $ 760.8 $ 624.0 22%

Cost of sales 167.2 113.4 47% 414.6 384.5 8%

Standby costs 2.5 0.9 178% 0.3 5.7 (95%)

Regional office administration 4.0 4.6 (12)% 14.7 19.1 (24%)

Earnings from mine operations 132.0 29.4 349% 331.2 214.7 54%

Revenue-based taxes 32.6 20.2 79% 96.3 84.6 14%

Care and maintenance costs 1.8 0% 1.8 - 0%

Other operating expenses 1.3 0.8 63% 2.7 1.9 42%

Pre-development project costs 3.1 1.8 72% 10.7 13.2 (19%)

Impairment of goodwill - - 0% - 18.7 (100%)

Thompson Creek Metals Inc. acquisition expenses 7.4 - 0% 12.0 - 0%

Exploration and business development (1) 4.4 2.6 49% 13.0 10.6 23%

Corporate administration 9.3 7.7 21% 27.6 35.8 (23%)

Earnings (loss) from operations 72.1 (3.6) 2103% 167.1 49.9 235%

Other expenses (income) 0.8 (1.5) 288% - 3.4 (100%)

Finance costs 6.7 1.1 509% 11.1 4.4 152%

Earnings (loss) before income taxes 64.6 (3.2) 2119% 156.0 42.1 271%

Income tax expense (recovery) 1.0 (0.4) (350%) 4.5 0.4 1025%

Net earnings (loss) $ 63.6 $ (2.9) 2293% $ 151.5 $ 41.6 264%

Earnings (loss) per common share - $ basic (2) $ 0.23 $ (0.01) 2400% $ 0.60 $ 0.18 233%

Earnings (loss) per common share - $ diluted (2) $ 0.23 $ (0.01) 2400% $ 0.60 $ 0.18 233%

Weighted average common shares outstanding -

basic (thousands) 281,671 236,846 19% 251,458 236,592 6%

Weighted average common shares outstanding -

diluted (thousands) 282,173 237,346 19% 252,079 236,951 6%

Total assets $ 2,654.8 $ 1,660.6 60% $ 2,654.8 $ 1,660.6 60%

Long-term debt and lease obligation 422.8 - 0% 422.8

- 0 %

Long-term provision for reclamation, dividends

payable and deferred income taxes 181.1 76.9 107% 181.1 76.9 107%

Cash provided by operations 170.4 47.5 259% 371.4 333.6 11%

Average realized gold price (third party) - $/oz(4) 1,170 1,098 7% 1,241 1,162 7%

Average realized gold price (combined) - $/oz(4) 1,154 1,098 5% 1,233 1,162 6%

Average gold spot price - $/oz(3) 1,222 1,106 10% 1,248 1,160 8%

Capital expenditures (5) $ 83.6 $ 33.6 149% $ 247.7 $ 370.5 (33%)

Operating Highlights

Gold produced – ounces poured 248,479 133,664 86% 598,677 536,920 12%

Gold sold – ounces sold 225,996 135,064 67% 580,496 536,842 8%

Payable copper produced – 000’s lbs 10,399 - - 10,399 - -

Copper sold – 000’s lbs 9,467 - - 9,467 - -

Operating costs (on a sales basis)(6) $ 84.0 $ 48.6 73% $ 211.5 $ 163.4 30%

Adjusted operating costs(4) $ 64.9 $ 54.7 19% $ 201.1 $ 189.8 6%

All-in Sustaining Costs(4) $ 132.7 $ 83.3 59% $ 395.8 $ 437.0 (9%)

All-in Costs, excluding development projects(4) $ 149.0 $ 88.4 69% $ 438.7 $ 461.8 (5%)

All-in Costs, excluding development projects -

including taxes(4) $ 182.6 $ 108.6 68% $ 539.5 $ 546.6 (1%)

Unit Costs

Cost of sales - $/oz sold(4) $ 740 $ 840 (12%) $ 714 $ 716 0%

Adjusted operating costs - $/oz sold(4) $ 287 $ 405 (29%) $ 346 $ 354 (2%)

All-in sustaining costs on a by-product basis –

$/oz sold(4) $ 586 $ 617 (5%) $ 682 $ 814 (16%)

All-in costs excluding de velopment projects, on

a by-product basis – $/oz sold(4) $ 659 $ 654 1% $ 756 $ 861 (12%)

All-in costs excluding de velopment projects, on

a by-product basis (including taxes) – $/oz

sold(4) $ 808 $ 804 1% $ 929 $ 1,018 (9%)

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(1) Includes business development of $0.5 million and $0.5 million for the three months a nd year ended December 31, 2016, respectiv ely ($0.3

million and $2.2 million for the three months and year ended December 31, 2015, respectively).

(2) As at December 31, 2016, the Company had 291,276,068 common shares issued and outstanding.

(3) Average for the period as reported by the London Bullion Market Association (US dollar Gold P.M. Fix Rate).

(4) Adjusted operating costs, all-in sustaining costs on a by-produc t basis, all-in costs excluding development projects on a by-pr oduct basis

and all-in costs excluding devel opment projects on a by-product basis - including taxes ($ millions and per ounce sold) as well as average

realized gold price (third party and combined) per ounce and cost of sales per ounce sold are non-GAAP measures and are discuss ed under

“Non-GAAP Measures”.

(5) Includes capitalized stripping of $58.3 milli on and $136.7 million in the three months and year ended December 31, 2016, respec tively

($12.2 million and $210.6 million in the three months and year ended December 31, 2015, respectively) and $75.7 million relatin g to

implementation of the Greenstone Partnership in 2016.

(6) Operating costs (on a sales basis) are comprised of mine operating costs such as mining, processing, regional office administration, royalties

and production taxes (except at Kumtor where revenue-based taxe s 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 t he ounces sold

in the period. See “Non-GAAP Measures”.

(7) 2016 includes results from Thompson Creek operations beginning October 20, 2016, the date of acquisition. Mount Milligan payable

production and ounces sold are presented on a 100% basis (Royal Gold streaming agreement en titles it to 35% and 18.75%

of gold and copper sales, respectively). 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. No comparative results presented prior to acquisition.

(8) Payable production for copper and gold reflects estimated meta llurgical losses resulting from handling of the concentrate

and payable metal deductions, s ubject to metal content, levied by smelters . The current payable percentage applied is

approximately 95.0% for copper and 96.5% fo r gold, which may be revised on a prosp ective basis after sufficient history of

payable amounts is determined

(9) Results may not add due to rounding.

Fourth Quarter 2016 compared to Fourth Quarter 2015

 Gold production for the fourth quarter of 2016 increased 86% to 248,479 ounces poured, including

200,762 ounces from Kumtor and 47,717 ounces from Mount Milligan. In the fourth quarter of 2016,

Kumtor processed the higher grade ore obtained from cut-back 17 of the SB Zone.

 Mount Milligan produced 23,022 dry metric tonnes of concentrate, containing 47,717 ounces of gold

and 10.4 million pounds of copper, since the clos ing of the acquisition of Thompson Creek Metals

Company Inc. on October 20, 2016. Mill throughput was negatively affected by the secondary crusher

commissioning activities and harder than average or e. Mine production was lower than budgeted due to

unexpected harsher winter conditions.

 Cost of sales per ounce 1 sold in the fourth quarter was $740 in 2016 compared to $840 in 2015, a 12%

decrease year over year. The 2016 result includes Kumtor and the Thompson Creek operations, with

Kumtor representing $537 per ounce sold. The comparative 2015 year represents only Kumtor and

includes a charge of $27.2 million to operating costs due to an inventory impairment recorded at the end

of the year. Excluding this impairment charge from the 2015 results, cost of sales per ounce in the prior

year would have been $645 per ounce sold. The reducti on at Kumtor year over year is a result of lower

operating costs, the processing of material with higher grades and recoveries and process improvements

in the mill achieved in the fourth quarter of 2016.

 All-in sustaining costs (on a by-product basis) per ounce sold 1, which excludes revenue-based tax and

income tax, for the fourth quarter of 2016 decreased to $586 compared to $617 in the same period of

2015. The consolidated measure includes a contribution from Kumtor of $538 per ounce sold,

reflecting higher volumes, grades, recoveries and lo wer operating costs. Mount Milligan contributed

$509 per ounce sold, while corporate costs and exploration added $17.6 million and $3.8 million

respectively of costs to the measure.

 All-in costs, excluding development project costs (on a by-product basis) per ounce sold 1, which

excludes revenue-based tax and income tax, were $659 in the fourth quarter of 2016 compared to $654

in the same quarter of 2015. The consolidated measure includes a contribution from Kumtor of $545

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

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per ounce sold, while Mount Milligan contributed $605 per ounce sold. The decrease at Kumtor

reflects more ounces sold, lower operating costs a nd lower spending on capital expenditures. The

fourth quarter of 2016 includes acquisition costs for Thompson Creek of $7.4 million and increased

exploration and business developments costs of $1.6 million as compared to the comparative period.

 Revenues in the fourth quarter of 2016 increased 106% to $305.7 million, as a result of selling 67%

more ounces and a 5% higher average realized gold price 1. The higher ounces sold are a reflection of

53% more production at Kumtor and the contribution from Mount Milligan (34,154 ounces sold) in the

fourth quarter of 2016.

 Cost of sales for the fourth quarter of 2016 incr eased 47% to $167.2 million compared to the same

quarter of 2015. The increase reflects more gold ounces sold at Kumtor and sales of gold and copper at

Mount Milligan starting October 20, 2016.

 Exploration expenditures in the fourth quarter totaled $3.9 million compared to $2.3 million in the same

period of 2015. The increase in the fourth quarter 2016 reflects increased activity and spending at the

Company’s projects and joint ventures in Mexico, Mongolia, Nicaragua and Portugal.

 Regional administration costs decreased 12% in the fourth quarter of 2016, primarily as a result of

company-wide cost cutting measures initiated in 2015, in addition to the weakening of the Kyrgyz som

in relation to the U.S. dollar. Corporate admini stration costs increased by $1.6 million as compared to

the same period of 2015, as a result of $1.6 milli on of new costs incurred in 2016 for administration

costs at the new administration office in Denver. Lastly, share-based compensation in the fourth

quarter of 2016 was higher by 31.7% as compared to the same period in 2015, driven by Centerra’s

underlying share price performance, offset by reduced spending at the corporate office in Toronto.

 Cash provided by operations was $170.4 million in the fourth quarter of 2016 compared to $47.5

million in the same period of 2015. The increase is pr imarily driven by significantly higher earnings in

the fourth quarter of 2016.

 Cash used in investing activities in the fourth quarter of 2016 totalled $843.7 million, compared to

$21.1 million of cash provided by investing activities in the same quarter of 2015. The fourth quarter of

2016 includes the payment to Thompson Creek debt holders of $783 million (net of cash assumed),

increased capital expenditures and a net redemptions of $25 million in short-term investment as

opposed to a net $58.0 million redeemed in the fourth quarter of 2015.

 Capital expenditures in the fourth quarter of 2 016 were $83.6 million, which included sustaining

capital1 of $15.3 million, growth capital 1 of $10.1 million (including $3.1 million at Mount Milligan)

and $58.3 million of capitalized stripping costs ($42 .9 million cash). Development project spending in

the quarter totalled $5.5 million in 2016, with $1.1 m illion spent at the Greenstone Gold Property, $2.4

million at Gatsuurt and $2.1 million at the Öksüt Project. In the fourth quarter of 2016, the mining fleet

at Kumtor focused primarily on waste stripping from cut-back 18. Capital expenditures in the same

quarter of 2015 were $33.6 million, which in cluded $11.7 million for sustaining capital 1 and $9.7

million for growth capital1 and capitalized stripping of $12.2 million ($9.1 million cash).

Full Year 2016 compared to Full Year 2015

 Gold production for 2016 totalle d 598,677 ounces, including 47,7 17 ounces produced by Mount

Milligan since October 20, 2016. This compares to 536,920 ounces produced at Kumtor and Boroo in

2015. Kumtor’s gold production in 2016 of 550,960 ounces was 30,266 ounces higher than the prior

year due primarily to achieving higher throughput as a result of improvements made in the mill, while

grades were 4% lower in 2016 and recoveries were slightly better as compared to 2015. Gold

production in 2015 also included 16,226 ounces from Bor oo as heap leach operations transitioned from

operations to rinse down and eventual shutdown.

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

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 Cost of sales per ounce1 sold in 2016 was $714, including the Thompson Creek assets (Mount Milligan

and Langeloth). Excluding Thompson Creek assets cost of sales per ounce sold was $641. In

comparison, cost of sales per ounce sold in 2015 was $716. The reduction at Kumtor year over year is

a result of lower operating costs and process improve ments in the mill achieved in 2016 (see discussion

in the Kumtor operating section) and the impact of a $27.2 million inventory impairment charge in

2015. The inventory impairment charge was reversed in 2016.

 All-in sustaining costs (on a by-product basis) per gold ounce sold 1, which excludes revenue-based tax

and income tax, for 2016 decreased to $682 from $814 in the comparative period of 2015. The

consolidated measure includes a contribution fro m Kumtor of $640 per ounce sold, while Mount

Milligan contributed $509 per ounce sold. In addition, corporate costs added $36 million of costs to the

measure in 2016. The improved result at Kumtor re flects lower operating costs and increased volumes

achieved as a result of lower fuel prices and various continuous improvements projects.

 All-in costs, excluding development projects co sts (on a by-product basis) per gold ounce sold 1 in 2016

was $756 compared to $861 in the comparative year , and includes all cash costs related to gold

production, excluding revenue-based tax and income tax. The consolidated measure includes a

contribution from Kumtor of $667 per ounce sold, while Mount Milligan contributed $605 per ounce

sold. Exploration and business development activities added $12.5 milli on and $3.8 million,

respectively, of costs to this measure in 2016.

 Revenue for 2016, increased to $760.8 million, compared to $624.0 million in the year ended December

31, 2015. Revenues in 2016 incl uded $74.4 million recorded by Mount Milligan and the molybdenum

business unit for the period from October 20, 2016 to December 31, 2016. Kumtor recorded a 14%

increase in revenues with 5% more ounces sold as a result of higher milling throughput, partially offset

by 4% lower ore grades. Average realized gold prices 1 were 7% higher than the prior year ($1,241 per

ounce compared to $1,162 per ounce in 2015). Gold sales volumes were 580,496 ounces (including

34,154 ounces from Mount Milligan) compared to 5 36,842 ounces in 2015. The higher revenue at

Kumtor resulted in a 14% increase in revenue based taxes in the Kyrgyz Republic in 2016.

 Cost of sales in 2016 were $414.6 million incl uding $64.3 million from Mount Milligan and the

molybdenum business unit for the period from October 20, 2016 to December 31, 2016. Cost of sales

at Kumtor were $17.5 million or 5% lower than in 2015, benefitting from the reversal of an inventory

impairment of $27.2 million and lower consumable co sts such as diesel fuel and other successful cost

reduction initiatives at the Kumtor mine. The larg est component of cost of sales, DD&A, was $195.3

million, which includes the reversal of $18.4 million of non-cash inventory impairment, in the year

ended December 31, 2016, compared to $221.1 million in 2015. The decrease reflects lower capitalized

stripping charges per ounce from cut-back 17.

 Operating costs (on a sales basis) 1 increased to $211.5 million in 2016, including $41.4 million from

Mount Milligan. Excluding Mount Milligan costs, operating costs (on a sales basis) at Kumtor was

$170.1 million which compares to $163.4 million in 2015. The increase was due to higher ounces sold

and lower capitalized stripping costs in 2016 as compared to the prior year. This was partially offset by

processing lower cost ounces at Kumtor, which reflects a reduction in costs for diesel, labour and other

consumables.

 Pre-development project costs decreased to $10.7 m illion in 2016 compared to $13.2 million in 2015.

The decrease in 2016 represents lower spending at the Company’s Greenstone Gold Property, as the

feasibility study was completed in November 2016 a nd issued a technical report in December. The

decrease also reflects lower expensed costs at the Öksüt Project as the Company began capitalization of

Öksüt project costs on August 1, 2015.

 Goodwill at Kumtor was impaired by $18.7 million in 2015 million as a result of the annual goodwill

impairment test carried out as at September 1, 2015, which brought the goodwill balance to zero.

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

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 During 2016, $0.3 million of standby costs at Boroo were incurred to maintain the mill and operation

on care and maintenance ($5.7 million in 2015). The spending in 2015 included mainly labour costs

associated with the closure of the heap leach fac ility and placing the operation on standby. The Boroo

mill will be kept on standby awaiting the entering into of definitive agreements and receipt of necessary

permits with the Mongolian Government regarding the development of the Gatsuurt Project.

 Exploration expenditures in 2016 totalled $12.5 million compared to $8.4 million in 2015. The increase

in 2016 reflects the Company’s focus on new regions with several joint ventures commencing in 2016.

 Corporate administration costs, which primarily consis t of professional fees, salaries and benefits, and

other administrative costs, were $27.6 million in 2016, including $1.7 million spent at Thompson

Creek’s Denver corporate office since acquisition. This compares to $35.8 million in 2015. Share-

based compensation in 2016 decreased to $4.6 mill ion compared to $12.4 million in the prior year,

mainly due to movements in the Company’s share price.

 The increase in income tax expense of $4.1 m illion in 2016 was mainly due to $4.3 million of

withholding and income tax expense incurred on the repatriation of earnings by Boroo during the year.

 Cash provided by operations increased to $371.4 million in 2016 from $333.6 million in 2015,

primarily from increased earnings and lower levels of working capital.

 Cash used in investing activities totalled $824.2 million in 2016, including a net of $783.0 million spent

on the acquisition of Thompson Creek Metals Inc. and $212.8 million spent on capital additions. The

outflow of cash from investing activities was partially offset by a net redemption of $181.5 million of

short-term investments. In 2015, cash outflows from investing activities included spending on capital

additions of $243.8.0 million and $ 75.7 million in cash contributions to the Greenstone Gold Property

partially offset by $79.9 million of net redemptions of short-term investments.

 Cash received from financing activities in the y ear ended December 31, 2016 was $500.0 million and

included proceeds of $398.4 million from debt issuan ce and proceeds of $141.4 million from an equity

offering related to the Thompson Creek acquisition. Th is compares to a use of cash of $33.4 million in

2015. Financing activities also include the payment of dividends and interest on borrowings in both

years.

 Capital expenditures in 2016 were $247.7 m illion, which included sustaining capital 1 of $65.2 million,

growth capital1 of $17.9 million, $12.0 million on Öksüt Pr oject development, $7.2 million on Gatsuurt

Project development, $8.7 million on Greenstone Gold Property capital, and $136.7 million of

capitalized stripping costs ($100.5 million cash). In 2016, lower capital expenditures resulted primarily

from lower spending on capitalized stripping and on de velopment projects, partially offset by higher

spending on sustaining and growth capital 1 mainly at Kumtor. Development project spending in 2016

included activities at Gatsuurt to update various development studies, while 2015 included $75.7

million spent on the acquisition of the Company’s 50% interest in the Greenstone Gold Property.

Capital expenditures in the same period of 2015 were $370.5 million, which included $51.1 million for

sustaining capital1 and $15.7 million for growth capital 1, $6.1 million on Öksüt Project development,

$11.3 million on Greenstone Gold Property capital, $75.7 million on Greenstone Partnership acquisition

and capitalized stripping of $210.6 million ($159.4 million cash).

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

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