Centerra Gold Reports Second Quarter 2024 Results; Consistent Operating Performance; Continued Return of Capital to Shareholders

2024-08-01

TSXV - TSX Venture Exchange · Scandium · Rare Earth Elements · Gold · Canada

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 and Other Financial Measures” disclosure at the end of this news release for a description of these measures.

TORONTO, Aug. 01, 2024 (GLOBE NEWSWIRE) -- Centerra Gold Inc. (“Centerra” or the “Company”) (TSX: CG and NYSE: CGAU) today reported its second quarter 2024 operating and financial results.

President and CEO, Paul Tomory, commented, “Centerra delivered another quarter of solid operating performance and maintained consistent cash flow from operations before changes in working capital and income taxes paid, with year-to-date production and costs in line with our guidance. We ended the second quarter with cash and cash equivalents of $592 million after making routine statutory tax and royalty payments in Türkiye totalling $105 million. We remained active on share buybacks and declared a quarterly dividend, delivering on our disciplined approach of returning capital to shareholders.

“Looking ahead, later this summer we expect to announce our integrated strategy for the Molybdenum Business Unit, including results of a feasibility study on the restart of the Thompson Creek mine and the details of an optimized commercial model at Langeloth. Additionally, we expect to publish an initial resource estimate at Goldfield by the end of 2024 and a preliminary economic assessment in the first half of 2025 illustrating future potential at Mount Milligan. Our production, cost and capital expenditure guidance for 2024 is unchanged. We continue to deliver on our value maximizing strategy, focused on realizing the full potential of each of Centerra’s assets,” concluded Mr. Tomory.

Second Quarter 2024 Highlights

Operations

Production: Consolidated gold production of 89,828 ounces, including 38,609 ounces from the Mount Milligan Mine (“Mount Milligan”) and 51,219 ounces from the Öksüt Mine (“Öksüt”). Copper production in the quarter was 13.5 million pounds. Sales: Second quarter 2024 gold sales of 83,258 ounces at an average realized gold price NG of $2,097 per ounce and copper sales of 11.7 million pounds at an average realized copper price NG of $3.79 per pound. The average realized gold and copper prices include the impact of the Mount Milligan streaming agreement. Costs: Consolidated gold production costs were $870 per ounce and all-in sustaining costs (“AISC”) on a by-product basis NG were $1,179 per ounce for the quarter. Capital expenditures NG : Additions to property, plant, and equipment (“PP&E”) and sustaining capital expenditures NG were $37.9 million and $30.6 million, respectively. Sustaining capital expenditures NG in the second quarter 2024 included step-out capital for the tailings storage facility, equipment overhauls, projects related to water sourcing and access, and in-pit capital exploration at Mount Milligan, as well as capitalized stripping and expansions at the heap leach pad and waste rock dump at Öksüt.

Financial

Net earnings: Second quarter 2024 net earnings were $37.7 million, or $0.18 per share, and adjusted net earnings NG were $46.4 million or $0.23 per share. Adjustments to net earnings included $7.4 million of unrealized loss on the financial asset related to the additional agreement with Royal Gold, $5.5 million of unrealized foreign currency exchange gains and $5.1 million of reclamation provision revaluation recovery. For additional adjustments refer to the “Non-GAAP and Other Financial Measures” disclosure at the end of this news release. Cash provided by operating activities and free cash flow NG : In the second quarter 2024, cash provided by operating activities before working capital and income taxes paid was $93.7 million, consistent with last quarter. Cash provided by operating activities was $2.6 million and free cash flow NG deficit was $27.0 million, impacted mainly by statutory tax and royalty payments at Öksüt. Cash and cash equivalents: Total liquidity of $992.4 million as at June 30, 2024, comprising a cash balance of $592.4 million and $400.0 million available under a corporate credit facility. Dividend: Quarterly dividend declared of C$0.07 per common share.

Other

Share buybacks: Under Centerra’s normal course issuer bid (“NCIB”) program, the Company repurchased 1,439,700 common shares in the second quarter 2024, for the total consideration of $9.8 million. Thompson Creek Feasibility Study: In the second quarter of 2024, following environmental studies and regulatory reviews, Centerra obtained authorizations for additional lands at Thompson Creek mine, which will enable a proposed pit highwall layback. This approval is subject to a minor update to the reclamation plan and is a key first step in the overall permitting process. Work is progressing on a feasibility study to evaluate the restart of mining operations at the Thompson Creek mine. The Company expects to share results of the study in late summer of 2024, in conjunction with details of an optimized commercial model for Langeloth.

Highlights Subsequent to Quarter End

Environmental, Social and Governance (“ESG”) Report: On July 18, 2024, Centerra published its 2023 ESG Report, which outlines the Company’s health, safety, environmental, social and governance performance for the year ended December 31, 2023. The report can be accessed on Centerra’s website at www.centerragold.com/sustainability .

Table 1 - Overview of Consolidated Financial and Operating Highlights

| ($millions, except as noted) | Three months ended June 30, | Six months ended June 30, | | | | | | | | | | | | 2024 | | 2023 | | % Change | | 2024 | 2023 | | % Change | | | Financial Highlights | | | | | | | | | | | | | Revenue | 282.3 | | 184.5 | | 53 | % | 588.2 | 411.0 | | 43 | % | | Production costs | 162.5 | | 153.5 | | 6 | % | 336.3 | 357.8 | | (6 | )% | | Depreciation, depletion, and amortization ("DDA") | 27.5 | | 23.3 | | 18 | % | 60.8 | 41.8 | | 45 | % | | Earnings from mine operations | 92.3 | | 7.7 | | 1099 | % | 191.0 | 11.4 | | 1575 | % | | Net earnings (loss) | 37.7 | | (39.7 | ) | 195 | % | 104.1 | (113.1 | ) | 192 | % | | Adjusted net earnings (loss) (1) | 46.4 | | (42.3 | ) | 210 | % | 77.7 | (95.1 | ) | 182 | % | | Cash provided by (used in) operating activities | 2.6 | | 33.4 | | 92 | % | 102.0 | (66.4 | ) | 254 | % | | Free cash flow (deficit) (1) | (27.0 | ) | 10.6 | | (355 | )% | 54.1 | (95.3 | ) | 157 | % | | Additions to property, plant and equipment (“PP&E”) | 37.9 | | 20.8 | | 82 | % | 53.2 | 28.8 | | 85 | % | | Capital expenditures - total (1) | 36.3 | | 22.5 | | 61 | % | 53.1 | 27.4 | | 94 | % | | Sustaining capital expenditures (1) | 30.6 | | 20.7 | | 48 | % | 46.8 | 25.6 | | 83 | % | | Non-sustaining capital expenditures (1) | 5.7 | | 1.8 | | 217 | % | 6.3 | 1.8 | | 250 | % | | Net earnings (loss) per common share - $/share basic (2) | 0.18 | | (0.18 | ) | 200 | % | 0.49 | (0.52 | ) | 195 | % | | Adjusted net earnings (loss) per common share - $/share basic (1)(2) | 0.23 | | (0.20 | ) | 215 | % | 0.36 | (0.44 | ) | 182 | % | | Operating highlights | | | | | | | | | | | | | Gold produced (oz) | 89,828 | | 61,622 | | 46 | % | 201,169 | 94,837 | | 112 | % | | Gold sold (oz) | 83,258 | | 48,155 | | 73 | % | 187,571 | 87,145 | | 115 | % | | Average market gold price ($/oz) | 2,238 | | 1,976 | | 13 | % | 2,203 | 1,932 | | 14 | % | | Average realized gold price ($/oz ) (3) | 2,097 | | 1,532 | | 37 | % | 1,955 | 1,493 | | 31 | % | | Copper produced (000s lbs) | 13,549 | | 13,787 | | (2 | )% | 27,880 | 27,142 | | 3 | % | | Copper sold (000s lbs) | 11,705 | | 12,831 | | (9 | )% | 27,327 | 28,162 | | (3 | )% | | Average market copper price ($/lb) | 4.42 | | 3.84 | | 15 | % | 4.12 | 3.95 | | 4 | % | | Average realized copper price ($/lb) (3) | 3.79 | | 2.56 | | 48 | % | 3.41 | 3.03 | | 13 | % | | Molybdenum sold (000s lbs) | 2,675 | | 3,030 | | (12 | )% | 5,623 | 6,377 | | (12 | )% | | Average market molybdenum price ($/lb) | 21.79 | | 21.23 | | 3 | % | 19.93 | 27.09 | | (26 | )% | | Average realized molybdenum price ($/lb) | 22.10 | | 24.01 | | (8 | )% | 21.25 | 29.08 | | (27 | )% | | Unit costs | | | | | | | | | | | | | Gold production costs ($/oz) (4) | 870 | | 1,066 | | (18 | )% | 802 | 1,085 | | (26 | )% | | All-in sustaining costs on a by-product basis ($/oz) (1)(4) | 1,179 | | 1,711 | | (31 | )% | 1,001 | 1,564 | | (36 | )% | | All-in costs on a by-product basis ($/oz) (1)(4) | 1,442 | | 2,284 | | (37 | )% | 1,191 | 2,205 | | (46 | )% | | Gold - All-in sustaining costs on a co-product basis ($/oz) (1)(4) | 1,260 | | 1,656 | | (24 | )% | 1,125 | 1,635 | | (31 | )% | | Copper production costs ($/lb) (4) | 2.47 | | 2.28 | | 8 | % | 2.14 | 2.51 | | (15 | )% | | Copper - All-in sustaining costs on a co-product basis – ($/lb) (1)(4) | 3.21 | | 2.77 | | 16 | % | 2.55 | 2.81 | | (9 | )% |

| (1) | | Non-GAAP financial measure. See discussion under “Non-GAAP and Other Financial Measures”. | | (2) | | As at June 30, 2024, the Company had 213,175,964 common shares issued and outstanding. | | (3) | | This supplementary financial measure within the meaning of National Instrument 52-112 - Non-GAAP and Other Financial Measures Disclosure (“NI 51-112”) is calculated as a ratio of revenue from the consolidated financial statements and units of metal sold and includes the impact from the Mount Milligan Streaming Agreement, copper hedges and mark-to-market adjustments on metal sold not yet finally settled. | | (4) | | All per unit costs metrics are expressed on a metal sold basis. | | | | |

2 024 Outlook

There has been no change to the Company’s 2024 guidance metrics except the expected Öksüt Mine current income taxes were increased from a range of $54 to $60 million to a range of $64 to $70 million reflecting higher gold prices expected for the year. The Company’s full year 2024 outlook, as adjusted, and comparative actual results for the six months ended June 30, 2024 are set out in the following table:

| | Units | 2024 Guidance | Six months ended June 30, 2024 | | Production | | | | | Total gold production (1) | (Koz) | 370 - 410 | 201 | | Mount Milligan Mine (2)(3)(4) | (Koz) | 180 - 200 | 87 | | Öksüt Mine | (Koz) | 190 - 210 | 114 | | Total copper production (2)(3)(4) | (Mlb) | 55 - 65 | 28 | | Unit Costs (5) | | | | | Gold production costs (1) | ($/oz) | 800 - 900 | 802 | | Mount Milligan Mine (2) | ($/oz) | 950 - 1,050 | 1,017 | | Öksüt Mine | ($/oz) | 650 - 750 | 653 | | All-in sustaining costs on a by-product basis NG(1)(3)(4) | ($/oz) | 1,075 - 1,175 | 1,001 | | Mount Milligan Mine (4) | ($/oz) | 1,075 - 1,175 | 912 | | Öksüt Mine | ($/oz) | 900 - 1,000 | 879 | | Capital Expenditures | | | | | Additions to PP&E (1) | ($M) | 108 - 140 | 53.2 | | Mount Milligan Mine | ($M) | 55 - 65 | 19.6 | | Öksüt Mine | ($M) | 40 - 50 | 21.6 | | Total Capital Expenditures NG(1) | ($M) | 108 - 140 | 53.1 | | Mount Milligan Mine | ($M) | 55 - 65 | 21.5 | | Öksüt Mine | ($M) | 40 - 50 | 20.1 | | Sustaining Capital Expenditures NG(1) | ($M) | 100 - 125 | 46.8 | | Mount Milligan Mine | ($M) | 55 - 65 | 21.5 | | Öksüt Mine | ($M) | 40 - 50 | 20.1 | | Non-sustaining Capital Expenditures NG(1) | ($M) | 8 - 15 | 6.3 | | Depreciation, depletion and amortization (1) | ($M) | 140 - 165 | 60.8 | | Mount Milligan Mine | ($M) | 90 - 100 | 32.4 | | Öksüt Mine | ($M) | 45 - 55 | 26.8 | | Income tax and BC mineral tax expense (1) | ($M) | 65 - 75 | 46.4 | | Mount Milligan Mine | ($M) | 1 - 5 | 1.6 | | Öksüt Mine | ($M) | 64 - 70 | 44.8 |

1. Consolidated Centerra figures. 2. The Mount Milligan Mine is subject to an arrangement with RGLD Gold AG and Royal Gold Inc. (together, “Royal Gold”) which entitles Royal Gold to purchase 35% and 18.75% of gold and copper produced, respectively, and requires Royal Gold to pay $435 per ounce of gold and 15% of the spot price per metric tonne of copper delivered (“Mount Milligan Mine Streaming Agreement”). Using an assumed market gold price of $2,200 per ounce and a blended copper price of $4.25 per pound for the second half of 2024, Mount Milligan Mine’s average realized gold and copper price for the remaining two quarters of 2024 would be $1,578 per ounce and $3.32 per pound, respectively, compared to average realized prices of $1,955 per ounce and $3.41 per pound in the six-month period ended June 30, 2024, when factoring in the Mount Milligan Streaming Agreement and concentrate refining and treatment costs. The blended copper price of $4.25 per pound factors in copper hedges in place as of June 30, 2024. 3. Gold and copper production for the second half of the year at the Mount Milligan Mine assumes estimated recoveries of 63% to 65% for gold and 76% to 78% for copper compared to actual recoveries for gold of 65.1% and for copper of 76.5% achieved in the first six months of 2024. The Company estimates full year recoveries of 64% for gold and 78% for copper. 4. Unit costs include a credit for forecasted copper sales treated as by-product for all-in sustaining costs NG and all-in costs NG . Production for copper and gold reflects estimated metallurgical losses resulting from handling of the concentrate and metal deductions levied by smelters. 5. Units noted as ($/oz) relate to gold ounces and ($/lb) relate to copper pounds.

_ Molybdenum Business Unit _

| (Expressed in millions of United States dollars) | 2024 Guidance | Six months ended June 30, 2024 | | Langeloth Facility | | | | Loss from operations NG(1) | (5) - (15) | (4.9) | | DD&A Expense | 5 - 10 | 1.6 | | Cash (used in) provided by operations before changes in working capital | (5) - 0 | (3.3) | | Changes in Working Capital | (20) - 20 | 5.0 | | Cash (Used in) Provided by Operations | (25) - 20 | 1.7 | | Sustaining Capital Expenditures NG | (5) - (10) | (3.7) | | Free Cash Flow (Deficit) from Operations NG(2) | (30) - 10 | (2.0) | | Thompson Creek Mine (2) | | | | Project Evaluation Expenses (3) | (17) - (20) | (13.7) | | Care and Maintenance Expenses - Cash | (1) - (3) | (1.6) | | Cash (used in) provided by operations before changes in working capital | (18) - (23) | (15.3) | | Changes in Working Capital | — | 1.1 | | Cash Used in Operations | (18) - (23) | (14.2) | | Non-sustaining Capital Expenditures NG | (7) - (12) | (2.1) | | Free Cash Flow (Deficit) from Operations NG | (25) - (35) | (16.3) | | Endako Mine | | | | Care and Maintenance Expenses | (5) - (7) | (1.8) | | Reclamation Costs | (15) - (18) | (0.4) | | Cash Used in Operations | (20) - (25) | (2.2) |

1. Additions to PP&E calculations for calculating Free Cash Flow (Deficit) from Operations NG include only cash expenditures for PP&E additions. 2. Relates to the original outlook range for the Thompson Creek Mine for the first six months of 2024 only. The difference between original guidance range and actual amount incurred for the six months ended June 30, 2024 is expected to be spent in the third quarter of 2024. 3. Project evaluation expenses are recognized as expense in the consolidated statements of earnings (loss).

_ Project Evaluation, Exploration, and Other Costs _

The Company’s 2024 outlook for the Goldfield Project, Kemess Project, corporate administration, and other exploration projects and comparative actual results for the six months ended June 30, 2024 are set out in the following table:

| (Expressed in millions of United States dollars) | 2024 Guidance | Six months ended June 30, 2024 | | Project Exploration and Evaluation Costs | | | | Goldfield Project | 9 - 13 | 3.8 | | Thompson Creek Mine (1) | 17 - 20 | 13.7 | | Total Project Evaluation Costs | 26 - 33 | 18.4 | | Brownfield Exploration (2) | 17 - 22 | 4.3 | | Greenfield and Generative Exploration | 18 - 23 | 13.8 | | Total Exploration Costs (2) | 35 - 45 | 18.1 | | Total Exploration and Project Evaluation Costs | 61 - 78 | 36.5 | | Other Costs | | | | Kemess Project ( 3 ) | 19 - 25 | 6.3 | | Corporate Administration Costs | 37 - 42 | 20.8 | | Stock-based Compensation | 8 - 10 | 3.3 | | Other Corporate Administration Costs | 29 - 32 | 17.5 |

1. Outlook range for the Thompson Creek Mine relates to the first six months of 2024 only. 2. Total exploration costs include capitalized exploration costs at the Mount Milligan Mine of $1.0 million for the six months ended June 30, 2024. 3. Kemess Project costs include care and maintenance costs as well as reclamation costs included in the reclamation provision as at June 30, 2024.

Mount Milligan

Mount Milligan produced 38,609 ounces of gold and 13.5 million pounds of copper in the second quarter of 2024. Mining activities were carried out in phases 5, 6, 7, and 9 of the open pit. A total of 12.3 million tonnes were mined in the second quarter of 2024. Process plant throughput for the second quarter of 2024 was 5.3 million tonnes, averaging 58,520 tonnes per day. Gold sales were down 30% and copper sales were down 25% compared to last quarter. As previously disclosed, the lower sales volumes were anticipated due to the timing of shipments. Both gold and copper sales are expected to increase in the second half of 2024, contributing approximately 60% of annual sales. 2024 guidance metrics at Mount Milligan remain unchanged.

Gold production costs in the second quarter 2024 were $1,102 per ounce. AISC on a by-product basis NG was $1,234 per ounce, higher than last quarter due to lower sales (as noted above) and higher sustaining capital expenditures.

In the second quarter 2024, sustaining capital expenditures at Mount Milligan were $17.4 million, focused on the tailings storage facility, equipment overhauls, projects related to water sourcing and access, and in-pit capital exploration.

Centerra continued to execute on its site-wide optimization program at Mount Milligan, initially launched in the fourth quarter 2023. The program is focused on a holistic assessment of occupational health and safety, as well as improvements in mine and plant operations. This program covers all aspects of the operation to maximize the potential of the orebody, setting up Mount Milligan for long-term success to 2035 and beyond. While the optimization program is still ongoing, year-to-date the Company has started to see productivity improvements in the load-haul cycle at the mine, as well as the unit processing costs related to recycling grinding media and maintenance efficiencies. In the first six months of 2024, milling costs were $5.60 per tonne processed, 12% lower than the first six months of last year. Due to the longer-term nature of the mining optimization initiatives, the Company expects to see improvements in mining costs per tonne in 2025.

In February 2024, Centerra announced that the Company has entered into an additional agreement with Royal Gold relating to Mount Milligan, which has resulted in a life of mine extension to 2035 and established favourable parameters for potential future mine life extensions. Work is progressing on a preliminary economic assessment (“PEA”) to evaluate the substantial mineral resources at the Mount Milligan mine with a goal to unlock additional value beyond its current 2035 mine life. The PEA is expected to be completed in the first half of 2025.

Öksüt

Öksüt produced 51,219 ounces of gold in the second quarter of 2024. Production was lower than last quarter due to processing most of the gold inventory that had accumulated in the previous year and seasonally significant precipitation leading to a minor amount of dilution to the pregnant gold solution which negatively affected gold recoveries. Mining activities were focused on phase 5 and phase 6 of the Keltepe pit and in phase 2 of the Güneytepe pit. A total of 3.9 million tonnes were mined and 1.1 million tonnes were stacked at an average grade of 1.12 g/t. The 2024 production guidance at Öksüt is unchanged, with approximately 40% to 45% of the annual production weighted to the second half of the year.

Gold production costs and AISC on a by-product basis NG for the second quarter 2024 at Öksüt were $729 per ounce and $943 per ounce, respectively. These costs were higher compared to last quarter primarily due to lower sales and higher royalty costs resulting from higher average realized gold prices. Öksüt’s gold production costs guidance and AISC on a by-product basis NG guidance for 2024 is unchanged. However, AISC on a by-product basis NG could exceed the guidance range if gold prices remain at current levels, due to resulting higher royalty rates.