Centerra Gold Inc. (TSX: CG) (NYSE: CGAU) reported its first quarter 2024 operating and financial results.
President and CEO, Paul Tomory, commented, “Centerra had a strong quarter of operating performance with production and costs outperforming our expectations. At Mount Milligan, we continued to advance a site-wide optimization program, implementing tangible initiatives in several areas, including concentrate management, mine operations and mine-to-mill optimization. We are also focused on a preliminary economic assessment to evaluate the substantial mineral resources at the Mount Milligan mine to unlock value beyond its current 2035 mine life. At Öksüt, we remain on track with elevated production in the first half of the year, in line with our guidance.
“In the first quarter of 2024, our cash and cash equivalents increased to $647.6 million, despite making the $24.5 million payment related to the additional agreement with Royal Gold. We have been active on share buybacks in late February and March, delivering on our disciplined capital allocation strategy. Looking ahead, in the second quarter we expect to make tax and annual royalty payments in Türkiye, totalling approximately $105 million, which will impact our cash balance. We continue to believe that Centerra is well positioned to achieve its 2024 guidance, as we are delivering on our value maximizing strategy for the Company’s portfolio of assets,” concluded Mr. Tomory.
First Quarter 2024 Highlights
Operations
Financial
Other
Table 1 – Overview of Consolidated Financial and Operating Highlights
($millions, except as noted) | Three months ended March 31, | ||||
2024 | 2023 | % Change | |||
Financial Highlights | |||||
Revenue | 305.8 | 226.5 | 35 | % | |
Production costs | 173.8 | 204.3 | (15 | )% | |
Depreciation, depletion, and amortization (“DDA”) | 33.3 | 18.5 | 80 | % | |
Earnings from mine operations | 98.7 | 3.7 | 2568 | % | |
Net earnings (loss) | 66.4 | (73.5 | ) | 190 | % |
Adjusted net earnings (loss)(1) | 31.3 | (52.9 | ) | 159 | % |
Cash provided by (used in) operating activities | 99.4 | (99.8 | ) | 200 | % |
Free cash flow (deficit)(1) | 81.2 | (105.9 | ) | 177 | % |
Additions to property, plant and equipment (“PP&E”) | 15.3 | 8.0 | 91 | % | |
Capital expenditures – total(1) | 16.8 | 4.9 | 243 | % | |
Sustaining capital expenditures(1) | 16.2 | 4.9 | 231 | % | |
Non-sustaining capital expenditures(1) | 0.6 | — | 0 | % | |
Net earnings (loss) per common share – $/share basic(2) | 0.31 | (0.34 | ) | 191 | % |
Adjusted net earnings (loss) per common share – $/share basic(1)(2) | 0.15 | (0.24 | ) | 163 | % |
Operating highlights | |||||
Gold produced (oz) | 111,341 | 33,215 | 235 | % | |
Gold sold (oz) | 104,313 | 38,990 | 168 | % | |
Average market gold price ($/oz) | 2,074 | 1,890 | 10 | % | |
Average realized gold price ($/oz )(3) | 1,841 | 1,446 | 27 | % | |
Copper produced (000s lbs) | 14,331 | 13,355 | 7 | % | |
Copper sold (000s lbs) | 15,622 | 15,332 | 2 | % | |
Average market copper price ($/lb) | 3.86 | 4.05 | (5 | )% | |
Average realized copper price ($/lb)(3) | 3.12 | 3.42 | (9 | )% | |
Molybdenum sold (000s lbs) | 2,948 | 3,347 | (12 | )% | |
Average market molybdenum price ($/lb) | 19.93 | 32.95 | (40 | )% | |
Average realized molybdenum price ($/lb) | 20.47 | 29.91 | (32 | )% | |
Unit costs | |||||
Gold production costs ($/oz)(4) | 746 | 1,124 | (34 | )% | |
All-in sustaining costs on a by-product basis ($/oz)(1)(4) | 859 | 1,383 | (38 | )% | |
All-in costs on a by-product basis ($/oz)(1)(4) | 991 | 2,107 | (53 | )% | |
Gold – All-in sustaining costs on a co-product basis ($/oz)(1)(4) | 1,013 | 1,603 | (37 | )% | |
Copper production costs ($/lb)(4) | 1.92 | 2.66 | (28 | )% | |
Copper – All-in sustaining costs on a co-product basis – ($/lb)(1)(4) | 2.09 | 2.67 | (22 | )% |
(1) | Non-GAAP financial measure. See discussion under “Non-GAAP and Other Financial Measures”. | |
(2) | As at March 31, 2024, the Company had 214,361,403 common shares issued and outstanding. | |
(3) | This supplementary financial measure within the meaning of National Instrument 52-112 – Non-GAAP and Other Financial Measures Disclosure (“NI 51-112”). is calculated as a ratio of revenue from the consolidated financial statements and units of metal sold and includes the impact from the Mount Milligan Streaming Agreement, copper hedges and mark-to-market adjustments on metal sold not yet finally settled. | |
(4) | All per unit costs metrics are expressed on a metal sold basis. | |
2024 Outlook
The Company’s 2024 outlook previously disclosed in the MD&A for the year ended December 31, 2023, filed on SEDAR+ at www.sedarplus.ca and EDGAR at www.sec.gov/edgar, is unchanged except for the following revisions: the Kemess Project’s reclamation costs have been revised down from the range of $24 to $30 million to the range of $19 to $25 million and the expected Öksüt Mine taxes have been increased from the range of $46 to $52 million to the range of $54 to $60 million due to higher gold prices. The Company notes that except for the changes highlighted above the rest of the outlook remains unchanged. The Company’s full year 2024 outlook, as adjusted, and comparative actual results for the three months ended March 31, 2024 are set out in the following table:
Units | 2024 Guidance |
Three months ended March 31, 2024 |
|
Production | |||
Total gold production(1) | (Koz) | 370 – 410 | 111 |
Mount Milligan Mine(2)(3)(4) | (Koz) | 180 – 200 | 48 |
Öksüt Mine | (Koz) | 190 – 210 | 63 |
Total copper production(2)(3)(4) | (Mlb) | 55 – 65 | 14 |
Unit Costs(5) | |||
Gold production costs(1) | ($/oz) | 800 – 900 | 746 |
Mount Milligan Mine(2) | ($/oz) | 950 – 1,050 | 954 |
Öksüt Mine | ($/oz) | 650 – 750 | 587 |
All-in sustaining costs on a by-product basisNG(1)(3)(4) | ($/oz) | 1,075 – 1,175 | 860 |
Mount Milligan Mine(4) | ($/oz) | 1,075 – 1,175 | 688 |
Öksüt Mine | ($/oz) | 900 – 1,000 | 823 |
Capital Expenditures | |||
Additions to PP&E(1) | ($M) | 108 – 140 | 15.3 |
Mount Milligan Mine | ($M) | 55 – 65 | 0.8 |
Öksüt Mine | ($M) | 40 – 50 | 12.6 |
Total Capital ExpendituresNG(1) | ($M) | 108 – 140 | 16.8 |
Mount Milligan Mine | ($M) | 55 – 65 | 4.1 |
Öksüt Mine | ($M) | 40 – 50 | 11.3 |
Sustaining Capital ExpendituresNG(1) | ($M) | 100 – 125 | 16.2 |
Mount Milligan Mine | ($M) | 55 – 65 | 4.1 |
Öksüt Mine | ($M) | 40 – 50 | 11.3 |
Non-sustaining Capital ExpendituresNG(1) | ($M) | 8 – 15 | 0.6 |
Depreciation, depletion and amortization(1) | ($M) | 140 – 165 | 33.3 |
Mount Milligan Mine | ($M) | 90 – 100 | 18.3 |
Öksüt Mine | ($M) | 45 – 55 | 14.2 |
Income tax and BC mineral tax expense(1) | ($M) | 55 – 65 | 37.4 |
Mount Milligan Mine | ($M) | 1 – 5 | 0.9 |
Öksüt Mine | ($M) | 54 – 60 | 36.5 |
Molybdenum Business Unit
(Expressed in millions of United States dollars) | 2024 Guidance |
Three months ended March 31, 2024 |
Langeloth Facility | ||
Loss from operationsNG(1) | (5) – (15) | (3.8) |
Cash (used in) provided by operations before changes in working capital | (5) – 0 | (2.0) |
Changes in Working Capital | (20) – 20 | 3.8 |
Cash (Used in) Provided by Operations | (25) – 20 | 1.8 |
Sustaining Capital ExpendituresNG | (5) – (10) | (0.5) |
Free Cash Flow (Deficit) from OperationsNG(2) | (30) – 10 | 1.3 |
Thompson Creek Mine(2) | ||
Project Evaluation Expenses(3) | (17) – (20) | (6.9) |
Care and Maintenance Expenses – Cash | (1) – (3) | (0.9) |
Changes in Working Capital | — | 0.6 |
Cash Used in Operations | (18) – (23) | (7.2) |
Non-sustaining Capital ExpendituresNG | (7) – (12) | (0.4) |
Free Cash Flow (Deficit) from OperationsNG | (25) – (35) | (7.6) |
Endako Mine | ||
Care and Maintenance Expenses | (5) – (7) | (1.1) |
Reclamation Costs | (15) – (18) | — |
Cash Used in Operations | (20) – (25) | (1.1) |
Project Evaluation, Exploration, and Other Costs
The Company’s 2024 outlook for the Goldfield Project, Kemess Project, corporate administration, and other exploration projects and comparative actual results for the three months ended March 31, 2024 are set out in the following table:
(Expressed in millions of United States dollars) | 2024 Guidance |
Three months ended March 31, 2024 |
Project Exploration and Evaluation Costs | ||
Goldfield Project | 9 – 13 | 2.6 |
Thompson Creek Mine(1) | 17 – 20 | 6.9 |
Total Project Evaluation Costs | 26 – 33 | 9.5 |
Brownfield Exploration | 17 – 22 | 2.9 |
Greenfield and Generative Exploration | 18 – 23 | 2.6 |
Total Exploration Costs | 35 – 45 | 5.5 |
Total Exploration and Project Evaluation Costs | 61 – 78 | 15.0 |
Other Costs | ||
Kemess Project(2) | 19 – 25 | 2.9 |
Corporate Administration Costs | 37 – 42 | 10.0 |
Stock-based Compensation | 8 – 10 | 1.0 |
Other Corporate Administration Costs | 29 – 32 | 9.0 |
Mount Milligan
Mount Milligan produced 48,317 ounces of gold and 14.3 million pounds of copper in the first quarter of 2024. Mining activities were carried out in phases 6, 7, and 9 of the open pit. A total of 12.3 million tonnes were mined in the first quarter of 2024. Process plant throughput for the first quarter of 2024 was 5.2 million tonnes, averaging 56,728 tonnes per day. Mount Milligan is on track for its 2024 gold production guidance of 180,000 to 200,000 ounces and copper production guidance of 55 to 65 million pounds. Both gold and copper production are expected to be evenly weighted throughout the year, however, gold and copper sales in the second half of 2024 are expected to contribute approximately 55% of the annual sales.
Gold production costs in the first quarter 2024 were $954 per ounce, in line with $946 per ounce last quarter. AISC on a by-product basisNG was $688 per ounce, 27% lower than last quarter, due to lower sustaining capital expenditures and higher by-product credits. The Company expects gold production costs and AISC on a by-product basisNG to be higher in the second quarter of 2024 as a result of a lower percentage of annual sales in the first half of 2024 (as noted above), along with higher expected sustaining capital expenditures. Mount Milligan is on track for its full year 2024 gold production costs guidance and AISC on a by-product basisNG guidance.
In the first quarter 2024, sustaining capital expenditures at Mount Milligan were $4.1 million, focused on the tailings storage facility, projects related to water sourcing and access, equipment overhauls, and equipment purchases. The Company maintains the 2024 sustaining capital guidance at Mount Milligan and expects the sustaining capital spending to increase throughout the year.
In the first quarter of 2024, Centerra made progress on its site-wide optimization program at Mount Milligan, initially launched in the fourth quarter 2023 and focused on a holistic assessment of occupational health and safety, as well as improvements in mine and plant operations. This program covers all aspects of the operation to maximize the potential of the orebody, setting up Mount Milligan for long-term success to 2035 and beyond. Notable achievements in the first quarter of 2024 were observed in key areas, including:
On February 14, 2024, Centerra announced that the Company has entered into an additional agreement with Royal Gold relating to Mount Milligan, which has resulted in a life of mine extension to 2035 and established favourable parameters for potential future mine life extensions. Centerra has initiated a preliminary economic assessment to evaluate the substantial mineral resources at the Mount Milligan mine with a goal to unlock additional value beyond its current 2035 mine life. The PEA is expected to be completed in first half of 2025.
Öksüt
Öksüt produced 63,024 ounces of gold in the first quarter of 2024. Mining activities were focused on phase 5 and phase 6 of the Keltepe pit and in phase 2 of the Güneytepe pit. In the first quarter 2024, a total of 3.7 million tonnes were mined and 1.0 million tonnes were stacked at an average grade of 1.44 g/t. The Company is on track to achieve its production 2024 guidance with approximately 60% of the annual production weighted to the first half of the year.
Gold production costs and AISC on a by-product basisNG for the first quarter 2024 at Öksüt were $587 per ounce and $823 per ounce, respectively. These costs per ounce were higher compared to last quarter primarily due to increased mining and hauling costs and higher weighted average costs per ounce in the remaining inventory, as well as decreased gold production and sales. Öksüt is on track to achieve its gold production costs guidance and AISC on a by-product basisNG guidance for 2024.
In the first quarter 2024, sustaining capital expenditures at Öksüt were $11.3 million, focused on capitalized stripping and water treatment plant construction.
In 2024, Öksüt’s current income tax paid is expected to be approximately $95 to $105 million, with approximately $75 million to be paid in the second quarter of 2024, assuming no change in the exchange rate between the Turkish lira and US dollar. Additionally, the annual Turkish government royalty payment will be made in the second quarter 2024. This is expected to be approximately $30 million. Together, these cash payments will require a cash outflow in the second quarter 2024 of approximately $105 million.
Molybdenum Business Unit
In the first quarter 2024, the Molybdenum Business Unit sold 2.9 million pounds of molybdenum, generating revenue of $63.4 million with an average realized price of $20.47 per pound. As part of Centerra’s previously disclosed 2024 guidance, the Langeloth Metallurgical Facility is expected to complete an acid plant maintenance shutdown in the second quarter 2024. A portion of Langeloth’s full year sustaining capital expenditure guidance is related to this planned outage. Molybdenum sales are not expected to be impacted by the acid plant maintenance shutdown as Langeloth has sufficient inventory levels to maintain a steady level of sales. As part of Centerra’s strategy to maximize the value for each asset in its portfolio, the Company has recently completed a commercial optimization plan at Langeloth, geared at increasing profitability and evaluating its future potential. Details of the commercial optimization plan and the value potential at Langeloth will be announced in conjunction with the Thompson Creek Mine feasibility study in late summer of 2024.
In the first quarter of 2024, the Thompson Creek Mine progressed with early works in the main open pit area that are expected to continue through 2024. The costs of these activities are expected to be expensed until a limited notice to proceed is authorized by the Board of Directors, a matter to be considered following completion of the feasibility study.
About Centerra
Centerra Gold Inc. is a Canadian-based mining company focused on operating, developing, exploring and acquiring gold and copper properties in North America, Türkiye, and other markets worldwide. Centerra operates two mines: the Mount Milligan Mine in British Columbia, Canada, and the Öksüt Mine in Türkiye. The Company also owns the Goldfield Project in Nevada, United States, the Kemess Project in British Columbia, Canada, and owns and operates the Molybdenum Business Unit in the United States and Canada.
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