Kumtor’s Basic Operating Results in 2015

Kumtor’s Basic Operating Results in 2015

published: 16 March 2016

Basic Operating and Financial Results

At the Kumtor mine gold production in 2015 was 520,694 ounces* or 16,195.4 kg.
Gold sales in 2015 were 520,517 ounces or 16,189.9 kg with a revenue totaling $604.5 million**. The table below displays Kumtor’s basic operating and financial results:

Unaudited ($ millions, except as noted)

Three Months Ended December 31,***

Year Ended December 31,***

2015

2014

Change

2015

2014

Change
Revenue from gold sales to Kyrgyzaltyn ** 144.5 346.2 (58%) 604.5 694.6 (13%)
Cost of sales – total **** 112.1 171.5 (35%) 367.9 444.5 (17%)
Cost of sales – $/oz sold **** 852 594 43% 707 792 (11%)
Tonnes mined – 000s 45,418 42,786 6% 169,527 191,723 (12%)
Tonnes ore mined – 000s 3,941 6,615 (40%) 6,583 8,640 (24%)
Tonnes milled – 000s 1,504 1,502 0% 5,729 5,840 (2%)
Average mill head grade – g/t 3.42 7.40 (54%) 3.57 3.90 (8%)
Recovery – % 79.9 82.2 (3%) 78.8 78.0 1%
Gold produced – ounces* 130,610 291,635 (55%) 520,694 567,693 (8%)
Gold produced — kg 4 062,4 9 070,9 (55%) 16 195,4 17 657,2 (8%)
Gold sold – ounces* 131 549 288 851 (54%) 520 517 561 154 (7%)
Gold sold –  kg 4,091.6 8,984.3 (54%) 16,189.9 17,453.8 (7%)
Average realized gold price**** – $/oz 1,098 1,198 (8%) 1,161 1,238 (6%)
Adjusted operating costs**** – $/oz 392 244 61% 356 357 (8%)
All-in sustaining costs**** – $/oz 553 378 46% 731 779 (6%)
All-in costs**** – $/oz 572 418 37% 758 851 (11%)
All-in costs including taxes**** – $/oz 725 585 24% 921 1,024 (10%)
Capital expenditures (sustaining)**** – $millions 11.8  13.4 (12%) 50.5 48.7 4%
Capital expenditures (growth)****  – $millions 2.5 11.5 (78%) 14.2 40.1 (65%)
Capital expenditures (stripping)****  – $ millions 12.1 32.5 (63%) 210.6 261.1 (19%)

* – 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”.

Payments to the Kyrgyz National Budget and Mandatory Contributions

During the twelve months of 2015, contributions to the national budget in taxes, deductions to the Social Fund and other mandatory payments exceeded $123 million, which according to the KR National Bank’s exchange rate as at December 31, 2015, amounts to approximately 9.373 billion soms.

 As of Dec 31, 2015

USD thousands***
Gross Proceeds Tax 92,936.47
Issyk-Kul Development Fund 7,148.96
Экологический платеж 310.00
Подоходный налог с сотрудников 4,269.06
Платежи в Социальный фонд КР  17,049.19
Таможенные платежи  705.59
Налог на доходы нерезидентов  709.17
Прочие налоги и обязательные отчисления 363.16
Итого 123,491.59
Официальный курс доллара США по отношению к сому КР на 31 декабря 2015 г. 75.8993
Эквивалент уплаченных платежей в тыс. сомов 9,372,925.39

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 2015 (including taxes, refining, domestic suppliers, infrastructure, charities, etc.) have exceeded $256 million.

In all, contributions made within the Kyrgyz Republic between 1994 and 2015 have exceeded $2.964 billion

USD millions***

2015

1994 – 2015
Taxes, customs & other mandatory payments 98.708 898.626
Social Insurance Fund 17.049 149.890
Issyk-Kul Development Fund 7.149 50.045
Licenses & permits 0.269 3.056
Pollution tax and payments to the Environment Protection Agency 0.310 4.679
Payments to Kyrgyzaltyn 0.298 12.347
Refinery 3.310 47.076
Revenue from the sale of Centerra shares – 86.000
Dividends 9.616 86.218
Purchases in the Kyrgyz Republic:
– supplies & services		 42.519 690.207
– foods 4.472 61.174
Kyrgyz-infrastructure-related payments:
– electricity		 12.633 153.639
– roads outside the mine site 1.867 41.149
– Tamga-Kumtor power-transmission line – 41.612
KGC employees’ net wage 56.026 569.955
Sanatoria treatment – 0.744
Education, scholarships & training 0.504 5.153
Sponsorships & sustainable development projects 2.008 27.417
Government contributions – 31.000
Payments to communities – 4.400
Total 256.728 2,964.39

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 2015 was 6.8 %;
• Kumtor’s share in the aggregate industrial output was 22.5 %;
• Gold’s share in the national exports in 2015 was 39.7 %.

Commentary

Daniel Desjardins, President of Kumtor Gold Company, stated, “I am pleased to report that we achieved our production guidance for the full year 2015. We beat our gold production guidance for 2015 due to relatively even quarterly gold production as compared to prior years when the majority of the ounces were produced in the fourth quarter.

Gold production for the full year 2016 at the Kumtor mine is forecast to be 480,000 to 530,000 ounces or 14.9-16.5 tonnes. In 2016, the company expects an increase in gold production in the latter half of the year after we have accessed the high-grade SB Zone in the third quarter of 2016”.

2016 Outlook

At Kumtor, 2016 total capital expenditures, excluding capitalized stripping, are forecast to be $110 million.
Spending on sustaining capital**** of $84 million relates primarily to major overhauls and replacements of certain heavy duty mine equipment ($69 million), construction to raise the tailings dam ($6 million) and other items ($9 million).

Growth capital**** investment at Kumtor for 2016 is forecast at $26 million and includes the relocation of certain infrastructure at Kumtor relating to the ongoing Kumtor pit expansion ($17 million), dewatering projects ($6 million) and other items ($3 million).

The cash component of capitalized stripping costs related to the development of the open pit is expected to be $122 million of the $162 million total capitalized stripping in 2016.

●●●

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 10.42 million ounces or 324.1 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 2014 are available on SEDAR at www.sedar.com and www.centerragold.com. Information on KGC is available at www.kumtor.kg