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BGC Bristol Gate Concentrated Canadian Equity ETF

31.25
-0.03 (-0.10%)
17 Jun 2024 - Closed
Delayed by 15 minutes
Name Symbol Market Type
Bristol Gate Concentrated Canadian Equity ETF TSX:BGC Toronto Exchange Traded Fund
  Price Change % Change Price Bid Price Offer Price High Price Low Price Open Price Traded Last Trade
  -0.03 -0.10% 31.25 31.15 31.38 0 22:00:00

Centerra Gold Reports Third Quarter Results, Net Earnings of $18 million or $0.07 per Share

05/11/2010 10:30am

Marketwired Canada


Centerra Gold Inc. (TSX:CG)

(This news release contains forward-looking information that is subject to the
risk factors and assumptions set out on page 15 and in our Cautionary Note
Regarding Forward-looking Information on page 17. All figures are in United
States dollars).


Centerra Gold Inc. (TSX:CG) today reported third quarter net earnings of $17.7
million or $0.07 per common share based on revenues of $115.5 million compared
to net earnings of $20.2 million or $0.09 per common share on revenues of $158.8
million in the same quarter of 2009. As a result of the completion of the sale
of the REN property early in the third quarter, the third quarter results
include a gain of $34.9 million.


Consolidated gold production for the third quarter of 2010 was in line with the
Company's guidance and totalled 96,308 ounces at a total cash cost of $798 per
ounce produced compared to 165,883 ounces at a total cash cost of $424 per ounce
produced in the corresponding quarter of 2009. (Total cash cost per ounce
produced is a non-GAAP measure and is discussed under "Non-GAAP Measures" in the
Company's Management's Discussion and Analysis issued in conjunction with this
news release.) During the third quarter of 2010, cash used by operations, net of
working capital changes, was $24.5 million compared to cash provided by
operations of $63.4 million in the third quarter of 2009.


Third Quarter Highlights



--  Maintain 2010 gold production and cost guidance 
--  The Company completed the sale of the REN property resulting in a gain
    of $34.9 million 
--  Appointed Mr. Raphael Girard, Mr. Karybek Ibraev and Mr. Amandgeldy
    Muraliev to the Board of Directors August 19, 2010 
--  Drilling has extended Kumtor's SB Zone, 120 metres along strike to the
    northeast   
--  Strong cash balances and no debt while continuing to fund capital
    programs 
--  Subsequent to end of third quarter settled Kumtor strike 



Commentary 

Steve Lang, President and CEO of Centerra stated, "The quarterly gold production
at both sites was right in line with our expectations. The fourth quarter will
see a significant increase in the gold production at Kumtor as we get back into
mining the high-grade SB Zone. While the 10-day strike at Kumtor did not have
any impact on annual guidance, we are pleased that we could settle it quickly
and get the operation back to normal."


"At the Boroo operation, the mining phase is coming to an end and mining
activities will cease at the end of November this year. We had planned to
redeploy workers from Boroo to Gatsuurt, but due to the delay in commissioning
the Gatsuurt project due to the uncertain impact of the water basin and forests
law, we will layoff approximately 250 workers at Boroo on December 1, 2010. We
continue to work closely with the Mongolian Government regarding the
commissioning of Gatsuurt."


Financial and Operating Summary 

Revenue for the third quarter of 2010 was $115.5 million compared to $158.8
million during the same period in 2009. Third quarter 2010 revenue reflects a
29% increase in realized gold price ($1,234 per ounce in the third quarter of
2009 versus $959 per ounce in the third quarter of 2009) offset by a 44%
decrease in ounces sold in the period.


The Company produced a total of 96,308 ounces of gold in the third quarter of
2010, compared to 165,883 ounces of gold produced in the third quarter of 2009.
Gold production at both operations was lower than the comparative period.
Kumtor's decrease mainly reflects lower ore grades and higher waste volumes
moved, while Boroo's comparative results reflect lower grades and recoveries as
well as lower contribution from the heap leach operation which remained idle
pending issuance of a final operating permit by the government authorities. See
"Operations Update - Kumtor and Boroo/Gatsuurt".


Centerra's total cash cost per ounce produced was $798 in the third quarter of
2010, up from $424 in the third quarter of 2009 due primarily to lower gold
production at both Kumtor and Boroo. The increase in unit cash cost per ounce
produced was due to a 42% reduction in gold production ($306 per ounce),
combined with a 9% increase in operating costs ($68 per ounce) primarily related
to the increase in volumes of waste moved at Kumtor and higher fuel and labour
costs at both sites. See "Operations Update". (Total cash cost per ounce
produced is a non-GAAP measure and is discussed under "Non-GAAP Measures" in the
Company's Management's Discussion and Analysis, issued in conjunction with this
news release.)


Cash used in operations was $24.5 million for the third quarter of 2010 compared
to a source of cash of $63.4 million for the prior year third quarter. The
decrease reflects the lower earnings as a result of reduced gold sales volumes
and higher operating costs, as well as the impact of increased working capital.


Capital expenditures spent and accrued in the third quarter of 2010 amounted to
$72.8 million of which $14.8 million was spent on sustaining capital projects.
Growth capital totaled $58.0 million which related mainly to the purchase of new
CAT 789 haul trucks at Kumtor ($32.2 million), the underground development at
Kumtor ($9.7 million), raising the tailings dam at Boroo ($2.5 million) and
spending on site development for the Gatsuurt project ($1.3 million). Capital
expenditures in the comparative quarter of 2009 totalled $21.0 million,
consisting of $6.1 million of sustaining capital and $14.9 million of growth
capital.


Exploration expenditures for the third quarter were $8.0 million compared to
$6.8 million in the third quarter of 2009 reflecting increased activity in
Mongolia at Gatsuurt, Ulaan Bulag and on other exploration and J.V. projects.


Centerra's cash and cash equivalents and short-term investments at the end of
September 2010 were $334.7 million, compared to cash and short-term investments
of $322.9 million at December 31, 2009.


Other Corporate Developments 

Boroo/Gatsuurt 

At the Boroo operation, the mining phase is coming to an end and mining
activities will cease at the end of November 2010. The Boroo mill will continue
to operate until mid-2011 processing stockpiled ores. Because of delays in
receiving the necessary approvals and commissioning of the Gatsuurt project due
to uncertain impact of the water basin and forest law, the Company will layoff
approximately 250 workers at Boroo on December 1, 2010, which the Company had
originally planned to redeploy from Boroo to Gatsuurt. The Company continues its
constructive discussions with the Government of Mongolia to resolve uncertainty
resulting from the water basin and forests law. See "Mongolia - Mongolian
Legislation" below.


Kumtor 

At the Kumtor operation, production at the mine was suspended on October 1, 2010
after the unionized employees commenced an illegal work stoppage on October 1,
2010. The strike was settled on October 10, 2010 and workers returned to work
that evening. A new collective agreement was ratified by the union and will
expire on December 31, 2012.


Inaugural Annual Dividend 

As part of the Company's long-term strategy to maximize shareholder value, the
Company's inaugural annual dividend of Cdn$0.06 per common share was paid on
September 8, 2010 to shareholders of record at the close of business on August
18, 2010. It is the intention of the Board of Directors to review the amount of
the dividend on an annual basis depending upon the Company's cash balances,
operating cash flows, anticipated capital requirements for future growth and the
yields of comparable companies' dividend rates.


Board Appointments 

In accordance with the restated shareholders agreement between the Company and
Kyrgyzaltyn JSC dated as of June 6, 2009 (the "Restated Shareholders
Agreement"), Centerra appointed Mr. Amandgeldy Muraliev and Mr. Karybek Ibraev
to the Board of Directors August 19, 2010.


Mr. Muraliev, a Kyrgyz citizen, has extensive experience in politics, including
being the Prime Minister of the Kyrgyz Republic from 1999 to 2000, and later
being a member and advisor to the Ministry of Economic Development and Trade of
the Kyrgyz Government. Mr. Muraliev is the First Vice Prime Minister of the
Interim Government of the Kyrgyz Republic, and the Chairman of the Board of
Directors of Kyrgyzaltyn JSC a shareholder of the Company. Mr. Muraliev received
degrees from the Academy of National Economy under the USSR Council of Ministers
and the Frunze Polytechnic Institute. 


Mr. Ibraev, a Kyrgyz citizen, has extensive experience in the mining industry.
Mr. Ibraev is a consultant with the Extractive Industries Transparency
Initiative (EITI) Secretariat in the Kyrgyz Republic. Mr. Ibraev is also a
former executive director of the Kyrgyz Mining Association. Mr. Ibraev is a
member of the Kyrgyz Mining Association and received degrees from the L'Ecole de
Mine de Paris, and the Moscow Geological Exploration Institute. In accordance
with the Restated Shareholders Agreement, Mr. Ibraev is independent from the
Kyrgyz Government.


On August 19, 2010, Mr. Raphael Girard was also appointed to Centerra's Board of
Directors. Mr. Girard is a public policy and international business consultant
who retired from the Department of Foreign Affairs in August 2003. Prior to his
retirement, Mr. Girard was the Canadian Ambassador to Romania, and earlier to
the Federal Republic of Yugoslavia. Mr. Girard was a member of the Board of
Directors of Gabriel Resources Ltd. from 2005 to 2010. Mr. Girard received his
Bachelor of Arts degree from the University of British Columbia.


Kyrgyz Republic 

Parliamentary elections were held in the Kyrgyz Republic on October 10, 2010.
According to reports the elections were carried out according to accepted
democratic standards and the results reflect the will of the electorate. Five
parties have received sufficient votes to be represented in the Parliament.
Currently, the parties are in talks to form a governing coalition. While
political and civil conditions appear to have stabilized, the political
situation in the Kyrgyz Republic continues to evolve and there can be no
assurances that future political developments will not have an adverse impact on
the Company's assets or operations.


Mongolia

Mongolian Regulatory Matters 

The regulatory conditions in Mongolia have not changed substantially since
Centerra's second quarter 2010 report. During the quarter however, progress was
made in the development of dispute resolution mechanisms through a commitment
made by the Prime Ministers of both Canada and Mongolia to press forward on the
conclusion of a Foreign Investment Protection Agreement. The following
discussion summarizes the current status of Mongolian regulatory matters
affecting Centerra.


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 Mongolian
General Department of Specialized Inspection ("SSIA"). While the suspension was
lifted on July 27, 2009, several issues arising from the inspection 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 Boroo Gold
Company Ltd. ("BGC") paid all relevant royalties and taxes with respect to gold
produced from the heap leach facility during that period. 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 efforts to obtain a
final permit for the operation of its heap leach facility at the Boroo mine. 


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
has held discussions with the Ministry of Finance regarding such concerns and
has received no further notice from the Ministry of Finance with respect to the
possible termination of the Boroo Stability Agreement. While the Company
believes that the issues raised by the Ministry of Finance and the SSIA will be
resolved through negotiations without a material impact on the Company, there
can be no assurance that this will be the case.


Mongolian Legislation 

The legislative conditions in Mongolia have not changed substantially since
Centerra's second quarter 2010 report. The commissioning of the Gatsuurt project
has been delayed as a result of the uncertain impact of the Water and Forest
Law. The following discussion summarizes the current status of certain Mongolian
legislation that may affect Centerra, including its Gatsuurt project and other
Mongolian mineral licenses.


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 (the "Water and Forest 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 exempt. In March 2010, the Company received a letter from MRAM
stating that certain of its mining and exploration licenses, including the
Gatsuurt mining licenses, could be revoked under the Water and Forest Law. The
letter requested that the Company submit an estimate of expenses incurred in
relation to each license and the compensation that it would expect to receive if
such licenses were to be revoked. The Company has provided a detailed estimate
to MRAM for all potentially affected licenses. The Company has submitted a draft
Investment Agreement for the Gatsuurt Project to the Ministry of Mineral
Resources and Energy ("MMRE"). In April 2010, the Company received a letter from
the MMRE indicating that the Gatsuurt licenses are within the area designated on
a preliminary basis where minerals mining is prohibited under the Water and
Forest Law. The letter also stated that the MMRE will communicate with the
Company regarding the investment agreement when the MMRE has more clarity on the
impact of the law. 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.


In August 2009, the Government of Mongolia repealed its windfall profit tax of
68% in respect of gold sales at a price in excess of US$850 an ounce, with the
repeal to take effect on January 1, 2011.


Other 

On July 2, 2010, the Company closed the sale of its REN interest to Homestake
Mining Company of California ("Homestake"), a subsidiary of Barrick Gold
Corporation, for cash proceeds of $35.2 million.


Operations Update

Kumtor 

At the Kumtor mine, gold production was 68,757 ounces in the third quarter of
2010 compared to 133,459 ounces of gold in the third quarter of 2009. As
planned, due to the mining sequence, the operation processed lower ore grades.
The mill head grade averaged 1.57 g/t with a recovery of 73.4% in the third
quarter of 2010, compared to 3.52 g/t with a recovery of 73.3% in the same
quarter of 2009.


During the third quarter of 2010, the mill processed 1.39 million tonnes
compared to 1.55 million tonnes or 10% lower than the same period of 2009 as a
result of the planned mill shutdown in July 2010 to replace the SAG mill ring
gear and the SAG mill liner.


Total cash cost per ounce produced, a non-GAAP measure of production efficiency,
increased to $887 in the third quarter of 2010 from $427 in the third quarter of
2009. The year-over-year $460 increase in unit cash cost per ounce produced was
due to 48% reduction in gold production ($401/ounce) and higher operating costs
($59/ounce) in 2010 period. Mining costs increased 17% to $35.5 million in the
third quarter of 2010 due to higher diesel costs which increased costs by $4.9
million ($0.62 per litre vs. $0.40 per litre in 2009), increased expenditures
for dewatering supplies ($1.2 million), blasting material ($1.1 million) and
labour costs ($0.9 million) offset by lower expenditures on reagents and other
consumables. Total cash cost per ounce produced is a non-GAAP measure and is
discussed under "Non-GAAP Measures" in the Management's Discussion and Analysis
issued in conjunction with this news release.


Exploration costs for the third quarter 2010 were $3.3 million unchanged from
the third quarter in 2009.


Capital expenditures in the third quarter of 2010 totalled $70.3 million
compared to $18.2 million for the same period in the prior year. This consisted
of $13.8 million of sustaining capital, predominantly spent on the heavy duty
equipment overhaul program ($5.6 million), replacement of four dozers ($1.4
million), shear key, buttress and tailing dam construction ($3.8 million) and
replacement and re-alignment of the SAG mill girth gear ($1.7 million). Growth
capital investment totalled $56.5 million spent mainly on the purchase of CAT
789 haul trucks ($32.2 million), other equipment ($8.7 million) and underground
development of the declines for SB and Stockwork Zones ($9.7 million).


At the request of the Kyrgyz Government, the Company agreed in August 2010 to
make advances of $11 million against future revenue-based tax ($8 million was
advanced in the third quarter 2010 and the balance of $3 million was advanced in
October 2010). The advances will be applied against the 2010 revenue-based tax
otherwise payable in January 2011.


The SB Zone underground decline (Decline #1) has now advanced to a total of 854
metres. During the quarter the decline advancement continued and drill and
remuck bays were established. The development rate was impacted by the ground
conditions as faulting and geo-structural conditions slowed the development
rate. The exploration drilling was restarted in the third quarter and
delineation drilling of the SB Zone is expected to commence late in the fourth
quarter of 2010 or early 2011.


The Stockwork Zone underground decline (Decline #2) has advanced a total of 399
metres. Decline #2 will facilitate the access to the Stockwork Zone and the SB
Zone for further exploration and delineation drilling. During the second
quarter, two headings were established in Decline #2 and are advancing
concurrently. The second heading in Decline #2 was established for the
exploration and delineation drilling program for the Stockwork Zone. It has
advanced 110 metres toward the north. Drill bays will be established along the
400 meter access drift. Exploration and delineation drilling of the Stockwork
Zone resource is expected to commence in the fourth quarter of 2010 and will
continue into 2011.


Boroo/Gatsuurt 

At the Boroo mine, gold production was 27,551 ounces in the third quarter of
2010 compared to 32,424 ounces in the third quarter of 2009, which included
4,322 ounces of heap leach production. During the third quarter 2010, the heap
leach operation remained idle awaiting issuance of the final operating permit
from the Mongolian government. The lower gold production in 2010 was the result
of lower average mill head grades, 1.97 g/t in the third quarter versus 2.45 g/t
in the third quarter 2009 and lower recoveries 69.8% compared to 76.0% for the
same period last year. In the comparative 2009 quarter, gold production was
impacted by an operational shutdown as a result of a six week license suspension
which ended July 27th, 2009. 


Total cash cost per ounce produced, a non-GAAP measure of production efficiency,
was $575 in the third quarter of 2010 compared to $411 in the third quarter of
2009. The year-over-year increase in unit cash cost per ounce produced was due
to higher operating costs in the 2010 period and lower gold production. The
increase in the unit cash cost per ounce produced of $164 per ounce results from
increased operating costs ($91/ounce) and lower ounces produced ($73/ounce).
Mining costs were unchanged at $3.8 million in the third quarter of 2010, but
milling costs were 63% higher at $5.4 million primarily due to higher costs for
electricity, reagents and grinding media. During the quarter, diesel costs
increased $0.8 million ($0.87 per litre vs. $0.71 per litre in 2009) and
royalties increased by $0.4 million due to higher sales revenue achieved from
higher gold price. Costs associated with heap leaching activities were $0.5
million or 49% lower than the same period in 2009 as a result of the expiry of
the temporary operating permit for the heap leach operation in April 2009. Total
cash cost per ounce produced is a non-GAAP measure and is discussed under
"Non-GAAP Measures" in the Management's Discussion and Analysis issued in
conjunction with this news release.


During the third quarter of 2010, exploration expenditures in Mongolia increased
to $2.2 million from $0.9 million in the same period of 2009. 


Capital expenditures spent and accrued at Boroo in the third quarter of 2010
were $3.5 million compared to $0.6 million the same quarter of 2009. This
consisted of $1.0 million of sustaining capital, predominantly spent on heavy
equipment component change outs. Growth capital investment totalled $2.5 million
spent on raising the tailings dam to accommodate future production including
Gatsuurt oxide ores.


At the Gatsuurt project, $1.3 million of growth capital was spent and accrued in
the quarter primarily related to completing the site preparation. Road
construction to the Gatsuurt project is complete and all site preparation is
complete. Minimal capital spending is planned on the Gatsuurt project going
forward while waiting for the final approvals to commence mining (See "Other
Corporate Developments - Mongolia - Mongolian Legislation"). 


Exploration Update

To view the graphics, maps/drill sections and complete drill results discussed
in this news release, please visit the following link:
http://media3.marketwire.com/docs/CG1105figuresA.pdf or visit the Company's web
site at: www.centerragold.com.


Kyrgyz Republic 

During the third quarter of 2010, exploration drilling programs continued in the
Kumtor Central Pit and regional exploration drilling continued on the Kumtor
concession area at the Northeast, Muzdusuu areas and at the Southwest and
Sarytor Deposits. Surface exploration work commenced the Karasay and Koendy
project areas.


Kumtor Pit 

In the third quarter of 2010, six drill holes were completed during the quarter
and a further three holes were in progress at quarter-end. One hole was
completed to test the northeast extension of the Kumtor structure at the 3,250
metre elevation approximately 700 metres below the planned bottom of the open
pit. Hole D1399A intersected the Kumtor structure but returned only low-grade
mineralization including 2.8 g/t Au over 9.0 metres and 2.6 g/t Au over 4.0
metres.


Two holes were completed to test the northeast strike extension of the SB Zone
with both holes returning significant results. Hole D1441, drilled on section 38
in the SB Zone, intersected high grade mineralization of 11.2 g/t Au over 25.7
metres (including 14.9 g/t Au over 18.3 metres) and 21.0 g/t Au over 5.5 metres
(including 27.5 g/t Au over 4.0 metres), at approximately the 3,500 metre
elevation. Hole D1443, drilled on section 46 in the SB Zone, intersected
significant mineralization including 9.1 g/t Au over 4.2 metres and 9.4 g/t Au
over 3.6 metres at the 3,500 metre elevation. These holes have extended the SB
Zone a further 120 metres along strike at this elevation. Further drilling to
test the strike and down dip extension of the SB Zone to the northeast is
planned in the fourth quarter 2010.


Three holes were completed to test the Southwest Extension of the SB Zone with
all of the holes returning significant results. Hole D1433, drilled on section
-18, tested the up dip projection of SB Zone primarily within the current pit
design and it intersected wide zones of mineralization with intercepts of 1.6
g/t Au over 14.2 metres, 6.8 g/t Au over 7.0 metres (including 13.2 g/t Au over
3.2 metres) and 1.4 g/t Au over 28.0 metres. Hole D1452 and D1454 were both
drilled on section -22 and returned significant intercepts immediately below the
bottom of the planned open pit. Hole D1452 returned intercepts of 5.9 g/t Au
over 20.6 metres (including 8.8 g/t over 11.3 metres), 4.8 g/t Au over 21.6
metres (including 10.4 g/t Au over 3.5 metres) and 2.6 g/t Au over 11.3 metres
at 3,750 metre elevation. Hole D1454 intersected 5.8 g/t Au over 20.4 metres
including 7.5 g/t Au over 9.1 metres, 4.6 g/t Au over 9.3 metres and 1.7 g/t Au
over 9.4 metres at 3,700 metre elevation. 


Additional drilling of the Southwest Extension of the SB Zone and the northeast
side of the SB Zone will be completed in the fourth quarter should access be
available within this active mining area of the open pit. 


True widths for the mineralized zones are typically from 70% to 95% of the
stated intercept.


Regional Exploration 

Regional exploration drilling continued in the third quarter of 2010 at the
Northeast prospect, Muzdusuu area, the Sarytor and Southwest Deposits.


Northeast Area 

Twenty-one drill holes were completed during the quarter and a further three
holes were in progress at the end of the quarter. The drilling is designed to
test the extent of the near surface potential open pit mineralization at the
Northeast prospect on 40 metre centres over a strike length of 800 metres to a
depth of 200 metres.


Some of the better intervals and grades of mineralization intersected in the
third quarter include: drill hole DN1428 3.4 g/t Au over 5.8 metres, DN1431 1.2
g/t Au over 4.8 metres, 2.0 g/t Au over 5.2 metres, 2.0 g/t Au over 4.0 metres,
DN 1436 2.1 g/t Au over 4.3 metres, 2.2 g/t Au over 15.6 metres, 8.5 g/t Au over
2.9 metres, DN1446 2.7 g/t Au over 12.2 metres and DN1451 3.6 g/t Au over 4.8
metres.


Southwest Area 

Four drill holes were completed during the third quarter of 2010 and one hole
was in progress at quarter-end. 


The wide spaced drilling was designed to test for zones of high grade
mineralization below the planned open pit. The holes intersected zones of
moderate to strong alteration with low to moderate grade mineralization. The
most extensive mineralization was in hole SW-10-236A which returned intercepts
of 1.8 g/t Au over 12.1 metres, 2.3 g/t Au over 25.5 metres, 1.3 g/t Au over
10.6 metres, 1.6 g/t Au over 7.0 metres and 2.2 g/t Au over 2.9 metres. Hole
SW-10-237A intersected 4.4 g/t Au over 4.9 metres and 3.6 g/t Au over 14.4
metres, hole SW-10-238 intersected 3.1 g/t Au over 18.2 metres and hole
SW-10-239 intersected 1.4 g/t Au over 4.0 metres.


Muzdusuu Area 

One hole was completed in the third quarter to test for structurally bounded
blocks of limestone and sandstone which are considered prospective settings for
mineralization in the footwall of the Kumtor Fault. Drilling intersected
Neogene-Paleogene sediments with no significant mineralization. 


Sarytor Area 

One hole was completed at Sarytor and one hole was in progress at quarter-end.
Hole SR-10-196 was drilled to test for high grade mineralization on the
structure below the planned Sarytor open pit, with the best mineralization
intersected returning assays of 2.3 g/t Au over 3 metres. 


A complete listing of the drill results and supporting maps for the Kumtor pit
and Northeast area 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.


Mongolia

Exploration work in the second quarter was conducted at the Gatsuurt, Ulaan
Bulag, Sumber and Khuder properties in the Yeroogol trend and at the Altan
Tsagaan Ovoo, Uul Bayan and Tuvshinshire properties in Eastern Mongolia.


Gatsuurt Project 

During the third quarter of 2010 exploration drilling continued at Gatsuurt with
31 holes completed. In addition, geological mapping, trenching, soil sampling
and geophysical surveys also continued. 


Drilling was carried out on the eastern side of the Central Zone deposit to fill
in the remaining gaps in the 30 x 30 metre grid on the SS-01 and SS-02 targets
and also test for the continuity of the mineralization between the two zones.
Drilling was also carried out to test the GT-60 target which is located on the
Sujigtei fault 150 metres to the northeast of the Central Pit.


Drilling of the SS-01 and SS-02 zones of mineralization has shown that even
though the two zones are controlled by the same structures, there is a gap in
mineralization between the zones that is defined by a less-altered block of
metasedimentary rock. The drilling completed to the northwest and east of the
SS-01 mineralized zone shows only weak mineralization present. The drilling
completed at the SS-02 mineralized zone indicates that the gold-bearing granite
is located 50 - 75 metres below surface. Additional drilling will be carried out
in the fourth quarter to test additional targets. 


During the third quarter 30 by 30 metre grid drilling was carried out on the
GT-60 target that it located on the Sujigtei fault approximately 150 metres to
the northeast of the Central Pit. Results indicate that the gold mineralization
is primarily steep dipping and is confined to altered granite mainly silica and
sericitic. The mineralization is relatively consistent from section to section,
with rare high-grade intervals with visible gold. Gently dipping mineralized
structures have also been identified with narrow zones of mineralization.


A complete listing of the drill results and supporting maps for the Gatsuurt
Project 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.


Ulaan Bulag Prospect 

During the third quarter a further 8 holes were completed to test the western
part of the Nuga Zone. The results are encouraging and indicate that the western
continuation of the Nuga Zone has potential to host additional mineralization
that is similar to the eastern zone. The mineralization is primarily oxide at a
depth of 15 to 80 metres to the mineralization upper boundary. Further drilling
is in progress to define the mineralization on the Western part of the Nuga
Zone. 


To view the graphics, maps/drill sections and complete drill results discussed
in this news release, please visit the following link:
http://media3.marketwire.com/docs/CG1105figuresA.pdf or visit the Company's web
site at: www.centerragold.com.


Outlook for 2010

2010 Production 

Centerra's 2010 consolidated gold production is forecast to be in the 640,000 to
700,000 ounce range, which is unchanged from the prior guidance disclosed in the
Company's news release of July 30, 2010.


Gold production for the full year 2010 at the Kumtor mine in the Kyrgyz Republic
is forecast to be between 530,000 to 570,000 ounces, which is unchanged from
prior guidance. At the Kumtor operation, production at the mine was suspended on
October 1, 2010 after the unionized employees commenced an illegal work stoppage
on October 1, 2010. The strike was settled on October 10, 2010 and workers
returned to work that evening. A new collective agreement was ratified by the
union and will expire on December 31, 2012. The Company continues to expect that
during the fourth quarter Kumtor will produce approximately 40% of its 2010
production.


At Boroo/Gatsuurt, gold production is forecast to be 110,000 to 130,000 ounces,
which is unchanged from prior guidance. 


While the Company believes it has met all the regulatory pre-conditions for the
issuance of the final heap leach operating permit, its issuance continues to be
delayed. Due to these continued delays in obtaining the final permit, the
Company has removed any heap leach production from this year's production
guidance. If the final operating permit is received, resumption of heap leach
operations at Boroo would add approximately 3,000 to 4,000 ounces per month to
production.


The production guidance does not include any gold production from Gatsuurt.
While the Company has received the permits and approvals in connection with the
road construction to Gatsuurt and for construction of surface facilities at the
project, further approvals and commissioning of the project have been delayed as
a result of the Water and Forest Law, see "Other Corporate Developments,
Mongolia, Mongolian Legislation".


The processing of remaining mine ores by the Boroo mill, in conjunction with,
the processing of stockpiled lower grade ores will allow the operation to meet
its 2010 production guidance. Mining activities will be terminated at Boroo
during the fourth quarter as the ores in Pit 3 will be exhausted.


These production estimates are based on certain assumptions. See "Material
Assumptions" below.


2010 Total Cash Cost per Ounce 

Total cash cost in 2010 is expected to be between $460 and $505 per ounce
produced, which is unchanged from the prior guidance of April 28, 2010. Total
cash cost is a non-GAAP measure and is discussed under "Non-GAAP Measures" in
the Management's Discussion and Analysis issued in conjunction with this news
release.


Total cash cost for 2010 for Kumtor is expected to be in the range of $430 to
$460 per ounce produced, which is unchanged from the prior guidance.


Boroo total cash cost for 2010 which reflects no production from either the heap
leach operation or Gatsuurt and is expected to be $590 to $690 per ounce
produced, which is unchanged from the prior guidance. 


Centerra's production and unit costs are forecast as follows:



----------------------------------------------------------------------------
                      2010 Production Forecast      2010 Total Cash Cost(1) 
                              (ounces of gold)        ($ per ounce produced)
----------------------------------------------------------------------------
Kumtor                       530,000 - 570,000                     430 - 460
----------------------------------------------------------------------------
Boroo                        110,000 - 130,000                     590 - 690
----------------------------------------------------------------------------
Consolidated                 640,000 - 700,000                     460 - 505
----------------------------------------------------------------------------
(1) Total cash cost is a non-GAAP measure. See "Non-GAAP Measures" in the   
    Management's Discussion and Analysis issued in conjunction with this    
    news release.                                                           



These cost estimates are based on certain assumptions. See "Material
Assumptions" below.


2010 Exploration Expenditures

Exploration expenditures of $30 million are planned for 2010, and the
exploration plan is unchanged from the prior guidance. 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 $230.8 million, including
$44.1 million of sustaining capital and $186.7 million of growth capital. This
represents a decrease of $10.3 million from prior guidance primarily due to the
timing of expenditures and reclassification of some expenditures related to
growth capital at Gatsuurt.


Capital expenditures include:



----------------------------------------------------------------------------
                                2010 Growth Capital  2010 Sustaining Capital
Projects                      (millions of dollars)    (millions of dollars)
----------------------------------------------------------------------------
Kumtor mine                                  $164.2                   $ 40.2
----------------------------------------------------------------------------
Boroo mine                                   $  5.9                   $  3.6
----------------------------------------------------------------------------
Gatsuurt project                             $ 16.6                        0
----------------------------------------------------------------------------
Other                                             0                   $  0.3
----------------------------------------------------------------------------
Consolidated Total                           $186.7                   $ 44.1
----------------------------------------------------------------------------



Kumtor Capital 

At Kumtor capital expenditures are estimated at $204.4 million representing a
$7.7 million increase from prior guidance, which includes an increase in growth
capital of $11.1 million partially offset by decrease in sustaining capital of
$3.4 million. The primary reason for the increase in the growth capital relates
to a determination that approximately $10 million of planned pre-stripping costs
associated with the SB Zone should be treated as capital and not operating costs
in accordance with the Company's accounting policies. The decrease of $3.4
million in sustaining capital is due to postponing or cancellation of some
capital projects.


The largest growth capital expenditure will be for the North Wall Expansion
project, estimated at $92.7 million primarily for purchases of mining and
auxiliary support equipment to renew and expand the mining fleet by 22 haul
trucks. The equipment ordered has begun to arrive on schedule. In addition,
seven new CAT 789 haul trucks were purchased to increase haulage capacity to
manage the ice/waste movement in the high movement area for a total cost of
$20.7 million. At the end of September 2010, 13 new CAT 789 trucks were on site
and operational. The balance of the equipment, remaining CAT 789 trucks and four
new Liebherr 9350 shovels, are expected to be delivered in the fourth quarter of
2010 and the first half of 2011. 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 $38.7 million in 2010.


Boroo & Gatsuurt Capital 

At Boroo, 2010 sustaining capital expenditures are expected to be $3.6 million,
primarily for the mobile equipment component change-outs ($3.3 million). Growth
capital is estimated to be $5.9 million, primarily for the expansion of the
existing Boroo tailings facility ($4.9 million) to contain Boroo and Gatsuurt
oxide tailings. These expenditures are based on operational needs and also
assume the receipt of the required approvals for Gatsuurt.


At Gatsuurt, expected 2010 growth capital spending is forecasted at $16.6
million down from $38.6 million in the prior guidance. The $20.0 million
reduction in growth capital relates to the deferral of the pre-stripping of the
sulphide ores initially planned to be carried out in 2010 ($9.2 million),
expansion of the existing Boroo tailings facility ($4.9 million) which has been
reclassified from the Gatsuurt project capital to Boroo growth capital and the
removal of the cost of the haul trucks ($5.3 million) for hauling ore from the
Gatsuurt site to the Boroo mill as these will be sold to a third party for ore
haulage. Minimal capital spending is planned on the Gatsuurt project going
forward while waiting for the final approvals to commence mining (See "Other
Corporate Developments - Mongolia - Mongolian Legislation").


The Company's planned phased approach to the development of the Gatsuurt orebody
consisting of an oxide project component followed by a sulphide project
component, has been delayed due to the delays in receiving the final approvals
including the commissioning of the Gatsuurt project pending the resolution of
the Water and Forest Law (See "Other Corporate Developments - Mongolia -
Mongolian Legislation"). The engineering and construction of the bio-oxidation
facility, which is needed to treat the sulphide ores, will be restarted only
after the approval to begin mining at Gatsuurt has been received from the
Government of Mongolia. The Company expects that the capital for the development
of the deeper sulphide ores at Gatsuurt will be invested only following
successful commissioning of the Gatsuurt oxide project. 


Administration 

Annual corporate and administration expenses are estimated at $45 million, which
represents an increase of $4 million from prior guidance due to higher
stock-based compensation from the increased Centerra share price.


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 the remaining three months of
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    1.6     10.7        9.1         9.3
----------------------------------------------------------------------------
Diesel Fuel (1)                   10%    1.1        -        1.1         1.1
----------------------------------------------------------------------------
Kyrgyz som                      1 som    0.6        -        0.6         0.6
----------------------------------------------------------------------------
Mongolian tugrik            25 tugrik    0.1        -        0.1         0.1
----------------------------------------------------------------------------
Canadian dollar              10 cents    1.1        -        1.1         1.1
----------------------------------------------------------------------------





(1) 10% change in diesel fuel price equals $5/oz.                           



Material Assumptions 

Material assumptions or factors used to forecast production and costs include
the following: 




--  a gold price of $1,175 per ounce, 
--  exchange rates: 
    --  $1USD:$1.04 CAD 
    --  $1USD:47.00 Kyrgyz Som 
    --  $1USD:1,300 Mongolian Tugrik 
    --  $1USD:0.80 Euro 
--  diesel fuel price assumption: 
    --  $0.68/litre at Kumtor(i) 
    --  $0.90/litre at Boroo 



(i)The assumed diesel price of $0.68/litre at Kumtor includes a customs export
duty imposed by the Russian authorities on the diesel fuel exported to the
Kyrgyz Republic. Russia imposed a customs duty of approximately $194 per tonne
on gasoline and diesel fuel exports to the Kyrgyz Republic that went into effect
on April 1, 2010. The Company estimates that the introduction of this new export
duty will increase operating costs at Kumtor by approximately $7 million.


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 approximately $82 per barrel.


Other important assumptions on which the Company's production, cost and capital
guidance is based include the following:




--  political and civil unrest in the Kyrgyz Republic does not impact
    operations, including movement of people, supplies and gold shipments to
    and from the Kumtor mine, 
    
--  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, 
    
--  no unplanned delays in or interruption of scheduled production from our
    mines, including due to civil unrest, natural phenomena, labour,
    regulatory or political 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 "Other Corporate Developments, Mongolia, Mongolian
    Regulatory Matters", 
    
--  no further suspension of Boroo's operating licenses, 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, and 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".


Qualified Person 

The new drilling results in this news release and on Centerra's website and the
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 Centerra's most recently filed Annual
Information Form (the "AIF") and a technical report dated December 16, 2009
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 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 Gatsuurt deposit is described in the Company's most recently filed 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 

This news release and the documents referred to herein contain statements which
are not statements of current or historical facts and are "forward-looking
information" within the meaning of applicable 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.
Wherever possible, words such as "believe", "expect", "anticipate",
"contemplate", "target", "plan", "intends", "continue", "budget", "forecast",
"projections", "estimate", "may", "will", "schedule", "potential", "strategy"
and other similar expressions have been used to 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. 


Although the forward-looking information in this news release reflects
Centerra's current beliefs as of the date of this news release based on
information currently available to management and based upon what management
believes to be reasonable assumptions, Centerra cannot be certain that actual
results, performance, achievements, prospects and opportunities, either
expressed or implied will be consistent with such forward-looking information.
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. 


Factors that could cause actual results or events to differ materially from
current expectations include, among other things: risks relating to the recent
political and civil unrest in the Kyrgyz Republic, risks related to the creep of
ice and waste movement into the Kumtor open-pit, 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, fluctuations in gold prices, replacement of mineral reserves, reduction in
reserves related to geotechnical risks, ground movements, political risk,
nationalization risk, changes in laws and regulations, political 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, the ability to renew
and obtain licenses, permits and other rights, 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. In addition, material assumptions used to forecast
production and costs include those described above under the heading "Material
Assumptions". There may be other factors that cause results, assumptions,
performance, achievements, prospects or opportunities in future periods not to
be as anticipated, estimated or intended. See "Risk Factors" in the Company's
most recently filed AIF and Annual Management's Discussion and Analysis
available on SEDAR at www.sedar.com.


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. 


Centerra's mineral reserve and mineral resource figures 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 these mineral reserve and
mineral resource estimates are well established and the best estimates of
Centerra's management, by their nature mineral reserve and mineral resource
estimates are imprecise and depend, to a certain extent, upon analysis of
drilling results and statistical inferences which may ultimately prove
unreliable. If Centerra's reserve or reserve estimates for its properties are
inaccurate or are reduced in the future, this could have an adverse impact on
Centerra's future cash flows, earnings, results or 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 November 4, 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 gold mining company focused on operating, developing, exploring
and acquiring gold properties primarily in Asia, the former Soviet Union and
other emerging markets worldwide. Centerra is a leading North American-based
gold producer and is the largest Western-based gold producer in Central Asia.
Centerra's shares trade on the Toronto Stock Exchange (TSX) under the symbol CG.
The Company is headquartered in Toronto, Canada.


Conference Call

Centerra invites you to join its 2010 third quarter conference call on Friday,
November 5, 2010 at 10:00 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)
935-1518 or International participants dial +1 (212) 231-2937. 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 Friday November 12, 2010. The recording can be
accessed by calling (416) 626-4100 or (800) 558-5253 and using the passcode
21484134.


Additional information on Centerra is available on the Company's web site at
www.centerragold.com and at SEDAR at www.sedar.com.


MDA and Financial Statements and Notes follow

Centerra Gold Inc.

Management's Discussion and Analysis ("MD&A")

For the period ended September 30, 2010

The following discussion has been prepared as of November 4, 2010, and is
intended to provide a review of the financial position and results of operations
of Centerra Gold Inc. ("Centerra" or the "Company") for the three and nine month
periods ended September 30, 2010 in comparison with those as at September 30,
2009. This discussion should be read in conjunction with the unaudited interim
consolidated financial statements and the notes of the Company for the three and
nine month periods ended September 30, 2010. This MD&A should also be read in
conjunction with the Company's audited annual consolidated financial statements
for the three years ended December 31, 2009, the related MD&A included in the
2009 Annual Report, and the 2009 Annual Information Form. The financial
statements of Centerra are prepared in accordance with Canadian generally
accepted accounting principles ("GAAP") and, unless otherwise specified, all
dollar amounts are in United States dollars. The Company's 2009 Annual Report
and Annual Information Form are available at www.centerragold.com and on the
System for Electronic Document Analysis and Retrieval ("SEDAR") at
www.sedar.com.




                              TABLE OF CONTENTS                             
                                                                            
Consolidated Financial Results                                             2
Highlights                                                                 2
Three-Month Period ended September 30, 2010 Compared with the Three-Month   
Period Ended September 30, 2009                                            3
Nine-Month Period ended September 30, 2010 Compared with the Nine-Month     
Period Ended September 30, 2009                                            5
Mine Operations                                                           10
Other Financial Information - Related Party Transactions                  21
Quarterly Results - Last Eight Quarters                                   22
Other Corporate Developments                                              23
Critical Accounting Estimates                                             26
Changes in Accounting Policies                                            27
Status of Centerra's Transition to International Financial Reporting        
Standards ("IFRS")                                                        28
Outlook for 2010                                                          33
Non-GAAP Measures                                                         39
Caution Regarding Forward-Looking Information                             41



Consolidated Financial Results

Centerra's consolidated financial results for the three and nine month periods
ended September 30, 2010 reflect 100% interests in the Kumtor and Boroo mines,
and the Gatsuurt project.




Highlights                                                                  
                                                                            
----------------------------------------------------------------------------
                    Three Months Ended             Nine Months Ended        
                       September 30                   September 30          
----------------------------------------------------------------------------
                                                                            
Financial and                                                               
 Operating                                                                  
 Summary           2010      2009  % Change       2010     2009   % Change  
              --------------------------------------------------------------
Revenue - $                                                                 
 millions         115.5     158.8       (27%)    523.1    361.6         45% 
----------------------------------------------------------------------------
Cost of sales                                                               
 - $ millions                                                               
 (1)               75.0      70.7         6%     195.2    221.8        (12%)
----------------------------------------------------------------------------
Net earnings                                                                
 (loss) - $                                                                 
 millions          17.7      20.2       (12%)    169.5    (79.6)       313% 
----------------------------------------------------------------------------
                                                                            
Earnings                                                                    
 (loss) per                                                                 
 common share                                                               
 - $ basic and                                                              
 diluted           0.07      0.09       (22%)     0.72    (0.36)       300% 
----------------------------------------------------------------------------
Cash provided                                                               
 (used) by                                                                  
 operations -                                                               
 $ millions       (24.5)     63.4      (139%)    134.3     57.0        136% 
----------------------------------------------------------------------------
Capital                                                                     
 expenditures                                                               
 - $ millions      72.8      21.0       247%     156.6     61.0        157% 
----------------------------------------------------------------------------
Weighted                                                                    
 average                                                                    
 common shares                                                              
 outstanding -                                                              
 basic                                                                      
 (thousands)    235,406   234,857         0%   235,088  222,027          6% 
----------------------------------------------------------------------------
Weighted                                                                    
 average                                                                    
 common shares                                                              
 outstanding -                                                              
 diluted                                                                    
 (thousands)    235,793   234,980         0%   235,431  222,027          6% 
----------------------------------------------------------------------------
                                                                            
----------------------------------------------------------------------------
Average gold                                                                
 spot price -                                                               
 $/oz             1,227       960        28%     1,178      931         27% 
----------------------------------------------------------------------------
Average                                                                     
 realized gold                                                              
 price - $/oz     1,234       959        29%     1,162      928         25% 
----------------------------------------------------------------------------
                                                                            
----------------------------------------------------------------------------
Gold sold -                                                                 
 ounces          93,562   165,606       (44%)  450,198  389,506         16% 
----------------------------------------------------------------------------
Cost of sales                                                               
 - $/oz sold        801       427        88%       434      569        (24%)
----------------------------------------------------------------------------
                                                                            
----------------------------------------------------------------------------
Gold produced                                                               
 - ounces        96,308   165,883       (42%)  429,075  379,544         13% 
----------------------------------------------------------------------------
Total cash                                                                  
 cost - $/oz                                                                
 produced(2)                                                                
 (3) (4)            798       424        88%       521      602        (13%)
----------------------------------------------------------------------------
Total                                                                       
 production                                                                 
 cost - $/oz                                                                
 produced(2)                                                                
 (4)                966       563        72%       650      781        (17%)
----------------------------------------------------------------------------
(1) Cost of sales for 2010 and its comparative year excludes regional office
    administration.                                                         
(2) Total cash cost and total production cost are non-GAAP measures and are 
    discussed under "Non-GAAP Measures".                                    
(3) 2009 includes the costs incurred during the strike and shutdown at Boroo
    of $0.7 million and $4.1 million for the quarter and nine months,       
    respectively: excluding these costs, the 2009 third quarter and nine    
    months cash cost per ounce produced would be $419 and $591,             
    respectively.                                                           
(4) As a result of Kumtor's Restated Investment Agreement, total cash cost  
    and total production cost per ounce measures for both years exclude     
    production and revenue-based taxes.                                     



Three-Month Period ended September 30, 2010 Compared with the Three-Month Period
Ended September 30, 2009


Gold Production and Revenue

Revenue in the third quarter of 2010 decreased to $115.5 million from $158.8
million in the same quarter last year reflecting 44% lower ounces sold in the
third quarter 2010 as compared to the prior year. Gold production for the
quarter was 96,308 ounces compared to 165,883 ounces reported in the third
quarter of 2009. The decrease in gold production reflects lower production at
both operations. Kumtor's decrease mainly reflects lower ore grades and higher
waste volumes moved, while Boroo's comparative results reflect lower grades and
recoveries as well as lower contribution from the heap leach process which
remained idle pending issuance of a final operating permit by the government
authorities. See "Mine Operations - Kumtor" and "Mine Operations - Boroo".


Centerra realized an average gold price of $1,234 per ounce for the third
quarter of 2010, an increase from the $959 per ounce realized in the same
quarter of 2009. Since Centerra's gold production is not hedged and gold is sold
at the prevailing spot price, the average realized gold price in the quarter
reflects the continued strength of the spot gold price, which averaged $1,227
per ounce for the third quarter of 2010 ($960 per ounce for the same period in
2009).


Cost of Sales

Cost of sales in the third quarter of 2010 was $75.0 million, compared to $70.7
million in the same quarter of 2009 resulting from higher quarter over quarter
cost of sales at Kumtor. The majority of ounces sold in the third quarter 2010
at Kumtor were produced in that quarter but at higher comparable cost. Higher
unit cash costs in the third quarter 2010 at Kumtor reflect the mining of lower
grades (1.89 g/t compared to 3.49 g/t), the processing of lower grades (1.57 g/t
compared to 3.52 g/t) and the increased fuel and labor costs associated with the
stripping of waste compared to the prior year. Cost of sales at Boroo in the
quarter remained constant year over year.


Cost of sales per ounce sold in the third quarter of 2010 increased to $801 from
$427 for the same period in 2009. This reflects the fewer ounces sold and
produced due to the mining and processing of much lower grades, lower recoveries
at Boroo and increased mining costs at Kumtor primarily from higher diesel
costs. Cost of sales per ounce sold is a non-GAAP measure and is discussed under
"Non-GAAP Measures".


The Company's total cash cost per ounce produced in the third quarter of 2010
increased to $798 from $424 when compared to the third quarter of 2009. The
increase is primarily due to lower production at Kumtor and Boroo resulting from
reduced grades and increased volumes of waste moved at Kumtor. Total cash cost
per ounce produced is a non-GAAP measure and is discussed under "Non-GAAP
Measures". See "Mine Operations - Kumtor" and "Mine Operations - Boroo".


Depreciation, Depletion and Amortization

Consolidated depreciation, depletion and amortization for the third quarter of
2010 decreased to $17.4 million from $27.0 million in the same quarter of 2009,
mainly due to fewer ounces produced and sold in the third quarter 2010 and an
increase in the mine ore reserves resulting in an extension of the mine life in
late 2009 at Kumtor leading to slower amortization of assets depreciated on the
unit of production method. On a per unit basis, depreciation, depletion and
amortization for the third quarter of 2010 was $185 per ounce sold compared to
$163 per ounce sold in the same quarter of 2009.


Accretion and Reclamation Expense

Accretion and reclamation expense of $0.5 million in the third quarter of 2010
compares to $0.4 million in the same quarter of 2009.


Exploration

Exploration costs in the third quarter of 2010 increased to $8.0 million from
$6.8 million in the same quarter of 2009 mainly reflecting increased drilling
activity in Mongolia and the Company's joint venture projects.


Capital Expenditures

Capital expenditures spent of $70.9 million and accrued of $1.9 million
(together $72.8 million) in the third quarter of 2010 included $14.8 million of
sustaining capital and $58.0 million invested in growth capital related mainly
to the SB Zone underground development at Kumtor ($9.7 million), the North Wall
mine expansion at Kumtor consisting of new mine equipment and infrastructure
upgrades including CAT 789 haul truck purchases ($32.2 million), other equipment
purchases ($8.7 million) and camp expansion and spending at the Gatsuurt project
on mine development ($1.3 million). Capital expenditures in the comparative
quarter of 2009 totalled $21.0 million, consisting of $6.1 million of sustaining
capital and $14.9 million of growth capital.


Corporate Administration

Corporate administration costs for the third quarter of 2010 increased to $13.4
million compared to $8.1 million in the same quarter of 2009, as a result of
increased costs associated with share-based compensation due to an increase in
the Company's stock price.


Revenue-based Tax - Kumtor

Revenue-based taxes are payable to the Kyrgyz Government under the Restated
Investment Agreement at a rate of 13% of gross revenue, with an additional
contribution of 1% of gross revenue to the Issyk-Kul Oblast Development Fund.
Revenue-based tax decreased to $11.5 million in the third quarter of 2010
compared to $18.1 million in the comparative quarter as a result of lower
revenue.


Other Item

On July 2, 2010, the Company completed the sale of its interest in the REN
project to Homestake Mining Company of California, a subsidiary of Barrick Gold
Corporation, for gross proceeds of $35.2 million resulting in a net gain of
$34.9 million.


Income Tax Expense

The Company is liable for income tax at its Boroo mine in Mongolia at a rate of
25% of taxable income in excess of 3 billion Tugriks (about $2.3 million as at
the balance sheet date), and 10% for income up to that amount. Boroo recorded an
income tax expense of $2.4 million for the quarters ended September 30, 2010 and
2009.


Kumtor ceased to be liable for income tax effective April 30, 2009 and became
subject to a new tax regime following the signing of the Restated Investment
Agreement, pursuant to which income taxes and other taxes were replaced by taxes
computed by reference to Kumtor's revenue.


Net Earnings

Net earnings for the third quarter of 2010 was $17.7 million, or $0.07 per
share, compared to $20.2 million or $0.09 per share for the same period in 2009,
reflecting the lower production and sales volumes and higher costs in 2010, as
well as the impact from the gain on sale of the REN project.


Cash Flow

Cash used in operations was $24.5 million for the third quarter of 2010 compared
to a source of cash in the same quarter of 2009 of $63.4 million, primarily
reflecting decreased earnings as a result of lower volumes and higher costs, as
well as the negative impact of increased working capital levels in 2010.


Cash provided by investing activities in the third quarter of 2010 totalled
$77.5 million, primarily reflecting $108.4 million of short-term investments
which matured in the quarter and $34.9 million of net proceeds from the sale of
the REN project. This is reduced by spending on capital additions described
previously of $70.9 million.


Nine-Month Period ended September 30, 2010 Compared with the Nine-Month Period
Ended September 30, 2009


Gold Production and Revenue

Revenue for the first nine months of 2010 totalled $523.1 million, a 45%
increase compared to $361.6 million in revenue in the same period of 2009 due
primarily to increased gold sales as a result of higher production levels and an
increase in the average spot price of gold. Gold production of 429,075 ounces in
the nine months of 2010 was higher than the 379,544 ounces reported in the same
period of 2009 mainly as a result of the increased production at Kumtor in the
first two quarters of 2010 due to higher grades and increased recoveries. Boroo
recorded lower production in 2010 from lower grades and due to the idling of the
heap leach process as a result of the expiry of the temporary heap leach
operating permit which was effective from May 1, 2009. The average realized gold
price for the first nine months of 2010 was $1,162 per ounce compared to $928
per ounce in the same period of 2009 reflecting higher spot prices for gold. See
"Mine Operations - Kumtor" and "Mine Operations - Boroo".


Cost of Sales

Cost of sales in the first nine months of 2010 was $195.2 million, compared to
$221.8 million in the same period of 2009. The reduction in the first nine
months year over year is primarily due to the impact at Kumtor of lower
operating costs in the first half of 2010 which lowered unit costs produced and
also from the selling of lower cost ounces which were in process at the end of
December 2009. High grades and recoveries in the fourth quarter of 2009 resulted
in a high production of gold, some of which remained in inventory at the end of
the year. Since the Company's operating cost to produce these ounces is roughly
the same in periods of high grade as it is in periods of lower grade, the unit
cost of gold produced in high grade periods is lower (more ounces, same cost).
These lower cost ounces coming from the inventory at the end of 2009 were sold
in the first nine months of 2010 thereby helping to lower the cost of sales for
the period. The impact of the agreement signed with the Kyrgyz government which
removed production-based taxes from cost of sales beginning April 30, 2009 also
had a positive effect in the year over year comparison ($8.7 million of
production taxes were charged against cost of sales in the first nine months of
2009).


The Company's total cash cost per ounce produced for the nine months ended
September 30, 2010 was $521, down from $602 in the same period in 2009. This
decrease is primarily due to the increased production levels in 2010. Excluding
the costs incurred during the shutdown at Boroo in 2009 of $4.1 million, total
cash cost per ounce produced for the first nine months of 2009 would be $591.


Revenue-based Tax - Kumtor

Revenue-based tax totaled $58.1 million in the first nine months of 2010
compared to $23.3 million in the same period of 2009. The new revenue-based tax
took effect from April 30, 2009 as a result of the Restated Investment
Agreement, signed with the Kyrgyz government (the "Government") in the second
quarter of 2009.


Other Items

A net gain of $34.9 million was recorded in the first nine months of 2010 as a
result of the sale of the REN project.


An expense of $49.3 million was recorded in the comparative period of 2009,
resulting from the Restated Investment Agreement. This amount in 2009 reflects
the settlement by the Company, as prescribed by the agreement, which included
the issuance of common shares to the Government, the settlement of legal claims,
a tax settlement going back to January 1, 2008 and various legal and related
costs incurred by the Company.


Income Tax Expense

The Company recorded an income tax expense at Boroo of $9.3 million during the
nine month period ended September 30, 2010 compared to $13.7 million for the
same period of 2009. While the impact of currency movements on income tax
expense in 2010 has been limited, the significant weakening of the Mongolian
Tugrik during 2009 was the material factor contributing to the variance in
Boroo's tax expense.


Net Earnings

Net earnings in the first nine months of 2010 was $169.5 million, or $0.72 per
share, compared to a net loss of $79.6 million, or $0.36 per share, for the same
period in 2009. The increase primarily reflects higher sales and production, a
reduction to cost of sales and the impact from the sale of the REN project in
2010 and the settlement of legal and tax claims with the Government in 2009 as a
result of the Restatement Investment Agreement.


Capital Expenditures

Capital expenditures spent and accrued of $156.6 million in the first nine
months of 2010 included $34.6 million of sustaining capital and $122.0 million
invested in growth capital related mainly to the SB Zone underground development
at Kumtor ($27.1 million), the mine expansion at Kumtor ($66.5 million) and
spending at the Gatsuurt project on mine development and road construction
($16.3 million). Capital expenditures in the comparative period of 2009 totalled
$61.0 million, consisting of $34.3 million of sustaining capital and $26.7
million of growth capital.


Cash Flow

Cash flow provided by operations for the first nine months of 2010 was $134.3
million compared to $57.0 million in the same period of 2009 reflecting higher
net earnings, partially offset by increased working capital levels in 2010 and
$22.4 million of tax settlement and pre-tax payments made by Kumtor in June 2009
under the Restated Investment Agreement. Cash used in investing activities
totaled $20.5 million in the nine months of 2010 compared to $45.8 million used
in investing activities in the prior year. Spending in 2010 includes $156.6
million on capital projects described above less accruals of $7.5 million ($63.7
million in 2009), a reduction in short-term investments of $93.7 million (2009
was partially offset by a reduction in short-term investments of $17.8 million)
and net proceeds of $34.9 million from the sale of REN in 2010.


Asset Retirement Obligations

The total future asset retirement obligations were estimated by management based
on the Company's ownership interest in all mines and facilities, estimated costs
to reclaim the mine sites and facilities, and the estimated timing of the costs
to be incurred in future periods.


The Company has estimated the net present value of the total asset retirement
obligations to be $30.3 million as at September 30, 2010 (December 31, 2009 -
$29.7 million). These payments are expected to be made over the 2010 to 2017
period. The Company used weighted average credit risk-adjusted rates of 6.99% at
Kumtor and 8% at Boroo to calculate the present value of the asset retirement
obligations.


Share capital and share options

As of November 4, 2010, Centerra had 235,755,488 shares issued and outstanding.
In addition, at the same date, the Company had 917,895 share options outstanding
under its share option plan with exercise prices between Cdn$4.68 and Cdn$14.29
per share, and with expiry dates between 2013 and 2017.


The shares outstanding include the issuance on June 11, 2009 of 18,232,615
common shares of Centerra as contemplated by the Restated Investment Agreement
for the Kumtor project. These shares were issued from treasury on June 11, 2009,
at the closing share price of $6.62 (Cdn. $7.30) to Kyrgyzaltyn JSC. As a
result, the Company recorded an addition to share capital of $120.7 million in
June 2009.


Gold hedges

The Company had no gold hedges in place in the third quarter of 2010 and no
deferred charges were recognized.


Credit and Liquidity

As at September 30, 2010, the Company has no outstanding loans.

The Company has entered into contracts to purchase capital equipment and
operational supplies which at September 30, 2010 totalled $84.0 million (Kumtor
$83.3 million, Boroo $0.1 million and Centerra Gold Mongolia LLC, a subsidiary
of Centerra, $0.6 million). The Kumtor commitment is primarily for the purchase
of mobile equipment for future expansion, including 22 CAT 789 haul trucks,
totalling approximately $75 million. These contracts are expected to be settled
over the next twelve months.


Cash and cash equivalents and short-term investments were $334.7 million at the
end of the third quarter of 2010, compared to cash and cash equivalents and
short-term investments of $322.9 million at December 31, 2009. The Company
believes it has sufficient cash to carry out its operational business plan for
2010.


A significant factor in determining profitability and cash flow from the
Company's operations is the price of gold. The spot market gold price based on
the London PM fix was approximately $1,307 per ounce on September 30, 2010. For
the third quarter of 2010, the gold price averaged $1,227 per ounce compared to
$960 per ounce for the same period in 2009. The average gold price for the first
nine months of 2010 was $1,178 per ounce compared to $931 per ounce for the same
period in 2009.


The Company receives its revenues through the sale of gold in U.S. dollars. The
Company has operations in the Kyrgyz Republic and Mongolia. Countries in which
the Company explores include Turkey, Russia, China, the United States, the
Kyrgyz Republic and Mongolia. Centerra's corporate head office is in Toronto,
Canada. During the nine-month period ending September 30, 2010, approximately
$233 million or 39% of total operating and capital costs were incurred by
Centerra in currencies other than the U.S. dollar out of a total of $595 million
in costs incurred. For the nine-month period, the percentage of Centerra's
non-U.S. dollar costs, by currency was, on average, as follows: 33% in Mongolian
tugriks, 29% in Kyrgyz soms, 18% in Canadian dollars, 18% in Euro, and 2% in
other currencies. On average, from the December 31, 2009 currency exchange rate,
the Mongolian Tugrik appreciated by 4.0% over the U.S. Dollar, whilst the Kyrgyz
Som depreciated against the U.S. Dollar by approximately 3.6%. The Canadian
Dollar appreciated by 1.6% whereas the Euro depreciated by 9.0% against the U.S.
Dollar. The estimated impact of these movements over the nine-month period to
September 30, 2010 has been to reduce costs by approximately $2.5 million, after
accounting for the Som, Tugrik and Canadian Dollars held at the beginning of the
year.


For information on forward-looking information see "Caution Regarding
Forward-Looking Information".


Mine Operations

Centerra owns 100% of the Kumtor and Boroo mines and therefore all operating and
financial results are on a 100% basis.




----------------------------------------------------------------------------
                Three Months Ended September   Nine Months Ended September  
                             30                            30               
----------------------------------------------------------------------------
                                                                            
Kumtor Operating                                                            
 Results             2010     2009  % Change       2010     2009  % Change  
                ------------------------------------------------------------
Revenue - $                                                                 
 millions            82.2    129.0       (36%)    415.3    260.6        59% 
----------------------------------------------------------------------------
Gold sold -                                                                 
 ounces            66,490  134,803       (51%)  358,461  279,293        28% 
----------------------------------------------------------------------------
Average realized                                                            
 gold price -                                                               
 $/oz               1,237      957        29%     1,159      933        24% 
----------------------------------------------------------------------------
Cost of sales -                                                             
 $ millions          63.1     59.7         6%     158.8    179.1       (11%)
----------------------------------------------------------------------------
Cost of sales -                                                             
 $/oz sold            948      443       114%       443      641       (31%)
----------------------------------------------------------------------------
Tonnes mined -                                                              
 000s              30,714   30,941        (1%)   86,905   89,549        (3%)
----------------------------------------------------------------------------
Tonnes ore mined                                                            
 - 000s               774    1,516       (49%)    2,953    2,706         9% 
----------------------------------------------------------------------------
Average mining                                                              
 grade - g/t (1)     1.89     3.49       (46%)     3.51     3.47         1% 
----------------------------------------------------------------------------
Tonnes milled -                                                             
 000s               1,390    1,546       (10%)    4,290    4,366        (2%)
----------------------------------------------------------------------------
Average mill                                                                
 head grade -                                                               
 g/t (1)             1.57     3.52       (55%)     3.10     2.71        14% 
----------------------------------------------------------------------------
Recovery - %         73.4     73.3         0%      76.4     70.4         9% 
----------------------------------------------------------------------------
Gold produced -                                                             
 ounces            68,757  133,459       (48%)  339,369  277,947        22% 
----------------------------------------------------------------------------
Total cash cost                                                             
 - $/oz (2) (3)       887      427       108%       512      651       (21%)
----------------------------------------------------------------------------
Total production                                                            
 cost - $/oz (2)                                                            
 (3)                1,065      547        95%       626      813       (23%)
----------------------------------------------------------------------------
Capital                                                                     
 expenditures -                                                             
 $ millions          70.3     18.2       286%     133.2     57.3       132% 
----------------------------------------------------------------------------
                                                                            
Boroo Operating                                                             
 Results                                                                    
----------------------------------------------------------------------------
Revenue - $                                                                 
 millions            33.3     29.8        12%     107.8    101.0         7% 
----------------------------------------------------------------------------
Gold sold -                                                                 
 ounces            27,072   30,803       (12%)   91,737  110,213       (17%)
----------------------------------------------------------------------------
Average realized                                                            
 gold price -                                                               
 $/oz               1,228      967        27%     1,175      916        28% 
----------------------------------------------------------------------------
Cost of sales -                                                             
 $ millions          11.9     11.0         8%      36.4     42.7       (15%)
----------------------------------------------------------------------------
Cost of sales -                                                             
 $/oz sold          440.0    354.0        24%     397.0    388.0         2% 
----------------------------------------------------------------------------
Total tonnes                                                                
 mined - 000s       2,578    2,755        (6%)    8,641    8,772        (1%)
----------------------------------------------------------------------------
Average mining                                                              
 grade - g/t (1)     1.47     1.70       (14%)     1.32     1.46       (10%)
----------------------------------------------------------------------------
Tonnes mined                                                                
 heap leach -                                                               
 000s                 143      589       (76%)    1,498    2,311       (35%)
----------------------------------------------------------------------------
Tonnes ore mined                                                            
 direct mill                                                                
 feed -000's          201      597       (66%)    2,074    1,663        25% 
----------------------------------------------------------------------------
Tonnes ore                                                                  
 milled - 000s        594      431        38%     1,832    1,450        26% 
----------------------------------------------------------------------------
Average mill                                                                
 head grade -                                                               
 g/t (1)             1.97     2.45       (20%)     1.98     2.41       (18%)
----------------------------------------------------------------------------
Recovery - %         69.8     76.0        (8%)     72.6     69.7         4% 
----------------------------------------------------------------------------
Gold produced -                                                             
 ounces            27,551   32,424       (15%)   89,706  101,597       (12%)
----------------------------------------------------------------------------
Total cash cost                                                             
 - $/oz (2) (4)       575      411        40%       558      466        20% 
----------------------------------------------------------------------------
Total production                                                            
 cost - $/oz (2)      720      625        15%       737      692         7% 
----------------------------------------------------------------------------
Capital                                                                     
 expenditures -                                                             
 $ millions                                                                 
 (Boroo)              3.5      0.6       483%       6.9      0.9       667% 
----------------------------------------------------------------------------
Capital                                                                     
 expenditures -                                                             
 $ millions                                                                 
 (Gatsuurt)           1.3      2.2       (41%)     16.3      2.6       527% 
----------------------------------------------------------------------------
(1) g/t means grams of gold per tonne.                                      
(2) Total cash cost and total production cost are non-GAAP Measures and are 
    discussed under "Non-GAAP Measures".                                    
(3) As a result of Kumtor's Restated Investment Agreement, total cash cost  
    and total production cost per ounce measures for both years are shown   
    excluding operating and revenue-based taxes.                            
(4) 2009 includes the costs incurred during the strike and shutdown of $4.1 
    million (nine months). Excluding these costs the third quarter and nine 
    months cash cost per ounce produced at Boroo would be $388 and $426,    
    respectively.                                                           



KUMTOR

The Kumtor open pit mine, located in the Kyrgyz Republic, is the largest gold
mine in Central Asia operated by a Western-based producer. It has been operating
since 1997 and has produced approximately 7.6 million ounces of gold. During the
third quarter 2010, Kumtor experienced two lost-time injuries and five level I
and one level II environmental incidents (non-reportable incidents).


During the quarter, the planned removal of waste and ice from the southeast
section of the high wall in the SB Zone continued. The overall rate of movement
of waste and ice from this area has slowed due to the offloading plan and the
de-watering program carried out during the year. During the third quarter of
2010, as expected, the high movement area did begin to accelerate, however the
offloading plan and the de- watering program has slowed the ice movement
compared to the same period last year.


The SB Zone underground decline (Decline #1) has now advanced a total of 854
metres. During the quarter the decline advancement continued and drill and
remuck bays were established. Poor ground conditions decreased the advance rate
in the latter portion of the quarter. It is expected that exploration drilling
will commence in the fourth quarter while delineation drilling of the SB Zone is
planned to commence in the first quarter of 2011.


The Stockwork Zone underground decline (Decline #2) has advanced a total of 509
metres (including the second heading for exploration). Decline #2 will
facilitate the access to the Stockwork Zone and the SB Zone for further
exploration and delineation drilling. During the second quarter, two headings
were established and are advancing concurrently. A second heading in decline #2
established for the exploration and delineation drilling program for the
Stockwork Zone has advanced 110 metres toward the north. Drill bays will be
established along the planned 400 metre access drift. Poor ground conditions in
the headings reduced the advance rate in the latter portion of the quarter.
Exploration and delineation drilling of the Stockwork Zone resource is expected
to commence in the fourth quarter of 2010 and continue into 2011.


Three-Month Period ended September 30, 2010 Compared with the Three-Month Period
Ended September 30, 2009


Revenue and Gold Production

Revenue in the third quarter of 2010 decreased to $82.2 million from $129.0
million in the third quarter of 2009 primarily as a result of the lower sales
volumes (66,490 ounces in the third quarter of 2010 compared to 134,803 ounces
in the same period of 2009) which was partially offset by an increased average
realized gold price. The average realized price in the third quarter 2010 was
$1,237 per ounce compared to $957 per ounce in the same period of 2009.


Kumtor produced 68,757 ounces of gold in the third quarter of 2010 compared to
133,459 ounces of gold in the third quarter of 2009. The decrease in production
resulted mainly from lower mill head grades. Actual mill head grade for the
third quarter of 2010 was 1.57 g/t with a recovery of 73.4%, versus 3.52 g/t and
a recovery of 73.3% for the same period in 2009.


Tonnes of ore milled were 1,390,015 versus 1,545,974 or 10% lower compared to
the same period of 2009 as a result of the planned mill shutdown in July 2010
which was required to replace the ring gear and replace the SAG mill liner.


Total tonnes mined in the third quarter of 2010 were 30.7 million roughly
equivalent to the same period in 2009. However, due to the increase in waste and
ice material moved, less tonnes of ore were mined in the third quarter 2010 as
compared to the comparative period in 2009 (0.8 million compared to 1.5
million).


Cost of Sales

Cost of sales at Kumtor in the third quarter 2010 were $63.1 million compared to
$59.7 million in the same quarter of 2009, an increase of $3.3 million or 6%.


Ounces sold in the third quarter 2010 came primarily from current third quarter
production which was at a higher unit cost than the comparable 2009 period due
to lower ore volumes from lower mining and milling grades (respectively 49% and
55% lower compared to the same period of 2009), on-going management of the
movement of waste rock and ice at higher operating costs due to the increase in
diesel fuel consumption, fuel tax levies, higher labour costs and higher
dewatering costs.


Operating cash costs at Kumtor increased by $3.2 million in the third quarter
2010 compared to the same quarter of 2009. This variance can be explained as
follows:


Mining costs for the third quarter of 2010 were $35.5 million, an increase of
$5.1 million (17%) compared to the same quarter in 2009. The increase was
primarily due to higher diesel costs ($4.8 million) as a result of the
introduction in April 2010 of a new tax levied by the Russian Government on its
exported fuel. Price alone added $4.1 million to this quarter's operating costs
while higher consumption from the larger fleet and longer hauls added the
remaining $0.7 million. Other factors include increases in dewatering supplies
($1.2 million) and blasting and explosives ($1.1 million). This was partially
offset by higher capitalized costs for work performed on the tailings.


Milling costs for the third quarter of 2010 were $12.9 million, a decrease of
$1.7 million (12%) compared to the same quarter of 2009. This was primarily due
to a reduction in reagents ($1.6 million) due to lower usage of carbon as a
direct result of the lower grade processed. Further savings were achieved
through lower cyanide expenditure also due to lower head grade ($0.4 million)
and a further saving on cyanide due to lower tonnages processed ($0.3 million).
This was partially offset by higher maintenance materials and supplies cost
($0.5 million) related to the shutdown in July 2010.


Site administration costs for the third quarter 2010 were $8.6 million, a
decrease of $0.6 million (7%) compared to the same quarter 2009. The favorable
variance resulted from increased allocation of camp catering costs ($1.7
million), partially offset by higher insurance costs ($0.4 million), higher
continuous improvement consultation costs ($0.2 million), higher fuel costs
($0.2 million) for extra transport and fuel trucks to support the increased
fleet.


The ultimate impact of these cost changes on the reported results for cost of
sales is dependant on the relative levels of capital and operating activities
and the buildup or drawdown of inventories during the periods presented. On a
unit cost basis, cost of sale per ounce sold for the third quarter 2010
increased to $948 per ounce compared to $443 per ounce for the same period in
2009. This is mainly due to lower sales volumes in the third quarter 2010 as a
result of lower ore production due to lower mining and mill head grades (mill
grades were 1.57 g/t compared to 3.52 g/t) and higher volumes of waste rock and
ice moved. Of the $505 cost of goods variance per ounce sold, the lower mining
volumes caused by the lower grades and higher waste volumes moved accounted for
$260 per ounce sold while the lower milling grades represented $103 per ounce
sold. The higher operating costs accounted for $52 of the cost of goods variance
per ounce sold.


Total cash cost per ounce produced in the third quarter 2010 was $887 per ounce
compared to $427 per ounce for the same period in 2009, mainly as a result of
the lower production due to reduced head grades, higher operating costs as
described above and the increased stripping of waste. Total cash cost per ounce
produced is a non-GAAP measure and is discussed under "Non-GAAP Measures".


Kumtor Regional Administration

Bishkek administration costs for the third quarter 2010 were $4.1 million. This
is an increase of $0.9 million (28%) compared to the same quarter 2009. The
increase results primarily from increased corporate contributions to the local
communities impacted by the June disturbances in the country.


Depreciation and Amortization

Depreciation, depletion and amortization of $13.4 million decreased by $7.3
million over the same period in 2009. This was mainly due to an increase in mine
ore reserves, from the extension of the mine life in late 2009 and the decrease
in mining and milling production in the third quarter of 2010 in comparison with
the same period of 2009 which led to slower amortization of assets depreciated
on the unit of production method.


Revenue-Based Tax

Revenue-based tax totaled $11.5 million in the third quarter of 2010 as compared
to $18.1 million in the same quarter of 2009 due to the lower sales in the third
quarter 2010.


Exploration

Exploration costs for the third quarter 2010 were $3.3 million which is
unchanged from the third quarter of 2009.


Capital Expenditures

Capital expenditures in the third quarter of 2010 were $70.3 million compared to
$18.2 million in the same quarter of 2009. In 2010, this consisted of $13.8
million of sustaining capital, predominantly spent on the heavy duty equipment
overhaul program ($5.6 million), shear key, buttress and tailings dam
construction ($3.8 million), replacement of 4 dozers ($1.4 million), the SAG
mill girth gear replacement and re- alignment ($1.7 million), 2010 waste dump
expansion ($0.5 million) and other projects totaling ($0.8 million). Growth
capital investment totaled $56.5 million spent mainly on the mine expansion,
including CAT 789 haul truck purchases ($32.2 million) and other equipment ($8.7
million) and on the underground development of the declines for the SB and
Stockwork zones ($9.7 million).


Nine-Month Period ended September 30, 2010 Compared with the Nine-Month Period
Ended September 30, 2009


Revenue and Gold Production

Revenue for the first nine months of 2010 increased to $415.3 million from
$260.6 million in same period of 2009 primarily as a result of higher sales
volumes (358,461 ounces for the nine months of 2010 compared to 279,293 ounces
in the same period of 2009). Revenue was also positively impacted due to a
higher average realized gold price for the first nine months of 2010 ($1,159 per
ounce compared to $933 per ounce in the same period in 2009).


Kumtor produced 339,369 ounces of gold for the nine months of 2010 compared to
277,947 ounces of gold in the same period of 2009. The increased production is
primarily from higher milling grades and recovery which occurred during the
first six months of 2010. The mill head grade averaged 3.1 g/t with a recovery
of 76.4% for the nine months of 2010 compared to 2.7 g/t and a recovery of 70.4%
for the comparative period of 2009.


The higher average realized gold price per ounce for both the three and nine
month periods in 2010 was due to higher gold spot prices.


Cost of Sales

Cost of sales at Kumtor for the first nine months of 2010 was $158.8 million
compared to $179.1 million in the same period of 2009. This is a reduction of
$20.3 million (11%) compared to the first nine months of 2009.


The reduction for the first nine months year over year is primarily due to the
impact of the lower operating costs in the first nine months of 2010 and from
the selling of lower cost ounces which were in process at the end of December
2009 resulting from a high production, low cost fourth quarter in 2009 which saw
significantly higher grades and recoveries. The first nine months of 2010 also
benefited from the new agreement with the Kyrgyz which eliminated production
taxes from cost of sales ($8.7 million was charged in the first nine months of
2009).


Operating cash costs at Kumtor decreased by $7.9 million for the first nine
months of 2010 compared to the same period in 2009. This variance can be
explained as follows:


Mining costs for the first nine months of 2010 were $96.2 million, a reduction
of $6.3 million (6%) compared to the same period in 2009. This arose primarily
due to lower maintenance materials and supplies costs ($4.9 million), lower
equipment expenditures on CAT 777 and CAT 785 haul trucks ($2.2 million), CAT
5130 shovels ($1.4 million) and track dozers ($0.8 million). This reduction is
partially due to a more comprehensive overhaul program which has reduced the
number of break downs and unscheduled maintenance.


Other favorable variances include increased capitalization of equipment costs
for work performed on the tailings dam ($2.2 million) lower cost for dewatering
supplies ($2.0 million), lower lubricants costs due to 19% lower usage as a
result of a successful oil sampling program ($1.1 million), lower tire costs
($1.1 million) due to the availability of radials which have a lower cost per
hour than bias ply tires, lower dewatering costs ($1.0 million), lower national
premiums ($1.0 million) and drilling bits ($0.5 million). The lower mining costs
were partially offset by higher diesel costs ($5.5 million) as a result of
higher prices due to the introduction of fuel tax levy by the Russian Government
which increased cost by $3.8 million and higher consumption rates due to longer
hauls which increased cost by $1.7 million. Other unfavorable variances are
higher camp cost ($2.0 million) and maintenance costs ($1.6 million).


Milling costs for the first nine months of 2010 were $41.1 million, an increase
of $0.7 million (2%) when compared to the same period in 2009. The increase was
primarily due to higher costs for maintenance materials and supplies ($2.1
million) which primarily resulted from the mill shutdown in July 2010, higher
electricity costs ($1.2 million) and higher camp catering cost ($0.3 million),
partially offset by a favorable price and consumption variance for grinding
media ($1.5 million) and reduced reagent costs in particular carbon ($0.8
million).


Site administration costs for the first nine months of 2010 were $25.2 million.
This is a reduction of $3.3 million (12%) when compared to the same period 2009.
The reduction is as a result of allocating camp catering costs to other
departments ($4.5 million), partially offset by higher insurance costs ($0.7
million) and higher technical consultants for the continuous improvement program
($0.4 million).


The ultimate impact of these cost changes on the reported results for cost of
sales is dependent on the relative levels of capital and operating activities
and the buildup or drawdown of inventories during the periods presented. On a
unit cost basis, cost of sales per ounce sold for the first nine months of 2010
decreased to $443 per ounce compared to $641 per ounce for the same period in
2009 mainly due to higher sales volumes and the decrease in cash operating
costs.


Total cash cost per ounce produced in the first nine months of 2010 was $512
compared to $651 per ounce for the same period in 2009. This reduction is
predominantly due to higher production and lower operating costs. Total cash
cost per ounce produced is a non-GAAP measure and is discussed under "Non-GAAP
Measures".


Kumtor Regional Administration

Bishkek Administration costs for the first nine months of 2010 were $10.7
million, $0.5 million or 5% higher than the same period 2009. This increase is
primarily a result of increased contributions to the local communities impacted
by the June 2010 disturbances in the country.


Depreciation and Amortization

Depreciation, depletion and amortization was $41.6 million in the first nine
months of 2010, a decrease of $11.6million over the same period of 2009 mainly
due to an extension to the life of mine in late 2009 leading to slower
amortization of assets depreciated on the units of production method. This
decrease was partially offset by higher mine and mill production in the first
nine months of 2010 leading to an increase in depreciation for mining and
milling assets and by an increase in additions to capital in the first nine
months of 2010 in comparison with the same period of 2009.


Revenue-based Tax - Kumtor

Revenue-based tax totaled $58.2 million in the first nine months of 2010
compared to $23.3 million in the comparative 2009 period. The increase reflects
the increased revenue in 2010 and the fact that the new revenue-based tax took
effect from April 30, 2009.


Exploration

Exploration costs for the first nine months of 2010 were $7.8 million, $1.1
million or 12% lower than the same period of 2009. The decrease was mainly due
to lower contractor labour services ($0.6 million) and lower exploration
materials and supplies ($0.5 million) which resulted from a delay in exploration
activities.


Capital Expenditures

Capital expenditure for the first nine months of 2010 was $133.2 million
compared to $57.3 million in the same period of 2009. This consisted of $31.6
million of sustaining capital, predominately spent on the heavy duty equipment
overhaul program ($14.4 million). Other sustaining capital expenditures included
shear key, buttress and tailings dam construction ($6.1 million), the
replacement of 4 dozers ($4.2 million), the 2010 waste dump expansion ($1.9
million), the SAG mill girth gear quadrant replacement ($1.1 million), the SAG
mill re-alignment ($0.7 million) and other projects totaling ($3.2 million).
Growth capital investment totaled $101.6 million spent mainly on the underground
development ($27.1 million) and the mine expansion, including the purchase of
CAT 789 haul trucks ($57.7 million), Liebherr shovel ($4.0 million), track
dozers ($2.6 million), tired dozer ($1.1 million), drills ($2.1 million), the
purchase of Mack tractors and fuel trailers ($1.2 million) and the expansion of
the camp ($1.2 million).


BOROO and GATSUURT

The Boroo open pit mine, located in Mongolia, was the first hard rock gold mine
in Mongolia. To date it has produced approximately 1.4 million ounces of gold
since it began operation in 2004. During the third quarter of 2010, there was
one lost time injury and four level I and one level II environmental incidents
(non-reportable incidents).


Heap leach operations at Boroo remain under care and maintenance. The Company
continues to work with the Mongolian authorities to obtain the final heap leach
operating permit. See "Other Corporate Developments- Mongolia".


Three-Month Period ended September 30, 2010 Compared with the Three-Month Period
Ended September 30, 2009


Revenue and Gold Production

Revenue in the third quarter of 2010 increased to $33.3 million from $29.8
million in the third quarter of 2009 primarily as a result of a higher realized
gold price, partially offset by lower ounces sold (27,072 ounces in the third
quarter of 2010, compared to 30,803 ounces sold in the same period of 2009).
Boroo produced 27,551 ounces of gold in the third quarter of 2010 compared to
32,422 ounces of gold in the same quarter of 2009. The milling operation
experienced lower recovery and lower ore grades. The heap leach operation
remained idle during the third quarter 2010 awaiting issuance of the final
operating permit from the Mongolian government. In the third quarter of 2009,
heap leach production was 4,322 ounces. The milling ore grade averaged 1.97 g/t
with a recovery of 69.8% in the third quarter of 2010, compared to 2.45 g/t with
a recovery of 76.0% in the same quarter of 2009.


The average realized gold price per ounce in the third quarter of 2010 was
$1,228 compared to $967 in the same period of 2009.


Cost of Sales

Cost of sales increased in the third quarter of 2010 to $11.9 million compared
to $11.7 million in same period of 2009.


Operating cash costs at Boroo increased by $2.2 million compared to the same
period in 2009. The third quarter year over year operating cost variance can be
explained as follows:


Mining costs for the third quarter in both 2010 and 2009 remained unchanged at
$3.8 million


Milling costs for the third quarter 2010 were $5.4 million, $2.1 million or 63%
higher than the same quarter in 2009. This primarily results from higher costs
for electricity, reagents and grinding media. Electricity unit costs increased
to $0.058 per kilowatt hour in the third quarter of 2010 compared to $0.046 per
kilowatt hour in the same period of 2009 ($0.2 million). Consumption levels in
the third quarter 2010 were higher as a result of the suspension of operations
in July 2009. The increase in tonnes ore milled resulted in higher consumption
of electricity, reagents and grinding media ($0.6 million). Additionally, higher
maintenance related costs were incurred in the third quarter 2010 compared to
the same period in 2009 ($0.8 million), largely because of the SAG mill reline
performed in the third quarter 2010. The revised collective agreement for
national employees, effective from July 1, 2010 contributed an additional $0.2
million in the third quarter 2010 compared to the same period in 2009.


Costs associated with the heap leach operation during the third quarter of 2010
were $0.5 million or 49% lower than the same period in 2009 as a result of the
expiry of the temporary operating permit for the heap leach operation in April
2009. The heap leach operation remained idle during the third quarter 2010
awaiting issuance of the final operating permit from the Mongolian government.
No cyanide has been added to the heap leach pad since the operating permit
expired.


Site administration costs for the third quarter 2010 were $2.2 million, $0.3
million or 13% higher than the same quarter in 2009. This is mainly due to
reclassification of expense elements from regional administration to the site
administration such as insurance and permit fees.


Royalties increased by $0.4 million, primarily due to higher sales revenue
achieved for the third quarter of 2010 compared to the same period in 2009.


The ultimate impact of these cost changes on the reported results for cost of
sales is dependant on the relative levels of capital and operating activities
and the buildup or drawdown of inventories during the periods presented. On a
cash unit cost basis, cost of sales per ounce sold for the third quarter of 2010
increased to $440 from $354 for the same period in 2009 mainly as a result of
higher operating costs.


Total cash cost per ounce produced in the third quarter 2010 was $575 compared
to $411 per ounce for the same period in 2009. The increase in the cash cost per
ounce results from increased operating costs and lower ounces produced mainly
due to lower grades and lower recoveries. Total cash cost per ounce produced is
a non-GAAP measure and is discussed under "Non-GAAP Measures".


Boroo Regional Administration

Regional administration costs for the third quarter 2010 were $2.1 million, $0.3
million or 20% higher than the same quarter in 2009, mainly due to higher social
development funds spent in the third quarter of 2010.


Depreciation and Amortization

Depreciation, depletion and amortization in the third quarter 2010 totaled $3.9
million, a decrease of $2.3 million or 37% as compared to the same period in
2009. The decrease was mainly due to an increase in mine ore reserves and an
extension of the mine life at Gatsuurt at the end of 2009 leading to a longer
amortization period of the mill assets depreciated on the unit of production
method in the third quarter of 2010. In addition the third quarter 2010 included
lower amortization of pit 3 pre-stripping costs than the comparative quarter of
2009.


Exploration

Exploration expenditures in Mongolia increased to $2.2 million in the third
quarter of 2010 from $0.9 million in the same period of 2009. This is primarily
due to additional drilling activities performed at Gatsuurt and other projects
in the country.


Capital Expenditures

Capital expenditures spent and accrued at Boroo in the third quarter of 2010
increased to $3.5 million compared to $0.6 million in the same period of 2009,
which included $1.0 million of sustaining capital mainly for heavy equipment
component change-outs required for the fleet. Growth capital totaled $2.5
million which was incurred to add a new lift to the main tailings dam wall to
accommodate future production including Gatsuurt oxide ores. At Gatsuurt, $1.3
million was spent in the third quarter 2010 for site development, as compared to
the same quarter in 2009 where $2.2 million was spent and accrued.


Nine-Month Period ended September 30, 2010 Compared with the Nine-Month Period
Ended September 30, 2009


Revenue and Gold Production

Revenue in the first nine months of 2010 increased to $107.8 million from $101.0
million in the same period of 2009 primarily as a result of higher average
realized gold price per ounce of $1,175 in the first nine months of 2010
compared to $916 in the same period of 2009.


The impact of the higher average realized gold price per ounce on revenue was
partially offset by fewer ounces sold. In the first nine months 2010, 91,737
ounces of gold were sold compared to 110,213 ounces sold in the same period of
2009. Boroo produced 89,706 ounces of gold in the first nine months of 2010
compared to 101,597 ounces of gold in the same period of 2009. During the first
nine months of 2010, the milling operation achieved increased recovery which was
partially offset by lower milling grades. The mill head grade averaged 1.97 g/t
with a recovery of 72.6% in the first nine months of 2010, compared to 2.41 g/t
with a recovery of 69.7% in the same period of 2009. Recovery was improved by
the less refractory ore fed to the mill in the first nine months of 2010
compared to the same period in 2009. The heap leach operation remained idle in
the first nine months of 2010, pending issuance of the final permitting by the
Mongolian government authorities. In the first nine months of 2009 heap leach
production totaled 22,985 ounces.


Cost of Sales

Cost of sales decreased in the first nine months of 2010 to $36.4 million
compared to $46.8 million in same period of 2009. The decrease results primarily
from the lower ounces sold in the first nine months of 2010 partially offset by
higher operating costs and royalties.


Operating cash costs at Boroo increased by $2.9 million over the first nine
months of 2009. This increase can be explained as follows:


Mining costs for the first nine months of 2010 were $15.1 million, $1.7 million
or 13% higher than the same period in 2009. This primarily results from
increased diesel costs at an average of $0.85 per liter in the first nine months
of 2010 compared to $0.69 per liter in the same period of 2009 ($0.9 million)
and higher consumption ($1.1 million) resulting from the increased distances as
mining progresses deeper in pit 3.


Milling costs for the first nine months of 2010 were $15.8 million, $3.1 million
or 25% higher than the same period in 2009. This primarily results from higher
costs for electricity, reagents and grinding media. Electricity unit cost
increased to $0.056 per kilowatt hour in the first nine months of 2010 compared
to $0.047 per kilowatt hour in the same period of 2009 ($0.5 million).
Consumption levels in the first nine months of 2010 were higher primarily as a
result of the suspension of operations which ended July 27, 2009. The increase
in tonnes of ore milled resulted in higher consumption of electricity, reagents
and grinding media ($0.9 million). In addition, maintenance costs increased by
$0.6 million compared to the same period in 2009 due to increased maintenance
performed at the mill crusher, grinding and decant line; mine equipment rented
for the mill crusher increased $0.4 million compared to 2009. The revised
collective agreement for national employees, effective from July 1, 2010
contributed an additional $0.2 million in the first nine months of 2010 compared
to the same period in 2009


Costs for the heap leach operations were $3.0 million lower than the same period
in 2009 due to the expiry of the temporary operating permit for the heap leach
operation in April 2009. The heap leach operation remained idle during the third
quarter 2010 awaiting issuance of the final operating permit from the Mongolian
government.


Site administration costs for the first nine months of 2010 were $6.1 million,
$0.4 million or 7% higher than the same period in 2009.


Royalties increased by $0.5 million, primarily due to higher sales revenue
achieved for the first nine months of 2010 compared to the same period in 2009.


The ultimate impact of these cost changes on the reported results for cost of
sales is dependant on the relative levels of capital and operating activities
and the buildup or drawdown of inventories during the periods presented. On a
unit cost basis, cost of sales per ounce sold increased to $397 in the first
nine months of 2010 compared to $388 in the same period of 2009.


Total cash cost per ounce produced in the first nine months of 2010 was $558
compared to $466 per ounce for the same period in 2009. The increase in the unit
cash cost per ounce results from the lower ounce production, mainly due to heap
leach license suspension and increased operating costs noted previously. Total
cash cost per ounce produced is a non-GAAP measure and is discussed under
"Non-GAAP Measures".


Mine Standby Costs

Standby costs at the Boroo mine during the first nine months of 2009 totalled
$4.1 million as a result of the operation's suspension due to a labour dispute
and a temporary suspension of the main mining license by the Mongolian
authorities. Although the main operating license was re-instated on July 27,
2009, the heap leach operation continues to be on care and maintenance pending
issuance of the final operating permit.


Boroo Regional Administration

Regional administration costs in the first nine months of 2010 were $5.3
million, $0.2 million or 4% lower than the same period in 2009.


Depreciation, Depletion and Amortization

Depreciation, depletion and amortization in the first nine months of 2010
totaled $13.8 million, a decrease of $6.8 million or 33% as compared to the same
period in 2009. This was mainly due to an increase in mine ore reserves at
Gatsuurt and an extension of the mine life in late 2009 leading to slower
amortization of assets depreciated on the unit of production method in the first
nine months of 2010. In addition the first nine months of 2010 included lower
amortization of pit 3 pre-stripping costs than the first nine months of 2009.


Exploration

Exploration expenditures in Mongolia increased to $4.9 million in the first nine
months of 2010 from $1.7 million in the same period of 2009. This is primarily
due to additional drilling activities performed at Gatsuurt, Ulaan Bulag and
other projects in the country.


Capital Expenditures

Capital spent and accrued at Boroo in the first nine months of 2010 increased to
$6.9 million compared to $0.9 million in the same period of 2009, which included
$2.8 million of sustaining capital mainly for heavy equipment component
change-outs required for the fleet. Growth capital at Boroo totalled $4.1
million which was incurred for the tailings dam expansion to accommodate future
production of Boroo and Gatsuurt oxide ores. At Gatsuurt, $16.3 million was
invested in the first nine months of 2010 on road building and site development.


Other Financial Information - Related Party Transactions

Kyrgyzaltyn and the Government of the Kyrgyz Republic

Effective June 11, 2009, revenues from the Kumtor mine are subject to a
management fee of $1.00 per ounce (inclusive of taxes) based on sales volumes
(previously $1.50 per ounce), payable to Kyrgyzaltyn JSC ("Kyrgyzaltyn"), which
holds approximately 33% of the outstanding common shares of Centerra.


The table below summarizes the management fees and concession payments and
accruals by Kumtor Gold Company ("KGC"), a subsidiary of the Company, to
Kyrgyzaltyn or the Government of the Kyrgyz Republic, and the amounts paid and
accrued by Kyrgyzaltyn to KGC according to the terms of a Restated Gold and
Silver Sales Agreement between Kumtor Operating Company ("KOC", a subsidiary of
the Company), Kyrgyzaltyn and the Kyrgyz Republic.




----------------------------------------------------------------------------
                                   Three months ended     Nine months ended 
($ thousands)                            September 30          September 30 
----------------------------------------------------------------------------
                                      2010       2009       2010       2009 
----------------------------------------------------------------------------
Management fees paid by KGC to                                              
 Kyrgyzaltyn                            66        135        358        343 
----------------------------------------------------------------------------
Concession payments paid by KGC                                             
 to Kyrgyz Republic                      -          -          -    (116(i))
----------------------------------------------------------------------------
Total                                   66        135        358        227 
----------------------------------------------------------------------------
Gross gold and silver sales from                                            
 KGC to Kyrgyzaltyn                 82,547    129,642    416,952    261,940 
----------------------------------------------------------------------------
Deduct: refinery and financing                                              
 charges                              (331)      (603)    (1,629)    (1,333)
----------------------------------------------------------------------------
Net sales revenue received by                                               
 KGC from Kyrgyzaltyn               82,216    129,039    415,323    260,607 
----------------------------------------------------------------------------
(i) Credit balance relates to a reversal of the concession tax accrued in   
    2008 for the last shipment in 2008, as per the Restated Investment      
    Agreement.                                                              



Gold produced by the Kumtor mine is purchased at the mine site by Kyrgyzaltyn
for processing at its refinery in the Kyrgyz Republic pursuant to a Gold and
Silver Sales Agreement which was amended and restated effective June 6, 2009.
Under this amended and restated agreement Kyrgyzaltyn is required to pay for
gold within 12 calendar days of shipment from the Kumtor mill at a price that is
fixed based on the London PM fixed price of gold on the London Bullion Market.
The obligations of Kyrgyzaltyn are partially secured by a pledge of 2,850,000
shares of Centerra owned by Kyrgyzaltyn, the value of which fluctuates with the
market price.


At the request of the Kyrgyz government, the Company agreed in August 2010 to
make advances of $11 million against future revenue-based taxes ($8 million was
advanced in the third quarter and the balance of $3 million was advanced in
October 2010). The advances will be applied against the 2010 revenue-based taxes
otherwise payable in January 2011.


As at September 30, 2010, the Company had a receivable of $26.7 million from
Kyrgyzaltyn (December 31, 2009 - $37.9 million).


Quarterly Results - Last Eight Quarters

Over the last eight quarters, Centerra's results reflect the positive impact of
rising gold prices, increased gold production at Kumtor, partially offset by
rising cash costs and lower production at Boroo. In 2009, production at Kumtor
was impacted by the unplanned mining of ice and the removal of waste in the
vicinity of the central pit. Unusual items of $49.3 million were recorded in the
third quarter of 2009 as a result of the ratification of the revised taxation
arrangements with the Kyrgyz Republic.




----------------------------------------------------------------------------
$ millions, except per share                                                
 data                                 2010               2009           2008
----------------------------------------------------------------------------
                                   Q3   Q2   Q1   Q4   Q3    Q2     Q1    Q4
----------------------------------------------------------------------------
Revenue                           115  152  255  324  159   104     98   241
----------------------------------------------------------------------------
Net earnings (loss)                18   30  122  140   20   (80)   (20)   43
----------------------------------------------------------------------------
Earnings (loss) per share (basic                                            
 and diluted)                    0.07 0.13 0.52 0.60 0.09 (0.36) (0.09) 0.20
----------------------------------------------------------------------------



Other Corporate Developments

Boroo/Gatsuurt

At the Boroo operation, the mining phase is coming to an end and mining
activities will cease at the end of November 2010. The Boroo mill will continue
to operate until mid-2011 processing stockpiled ores. Because of delays in
receiving the necessary approvals and commissioning of the Gatsuurt project due
to uncertain impact of the water basin and forest law, the Company will layoff
of approximately 250 workers at Boroo on December 1, 2010, which the Company had
originally planned to redeploy from Boroo to Gatsuurt. The Company continues its
constructive discussions with the Government of Mongolia to resolve uncertainty
resulting from the water basin and forests law. See "Mongolia - Mongolian
Legislation" below.


Kumtor

At the Kumtor operation, production at the mine was suspended on October 1, 2010
after the unionized employees commenced an illegal work stoppage on October 1,
2010. The strike was settled on October 10, 2010 and workers returned to work
that evening. A new collective agreement was ratified by the union and will
expire on December 31, 2012.


Inaugural Annual Dividend

As part of the Company's long-term strategy to maximize shareholder value, the
Company's inaugural annual dividend of Cdn$0.06 per common share was paid on
September 8, 2010 to shareholders of record at the close of business on August
18, 2010. It is the intention of the Board of Directors to review the amount of
the dividend on an annual basis depending upon the Company's cash balances,
operating cash flows, anticipated capital requirements for future growth and the
yields of comparable companies' dividend rates.


Board Appointments

In accordance with the restated shareholders agreement between the Company and
Kyrgyzaltyn JSC dated as of June 6, 2009 (the "Restated Shareholders
Agreement"), Centerra appointed Mr. Amandgeldy Muraliev and Mr. Karybek Ibraev
to the Board of Directors August 19, 2010.


Mr. Muraliev, a Kyrgyz citizen, has extensive experience in politics, including
being the Prime Minister of the Kyrgyz Republic from 1999 to 2000, and later
being a member and advisor to the Ministry of Economic Development and Trade of
the Kyrgyz Government. Mr. Muraliev is the First Vice Prime Minister of the
Interim Government of the Kyrgyz Republic, and the Chairman of the Board of
Directors of Kyrgyzaltyn JSC, a shareholder of the Company. Mr. Muraliev
received degrees from the Academy of National Economy under the USSR Council of
Ministers and the Frunze Polytechnic Institute.


Mr. Ibraev, a Kyrgyz citizen, has extensive experience in the mining industry.
Mr. Ibraev is a consultant with the Extractive Industries Transparency
Initiative (EITI) Secretariat in the Kyrgyz Republic. Mr. Ibraev is also a
former executive director of the Kyrgyz Mining Association. Mr. Ibraev is a
member of the Kyrgyz Mining Association and received degrees from the L'Ecole de
Mine de Paris, and the Moscow Geological Exploration Institute. In accordance
with the Restated Shareholders Agreement, Mr. Ibraev is independent from the
Kyrgyz government.


On August 19, 2010, Mr. Raphael Girard was also appointed to Centerra's Board of
Directors. Mr. Girard is a public policy and international business consultant
who retired from the Department of Foreign Affairs in August 2003. Prior to his
retirement, Mr. Girard was the Canadian Ambassador to Romania, and earlier to
the Federal Republic of Yugoslavia. Mr. Girard was a member of the Board of
Directors of Gabriel Resources Ltd. from 2005 to 2010. Mr. Girard received his
Bachelor of Arts degree from the University of British Columbia.


Kyrgyz Republic

Parliamentary elections were held in the Kyrgyz Republic on October 10, 2010.
According to reports the elections were carried out according to accepted
democratic standards and the results reflect the will of the electorate. Five
parties have received sufficient votes to be represented in the Parliament.
Currently, the parties are in talks to form a governing coalition. While
political and civil conditions appear to have stabilized, the political
situation in the Kyrgyz Republic continues to evolve and there can be no
assurances that future political developments will not have a significant
adverse impact on the Company's assets or operations.


Mongolia

Mongolian Regulatory Matters

The regulatory conditions in Mongolia have not changed substantially since
Centerra's second quarter 2010 report. During the quarter however, progress was
made in the development of dispute resolution mechanisms through a commitment
made by the Prime Ministers of both Canada and Mongolia to press forward on the
conclusion of a Foreign Investment Protection Agreement. The following
discussion summarizes the current status of Mongolian regulatory matters
affecting Centerra.


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 Mongolian
General Department of Specialized Inspection ("SSIA"). While the suspension was
lifted on July 27, 2009, several issues arising from the inspection 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 Boroo Gold
Company Ltd. ("BGC") paid all relevant royalties and taxes with respect to gold
produced from the heap leach facility during that period. 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 efforts to obtain a
final permit for the operation of its heap leach facility at the Boroo mine.


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
has held discussions with the Ministry of Finance regarding such concerns and
has received no further notice from the Ministry of Finance with respect to the
possible termination of the Boroo Stability Agreement. While the Company
believes that the issues raised by the Ministry of Finance and the SSIA will be
resolved through negotiations without a material impact on the Company, there
can be no assurance that this will be the case.


Mongolian Legislation

The legislative conditions in Mongolia have not changed substantially since
Centerra's second quarter 2010 report. The commissioning of the Gatsuurt project
has been delayed as a result of the uncertain impact of the Water and Forest
Law. The following discussion summarizes the current status of certain Mongolian
legislation that may affect Centerra, including its Gatsuurt project and other
Mongolian mineral licenses.


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 (the "Water and Forest 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 exempt. In March 2010, the Company received a letter from MRAM
stating that certain of its mining and exploration licenses, including the
Gatsuurt mining licenses, could be revoked under the Water and Forest Law. The
letter requested that the Company submit an estimate of expenses incurred in
relation to each license and the compensation that it would expect to receive if
such licenses were to be revoked. The Company has provided a detailed estimate
to MRAM for all potentially affected licenses. The Company has submitted a draft
Investment Agreement for the Gatsuurt Project to the Ministry of Mineral
Resources and Energy ("MMRE"). In April 2010, the Company received a letter from
the MMRE indicating that the Gatsuurt licenses are within the area designated on
a preliminary basis where minerals mining is prohibited under the Water and
Forest Law. The letter also stated that the MMRE will communicate with the
Company regarding the investment agreement when the MMRE has more clarity on the
impact of the law. 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. While the Company has continued to receive permits and
approvals in connection with the road construction to Gatsuurt and for
construction of surface facilities at the project, further approvals and
commissioning of the project have been delayed as a result of the Water and
Forest Law.


In August 2009, the Government of Mongolia repealed its windfall profit tax of
68% in respect of gold sales at a price in excess of US$850 an ounce, with the
repeal to take effect on January 1, 2011.


Other

On July 2, 2010, the Company closed the sale of its REN interest to Homestake
Mining Company of California ("Homestake"), a subsidiary of Barrick Gold
Corporation, for cash proceeds of $35.2 million and a resulting net gain of
$34.9 million.


For information on forward-looking information see "Caution Regarding
Forward-looking Information".


Critical Accounting Estimates

Centerra prepares its consolidated financial statements in accordance with
Canadian GAAP. In doing so, management is required to make various estimates and
judgments in determining the reported amounts of assets and liabilities,
revenues and expenses for each year presented and in the disclosure of
commitments and contingencies. Management bases its estimates and judgments on
its own experience, guidelines established by the Canadian Institute of Mining,
Metallurgy and Petroleum and various other factors believed to be reasonable
under the circumstances. In reference to the Company's significant accounting
policies as described in note 3 to the December 31, 2009 Consolidated Financial
Statements management believes the following critical accounting policies
reflect its more significant estimates and judgments used in the preparation of
the consolidated financial statements.


Inventories of broken ore, heap leach ore, in-circuit gold and gold dore are
valued at the lower of average production cost and net realizable value, while
consumable supplies and spares are valued at the lower of weighted-average cost
and replacement cost. Determination of realizable value or replacement costs
requires estimates to be made for costs to complete and sell inventory.
Management periodically makes estimates regarding whether an allowance is
necessary for slow moving or obsolete consumable supplies and spares
inventories.


Depreciation and depletion of property, plant and equipment directly involved in
mining and milling operations is primarily calculated using the "unit of
production" method. This method allocates the cost of an asset to each period
based on current period production as a portion of total lifetime production or
a portion of estimated recoverable ore reserves. Estimates of lifetime
production and amounts of recoverable reserves are subject to judgment and could
change significantly over time. If actual reserves prove to be significantly
different than the estimates, there would be a material impact on the amounts of
depreciation and depletion charged to earnings.


Mobile equipment and other administrative-type assets are depreciated according
to the straight-line method, based on an estimate of their useful lives.


Significant decommissioning and reclamation activities are often not undertaken
until substantial completion of the useful lives of productive assets.
Regulatory requirements and alternatives with respect to these activities are
subject to change over time. A significant change to either the estimated costs
or recoverable reserves would result in a material change in the amount charged
to earnings.


If it is determined that carrying values of property, plant and equipment cannot
be recovered, then the asset is written down to fair value. Similarly, Centerra
tests goodwill at least annually for impairment to ensure that the fair value
remains greater than or equal to book value. Any excess of book value over fair
value is charged to income in the period in which the impairment is determined.
Recoverability and fair value assessments are dependent upon assumptions and
judgments regarding future prices, costs of production, sustaining capital
requirements and economically recoverable ore reserves and resources. A material
change in assumptions may significantly impact the potential impairment of these
assets.


The Company uses the asset and liability method of accounting for future income
taxes. Under this method, current income taxes are recognized for the estimated
income taxes payable for the current year. Future income tax assets and
liabilities are recognized for temporary differences between the tax and
accounting bases of assets and liabilities, calculated using the currently
enacted or substantively enacted tax rates anticipated to apply in the period
that the temporary differences are expected to reverse. Future income tax
inflows and outflows are subject to estimation in terms of both timing and
amount of future taxable earnings. Should these estimates change the carrying
value of income tax assets or liabilities may change.


Grants under our stock-based compensation plans are accounted for in accordance
with the fair-value-based method of accounting. For stock-based compensation
plans that will settle through the issuance of equity such as stock options, the
fair value of stock options is estimated on the date of grant using the Black-
Scholes option pricing model, while for the cash-settled stock-based
compensation, fair value is determined based on the market value of the
Company's common shares at the reporting date. In addition, option valuation
models require the input of certain assumptions including expected share price
volatility.


Changes in Accounting Policies

There were no new accounting policies adopted during the three months and nine
months ended September 30, 2010.


New Pronouncements

The Canadian Institute of Chartered Accountants issued three accounting
standards in January 2009 which take effect January 1, 2011: Section 1582,
Business Combinations, Section 1601, Consolidated Financial Statements and
Section 1602, Non-Controlling interests.


Section 1582 replaces section 1581 and establishes standards for the accounting
of a business combination. It provides the Canadian equivalent to the
International Financial Reporting Standards ("IFRS") 3 - Business Combinations.
The section applies prospectively to business combinations for which the
acquisition date is on or after the beginning of the first annual reporting
period beginning on or after January 1, 2011.


Sections 1601 and 1602 together replace section 1600, Consolidated Financial
Statements. Section 1601, establishes standards for the preparation of
consolidated financial statements. Section 1601 applies to interim and annual
consolidated financial statements relating to fiscal years beginning on or after
January 1, 2011. Section 1602 establishes standards for accounting of a
non-controlling interest in a subsidiary in consolidated financial statements
subsequent to a business combination. It is equivalent to the corresponding
provisions of IFRS lAS 27 - Consolidated and Separate Financial Statements and
applies to interim and annual consolidated financial statements relating to
fiscal years beginning on or after January 1, 2011.


The Company does not anticipate that the adoption of these standards will impact
its financial results.


Status of Centerra's Transition to International Financial Reporting Standards
("IFRS")


As previously disclosed, the IFRS project is now in its final phase, the
implementation phase. During the first quarter 2010, the Company initiated work
to quantify its opening balance sheet as of January 1, 2010 under IFRS, applying
the IFRS1 elections/exemptions and accounting policies it selected during the
development work performed in 2009. During the third quarter 2010, the IFRS
opening balance sheet was reviewed with the Company's Audit Committee of the
Board.


During the third quarter 2010, the Company completed work on the conversion of
its second quarter 2010 financial statements to IFRS standards. The converted
financial statements have been discussed with the Company's Audit Committee. The
Company is working with its auditors during the conversion process.


Full auditor attestation of the 2010 converted IFRS statements will be provided
at the conclusion of the annual audit of the 2011 financial statements which is
scheduled to be completed during the first quarter of 2012.


Impact of Adopting IFRS on the Company's Opening Balance Sheets

Standards under IFRS are based on a conceptual framework similar to Canadian
GAAP, however, significant differences exist in certain matters of recognition,
measurement and disclosure. While the Company believes that the adoption of IFRS
will not have a material impact on the Company's reported cash flows, it will
likely have a more significant impact on the consolidated balance sheets and
statements of income. In particular, the Company's opening balance sheet will
reflect the fair value of the provision for reclamation (Decommissioning
Liabilities) and liability resulting from cash-settled share-based compensation.
In addition, a portion of the book value of the Property Plant and Equipment
associated with the Asset Retirement Obligation will be increased. Finally, all
changes to the opening balance sheet will require that a corresponding tax asset
or liability be established based on the resultant differences between the
carrying value of assets and liabilities and their associated tax bases. Certain
income statement items such as depreciation, depletion and amortization expense,
accretion and share based compensation expense are also expected to be impacted.


The Company's estimate of the impact of the conversion to IFRS will decrease
opening retained earnings by approximately $6.9 million. As a result the
retained earnings under Canadian GAAP as at December 31, 2009 decreased from
$272 million to $265 million. The following summarizes the preliminary
quantitative impact of differences between Canadian GAAP and IFRS in the
Company's more significant accounting policies and from its transition elections
from Canadian GAAP to IFRS as of January 1, 2010.




                                         Summary of Opening Balance Sheet   
                                                      Impact                
                                       -------------------------------------
                                           Assets  Liabilities  Opening R/E 
                              Notes       Dr (Cr)      Dr (Cr)      Dr (Cr) 
                                       -------------------------------------
                                                                            
Provision for reclamation   (i) & (ii)        1.3         (4.3)         3.0 
Share-based compensation      (iii)             -         0.08        (0.08)
Future income taxes            (iv)          (2.9)        (1.1)         4.0 
                                       -------------------------------------
                                             (1.6)        (5.3)         6.9 
                                       -------------------------------------
                                       -------------------------------------



Adjustments to IFRS opening balance sheet as at the transition date

This discussion has been prepared using the IFRS standards and interpretations
currently issued and expected to be in force during 2011, the Company's first
annual IFRS reporting period. It should be noted that should the regulatory
environment or standards substantially change from those currently defined, the
Company's elections and accounting policy selections may be modified
accordingly. This change would potentially affect the underlying values and
results of the Company's opening balance sheet at January 1, 2010. At the
present time however, we are not aware of any significant expected changes that
would materially impact the summary presented below.


i.) Provision for reclamation and rehabilitation (Decommissioning Liabilities) 

Under IFRS, a liability must be recognized at the time when the entity becomes
legally or constructively obliged to rehabilitate a disturbance resulting from
mining activities, while under Canadian GAAP, a liability is only recognized
when the entity is legally bound. Discount rates used should reflect the risks
specific to the decommissioning provision. Unlike IFRSs, under Canadian GAAP
discount rates for asset retirement obligations are based on the entity's
credit-adjusted risk-free rate. IFRS requires re-measurement of the liability at
each reporting date whereas Canadian GAAP requires re-measurement of the
liability in the event of changes in the amount or timing of cash flows required
to settle the obligation. Over and above this, IAS 37, Provisions, Contingent
Liabilities and Contingent Assets, requires the re-measurement of the provision
for reclamation and rehabilitation if there is a change in the current market
based discount rate. However under CGAAP HB 3110 Asset Retirement Obligations,
the provision for reclamation and rehabilitation is not adjusted for changes in
the discount rate.


The use of the current discount rate for all changes in estimates combined with
the requirement to re- measure the liability at each reporting date under IFRS
will significantly simplify the process required to measure any restoration
liabilities as there will no longer be a need to record separate layers for the
original liability and each subsequent upward revision in estimated cash flows.
As a result, the ARO liability under IFRS has been re-measured using the risk
free discount rate in effect at December 31, 2009 resulting in an adjustment of
$4.2 million recorded as an increase to the provision for reclamation.


ii.) Property, Plant and Equipment 

Under IFRIC 1, Changes in Decommissioning, Restoration and Similar Liabilities,
contains guidance on accounting for changes in decommissioning, restoration and
similar liabilities due to timing in the revision of estimated outflows and
revisions to the risk free discount rate. Where these changes occurred, these
changes are required to be capitalized as part of the cost of the underlying
assets and depreciated prospectively over the remaining life of the asset to
which they relate.


Due to the adjustments to the provision for reclamation discussed in (i) above,
the book value of the property, plant and equipment at January 1, 2010 increased
by $1.3 million.


iii.) Share-based payments 

In certain circumstances, IFRS requires a different measurement of stock-based
compensation related to cash settled share-based compensation than current
Canadian GAAP. While there is convergence in that share based payments are
recognized as an expense, there are a number of measurement differences. IFRS
requires that cash-settled share based payments be accounted for using a fair
value method, as opposed to an intrinsic value under Canadian GAAP. IFRS
requires that when the employee has the choice of settling for cash or shares,
the entity has been deemed to have granted a compound instrument and must
account for the debt and equity components separately. Unlike IFRSs, Canadian
GAAP requires that when the employee has the choice of settling for cash or
shares, the award is accounted for as a liability based on its intrinsic value.
If modifications are made to share based payments, differences could arise due
to the specific guidance in IFRS that is absent from Canadian GAAP.


IFRS 2, Share Based Payments was applied for applicable liabilities arising from
cash settled share-based payment transactions that existed at December 31, 2009.
Under Canadian GAAP, the liability for cash- settled share-based payments is
accrued based upon the intrinsic value (mark-to-market) of the award. However
the liability for cash-settled share-based awards is measured, under IFRS, at
the fair value of the vested awards using the Monte Carlo model. Changes in fair
value are recognized in the period of change until the liability is settled.


Consequently, as a result of the difference in measurement at December 31, 2009,
an adjustment of $0.08 million was recorded to decrease the outstanding
liability related to cash-settled share-based compensation ("PSU") included as
part of accounts payables and accrued liabilities.


iv.) Income Taxes

IAS 12, Taxes contains different guidance related to the recognition and
measurement of future income taxes. It requires the recognition of future taxes
in situations not required under Canadian GAAP. Specifically, a future tax
liability (asset) is recognized for exchange gains and losses relating to
foreign non- monetary assets and liabilities that are re-measured into the
functional currency using historical exchange rates. Similar timing differences
are also recognized for the difference in tax bases between jurisdictions as a
result of the intra-group transfer of assets


Furthermore, Canadian GAAP requires that the current and long term portions of
future income tax assets, and future income tax liabilities, be shown separately
on the financial statements, whereas IFRS does not. As a result of differences
in recognition and measurement under IFRS and CGAAP, a decrease to the future
income tax asset of $2.9 million associated with Boroo was derecognized and
adjusted to opening retained earnings. An additional $1.04 million of future
income tax liability was recognized as the deferred tax effect on differences
between CGAAP and IFRS, described in (i) to (iii) above.


v.) Impact of ongoing or future IFRS to Canadian GAAP differences 

a.) Impairment of Assets

IAS 36, Impairment of Assets, uses a one-step approach for both testing for and
measurement of impairment, with asset carrying values compared directly with the
higher of fair value less costs to sell and value in use, which is based on
discounted future cash flows. Canadian GAAP, on the other hand, generally uses a
two-step approach to impairment testing of long-lived assets and finite-life
intangible assets by first comparing asset carrying values with undiscounted
future cash flows to determine whether impairment exists. If it is determined
that there is impairment under this basis, the impairment is then calculated by
comparing the asset carrying values with fair values (on a discounted basis) in
much the same manner as computed under IFRS. Additionally under IFRS, testing
for impairment occurs at the level of cash generating units, which is the lowest
level of assets that generate largely independent cash inflows. This lower level
of grouping compared to CGAAP along with the one-step approach to testing for
impairment may or may not increase the likelihood that the Company will realize
an impairment of assets under IFRS. It should also be noted that under IAS 36,
previous impairment losses can be reversed when there are indications that
circumstances have changed whereas Canadian GAAP prohibits reversal of
non-financial asset impairment losses.


As at January 1, 2010, impairment testing was performed in accordance with the
provisions of IFRS. The result indicated no impairment of the assets or
goodwill.


The Company's IFRS based accounting policies related to impairment of
non-financial assets will be changed to reflect the differences in the
standards.


b.) Revenue recognition

Under Canadian GAAP, revenues from the sale of gold and silver are recognized
when title transfers, risks of ownership have substantially passed, delivery is
effected and when the Company has reasonable assurance with respect to
measurement and collectability. Under IFRS, revenues from the sale of gold and
silver are recognized when risks and rewards of ownership are transferred, which
is defined to be at the point when the customer has taken delivery. Revenue is
measured at the fair value of the consideration received or receivable, provided
it is probable that economic benefit will flow to the Company and the revenue
and costs, if applicable, can be measured reliably.


As at January 1, 2010, there were no differences between the treatment under
both standards for the shipments and sales at that time: hence there was no
impact on the revenue recognized in accordance with the Company's IFRS-based
accounting policy at the transition date. During the current accounting year
ended December 31, 2010, there may exist at times differences in accounting for
the shipments and sales between the recognition of revenue under IFRS and the
existing Canadian GAAP treatment: these differences could be material.


c.) Foreign Currency

IFRS requires that the functional currency of Centerra and its subsidiaries be
determined separately, and the factors considered to determine functional
currency are somewhat different than current Canadian GAAP. After review, the
Company does not expect any changes to its accounting policies related to
foreign currency and its determination of entity-specific functional currency
that would result in a significant change to its financial statements.


d.) Exploration Expenditures

IFRS currently allows an entity to retain its existing accounting policies
related to the exploration and evaluation of mineral properties, subject to some
restrictions. The Company expects to retain its current policy of expensing
exploration costs as incurred, and therefore does not expect that the adoption
of IFRS will result in any significant change to the related line items within
the Company's financial statements.


e.) Others

The Company has assessed the impacts of adopting IFRS on other contractual
arrangements, internal planning process and compensation arrangements and has
not identified any material compliance issues.


Further, changes in regulation or economic conditions at the date of the
changeover or throughout the project could result in changes in elections or
accounting policies and could also result in the transition plan being different
from those communicated.


The Company does anticipate a significant increase in disclosure resulting from
the adoption of IFRS and is continuing to assess the level of disclosure
required as well as systems changes that may be necessary to gather and process
the information.


A review of complete, annual IFRS-compliant financial statement notes
disclosures is scheduled with the Company's Audit Committee of the Board during
the fourth quarter of 2010.


The Company continues to monitor the project's progress and the potential impact
on internal controls. At this point in the project, the Company does not
anticipate any significant impact on internal controls.


Centerra is monitoring the impact of the IFRS conversion on various functional
activities of the Company. Training of the IFRS requirements with all management
levels concerned including Directors and other related parties are continuing.
IFRS training program requirements for other stakeholders of the Company are
being assessed.


Outlook for 2010

2010 Production

Centerra's 2010 consolidated gold production is forecast to be in the 640,000 to
700,000 ounce range, which is unchanged from the prior guidance disclosed in the
Company's news release of July 30, 2010.


Gold production for the full year 2010 at the Kumtor mine in the Kyrgyz Republic
is forecast to be between 530,000 to 570,000 ounces, which is unchanged from
prior guidance. Production at the mine was suspended on October 1, 2010 after
the unionized employees commenced an illegal work stoppage on October 1, 2010.
The strike was settled on October 10, 2010 and workers returned to work that
evening. A new collective agreement was ratified by the union and will expire on
December 31, 2012. The Company continues to expect that during the fourth
quarter Kumtor will produce approximately 40% of its 2010 production.


At Boroo/Gatsuurt, gold production is forecast to be 110,000 to 130,000 ounces,
which is unchanged from prior guidance.


While the Company believes it has met all the regulatory pre-conditions for the
issuance of the final heap leach operating permit, its issuance continues to be
delayed. Due to these continued delays in obtaining the final permit, the
Company has removed any heap leach production from this year's production
guidance. If the final operating permit is received, resumption of heap leach
operations at Boroo would add approximately 3,000 to 4,000 ounces per month to
production.


The production guidance does not include any gold production from Gatsuurt.
While the Company received the permits and approvals in connection with the road
construction to Gatsuurt and for construction of surface facilities at the
project, further approvals and commissioning of the project has been delayed as
a result of the Water and Forest Law, see "Other Corporate Developments,
Mongolia, Mongolian Legislation".


The processing of remaining mine ores by the Boroo mill, in conjunction with,
the processing of stockpiled lower grade ores will allow the operation to meet
its production guidance. Mining activities will be terminated at Boroo during
the fourth quarter as the ores in Pit 3 will be exhausted.


These production estimates are based on certain assumptions. See "Material
Assumptions" below.


2010 Total Cash Cost per Ounce

Total cash cost in 2010 is expected to be between $460 and $505 per ounce
produced, which is unchanged from the prior guidance of April 28, 2010. Total
cash cost is a non-GAAP measure and is discussed under "Non-GAAP Measures" in
the Management's Discussion and Analysis issued in conjunction with this news
release.


Total cash cost for 2010 for Kumtor is expected to be in the range of $430 to
$460 per ounce produced, which is unchanged from the prior guidance.


Boroo total cash cost for 2010 which reflects no production from either the heap
leach operation or Gatsuurt and is expected to be $590 to $690 per ounce
produced, which is unchanged from the prior guidance.


Centerra's production and unit costs are forecast as follows:



----------------------------------------------------------------------------
                      2010 Production Forecast       2010 Total Cash Cost(1)
                                                                            
                              (ounces of gold)        ($ per ounce produced)
                                                                            
----------------------------------------------------------------------------
Kumtor                       530,000 - 570,000                     430 - 460
                                                                            
----------------------------------------------------------------------------
Boroo                        110,000 - 130,000                     590 - 690
                                                                            
----------------------------------------------------------------------------
Consolidated                 640,000 - 700,000                     460 - 505
                                                                            
----------------------------------------------------------------------------
(1) Total cash cost is a non-GAAP measure. See "Non-GAAP Measures" in the   
    Management's Discussion and Analysis issued in conjunction with this    
    news release.                                                           



These cost estimates are based on certain assumptions. See "Material
Assumptions" below.


2010 Exploration Expenditures

Exploration expenditures of $30 million are planned for 2010, and the
exploration plan is unchanged from the prior guidance. 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 $230.8 million, including
$44.1 million of sustaining capital and $186.7 million of growth capital. This
represents a decrease of $10.3 million from prior guidance primarily due to the
timing of expenditures and reclassification of some expenditures related to
growth capital at Gatsuurt.


Capital expenditures include:



----------------------------------------------------------------------------
                           2010 Growth Capital       2010 Sustaining Capital
Projects                                                                    
                         (millions of dollars)         (millions of dollars)
                                                                            
----------------------------------------------------------------------------
Kumtor mine                            $ 164.2                       $  40.2
                                                                            
----------------------------------------------------------------------------
Boroo mine                             $   5.9                       $   3.6
                                                                            
----------------------------------------------------------------------------
Gatsuurt project                       $  16.6                             0
                                                                            
----------------------------------------------------------------------------
Other                                        0                       $   0.3
                                                                            
----------------------------------------------------------------------------
Consolidated                                                                
 Total                                 $ 186.7                       $  44.1
                                                                            
----------------------------------------------------------------------------



Kumtor Capital

At Kumtor capital expenditures are estimated at $204.4 million representing a
$7.7 million increase from prior guidance, which includes an increase in growth
capital of $11.1 million partially offset by decrease in sustaining capital of
$3.4 million. The primary reason for the increase in the growth capital relates
to a determination that approximately $10 million of planned pres-stripping
costs associated with the SB Zone should be treated as capital and not operating
costs in accordance with the Company's accounting policies. The decrease of $3.4
million in sustaining capital is due to postponing or cancellation of some
capital projects.


The largest growth capital expenditure will be for the North Wall Expansion
project, estimated at $92.7 million primarily for purchases of mining and
auxiliary support equipment to renew and expand the mining fleet by 22 haul
trucks. The equipment ordered has begun to arrive on schedule. In addition,
seven new CAT 789 haul trucks were purchased to increase haulage capacity to
manage the ice/waste movement in the high movement area for a total cost of
$20.7 million. At the end of September 2010, 13 new CAT 789 trucks were on site
and operational. The balance of the equipment, remaining CAT 789 trucks and four
new Liebherr 9350 shovels, are expected to be delivered in the fourth quarter of
2010 and the first half of 2011. 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 $38.7 million in 2010.


Boroo & Gatsuurt Capital

At Boroo, 2010 sustaining capital expenditures are expected to be $3.6 million,
primarily for the mobile equipment component change-outs ($3.3 million). Growth
capital is estimated to be $5.9 million, primarily for the expansion of the
existing Boroo tailings facility ($4.9 million) to contain Boroo and Gatsuurt
oxide tailings. These expenditures are based on operational needs and also
assume the receipt of the required approvals for Gatsuurt.


At Gatsuurt, expected 2010 growth capital spending is forecasted at $16.6
million down from $38.6 million in the prior guidance. The $20.0 million
reduction in growth capital relates to the deferral of the pre-stripping of the
sulphide ores initially planned to be carried out in 2010 ($9.2 million),
expansion of the existing Boroo tailings facility ($4.9 million) which has been
reclassified from the Gatsuurt project capital to Boroo growth capital and the
removal of the cost of the haul trucks ($5.3 million) for hauling ore from the
Gatsuurt site to the Boroo mill as these will be sold to a third party for ore
haulage. Minimal capital spending is planned on the Gatsuurt project going
forward while waiting for the final approvals to commence mining (See "Other
Corporate Developments - Mongolia - Mongolian Legislation").


The Company's planned phased approach to the development of the Gatsuurt orebody
consisting of an oxide project component followed by a sulphide project
component, has been delayed due to the delays in receiving the final approvals
including the commissioning of the Gatsuurt project pending the resolution of
the water basin and forests law. The engineering and construction of the
bio-oxidation facility, which is needed to oxidize the sulphide ores, will be
restarted only after the approval to begin mining at Gatsuurt has been received
from the Government of Mongolia. The Company expects that the capital for the
development of the deeper sulphide ores at Gatsuurt will be invested only
following successful commissioning of the Gatsuurt oxide project.


Administration

Annual corporate and administration expenses are estimated at $45 million, which
represents an increase of $4 million from prior guidance due to higher
stock-based compensation from the increased Centerra share price.


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 the remaining three months of
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                  
                                                                            
                                                ($ millions)                
                        Change                                              
                               ---------------------------------------------
                                                             Earnings before
                                 Costs  Revenues  Cash flow                 
                                                                  income tax
                                                                            
----------------------------------------------------------------------------
Gold Price              $50/oz     1.6      10.7        9.1              9.3
                                                                            
----------------------------------------------------------------------------
Diesel Fuel (1)             10%    1.1         -        1.1              1.1
                                                                            
----------------------------------------------------------------------------
Kyrgyz som               1 som     0.6         -        0.6              0.6
                                                                            
----------------------------------------------------------------------------
Mongolian tugrik     25 tugrik     0.1         -        0.1              0.1
                                                                            
----------------------------------------------------------------------------
Canadian dollar       10 cents     1.1         -        1.1              1.1
                                                                            
----------------------------------------------------------------------------
(1) 10% change in diesel fuel price equals $5/oz.                           



Material Assumptions

Material assumptions or factors used to forecast production and costs include
the following:




--  a gold price of $1,175 per ounce, 
--  exchange rates: 
    --  $1USD:$1.04 CAD 
    --  $1USD:47.00 Kyrgyz Som 
    --  $1USD:1,300 Mongolian Tugrik 
    --  $1USD:0.80 Euro 
--  diesel fuel price assumption: 
    --  $0.68/litre at Kumtor(i) 
    --  $0.90/litre at Boroo 



(i)The assumed diesel price of $0.68/litre at Kumtor includes a customs export
duty imposed by the Russian authorities on the diesel fuel exported to the
Kyrgyz Republic. Russia imposed a customs duty of approximately $194 per tonne
on gasoline and diesel fuel exports to the Kyrgyz Republic that went into effect
on April 1, 2010. The Company estimates that the introduction of this new export
duty will increase operating costs at Kumtor by approximately $7 million.


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 approximately $82 per barrel.


Other important assumptions on which the Company's production, cost and capital
guidance is based include the following:




--  political and civil unrest in the Kyrgyz Republic does not impact
    operations, including movement of people, supplies and gold shipments to
    and from the Kumtor mine, 
--  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, 
--  no unplanned delays in or interruption of scheduled production from our
    mines, including due to civil unrest, natural phenomena, labour,
    regulatory or political 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 "Other Corporate Developments, Mongolia, Mongolian
    Regulatory Matters", 
--  no further suspension of Boroo's operating licenses, 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, and 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".


Non-GAAP Measures

This MD&A presents information about total cash cost of production of an ounce
of gold and total production cost per ounce of gold 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. Cost of sales per ounce sold is calculated by dividing cost of
sales by gold ounces sold for the relevant period. Total cash cost and total
production cost per ounce produced, as well as cost of sales per ounce sold, are
non-GAAP measures.


Total cash costs include mine operating costs such as mining, processing,
administration, royalties and production taxes (except at Kumtor where
revenue-based taxes and production 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 produced, total production
cost per ounce produced and cost of sales per ounce sold 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.




Centerra Gold Inc.                                                          
                                          Three months                      
TOTAL CASH COST & TOTAL PRODUCTION COST      ended        Nine months ended 
RECONCILIATION (unaudited)               September 30,      September 30,   
($ millions, unless otherwise                                               
 specified)                                2010     2009      2010     2009 
                                       ------------------ ------------------
                                       ------------------ ------------------
Centerra:                                                                   
Cost of sales, as reported              $  75.0  $  70.7   $ 195.2  $ 221.8 
Adjust for:  Refining fees & by-product                                     
              credits                      (0.1)     0.1       0.1      0.5 
             Regional Office                                                
              administration                6.0      4.9      16.0     15.7 
             Mining Standby Costs             -      0.7         -      4.1 
             Operating taxes                                                
              excluded(1)                     -        -         -     (8.7)
             Non-operating costs           (0.9)     5.1      (1.0)    (0.7)
             Inventory movement            (3.2)   (11.3)     13.3     (4.3)
                                       ------------------ ------------------
                                       ------------------ ------------------
Total cash cost - 100%                  $  76.8  $  70.2   $ 223.6  $ 228.4 
   Depreciation, Depletion,                                                 
    Amortization and Accretion             15.0     27.0      56.6     74.7 
   Inventory movement - non-cash            1.2     (3.9)     (1.5)    (6.8)
                                       ------------------ ------------------
                                       ------------------ ------------------
Total production cost - 100%            $  93.0  $  93.3   $ 278.7  $ 296.3 
Ounces poured - 100% (000)                 96.3    165.9     429.1    379.5 
Total cash cost per ounce               $   798  $   424   $   521  $   602 
Total production cost per ounce         $   966  $   563   $   650  $   781 
Kumtor:                                                                     
Cost of sales, as reported              $  63.1  $  59.7   $ 158.8  $ 179.1 
Adjust for:  Refining fees & by-product                                     
              credits                      (0.1)     0.1         -      0.3 
             Regional Office                                                
              administration                4.0      3.2      10.7     10.2 
             Mining Standby Costs                      -                  - 
             Operating taxes                                                
              excluded(1)                              -               (8.7)
             Non-operating costs           (0.9)     5.2      (0.8)    (0.4)
             Inventory movement            (5.1)   (11.3)      4.9      0.6 
                                       ------------------ ------------------
                                       ------------------ ------------------
Total cash cost - 100%                  $  61.0  $  56.9   $ 173.6  $ 181.1 
   Depreciation, Depletion,                                                 
    Amortization and Accretion          $  10.9  $  20.7   $  41.9  $  53.3 
   Inventory movement - non-cash        $   1.3  $  (4.6)  $  (2.9) $  (8.3)
                                       ------------------ ------------------
                                       ------------------ ------------------
Total production cost - 100%            $  73.2  $  73.0   $ 212.6  $ 226.1 
Ounces poured - 100% (000)                 68.8    133.5     339.4    277.9 
Total cash cost per ounce               $   887  $   427   $   512  $   651 
Total production cost per ounce         $ 1,065  $   547   $   626  $   813 
Boroo:                                                                      
Cost of sales, as reported              $  11.9  $  11.0   $  36.4  $  42.7 
Adjust for:  Refining fees & by-product                                     
              credits                         -        -       0.1      0.2 
             Regional Office                                                
              administration                2.0      1.7       5.3      5.5 
             Mining Standby Costs             -      0.7         -      4.1 
             Operating taxes                                                
              excluded(1)                     -        -         -        - 
             Non-operating costs              -     (0.1)     (0.2)    (0.3)
             Inventory movement             1.9        -       8.4     (4.9)
                                       ------------------ ------------------
                                       ------------------ ------------------
Total cash cost - 100%                  $  15.8  $  13.3   $  50.0  $  47.3 
   Depreciation, Depletion,                                                 
    Amortization and Accretion              4.1      6.3      14.7     21.4 
   Inventory movement - non-cash           (0.1)     0.7       1.4      1.5 
                                       ------------------ ------------------
                                       ------------------ ------------------
Total production cost - 100%            $  19.8  $  20.3   $  66.1  $  70.2 
Ounces poured - 100% (000)                 27.5     32.4      89.7    101.6 
Total cash cost per ounce               $   575  $   411   $   558  $   466 
Total production cost per ounce         $   720  $   625   $   737  $   692 
(1) Kumtor's production taxes under the previous regime are removed in the  
    comparative year since these were replaced with a revenue-based tax in  
    April 2009 combining income and operating taxes from the previous       
    regime.                                                                 



Qualified Person

The scientific and technical information in this document was prepared in
accordance with National Instrument 43-101 - Standards of Disclosure for Mineral
Projects ("NI 43-101") and was 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.


Caution Regarding Forward-Looking Information

This Management's Discussion and Analysis and the documents referred to herein
contain statements which are not statements of current or historical facts and
are "forward-looking information" within the meaning of applicable 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. Wherever possible, words such as "believe",
"expect", "anticipate", "contemplate", "target", "plan", "intends", "continue",
"budget", "forecast", "projections", "estimate", "may", "will", "schedule",
"potential", "strategy" and other similar expressions have been used to 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.


Although the forward-looking information in this Management's Discussion and
Analysis reflects Centerra's current beliefs as of the date of this Management's
Discussion and Analysis based on information currently available to management
and based upon what management believes to be reasonable assumptions, Centerra
cannot be certain that actual results, performance, achievements, prospects and
opportunities, either expressed or implied will be consistent with such
forward-looking information. 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.


Factors that could cause actual results or events to differ materially from
current expectations include, among other things: risks relating to the recent
political and civil unrest in the Kyrgyz Republic, risks related to the creep of
ice and waste movement into the Kumtor open-pit, 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, fluctuations in gold prices, replacement of mineral reserves, reduction in
reserves related to geotechnical risks, ground movements, political risk,
nationalization risk, changes in laws and regulations, political 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, the ability to renew
and obtain licenses, permits and other rights, 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. In addition, material assumptions used to forecast
production and costs include those described above under the heading "Material
Assumptions". There may be other factors that cause results, assumptions,
performance, achievements, prospects or opportunities in future periods not to
be as anticipated, estimated or intended. See "Risk Factors" in the Company's
most recently filed Annual Information Form and Annual Management's Discussion
and Analysis available on SEDAR at www.sedar.com.


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.


Centerra's mineral reserve and mineral resource figures 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 these mineral reserve and
mineral resource estimates are well established and the best estimates of
Centerra's management, by their nature mineral reserve and mineral resource
estimates are imprecise and depend, to a certain extent, upon analysis of
drilling results and statistical inferences which may ultimately prove
unreliable. If Centerra's reserve or reserve estimates for its properties are
inaccurate or are reduced in the future, this could have an adverse impact on
Centerra's future cash flows, earnings, results or 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
Management's Discussion and Analysis. 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 July 29, 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.


Centerra Gold Inc.

Consolidated Financial Statements

For the Third Quarter Ended September 30, 2010

(Unaudited)

(Expressed in United States Dollars)



Centerra Gold Inc.                                                          
Consolidated Balance Sheets                                                 
(Expressed In Thousands of United States Dollars)                           
                                                                            
                                                 September 30,  December 31,
                                                          2010          2009
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                   (Unaudited)              
                                                                            
Assets                                                                      
Current assets                                                              
  Cash and cash equivalents                        $   282,403   $   176,904
  Short-term investments                                52,255       145,971
  Amounts receivable                                    35,090        44,281
  Current portion of future income tax asset             1,657         1,555
  Inventories (note 3)                                 153,870       151,822
  Prepaid expenses                                      27,042        11,718
                                                ----------------------------
                                                       552,317       532,251
                                                                            
Property, plant and equipment                          483,250       380,979
Goodwill                                               129,705       129,705
Long-term receivables and other                         18,535         6,554
Long-term inventories (note 3)                          30,308        23,120
Future income tax asset                                     45         1,418
                                                ----------------------------
                                                       661,843       541,776
                                                ----------------------------
Total assets                                       $ 1,214,160   $ 1,074,027
                                                ----------------------------
                                                ----------------------------
                                                                            
                                                                            
Liabilities and Shareholders' Equity                                        
Current liabilities                                                         
  Accounts payable and accrued liabilities         $    55,417   $    49,178
  Taxes payable                                         11,305        35,066
  Current portion of provision for reclamation                              
   (note 4)                                              8,326         8,169
  Current portion of future income tax liability         2,362         7,662
                                                ----------------------------
                                                        77,410       100,075
                                                                            
Provision for reclamation (note 4)                      22,001        21,533
                                                                            
Shareholders' equity (note 5)                                               
  Share capital                                        653,541       646,081
  Contributed surplus                                   33,275        34,298
  Retained earnings                                    427,933       272,040
                                                ----------------------------
                                                     1,114,749       952,419
                                                ----------------------------
Total liabilities and shareholders' equity         $ 1,214,160   $ 1,074,027
                                                ----------------------------
                                                ----------------------------
                                                                            
Commitments and contingencies (note 8)                                      
                                                                            
The accompanying notes form an integral part of these unaudited interim     
consolidated financial statements.                                          
                                                                            
                                                                            
Centerra Gold Inc.                                                          
Consolidated Statements of Earnings and Comprehensive Income                
(Unaudited)                                                                 
(Expressed In Thousands of United States Dollars)                           
                                                                            
                        Three Months Ended           Nine Months Ended      
                   September 30, September 30,  September 30, September 30, 
                            2010          2009           2010          2009 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
                                                                            
Revenue from Gold                                                           
 Sales               $   115,467   $   158,822    $   523,125   $   361,596 
                   ---------------------------- ----------------------------
                                                                            
Expenses                                                                    
  Cost of sales (1)       74,975        70,650        195,241       221,823 
  Mine standby                                                              
   costs                       -           738              -         4,081 
  Regional office                                                           
   administration          6,108         4,886         16,025        15,748 
  Depreciation,                                                             
   depletion and                                                            
   amortization           17,355        26,980         55,723        74,474 
  Accretion and                                                             
   reclamation                                                              
   expense (note 4)          552           437          1,657         1,725 
  Revenue based                                                             
   taxes (note                                                              
   6(a))                  11,510        18,065         58,145        23,345 
  Exploration and                                                           
   business                                                                 
   development             8,045         6,966         20,701        16,992 
  Other (income)                                                            
   and expenses           (1,661)         (632)           742          (744)
  Corporate                                                                 
   administration         13,370         8,089         30,946        20,789 
                   ---------------------------- ----------------------------
                         130,254       136,179        379,180       378,233 
Gain on sale of REN                                                         
 property (note 7)       (34,866)            -        (34,866)            - 
Kyrgyz settlement              -             -              -        49,333 
                   ---------------------------------------------------------
                          95,388       136,179        344,314       427,566 
                   ---------------------------------------------------------
                   ---------------------------------------------------------
Earnings (loss)                                                             
 before income                                                              
 taxes                    20,079        22,643        178,811       (65,970)
  Income tax                                                                
   expense (note 6                                                          
   (b))                    2,418         2,413          9,298        13,672 
                   ---------------------------- ----------------------------
Net earnings (loss)                                                         
 and comprehensive                                                          
 income (loss)       $    17,661   $    20,230    $   169,513   $   (79,642)
                   ---------------------------- ----------------------------
                   ---------------------------- ----------------------------
                                                                            
                                                                            
Basic and diluted                                                           
 net earnings                                                               
 (loss) per common                                                          
 share (note 5)      $      0.07   $      0.09    $      0.72   $     (0.36)
                   ---------------------------- ----------------------------
                   ---------------------------- ----------------------------
                                                                            
(1) Excludes                                                                
 depreciation,                                                              
 depletion and                                                              
 amortization                                                               
 expenses                 17,238        26,798         55,360        73,772 
                                                                            
                                                                            
The accompanying notes form an integral part of these unaudited interim     
 consolidated financial statements.                                         
                                                                            
                                                                            
Centerra Gold Inc.                                                          
Consolidated Statements of Cash Flows                                       
(Unaudited)                                                                 
(Expressed In Thousands of United States Dollars)                           
                                                                            
                                                                            
                            Three Months Ended        Nine Months Ended     
                           September    September    September    September 
                                 30,          30,          30,          30, 
                                2010         2009         2010         2009 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
                                                                            
Operating activities                                                        
Net earnings (loss)        $  17,661    $  20,230    $ 169,513    $ (79,642)
Items not involving                                                         
 cash:                                                                      
 Depreciation, depletion                                                    
  and amortization            17,355       26,980       55,723       74,474 
 Accretion and                                                              
  reclamation expense            552          437        1,657        1,725 
 Loss on disposal of                                                        
  property plant and                                                        
  equipment                      376          179        1,366          716 
 Stock based                                                                
  compensation expense           297          455        1,180        1,269 
 Gain on disposal of REN                                                    
  property                   (34,866)           -      (34,866)           - 
 Kyrgyz settlement                 -            -            -       31,616 
 Future income tax                                                          
  (recovery) expense          (2,739)         365       (4,030)       3,738 
 Long-term inventory          (4,741)      (1,377)      (7,188)      (4,846)
 Long-term other assets      (11,981)           -      (11,981)           - 
 Other operating items           487         (845)      (1,034)      (2,000)
                        -------------------------- -------------------------
                             (17,599)      46,424      170,340       27,050 
 Decrease (increase) in                                                     
  working capital             (6,873)      16,992      (36,003)      29,932 
                        -------------------------- -------------------------
Cash provided by (used                                                      
 in) operations              (24,472)      63,416      134,337       56,982 
                        -------------------------- -------------------------
                                                                            
Investing activities                                                        
 Additions to property,                                                     
  plant and equipment        (70,894)     (21,250)    (149,101)     (63,676)
 Short-term investments                                                     
  matured                    108,412            -       93,716       17,781 
 Proceeds from                                                              
  disposition of                                                            
  property,plant and                                                        
  equipment                        -           62           44           64 
 Advance for long-term                                                      
  assets                       5,152            -            -            - 
 Proceeds from                                                              
  disposition of REN                                                        
  property                    34,866            -       34,866            - 
                        -------------------------- -------------------------
Cash provided by (used                                                      
 in) investing                77,536      (21,188)     (20,475)     (45,831)
                        -------------------------- -------------------------
                                                                            
Financing activities                                                        
 Issuance of common                                                         
  shares for cash              3,779            -        5,257        1,944 
 Dividends paid              (13,620)           -      (13,620)           - 
                        -------------------------- -------------------------
Cash provided by (used                                                      
 in) financing                (9,841)           -       (8,363)       1,944 
                        -------------------------- -------------------------
                                                                            
Increase in cash and                                                        
 cash equivalents during                                                    
 the period                   43,223       42,228      105,499       13,094 
Cash and cash                                                               
 equivalents at                                                             
 beginning of the period     239,180      120,449      176,904      149,583 
                        -------------------------- -------------------------
Cash and cash                                                               
 equivalents at end of                                                      
 the period                $ 282,403    $ 162,677    $ 282,403    $ 162,677 
                        -------------------------- -------------------------
                        -------------------------- -------------------------
                                                                            
                                                                            
                                                                            
Supplemental disclosure                                                     
 with respect to cash                                                       
 flows                                                                      
                                                                            
Cash and cash                                                               
 equivalents consist of:                                                    
 Cash                      $  36,144    $  44,528    $  36,144    $  44,528 
 Cash equivalents            246,259      118,149      246,259      118,149 
                        -------------------------- -------------------------
                           $ 282,403    $ 162,677    $ 282,403    $ 162,677 
                        -------------------------- -------------------------
                        -------------------------- -------------------------
                                                                            
Additions to property,                                                      
 plant and equipment                                                        
 Capital expenditures                                                       
  during the period        $  72,761    $  20,993    $ 156,585    $  61,037 
 Reduction (increase) to                                                    
  accruals included in                                                      
  additions to PP&E           (1,867)         257       (7,484)       2,639 
                        -------------------------- ------------------------ 
 Additions to property,                                                     
  plant and equipment      $  70,894    $  21,250    $ 149,101    $  63,676 
                        -------------------------- -------------------------
                        -------------------------- -------------------------
                                                                            
                                                                            
The accompanying notes form an integral part of these unaudited interim     
consolidated financial statements.                                          
                                                                            
                                                                            
Centerra Gold Inc.                                                          
Consolidated Statements of Shareholders' Equity                             
(Unaudited)                                                                 
(Expressed In Thousands of United States Dollars)                           
                                                                            
----------------------------------------------------------------------------
                                                                            
                 Number of                                                  
                    Common             Contributed    Retained              
                    Shares    Amount       Surplus    Earnings       Total  
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
Balance at                                                                  
 December 31,                                                               
 2008          216,318,188 $ 523,107 $      32,904  $  211,727     767,738  
Common shares                                                               
 issued for                                                                 
 Agreement on                                                               
 New Terms      18,232,615   120,700             -           -     120,700  
Common shares                                                               
 issued on                                                                  
 exercise of                                                                
 stock options     306,425     2,274          (330)          -       1,944  
Stock-based                                                                 
 compensation                                                               
 expense                 -         -         1,269           -       1,269  
Net loss for                                                                
 the period              -         -             -     (79,642)    (79,642) 
----------------------------------------------------------------------------
Balance at                                                                  
 September 30,                                                              
 2009          234,857,228 $ 646,081 $      33,843  $  132,085     812,009  
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
Balance at                                                                  
 December 31,                                                               
 2009          234,857,228 $ 646,081 $      34,298  $  272,040  $  952,419  
Common shares                                                               
 issued on                                                                  
 exercise of                                                                
 stock options     898,260     7,460        (2,203)          -       5,257  
Stock-based                                                                 
 compensation                                                               
 expense                 -         -         1,180           -       1,180  
Dividends                                                                   
 declared                -         -             -     (13,620)    (13,620) 
Net earnings                                                                
 for the                                                                    
 period                  -         -             -     169,513     169,513  
----------------------------------------------------------------------------
Balance at                                                                  
 September 30,                                                              
 2010          235,755,488 $ 653,541 $      33,275  $  427,933  $1,114,749  
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                                                                            
The accompanying notes form an integral part of these unaudited interim     
 consolidated financial statements.                                         
                                                                            
Centerra Gold Inc.                                                          
Notes to Consolidated Financial Statements                                  
(Unaudited)                                                                 
(Expressed in thousands of United States Dollars)                           
----------------------------------------------------------------------------



1. Basis of Presentation

These unaudited interim consolidated financial statements of Centerra Gold Inc.
("Centerra" or the "Company") have been prepared by management in accordance
with accounting principles generally accepted in Canada ("Canadian GAAP").
Certain information and note disclosures normally included in the annual
consolidated financial statements prepared in accordance with Canadian GAAP have
been condensed or excluded. As a result, these unaudited interim consolidated
financial statements do not contain all disclosures required to be included in
the annual consolidated financial statements and should be read in conjunction
with the most recent audited annual consolidated financial statements and notes
thereto for the year ended December 31, 2009.


These financial statements have been prepared on the basis of accounting
principles applicable to a going concern which assumes that the Company will be
able to continue in operation for the foreseeable future and will be able to
realize its assets and discharge its liabilities in the normal course of
business. The operating cash flow and profitability of the Company are affected
by various factors, including the amount of gold produced and sold, the market
price of gold, operating costs, interest rates, environmental costs and the
level of exploration activity and other discretionary costs and activities. The
Company is also exposed to fluctuations in currency exchange rates, interest
rates, political risk and varying levels of taxation. The Company seeks to
manage the risks associated with its business; however, many of the factors
affecting these risks are beyond the Company's control.


As at September 30, 2010 and December 31, 2009, Centerra held a 100% interest in
the Kumtor mine, the Boroo mine, and the Gatsuurt property.


2. Significant Accounting Policies: 

These unaudited interim consolidated financial statements are prepared following
accounting policies consistent with the Company's audited annual consolidated
financial statements and notes thereto for the year ended December 31, 2009.
There were no new accounting policies adopted during the three months and nine
months ended September 30, 2010.


New Pronouncements

The CICA issued three new accounting standards in January 2009 which take effect
January 1, 2011: Section 1582, Business Combinations, Section 1601, Consolidated
Financial Statements and Section 1602, Non-Controlling interests.


Section 1582 replaces section 1581 and establishes standards for the accounting
of a business combination. It provides the Canadian equivalent to International
Financial Reporting Standards ("IFRS") 3, Business Combinations. Section 1582
applies prospectively to business combinations for which the acquisition date is
on or after the beginning of the first annual reporting period beginning on or
after January 1, 2011.


Sections 1601 and 1602 together replace section 1600, Consolidated Financial
Statements. Section 1601 establishes standards for the preparation of
consolidated financial statements. Section 1601 applies to interim and annual
consolidated financial statements relating to fiscal years beginning on or after
January 1, 2011.


Section 1602 establishes standards for accounting of a non-controlling interest
in a subsidiary in consolidated financial statements subsequent to a business
combination. It is equivalent to the corresponding provisions of IFRS IAS 27 -
Consolidated and Separate Financial Statements and applies to interim and annual
consolidated financial statements relating to fiscal years beginning on or after
January 1, 2011.


The Company does not anticipate that the adoption of these standards will
significantly impact its financial results.


3. Inventories



----------------------------------------------------------------------------
                                               September 30,   December 31, 
(Thousands of US$)                                      2010           2009 
----------------------------------------------------------------------------
Stockpiles                                       $    58,146    $    50,234 
Gold in-circuit                                       11,356          5,045 
Heap leach in circuit                                  3,423          4,908 
Gold dore                                              7,104          8,818 
----------------------------------------------------------------------------
                                                      80,029         69,005 
Supplies                                             104,149        105,937 
----------------------------------------------------------------------------
                                                     184,178        174,942 
                                                                            
Less: Long-term inventory (Heap leach-                                      
 stockpiles)                                         (30,308)       (23,120)
----------------------------------------------------------------------------
                                                                            
Total inventories-current portion                $   153,870    $   151,822 
----------------------------------------------------------------------------



During the nine month ended September 30, 2010, the Company recorded $0.8
million (September 30, 2009 - Nil) as an expense for the write-down of
inventories to net realizable value.


4. Asset Retirement Obligations

The following table reconciles the Company's discounted liability for asset
retirement obligations. The discount rates used to discount the obligations to
their present value are unchanged from the rates disclosed at the end of 2009.




----------------------------------------------------------------------------
                                 Three Months Ended       Nine Months Ended 
(Thousands of US$)            Sept 30/10 Sept 30/09   Sept 30/10 Sept 30/09 
----------------------------------------------------------------------------
                                                                            
Balance, beginning of period   $  30,317  $  31,499    $  29,702  $  32,780 
Liabilities settled                 (542)      (277)      (1,032)      (872)
Revisions in cost                      -          -            -     (1,974)
Accretion expense                    552        437        1,657      1,725 
----------------------------------------------------------------------------
Balance, end of period            30,327     31,659       30,327     31,659 
Less: current portion             (8,326)    (4,463)      (8,326)    (4,463)
----------------------------------------------------------------------------
                               $  22,001  $  27,196       22,001  $  27,196 
----------------------------------------------------------------------------



5. Shareholders' Equity

a. Earnings (Loss) Per Share

The basic net earnings (loss) per share is computed by dividing the net earnings
(loss) applicable to common shares by the weighted average number of common
shares outstanding during the year.


The diluted net earnings (loss) per share is computed by dividing the net
earnings (loss) applicable to common shares by the weighted average number of
common shares outstanding during the year, plus the effects of dilutive common
share equivalents such as stock options. The number of additional shares for
inclusion in diluted earnings per share is determined using the treasury stock
method, whereby stock options, whose exercise price is less than the average
market price of the Company's common shares, are assumed to be exercised and the
proceeds plus the amount of fair value of the stock options not yet recognized
in income as expense are used to purchase common shares at the average market
price for the period. The incremental number of common shares issued under stock
options and warrants is included in the calculation of diluted earnings per
share.


Potential common shares from the exercise of stock options are not included in
the computation of diluted net earnings (loss) per share in years when net
losses are recorded given that they are anti-dilutive.




----------------------------------------------------------------------------
                                  Three Months Ended       Nine Months Ended
(Thousands of shares)          Sept 30/10 Sept 30/09   Sept 30/10 Sept 30/09
----------------------------------------------------------------------------
                                                                            
Basic weighted average number                                               
 of common shares outstanding     235,406    234,857      235,088    222,027
Effect of stock options               387        123          343          -
----------------------------------------------------------------------------
Diluted weighted average                                                    
 number of common shares                                                    
 outstanding                      235,793    234,980      235,431    222,027
----------------------------------------------------------------------------
                                                                            
----------------------------------------------------------------------------
                                  Three Months Ended       Nine Months Ended
(Thousands of shares)          Sept 30/10 Sept 30/09   Sept 30/10 Sept 30/09
----------------------------------------------------------------------------
Anti-dilutive number of common                                              
 share equivalents excluded             7        391           23       1816
                                                                            
----------------------------------------------------------------------------



Common share equivalents consist of stock options granted to eligible employees
of the Company.


b. Stock-Based Compensation

The impact of Stock-Based Compensation is summarized as follows:



----------------------------------------------------------------------------
(Millions of US$          Number              Expense/(Income)              
                                --------------------------------------------
except as indicated) outstanding  Three Months Ended     Nine Months Ended  
                                --------------------------------------------
                      Sept 30/10 Sept 30/10 Sept 30/09 Sept 30/10 Sept 30/09
----------------------------------------------------------------------------
                                                                            
(i)   Centerra stock                                                        
       options           917,895  $     0.3  $     0.5  $     1.2  $     1.3
(ii)  Centerra -PSU                                                         
       (1)             1,528,209        6.2        1.3       10.8        2.3
(iii) Centerra                                                              
       annual-PSU        155,014        1.4        1.0        2.9        2.9
(iv)  Deferred share                                                        
       units             368,478        2.1        0.9        2.8        1.3
(v)   Cameco stock                                                          
       options                 -          -          -          -        0.4
----------------------------------------------------------------------------
                                  $    10.0  $     3.7  $    17.7  $     8.2
----------------------------------------------------------------------------
----------------------------------------------------------------------------

-------------------------------------------
(Millions of US$                           
                                           
except as indicated)        Liability      
                     ----------------------
                      Sept 30/10  Dec 31/09
-------------------------------------------
                                           
(i)   Centerra stock                       
       options         $       -  $       -
(ii)  Centerra -PSU                        
       (1)                  15.9        6.2
(iii) Centerra                             
       annual-PSU            2.5        6.3
(iv)  Deferred share                       
       units                 6.0        3.8
(v)   Cameco stock                         
       options                 -        1.3
-------------------------------------------
                       $    24.4  $    17.6
-------------------------------------------
-------------------------------------------
(1) Performance Share Units (PSU).                                          



Movements in the number of options and units year-to-date are summarized as follows:



----------------------------------------------------------------------------
                   Number                    Expired/      Number     Number
              outstanding  Issued Exercised Forfeited outstanding     Vested
                Dec 31/09                         (1)  Sept 30/10 Sept 30/10
----------------------------------------------------------------------------
                                                                            
(i)   Centerra                                                              
       stock                                                                
       options  1,816,155       -  (898,260)        -     917,895    441,877
(ii)  Centerra                                                              
       -PSU     1,201,677 539,546   (99,434) (113,580)  1,528,209          -
(iii) Centerra                                                              
       annual-                                                              
       PSU        420,870 177,492  (425,877)  (17,471)    155,014    116,261
(iv)  Deferred                                                              
       share                                                                
       units      375,216  47,103   (53,841)        -     368,478    368,478
----------------------------------------------------------------------------
----------------------------------------------------------------------------
(1) 112,439 units from the Centerra PSU 2007 series expired.                



The terms of Centerra's performance share unit plan for the regularly issued
series in 2010 (282,171 units issued) were modified from the standard terms
described in the December 31, 2009 audited annual consolidated financial
statements and notes thereto as follows:




Vesting     - 50% of the units granted in any particular year vest on       
              December 31 of the second year, and the remaining 50% vest on 
              December 31 of the third year.                                
                                                                            
Multiplier  - maximum adjustment factor by which granted units are          
              multiplied increased from 1.5 to 2.0                          



The units issued during the first quarter of 2010 under Centerra's PSU plan also
include 246,021 "special" performance share units. Distinguishing these
"special" units from the regularly issued PSU series is the fact that the
"special" units vest one third at the end of each year of their three year term
and carry a multiplier factor of 1.0.


6. Taxes

a. Revenue Based Taxes

Revenue based taxes are payable to the Kyrgyz government under the Restated
Investment Agreement between the Company and the Kyrgyz government which
received the approval of the Kyrgyz Parliament on April 30, 2009. Under the tax
provisions of this agreement, which has retroactive effect to January 1, 2008,
taxes are payable monthly at a rate of 13% of gross revenue. In addition,
effective from January 1, 2009, a contribution is made monthly to the Issyk-Kul
Oblast Development Fund in the amount of 1% of gross revenue.


During the three months and nine months ended September 30, 2010, the revenue
based tax expensed by Kumtor was $11.5 million and $58.1 million respectively
($18.1 million and $23.3 million for both the three months and nine months ended
September 30, 2009).


At the request of the Kyrgyz government, the Company agreed in August 2010 to
make advances of $11 million against future revenue based taxes ($8 million was
advanced in the third quarter and the balance of $3 million was advanced in
October 2010). The advances will be applied against the 2010 revenue based taxes
otherwise payable in January 2011.


b. Corporate Income Taxes

The Company recorded income tax expense of $2.4 million and $9.3 million for the
three months and nine months ended September 30, 2010 ($2.4 million and $13.7
million for the three and nine months ended September 30, 2009).


Boroo

The income tax rate for Boroo is 25% of taxable income in excess of 3 billion
Tugriks (approximately $2.3 million as at the balance sheet date), and 10% for
income up to that amount.


During the three months and nine months ended September 30, 2010, Boroo recorded
income tax expense of $2.4 million and $9.3 million respectively ($2.4 million
and $16.5 million for the three months and nine months ended September 30,
2009).


Kumtor

Effective April 30, 2009 Kumtor became subject to a tax regime pursuant to which
income taxes, and other taxes, were replaced by taxes computed by reference to
Kumtor's revenue (as discussed in 6(a) above). As a result, the income tax
expense was no longer recorded by Kumtor, from May 1, 2009 onward, including the
three and nine months periods ended September 30, 2010 and for the three months
ended September 30, 2009. For the first nine months of 2009, Kumtor recorded an
income tax recovery of $2.9 million representing taxes under the old tax regime
where Kumtor was subjected to 10% income tax rate computed on earnings and 2% of
net income as a contribution to Issyk-Kul Social Fund.


7. Disposal of interest in REN Property

On July 2, 2010, the Company closed the sale of its REN interest to Homestake
Mining Company of California ( a subsidiary of Barrick Gold Corporation) for
gross cash proceeds of $35.2 million resulting in a net gain of $34.9 million.


8. Commitments and Contingencies 

Commitments

As at September 30, 2010, the Company had entered into contracts to purchase
capital equipment and operational supplies totalling $84.0 million (Kumtor $83.3
million, Boroo $0.1 million and Centerra Gold Mongolia LLC , a subsidiary of
Centerra, $0.6 million). These are expected to be settled over the next twelve
months.


Mongolian Regulatory Matters

The regulatory conditions in Mongolia have not changed substantially since
Centerra's second quarter 2010 report. During the quarter however, progress was
made in the development of dispute resolution mechanisms through a commitment
made by the Prime Ministers of both Canada and Mongolia to press forward on the
conclusion of a Foreign Investment Protection Agreement. The following
discussion summarizes the current status of Mongolian regulatory matters
affecting Centerra.


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 Mongolian
General Department of Specialized Inspection ("SSIA"). While the suspension was
lifted on July 27, 2009, several issues arising from the inspection 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 Boroo Gold
Company Ltd. ("BGC") paid all relevant royalties and taxes with respect to gold
produced from the heap leach facility during that period. 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 efforts to obtain a
final permit for the operation of its heap leach facility at the Boroo mine.


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 has held discussions with the Ministry of Finance regarding such
concerns and has received no further notice from the Ministry of Finance with
respect to the possible termination of the Boroo Stability Agreement. While the
Company believes that the issues raised by the Ministry of Finance and the SSIA
will be resolved through negotiations without a material impact on the Company,
there can be no assurance that this will be the case.


Mongolian Legislation

The legislative conditions in Mongolia have not changed substantially since
Centerra's second 2010 quarter report. The commissioning of the Gatsuurt project
has been delayed as a result of the uncertain impact of the Water and Forest
Law. The following discussion summarizes the current status of certain Mongolian
legislation that may affect Centerra, including its Gatsuurt project and other
Mongolian mineral licenses.


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 (the "Water and Forest 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 exempt. In March 2010, the Company received a letter from MRAM
stating that certain of its mining and exploration licenses, including the
Gatsuurt mining licenses, could be revoked under the Water and Forest Law. The
letter requested that the Company submit an estimate of expenses incurred in
relation to each license and the compensation that it would expect to receive if
such licenses were to be revoked. The Company has provided a detailed estimate
to MRAM for all potentially affected licenses. The Company has submitted a draft
Investment Agreement for the Gatsuurt Project to the Ministry of Mineral
Resources and Energy ("MMRE"). In April 2010, the Company received a letter from
the MMRE indicating that the Gatsuurt licenses are within the area designated on
a preliminary basis where minerals mining is prohibited under the Water and
Forest Law. The letter also stated that the MMRE will communicate with the
Company regarding the investment agreement when the MMRE has more clarity on the
impact of the law. 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.


In August 2009, the Government of Mongolia repealed its windfall profit tax of
68% in respect of gold sales at a price in excess of US$850 an ounce, with the
repeal to take effect on January 1, 2011.


9. Related Party Transactions 

Kyrgyzaltyn and the Government of the Kyrgyz Republic

Revenues from the Kumtor gold mine are subject to a management fee of $1.00 per
ounce based on sales volumes, payable to Kyrgyzaltyn JSC ("Kyrgyzaltyn"), a
shareholder of the Company and a state-owned entity of the Kyrgyz Republic.


The table below summarizes 100% of the management fees and concession payments
paid and accrued by Kumtor Gold Company to Kyrgyzaltyn or the Government of the
Kyrgyz Republic and the amounts paid and accrued by Kyrgyzaltyn to Kumtor
according to the terms of a Gold and Silver Sales Agreement between Kumtor
Operating Company ("KOC"), Kyrgyzaltyn and the Government of the Kyrgyz Republic
and which was restated in June 2009.




                               Three Months Ended         Nine Months Ended 
Thousands of US$)          Sept 30/10  Sept 30/09   Sept 30/10   Sept 30/09 
----------------------------------------------------------------------------
                                                                            
Management fees to                                                          
 Kyrgyzaltyn                 $     66    $    135    $     358    $     343 
Concession payments to the                                                  
 Kyrgyz Republic                    -           -            -         (116)
----------------------------------------------------------------------------
                             $     66    $    135    $     358    $     227 
----------------------------------------------------------------------------
                                                                            
Gross gold and silver                                                       
 sales to Kyrgyzaltyn        $ 82,547    $129,642    $ 416,952    $ 261,940 
----------------------------------------------------------------------------
Deduct: refinery and                                                        
 financing charges               (331)       (603)      (1,629)      (1,333)
----------------------------------------------------------------------------
Net sales revenue received                                                  
 from Kyrgyzaltyn            $ 82,216    $129,039    $ 415,323    $ 260,607 
----------------------------------------------------------------------------



Gold produced by the Kumtor mine is purchased at the mine site by Kyrgyzaltyn
for processing at its refinery in the Kyrgyz Republic pursuant to Gold and
Silver Sale Agreement that was amended and restated, effective June 6, 2009.


Pursuant to the amended and restated Gold and Silver Sales Agreement,
Kyrgyzaltyn is required to pay for gold delivered within 12 days from the date
of shipment. Default interest is accrued on any unpaid balance after the
permitted payment period of 12 days.


The obligations of Kyrgyzaltyn are partially secured by a pledge of 2,850,000
shares of Centerra owned by Kyrgyzaltyn. As at September 30, 2010, $26.7 million
was outstanding under these arrangements (December 31, 2009 - $37.9 million).


As noted in note 6 (a) above, the Company has prepaid a portion of its revenue
based taxes to the Kyrgyz government.


10. Financial Risk Exposure and Risk management 

a. Currency Risk

As required, the Company either makes purchases at the prevailing spot price to
fund corporate activities or enters into short-term forward contracts to
purchase Canadian Dollars, or other currencies. During the three months and nine
months ended September 30, 2010, Cdn nil and Cdn $6.7 million of such forward
contracts were executed (Cdn $0.6 million and Cdn $6.3 million for three months
and nine months ended September 30, 2009). These forward contracts all expire in
2010, and the fair value is determined based on a mark-to-market valuation
approach. The closing exchange rate is a quoted rate obtained from observable
market data for the particular foreign currency, and therefore is classified
within Level 2 of the fair value hierarchy. Level 2 of the fair value hierarchy
is defined as inputs, other than the quoted market prices in active markets,
which are observable, either directly and/or indirectly.


There were six forward contracts, to purchase a total of Cdn $1.7 million,
outstanding at September 30, 2010 (December 31, 2009 -Nil).


The exposure of the Company's financial assets and liabilities to currency risk
as at September 30, 2010 are as follows:




----------------------------------------------------------------------------
                                       Kyrgyz  Mongolian  Canadian  European
(Thousands of US$)                        Som     Tugrik    Dollar      Euro
----------------------------------------------------------------------------
Financial Assets                                                            
  Cash and cash equivalents           $   136  $     129  $  3,042  $  1,366
  Amounts receivables                      76      3,314       154       177
----------------------------------------------------------------------------
                                      $   212  $   3,443  $  3,196  $  1,543
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Financial Liabilities                                                       
  Accounts payable and accrued                                              
   liabilities                        $ 4,616  $   5,948  $ 23,881  $  1,210
----------------------------------------------------------------------------
----------------------------------------------------------------------------



A strengthening of the U.S. Dollar by 5% against the Canadian Dollar, the Kyrgyz
Som, European Euro and the Mongolian Tugrik at September 30, 2010, with all
other variables held constant would have led to additional before tax net income
of $1.4 million as a result of a change in value of the financial assets and
liabilities denominated in those currencies


b. Concentration of Credit Risk 

To partially mitigate exposure to potential credit risk related to Kumtor sales,
the Company has an agreement in place whereby Kyrgyzaltyn has pledged 2,850,000
of Centerra common shares as security against unsettled gold shipments, in the
event of default on payment (Note 9). Based on movements of Centerra's share
price, and the value of individual or unsettled gold shipments, over the course
of the three months and nine months ended September 30, 2010, the maximum
exposure during the period, reflecting the shortfall in the value of the
security as compared to the value of any unsettled shipments, was approximately
nil and $36.3 million.


The Company manages counterparty credit risk in respect of short-term
investments by maintaining bank accounts with highly-rated U.S. and Canadian
banks and investing only in highly-rated Canadian and U.S. Government bills,
term deposits or banker's acceptances with highly-rated financial institutions
and corporate direct credit issues that can be promptly liquidated.


At the balance sheet date, approximately 68% of the Company's liquid assets were
held in government securities and highly-rated, highly-liquid commercial paper.
The remaining cash and cash equivalents, and short-term investments, were held
with highly-rated U.S. and Canadian banks (26%) and invested in other
highly-rated sovereign paper (6%). 


11. Segmented Information

Centerra has three reportable segments. The Kyrgyz Republic segment involves the
operations of the Kumtor Gold Project and local exploration and development
activities, and the Mongolian segment involves the operations of the Boroo Gold
Project, development of the Gatsuurt Project and local exploration activities.
The North American segment involves the head office located in Toronto, loans to
each of the mine operations, as well as other exploration activities.


Geographic Segmentation of Revenue

All production from the Kumtor Gold Project was sold to the Kyrgyzaltyn refinery
in the Kyrgyz Republic while production from the Boroo Gold Project was sold to
a refinery that is located in Ontario, Canada.




Three months ended September 30, 2010                                       
----------------------------------------------------------------------------
($ millions)                             Kygyz              North           
                                      Republic  Mongolia  America     Total 
----------------------------------------------------------------------------
Revenue                                $  82.2    $ 33.3  $     -   $ 115.5 
Expenses                                                                    
  Cost of sales                           63.1      11.9        -      75.0 
  Mine standby costs                         -         -        -         - 
  Regional office administration           4.0       2.1        -       6.1 
  Depreciation, depletion and                                               
   amortization                           13.4       3.9      0.1      17.4 
  Accretion and reclamation expense        0.3       0.3        -       0.6 
  Revenue based taxes                     11.5         -        -      11.5 
  Exploration and business                                                  
   development                             3.5       2.1      2.4       8.0 
  Other (income) and expenses             (1.4)        -     (0.3)     (1.7)
  Administration                           0.5       0.1     12.8      13.4 
----------------------------------------------------------------------------
                                         (12.7)     12.9    (15.0)    (14.8)
Gain on sale of REN property                                           34.9 
----------------------------------------------------------------------------
Earnings before income taxes                                           20.1 
Income tax expense                                                      2.4 
----------------------------------------------------------------------------
Net earnings                                                           17.7 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Capital expenditure for the period     $  70.3   $   2.5  $     -   $  72.8 
----------------------------------------------------------------------------
                                                                            
                                                                            
Three months ended September 30, 2009                                       
----------------------------------------------------------------------------
($ millions)                            Kygyz               North           
                                     Republic  Mongolia   America     Total 
----------------------------------------------------------------------------
Revenue                               $ 129.0   $  29.8   $     -   $ 158.8 
Expenses                                                                    
 Cost of sales                           59.7      11.0         -      70.7 
 Mine standby costs                         -       0.7         -       0.7 
 Regional office administration           3.2       1.7         -       4.9 
 Depreciation, depletion and                                                
  amortization                           20.7       6.1       0.2      27.0 
 Accretion and reclamation expense        0.3       0.1         -       0.4 
 Revenue based taxes                     18.1         -         -      18.1 
 Exploration and business                                                   
  development                             3.4       0.9       2.7       7.0 
 Other (income) and expenses              1.3      (1.7)     (0.3)     (0.7)
 Administration                           0.9         -       7.2       8.1 
----------------------------------------------------------------------------
                                         21.4      11.0      (9.8)     22.6 
Kyrgyz settlement                                                         - 
----------------------------------------------------------------------------
Loss before income taxes                                               22.6 
Income tax expense                                                      2.4 
----------------------------------------------------------------------------
Net loss                                                              $20.2 
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Capital expenditure for the period    $  18.0   $   2.8   $   0.2   $  21.0 
----------------------------------------------------------------------------
                                                                            
                                                                            
Nine months ended September 30, 2010                                        
----------------------------------------------------------------------------
($ millions)                            Kygyz               North           
                                     Republic  Mongolia   America      Total
----------------------------------------------------------------------------
Revenue                               $ 415.3   $ 107.8   $     -   $  523.1
Expenses                                                                    
  Cost of sales                         158.8      36.4         -      195.2
  Mine standby costs                        -         -         -          -
  Regional office administration         10.7       5.3         -       16.0
  Depreciation, depletion and                                               
   amortization                          41.6      13.8       0.3       55.7
  Accretion and reclamation expense       0.8       0.9         -        1.7
  Revenue based taxes                    58.2         -         -       58.2
  Exploration and business                                                  
   development                            8.1       4.8       7.8       20.7
  Other (income) and expenses             1.0      (0.1)     (0.2)       0.7
  Administration                          1.5       0.2      29.3       31.0
----------------------------------------------------------------------------
                                        134.6      46.5     (37.2)     143.9
Gain on sale of REN property                                            34.9
----------------------------------------------------------------------------
Earnings before income taxes                                           178.8
Income tax expense                                                       9.3
----------------------------------------------------------------------------
Net earnings                                                           169.5
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Capital expenditure for the period    $ 133.2   $  23.2   $   0.2   $  156.6
----------------------------------------------------------------------------
Assets(excluding Goodwill)            $ 557.8   $ 471.2   $  55.4   $1,084.4
----------------------------------------------------------------------------
                                                                            
                                                                            
Nine months ended September 30, 2009                                        
----------------------------------------------------------------------------
($ millions)                            Kygyz               North           
                                     Republic  Mongolia   America     Total 
----------------------------------------------------------------------------
Revenue                               $ 260.6   $ 101.0   $     -   $ 361.6 
Expenses                                                                    
  Cost of sales                         179.1      42.7         -     221.8 
  Mine standby costs                        -       4.1         -       4.1 
  Regional office administration         10.2       5.5         -      15.7 
  Depreciation, depletion and                                               
   amortization                          53.3      20.6       0.6      74.5 
  Accretion and reclamation expense       0.8       0.9         -       1.7 
  Revenue based taxes                    23.3         -         -      23.3 
  Exploration and business                                                  
   development                            9.2       1.7       6.1      17.0 
  Other (income) and expenses             1.2      (2.7)      0.8      (0.7)
  Administration                          2.2       0.9      17.7      20.8 
----------------------------------------------------------------------------
                                        (18.7)     27.3     (25.2)    (16.6)
Kyrgyz settlement                                                     (49.3)
----------------------------------------------------------------------------
Loss before income taxes                                              (65.9)
Income tax expense                                                     13.7 
----------------------------------------------------------------------------
Net loss                                                            $ (79.6)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Capital expenditure for the period    $  57.1   $   3.7   $   0.2   $  61.0 
----------------------------------------------------------------------------
Assets(excluding Goodwill)            $ 445.6   $ 297.7   $  19.0   $ 762.3 
----------------------------------------------------------------------------

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