Kumtor’s Basic Operating Results in 2014

Kumtor’s Basic Operating Results in 2014

published: 13 March 2015

 

Basic Operating and Financial Results

At the Kumtor mine gold production in 2014 was 567,693 ounces* or 17,657 kg. Gold sales in 2014 were 561,154 ounces or 17,454 kg with a revenue totaling $694.6 million**. The table below displays Kumtor’s basic operating and financial results:

Three Months Ended December 31

Year Ended December 31

2014

2013

Change

2014

2013

Change
Revenue from gold sales to Kyrgyzaltyn – $ millions** 346.2 448.9 (23%) 694.6 810.9 (14%)
Cost of sales*** – $millions 171.5 255.1 (33%) 444.5 473.0 (6%)
Cost of sales*** – $/oz 594 722 (18%) 792 786 1%
Tonnes mined – 000s 42,786 46,866 (9%) 191,723 176,693 9%
Tonnes ore mined – 000s 6,615 4,194 58% 8,640 7,289 19%
Tonnes milled – 000s 1,502 1,460 3% 5,840 5,596 4%
Average mill head grade – g/t 7.40 8.88 (17%) 3.90 4.26 (9%)
Recovery – % 82.2 84.1 (2%) 78.0 79.3 (2%)
Gold produced – ounces* 291,635 348,130 (16%) 567,693 600,402 (5%)
Gold produced – kg 9,071 10,828 (16%) 18 674,6 18,675 (5%)
Gold sold – ounces* 288,851 353,252 (18%) 561,154 601,887 (7%)
Gold sold – kg  8,984 10,987 (18%) 17,454 18,721 (7%)
Average realized gold price*** – $/oz 1,198 1,271 (6%) 1,238 1,347 (8%)
Adjusted operating costs*** – $/oz 244 217 12% 356 357 0%
All-in sustaining costs*** – $/oz 378 388 (3%) 779 775 1%
All-in costs*** – $/oz 418 407 3% 851 853 0%
All-in costs including taxes*** – $/oz   585  585 0%  1,024  1,042  (2%)
Capital expenditures (sustaining)*** – $millions  13.4  9.6  40%  48.7  49.7  (2%)
Capital expenditures (growth)***  – $millions  11.5  5.8  98%  40.1 39.2  (2%)
Capital expenditures (stripping)***  – $millions  32.5  70.8  (54%)  261.1  278.6  (2%)

(*) One Troy ounce equals to 31.10348 grammes.

(**) Unless specified otherwise, all dollar figures in this news release are in US dollars.

(***) Adjusted operating costs, all-in sustaining costs, all-in costs and all-in costs – including taxes (in $ per ounce sold), as well as average realized gold price per ounce sold, cost of sales per ounce sold and capital expenditures (sustaining and growth) are non-GAAP measures and are discussed under “Non-GAAP Measures in Centerra’s news release and MD&A dated February 19, 2015”.

Payments to the Kyrgyz National Budget and Mandatory Contributions

During the twelve months of 2014, contributions to the national budget in taxes, deductions to the Social Fund and other mandatory payments exceeded $120 million, which according to the KR National Bank’s exchange rate as at December 31, 2014, amounts to approximately 7.075 billion soms.

2014

USD thousands
Revenue-based tax 85,995.22
Issyk-Kul Development Fund 7,384.25
Pollution tax 310.00
Employee Income tax 4,774.74
Social Insurance Fund 19,869.53
Customs 1,103.60
Tax on nonresident companies 589.22
Other taxes and mandatory payments 121.26
Total 120,147.81
US$ official exchange rate to the Kyrgyz Soms as of December 31, 2014 58.8865
Equivalent of payments effected in million Kyrgyz Soms 7,075,083.91

Note: Under the Agreement on New Terms dated as of April 24, 2009, the revenue-based tax and contributions to the Issyk-Kul Region Development Fund are estimated based on actual cash revenues from sales during the period under review.

 

Payments within the Kyrgyz Republic

Contributions made within the Kyrgyz Republic in 2014 (including taxes, refining, domestic suppliers, infrastructure, charities, etc.) have exceeded $283 million.

In all, contributions made within the Kyrgyz Republic between 1994 and 2014 have exceeded $2.707 billion.

USD millions

2014

1994 – 2014
Taxes, customs & other mandatory payments 92.590 799.918
Social Insurance Fund 19.870 132.840
Issyk-Kul Development Fund 7.384 42.896
Licenses & permits 0.208 2.787
Pollution tax and payments to the Environment Protection Agency 0.310 4.369
Payments to Kyrgyzaltyn 0.384 12.059
Refinery 3.313 43.765
Revenue from the sale of Centerra shares – 86.000
Dividends 11.164 76.615
Purchases in the Kyrgyz Republic:

– supplies & services

 59.873 647.688
– foods 4.924 56.702
Kyrgyz-infrastructure-related payments:

– electricity

 10.413 141.006
– roads outside the mine site 1.763 39.281
– Tamga-Kumtor power-transmission line – 41.612
KOC employees’ net wage 65.919 513.928
Sanatoria treatment – 0.744
Education, scholarships & training 0.738 4.649
Sponsorships & sustainable development projects 4.482 25.408
Government contributions – 31.000
Payments to communities – 4.400
Total 283.333 2,707.67

 

Kumtor’s Impact on the Macroeconomic Performance of the Kyrgyz Republic

 

According to preliminary reports of the KR National Statistics Committee,

– Kumtor’s share in KR GDP in 2014 was 7.4 %;

– Kumtor’s share in the aggregate industrial output was 23.1 %.

 

Commentary

Daniel Desjardins, President of Kumtor Gold Company, commented on the results in 2014 as follows: «I am pleased to report that the operation met its annual production guidance for 2014. During the fourth quarter, the Company produced 291,635 ounces of gold as we accessed the high-grade SB Zone, which we are continuing to mine in the first quarter of 2015.

At Kumtor this year, we are expecting relatively even quarterly gold production as compared to prior years when the majority of the ounces were produced in the fourth quarter. The Kumtor mine is expected to produce between 470,000 and 520,000 ounces of gold, or 14.6 and 16.2 tonnes of gold in 2015.»

2015 Outlook

At Kumtor, 2015 total capital expenditures, excluding capitalized stripping, are forecast to be $75 million. Spending on sustaining capital of $49 million relates primarily to the major overhaul maintenance of the heavy duty mine equipment ($36 million), construction to raise the tailings dam ($7 million) and other items ($6 million).

Growth capital investment at Kumtor for 2015 is forecast at $26 million and includes the relocation of certain infrastructure at Kumtor related to the KS-13 life-of-mine expansion plan and dewatering projects.

The projected cash component of capitalized stripping costs related to the development of the open pit is expected to be $185 million of the $234 million total capitalized stripping forecast  in 2015.

●●●

The Kumtor open pit mine, located in the Kyrgyz Republic, is the largest gold mine in Central Asia operated by a Western-based producer. It has been in operation since May 1997 and, as of December 31, 2014, has produced approximately 9.9 million ounces or 307.9 tonnes of gold.

Kumtor Gold Company is the operator of the Kumtor project responsible for the entire production cycle.

Centerra Gold Inc. (Centerra) is a gold mining company focused on operating, developing, exploring and acquiring gold properties in Asia, Canada and other markets worldwide. Centerra is a leading North American-based gold producer and is the largest Western-based gold producer in Central Asia. Centerra’s common shares trade on the Toronto Stock Exchange (TSX) under the symbol CG. The Company is headquartered in Toronto, Ontario, Canada.

Additional information on Centerra and the full text of the news release on the 4th quarter and basic operating results of 2013 are available on SEDAR at www.sedar.com and www.centerragold.com. Information on KGC is available at www.kumtor.kg