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Stable quarter for Centerra

Centerra Gold has reported a slight drop in headline profit for the March quarter as higher gold and copper production, and robust gold prices were offset by a lower realised copper price.
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Centerra Gold reported 8% higher gold output for Q1, buoyed by the cornerstone Kumtor mine in Kazakhstan

The Toronto-based company, which mines in Kazakhstan, Canada and now also Turkey, reported an 8% year-on-year drop in headline profit to US$46.4 million, or 16c per share, which excluded major items such as $26.4 million owing to higher reclamation costs and a molybdenum inventory writedown of $7.5 million.

The result was still better than average Bay Street analyst forecasts that called for earnings of 13c per share, on expected revenues of $237 million.

The top line showed a 12% improvement to $374 million, mainly the result of a 21% higher average realised gold price and 63% more copper pounds sold.

Gold output, including pre-commercial production from Oksut, was 4% higher at 190,474oz, with the flagship Kumtor mine contributing 152,307oz and Mount Milligan 33,681oz, reflecting a 1% year-on-year increase for both mines.

Kumtor benefitted from higher recoveries and more gold from carbon fines, which was offset by lower grades. At Mount Milligan, throughput averaged 53,527t/d, compared with 27,000t/d in the prior-year period. This was offset by lower grades and recovery.

Gold production at Oksut was 4,486oz, following the first gold pour in late January.

Copper output from Mount Milligan was 20.1Mlb, 8.6Mlb more than the comparable period of 2019, reflecting the higher throughput.

Centerra's all-in sustaining costs increased more than 6% to $712/oz, from $669/oz a year ago due to higher capitalised stripping costs, partially offset by higher sales from Kumtor.

Cash and cash equivalents at end-March was $193.8 million, an increase of $151.1 million from December 31, as the company realised $77 million in free cash flow, drew down $136 million from the its revolving credit facility, while repaying the $77.5 million Öksüt financing facility which unlocked $25 million of restricted cash.

Centerra finished the quarter with net cash of $57.8 million.

Amid the COVID-19 pandemic, Kumtor continued to operate at planned rates. Oksut openpit mining resumed in mid-April after a two-week period of reduced manpower, while Mount Milligan is expected to return to targeted levels in the first half of May, after also reducing manpower on April 6 and completing a scheduled two-week shutdown for process plant maintenance.

CEO Scott Perry said full-year production guidance remained unchanged, despite a slowdown in activities at Mount Milligan and Oksut at the start of the current quarter due to COVID-19 restrictions. However, he cautioned the pandemic could further disrupt operations.

Centerra expects to produce 740,000-820,000oz gold at AISC of $820-$870/oz, and 80-90Mlb copper this year.

Centerra has a market value of $3.4 billion (US$2.4 billion) at a $11.72 share price.