2019 Fourth Quarter and 2019 Year-end Results

published: 07 April 2020

Basic Operating and Financial Results

At the Kumtor Mine gold production in 2019 was 600,201 ounces¹ or 18,668.35 kg. Gold sales in 2019 were 600,231 ounces¹ or 18,669.28 kg with a revenue totaling $827.5 million². Contribution to the national budget in taxes and mandatory payments in 2019 is more than 14.8 billion soms.

The Dore bars produced by the Kumtor mine are purchased by Kyrgyzaltyn JSC for processing at the Kara-Balta refinery pursuant to a Gold and Silver Sales Agreement signed by KGC, Kyrgyzaltyn and the Government of the Kyrgyz Republic. Kyrgyzaltyn JSC enjoys the exclusive right to sell refined gold and silver both within and outside the Kyrgyz Republic.

COVID-19 Update

Centerra Gold (“Centerra”) continues to prioritize the health, safety and well-being of its employees, contractors, communities and other stakeholders, particularly during the current outbreak of COVID-19. To date, the Company has experienced no operating or production disruptions nor any supply chain interruptions or impact. Kumtor and Mount Milligan operations continue for the time being and, in the case of Kumtor, with the support of the Kyrgyz Republic Government.
Centerra has taken the following measures to provide its employees with accurate information, help prevent infection and reduce the potential transmission of COVID-19:

• Pandemic & Crisis Management: A global crisis management team was activated in early March.The team, comprised of executives and local site leaders, has been leading Centerra’s global response and has implemented a corporate pandemic response plan complemented by local site-specific crisis management plans.
• Health and Mental Well-being Support: Centerra continues to educate and raise awareness on COVID-19 facts and preventative actions through frequent communication with employees and is directing leaders to offer compassionate support for employees who are concerned about their wellbeing and the wellbeing of their families. Any employee who is feeling unwell or experiencing flu-like symptoms has been advised to stay home. The Company is conducting temperature checks using non-contact thermometers and asking health questions of all individuals entering any of its sites. A standard operating procedure has been implemented in case there is a need for individual isolation and subsequent transportation from site for any individual who exhibits COVID-19 related symptoms.
• Workplace Hygiene: All sites have increased daily cleaning of all common areas and spaces where there is frequent employee contact, including shared objects and any high-touch surfaces. Proper food hygiene and preparation practices have been reinforced at the Company’s mine sites which have onsite living quarters.
• Remote Working: As noted above, to promote social distancing practices, corporate and regional offices have been closed for the time being and flexible work arrangements have been implemented globally. Site employees who can work at home have been encouraged to do so. The Company has also moved to virtual meetings across the organization where possible or limited attendees at meetings while practicing prudent social distancing.
• Travel and Site Visit Restrictions: The Company has instituted a no-air travel policy. At the guidance of public health authorities, individuals who have recently returned from either business or non-business-related travel have entered a 14-day self-isolation period. In addition, a visitor ban has been instituted at all sites, including our operating mines, development projects and at our care and maintenance sites.

Brownfields Exploration
During the fourth quarter of 2019, exploration drilling programs continued with the completion of seventy-two diamond drill holes for 17,777 metres, including 3,202 metres of infill drilling in the Hockey Stick Zone and four RC drill holes for 691 metres. Exploration drilling focused on testing zones of mineralization near the surface for additional open pit resources on the north-east side of the Central Pit, at the corridor between the Central and Southwest pits, and on the flanks of the Sarytor target area. An Airborne magnetic geophysical survey was also carried out within the Kumtor Concession area and beyond.

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.

The table below displays Kumtor’s basic operating and financial results5:

Financial
Kumtor recognized 25% higher revenues and 38% higher earnings from mine operations during 2019 when compared to the prior year as a result of more ounces sold, higher realized gold prices and lower unit costs from the processing of ore with higher grades and recoveries. Cash provided by mine operations was $85.3 million higher in 2019 when compared to 2018 due to higher realized gold prices, higher ounces sold and higher accounts payable.

Production
During 2019, Kumtor focused on developing cut-back 19 and stripping and unloading of ice from cut-back 20. Total waste and ore mined in 2019 was 156.4 million tonnes compared to 180.3 million tonnes in the comparative prior year, due primarily to weather delays affecting the truck and shovel availability and the suspension of mining operations in December 2019. Kumtor produced 600,201 ounces of gold in 2019 compared to 534,563 ounces of gold in 2018. The increase was due primarily to processing ore with higher grade and recovery from cut-back 18 and cut-back 19. During 2019, Kumtor’s mill head grade was 3.7 g/t with a recovery of 83.5% compared with 3.3 g/t grade and a recovery of 79.3% for 2018.

Mining Costs, including capitalized stripping
Mining costs, including capitalized stripping, were $197.6 million in 2019 compared to $211.1 million in 2018. Mining costs decreased due to fewer tonnes mined as a result of the suspension of mining in December 2019 and poor weather conditions during the summer, resulting in a decrease in diesel costs, partially offset by higher costs for spare parts.

Milling Costs
Milling costs were $71.6 million in 2019 compared to $67.3 million in the comparative prior year, which increased due to higher carbon fine processing, costs related to the comprehensive maintenance shutdown for the planned replacement of equipment (not performed in 2018) and higher grinding media and cyanide costs due to the processing of a harder ore type.

Site Support Costs
Site support costs in 2019 totaled $49.0 million compared to $51.7 million in the comparative prior year, the decrease was due primarily to fewer contractors on site and lower camp supply costs.

Production costs per ounce of gold sold
Production costs per ounce of gold sold were $381 for 2019, consistent with $394 in 2018, due to ounces sold and cost of sales increasing by similar percentages.

All-in Sustaining Costs⁴                                                                                                          
All-in sustaining costs on a by-product basis per ounce sold⁴, which excludes revenue-based tax, were $598 per ounce in 2019 compared to $694 per ounce in 2018. The decrease was mainly due to more ounces of gold sold and lower capitalized stripping as a result of the suspension of mining operations and earlier cessation of stripping activity in 2019 (cut-back 19) than in 2018 (cut-back 18). Including revenue-based taxes, all-in sustaining costs on a by-product basis per ounce sold⁴ were $792 per ounce in 2019 compared to $869 per ounce in 2018.