Basic Operating and Financial Results
At the Kumtor mine gold production in 2016 was 550,960 ounces or 17,136.78 kg. Gold sales in 2016 were 546,342 ounces* or 16,993.15 kg with a revenue totaling $686.4 million**.
The table below displays Kumtor’s basic operating and financial results:
Three Months Ended December 31
Year Ended December 31
|Revenue from gold sales to Kyrgyzaltyn – $ millions||231.3||144.5||60%||686.4||604.5||14%|
|Operating costs (on a sales basis)****||44.6||46.9||(5%)||171.8||151.1||14%|
|Cost of sales – total||103.1||112.1||(8%)||350.4||367.9||(5%)|
|Cost of sales – $/oz sold***||537||852||(37%)||641||707||(9%)|
|Tonnes mined – 000s||35,542||45,418||(22%)||144,399||169,527||(15%)|
|Tonnes ore mined – 000s||223||3,941||(94%)||8,911||6,583||35%|
|Tonnes milled – 000s||1,581||1,504||5%||6,303||5,729||10%|
|Average mill head grade – g/t||4.71||3.42||38%||3.44||3.57||(4)%|
|Recovery – %||83.5%||79.9%||5%||79.2%||78.8%||1%|
|Gold produced – ounces*||200,762||130,610||54%||550,960||520,694||6%|
|Gold produced — kg||6,244.40||4,062.43||54%||17,136.78||16,195.41||6%|
|Gold sold – ounces*||191,842||131,549||46%||546,342||520,517||5%|
|Gold sold – kg||5,966.96||4,091.63||46%||16,993.15||16,189.90||5%|
|Average realized gold price – $/oz***||1,206||1,098||10%||1,256||1,161||8%|
|Capital expenditures (sustaining)***||11.5||11.8||(3%)||61.0||50.5||21%|
|Capital expenditures (growth)***||1.4||2.5||(44%)||14.8||14.2||4%|
|Capital expenditures (stripping)***||58.3||12.1||382%||136.7||210.6||(35%)|
|Adjusted operating costs – $/oz sold***||253||392||(36%)||342||326||5%|
|All-in sustaining costs – $/oz sold***||538||553||(3%)||640||731||(12%)|
|All-in costs – $/oz sold***||545||572||(5%)||667||758||(12%)|
|All-in costs (including taxes) – $/oz sold***||715||725||(1%)||843||921||(9%)|
* – One Troy ounce equals to 31.10348 grammes.
** – Unless specified otherwise, all dollar figures in this news release are in US dollars.
*** – Results may not add due to rounding
**** – Adjusted operating costs, all-in sustaining costs, all-in costs and all-in costs – including taxes (in $ millions and 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 discussed under “Non-GAAP Measures”.
Kumtor’s Contributions in Taxes and Mandatory Payments for the Twelve Months of 2016
As of Dec 31, 2016
|Gross Proceeds Tax||80,083.32|
|Issyk-Kul Development Fund||6,160.26|
|Employee Income tax||4,104.37|
|Social Insurance Fund||17,906.10|
|Tax on nonresident companies||665.04|
|Other taxes and mandatory payments||1,043.11|
|US$ official exchange rate to the Kyrgyz Soms as of Dec 31, 2016||69.2301|
|Equivalent of payments effected in thousand Kyrgyz Soms||7,633,766.55|
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 2016 (including taxes, refining, domestic suppliers, infrastructure, charities, etc.) have exceeded $238.450 million. In all, contributions made within the Kyrgyz Republic between 1994 and 2016 have exceeded $3.2 billion.
1994 – 2015
|Taxes, customs & other mandatory payments||86.949||984.575|
|Social Insurance Fund||17.906||167.796|
|Issyk-Kul Development Fund||6.160||56.205|
|Licenses & permits||0.458||3.514|
|Pollution tax and payments to the Environment Protection Agency||0.310||4.989|
|Payments to Kyrgyzaltyn||0.472||12.819|
|Revenue from the sale of Centerra shares||–||86.000|
|Purchases in the Kyrgyz Republic:
– supplies & services
|– roads outside the mine site||1.596||42.745|
|– Tamga-Kumtor power-transmission line||–||41.612|
|KGC employees’ net wage||59.244||629.199|
|Education, scholarships & training||0.664||5.817|
|Sponsorships & sustainable development projects||0.706||28.123|
|Payments to communities||–||4.400|
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 2016 was 8%;
- Kumtor’s share in the aggregate industrial output was 4%.
Outlook for 2017
Kumtor’s gold production forecast is expected to be in the range of 455,000 ounces to 505,000 ounces with 30% of the gold production expected to be in the fourth quarter.
At Kumtor, 2017 total capital expenditures, excluding capitalized stripping, are forecast to be $96 million**. Spending on sustaining capital*** of $68 million relates primarily to major overhauls and replacements of the heavy duty mine equipment ($58 million), major overhauls and replacements of mill equipment ($3 million) and other items ($7 million). Growth capital*** investment at Kumtor for 2017 is forecast at $28 million and includes the relocation of certain infrastructure at Kumtor related to the life-of-mine expansion plan amounting to $9 million, tailings dam construction ($11 million), purchase of new mining equipment ($4 million), dewatering projects ($2 million) and other items ($2 million). The cash component of capitalized stripping costs related to the development of the open pit is expected to be $172 million of the $234 million total capitalized stripping in 2017.
Scott Perry, Chief Executive Officer of Centerra stated, “Regrettably 2016 got off to an unfortunate start when a mill employee at Kumtor was fatally injured. With this tragic event the Company is rolling out a new Company-wide safety leadership program called Work Safe – Home Safe. On the operational front, as we disclosed earlier, Kumtor had another strong year and we exceeded the mid-point (540,000 ounces) of Centerra’s favourably revised gold production guidance for 2016. I am pleased to report that Centerra also significantly beat its unit cost guidance for the year as the all-in sustaining costs were $682 per ounce sold. Our lower costs reflect Kumtor favourably exceeding its cost guidance with all-in sustaining costs of $640 per ounce sold for the year. Kumtor successfully implemented various continuous improvement initiatives throughout the year resulting in higher throughput in the mill and lower unit costs. Kumtor once again generated a significant amount of cash, after all capital expenditures and taxes – it generated $237 million in 2016. The Company continues its discussions with the Government of the Kyrgyz Republic to resolve all outstanding issues affecting the Kumtor Project in a manner that is fair to all of its stakeholders.”
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 operating since May 1997 and, as of December 31, 2016, has produced approximately 10.937 million ounces or 340.181 tonnes of gold.
Kumtor Gold Company is the operator of the Kumtor Project responsible for the entire production cycle.
Centerra Gold Inc. is a Canadian-based gold mining company focused on operating, developing, exploring and acquiring gold properties in North America, Asia and other markets worldwide. Centerra is the largest Western-based gold producer in Central Asia. Centerra’s shares trade on the Toronto Stock Exchange (TSX) under the symbol CG. The Company is headquartered in Toronto, Ontario, Canada.
The Kyrgyz Republic, via Kyrgyzaltyn JSC, is Centerra’s largest shareholder owning 77,401,766 common shares. As of March 23, 2017, Kyrgyzstan’s interests were estimated at $422 million.
Additional information on Centerra and the full text of the news release on the fourth quarter 2016 year-end results are available on SEDAR at www.sedar.com and the corporate websites at www.centerragold.com and www.kumtor.kg.