Centerra Gold Q4 2024 Earnings Call Transcript

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Provided by Quartr
February 21, 2025
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Operator

Operator. Welcome to the Centara Gold Fourth Quarter twenty twenty four Conference Call. As a reminder, all participants are in a listen only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. I would now like to turn the conference call over to Lisa Wilkinson, Vice President, Investor Relations and Corporate Communications with Centerra Gold.

Operator

Please go ahead.

Operator

And you

Operator

And apologies, everyone. This is the conference operator once again. We would like to welcome you to the Centerra Gold Fourth Quarter twenty twenty four Conference Call. And at this time, I will turn that floor over to Lisa Wilkinson, and once again, the Vice President, Investor Relations and Corporate Communications with Centerra Gold. Ma'am, you may begin.

Lisa Wilkinson
Lisa Wilkinson
Vice President of Investor Relations & Corporate Communications at Centerra Gold

Thank you, operator, and good morning, everyone. Welcome to Centerra Gold's fourth quarter twenty twenty four results conference call. Joining me on the call today are Paul Tomori, President and Chief Executive Officer Paul Charan, Chief Operating Officer and Ryan Snyder, Chief Financial Officer. Our release yesterday details our fourth quarter twenty twenty four results. It should be read in conjunction with our MD and A and financial statements, both of which can be found on SEDAR, EDGAR and our website.

Lisa Wilkinson
Lisa Wilkinson
Vice President of Investor Relations & Corporate Communications at Centerra Gold

All figures are in U. S. Dollars unless otherwise noted. Presentation slides accompanying this webcast are available on Centerra's website. Following the prepared remarks, we will open the call for questions.

Lisa Wilkinson
Lisa Wilkinson
Vice President of Investor Relations & Corporate Communications at Centerra Gold

Before we begin, I would like to caution everyone that certain statements made today may be forward looking and are subject to risks which may cause our actual results to differ from those expressed or implied. Please refer to the cautionary statements included in the presentation as well as the risk factors set out in our annual information form. Certain measures we will discuss are non GAAP measures. Please refer to the description of non GAAP measures in our news release and MD and A issued yesterday. I will now turn the call over to Paul Tomori.

Paul Tomory
Paul Tomory
President & CEO at Centerra Gold

Thank you, Lisa, and good morning, everyone. In the fourth quarter, we had steady operational performance producing over 73,000 ounces of gold and 12,800,000 pounds of copper, and we ended 2024 near the low end of our consolidated production guidance range. We generated strong free cash flow both operations in the fourth quarter, driven by robust contributions from Mount Milligan, which increased our cash balance to $625,000,000 In 2024, we made meaningful progress in executing on our strategic plan to maximize the value of our assets. Since the restart of operations at Oksut in June 2023, the mine has generated over $480,000,000 of free cash flow. While at Mount Milligan, our additional agreement with Royal Gold created the opportunity to assess the mine's long term potential.

Paul Tomory
Paul Tomory
President & CEO at Centerra Gold

In September, we announced the restart of operations at Thompson Creek and a progressive ramp up at Langalot, marking a major step in unlocking value in our U. S. Molybdenum operations. At current metal prices, the three ninety seven million dollars of capital investment to restart Thompson Creek is expected to be funded largely from our cash flow from operations at Mount Milligan and Oksut. Yesterday, we published an initial resource at Goldfield of 706,000 ounces of gold.

Paul Tomory
Paul Tomory
President & CEO at Centerra Gold

After a thorough evaluation, we decided the resource site does not meet our requirements to support near term development. We remain committed to maximizing the project's potential, while exploring strategic and commercial options for Goldfield. Looking ahead to 2025, we're focused on Mount Milligan and Kemess, which are the foundations for our future growth. At Mount Milligan, the technical studies are progressing better than planned, and we decide to move straight to completing a pre feasibility study for the mine. This upgrade, together with an extensive drill program planned for this year, has the objective of significantly increasing proven approval of reserves at Mount Milligan once the study results are announced in the third quarter of twenty twenty five, making another key step in unlocking the full value of this asset located in a top tier mining jurisdiction.

Paul Tomory
Paul Tomory
President & CEO at Centerra Gold

As we look to the future of Mount Milligan, the establishment of the new Mining and Critical Minerals Ministry is an encouraging step forward, demonstrating the province of British Columbia's commitment to streamlining permitting and regulatory processes for critical mineral projects, including Mount Milligan. We are optimistic about Kemess, which could be a future source of gold and copper production. The property has substantial gold and copper resources in a highly prospective district with significant infrastructure already in place, which includes a 300 kilometer, two thirty kV power line, one of the longest privately owned power lines in British Columbia a 50,000 tonne per day nameplate processing plant, which would require some refurbishment and equipment replacements significant site infrastructure, camp, admin facilities, truck shop, warehouse and lastly, significant available tailings capacity through a combination of input deposition and expansion potential at the existing TSF. Last year, we started evaluating technical concepts and engineering trade off studies for potential restart options at Kemess. Early concepts include a combined open pit and conventional underground operation, which is expected to be less capital intensive and have better cash flow profile than the previously permitted underground blockade concept.

Paul Tomory
Paul Tomory
President & CEO at Centerra Gold

This year, in addition to an exploration campaign to further delineate the resource, we are continuing to advance technical studies. Early indications show potential for a long life operation that takes advantage of our significant infrastructure already in place. We expect to provide an updated resource estimate and an accompanying update on the technical concept for Kemess in the second quarter of twenty twenty five. Finally, I'd like to provide an update on our sustainability initiatives. We remain committed to responsible mining and continue to make meaningful progress in our environmental and permitting efforts.

Paul Tomory
Paul Tomory
President & CEO at Centerra Gold

At Mount Milligan, we are actively engaged with the government of BC as we prepare to submit an amended application in the coming months for permits and expansions related to our ongoing operations. As I mentioned earlier, we are encouraged by the province's approach to streamline the permitting process for critical mineral mines, including Mount Milligan, going forward. At Oksut, we successfully obtained permits for expanded infrastructure and activities in line with our 2023 EIA and optimized infrastructure. This was achieved through ongoing constructive engagement with government authorities, ensuring we continue to meet all operational requirements while maintaining compliance with environmental and regulatory standards. With respect to our efforts on climate change, we have completed a thorough analysis of potential greenhouse gas reduction initiatives across our operations.

Paul Tomory
Paul Tomory
President & CEO at Centerra Gold

These findings have identified key opportunities that will help shape our long term strategy, ensuring that we pursue emission reductions in a way that is both economically and operationally viable. And with that, I'll pass the call over to Paul Scharen to walk through our operational performance for the quarter.

Paul Chawrun
Paul Chawrun
Executive VP & COO at Centerra Gold

Thanks, Paul. On Slide 10, we show operating highlights at Mount Milligan for the quarter and the full year. Mount Milligan produced almost 38,000 ounces of payable gold and 12,800,000 pounds of payable copper in the fourth quarter. Full year 2024 gold and copper production was over 167,000 ounces, 54,000,000 pounds respectively, which was below our guidance range due to lower grades encountered in an area of Phases six and nine that are at the periphery of the ore body. Gold and copper sales were up 415% respectively quarter over quarter, which was anticipated due to the timing of shipments.

Paul Chawrun
Paul Chawrun
Executive VP & COO at Centerra Gold

In 2025, Mount Milligan gold production is expected to be 165,000 to 185,000 ounces and copper production is expected to be 50,000,000 to 60,000,000 pounds. In the fourth quarter, all in sustaining costs on a byproduct basis were $11.14 dollars per ounce, 15% lower quarter over quarter, driven by a decrease in sustaining capital expenditures. Full year all in sustaining costs on a byproduct basis were $10.78 dollars per ounce at the low end of the guidance range. The site wide optimization program at Mount Milligan continues to progress. The site has reduced operating costs and we continue to see productivity improvements in the load haul cycle at the mine, as well as improvements in the unit processing costs.

Paul Chawrun
Paul Chawrun
Executive VP & COO at Centerra Gold

In the full year of 2024, milling costs at Mount Milligan were $5.33 per tonne processed, 11% lower than 2023, despite a slight decrease in throughput. In 2025, all in sustaining costs on a byproduct basis are expected to be $1,100 to $1,200 per ounce. In 2024, Centerra identified an opportunity to accelerate the use of in pit mine potential asset generating waste storage, which has increased the available capacity in the existing tailings facility. As a result, mine operating costs are expected to improve over the life of mine, and there was an increase in the stated reserves at the end of twenty twenty four. This resulted in a one year mine life extension to 02/1936.

Paul Chawrun
Paul Chawrun
Executive VP & COO at Centerra Gold

As Paul mentioned earlier, we have made the strategic decision to move directly to a pre feasibility study for the life of mine plan. We are optimistic the mine life can be extended beyond 02/1936, which is currently constrained by tailings capacity. We are evaluating options for additional tailings capacity by expanding the existing storage facility or constructing a second facility. It is also expected that the pre feasibility study will incorporate an increase of annual mill throughput in the range of 10% through ball mill motor upgrades and additional downstream flow sheet improvements at a modest overall capital expenditure, which may also provide the benefit of improved overall recovery. The pre feasibility study and associated mineral reserves estimate are expected to be announced in the third quarter of twenty twenty five.

Paul Chawrun
Paul Chawrun
Executive VP & COO at Centerra Gold

Now moving on to Erksut. On Slide 11, we show operating highlights at Erksut for the quarter and the full year. Fourth quarter production was over 35,000 ounces. Oksut has now completed processing the excess inventory that was accumulated in 2022 and 2023. A total of 4,400,000 tonnes were mined in the quarter and 1,100,000 tonnes were stacked at an average grade of 0.99 grams per tonne.

Paul Chawrun
Paul Chawrun
Executive VP & COO at Centerra Gold

Full year production in 2024 was over 200,000 ounces of gold, which was the midpoint of the guidance range. In 2025, gold production at Oksut is expected to be 105,000 to 125,000 ounces, driven by a return to normal production levels as planned. In the fourth quarter, all in sustaining costs on a byproduct basis were $13.27 dollars per ounce, which is higher compared to last quarter due to lower sales and higher royalty costs from the elevated gold prices, which also contributed to higher cash flows and margins. Full year 2024 all in sustaining costs on a byproduct basis were $10.15 dollars per ounce near the upper end of the guidance range. 2025 all in sustaining costs on a byproduct basis are expected to be $14.75 dollars to $15.75 dollars per ounce, up year over year, primarily due to a lower production profile and partially due to the impact of inflation in Turkey, which has not been fully offset by the devaluation of the lira.

Paul Chawrun
Paul Chawrun
Executive VP & COO at Centerra Gold

On Slide 12, in the fourth quarter, we made great progress on the restart activities at Thompson Creek. Detailed engineering work for the plant refurbishment was initiated with a focus on engineering and procurement for long lead items. Mobile fleet refurbishment is on track and approximately 80% complete with most of the work on trucks, shovels, dozers and road graders completed. By the end of twenty twenty four, Thompson Creek had 170 people on-site, two electric rope shovels and 14 trucks in operation. The project schedule and costs are on track and in line with the feasibility study targeting first production in the second half of twenty twenty seven.

Paul Chawrun
Paul Chawrun
Executive VP & COO at Centerra Gold

We expect to commission the remaining haul trucks, shovels and drills to achieve the planned mine production with a ramp up of the tonnes mine per month in the early part of twenty twenty five. We expect to substantially complete detailed engineering work and procurement of long lead mill equipment by the end of the third quarter twenty twenty five. I'll now pass it to Ryan to walk through our financial highlights for the quarter.

Ryan Snyder
Ryan Snyder
Executive VP & CFO at Centerra Gold

Thanks, Paul. Slide 13 details our fourth quarter financial results. Adjusted net earnings in the fourth quarter were $37,000,000

Ryan Snyder
Ryan Snyder
Executive VP & CFO at Centerra Gold

or $0.17

Ryan Snyder
Ryan Snyder
Executive VP & CFO at Centerra Gold

per share. In the fourth quarter, sales were almost 84,000 ounces of gold and 16,400,000 pounds of copper. The average realized price was $2,207 per ounce of gold and $2.88 per pound of copper, which incorporates the existing streaming arrangements at Mount Milligan. At the molybdenum business unit, approximately 2,900,000 pounds of molybdenum was sold in the fourth quarter at the Langloft facility at an average realized price of $22.67 per bin. Consolidated all in sustaining costs on a byproduct basis in the fourth quarter were $12.96 dollars per ounce.

Ryan Snyder
Ryan Snyder
Executive VP & CFO at Centerra Gold

Full year 2024 all in sustaining costs were $11.48 dollars per ounce in line with the guidance range. Slide 14 shows our financial highlights for the quarter. In the fourth quarter, we generated strong free cash flow at both operations driven by robust contributions from Mount Milligan. Cash flow from operations on a consolidated basis for the quarter was $93,000,000 and free cash flow was $47,000,000 which includes spending of $23,000,000 on development costs for the Thompson Creek line. In the fourth quarter, Mount Milligan generated $77,000,000 in cash from operations and $65,000,000 in free cash flow.

Ryan Snyder
Ryan Snyder
Executive VP & CFO at Centerra Gold

In the fourth quarter, Oksut generated $52,000,000 of cash from operations and had free cash flow of $41,000,000 The Molindadom business unit as a whole used $12,000,000 of cash in operations and had a free cash flow deficit of $35,000,000 this quarter, mainly related to spending on the Thompson Creek restart. Returning capital to shareholders remains a key pillar in our disciplined approach to capital allocation. In the fourth quarter, we remained active on our share buybacks, repurchasing 1,800,000.0 shares for total consideration of $12,000,000 The Board also declared a quarterly dividend of CAD 0.07 per share. In the full year 2024, we returned $88,000,000 to shareholders, including $44,000,000 in share buybacks and $44,000,000 in dividends. A key focus for Centerra is returning capital to shareholders and we expect to remain active on the share buybacks dependent on market conditions.

Ryan Snyder
Ryan Snyder
Executive VP & CFO at Centerra Gold

At the end of the year, our cash balance was $625,000,000 This provides us with total liquidity of over $1,000,000,000 and positions us well to execute on our strategic plan and deliver shareholder value. Slide 15 shows our 2025 outlook. This year, we expect to produce between 580,000 ounces of gold on a consolidated basis, driven by Oxy returning to normal production levels. Copper production is expected to be between 50,000,000 pounds and 60,000,000 pounds. 2025 consolidated all in sustaining costs are expected to be $1,400 to $1,500 per ounce, up compared to last year, driven mainly by lower gold production at Aksut and the impact of net inflation in Turkey.

Ryan Snyder
Ryan Snyder
Executive VP & CFO at Centerra Gold

We remain disciplined to protect margins through our initiatives at our sites, including at Mount Milligan through the site optimization program, which will continue in 2025. Sustaining capital expenditures in 2025 are expected to be $97,000,000 to $119,000,000 and non sustaining capital expenditure guidance is $140,000,000 to $160,000,000 mainly driven by the restart of operations at Thompson Creek. In 2025, we expect to roast 13,000,000 pounds to 15,000,000 pounds of molybdenum, an increase in volume compared to 2024 as we work to incrementally ramp up Langloft to its full capacity of approximately 40,000,000 pounds per year over the next several years, as we previously announced in September. We expect the increased volumes in 2025 will lead to land loss moving to an EBITDA positive business. We continue to invest in exploration.

Ryan Snyder
Ryan Snyder
Executive VP & CFO at Centerra Gold

This year, we expect to spend 35,000,000 including $20,000,000 to $25,000,000 of brownfield exploration and $15,000,000 to $20,000,000 of greenfield and generative exploration programs. Over 80% of our exploration expenditures are expected to be expensed. We are expecting a solid 2025 with continued strong cash flow generation at our operations, allowing us to fund the restart of Thompson Creek and continue to return capital to shareholders while preserving our cash for strategic opportunities. I'll pass it back to Paul for some closing remarks.

Paul Tomory
Paul Tomory
President & CEO at Centerra Gold

Thanks very much, Ryan. Looking ahead to 2025, we're advancing key growth catalysts at both Mount Milligan and CheMS while continuing to expand our exploration efforts. With great progress on the PFS study at Mount Milligan and ongoing technical evaluation of CheMS, we remain focused on unlocking long term value and strengthening our asset base for the future. And operator, we can open the call to questions, please.

Operator

Ladies and gentlemen, at this time, we will begin the question and answer session. And our first question today comes from Lawson Winter from Bank of America Securities. Please go ahead with your question.

Lawson Winder
Lawson Winder
Analyst at Bank of America

Hey, operator. Thank you very much. And Paul, hello, good morning and hello to your team. I just wanted to get an idea for your thinking around growing in gold going forward. So in particular, Aksu, we saw reserves decline there.

Lawson Winder
Lawson Winder
Analyst at Bank of America

Is there an interest to expand the presence in Turkey in any way? And then when you think about goldfields as an option that is not really there any longer, is M and A on the table when you think about growing that gold business? Thank you.

Paul Tomory
Paul Tomory
President & CEO at Centerra Gold

Thanks for the

Paul Tomory
Paul Tomory
President & CEO at Centerra Gold

question, Lawson. Our principal focus so the straight up answer is yes. We are Centara Gold Corporation and we intend to keep gold as our primary metal. In terms of where we look for, valuations for production assets as you've seen in the market are very high right now. Our first order priority is to unlock value within the portfolio.

Paul Tomory
Paul Tomory
President & CEO at Centerra Gold

So we think that the best path to continued gold exposure is through the extension at Milligan that we described, but also this work we're advancing at ChemS. You quite rightly pointed out, we're putting goldfield on the shelf right now, but Kemess is a major area of focus. And that is a very significant mineralized asset and we're looking at different ways to mine that. That doesn't involve a blockade. So first and foremost, our continued exposure to gold will come through the assets that we already own.

Paul Tomory
Paul Tomory
President & CEO at Centerra Gold

We are though always on the lookout for assets that may fit our portfolio and may fit our strategy. You asked about Turkey. We are committed to Turkey. We think it's a great place to operate. And should assets become available there, principally in gold, we certainly would be interested in looking at them.

Paul Tomory
Paul Tomory
President & CEO at Centerra Gold

And I should add that we are active on three or four greenfield exploration programs in Turkey.

Lawson Winder
Lawson Winder
Analyst at Bank of America

Okay. That's interesting. Also wanted to just kind of stay in the capital allocation theme. You guys continue to be remarkably consistent with your buyback and both the dividend. Since those levels of capital return were set, the gold price is $1,000 higher.

Lawson Winder
Lawson Winder
Analyst at Bank of America

Is the thinking of evolving any further along the lines of potential higher capital return? I know I've asked you this before, but the gold price just keeps going higher and higher. And so at some point, is there a need to maybe rethink the dividend or maybe get more aggressive on the buyback?

Paul Tomory
Paul Tomory
President & CEO at Centerra Gold

Well, we are committed to the buyback. We think that our shares are cheap and we think they are a great investment first and foremost. What we are doing right now and this is a discussion we have been having over the last little while on that capital allocation point. We think that we have some credible projects potentially on the horizon here at Milligan and Kemess. So our preference is to allocate capital to the gold growth point to your earlier question while maintaining our current levels of dividend and buyback.

Paul Tomory
Paul Tomory
President & CEO at Centerra Gold

So to answer your question, our preference on incremental investments or capital allocation, our preference is to put those to work in gold assets, principally the organic opportunities, but also potentially in M and A.

Lawson Winder
Lawson Winder
Analyst at Bank of America

And then just a final question, which we often talk about is the potential to materially increase gold recoveries at Mount Milligan. What is kind of the target now? Is that evolved in any way? Is it potentially higher than you had thought last quarter or even a year ago this time? And what is now the timeline on getting to a point where those gold recoveries are materially improved versus the 2024 levels?

Paul Chawrun
Paul Chawrun
Executive VP & COO at Centerra Gold

Yes, that's a great question, Lawson, and it's a very key area of focus for us internally. So the first thing I want to say is Q4 was lower recoveries both in copper and gold and the primary reason was you have to go back to the LOM that we negotiated with Royal Gold. What's happened is we're re sequencing overall and in periods of time like in Q4, just open up the pit, get more in pit storage down the track. We opened up an area that there was a little bit periphery to the ore body and then what happened was near the surface, the oxidation partially, we were able to still put it through the plant was a little higher than expected and there was some faulting that we didn't have mapped as well. So that's why Q4 was somewhat lower, but on the positive side, it is because we're expanding and we're looking at this as a 20, 30 year mine life, not short term.

Paul Chawrun
Paul Chawrun
Executive VP & COO at Centerra Gold

And to really answer your question, when we expect it to get better, well, we are better than we were in Q4. And we I think in terms of numbers in between, I would say mid-60s should be a good target. We're looking at ways that we can recover better both with the LOM work that we're doing and in the short term with better understanding of the GeoMet model and doing some better blending because there are some mineralogical changes throughout the ore body that we're getting better at understanding.

Lawson Winder
Lawson Winder
Analyst at Bank of America

Okay. I look forward to watching that evolve. Thank you, Paul. And thank you both gentlemen.

Paul Chawrun
Paul Chawrun
Executive VP & COO at Centerra Gold

Thanks,

Paul Chawrun
Paul Chawrun
Executive VP & COO at Centerra Gold

Lawson.

Operator

Our next question comes from Jeremy Hoi from Canaccord Genuity. Please go ahead with your question.

Jeremy Hoy
Equity Research Analyst at Canaccord Genuity Inc

Hey, Paul and team, thanks

Jeremy Hoy
Equity Research Analyst at Canaccord Genuity Inc

for taking my question. Realizing it's difficult to anticipate what's going to happen over the next four years, could you comment on the potential impact of tariffs on Elegant costs and any plans that may be

Jeremy Hoy
Equity Research Analyst at Canaccord Genuity Inc

put in place to alleviate those?

Paul Tomory
Paul Tomory
President & CEO at Centerra Gold

Yes, thanks for that. We're not terribly worried about the tariff situation. We've done an internal assessment that we don't think we're really exposed, but there may be some details and Ryan you may want to talk about how we've looked at this.

Ryan Snyder
Ryan Snyder
Executive VP & CFO at Centerra Gold

Sure. We've looked at our operating sites and in the global scale we think we're generally not going to be too adversely impacted. So 95% of Milligan's costs are from Canadian suppliers. You never know what's going to happen with supplier to supplier arrangements and how those costs pass through. But our supplier base is largely Canadian.

Ryan Snyder
Ryan Snyder
Executive VP & CFO at Centerra Gold

And so we don't see even in a tariff world or a retaliatory tariff world a big change in the milligram cost base. I think we're still hammering away at the M plus program to try to drive costs down, which offsets any cost creep that may come. So we feel pretty good about the milligram costs. And then all the milligram concentrate is sold into Asia, nothing goes into The U. S.

Ryan Snyder
Ryan Snyder
Executive VP & CFO at Centerra Gold

So there shouldn't be any noise there. Hopefully that answers your question, It does.

Jeremy Hoy
Equity Research Analyst at Canaccord Genuity Inc

Thank you very much. And I'll step back in the queue.

Operator

Our next question comes from Anita Soni from CIBC. Please go ahead with your question.

Anita Soni
Managing Director at CIBC Capital Markets

Hi, good morning, Paul and team. Thanks for taking the question. I just wanted to ask about the reserve and resource update. The grade increase at Mount Milligan, I was just wondering what drove that. I think you said drilling, but can you just give me a little bit more granularity on that?

Paul Tomory
Paul Tomory
President & CEO at Centerra Gold

Yes. So Paul, the question was what Anita, you're a little bit faint there, but I think your question was what drove the grade increase in the reserve at Milligan, is that correct?

Anita Soni
Managing Director at CIBC Capital Markets

Yes, that's correct.

Paul Chawrun
Paul Chawrun
Executive VP & COO at Centerra Gold

Yes, that's primarily domaining of where the mineralization is occurring and we're actually still working on that. You do get what's called soft boundaries on the domains and then where do you actually draw that boundary and we remodeled based on the drilling from 2023. And fundamentally, we tightened up the domain, so that lowers the amount of ore and increases the amount of waste and increases the grade and we're still working with where that balance is as we work through the ore body.

Anita Soni
Managing Director at CIBC Capital Markets

Okay. I'm just wondering if you guys did that have any impact on the near term production profile that we should be aware

Anita Soni
Managing Director at CIBC Capital Markets

of?

Paul Chawrun
Paul Chawrun
Executive VP & COO at Centerra Gold

Yes. So that's actually one of the reasons why we didn't quite get the production that we had expected at Mount Milligan is because we did get more tonnes and lower grade overall. So we're looking at readjusting that factor. It won't affect the overall metal and it won't affect the strip ratio.

Paul Chawrun
Paul Chawrun
Executive VP & COO at Centerra Gold

It's really a fairly minor difference, but that's the work on the grade and it does vary throughout the ore body as well. So we're continuing to understand that better.

Anita Soni
Managing Director at CIBC Capital Markets

Okay. I guess, could you maybe I'm a little bit confused now. So originally, we were talking about higher grades and sort of losing some of the waste in the ore sorry, losing some of the waste in the lower the more marginal ore. But now like was it the fact that you were Q4 was presenting sort of problems that

Paul Chawrun
Paul Chawrun
Executive VP & COO at Centerra Gold

you're Okay.

Anita Soni
Managing Director at CIBC Capital Markets

Yes. I'm not sure I'm not quite sure what I should do with my model at this stage.

Paul Chawrun
Paul Chawrun
Executive VP & COO at Centerra Gold

Okay. So the new model update has higher grade because you lowered the amount of tonnes and you tightened up where the mineralization occurs in the domains. And then when you go ahead and mine it, you expect to get those grades. What's happening in some areas, including Phase six and nine, you mine it and then you actually have more, more than you thought, but at a lower grade. So in essence, the mineralization is spread out over a wider area.

Paul Chawrun
Paul Chawrun
Executive VP & COO at Centerra Gold

And so that balance is what we're working through. On the reserves estimate, the grade is higher because the amount of ore is slightly less. So it's a balance between how much ore you have and how much waste you have.

Anita Soni
Managing Director at CIBC Capital Markets

Okay, got it. Can you tell me what kind of geostatistical model you use that was for? Was it ID2, ID3 or near kriging? Do you know?

Paul Chawrun
Paul Chawrun
Executive VP & COO at Centerra Gold

No, we use ordinary kriging and we used soft boundaries. So the key focus though is the mineralization domain.

Anita Soni
Managing Director at CIBC Capital Markets

Okay. All right. Thank you.

Operator

Our next question comes from Brian MacArthur from Raymond James. Please go ahead with your question.

Brian Macarthur
Brian Macarthur
Managing Director at Raymond James

Good morning and thank you for taking my question. I apologize I was cut off if this has been answered. But I have two questions. Just first of all on Goldfields, so what is the strategy now? Obviously, resources there and it's not near term development.

Brian Macarthur
Brian Macarthur
Managing Director at Raymond James

Does that mean you're willing to sell it? Or does it just mean there's going to be some more work or it's just going to be kind of like Kenneth was for your year, just put in the queue and hold on for a while?

Paul Tomory
Paul Tomory
President & CEO at Centerra Gold

I think it's more of the latter there. So we had three objectives in the year. One was to see if we can get run of mine recoveries, that was a check. Second was to see if we can get lower CapEx, that was a check. And the third was to see if we can grow the resource and we didn't do it.

Paul Tomory
Paul Tomory
President & CEO at Centerra Gold

At least it didn't meet our thresholds if we continue to advance the project. So it is going on the shelf right now. You have seen that reflected in the impairment we took on the asset. And you also asked in there, is it open to a sale or a JV or something? Absolutely, yes.

Paul Tomory
Paul Tomory
President & CEO at Centerra Gold

So what we're the phase we're in right now with Goldfield is more strategic or commercial rather than technical. But I will say there's gold in the ground there. It doesn't yet meet our thresholds for amount, but we aren't going to be doing a lot of drilling there. So, the focus is more strategic.

Brian Macarthur
Brian Macarthur
Managing Director at Raymond James

Great. Thanks. That's very clear. And just on another strategic issue, any update or comments on potentially a partner on the molybdenum operations? I mean, what's going on U.

Brian Macarthur
Brian Macarthur
Managing Director at Raymond James

S. Assets may become more strategic going forward. Is there any comment you can make on that?

Paul Tomory
Paul Tomory
President & CEO at Centerra Gold

Well, I'll say that we notwithstanding the fact that most people don't seem to like it, we love our merleptom business. We view it as a high return, high NPV, relatively low risk project in a metal that is in fact strategic, particularly when you look at more macro political situations in The United States. So we really like the business. We are open to some sort of strategic outcome there, but it would have to meet our minimum requirements on valuation. And there's always interest in the assets, particularly now that we are moving forward with the project.

Paul Tomory
Paul Tomory
President & CEO at Centerra Gold

But I will just reiterate, we do like it, not within the fact that it's kind of out of favor with some more general market sentiment as it relates to Centerra. We do like the business.

Brian Macarthur
Brian Macarthur
Managing Director at Raymond James

Okay. And just my final question, just on Oksut, it was mentioned earlier, obviously, the reserve life there is not that long. Is

Brian Macarthur
Brian Macarthur
Managing Director at Raymond James

there a

Brian Macarthur
Brian Macarthur
Managing Director at Raymond James

lot of potential to extend that? Again, I sort of with all the stockpiling of inventory, I've sort of the mine plan has sort of lost a little bit of where we are on everything. So it's sort of four or five years one hundred thousand ounces now I think. But is there anything possible to go beyond that?

Paul Tomory
Paul Tomory
President & CEO at Centerra Gold

I wouldn't guide you towards any significant exploration potential of that exude. However, we need to understand just how much gold is in those heaps and there may be some potential for a period of residual leaching. Our exploration efforts in Turkey are focused, as I said earlier, at greenfield types targets and we do see some certainly Turkey has extremely attractive geology and we're trying to take advantage of that more through a greenfields program rather than a brownfield expansion at Oak Sud.

Brian Macarthur
Brian Macarthur
Managing Director at Raymond James

Great. Thanks very much for answering my questions, Paul.

Paul Tomory
Paul Tomory
President & CEO at Centerra Gold

Thank you.

Operator

And our next question comes from Mike Parkin from National Bank. Please go ahead with your question.

Mike Parkin
Mike Parkin
Analyst at National Bank

Thanks guys for taking the question. I'll start with Oksut. Just given the fact we're sitting at almost $3,000 gold, is there an opportunity, like there's always kind of a bit of a perfect balance on the economics on a heap with the amount of like chemicals you're putting on it. But at an elevated gold price environment like we're at, is there a potential to kind of shock the pad and potentially pull additional ounces out by putting in, for instance, like a higher cyanidation concentration where you might get very short term kind of boosted recoveries that would normally not be economic, but in this gold price environment, they would probably be to drive some of that potential, not expected to be recovered gold at your standard base case operating metrics, but at an elevated one, you'd get some additional ounces?

Paul Chawrun
Paul Chawrun
Executive VP & COO at Centerra Gold

Yes. That's actually a great question. And we look at that all the time as well as cut off grades both at Oxford and elsewhere just due to the run up on the gold price. The sensitivity to the concentration of the cyanide and then the recovery is not all that high. So you might get a small amount of gain, but we don't really look at that because when you do the column test, there's not a whole lot of sensitivity to the concentration of the cyanide with respect to recovery.

Mike Parkin
Mike Parkin
Analyst at National Bank

What about waste that were classified at a lower gold price, is there ability to potentially reclassify some waste material as ore now?

Paul Chawrun
Paul Chawrun
Executive VP & COO at Centerra Gold

Not at Aksu, no. I mean, in future, you may look at cut off grades, but really at the end of the day, the way Aksu, the mineralogy is put together, you're not really looking at lower grade, a whole lot of lower grade going into the waste dump.

Paul Tomory
Paul Tomory
President & CEO at Centerra Gold

Yes. So, Mike, it's not like Nevada where you have mineralized waste dumps that you could re leach. Here, it's really it's not quite this simple, but it's either or or waste.

Mike Parkin
Mike Parkin
Analyst at National Bank

Okay.

Paul Tomory
Paul Tomory
President & CEO at Centerra Gold

It's much more delineated than I'd say it would be in Nevada.

Mike Parkin
Mike Parkin
Analyst at National Bank

Okay. And then I apologize for joining the call a little late. I see you've got an interesting slide on Kemmis. Just from the cross section, it looks like the cross section on Slide eight isn't really going through the plan kind of twenty three year end pit limit. So am I correct that if you move that to the assume that's northwest the line AA, you'd actually see deeper pits pulling in more of that mineralization that you're seeing in the cross section?

Paul Tomory
Paul Tomory
President & CEO at Centerra Gold

Let's just take a step backward here on Chemex. So the concept that Centerra had was for a block cave and that's to the right of that cross section on that page. What we've done over the last six, eight months is we've relooked at all the drill data and we've recreated a site wide resource model to see where else there might be mineralization on the property. And what we've concluded, and I think the slide illustrates that, is that we are no longer focused on the blockade, which is over on the right there, but rather on a whole string of near surface mineralization away from what was formerly the underground concept and by the way away from the old Northgate Pit. And so to your question, that's exactly what we're doing is we're doing a bunch of infill drilling there to see if we can connect those various open pitiable deposits, the area we call the Saddle there, the central area, and can we get to a fairly low strip reasonably accessible set of open pitiable resources.

Paul Tomory
Paul Tomory
President & CEO at Centerra Gold

So our focus right now is drilling and technical studies looking at potential concepts there. And as I said in my prepared remarks, we're going to put out a resource here in the early part of the year with some description around what we might look at. There's a lot of mineralization though at Kemas. It's a very significant mineralizing system and the property that we control is quite large.

Mike Parkin
Mike Parkin
Analyst at National Bank

I might be dating myself, but I remember covering Northgate with Kemah South and that being a bit of a cash cow of an asset for them. Where is that pit? Would that be on that slide or further off to the left?

Paul Tomory
Paul Tomory
President & CEO at Centerra Gold

No, it's these deposits are north and west of the old Northgate Pit. There's some like eight or nine or 10 kilometers away. And so I'm getting ahead of myself here, but what we would look at is how would we transport material from these new deposits should they prove up over towards the old pit and the old facilities. And what we really like about Kemas is, if you were to build a 50,000 tonne a day concentrator in that part of BC today, you'd be looking at a $2,000,000,000 to $3,000,000,000 maybe higher $1,000,000,000 project. What we have, and I said this in my prepared remarks, we have a power line, probably the longest privately owned power line in BC.

Paul Tomory
Paul Tomory
President & CEO at Centerra Gold

We have an Aerostrip, we have a camp, We have the old process plant. And that is really valuable. That infrastructure is really valuable. And the combination of our relook at the site wide resource model and of course higher commodity prices have given us a degree of optimism in looking at these deposits, which are not near the old Northgate pit over there on the property, but they are not particularly close to the old pit.

Mike Parkin
Mike Parkin
Analyst at National Bank

Okay. No, that's interesting. I will look forward to the update.

Paul Tomory
Paul Tomory
President & CEO at Centerra Gold

Thanks, Mike.

Operator

And ladies and gentlemen, with that, we'll be concluding today's question and answer session as well as today's conference call. You may now disconnect your lines. Thank you for participating and have a pleasant day.

Executives
    • Lisa Wilkinson
      Lisa Wilkinson
      Vice President of Investor Relations & Corporate Communications
    • Paul Tomory
      Paul Tomory
      President & CEO
    • Paul Chawrun
      Paul Chawrun
      Executive VP & COO
    • Ryan Snyder
      Ryan Snyder
      Executive VP & CFO
Analysts
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Key Takeaways

  • Centerra delivered steady Q4 results with 73,000 ounces of gold and 12.8 million pounds of copper produced, generating strong free cash flow and ending 2024 with $625 million in cash.
  • The company advanced its strategic plan by generating over $480 million of free cash flow from Oksut since June 2023, agreeing a royalty deal at Mount Milligan and restarting Thompson Creek and Langloit to unlock value in its molybdenum operations.
  • Key growth catalysts include moving directly to a pre-feasibility study at Mount Milligan to expand proven reserves and an updated resource and technical concept for Kemess in Q2 2025, while Goldfield remains on hold pending strategic options.
  • In Q4, Centerra reported adjusted net earnings of $37 million ($0.17 per share), generated $93 million of operating cash flow and $47 million of free cash flow, repurchased $12 million of shares and declared a CAD 0.07 dividend, leaving total liquidity over $1 billion.
  • For 2025, the company expects consolidated production of 580,000 ounces of gold and 50–60 million pounds of copper with all-in sustaining costs of $1,400–$1,500 per ounce, sustaining CapEx of $97–$119 million, non-sustaining CapEx of $140–$160 million and $35 million in exploration.
AI Generated. May Contain Errors.
Earnings Conference Call
Centerra Gold Q4 2024
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