Centerra Gold Inc. and Kumtor Gold Company updated the Kumtor reserves and resources as of December 31, 2014.
During 2014, gold production at the Kumtor mine was 567,693 ounces¹ or 17,657.2 kg of gold for the full year. The Kumtor mine met its annual gold production guidance as it accessed the high-grade SB Zone, which the Company is continuing to mine in the first quarter of 2015.
Kumtor’s proven and probable reserves total an estimated 6.1 million ounces of contained gold (68.5 million tonnes (Mt) at a grade of 2.8 grammes per tonne gold (g/t Au)), compared to 8.5 million contained ounces as of December 31, 2013. Proven and probable gold reserves decreased by 1.6 million contained ounces of gold, after accounting for processing of 731,000 contained ounces of gold in 2014. At the end of December 2014, work on a new Central Pit resource model was completed to account for negative block model reconciliation experienced during 2014. The net impact of the new resource model was to decrease probable reserves by 590,000 contained ounces of gold. In addition, the mine design was revised as a result of the new resource model and flattening of certain pit slopes to mitigate geotechnical concerns. The new mine design has resulted in a decrease in probable reserves of 743,000 contained ounces of gold. During 2014, a buttress was built to limit the movement in the South Arm of the Davidov Glacier. The location of the buttress has reduced the ultimate pit wall boundary thereby decreasing probable reserves by an additional 358,000 contained ounces of gold. Optimization of the Sarytor and Southwest open pits resulted in an increase in the Sarytor probable reserves of 147,000 contained ounces of gold and a decrease in the Southwest probable reserves of 105,000 contained ounces of gold.
Measured and indicated open pit resources at Kumtor increased by 284,000 contained ounces of gold, to an
estimated total 2.8 million contained ounces of gold (29.5 Mt at 3.0 g/t Au) at December 31, 2014, primarily
as a result of the downgrade of reserves to resources at the Kumtor Central Pit. Measured resources decreased by 158,000 contained ounces of gold to an estimated 1.47 million contained ounces of gold (14.3 Mt at 3.2 g/t Au) and indicated resources increased by 441,000 contained ounces of gold to an estimated 1.3 million contained ounces of gold (15.1 Mt at 2.7 g/t Au). These changes are attributable to the pit optimization undertaken at the Sarytor and Southwest deposits and to applying a standardized resource estimation methodology on all deposits at Kumtor in 2014.
As of December 31, 2014, Kumtor’ inferred resource estimate totals 1.7 million ounces of contained gold (7.2 Mt at 7.4 g/t Au), a net decrease of 0.9 million contained ounces of gold over the December 31, 2013 estimate. The decrease in inferred contained ounces is, primarily the result of 581,000 inferred contained ounces of gold being removed from the Northeast Prospect, Southwest and Sarytor deposits as a result of not being captured within the constraining pit resource shell developed at a gold price of US$1,450 per ounce, 411,000 contained ounces of gold being reallocated to open pit indicated resources from the high-grade underground Stockwork Zone inferred resource category offset by an increase of 86,000 contained ounces of gold in the high-grade underground SB Zone inferred resource category.
At Kumtor, of the estimated 1.7 million contained ounces of gold of inferred resources, 1.6 million estimated contained ounces of gold are within the high-grade underground inferred resources shell in the SB and Stockwork Zones. There was a minor change in the 2014 year-end inferred underground resource estimate at the SB Zone due to the impact of the buttress, which increased the SB Zone inferred underground resources by 86,000 contained ounces of gold to 1.3 million contained ounces of gold (3.8 Mt at 10.7 g/t Au); however, the inferred underground resources at the Stockwork Zone declined to an estimated 294,000 contained ounces of gold (0.8 Mt at 11.8 g/t Au) reflecting 411,000 contained ounces of gold being reallocated to open pit indicated resources.
The use of a constraining pit resource shell captures the open pit mineral resources outside the mineral reserves pit and includes parameters for location, deposit scale and continuity, mining method, metallurgical recovery, operating costs and commodity price. However the resource shell does not take into account any future capital requirements; therefore it should not be used as a proxy for conversion to mineral reserves.
Reserves and resources at Kumtor as of December 31, 2014*
Thousands of tonnes
Thousands of oz
|– measured Open Pit||14,317||3.2||1,473||45.82|
|– indicated Open Pit||15,144||2.7||1,330||41.37|
|– indicated Stockwork Underground||156||10.8||54||1.68|
|Total Measured and Indicated Resources||29,617||3.0||2,858||88.90|
|– Open Pit||2,655||1.5||126||3.92|
|– Underground Stockwork Zone||775||11.8||294||9.4|
|– Underground SB Zone||3,806||10.7||1,315||40.9|
|Total Inferred Resources||7,236||7.4||1,735||54.22|
* The reserves and resources include those of the open-pit area as well as of the Southwest and Sarytor deposits. Reserves have been estimated based on a gold price of US$1,300 per ounce.
Open Pit resources are constrained by a pit shell developed using a gold price of US$1,450 per ounce.
The open pit reserves and resources at Kumtor are estimated based on a cut-off grade of 0.85 grammes of gold per tonne for the Central Pit and 1.0 grammes of gold per tonne for the Southwest and Sarytor deposits.
Underground resources occur below the open pit resources shell and are estimated based on a cut-off grade of 6.0 grammes of gold per tonne.
The reserves and resources estimated by Centerra are determined in accordance with National Instrument 43-101 which is the same standard used by many international mining companies. The Company will file updated reserve and resource estimates with the appropriate Kyrgyz authorities for their review and approval to facilitate the updating of the Kyrgyz state reserve registry.
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. At Kumtor, relatively even quarterly production is expected in 2015 as compared to prior years when the majority of the ounces were produced in the fourth quarter.
At Kumtor, 2015 total capital expenditures, excluding capitalized stripping, are forecast to be $75 million2. Spending on sustaining capital3 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 in 2015.
Additional information on Centerra and the full text of Centerra’s news release on the 2014 reserves and resources are available on SEDAR at www.sedar.com and the corporate website at www.centerragold.com. Information on Kumtor Gold Company is available at www.kumtor.kg
1 – One Troy ounce equals to 31.10348 grammes.
2 – Unless specified otherwise, all dollar figures in this news release are in US dollars.
3 – Non-GAAP measure, see discussion under “Non-GAAP Measures” in the Centerra’s MD&A filed on SEDAR.