Centerra Gold Announces Thompson Creek Feasibility Study Results and Strategic Plan for US Molybdenum Operations, Including a Restart of the Thompson Creek Mine and Ramp-Up of Langeloth

2024-09-12

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Integrated value of Thompson Creek and Langeloth is expected to have after-tax NPV 8% of $472M and IRR of 22% Langeloth, at full capacity and integrated with Thompson Creek, is expected to generate approximately $45M earnings from operations and $50M EBITDA NG per year

All figures are in United States dollars. All production figures reflect payable metal quantities and are on a 100% basis, unless otherwise stated. For references denoted with NG, refer to the “Non-GAAP Financial Measures” disclosure at the end of this news release for a description of these measures.

TORONTO, Sept. 12, 2024 (GLOBE NEWSWIRE) -- Centerra Gold Inc. (“Centerra” or the “Company”) (TSX: CG) (NYSE: CGAU) announces the results from its Thompson Creek feasibility study, including a strategic, integrated business plan for its Molybdenum Business Unit (“MBU”) consisting of a restart of the Thompson Creek Mine (“Thompson Creek”) and a commercially optimized plan for the Langeloth Metallurgical Facility (“Langeloth”), collectively the US Molybdenum Operations (“US Moly”). Centerra will host a conference call and webcast to discuss the strategic plan for US Moly on Friday, September 13, 2024, at 9:00 am Eastern Time. Details for the conference call and webcast are included at the end of the news release.

President and CEO, Paul Tomory, commented, “Over the last year, we have developed a value-enhancing strategy for Centerra’s US molybdenum operations, centered around the vertical integration of Thompson Creek and Langeloth, and supported by strong molybdenum market fundamentals. The combined US Moly business is expected to produce an after-tax net present value (8%) (“NPV 8% ”) of $472 million. A key contributor to this value is Langeloth, which at full capacity, integrated with Thompson Creek, has the potential to generate robust annual EBITDA. Today, we announce the decision to unlock significant value through the restart of operations at Thompson Creek and a progressive ramp-up of production at Langeloth. When Thompson Creek begins production, currently targeted for the second half of 2027, it will provide additional high-grade, high-quality feed to Langeloth, enabling a ramp-up of production towards Langeloth’s full annual capacity of 40 million pounds while improving operational flexibility to meet market demand.”

Paul Tomory continued, “We completed a feasibility study at Thompson Creek that has confirmed the capital estimate from the pre-feasibility study, while adding another year of production. Following significant progress on permitting efforts in the second quarter 2024, we have pivoted from a two-phased approval to a single-phase capital investment of $397 million over three years, from now through mid-2027. Our total project costs guidance at Thompson Creek for the second half of 2024 is expected to be $55 to $65 million. We will provide 2025 guidance for Thompson Creek with our annual guidance that is expected to be published early next year.”

Paul Tomory concluded, “We are continuing to explore strategic options to unlock the full potential of our molybdenum business, in line with Centerra’s strategy to maximize the value of each asset in our portfolio. While Centerra expects to remain a gold-focused company, we acknowledge the significant value of our base metal assets.”

Integrated US Moly Highlights

Robust integrated economics of Thompson Creek and Langeloth: Strong project economics due to synergies with the high-quality concentrate blend that could be achieved when Thompson Creek is vertically integrated with Langeloth. Once Thompson Creek resumes full production, the US Moly business is expected to generate sustainable strong annual cash flows.

| | US Moly ( 1 ) (Thompson Creek + Langeloth) | Thompson Creek Only (3) | Langeloth Only | | NPV 8% | $472M | $185M | $258M | | Internal Rate of Return (“IRR”) | 22% | 15% | n.m. | | Additions to PP&E / Non-sustaining capital expenditures NG( 2 ) | $397M | $397M | - |

| (1) | US Moly includes an additional $29M of unattributed tax synergies. | | (2) | Additions to Property, Plant, and Equipment (“PP&E”) are the same as Capital Expenditures NG . | | (3) | The economic assessment for Thompson Creek in the FS (as defined below) has been prepared on a stand-alone basis and does not include integration with Langeloth. The economics for integrating Thompson Creek and Langeloth are extrapolated from the Thompson Creek feasibility study. NOTE: See “Assumptions” at the end of this news release. “n.m.” stand for not meaningful. |

Improved integrated economics compared to the pre-feasibility study (“PFS”) in September 2023: Integrated economics based on the FS have improved as compared to the PFS, specifically the Thompson Creek updated life of mine (“LOM”) plan has an additional 12 million pounds of molybdenum being produced, one year of additional mine life, more concentrate produced in the first four years, and a de-risked capital estimate.

| | US Moly: Thompson Creek + Langeloth | | | FS (1) | PFS | | | NPV 8% | $472M | $218M | | NPV 5% | $692M | $373M | | IRR | 22% | 16% | | LOM | 12 years | 11 years | | Thompson Creek Molybdenum Production | 146M lbs | 134M lbs | | Additions to PP&E / Non-sustaining capital expenditures NG(2 ,3 ) | $397M | $350M - $400M |

| (1) | The economics for integrating Thompson Creek and Langeloth are extrapolated from the Thompson Creek feasibility study. | | (2) | Additions to PP&E are the same as Capital Expenditures NG . | | (3) | Thompson Creek only; Langeloth additions to PP&E are in the range of $3 to $4 million per year and are considered sustaining capital. |

Langeloth Highlights

Phased ramp-up to full capacity: Langeloth plans to ramp up production progressively over the next few years to increase production towards its full capacity of 40 million pounds per annum by 2028, which aligns with Thompson Creek’s first full year of production. At full capacity, the molybdenum feed to Langeloth is expected to consist of approximately one third supplied by Thompson Creek and two thirds purchased from third parties. At full capacity, Langeloth is expected to generate approximately $45 million in earnings from operations and $50 million of earnings before interest, taxes, depreciation and amortization (“EBITDA”) NG annually. Significant synergies and margin improvements are expected to result from increased capacity utilization at Langeloth, including improved blending flexibility and more higher margin molybdenum products enabled by the high-quality feed from Thompson Creek. Strategic geographic location: Langeloth is strategically connected to the North American steel supply and sales markets via efficient transportation networks and reliable infrastructure. Being close to several major US east coast ports, Langeloth is also well located for importing molybdenum concentrates and exporting molybdenum products. Flexible and agile operations: With six roasters, the ability to produce a variety of finished molybdenum products and a potential total capacity of approximately 40 million pounds, Langeloth has flexibility to adapt to changing market and commercial conditions. Langeloth has value-added production capabilities, namely for ferromolybdenum and pure molybdenum oxide, positioning the business for opportunities and growth. Strong leadership and people: The Langeloth management team and staff are highly experienced, dedicated and committed to a strong culture of operational excellence and innovation. With 100 years of experience in processing molybdenum, the team at Langeloth has developed a strong commercial network and constructive engagement with local regulators.

Thompson Creek FS Highlights

Robust project economics: NPV 8 % of $185 million and after-tax IRR of 15% using an assumed flat molybdenum price of $20 per pound for the LOM. The economic assessment for Thompson Creek in the FS has been prepared on a stand-alone basis and does not include the benefits of integration with Langeloth. De-risked capital costs: Initial capital investment of approximately $397 million. The capital expenditures needed to restart Thompson Creek are significantly de-risked due to an existing pit, significantly advanced equipment rebuilds and purchases and an existing process plant that requires minimal upgrades and refurbishment. A majority of the anticipated capital expenditures are focused on capitalized stripping, plant refurbishment and mine mobile fleet upgrades. Initial mine life of 12 years: Average annual molybdenum production is estimated to be approximately 13 million pounds after initial ramp-up. The average LOM operating costs are $9.66 per molybdenum pound sold and LOM all-in sustaining costs (“AISC”) NG are $12.46 per molybdenum pound sold. Strong Reserve Base: The FS includes proven and probable molybdenum reserves of 161 million pounds, measured and indicated molybdenum resources of 63 million pounds and inferred molybdenum resources of 17 million pounds, as of September 1, 2024. The average reserve grade is 0.065% molybdenum.

The Company expects to file a technical report for Thompson Creek on its website at www.centerragold.com , on SEDAR+ at www.sedarplus.ca and EDGAR at www.sec.gov/edgar .

US Moly Overview

US Moly, consisting of the Langeloth metallurgical facility near Pittsburgh, Pennsylvania, and the Thompson Creek mine in Idaho, is part of Centerra’s MBU. The molybdenum assets were acquired by Centerra in 2016, along with the Mount Milligan gold-copper mine.

Langeloth

Langeloth is one of three molybdenum conversion facilities in the United States. Its facility and existing permits make it a unique and strategic asset, given its proximity to the North American steel market. Langeloth began commercial molybdenum conversion operations in 1924 and has historically operated at levels significantly higher than today. Over a two-year period prior to the suspension of the Thompson Creek mine in December 2014, the volume of molybdenum roasted at Langeloth was around 37 million pounds per year.

Langeloth operates as a conversion facility of molybdenum concentrate into metallurgical and chemical grade products. These products are sold to steel, other metallurgical, and chemical producers globally. Technical oxide is the main product manufactured by Langeloth due to its role as a key input in the manufacturing of high-performance steels. It can potentially be further processed into value-added products that command a higher margin. Langeloth can also produce ferromolybdenum and pure molybdenum oxide, and it has the capability to produce byproducts such as rhenium, with flexibility to adjust the product mix depending on market demand and the quality of concentrates sourced. The availability of high-quality Thompson Creek concentrate provides significant commercial flexibility to the MBU.

Commercial Optimization of Langeloth

Centerra has completed a commercial optimization plan at Langeloth, geared at increasing profitability and maximizing its future potential by increasing production levels, achieved by a ramp-up in the purchase of third-party concentrates and the restart of the Thompson Creek primary molybdenum mine.

Langeloth is well-positioned to capitalize on the current supply deficit in the molybdenum market and grow the business to meet the market demand. In the recent past Langeloth has operated slightly below its annual breakeven capacity of approximately 14 million pounds. The operation can be ramped up to full capacity to enable production of approximately 40 million pounds per year in a straightforward manner.

At full capacity, significant synergies and margin improvements that will enhance future cash flow generation and profitability from US Moly are expected to result from: (1) ability to leverage fixed costs, related to increased capacity utilization at Langeloth from the current level of approximately one third; (2) ability to blend the high-quality Thompson Creek concentrate with lower quality third-party concentrates; and (3) the ability, enabled by the quality of the Thompson Creek concentrate, to produce an increased volume of higher margin final molybdenum products.

At full production capacity, integrated with Thompson Creek, the molybdenum conversion facility at Langeloth has the potential to generate annually approximately $50 million of EBITDA NG , $40 million in cash flow from operations and free cash flow NG of $35 million.

As a result of the compelling value opportunity, Centerra is initiating a progressive ramp-up at Langeloth to allow for commercial optimization. Langeloth is expected to ramp up production progressively towards its full capacity of 40 million pounds per annum by 2028, which aligns with Thompson Creek’s expected first full year of production. At full capacity, the molybdenum feed processed at the Langeloth facility is expected to consist of approximately one third supplied by Thompson Creek and approximately two thirds purchased from third-party providers. Further details on the restart of Thompson Creek are provided below.

Based on an assumed flat price of $20 per pound molybdenum, a working capital investment will be required over the period from 2025 to 2028 to support the ramp-up to full capacity. On a cash flow basis, this increase in working capital is expected to be largely offset by cash flow generated by Langeloth during the same period. The structure of commercial contracts at Langeloth helps to mitigate molybdenum price volatility. Concentrates are purchased at a discount to the prevailing market molybdenum price, while final products are generally sold at prices at or above this benchmark. As a result, the integrated operations of US Moly will be better positioned to withstand future fluctuations in molybdenum prices.

Reaching higher capacity utilization will depend on several factors which are not fully in Centerra’s control, including the ability to acquire third-party concentrates on favourable commercial terms over a significant period of time.

Thompson Creek

The Thompson Creek mine is a large open-pit primary molybdenum mine. It was a producing mine until it was placed on care and maintenance in December 2014. It has an existing open pit, as well as established site infrastructure, processing facilities and equipment fleet.

Feasibility Study

The Company has completed a FS on the restart of mining at Thompson Creek, with the objective of realizing value for the US Moly business. A restart of Thompson Creek, on a stand-alone basis, is expected to result in NPV 8% of $185 million and IRR of 15%, based on an assumed flat molybdenum price of $20 per pound. The FS includes an optimized mine plan with a 12-year mine life. A summary of the FS production profile is included in the table below.

Thompson Creek FS Production Profile

| | Total Mined (M tons) | Grade of Ore Processed (% Mo) | Molybdenum Production ( 3 ) (Mlb) | | 2024 (1) | 4.9 | - | - | | 2025 | 50.0 | - | - | | 2026 | 48.0 | - | - | | 2027 (2) | 52.0 | 0.05 | 4.7 | | 2028 | 56.9 | 0.07 | 12.4 | | 2029 | 51.0 | 0.08 | 14.5 | | 2030 | 45.0 | 0.08 | 14.7 | | 2031 | 37.0 | 0.07 | 13.7 | | 2032 | 57.0 | 0.05 | 9.7 | | 2033 | 40.0 | 0.04 | 7.8 | | 2034 | 36.7 | 0.08 | 15.9 | | 2035 | 24.2 | 0.10 | 19.3 | | 2036 | 8.0 | 0.06 | 12.2 | | 2037 | - | 0.05 | 9.1 | | 2038 | - | 0.05 | 9.1 | | 2039 (2) | - | 0.03 | 2.4 | | Total LOM | 510.7 | 0.06 | 145.6 |

| (1) | 2024 figures for the period from September 1, 2024 to December 31, 2024. | | (2) | Production is expected for a part of this year. | | (3) | It is estimated that approximately 4.7% of the recovered molybdenum pounds will be further refined at Thompson Creek and sold as high-performance molybdenum. | | NOTE: “Mo” stands for molybdenum, “M tons” stands for millions of short (US) tons, “Mlb” stands for millions of molybdenum pounds. Totals may not sum precisely due to rounding. | |

The cost profile associated with the FS is largely driven by the grade profile. AISC NG per pound from 2028 to 2031 are expected to be lower than the LOM average due to higher grades and more ore tons mined, which is expected to result in stronger cash flows in these years. The average operating costs over the LOM are detailed in the table below. These operating costs exclude capitalized pre-production costs, which are included in capital costs. Processing costs cover mill, tailings and water management costs.

_ Capital Expenditures __N __G _

Centerra is proceeding with a restart of Thompson Creek, which is expected to require an investment of approximately $397 million in total initial, non-sustaining capital expenditures NG over three years, from September 2024 through mid-2027. In the second quarter of 2024, following environmental studies and regulatory reviews, Centerra obtained mine permit authorizations for additional lands at Thompson Creek, which will enable the proposed pit highwall layback included in the FS. As a result of receiving these mine permit authorizations, a key first step in the overall permitting process, the Company is moving away from a two-phased capital approval previously disclosed to a single-phase capital investment over three years. Thompson Creek is proactively advancing environmental studies which should support future permitting, which will not be required until several years after first production.

Centerra’s capital investment at the Thompson Creek mine is significantly de-risked due to an existing pit, significantly advanced equipment rebuilds and purchases, and an existing process plant that requires some refurbishment. Early works to support the restart of operations at Thompson Creek are underway, progressing on budget and on schedule. The majority of the capital expenditures going forward are expected to be focused on pre-stripping activities and mill refurbishment. Over the first six months of 2024, capital spending at Thompson Creek was primarily related to refurbishment of existing mining mobile equipment and the purchase of additional mobile equipment, stripping activities and technical studies.

Updated 2024 Guidance at Thompson Creek

For the second half of 2024, total project costs at Thompson Creek are expected to be $55 to $65 million, primarily related to pre-production stripping and mine mobile fleet upgrades. Approximately $10 million of these costs will be expensed for accounting purposes, with the remainder treated as capital expenditures. Including the actual amounts spent in the first six months of 2024 of $20.9 million, full year 2024 project development costs guidance at Thompson Creek is $75 to $85 million.

Sensitivity to Molybdenum Prices

The Thompson Creek FS and integration of Langeloth demonstrate strong economics at assumed flat molybdenum prices of $20 per pound. Langeloth provides resilience to low molybdenum prices in the cycle. The sensitivity to changes in molybdenum prices is illustrated in the table below.

FS Economics (Thompson Creek only)

| | Molybdenum Price ($/pound) | | | | | $ 17.50 | $20.00 (FS price) | $ 22.50 | $ 25.00 | | | NPV 8% | ($7M) | $185M | $370M | $542M | | NPV 5% | $70M | $307M | $535M | $744M | | IRR | 8% | 15 % | 21% | 26% |

US Moly Integrated Economics (Thompson Creek plus Langeloth)

| | Molybdenum Price ($/pound) | | | | | $ 17.50 | $20.00 (FS price) | $ 22.50 | $ 25.00 | | | NPV 8% | $313M | $472M | $628M | $782M | | NPV 5% | $496M | $692M | $885M | $1,076M | | IRR | 18% | 22 % | 26% | 29% |

_ Mineral Reserve and Mineral Resource Estimates _

Thompson Creek is an open pit operation that was active until 2014 when management made the decision to cease operations due to falling molybdenum prices. After approximately 10 years on care and maintenance, the historical mineral resource model needed to be updated. The tables below outline the mineral reserve and resources at Thompson Creek as of September 1, 2024.