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Centerra Gold reports adjusted profit, dividend payment

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(Kitco News) - Centerra Gold Inc. (TSX: CG) reported a fourth-quarter adjusted profit on Thursday, announced a quarterly dividend and reported a decline in proven and probable reserves.

Adjusted net earnings for the quarter were $22.3 million, or 8 cents per share, down from $90.8 million, or 31 cents, in the same period a year ago. Cash flow from operations was put at $92.5 million in the quarter, a decline of 39%.

The company said the lower adjusted earnings were due to lower gold grades at Kumtor and Mount Milligan and costs related to significant waste-rock movement at Kumtor’s Lysii waste rock dump. This was partially offset by higher average gold prices, along with higher copper grades processed at the Mount Milligan Mine.

Gold production for the quarter was 194,507 ounces, while copper production was 18.1 million pounds.

Centerra said its board of directors authorized a dividend of four Canadian cents per share, amounting to C$11.8 million (approximately US$8.2 million at the current exchange rate). This will be paid on April 22 to shareholders of record on April 8. However, officials said they will have to evaluate conditions when assessing future payments, including the impact of the COVID-19 pandemic on the company. 

“In 2019, due to the strong operating performance at both operations, the company exceeded its consolidated gold production and cost guidance…,” said Scott Perry, president and chief executive officer.

The company’s full-year output guidance was 765,000 ounces. Gold output for full-year 2019 was put at 783,308 ounces, while copper output was within guidance at 71.1 million pounds.

“For 2020, we are estimating consolidated gold production to be in the range of 740,000 to 820,000 ounces combined with 80 million to 90 million pounds of payable copper production from Mount Milligan,” Perry said. “Centerra’s consolidated all-in sustaining cost on a by-product basis per ounce sold for 2020 is expected to be in the range of $820 to $870 per ounce.”

So far, Centerra said, the company has not had any mining disruptions due to the COVID-19 pandemic.    However, officials plan to reduce work on the Öksüt project on March 31 for an initial period of two weeks as a result of Turkish government initiatives aimed to reducing the spread of COVID-19.

“Kumtor and Mount Milligan remain in operation for the time being, but we will not hesitate to reduce or shut down operations at those sites if we believe it is required to responsibly protect people,” Perry said.

Meanwhile the company has temporarily closed its head office in Toronto and regional offices in Bishkek, Kyrgyz Republic; Prince George, British Columbia; and Ankara, Turkey. The workforce was asked to operate remotely.

Centerra also reported that as of Dec. 31, proven and probable gold mineral reserves were estimated at 11.1 million contained ounces, down from 14.2 million contained ounces in the prior year. This was partly due to processing of 986,000 contained ounces. Also, there was a net deletion of more than 2 million ounces at the Mount Milligan Mine.

“The [Mount Milligan] decrease in reserves was driven by two main factors,” Centerra said in its news release. “First, during 2019, the company identified cost escalation relating to water sourcing, increased maintenance, increased labor complements, decreased productivities and lower process plant throughput, among other things, compared to the previous 2017 technical report for the Mount Milligan Mine. These factors have resulted in the estimated NSR cut-off increasing from C$8.12/t to C$9.55/t.

“Second, the resource model has been updated and metallurgical recoveries re-estimated, resulting in a revised ultimate open-pit design with the associated reserve decrease.”

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