Centerra Gold, Inc. Q1 FY2024 earnings call

Management Statement and Operational Highlights

• Operating Performance: Delivered strong first quarter operating performance, on track for full year guidance. Cash balance increased by $35 million to $648 million. Generated significant free cash flow.
• Mount Milligan: Site-wide optimization program implemented, with improved safety performance (increased proactive safety interactions, fewer incidents), increased mining fleet productivity, mill throughput, and efforts to increase gold and copper recoveries.
• Öksüt: Site team achieved 3 million hours without a lost time injury in January. Had strong operating performance in the first quarter, on track for full year production guidance.
• Strategic Initiatives: Announced agreement with Royal Gold for Mount Milligan, commercial optimization at Langeloth, and ongoing ESG initiatives focusing on site-level climate and nature risk investigations and community engagement.

Segment Performance

• Mount Milligan: In the first quarter, produced over 48,000 ounces of gold and over 14 million pounds of copper. Full year production guidance is 180,000-200,000 ounces of gold and 55-65 million pounds of copper. All-in sustaining cost on a byproduct basis was $688 per ounce in the first quarter, 27% lower than the previous quarter due to lower sustaining capital spending and higher byproduct credits.
• Öksüt: First quarter production was over 63,000 ounces. All-in sustaining loss on a byproduct basis was $823 per ounce, higher than the last quarter due to increased mining and hauling costs, etc. Öksüt is on track to achieve its full year cost guidance ranges.
• Molybdenum business unit: In the first quarter, used $7 million of cash from operations and had a free cash flow deficit of $7 million, primarily related to activities at the Thompson Creek Mine; Langeloth had slightly positive operating cash flows for the quarter.

Guidance

• On track to meet full year 2024 guidance. Cash balance at $648 million. Board declared a quarterly dividend of $0.07 per share. Active in share buybacks in the first quarter. Expect routine statutory payments in Q2 2024 (approximately $105 million) to impact cash flow, but Öksüt expected to have strong cash flow from operations before working capital in all quarters this year.

Risks

• Timing of sales versus production at Mount Milligan due to shipping schedule timing.
• Working capital movements related to mismatches between molybdenum concentrate purchase and sale prices.
• Dependence on shipment timing and market conditions affecting TC/RCs and refining costs.

Q: Regarding Mount Milligan optimization initiatives, any comment on sustainability of cost decrease and potential further unit cost reduction? Also, on Molybdenum business unit, status of strategic process.

A: Paul Tomory mentioned progress in M Plus program, around 10% cost decrease so far, ongoing continuous improvement. Ryan Snyder stated Molybdenum business unit has threefold program: advancing feasibility study, completed commercial optimization at Langeloth, and continuing strategic process tied to feasibility study results.

Q: On Langeloth commercial optimization plan, key wins and future improvements?

A: Paul Chawrun explained Langeloth has new commercial framework for contracts, current contracts more commercially attractive, and profitability model confident when ramping up capacity.

Q: Timing of sales vs production at Mount Milligan and TC/RCs sustainability?

A: Ryan Snyder said sales timing is due to shipment schedules (e.g., last shipment of Q1 was end of quarter, next shipment in early July). TC/RCs expected to remain fairly flat as mix of contracts and recovery initiatives balance out costs.