Earnings call: Centerra Gold met its production and cost guidance

Centerra Gold Inc. (CG) has reported a blended monetary efficiency within the fourth quarter of 2023, with a internet lack of $28.8 million however an adjusted internet earnings of $61.2 million. The corporate met its manufacturing and value steerage for the 12 months and generated vital free money stream. With a strong money steadiness of $613 million on the finish of the 12 months, Centerra Gold is positioned for future development, anticipating larger gold manufacturing in 2024. The corporate has additionally introduced preliminary plans to increase the lifetime of its Mount Milligan mine and is progressing with different key initiatives.

Key Takeaways

• Centerra Gold met its manufacturing and value steerage for 2023.
• The corporate reported a internet lack of $28.8 million in This fall however had adjusted internet earnings of $61.2 million.
• Vital free money stream was generated, with $111 million in This fall and $160 million for the complete 12 months.
• Centerra Gold ended the 12 months with a robust money steadiness of $613 million.
• An settlement with Royal Gold (NASDAQ:) was introduced to evaluate the potential for extending the lifetime of Mount Milligan mine past 2035.
• The corporate expects to provide extra gold in 2024 with projected robust money stream from operations.

Firm Outlook

• Centerra Gold anticipates larger gold manufacturing in 2024, between 370,000 and 410,000 ounces.
• Gold manufacturing prices are anticipated to vary from $800 to $900 per ounce.
• All-in sustaining prices are projected to be $1,075 to $1,175 per ounce.
• The corporate plans to take a position $35 million to $45 million in exploration, with a deal with each brownfield and greenfield targets.

Bearish Highlights

• The corporate reported a internet lack of $28.8 million within the fourth quarter.
• The Molybdenum Enterprise Unit skilled a free money stream deficit of $9 million.

Bullish Highlights

• Adjusted internet earnings for This fall reached $61.2 million.
• Centerra Gold generated $146 million from working actions and $111 million in free money stream in This fall.
• The Mount Milligan and Öksüt mines produced vital money stream in This fall.
• Money steadiness elevated by $121 million, offering whole liquidity of over $1 billion.

Misses

• The online loss in This fall displays challenges regardless of robust operational efficiency.

Q&A highlights

• Paul Chawrun mentioned ongoing efforts to optimize the Goldmark mine plan and decrease the strip ratio.
• Paul Tomory highlighted long-term enhancements at Mount Milligan, together with potential course of plant modifications to boost gold restoration.

Centerra Gold’s fourth-quarter efficiency demonstrated a sturdy operational functionality, balanced by monetary challenges. The corporate’s forward-looking statements point out confidence of their skill to extend gold manufacturing and preserve robust money stream within the coming 12 months. With strategic investments in exploration and undertaking improvement, Centerra Gold is charting a course for sustained development and profitability. The transition of the CFO position from Darren Millman to Ryan Snyder in April marks a brand new chapter within the firm’s monetary management, because it continues to navigate the complexities of the worldwide mining business.

InvestingPro Insights

Centerra Gold Inc.’s (CG) current monetary efficiency and future outlook current a blended image, with vital operational strengths underscored by some monetary challenges. The InvestingPro Insights gleaned from real-time knowledge and professional evaluation spotlight key components that traders ought to think about when evaluating the corporate’s potential.

InvestingPro Information signifies a market capitalization of roughly $1.1 billion, suggesting a notable presence within the mining sector. The corporate’s P/E ratio stands at -6.18, reflecting its current internet loss, whereas the adjusted P/E ratio for the final twelve months as of This fall 2023 is -20.34. Regardless of the destructive earnings, Centerra Gold has demonstrated robust income development, with a 28.78% improve during the last twelve months and a powerful 63.2% quarterly income development in This fall 2023. This development factors to the corporate’s skill to broaden its operations efficiently and generate larger gross sales.

Among the many “InvestingPro Ideas,” it is price noting that Centerra Gold’s administration has been actively partaking in share buybacks, which could be a signal of confidence within the firm’s future efficiency and a possible worth proposition for shareholders. Moreover, the corporate holds extra cash than debt on its steadiness sheet, offering monetary flexibility and a strong basis for future development initiatives. That is notably related given the corporate’s plans to spend money on exploration and lengthen the lifetime of its Mount Milligan mine.

Buyers taken with a deeper evaluation can discover extra “InvestingPro Ideas” on Centerra Gold, with a complete of 8 suggestions obtainable. The following pointers can present additional insights into the corporate’s monetary well being and future prospects. For entry to those helpful suggestions, go to https://www.investing.com/professional/CGAU and keep in mind to make use of coupon code PRONEWS24 to get a further 10% off a yearly or biyearly Professional and Professional+ subscription.

The corporate’s outlook for elevated gold manufacturing and projected robust money stream from operations in 2024 aligns with the optimistic indicators from the “InvestingPro Ideas,” such because the expectation of internet revenue development this 12 months and a excessive shareholder yield. These components, mixed with the corporate’s strategic investments in exploration and undertaking improvement, recommend that Centerra Gold is positioning itself for sustained development and profitability within the mining business.

Full transcript – Centerra Gold NYQ (CGAU) This fall 2023:

Operator: Thanks for standing by. That is the convention operator. Welcome to the Centerra Gold Fourth Quarter 2023 Convention Name. As a reminder, all contributors are in listen-only mode, and the convention is being recorded. After the presentation, there will likely be a chance to ask questions. [Operator Instructions] I might now like to show the convention over to Lisa Wilkinson, Vice President, Investor Relations and Company Communications with Centerra Gold. Please go forward.

Lisa Wilkinson: Thanks, operator, and good morning, everybody. Welcome to Centerra Gold’s fourth quarter 2023 outcomes convention name. Becoming a member of me on the decision right this moment are Paul Tomory, President and Chief Govt Officer; Paul Chawrun, Chief Working Officer; and Darren Millman, Chief Monetary Officer. Our launch yesterday particulars our fourth quarter 2023 outcomes. It ought to be learn together with our MD&A and monetary statements, each of which might be discovered on SEDAR, EDGAR and our web site. All figures are in U.S. {dollars}, until in any other case famous. Presentation slides accompanying this webcast can be found on Centerra’s web site. Following the ready remarks, we are going to open the decision for questions. Earlier than we start, I wish to warning everybody that sure statements made right this moment could also be forward-looking and are topic to dangers which can trigger our precise outcomes to vary from these expressed or implied. Please seek advice from the cautionary statements included within the presentation in addition to the danger components set out in our annual info type. Sure measures we are going to focus on are non-GAAP measures. Please seek advice from the outline of non-GAAP measures in our information launch and MD&A issued yesterday. I’ll now flip the decision over to Paul Tomory.

Paul Tomory: Thanks, Lisa, and good morning, everybody. To start out, I would like to precise my sympathy and help to everybody impacted because of a current slip of the heap leach pad on the mine in Türkiye. We now have despatched a mine rescue workforce to help within the restoration efforts and our ideas and prayers are with the affected people. Shifting on to Centerra’s efficiency, we delivered a robust end to 2023, reaching each manufacturing and value steerage for the 12 months. Fourth quarter was our second consecutive quarter of great free money stream, and we ended the 12 months with over $600 million in money and money equivalents. I would additionally like to focus on annual document efficiency at Mount Milligan in each the mine and the plant. Our lately introduced extra settlement with Royal Gold permits us to take a look at the Mount Milligan copper-gold porphyry deposit rather more broadly and to evaluate its potential to be a multi-decade operation. This can be a key first step in our technique to comprehend the complete potential of this cornerstone asset in a top-tier mining jurisdiction. Trying forward at Mount Milligan, we have initiated a preliminary financial evaluation to judge the potential of a mine life extension past 2035. The PEA is predicted to be accomplished within the first half of 2025. We may also proceed to spend money on exploration drilling to unlock the massive mineral endowment in Mount Milligan, setting the stage for potential future useful resource additions. And at last, we’re persevering with to advance site-wide optimization program, assessing all facets of the operation to maximise the potential of the ore physique to set Mount Milligan up for long-term success to 2035 and past. Along with our strategic method on Mount Milligan, we’re additionally targeted on a number of key areas in 2024. We anticipate to finish the feasibility examine for the Thompson Creek restart in the midst of 2024 in addition to an preliminary useful resource estimate of the Goldfield Undertaking by the tip of 2024. Within the 12 months forward, we anticipate to proceed to ship on our strategic plan to maximise the worth of the property in our portfolio. Lastly, I would like to the touch on a current ESG achievement. In 2020, Öksüt joined the Worldwide Cyanide Administration Institute as a signatory. Over a span of three years, the location underwent a certification program to align with the Institute’s ideas and requirements apply. In early January, Öksüt efficiently attained certification for the Institute, confirming full adherence to the Worldwide Cyanide Administration Code. This was a collaborative effort with workforce members from ESG, occupational well being and security, course of, upkeep and building departments working collectively to realize this vital milestone. And with that, I will move the decision over to Paul Chawrun to stroll us by means of our operational efficiency for the quarter.

Paul Chawrun: Thanks, Paul. On Slide 5, we present working highlights at Mount Milligan for the quarter. The Mount Milligan mine produced over 40,000 ounces of gold and nearly 20 million kilos of within the fourth quarter, reaching 2023 manufacturing steerage ranges for each gold and copper. For 2023, Mount Milligan achieved annual information for whole tonnes mined and plant throughput at over 50 million tonnes mined and 21.7 million tonnes processed, respectively. Trying forward, in 2024, we anticipate Mount Milligan to provide 180,000 to 200,000 ounces of payable gold, which is 23% larger than final 12 months, primarily as a consequence of mine sequencing and better gold grade. 2024 payable copper manufacturing is predicted to be between 55 million to 65 million kilos. Each gold and copper manufacturing are anticipated to be evenly weighted all year long, however gross sales within the second half of 2024 are anticipated to contribute roughly 55% of the annual gross sales. Within the fourth quarter, gold manufacturing prices had been $946 per ounce and all-in sustaining prices on a by-product foundation had been $946 per ounce. Full 12 months 2023 gold manufacturing value at Mount Milligan had been $1,088 per ounce, which was in keeping with the steerage vary. Full 12 months all-in sustaining prices had been $1,156 per ounce, beating the steerage vary. Trying forward, Mount Milligan’s 2024 all-in sustaining prices are anticipated to be $1,075 to $1,175 per ounce. Within the fourth quarter, we launched into a site-wide optimization program at Mount Milligan targeted on an built-in holistic evaluation of occupation and well being and security, mine and plant operations. We’re inspired by the preliminary money stream enchancment estimates from the primary section of labor on this program, and we anticipate to begin realizing the advantages of this system later this 12 months. In consequence, the potential value financial savings usually are not included within the Mount Milligan’s 2024 value steerage ranges. On Slide 6, as Paul talked about earlier, we’re assessing Mount Milligan’s potential to be a multi-decade operation. We now have 250 million tonnes of reserves at Mount Milligan, extending our mine life out to 2035. As well as, we’ve got considerably elevated our useful resource to 260 million tonnes, most of which is classed as measured or indicated. And lastly, we’ve got extra drilled stock, which has not been integrated into the sources, the place we intend to proceed drilling with the target of additional will increase to the sources. We intend to include these extra sources into an optimized mine plan in help of a preliminary financial evaluation. On Slide 7, to offer extra element, we’re focusing on deposits to the west and southwest of the principle pit inside the present mining lease. At Goldmark and South Boundary, there are prospects for close to floor additions. At North Slope, DWBX and Saddle West, we proceed to check for depth extension. And at last, I commend the Mount Milligan website workforce for embracing the location optimization program. The workforce has been absolutely engaged and is devoted to enhancing the tradition for steady enchancment by means of this essential initiative. Thus far, we began to see proof of this regularly improved security efficiency within the fourth quarter and year-to-date. On Slide 8 are the working highlights at Öksüt. Öksüt closed out the 12 months with a second consecutive quarter of robust efficiency. Fourth quarter manufacturing was over 88,000 ounces and full 12 months manufacturing was nearly 196,000 ounces, reaching the midpoint of the steerage vary. Manufacturing steerage for 2024 at Öksüt is estimated to be 190,000 to 210,000 ounces of gold, which is aligned with our beforehand disclosed lifetime of mine plan printed final September. As we’re nonetheless going by means of the buildup of stock, roughly 60% of the annual manufacturing is predicted to be weighted to the primary half of this 12 months. Gold manufacturing prices and all-in sustaining prices on a by-product foundation within the fourth quarter of 2023 had been $474 per ounce and $671 per ounce, respectively. Full 12 months 2023 gold manufacturing prices and all-in sustaining prices had been $457 per ounce and $675 per ounce, respectively, in keeping with the steerage ranges. Trying forward, 2024 gold manufacturing value steerage is predicted to be $650 to $750 per ounce and all-in sustaining value steerage is predicted to be $900 to $1,000 per ounce. Prices in 2024 at Öksüt are anticipated to be larger than beforehand disclosed within the lifetime of mine plan as a consequence of a brand new multiyear contract with the prevailing mining and hauling service supplier in addition to larger weighted common value per ounce within the remaining stock. To wrap up, I would prefer to commend the Öksüt workforce for outperforming their 2023 security targets and reaching one 12 months and not using a misplaced time harm in early December. This milestone demonstrates our precedence to the security of our workforce and our dedication to the journey in the direction of reaching zero hurt. I will now move on to Darren to stroll by means of our monetary highlights for the quarter.

Darren Millman: Thanks, Paul. Slide 9 particulars our fourth quarter monetary outcomes. Within the quarter, we incurred a internet lack of $28.8 million or a lack of $0.13 per share. There have been a number of adjusting gadgets within the quarter, together with $50 million of reclamation provision reevaluation expense and $34.1 million of noncash impairment loss associated to the useful resource change on the Kemess Undertaking and the sale of the Berg Undertaking amongst different issues. Because of the one-time gadgets adjusting internet earnings within the fourth quarter was $61.2 million or $0.28 per share. Within the fourth quarter, gross sales had been 130,281 ounces of gold and 16.6 million kilos of copper. The common realized worth was $1,846 per ounce of gold and $3 per pound of copper, which contains the prevailing stream preparations on the Mount Milligan Mine. On the Molybdenum Enterprise Unit within the fourth quarter, roughly 2.1 million kilos of molybdenum was offered at a median molybdenum worth of $20.35 per pound, producing $47 million in income. Within the fourth quarter of 2023, additions to property, plant and tools, and whole capital expenditure was $68 million and $36 million, respectively. Consolidated all-in sustaining prices on a by-product foundation for the quarter had been $831 per ounce, which achieved our 2023 steerage goal. Slide 10 exhibits our monetary highlights for the quarter. The fourth quarter was our second consecutive quarter of great free money stream. Money generated by working actions was $146 million within the quarter, and free money stream was $111 million. For the complete 12 months 2023, money supplied for working actions was $246 million and free money stream was $160 million. On the Mount Milligan Mine, money supplied by the mine operations and free money stream had been $29 million and $14 million, respectively, within the fourth quarter. For the complete 12 months, money supplied by working actions was $114 million and free money stream was $73 million. At Öksüt, within the fourth quarter, the mine generated $144 million in money from operations and $128 million in free money stream. For the complete 12 months, money supplied by working exercise was $275 million, and free money stream was $238 million. On the Langeloth metallurgical facility, roughly $6 million of funding in working capital from the primary quarter was launched in the course of the fourth quarter. Nonetheless, the Molybdenum Enterprise Unit as an entire had a free money stream deficit of $9 million within the fourth quarter. Within the fourth quarter, we obtained a $25 million fee from Orion Mine Finance Group in relation to the December 2021 sale of our curiosity within the Greenstone Undertaking. Within the fourth quarter, our money steadiness grew by $121 million to $613 million. This gives us with whole liquidity over $1 billion and positions the corporate nicely to execute on our strategic plan and ship shareholder worth. Given our robust monetary place, the Board declared a quarterly dividend of $0.07 per share. Slide 11 exhibits our 2024 outlook. In 2024, we anticipate to provide between 370,000 ounces and 410,000 ounces of gold, which is 11% larger than final 12 months, and copper manufacturing is predicted to be between 55 million and 65 million kilos of copper. 2024 consolidated gold manufacturing value and all-in sustaining prices are anticipated to be $800 to $900 per ounce and $1,075 and $1,175 per ounce, respectively. 2024 sustaining capital expenditure are anticipated to be $100 million to $125 million and non-sustaining capital steerage is $8 million to $15 million. We proceed to spend money on exploration. In 2024, we anticipate to spend $35 million to $45 million. Roughly 48% of exploration spending is said to brownfield targets and 52% is said to greenfield and basic exploration packages. In 2024, Öksüt’s present revenue tax paid is predicted to be between $85 million and $95 million. Given the timing of the statutory funds made in Türkiye, the annual royalty fee and revenue tax funds referring to This fall 2023 and Q1 2024 will likely be made within the second quarter of 2024. In consequence, our money stream within the second quarter of 2024 will likely be impacted by these money funds. We’re anticipating a strong 2024 with a excessive gold manufacturing in comparison with final 12 months, and we anticipate to proceed to generate robust money stream from our operations. I will move it again to Paul for some closing remarks.

Paul Tomory: Thanks very a lot, Darren. Earlier than we wrap up the decision and on behalf of the Board of Administrators, I would prefer to take this chance to thank Darren for his laborious work and dedication for the previous 11 years at Centerra. And personally, it has been a pleasure for me to have labored with Darren over the previous 10 months, as I personally have executed my very own onboarding right here. He is constructed a robust monetary place for the corporate with over $1 billion of liquidity, no debt, and has set us up for a profitable CFO transition. Ryan Snyder will likely be taking up from Darren as CFO in April. Ryan has been with us for nearly two years as VP of Finance and may be very nicely positioned for this new alternative. We want Darren and his household all the very best as they relocate again house to Australia. And with that, I will conclude and open the decision to questions.

Operator: We’ll now start the question-and-answer session. [Operator Instructions] The primary query comes from Brian MacArthur with Raymond James. Please go forward.

Brian MacArthur: Good morning. I simply needed to comply with up on the Q2 fee for Öksüt. Is that simply the $40 million you present in taxes payable for the taxes after which there will be the royalty fee on high of that? So, I ought to be taking a look at — I do not know in the event you may give me a quantity for that quarter. After which, the $85 million to $90 million that you simply’re forecasting for this 12 months, I assume that will get paid then within the second quarter of subsequent 12 months. Is that appropriate?

Paul Tomory: Yeah, Darren, go forward on that.

Darren Millman: Yeah. So, the numbers referenced earlier, in order that references the 2024 — sorry, the 2023 revenue tax payable and likewise the Q1 2024 royalty. In order that quantity referenced — the entire quantity I referenced earlier is mixed of each these two, Brian.

Brian MacArthur: Proper. However the taxes — you have got taxes payable and your present liabilities of $40.9 million, is that — is that — that’s the Öksüt fee, proper? So, I ought to be considering of $40 million for that plus regardless of the royalty is on high of that?

Darren Millman: Appropriate.

Brian MacArthur: Proper. Thanks. And my second query is, I do not know in the event you may give steerage on this, and clearly, congratulations on the excellent free money stream, we’re nonetheless working by means of stock at Öksüt, however we all know all of the ADR stuff, which was very low cost on a money foundation has gone. Is there a number of, what I might name, historic — I imply you used to present a quantity, there is a truthful variety of ounces that also have to return out with very low money prices versus what would you label as ongoing value out of the mine. Is there nonetheless a bunch of money to deliberate in from that within the first half of the 12 months?

Paul Chawrun: Yeah, Brian. So I suppose, basically, we’re working by means of the stock and there was some constructed up on the finish of 2023. So, I suppose one of the simplest ways to clarify it’s our all-in sustaining prices that we have guided to, that can have that baked in for the rest of the 12 months. And the majority of that stock is accomplished in Q1 and Q2. As a result of it will get built-in with what we’re stacking now.

Brian MacArthur: Proper. Okay. That is clear. I simply needed to verify that. However there — so there’s nonetheless a few of that, what I name older pre-mine stuff nonetheless coming by means of within the first half of the 12 months, but it surely’s all weighted into your common value of stock, which is able to come out. Is that appropriate?

Paul Chawrun: That is proper. So, we have baked that into the all-in sustaining for all of 2024. And in actuality, it would most likely be barely much less within the entrance finish and barely larger on the again finish in consequence.

Paul Tomory: And that is why we have guided to the upper proportion of manufacturing coming from the primary half of the 12 months as a result of we’re nonetheless benefiting from these stock ounces.

Brian MacArthur: Nice. Thanks very a lot. Very clear.

Operator: [Operator Instructions] The subsequent query comes from Lawson Winder with Financial institution of America Securities. Please go forward.

Lawson Winder: Thanks very a lot, operator, and good morning, everybody. Thanks for the presentation. I needed to ask about Mount Milligan exploration upside. And simply taking a look at that chart you guys have displaying the Goldmark deposit after which the opposite deposit beneath it, do you have got a way of what the strip ratio may seem like on that? I imply it appears like it will be comparatively low given the place Goldmark is, after which you have got that deposit proper beneath it. Thanks.

Paul Chawrun: Yeah. I haven’t got a quantity on strip ratio as a result of a few of that hasn’t actually been that nicely outlined in between on that precise part view that you simply’re referring to. However what we’ll be doing is we’ll be drilling that by means of secondly, over on that North Slope after which simply a number of the different part view to the Southwest. We now have fairly a bit of how to go to increase the mineralization with what we have already drilled after which we’ll be optimizing the mine plan in order that we’ll be taking good care of the strip ratio — low strip ratio on the entrance finish after which, in fact, at depth previously. In order that will likely be all a part of the optimization of the PEA. However no, I haven’t got a precise strip ratio as a result of we have not outlined all of the mineralization in these areas.

Lawson Winder: Okay. Honest sufficient. I simply thought perhaps you’d have some sense of it by now, however that is fully truthful. The opposite factor I needed to ask about is, for ages, there’s been dialogue about doubtlessly bettering the recoveries of gold at Mount Milligan. And I assume with the up to date settlement with Royal Gold, there’s most likely extra motivation to take action. What are form of the gadgets you are specializing in? And what is the timeline to offering some readability to the market and what you could possibly doubtlessly do there?

Paul Tomory: Sure, Lawson, I will give a response right here, and Paul will give just a little bit extra element. However you are fairly appropriate. With the transaction introduced with Royal Gold, what that offers us is the boldness to take a look at long-term investments within the asset, which incorporates course of plant enhancements. In order a part of the PEA, we will likely be taking a look at longer-term modifications to the plant that might enhance restoration. Now that does not imply that there aren’t near-term steady enchancment sort issues we will do on restoration. However long term, there could also be capital enhancements that might be made within the mill. However Paul, why do not you discuss each of these, the shorter-term and the longer-term concepts?

Paul Chawrun: Yeah. So, in the long run, we’ll be taking a look at changes to the stream sheet with some capital, and that will likely be a key a part of the PEA. And we have already initiated the metallurgical check work for that. I will not get into specifics, however it might contain a unique course of that would want a separate stage of allowing. After which, on the quick time period, it is actually nearly wanting incrementally right through balancing throughput versus the reagent consumption versus the grind dimension to incrementally achieve on the gold and the copper restoration, understanding the ore physique, getting a geomet steadiness. And it is actually simply the laborious yards lifting — heavy lifting of getting the incremental good points right through. The opposite key component right here is we’ve got improved on the throughput on the entrance finish on the secondary crush. After which, in fact, there is a steadiness between throughput and total restoration. And so, we’re working by means of all that optimization and there is a myriad of initiatives to undergo every of these incremental good points.

Lawson Winder: Okay. Nice. Thanks each very a lot.

Operator: [Operator Instructions] Since there are not any extra questions, this concludes the question-and-answer session and right this moment’s convention name. Chances are you’ll disconnect your traces. Thanks for collaborating, and have a nice day.

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