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

• Production: Consolidated gold production of 111,341 ounces, including 48,317 ounces of gold from the Mount Milligan Mine and 63,024 ounces of gold from the Öksüt Mine Copper production in the quarter was 14.3 million pounds.
• Sales: First quarter 2024 gold sales of 104,313 ounces at an average realized gold price^NG of $1,841 per ounce and copper sales of 15.6 million pounds at an average realized copper price^NG of $3.12 per pound. The average realized gold and copper prices include the impact from the Mount Milligan streaming agreement.
• Costs: Consolidated gold production costs were $746 per ounce and all-in sustaining costs on a by-product basis^NG were $859 per ounce for the quarter.
• Capital expenditures^NG: Additions to property, plant, and equipment and sustaining capital expenditures^NG were $15.3 million and $16.2 million, respectively. Sustaining capital expenditures^NG in the first quarter 2024 included water pumping system construction, equipment overhauls, and purchases of mobile equipment at Mount Milligan, as well as the heap leach pad expansion and capitalized stripping and water treatment plant construction at Öksüt.

Financial

• Net earnings: First quarter 2024 net earnings were $66.4 million, or $0.31 per share, and adjusted net earnings^NG were $31.3 million or $0.15 per share. Adjustments to net earnings include $25.0 million of reclamation provision revaluation recovery, $8.9 million of unrealized foreign currency exchange gains, and $6.8 million in income tax adjustments mainly resulting from a withholding tax expense on the repatriation of Öksüt’s earnings. For additional adjustments refer to the “Non-GAAP and Other Financial Measures” disclosure at the end of this news release.
• Cash provided by operating activities and free cash flow^NG: Cash provided by operating activities was $99.4 million and free cash flow^NG was $81.2 million. This includes $101.4 million of cash provided by mine operations and $90.1 million of free cash flow^NG at Öksüt; and $30.0 million of cash provided by mine operations and $24.1 million of free cash flow^NG at Mount Milligan. This is offset by cash used in operating activities and a free cash flow^NG deficit from corporate expenses, Thompson Creek expenditures, and other exploration activities.
• Cash and cash equivalents: Total liquidity of $1,046.9 million as at March 31, 2024, comprising a cash balance of $647.6 million and $399.3 million available under a corporate credit facility.
• Dividend: Quarterly dividend declared of C$0.07 per common share.

Other

• Share buybacks: Under Centerra’s normal course issuer bid (“NCIB”) program, the Company repurchased 1,783,800 common shares in the first quarter 2024, for the total consideration of $10.0 million.
• Mount Milligan mine life extension and additional agreement with Royal Gold: In the first quarter of 2024, Centerra announced an additional agreement with Royal Gold related to Mount Milligan, which resulted in a life of mine extension to 2035 and established favourable parameters for potential future mine life extensions. This is a key first step in the Company’s strategy to realize the full potential of this cornerstone asset in a top-tier mining jurisdiction. For additional details, please refer to the announcement entitled “Centerra Gold Announces Mount Milligan Mine Life Extension and Additional Agreement with Royal Gold”, issued on February 14, 2024.
• Thompson Creek Feasibility Study: Work is progressing on the feasibility study to evaluate the restart of mining at the Thompson Creek mine. The Company expects to complete the study in late summer of 2024.

Table 1 – Overview of Consolidated Financial and Operating Highlights

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:

1. Consolidated Centerra figures.
2. The Mount Milligan Mine is subject to the Mount Milligan Streaming Agreement. Using an assumed market gold price of $2,000 per ounce and a blended copper price of $3.75 per pound for 2024, Mount Milligan Mine’s average realized gold and copper price for the remaining three quarters of 2024 would be $1,419 per ounce and $2.96 per pound, respectively, compared to average realized prices of $1,552 per ounce and $3.12 per pound in the three-month period ended March 31, 2024, when factoring in the Mount Milligan Streaming Agreement and concentrate refining and treatment costs. The blended copper price of $3.75 per pound factors in copper hedges in place as of March 31, 2024.
3. In 2024, gold and copper production at the Mount Milligan Mine is projected with recoveries estimated at 64% and 78%, respectively.
4. Unit costs include a credit for forecasted copper sales treated as by-product for all-in sustaining costs^NG and all-in costs^NG. Production for copper and gold reflects estimated metallurgical losses resulting from handling of the concentrate and metal deductions levied by smelters.
5. Units noted as ($/oz) relate to gold ounces and ($/lb) relate to copper pounds.

Molybdenum Business Unit

1. Includes DDA of $0.9 million in the Q1 2024 actuals and $5 to $10 million in the full year of 2024 guidance.
2. Outlook range for the Thompson Creek Mine relates to the first half of 2024 only.
3. Project evaluation expenses are recognized as expense in the consolidated statements of earnings (loss).

Project Evaluation, Exploration, and Other Costs

The Company’s 2024 outlook for the Goldfield Project, Kemess Project, corporate administration, and other exploration projects and comparative actual results for the three months ended March 31, 2024 are set out in the following table:

1. Outlook range for the Thompson Creek Mine relates to the first half of 2024 only.
2. Includes care and maintenance costs as well as reclamation costs included in the reclamation provision as at March 31, 2024.

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 basis^NG 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 basis^NG 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 basis^NG 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:

• Occupational health and safety: An improved safety record, including an increase in proactive safety interactions, fewer incidents and a much lower severity index compared to the same period last year. There has been a significant increase of focus and measurement of the leading indicators such as our visible felt leadership program, root cause incident investigation and mitigation of fatal risks (MFR). These initiatives collectively have contributed to cultivating a safer and more informed workplace, fostering the well-being and productivity of all personnel.
• Mine: Increase in the mining fleet mechanical availability, utilization and overall productivity of the load-haul cycle. These strategies have contributed to higher tonnes mined compared to the same period last year, while simultaneously lowering the unit operating costs.
• Plant: Increased mill throughput per operating day due to factors such as consistent ore supply, renewed operating strategy of the flotation circuit and equipment modifications. Additionally, as part of the optimization efforts, the site has started to test a number of initiatives that aim to increase the overall copper and gold recoveries. This includes real-time adjustments to the flotation circuit for improved stabilization with optimal grind sizing and throughput, producing a higher volume of gold-copper concentrate with lower copper grades and ore blending initiatives to improve the processing of elevated pyrite bearing high-grade gold, low-grade copper ore.

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 basis^NG 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 basis^NG 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.