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| Bristol Gate Concentrated Canadian Equity ETF | TSX:BGC | Toronto | Exchange Traded Fund |
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Hot Features
Premium
(This news release contains forward-looking information that is subject to the
risk factors and assumptions set out on page 17 and in our Cautionary Note
Regarding Forward-looking Information on page 26. All figures are in United
States dollars.)
Centerra Gold Inc. (TSX:CG) today reported quarterly net earnings of $140.0
million or $0.60 per common share based on revenues of $323.9 million. This
compares to earnings of $61.4 million or $0.28 per common share before an
impairment charge of $18.8 million on revenues of $241.3 million in the same
quarter of last year. After the impairment charge to write-down the goodwill in
the Mongolian operating unit to fair value, the net earnings for the fourth
quarter of 2008 were $42.6 million or $0.20 per common share.
Centerra's consolidated gold production for the fourth quarter of 2009 totaled
296,048 ounces at a total cash cost of $276 per ounce compared to 284,045 ounces
at a total cash cost of $316 per ounce in the corresponding quarter of 2008. The
increase in gold production was the result of higher gold production at both of
the Company's operations primarily due to the processing of higher grade
material along with achieving higher recoveries. (Total cash cost is a non-GAAP
measure and is discussed under "Non-GAAP Measures" in this news release.)
Cash provided by operations in the fourth quarter, net of working capital
changes and other operating items was $188.6 million compared to $103.3 million
in the fourth quarter of 2008. The increase reflects the higher gold sales as a
result of the higher average realized price of gold ($1,129 per ounce) in the
fourth quarter of 2009.
2009 Fourth Quarter Highlights
- Proven and probable mineral reserves increased 26% to 7.3 million contained
ounces of gold as a result of reserve increases at Kumtor and Gatsuurt. This
represents an increase of 2.4 million ounces before accounting for production of
930,000 ounces of contained gold.
- Before accounting for annual production, added 2.1 million ounces of proven
and probable mineral reserves at Kumtor which will extend Kumtor's mine life to
2019. Includes the previously announced 1.3 million ounce increase at October
31, 2009.
- Record fourth quarter gold production at Kumtor of 247,095 ounces at total
cash costs of $245 per ounce.
- Fourth quarter revenue increased 104% over the third quarter to $324 million.
- Cash provided by operations of $189 million or $0.80 per share for the fourth
quarter.
- Successfully completed secondary offering of 88,618,472 Centerra common shares
held by Cameco Corporation, which were sold to the public at C$10.25 per share.
With the transfer by Cameco of 25,300,000 common shares to Kyrgyzaltyn JSC,
Cameco has now disposed of all of its holdings in Centerra.
- Expanded the Board of Directors to eleven members, and appointed John W. Lill,
Aleksei A. Eliseev and Iurii I. Kosvin to the Board.
- Cash and short-term investments of $323 million as at December 31, 2009
compared to $167 million a year earlier and the Company continues to have no
debt outstanding.
Commentary
Stephen Lang, President and CEO of Centerra Gold commented, "The fourth quarter
was an eventful quarter for the Company. Our proven and probable reserves
increased 26% to 7.3 million ounces, Kumtor set a new quarterly gold production
record, we added reserves at Kumtor, extending the open pit mine life to 2019
and Cameco sold its block of stock and transferred the 25.3 million Centerra
shares to the Kyrgyz Government, who now is Centerra's largest shareholder
holding 33% of the common shares. Our operations generated strong cash flow
during the quarter of $188.6 million and Centerra ended the year with a balance
sheet that includes $323 million in cash and short-term investments and no debt
outstanding."
"For 2010, consolidated gold production is expected to be in the 640,000 to
700,000 ounce range and total cash costs are expected in the $460 to $505 per
ounce range. The production profile at Kumtor will be somewhat similar to 2009
with 43% of its gold production expected in the fourth quarter, but this year we
expect a stronger first quarter at Kumtor with 28% of its annual production to
be recovered," he concluded.
For the full year 2009, the Company recorded earnings before unusual items of
$109.6 million or $0.48 per common share reflecting the increased number of
shares outstanding in 2009 on revenues of $685.5 million, compared to earnings
before unusual items of $97.1 million or $0.45 per common share on revenues of
$636.0 million in 2008. Net earnings for 2009 were $60.3 million or $0.27 per
share, after reflecting a charge for unusual items of $49.3 million relating to
the Kyrgyz settlement. Net earnings for 2008 were $134.8 million or $0.62 per
share, after reflecting unusual items of $37.7 million (gain) relating to the
reduction to fair value recorded in the second quarter of 2008 of the contingent
share obligation under the expired preliminary framework agreement with the
Kyrgyz Government.
Cash provided by operations in 2009 of $245.6 million represented $1.08 per
share up from $166.3 million or $0.77 per share in 2008, reflecting the higher
net earnings, primarily as a result of the higher average gold price realized.
Consolidated 2009 gold production of 675,592 ounces at a total cash cost of $459
per ounce exceeded the Company's revised guidance of 620,000 to 630,000 ounces,
compared with consolidated gold production of 748,888 ounces at a total cash
cost of $423 per ounce for the prior year. Note that the 2008 unit cost was
restated to remove revenue-based taxes. (Total cash cost is a non-GAAP measure
and is discussed under "Non-GAAP Measures" in this news release.)
Year-end Reserves and Resources
Reserves
As of December 31, 2009, on a 100% project basis, Centerra's proven and probable
reserves increased 26% to 7.3 million ounces of contained gold, compared to 5.8
million ounces as of December 31, 2008. This represents an increase of 2.4
million contained ounces before accounting for the processing of 930,000
contained ounces processed at Kumtor and Boroo or placed on Boroo's heap leach
pad during 2009. All 2009 year-end reserves and resources were estimated using a
gold price of $825 per ounce compared to $675 per ounce in 2008.
At Kumtor, before accounting for the processing of 695,000 contained ounces
produced during 2009, proven and probable reserves increased by 2.1 million
contained ounces. The increase is a combination of reserve increases in the
Central Pit as described in the Company's news release of December 7, 2009
(adjusted for production in November and December 2009) and a year-end increase
of the Sarytor and Southwest reserves.
As described in the December 2009 news release, the increase in the Central Pit
reserves is the result of successful exploration drilling, changes in the
life-of-mine plan as a result of the gold price increase and an expansion of the
mining fleet at Kumtor to complete the North Wall expansion. With this fleet
expansion there will be excess mining equipment capacity in the latter years of
the Central Pit life-of-mine plan which could be deployed for the mining of
satellite deposits. At year-end, a further review of the Sarytor and Southwest
reserves and resources using the higher gold price of $825 per ounce and the
availability of excess mining equipment capacity has led to pit expansions at
both the Sarytor and Southwest satellite deposits. At Sarytor, proven and
probable reserves increased by 442,000 contained ounces of gold to total 814,000
contained ounces of gold. At the Southwest deposit, proven and probable reserves
increased by 394,000 contained ounces of gold to total 394,000 contained ounces.
The Kumtor life-of-mine plan has been revised and extended a further two years
to 2019 from the life-of-mine plan described in the December 2009 news release.
Kumtor's life-of-mine plan is based only on the open pit reserves and resources,
and no provision has been made for production from the underground development
activities.
At Boroo, before accounting for the processing of 235,000 contained ounces
produced during 2009 in the Boroo mill and heap leach pad, proven and probable
reserves increased by 24,000 contained ounces. In addition, a technical report
was finalized to include heap leach processing in the life-of-mine plan at
Boroo.
At Gatsuurt, proven and probable reserves increased by 275,000 contained ounces
due to an expanded pit as a result of the higher gold price and a resulting
lowering of the cut-off grades.
Resources
As of December 31, 2009, on a 100% project basis, Centerra's measured and
indicated resources decreased by 791,000 ounces over the December 31, 2008
figures to total 4.1 million ounces of contained gold (Centerra's share is 4.0
million ounces), compared to 4.9 million ounces (Centerra's share was 4.5
million ounces) as of December 31, 2008. The decrease from the 2008 year-end
measured and indicated resources is largely attributable to conversion of
resources into reserves at Kumtor and Gatsuurt as a result of using a higher
gold price for reserve estimation.
The Company's inferred resources, on a 100% project basis increased by 218,000
contained ounces year-over-year. At Kumtor, the inferred resources in the
high-grade SB Zone increased to 1.8 million contained ounces of gold with an
average grade of 17.0 g/t, as a result of the successful 2009 drilling of the
southwest extension of the SB Zone. The strike length of the deposit was
extended by a further 350 metres to the southwest of the 2008 year-end resource
model. A significant portion of the new ounces identified by this drilling,
341,000 ounces of contained gold, fall within the new Kumtor open pit design and
therefore are included in the new in-pit proven and probable reserves.
In addition, this southwest expansion of the Central Pit also captured 155,000
ounces of contained gold that were previously classified as part of the
high-grade underground SB Zone inferred resource, that is now within the new
open pit design, and therefore is included in the Kumtor central pit proven and
probable reserves. The shallow drilling also identified an estimated 313,000 new
ounces of contained gold beneath the 2008 open pit design that were added to the
2008 year-end high-grade underground SB Zone inferred resource. This addition,
offset by the 155,000 ounces of contained gold reclassified as open pit
reserves, has resulted in a net increase of an estimated 158,000 ounces of
contained gold to the high-grade underground SB Zone inferred resource.
At the Sarytor and Southwest deposits, measured and indicated resources
increased due to the expansion of the mineralization identified as having a
reasonable expectation of economic extraction using an $825 per ounce gold
price. In addition, inferred resources increased at the Sarytor and Southwest
deposits.
Reconciliation of Gold Reserves and Resources
(in thousands of ounces of contained gold)(8)(9)
----------------------------------------------------------------------------
December Jan-1 to Nov-1 to 2009 December Centerra
31 2008(1) Oct-31 2009 Dec-31 2009 Addition 31 2009 Share(4)
Through- Through- (Deletion)
put(2) put(2) (3)
----------------------------------------------------------------------------
Reserves
- Proven
and
Probable
----------------------------------------------------------------------------
Kumtor(5) 4,025 409 286 2,144 5,474 5,474
----------------------------------------------------------------------------
Boroo 778 188 47 24 567 567
----------------------------------------------------------------------------
Gatsuurt(7) 1,005 0 0 275 1,280 1,280
----------------------------------------------------------------------------
Total
Proven
and
Probable
Reserves 5,808 597 333 2,443 7,321 7,321
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Resources
- Measured
and
Indicated
----------------------------------------------------------------------------
Kumtor(6) 2,865 0 0 (664) 2,201 2,201
----------------------------------------------------------------------------
Boroo 242 0 0 0 242 242
----------------------------------------------------------------------------
Gatsuurt(7) 607 0 0 (127) 480 480
----------------------------------------------------------------------------
REN(11) 1,220 0 0 0 1,220 781
----------------------------------------------------------------------------
Total
Measured
& Indicated
Resources 4,934 0 0 (791) 4,143 3,704
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Resources
- Inferred
(10)
----------------------------------------------------------------------------
Kumtor(6) 34 0 0 275 309 309
----------------------------------------------------------------------------
Kumtor
Stockwork
Underground 757 0 0 (136) 621 621
----------------------------------------------------------------------------
Kumtor
SB
Underground 1,593 0 0 158 1,751 1,751
----------------------------------------------------------------------------
Boroo 233 0 0 0 233 233
----------------------------------------------------------------------------
Gatsuurt(7) 256 0 0 (79) 177 177
----------------------------------------------------------------------------
REN(11) 432 0 0 0 432 277
----------------------------------------------------------------------------
Total
Inferred
Resources 3,305 0 0 218 3,523 3,368
----------------------------------------------------------------------------
(1) Reserves and resources as reported in Centerra's Annual Information
Form filed in March 2009.
(2) Corresponds to mill and heap leach pad feed. The discrepancy between
the 2009 throughput and 2009 ounces of gold produced is due to gold
recovery in the mill and heap leach pad.
(3) Changes in reserves or resources, as applicable, are attributed to
information provided by drilling and subsequent reclassification of
reserves or resources, an increase in the gold price, changes in pit
designs, reconciliation between the mill and the resource model, and
changes to operating costs.
(4) Centerra's equity interests as at December 31, 2009, were as follows:
Kumtor 100%, Gatsuurt 100%, Boroo 100% and REN 64%.
(5) Kumtor reserves include the Central Pit and the Southwest and Sarytor
Deposits.
(6) Kumtor open pit resources include the Central Pit and the Southwest
Deposit and Sarytor Deposit.
(7) Gatsuurt reserves and resources include the Central Zone and Main
Zone deposits.
(8) Centerra reports reserves and resources separately. The amount of
reported resources does not include those amounts identified as
reserves.
(9) Numbers may not add up due to rounding.
(10) Inferred mineral resources have a great amount of uncertainty as to
their existence and as to whether they can be mined economically. It
cannot be assumed that all or part of the inferred resources will ever
be upgraded to a higher category.
(11) Centerra's interest in the REN joint venture is subject to a purchase
agreement. Upon payment in full of the purchase price, Centerra will
transfer its interest to the acquiring party, Rye Patch Gold Inc.
See "Exploration Update - United States - REN".
Centerra Gold Inc.
2009 Year-end Reserve and Resource Summary
(as of December 31, 2009)
----------------------------------------------------------------------------
Reserves(1) (Tonnes and ounces in thousands)(11)(12)
----------------------------------------------------------
Proven Probable
----------------------------------------------------------------------------
Property Tonnes Grade Contained Tonnes Grade Contained
(g/t) Gold (oz) (g/t) Gold (oz)
----------------------------------------------------------------------------
Kumtor(1)(6)(13) 1,659 2.1 113 54,201 3.1 5,361
----------------------------------------------------------------------------
Boroo(1)(8) 10,674 0.9 295 4,777 1.8 272
----------------------------------------------------------------------------
Gatsuurt(1)(9) - - - 13,850 2.9 1,280
----------------------------------------------------------------------------
Total 12,333 1.0 408 72,828 3.0 6,913
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Reserves(1) (Tonnes and ounces in thousands)(11)(12)
----------------------------------------------------------
Total Proven and Probable Reserves
----------------------------------------------------------------------------
Property Tonnes Grade Contained Centerra Mining
(g/t) Gold (oz) Share (oz)(3) Method(4)
----------------------------------------------------------------------------
Kumtor(1)(6)(13) 55,860 3.0 5,474 5,474 OP
----------------------------------------------------------------------------
Boroo(1)(8) 15,451 1.1 567 567 OP
----------------------------------------------------------------------------
Gatsuurt(1)(9) 13,850 2.9 1,280 1,280 OP
----------------------------------------------------------------------------
Total 85,161 2.7 7,321 7,321
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Measured and Indicated Resources(2) (Tonnes and ounces in thousands)(11)(12)
----------------------------------------------------------
Measured Indicated
----------------------------------------------------------------------------
Property Tonnes Grade Contained Tonnes Grade Contained
(g/t) Gold (oz) (g/t) Gold (oz)
----------------------------------------------------------------------------
Kumtor(5)(6)(13) 18,480 2.4 1,441 10,372 2.3 760
----------------------------------------------------------------------------
Boroo(5)(8) 452 2.2 32 4,464 1.5 210
----------------------------------------------------------------------------
Gatsuurt(9) - - - 5,751 2.6 480
----------------------------------------------------------------------------
REN(10)(15) - - - 2,990 12.7 1,220
----------------------------------------------------------------------------
Total 18,932 2.4 1,473 23,577 3.5 2,670
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Measured and Indicated Resources(2) (Tonnes and ounces in thousands)(11)(12)
----------------------------------------------------------
Total Measured and Indicated Resources
----------------------------------------------------------------------------
Property Tonnes Grade Contained Centerra Mining
(g/t) Gold (oz) Share (oz)(3) Method(4)
----------------------------------------------------------------------------
Kumtor(5)(6)(13) 28,852 2.4 2,201 2,201 OP
----------------------------------------------------------------------------
Boroo(5)(8) 4,916 1.5 242 242 OP
----------------------------------------------------------------------------
Gatsuurt(9) 5,751 2.6 480 480 OP
----------------------------------------------------------------------------
REN(10)(15) 2,990 12.7 1,220 781 UG
----------------------------------------------------------------------------
Total 42,509 3.0 4,143 3,704
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Inferred Resources(2)(14) (Tonnes and ounces in thousands)(11)(12)
---------------------------------------------------------
Inferred
----------------------------------------------------------------------------
Property Tonnes Grade Contained Centerra Mining
(g/t) Gold (oz) Share (oz)(3) Method(4)
----------------------------------------------------------------------------
Kumtor(5)(6)(13) 3,793 2.5 309 309 OP
----------------------------------------------------------------------------
Kumtor Stockwork
Underground(7) 1,700 11.4 621 621 UG
----------------------------------------------------------------------------
Kumtor SB
Underground(7) 3,203 17.0 1,751 1,751 UG
----------------------------------------------------------------------------
Boroo(5)(8) 7,323 1.0 233 233 OP
----------------------------------------------------------------------------
Gatsuurt(9) 2,260 2.4 177 177 OP
----------------------------------------------------------------------------
REN(10)(15) 835 16.1 432 277 UG
----------------------------------------------------------------------------
Total 19,114 5.7 3,523 3,368
----------------------------------------------------------------------------
(1) The reserves have been estimated based on a gold price of $825 per
ounce.
(2) Mineral resources are in addition to reserves. Mineral resources do
not have demonstrated economic viability.
(3) Centerra's equity interests are: Kumtor 100%, Gatsuurt 100%, Boroo
100% and REN 64%.
(4) "OP" means open pit and "UG" means underground.
(5) Open pit resources occur outside the current ultimate pits which have
been designed using a gold price of $825 per ounce.
(6) The open pit reserves and resources at Kumtor are estimated based on
a cutoff grade of 1.0 gram of gold per tonne and includes the Central
Pit and the Southwest and Sarytor deposits.
(7) Underground resources occur below the Central pit and are estimated
based on a cutoff grade of 7.0 grams of gold per tonne.
(8) The reserves and resources at Boroo are estimated based 0.5 gram of
gold per tonne cutoff grade.
(9) The reserves and resources at Gatsuurt are estimated using either a
1.2, 1.4 or 1.5 grams of gold per tonne cutoff grade depending on ore
type and process method.
(10) The resources at REN are estimated based on a cutoff grade of 8.0
grams of gold per tonne.
(11) A conversion factor of 31.10348 grams per ounce of gold is used in the
reserve and resource estimates.
(12) Numbers may not add up due to rounding.
(13) Kumtor reserves and resources include Sarytor and Southwest reserves
of 15.1 million tonnes grading 2.5 g/t for 1,208,000 contained ounces,
Sarytor and Southwest indicated resources of 4.8 million tonnes
grading 2.1 g/t for 325,000 contained ounces and Sarytor and Southwest
inferred resources of 3.7 million tonnes grading 2.5 g/t for 303,000
contained ounces.
(14) Inferred mineral resources have a great amount of uncertainty as to
their existence and as to whether they can be mined economically. It
cannot be assumed that all or part of the inferred resources will ever
be upgraded to a higher category.
(15) Centerra's interest in the REN joint venture is subject to a purchase
agreement. Upon payment in full of the purchase price, Centerra will
transfer its interest to the acquiring party, Rye Patch Gold Inc. See
"Exploration Update - United States - REN".
Financial and Operating Summary
Highlights
----------------------------------------------------------------------------
Three Months Ended December 31 Year Ended December 31
----------------------------------------------------------------------------
Financial and
Operating Summary 2009 2008 % Change 2009 2008 % Change
---- ---- -------- ---- ---- --------
----------------------------------------------------------------------------
Revenue - $ millions 323.9 241.3 34% 685.5 636.0 8%
----------------------------------------------------------------------------
Cost of sales
- $ millions(1) 74.1 113.4 (35%) 295.9 332.0 (11%)
----------------------------------------------------------------------------
Impairment charge
- $ millions - 18.8 100% - 18.8 100%
----------------------------------------------------------------------------
Earnings before
unusual items
- $ millions(2) 140.0 42.6 228% 109.6 97.1 13%
----------------------------------------------------------------------------
Earnings per
common share
before unusual
items - $ basic
and diluted 0.60 0.20 200% 0.48 0.45 7%
----------------------------------------------------------------------------
Unusual items (gain)
- $ millions - - - 49.3 (37.7) (231%)
----------------------------------------------------------------------------
Net earnings
- $ millions 140.0 42.6 228% 60.3 134.8 (55%)
----------------------------------------------------------------------------
Earnings per common
share - $ basic and
diluted 0.60 0.20 200% 0.27 0.62 (56%)
----------------------------------------------------------------------------
Cash provided by
operations - $ millions 188.6 103.3 83% 245.6 166.3 48%
----------------------------------------------------------------------------
Capital expenditures
- $ millions 28.7 27.3 5% 89.8 94.5 (5%)
----------------------------------------------------------------------------
Weighted average
common shares
outstanding - basic
(thousands)(3) 234,857 216,318 9% 226,699 216,318 5%
----------------------------------------------------------------------------
Weighted average
common shares
outstanding - diluted
(thousands)(3) 235,379 218,166 8% 226,801 216,438 5%
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Average gold spot
price - $/oz 1,100 795 38% 973 872 12%
----------------------------------------------------------------------------
Average realized
gold price - $/oz 1,129 806 40% 1,013 853 19%
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Gold sold - ounces 286,888 299,242 (4%) 676,394 745,730 (9%)
----------------------------------------------------------------------------
Cost of sales
- $/oz sold 258 379 (32%) 438 445 (2%)
----------------------------------------------------------------------------
Gold produced - ounces 296,048 284,045 4% 675,592 748,888 (10%)
----------------------------------------------------------------------------
Total cash cost(4)(5)
- $/oz produced 276 316 (12%) 459 423 8%
----------------------------------------------------------------------------
Total production
cost(4)(5) - $/oz
produced 393 437 (10%) 611 533 15%
----------------------------------------------------------------------------
(1) Cost of sales excludes regional office administration.
(2) Net earnings before unusual items is a non-GAAP measure and is
discussed under "Non-GAAP Measures".
(3) As of December 31, 2009, the Company had 234,857,228 common shares
issued and outstanding.
(4) Total cash cost and total production cost are non-GAAP measures and
are discussed under "Non-GAAP Measures".
(5) As a result of Kumtor's Restated Investment Agreement, total cash cost
and total production cost per ounce measures for 2009 and the
comparative years have been restated to exclude operating and
revenue-based taxes.
Capital expenditures in the fourth quarter of 2009 amounted to $28.7 million of
which $5.7 million was spent and accrued on sustaining capital projects and
$23.0 million invested in growth capital. The major growth components are
related to the SB Zone underground development at Kumtor ($12.1 million), and
the Gatsuurt development project ($10.3 million). Capital expenditures in the
same quarter of 2008 were $27.3 million, which included $16.4 million of
sustaining capital and $10.9 million of growth capital.
Exploration expenditures for the fourth quarter were $8.5 million dollars
compared to $7.9 million in the fourth quarter of 2008 reflecting higher
spending on new exploration joint ventures in Turkey, Russia and exploration
projects in the United States.
For the year 2009, capital expenditures were $89.8 million of which $40.1
million was spent and accrued on sustaining capital projects and $49.7 million
invested in growth capital. The major growth capital components are related to
the SB Zone underground development at Kumtor ($33.4 million) and the Gatsuurt
development project ($12.9 million). For the full year 2008, capital
expenditures totaled $94.5 million, which included $47.5 million of sustaining
capital and $47.0 million of growth capital.
Exploration expenditures in 2009 were $25.0 million compared to $23.5 million in
2008 reflecting higher spending at the Gatsuurt project, on new exploration
joint ventures in Turkey, Russia and exploration projects in the United States
and an increase in exploration activities elsewhere.
Operations Update
Kumtor
At the Kumtor mine, gold production was a record 247,095 ounces in the fourth
quarter of 2009 representing a 4% increase from the same quarter in 2008, due to
higher ore grades and increased recovery. The ore grade in the fourth quarter
averaged 6.92 g/t with a recovery of 84.4% compared to 5.60 g/t with a recovery
of 83.2% in the same quarter of 2008. The gold production increased 85% in
fourth quarter of 2009 from the third quarter of 2009, as the high-grade SB Zone
was mined in the quarter. During the fourth quarter of 2009, the Kumtor mill
performed better than expected in handling the high-grade feed in the flotation,
concentrate and gold recovery circuits. During December, the average mill feed
grade was 10.14 g/t gold and the average recovery was 85.5%.
Total cash cost per ounce produced, a non-GAAP measure of production efficiency,
decreased to $245 in the fourth quarter compared to $284 a year earlier due to
lower consumable costs ($27 per ounce) and a 4% increase in production as a
result of higher grades and recoveries ($12 per ounce). Total cash operating
costs decreased to $60.5 million in the fourth quarter compared to $67.3 million
in the fourth quarter of 2008. The cost decrease year-over-year was due to lower
costs of diesel fuel ($4.6 million), maintenance materials and supplies ($1.4
million), and tires ($0.7 million), which represents $27 per ounce decrease.
Exploration expenditures totaled $2.8 million for the fourth quarter of 2009, a
slight decrease from $3.4 million in the fourth quarter 2008, primarily as a
result of lower drill costs.
During the fourth quarter of 2009, capital expenditures were $16.0 million,
which included $3.4 million of sustaining capital spent mainly on the CAT 785
haul truck major overhaul program and on shovel rebuilds. In addition, $12.6
million was invested in growth capital mainly for the SB Zone underground
development ($12.1 million) in the fourth quarter of 2009.
The SB Zone underground decline has advanced a total of 680 metres and the
ground conditions are fluctuating between good and poor, with the poor ground
associated with structural faults.
As planned, a second portal and decline was started from within the Central Pit.
The underground development program has been revised to allow access to both the
SB Zone and Stockwork Zone at the same time. The second portal and the
associated infrastructure have been completed and mining development is
underway. Exploration and delineation drilling of the two resources (SB Zone and
Stockwork Zone) is planned for 2010.
Boroo & Gatsuurt
At the Boroo mine in the fourth quarter of 2009, gold production was 48,953
ounces, 3% better than the fourth quarter of 2008 due to higher ore grade (2.91
g/t versus 2.55 g/t in 2008) and higher mill recovery (79.1% compared to 70.7%).
During the fourth quarter of 2009, the mill throughput rate exceeded plan and
less transitional ore was mined from Pit 3. During the quarter, Boroo mined in
an area that was less refractory in nature than anticipated. Better ore grades
from the mine and the stockpiles, and better recovery lead to the higher gold
production.
Total cash costs per ounce produced, a non-GAAP measure of production
efficiency, decreased to $435 in the fourth quarter of 2009 from $471 in the
fourth quarter of 2008. Total cash operating costs decreased to $21.3 million in
the fourth quarter compared to $22.4 million in the fourth quarter of 2008,
primarily as the result of lower mining, milling and leaching costs due to lower
consumable costs ($22 per ounce), and a 3% increase in ounces produced
(representing $14 per ounce of the decrease).
During the fourth quarter of 2009, capital expenditures at Boroo were $2.3
million of sustaining capital and no growth capital.
At the Gatsuurt project, $10.3 million of growth capital was spent in the
quarter primarily related to the construction of the road to access the Gatsuurt
project and connect it with the Boroo mill facilities. Late in the fourth
quarter, condemnation drilling was performed at Gatsuurt to confirm waste dump
locations. Development of the mine site infrastructure is continuing, though
cold winter weather has reduced some construction activities. The road
construction is on schedule for a second quarter 2010 completion.
Summary of Key Operating Results
----------------------------------------------------------------------------
Three Months Ended December 31 Year Ended December 31
----------------------------------------------------------------------------
Kumtor Operating
Results 2009 2008 % Change 2009 2008 % Change
---- ---- -------- ---- ---- --------
----------------------------------------------------------------------------
Revenue - $ millions 263.1 208.5 26% 523.7 468.3 12%
----------------------------------------------------------------------------
Gold sold - ounces 231,799 258,642 (10%) 511,092 552,253 (7%)
----------------------------------------------------------------------------
Average realized gold
price - $/oz 1,135 806 41% 1,025 848 21%
----------------------------------------------------------------------------
Cost of sales
- $ millions(1) 57.4 96.8 (41%) 236.5 273.1 (13%)
----------------------------------------------------------------------------
Cost of sales
- $/oz sold 248 374 (34%) 463 495 (6%)
----------------------------------------------------------------------------
Tonnes mined - 000s 25,995 29,000 (10%) 115,544 115,548 (0%)
----------------------------------------------------------------------------
Tonnes ore mined - 000s 1,759 1,490 18% 4,464 4,967 (10%)
----------------------------------------------------------------------------
Tonnes milled - 000s 1,414 1,560 (9%) 5,780 5,577 4%
----------------------------------------------------------------------------
Average mill head grade
- g/t(2) 6.92 5.60 24% 3.74 3.89 (4%)
----------------------------------------------------------------------------
Recovery - % 84.4 83.2 1% 76.7 79.7 (4%)
----------------------------------------------------------------------------
Gold produced - ounces 247,095 236,544 4% 525,042 556,251 (6%)
----------------------------------------------------------------------------
Total cash cost(3)(4)
- $/oz produced 245 284 (14%) 460 438 5%
----------------------------------------------------------------------------
Total production
cost(3)(4)- $/oz produced 346 403 (14%) 593 548 8%
----------------------------------------------------------------------------
Capital expenditures
- $ millions 16.0 20.3 (21%) 73.4 57.1 28%
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Boroo Operating Results
----------------------------------------------------------------------------
Revenue - $ millions 60.8 32.8 85% 161.8 167.7 (4%)
----------------------------------------------------------------------------
Gold sold - ounces 55,089 40,600 36% 165,302 193,477 (15%)
----------------------------------------------------------------------------
Average realized gold
price - $/oz 1,104 808 37% 979 867 13%
----------------------------------------------------------------------------
Cost of sales
- $ millions(1) 16.7 16.6 1% 59.5 58.9 1%
----------------------------------------------------------------------------
Cost of sales
- $/oz sold 303 409 (26%) 360 304 18%
----------------------------------------------------------------------------
Total tonnes mined
- 000s 3,624 5,039 (28%) 12,396 21,450 (42%)
----------------------------------------------------------------------------
Tonnes mined heap
leach - 000s 1,170 1,037 13% 3,481 3,629 (4%)
----------------------------------------------------------------------------
Tonnes ore mined direct
mill feed - 000's 1,250 625 100% 2,913 2,416 21%
----------------------------------------------------------------------------
Tonnes ore milled - 000s 628 620 1% 2,077 2,496 (17%)
----------------------------------------------------------------------------
Average mill head
grade - g/t(2) 2.91 2.55 14% 2.56 2.69 (5%)
----------------------------------------------------------------------------
Recovery - % 79.1 70.7 12% 72.9 77.7 (6%)
----------------------------------------------------------------------------
Gold produced - ounces 48,953 47,501 3% 150,550 192,637 (22%)
----------------------------------------------------------------------------
Total cash cost(3)
- $/oz produced 435 471 (8%) 456 382 19%
----------------------------------------------------------------------------
Total production cost(3)
- $/oz produced 634 606 5% 673 490 37%
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Capital expenditures
(Boroo) - $ millions 2.3 6.7 (65%) 3.3 35.9 (91%)
----------------------------------------------------------------------------
Capital expenditures
(Gatsuurt) - $ millions 10.3 0.1 10200% 12.9 0.6 2050%
----------------------------------------------------------------------------
(1) Cost of sales for 2009 and its comparative years exclude regional
office administration.
(2) g/t means grams gold per tonne.
(3) Total cash cost and total production cost are non-GAAP Measures and
are discussed under "Non-GAAP Measures".
(4) As a result of Kumtor's Restated Investment Agreement, Kumtor's total
cash cost and total production cost per ounce measures for 2009 and
the comparative years have been restated to exclude operating and
revenue-based taxes.
Exploration Update
Kyrgyz Republic
During the fourth quarter of 2009, exploration drilling programs continued in
the Kumtor Central Pit and from the underground in decline 1. Regional
exploration drilling continued on the Kumtor concession area at the Northeast,
Muzdusuu, Southwest and Sarytor areas. During the quarter, a 140
square-kilometre exploration license contiguous to the Kumtor concession was
obtained. The Karasay prospect is 15 kilometres south of the current Kumtor
mining areas and fieldwork is expected to commence in the second quarter of
2010.
Kumtor Pit
In the fourth quarter of 2009, the drilling program focused on testing the
southwest extension of the SB Zone outside of the planned open pit, as well as
wide-spaced drill testing for strike and down dip extensions of the main
mineralized horizons in the Saddle Zone and Northeast Extension Zones.
Drill results from testing the southwest extension of the SB Zone within and
beyond the current planned open pit continue to confirm the extension of the
Kumtor structure and mineralization. Drill hole D1373 intersected the upper zone
of mineralization but had to be stopped whilst still within the zone of
alteration, due to technical drilling problems. The most significant
mineralization intersected in this hole was 4.4 g/t Au over 9.6 metres,
including 7.5 g/t Au over 4.0 metres. This intercept, although narrower and
lower grade than the high grades intersected in drill hole D1352 in the third
quarter of 2009, has confirmed the extension of the structure and mineralization
for a further 200 metres down dip of D1352. Drill hole D1376, drilled on section
-34 of the southwest extension of the SB Zone intersected strong tectonic
brecciation and alteration in the main structure position but did not return any
significant values.
In the fourth quarter of 2009, drilling continued in the Saddle Zone area
between the SB and Stockwork Zones of the Central Pit. Drill hole, D1371,
intersected low-grade mineralization including 2.3 g/t Au over 23.5 metres and
1.6 g/t Au over 15.0 metres at 3,300 to 3,400 metre elevation.
Drilling continued in the fourth quarter to test the extension of the Kumtor
structure to the northeast of the Central pit high-wall. Drill hole D1368 was
drilled to test the down dip extension of the high grade mineralization
intersected in the second quarter of 2009 in drill hole D1301A, which returned
assays of 9.1 g/t Au over 11.0 metres, including 10.8 g/t over 8.5 metres. Drill
hole D1368 intersected 8.64 g/t Au over 2.7 metres. Further drilling in the
Northeast Extension area is planned for early 2010.
Decline Exploration
One additional drill hole was completed in the fourth quarter 2009, which
intersected the Kumtor structure in the anticipated position below the decline
but did not return any significant gold values. Exploration drilling will be
resumed in early 2010.
Regional Exploration
Regional exploration drilling continued in the fourth quarter of 2009 at
Northeast, Muzdusuu, Southwest and Sarytor areas.
Northeast Area
The drill program was designed to follow up on the mineralization intersected in
drilling completed in 2007, 2008 and 2009. The drilling continues to give
encouraging results which indicated the potential for a near surface zone of
mineralization, similar in grade to the Sarytor deposit. The most significant
widths and grades of mineralization intersected in the fourth quarter include:
----------------------------------------------------------------------------
DN1377 2.8 g/t Au over 9.3 metres
----------------------------------------------------------------------------
DN1378 6.2 g/t Au over 2.0 metres
----------------------------------------------------------------------------
DN1379 2.3 g/t Au over 7.0 metres and 3.0 g/t Au over 10.8 metres
----------------------------------------------------------------------------
DN1380 3.4 g/t Au over 16.5 metres and 4.7 g/t Au over 5.2 metres
----------------------------------------------------------------------------
DN1381 3.7 g/t Au over 13.9 metres and 1.3 g/t Au over 12.1 metres
----------------------------------------------------------------------------
DN1383 2.5 g/t Au over 6.2 metres
----------------------------------------------------------------------------
DN1386 2.0 g/t Au over 6.6 metres and 4.6 g/t Au over 8.4 metres
----------------------------------------------------------------------------
DN1391 1.6 g/t Au over 5.4 metres and 6.2 g/t Au over 10.3 metres, including
10.8 g/t Au over 5.1 metres
----------------------------------------------------------------------------
DN1397 9.3 g/t Au over 23.4 metres, including 15.2 g/t Au over 11.2 metres
----------------------------------------------------------------------------
The high-grade mineralization intersected in holes DN1391 and DN1397 are the
first indications of the presence of high-grade mineralization at the Northeast
prospect.
The mineralization intersected in holes DN1380 and DN1397 on sections 434 and
426, respectively, is higher in grade that the mineralization reported from
Soviet era adit sampling in this area (1.8 g/t Au over 12.3 metres) and confirms
the continuation of the mineralized structure for a further 500m along strike to
the northeast the high grade mineralization in hole DN1391. Follow-up drilling
along strike of both intersections is in progress.
True widths for the mineralized zones are typically from 40% to 95% of the
stated intercept.
To view the graphics, maps/drill sections and complete drill results discussed
in this news release, please visit the following link:
http://file.marketwire.com/release/cg0223.pdf or visit the Company's web site
at: www.centerragold.com.
A complete listing of the drill results and supporting maps for the Kumtor pit
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 at:
www.centerragold.com.
United States
REN
On February 4, 2010, Centerra Gold (U.S.) Inc., a wholly-owned subsidiary of
Centerra, signed a purchase agreement with Rye Patch Gold Corp. and its U.S.
subsidiary, Rye Patch Gold US Inc. (collectively "Rye Patch") for the sale of
Centerra Gold (U.S.) Inc.'s interest in the REN project in Nevada, subject to
the joint venture project partner, Homestake Mining Company of California (a
subsidiary of Barrick Gold Corporation) waiving its pre-emptive right to acquire
Centerra Gold U.S. Inc.'s interest and Rye Patch obtaining TSX Venture approval
(the "Conditions Precedent"). The purchase price for the acquisition is $42
million payable as follows: (i) $2 million within 2 business days after
satisfaction of both Condition Precedents (the "First Payment Date"); (ii) $10
million on or before the second anniversary of the First Payment Date, at Rye
Patch's election, or, at Rye Patch's election, it may issue up to $5 million in
Rye Patch common shares and pay the balance of the $10 million in cash; and
(iii) $30 million on or before the third anniversary of the First Payment Date,
or, at Rye Patch's election, it may issue up to $15 million in Rye Patch common
shares and pay the balance of the $30 million in cash.
From the First Payment Date, Rye Patch has agreed to perform all of Centerra
Gold (U.S.) Inc.'s obligations under the REN joint venture agreement, including
acting as manager. When the purchase price has been paid in full, Centerra Gold
(U.S.) Inc. has agreed to transfer the joint venture interest to Rye Patch's
subsidiary, Rye Patch Gold US Inc.
Outlook for 2010
Centerra's 2010 consolidated gold production is forecast to be in the 640,000 to
700,000 ounce range. Total cash cost in 2010 is expected to be between $460 and
$505 per ounce produced. Total cash cost is a non-GAAP measure and is discussed
under "Non-GAAP Measures".
The Kumtor mine is expected to produce between 520,000 to 560,000 ounces in
2010, which excludes any production from the nearby Sarytor deposit, which will
be mined in 2012 and 2013. Total cash cost for 2010 is expected to be $430 to
$460 per ounce.
On a quarterly break-down Kumtor's 2010 gold production profile will be somewhat
similar to 2009, except that, during the first quarter, higher grade material
will be processed as a result of the high-grade stockpile established in the
fourth quarter of 2009 as well as continued mining of the high-grade material in
the SB Zone during January of 2010. The planned mining sequence for the year has
approximately 28% of gold production being recovered in the first quarter and
43% in the fourth quarter. The second and third quarters of 2010 will have lower
production due primarily to the sequence of mining in the Kumtor pit as well as
the anticipated change of the ball mill ring gear at the end of second quarter
and replacement of the SAG mill liner in the third quarter at the Kumtor mill.
At Boroo/Gatsuurt, gold production is forecast to be 120,000 to 140,000 ounces.
The forecast assumes that:
- the Company has received the final operating permit for the Boroo heap leach
facility by mid-April 2010 allowing it to restart the heap leach within days of
receiving the permit. Approximately 36,000 ounces of gold production is planned
from the heap leach in 2010 and,
- all permitting and commissioning requirements for Gatsuurt are in place by
mid-2010 in order to allow for the commencement of processing of Gatsuurt oxide
ore in the second half of 2010 (expected production of approximately 52,000
ounces of gold from the Gatsuurt project).
Boroo/Gatsuurt total cash cost is expected to be $590 to $690 per ounce in 2010
reflecting Gatsuurt start-up. See also "Mongolian Regulatory Matters" and other
material assumptions set out below.
Centerra's production and unit costs are forecast as follows:
----------------------------------------------------------------------------
Production 2010 2009
Ounces of gold Forecast Actual
----------------------------------------------------------------------------
Kumtor 520,000 - 560,000 525,042
----------------------------------------------------------------------------
Boroo/Gatsuurt 120,000 - 140,000 150,550
----------------------------------------------------------------------------
Total Consolidated 640,000 - 700,000 675,592
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Total Cash Cost(1) 2010 2009
$ per ounce Forecast Actual
----------------------------------------------------------------------------
Kumtor 430 - 460 460
----------------------------------------------------------------------------
Boroo/Gatsuurt 590 - 690 456
----------------------------------------------------------------------------
Consolidated 460 - 505 459
----------------------------------------------------------------------------
(1) Total cash cost is a non-GAAP measure. See "Non-GAAP Measures" below.
2010 Exploration Expenditures
Exploration expenditures of $30 million are planned for 2010, an increase from
$25 million spent in 2009. The 2010 program will continue the aggressive
exploration work at the Kumtor mine with $12.6 million of planned expenditures
to test for additional open pit and underground resources. Initially, $2.1
million is allocated for target definition work and drill programs on our large
land holdings in Mongolia. In addition, drilling and generative programs will be
continued in Russia ($2.7 million), Turkey ($2.9 million) and Nevada ($2.1
million) with drilling programs continuing on the four joint ventures and two
projects generated in 2008 and on the four new joint ventures acquired in 2009.
Generative programs will continue in Central Asia, Russia, China, Turkey and the
U.S. to increase the pipeline of projects that are being developed to meet the
longer term growth targets of Centerra.
2010 Capital Expenditures
The capital expenditures for 2010 are estimated to be $276.4 million, including
$49.7 million of sustaining capital and $226.7 million of growth capital.
Capital expenditures include:
----------------------------------------------------------------------------
Projects 2010 Growth Capital 2010 Sustaining Capital
(millions of dollars) (millions of dollars)
----------------------------------------------------------------------------
Kumtor mine $152.1 $44.3
----------------------------------------------------------------------------
Boroo mine $0.8 $5.0
----------------------------------------------------------------------------
Gatsuurt project $73.8 0
----------------------------------------------------------------------------
Consolidated Total $226.7 $49.7
----------------------------------------------------------------------------
Kumtor Capital
At Kumtor, during 2010 the largest sustaining capital spending will be on the
major overhaul maintenance of the heavy duty mine equipment ($21.9 million) and
mill equipment overhaul ($1.8 million). Sustaining capital spending also
includes $6.8 million of expenditures for shear key, buttress and tailings dam
construction works and a waste dump expansion project ($1.2 million) will be
implemented that requires a new road and power line alignment.
The significant growth capital investment of $152.1 million during 2010 at
Kumtor will enable Centerra to develop the long-term potential of the mine, by
expanding and renewing the open pit mining fleet, increasing ice haulage
capacity and continuing the underground development. Included in this is the
North Wall Expansion project's growth capital, estimated at $92.9 million
primarily for purchases of mining and auxiliary support equipment to renew and
expand the mining fleet. To increase haulage capacity to manage the ice/waste
movement in the high movement area, an additional seven new CAT 789 haul trucks
for the total cost of $19.7 million will be acquired early in 2010. It is
expected that the trucks will be delivered in the second quarter of 2010. The
underground growth capital, for developing the SB Zone and Stockwork Zone, as
well as, for delineation drilling and capital purchases, is estimated to be
$37.6 million in 2010.
Boroo & Gatsuurt Capital
At Boroo, 2010 sustaining capital expenditures are expected to be $5.0 million,
primarily for the purchase of new ball and SAG mill gears ($2.1 million) and
mobile equipment component change-outs ($1.9 million).
At Gatsuurt, expected 2010 growth capital spending remains unchanged at $73.8
million which includes completion of the Gatsuurt site infrastructure including
the haul road between Gatsuurt and Boroo ($6.4 million), purchase of mobile
equipment to be used at the Gatsuurt site ($6.3 million), pre-stripping of the
Gatsuurt sulphide orebody ($12.9 million), expansion of the existing Boroo
tailings facility to contain Gatsuurt oxide and sulphide tailings ($4.9
million), and the engineering and construction of the Boroo bio-oxidation
facility to process the Gatsuurt sulphide ore ($40 million).
The Company has implemented a phased approach to the development of the Gatsuurt
orebody consisting of an oxide project component and a sulphide project
component. It is anticipated that the Gatsuurt oxide ores will begin to be
processed through the Boroo facility in the third quarter of 2010 for an
expected 2010 capital expenditure of approximately $15 million ($6.4 million for
development and infrastructure, $6.3 million for mobile equipment, and $2.3
million for tailings expansion). Development of the sulphide project accounts
for the remaining $58.8 million in expected 2010 growth capital expenditure. The
sulphide project is currently in the engineering phase of development. The
balance of the capital for the development of the deeper sulphide ores at
Gatsuurt will only be invested if the Company is successful in obtaining an
acceptable investment agreement for Gatsuurt with the Government of Mongolia.
Administration
Annual corporate and administration expenses without unusual items are expected
to amount to approximately $34 million in 2010.
Corporate Income Taxes
Kumtor's operations are not subject to corporate income taxes, pursuant to the
Restated Investment Agreement between Centerra, the government of the Kyrgyz
Republic, Kumtor Operating Company and Kumtor Gold Company signed in June 2009.
The agreement replaced the prior tax regime applicable to the Kumtor project
with a simplified regime effective January 1, 2008. This simplified regime,
which assesses tax at 13% on gross revenue (plus 1% for the Issyk-Kul Oblast
Development Fund effective January 2009), was approved and enacted by the
government of the Kyrgyz Republic on April 30, 2009.
The corporate income tax rate for Centerra's Mongolian subsidiary, Boroo Gold
Company, for 2010 and subsequent years, is 25% for taxable income over 3 billion
Mongolian tugrik (approximately $2.1 million at the 2009 year-end foreign
exchange rate) with a tax rate of 10% for taxable income up to that amount.
Production, cost and capital forecasts for 2010 are forward-looking information
and are based on key assumptions and subject to material risk factors that could
cause actual results to differ materially and which are discussed under the
heading "Material Assumptions" and "Cautionary Note Regarding Forward-looking
Information".
Sensitivities
Centerra's revenues, earnings and cash flows for 2010 are sensitive to changes
in certain variables and the Company has estimated their impact on revenues, net
earnings and cash from operations.
----------------------------------------------------------------------------
Impact on
Change ($ millions)
------------------------------------------------
Earnings before
Costs Revenues Cash flow income tax
----------------------------------------------------------------------------
Gold Price $50/oz 5.9 34.4 27.2 28.5
----------------------------------------------------------------------------
Diesel Fuel(1) 10% 4.8 - 4.4 4.4
----------------------------------------------------------------------------
Kyrgyz som 1 som 1.6 - 1.6 1.6
----------------------------------------------------------------------------
Mongolian tugrik 25 tugrik 0.3 - 0.3 0.3
----------------------------------------------------------------------------
Canadian dollar 10 cents 2.6 - 2.6 2.6
----------------------------------------------------------------------------
(1) 10% change in diesel fuel price equals $7/oz.
Material Assumptions
Material assumptions or factors used to forecast production and costs
include the following:
- a gold price of $1,000 per ounce,
- exchange rates:
-- $1USD:$1.04 CAD
-- $1USD:43.50 Kyrgyz Som
-- $1USD:1,390 Mongolian Tugrik
-- $1USD:0.68 Euro
- diesel fuel price assumption:
-- $0.61/litre at Kumtor
-- $0.81/litre at Boroo
Diesel fuel is sourced from separate Russian suppliers for both sites and only
loosely correlates with world oil prices. The diesel fuel price assumptions were
made when the price of oil was $78 per barrel.
Other important assumptions on which the Company's production, cost and capital
guidance is based include the following:
- grades and recoveries at Kumtor will remain consistent with the life-of-mine
plan to achieve the forecast gold production,
- the dewatering and depressurization programs at Kumtor continue to produce the
expected results and the water management system works as planned,
- the remedial plan to deal with the Kumtor waste and ice movement is
successful, see "Kumtor Mine - Remedial Plan to Manage the High Movement Area"
in the Company's December 7, 2009 news release,
- the equipment to execute the Company's remedial plan to manage the high
movement area at Kumtor is available for purchase and is delivered on time,
- no unplanned delays in or interruption of scheduled production from our mines,
including due to natural phenomena, labour or regulatory disputes, equipment
breakdown or other developmental and operational risks,
- certain issues at Boroo raised by the General Department of Specialized
Inspection ("SSIA") concerning state alluvial reserves, the production and sale
of gold from the Boroo heap leach facility and other matters will be resolved
through negotiation without material adverse impact on the Company, see
"Mongolian Regulatory Matters",
- Boroo ore does not become more refractory in nature than anticipated,
affecting mill recoveries,
- no further suspension of Boroo's operating licenses,
- Boroo receives the final operating permit for the heap leach facility by
mid-April 2010,
- permitting and commissioning requirements for mining activities at Gatsuurt
are in place by mid-2010 in order to allow for the commencement of processing of
Gatsuurt oxide ore in the timeframe planned,
- the commitment of capital for developing the Gatsuurt sulphides is dependent
on signing an acceptable investment agreement with the Government of Mongolia,
- the development of Gatsuurt will be exempt from the new forest and water basin
legislation in Mongolia, see "Mongolian Regulatory Matters", and
- all necessary permits, licences and approvals are received in a timely manner.
Production and cost forecasts and capital estimates are forward-looking
information and are based on key assumptions and subject to material risk
factors. If any event arising from these risks occurs, the Company's business,
prospects, financial condition, results of operations or cash flows could be
adversely affected. Additional risks and uncertainties not currently known to
the Company, or that are currently deemed immaterial, may also materially and
adversely affect the Company's business operations, prospects, financial
condition, results of operations or cash flows. See the sections entitled
"Recent Developments" and "Risk Factors" in the Company's most recently filed
annual information form, available on SEDAR at www.sedar.com and see also the
discussion below under the heading "Cautionary Note Regarding Forward-looking
Information".
Mongolian Regulatory Matters
On June 12, 2009, the main operating licenses at the Company's Boroo mine were
suspended by the Minerals Resources Authority of Mongolia ("MRAM") following
extensive inspections of the Boroo mine operation conducted by the SSIA. While
the suspension was lifted on July 27, 2009, several issues arising from the
suspension continue to be discussed by Centerra and the Mongolian regulatory
authorities. On October 23, 2009, Centerra received a very significant claim for
compensation from the SSIA in respect of certain mineral reserves, including
state alluvial reserves covered by the Boroo mine licenses, that are recorded in
the Mongolian state reserves registry, but for which there are no or incomplete
records or reports of mining activity. Centerra disputes the claim. While
Centerra cannot give assurances, it believes settlement will be concluded
through negotiation and will not result in a material impact. In addition, the
SSIA inspections raised a concern about the production and sale of gold from the
Boroo heap leach facility. The heap leach facility was operated under a
temporary permit from June 2008 until the expiry of the temporary permit in
April, 2009 and paid all relevant royalties and taxes with respect to gold
produced from the heap leach facility during that period. Boroo Gold Company
("BGC") believes that it had all necessary permits to carry out its heap leach
activities and that any regulatory concerns are unfounded. BGC is continuing its
effort to obtain a final permit for the operation of its heap leach facility at
the Boroo mine. Centerra understands that this matter has been referred to the
Mongolian Ministry of Mineral Resources and Energy for review but has received
no official notice of any concern.
Under the stability agreement relating to the Boroo mine between the Company and
the Government of Mongolia, signed July 6, 1998, as amended (the "Boroo
Stability Agreement"), the Company is permitted to offset any value added taxes
("VAT") that it pays against other taxes payable in respect of its Boroo mine
operation. In 2009, the Mongolian Ministry of Finance indicated that, despite
the Boroo Stability Agreement, Centerra would not longer be permitted to offset
its VAT overpayments. This decision was challenged by Centerra and in November
2009, Centerra was notified by Ministry of Finance officials that VAT
overpayments up to August 31, 2009 could be offset. Despite this, recovery of
any VAT overpayments from September 1, 2009 onwards continues to be subject to
negotiations with the Ministry of Finance.
On November 2, 2009, Centerra received a letter from the Mongolian Ministry of
Finance re-iterating some of the issues raised by the SSIA and indicating that
the Boroo Stability Agreement would be terminated if such issues were not
resolved within a period of 120 days from the date of the letter. The Company is
in discussions with the Ministry of Finance regarding such concerns. While the
Company believes that the issues raised by the Ministry of Finance will be
resolved through negotiations without a material impact on the Company, there
can be no assurance that this will be the case.
In July 2009, the Mongolian Parliament enacted legislation that would prohibit
mineral prospecting, exploration and mining in water basins and forest areas in
the territory of Mongolia and provides for the revocation of licenses affecting
such areas. Regulations under the new legislation, which will specify the
affected licenses, have not been prepared or published. The Company understands
that prior to the law becoming effective the Mongolian government will undertake
physical surveys and consult with local officials to determine which, if any,
existing licenses will be subject to the new law. The legislation provides a
specific exemption for "mineral deposits of strategic importance", and
accordingly, the main Boroo mining licenses will not be subject to the law. The
Company's Gatsuurt licenses and its other exploration license holdings in
Mongolia are currently not so exempt. However, the Company is reasonably
confident that the economic and development benefits resulting from its
exploration and development activities will ultimately result in the law having
a limited impact on the Company's Mongolian activities.
See "Risk Factors" in the Company's most recently filed annual information form,
available on SEDAR at www.sedar.com and see also the discussion below under the
heading "Cautionary Note Regarding Forward-looking Information".
Non-GAAP Measures
This news release presents information about total cash cost of production of an
ounce of gold and total production cost per ounce for the operating properties
of Centerra. Except as otherwise noted, total cash cost per ounce produced is
calculated by dividing total cash costs by gold ounces produced for the relevant
period. Total production cost per ounce produced includes total cash cost plus
depreciation, depletion and amortization divided by gold ounces produced for the
relevant period. Total cash cost and total production cost per ounce are
non-GAAP measures.
Total cash costs include mine operating costs such as mining, processing,
administration, royalties and operating taxes (except at Kumtor where
revenue-based taxes are excluded), but exclude amortization, reclamation costs,
financing costs, capital development and exploration. Certain amounts of
stock-based compensation have been excluded as well. Total production costs
includes total cash cost plus depreciation, depletion and amortization. Total
cash cost per ounce and total production cost per ounce have been included
because certain investors use this information to assess performance and also to
determine the ability of Centerra to generate cash flow for use in investing and
other activities. The inclusion of total cash cost per ounce and total
production cost per ounce may enable investors to better understand
year-over-year changes in production costs, which in turn affect profitability
and cash flow.
Net earnings before unusual items is a non-GAAP measure. It has been included
because certain investors use this information to assess how the Company would
perform when items not considered to be usual in nature are excluded. This may
enable investors to better understand year-over-year changes in income.
Total Cash Cost per Ounce Produced and Total Production Cost per Ounce
Produced can be reconciled as follows:
Three months ended Year ended
(unaudited) December 31, December 31,
($ millions, unless otherwise
specified) 2009 2008 2009 2008
---------------------- ----------------------
Centerra:
---------
Cost of sales, as reported $ 74.1 $ 113.3 $ 296.0 $ 332.0
Adjust for:
Refining fees & by-
product credits 0.2 0.6 0.6 (0.1)
Regional office
administration 7.5 5.0 23.2 18.8
Mining Standby Costs - - 4.1 -
Operating taxes excluded (1) - (18.1) (8.7) (44.4)
Non-operating costs (0.6) 0.5 (1.4) 1.5
Inventory movement 0.6 (11.6) (3.6) 9.3
---------------------- ----------------------
Total cash cost $ 81.8 $ 89.7 $ 310.2 $ 317.1
Depreciation, depletion,
amortization and accretion 29.5 32.9 104.3 78.8
Inventory movement - non-cash 2.3 1.5 (4.5) 3.4
---------------------- ----------------------
Total production cost $ 113.6 $ 124.1 $ 410.0 $ 399.3
Ounces poured - (000) 296.1 284.0 675.6 748.9
Total cash cost per ounce
produced $ 276 $ 316 $ 459 $ 423
Total production cost per ounce
produced $ 384 $ 437 $ 607 $ 533
Kumtor:
-------
Cost of sales, as reported $ 57.4 $ 96.7 $ 236.5 $ 273.1
Adjust for:
Refining fees & by-
product credits 0.1 0.6 0.4 (0.2)
Regional office
administration 5.1 3.8 15.3 12.1
Mining Standby Costs - - - -
Operating taxes excluded (1) - (18.1) (8.7) (44.4)
Non-operating costs (0.2) 0.3 (0.7) 1.3
Inventory movement (1.9) (16.0) (1.2) 1.5
---------------------- ----------------------
Total cash cost $ 60.5 $ 67.3 $ 241.6 $ 243.4
Depreciation, depletion,
amortization and accretion 20.4 27.5 $ 73.7 $ 60.0
Inventory movement - non-cash 1.7 0.5 $ (6.6) $ 1.5
---------------------- ----------------------
Total production cost $ 82.6 $ 95.3 $ 308.7 $ 304.9
Ounces poured - (000) 247.1 236.5 525.0 556.3
Total cash cost per ounce
produced $ 245 $ 361 $ 460 $ 438
Total production cost per ounce
produced $ 334 $ 479 $ 588 $ 548
Boroo:
------
Cost of sales, as reported $ 16.7 $ 16.6 $ 59.5 $ 58.9
Adjust for:
Refining fees & by-
product credits 0.1 - 0.2 0.1
Regional office
administration 2.4 1.2 7.9 6.7
Mining Standby Costs - - 4.1 -
Operating taxes excluded (1) - - - -
Non-operating costs (0.4) 0.2 (0.7) 0.2
Inventory movement 2.5 4.4 (2.4) 7.8
---------------------- ----------------------
Total cash cost $ 21.3 $ 22.4 $ 68.6 $ 73.7
Depreciation, depletion,
amortization and accretion 9.1 5.4 30.6 18.8
Inventory movement - non-cash 0.6 1.0 2.1 1.9
---------------------- ----------------------
Total production cost $ 31.0 $ 28.8 $ 101.3 $ 94.4
Ounces poured - (000) 49.0 47.5 150.6 192.6
Total cash cost per ounce
produced $ 435 $ 471 $ 456 $ 382
Total production cost per ounce
produced $ 634 $ 606 $ 673 $ 490
(1) Kumtor's operating taxes under the previous regime are removed in both
years since these were replaced with a revenue-based
tax combining income and operating taxes from the previous regime.
Centerra Gold Inc.
Consolidated Balance Sheets
(Expressed In Thousands of United States Dollars)
December 31, December 31,
2009 2008
---------------------------------------------------------------------------
(Unaudited)
Assets
Current assets
Cash and cash equivalents $ 176,904 $ 149,583
Short-term investments 145,971 17,781
Amounts receivable 44,281 30,247
Income taxes recoverable - 3,323
Current portion of future income tax asset 1,555 -
Inventories 151,822 170,157
Prepaid expenses 11,718 18,012
------------------------------
532,251 389,103
Property, plant and equipment 380,979 394,933
Goodwill 129,705 129,705
Long-term receivables and other 6,554 5,917
Long-term inventories 23,120 18,009
Future income tax asset 1,418 3,160
------------------------------
541,776 551,724
------------------------------
Total assets $ 1,074,027 $ 940,827
------------------------------
------------------------------
Liabilities and Shareholders' Equity
Current liabilities
Accounts payable and accrued liabilities $ 49,178 $ 35,611
Taxes payable 35,066 14,493
Current portion of future income tax
liability 8,169 3,458
Current portion of provision for
reclamation 7,662 -
------------------------------
100,075 53,562
Provision for reclamation 21,533 29,322
Future income tax liability - 1,121
------------------------------
21,533 30,443
Contingent common shares issuable - 89,084
Shareholders' equity
Share capital 646,081 523,107
Contributed surplus 34,298 32,904
Retained earnings 272,040 211,727
------------------------------
952,419 767,738
------------------------------
Total liabilities and shareholders' equity $ 1,074,027 $ 940,827
------------------------------
Centerra Gold Inc.
Consolidated Statements of Earnings and Comprehensive Income
(Unaudited)
(Expressed In Thousands of United States Dollars)
Three Months Ended Twelve Months Ended
December December December December
31, 31, 31, 31,
2009 2008 2009 2008
----------------------------------------------------------------------------
Revenue from Gold Sales $ 323,894 $ 241,334 $ 685,490 $ 635,980
------------------------- ------------------------
Expenses
Cost of sales (1) 74,121 113,373 295,944 332,037
Mine standby costs - - 4,081 -
Regional office
administration 7,549 5,033 23,297 18,831
Depreciation, depletion
and amortization 29,274 32,841 103,748 78,332
Accretion and reclamation
expense 638 275 2,363 1,404
Revenue based taxes 36,834 - 60,179 -
Impairment charge - 18,835 - 18,835
Exploration and business
development 8,834 7,915 25,826 23,628
Other (income) and
expenses (967) 2,658 (1,711) 4,458
Corporate administration 12,133 6,113 32,922 27,312
------------------------- ------------------------
168,416 187,043 546,649 504,836
------------------------- ------------------------
Earnings before unusual
items and income taxes 155,478 54,291 138,841 131,144
Unusual items-Kyrgyz
settlement - - 49,333 (37,710)
------------------------- ------------------------
Earnings before income
taxes 155,478 54,291 89,508 168,854
Income tax expense 15,523 11,678 29,195 34,089
------------------------- ------------------------
Net earnings and
comprehensive income $ 139,955 $ 42,613 $ 60,313 $ 134,765
------------------------- ------------------------
------------------------- ------------------------
Basic and diluted earnings
per common share $ 0.60 $ 0.20 $ 0.27 $ 0.62
------------------------- ------------------------
------------------------- ------------------------
(1) Excludes depreciation,
depletion and amortization
expenses 29,227 32,564 102,999 77,315
Centerra Gold Inc.
Consolidated Statements of Cash Flows
(Unaudited)
(Expressed In Thousands of United States Dollars)
Three Months Ended Twelve Months Ended
December December December December
31, 31, 31, 31,
2009 2008 2009 2008
----------------------------------------------------------------------------
Operating activities
Net earnings $ 139,955 $ 42,613 $ 60,313 $ 134,765
Items not involving cash:
Depreciation, depletion
and amortization 29,274 32,841 103,748 78,332
Accretion and reclamation
expense 638 275 2,363 1,404
Impairment charge - 18,835 - 18,835
Loss on disposal of plant
and equipment 115 918 831 3,939
Stock based compensation
expense 455 545 1,724 2,137
Unusual items-Kyrgyz
settlement - - 31,616 (37,710)
Future income tax expense 2,989 6,333 6,727 10,630
Long-term inventory (265) 846 (5,111) 1,481
Other operating items 278 643 (1,724) 146
------------------------ ------------------------
173,439 103,849 200,487 213,959
Decrease (increase) in
working capital 15,147 (547) 45,079 (47,649)
------------------------ ------------------------
Cash provided by operations 188,585 103,302 245,566 166,310
------------------------ ------------------------
Investing activities
Additions to property,
plant and equipment (28,397) (27,741) (92,073) (95,104)
Short-term investments (145,971) (17,781) (128,190) (17,781)
Proceeds from disposition
of property, plant and
equipment 10 33 74 676
------------------------ ------------------------
Cash used in investing (174,358) (45,489) (220,189) (112,209)
------------------------ ------------------------
Financing activities
Issuance of common shares
for cash - - 1,944 -
Repayment of short term
debt - - - (10,000)
------------------------ ------------------------
Cash provided by (used in)
financing - - 1,944 (10,000)
------------------------ ------------------------
Increase in cash and cash
equivalents during the
period 14,227 57,813 27,321 44,101
Cash and cash equivalents
at beginning of the period 162,677 91,770 149,583 105,482
------------------------ ------------------------
Cash and cash equivalents
at end of the period $ 176,904 $ 149,583 $ 176,904 $ 149,583
------------------------ ------------------------
------------------------ ------------------------
Supplemental disclosure
with respect to cash flows
Cash and cash equivalents
consist of :
Cash $ 102,204 $ 91,227 $ 102,204 $ 91,227
Cash equivalents 74,700 58,356 74,700 58,356
------------------------ ------------------------
$ 176,904 $ 149,583 $ 176,904 $ 149,583
------------------------ ------------------------
Centerra Gold Inc.
Consolidated Statements of Shareholders' Equity
(Unaudited)
(Expressed In Thousands of United States Dollars)
--------------------------------------------------------------------------
Contingent
Number of Common
Common Shares
Shares Amount Issuable
--------------------------------------------------------------------------
Balance at December 31, 2007 216,318,188 $ 523,107 $ 126,794
Contingent common shares issuable
revalued - - 4,468
Stock-based compensation expense - - -
Inventory adjustments, on adoption
of accounting standard, net of tax - - -
Net earnings for the period - - -
--------------------------------------------------------------------------
Balance at March 31, 2008 216,318,188 $ 523,107 $ 131,262
Contingent common shares issuable
revalued - - (42,178)
Contingent common shares issuable
reclassified - - (89,084)
Stock-based compensation expense - - -
Net earnings for the period - - -
--------------------------------------------------------------------------
Balance at June 30, 2008 216,318,188 $ 523,107 $ -
Stock-based compensation expense - - -
Net earnings for the period - - -
--------------------------------------------------------------------------
Balance at September 30, 2008 216,318,188 $ 523,107 $ -
Stock-based compensation expense - - -
Net earnings for the period - - -
--------------------------------------------------------------------------
Balance at December 31, 2008 216,318,188 $ 523,107 $ -
Stock-based compensation expense - - -
Net loss for the period - - -
--------------------------------------------------------------------------
Balance at March 31, 2009 216,318,188 $ 523,107 $ -
Common shares issued on New Terms
Agreement 18,232,615 120,700 -
Common shares issued on exercise of
stock options 306,425 2,274 -
Stock-based compensation expense - - -
Net loss for the period - - -
--------------------------------------------------------------------------
Balance at June 30, 2009 234,857,228 $ 646,081 $ -
Stock-based compensation expense - - -
Net earnings for the period - - -
--------------------------------------------------------------------------
Balance at September 30, 2009 234,857,228 $ 646,081 $ -
Stock-based compensation expense - - -
Net earnings for the period - - -
--------------------------------------------------------------------------
Balance at December 31, 2009 234,857,228 $ 646,081 $ -
--------------------------------------------------------------------------
--------------------------------------------------------------------------
Contributed Retained
Surplus Earnings Total
--------------------------------------------------------------------------
Balance at December 31, 2007 $ 30,767 $ 60,350 $ 741,018
Contingent common shares issuable
revalued - - 4,468
Stock-based compensation expense 187 - 187
Inventory adjustments, on adoption
of accounting standard, net of tax - 16,612 16,612
Net earnings for the period - 19,272 19,272
--------------------------------------------------------------------------
Balance at March 31, 2008 $ 30,954 $ 96,234 $ 781,557
Contingent common shares issuable
revalued - - (42,178)
Contingent common shares issuable
reclassified - - (89,084)
Stock-based compensation expense 1,126 - 1,126
Net earnings for the period - 55,993 55,993
--------------------------------------------------------------------------
Balance at June 30, 2008 $ 32,080 $ 152,227 707,414
Stock-based compensation expense 279 - 279
Net earnings for the period - 16,886 16,886
--------------------------------------------------------------------------
Balance at September 30, 2008 $ 32,359 $ 169,114 724,580
Stock-based compensation expense 545 - 545
Net earnings for the period - 42,613 42,613
--------------------------------------------------------------------------
Balance at December 31, 2008 $ 32,904 $ 211,727 767,738
Stock-based compensation expense 359 - 359
Net loss for the period - (20,286) (20,286)
--------------------------------------------------------------------------
Balance at March 31, 2009 $ 33,263 $ 191,441 747,811
Common shares issued on New Terms
Agreement - - 120,700
Common shares issued on exercise of
stock options (330) - 1,944
Stock-based compensation expense 455 - 455
Net loss for the period - (79,586) (79,586)
--------------------------------------------------------------------------
Balance at June 30, 2009 $ 33,388 $ 111,855 791,324
Stock-based compensation expense 455 - 455
Net earnings for the period - 20,230 20,230
--------------------------------------------------------------------------
Balance at September 30, 2009 $ 33,843 $ 132,085 $ 812,009
Stock-based compensation expense 455 - 455
Net earnings for the period - 139,955 139,955
--------------------------------------------------------------------------
Balance at December 31, 2009 $ 34,298 $ 272,040 $ 952,419
--------------------------------------------------------------------------
To view the 2009 Management's Discussion and Analysis and the Audited Financial
Statements and Notes for the year-ended December 31, 2009, please visit the
following link: http://file.marketwire.com/release/cgfsmda0223.pdf.
The 2009 Audited Financial Statements and Notes and Management's Discussion and
Analysis for the year-ended December 31, 2009 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 at: www.centerragold.com
Qualified Person
The resource and reserve estimates, production information, exploration drilling
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 were reviewed, verified and
compiled by Centerra's geological and mining staff under the supervision of Ian
Atkinson, Certified Professional Geologist, Centerra's Vice-President,
Exploration, who is the qualified person for the purpose of NI 43-101.
The Kumtor deposit is described in a technical report dated December 16, 2009
prepared in accordance with NI 43-101. The technical report has been filed on
SEDAR at www.sedar.com. The technical report describes the exploration history,
geology and style of gold mineralization at the Kumtor deposit. Sample
preparation, analytical techniques, laboratories used and quality assurance-
quality control protocols used during the drilling programs at the Kumtor site
are described in the technical report.
The Boroo deposit is described in a technical report dated December 17, 2009
prepared in accordance with NI 43-101, which is available on SEDAR at
www.sedar.com. The technical report describes the exploration history, geology
and style of gold mineralization at the Boroo deposit. Sample preparation,
analytical techniques, laboratories used and quality assurance-quality control
protocols used during the drilling programs at the Boroo site are the same as,
or similar to, those described in the technical report.
The Gatsuurt deposit is described in the Company's most recently filed Annual
Information Form (the "AIF") and in a technical report dated May 9, 2006
prepared in accordance with NI 43-101. The AIF and technical report have been
filed on SEDAR at www.sedar.com. The technical report describes the exploration
history, geology and style of gold mineralization at the Gatsuurt deposit.
Sample preparation, analytical techniques, laboratories used and quality
assurance-quality control protocols used during the drilling programs at the
Gatsuurt project are the same as, or similar to, those described in the
technical report.
Cautionary Note Regarding Forward-looking Information
Information contained in this news release and the documents referred to herein
which are not a statement of historical facts may be "forward looking
information" for the purposes of Canadian securities laws. Such forward looking
information involves risks, uncertainties and other factors that could cause
actual results, performance, prospects and opportunities to differ materially
from those expressed or implied by such forward looking information. The words
"believe", "expect", "anticipate", "contemplate", "target", "plan", "intends",
"continue", "budget", "estimate", "may", "will", "schedule" and similar
expressions identify forward looking information. These forward- looking
statements relate to, among other things, Centerra's expectations regarding
future growth, results of operations (including, without limitation, future
production and sales, and operating and capital expenditures), performance (both
operational and financial), business and political environment and business
prospects (including the timing and development of new deposits and the success
of exploration activities) and opportunities.
Forward looking information is necessarily based upon a number of estimates and
assumptions that, while considered reasonable by Centerra, are inherently
subject to significant political, business, economic and competitive
uncertainties and contingencies. Known and unknown factors could cause actual
results to differ materially from those projected in the forward looking
information. Material assumptions used to forecast production and costs include
those described above under the heading "Assumptions". Factors that could cause
actual results or events to differ materially from current expectations include,
among other things: gold prices, replacement of mineral reserves, reduction in
reserves related to geotechnical risks, ground movements, political risk,
nationalization risk, changes in laws and regulations, civil unrest, labour
unrest, legal compliance costs, reserve and resource estimates, production
estimates, exploration and development activities, competition, operational
risks, environmental, health and safety risks, costs associated with reclamation
and decommissioning, defects in title, seismic activity, cost and availability
of labour, material and supplies, increases in production and capital costs,
permitting and construction to raise the tailings dam height and increase the
capacity of the existing Kumtor tailing dam, costs associated with the movement
of ice and waste at the Kumtor mine, the ability to renew and obtain licenses,
permits and other rights, costs associated with the resolution of issues at the
Boroo mine raised by the Mongolian SSIA concerning alluvial reserves and matters
relating to the suspension of the Boroo licenses in June 2009, the potential
impact of Mongolian legislation prohibiting mineral activity in water basins and
forest areas on the Gatsuurt project, the threatened termination of the
stability agreement with the Mongolian Government in relation to the Boroo mine,
the receipt of a final permit to operate the heap leach operation at the Boroo
mine, illegal mining, enforcement of legal rights, decommissioning and
reclamation cost estimates, future financing and personnel and the receipt of
all permitting and commissioning requirements for the Gatsuurt mine by mid-2010.
Furthermore, market price fluctuations in gold, as well as increased capital or
production costs or reduced recovery rates may render ore reserves containing
lower grades of mineralization uneconomic and may ultimately result in a
restatement of reserves. The extent to which resources may ultimately be
reclassified as proven or probable reserves is dependent upon the demonstration
of their profitable recovery. Economic and technological factors which may
change over time always influence the evaluation of reserves or resources.
Centerra has not adjusted mineral resource figures in consideration of these
risks and, therefore, Centerra can give no assurances that any mineral resource
estimate will ultimately be reclassified as proven and probable reserves.
Mineral reserve and mineral resource figures included are estimates and Centerra
can provide no assurances that the indicated levels of gold will be produced or
that Centerra will receive the gold price assumed in determining its mineral
reserves. Such estimates are expressions of judgment based on knowledge, mining
experience, analysis of drilling results and industry practices. Valid estimates
made at a given time may significantly change when new information becomes
available. While Centerra believes that the mineral reserve and mineral resource
estimates included are well established and are the best estimates of Centerra's
management, reserve and resource estimates by their nature are imprecise and
depend, to a certain extent, upon statistical inferences which may ultimately
prove unreliable.
Mineral resources are not mineral reserves, and do not have demonstrated
economic viability, but do have reasonable prospects for economic extraction.
Measured and indicated resources are sufficiently well defined to allow
geological and grade continuity to be reasonably assumed and permit the
application of technical and economic parameters in assessing the economic
viability of the resource. Inferred resources are estimated on limited
information not sufficient to verify geological and grade continuity or to allow
technical and economic parameters to be applied. Inferred resources are too
speculative geologically to have economic considerations applied to them to
enable them to be categorized as mineral reserves. There is no certainty that
mineral resources of any category can be upgraded to mineral reserves through
continued exploration.
A mineral reserve is the economically mineable part of a measured or indicated
mineral resource demonstrated by at least a preliminary feasibility study. This
study must include adequate information on mining, processing, metallurgical,
economic and other relevant factors that demonstrate, at the time of reporting,
that economic extraction can be justified. A mineral reserve includes diluting
materials and allowances for losses that may occur when the material is mined.
Centerra reports mineral reserves separate from mineral resources.
If Centerra's reserve or resource estimates for its gold properties are
inaccurate or are reduced in the future, this could have an adverse impact on
Centerra's future cash flows, earnings, results of operations and financial
condition.
Centerra estimates the future mine life of its operations. Centerra can give no
assurance that mine life estimates will be achieved. Failure to achieve these
estimates could have an adverse impact on Centerra's future cash flows,
earnings, results of operations and financial condition.
There can be no assurances that forward-looking information and statements will
prove to be accurate, as many factors and future events, both known and unknown
could cause actual results, performance or achievements to vary or differ
materially from the results, performance or achievements that are or may be
expressed or implied by such forward-looking statements contained in this news
release. Accordingly, all such factors should be considered carefully when
making decisions with respect to Centerra, and prospective investors should not
place undue reliance on forward-looking information. Forward-looking information
is as of February 23, 2010. Centerra assumes no obligation to update or revise
forward-looking information to reflect changes in assumptions, changes in
circumstances or any other events affecting such forward-looking information,
except as required by applicable law.
About Centerra
Centerra is a North American-based gold mining company focused on acquiring,
exploring, developing and operating gold properties primarily in Asia, the
former Soviet Union and other emerging markets worldwide. Centerra is the
largest Western-based gold producer in Central Asia and the former Soviet Union.
Centerra's shares trade on the Toronto Stock Exchange (TSX) under the symbol CG.
The Company is based in Toronto, Canada.
Additional information on Centerra is available on the Company's website at
www.centerragold.com and at SEDAR at www.sedar.com.
Conference Call
Centerra invites you to join its 2009 fourth quarter, year-end conference call
on Wednesday, February 24, 2010 at 11:00 am. Eastern Time. The call is open to
all investors and the media. To join the call, please dial Toll-Free in North
America (800) 667-9701 or International callers dial (416) 359-1270.
Alternatively, an audio feed web cast will be available on www.centerragold.com.
A recording of the call will be available on www.centerragold.com shortly after
the call, and via telephone until midnight on Wednesday, March 3, 2010 by
calling (416) 626-4100 or (800) 558- 5253 and using passcode 21456846.
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