Centerra Gold Inc. (Centerra) and Kumtor Gold Company (KGC) have summed up their operating results in the first quarter of 2016. In the first three months of 2016, KGC produced 86,444 ounces* or 2688.7 kg of gold and contributed more than 1.6 billion soms in taxes and mandatory payments.
Gold Production and Sales
Gold production for the first quarter of 2016 was 86,444 ounces compared to 164,272 ounces of gold in the comparative period of 2015. The decrease in ounces poured in the first quarter of 2016 resulted from the processing of lower grade ore mined from cut-back 17 which was blended with lower grade stockpiles. In contrast, during the comparative quarter of 2015, the Company mined and processed ore from the higher grade final benches from cut-back 16.
Gold sales in the first quarter of 2016 were 61,744 ounces, or 1.92 tonnes. Total revenues from gold sales in the first quarter of 2016 were $ 73.2 million**.
The Dore bars produced by the Kumtor mine are purchased by Kyrgyzaltyn JSC for processing at the Kara-Balta refinery pursuant to a Gold and Silver Sales Agreement signed by KGC, Kyrgyzaltyn and the Government of the Kyrgyz Republic. Kyrgyzaltyn JSC enjoys the exclusive right to sell refined gold and silver both in and outside the Kyrgyz Republic.
Production costs and capital expenditures
All-in costs per ounce sold****, which excludes revenue-based tax, for the first quarter of 2016 was $993 compared to $673 in the comparative period of 2015, representing an increase of 48%. The increase is due to the higher all-in sustaining costs**** and lower ounces sold.
Capital expenditures in the first quarter of 2016 totaled $41.8 million which includes $23.0 million of sustaining capital**** mainly on equipment rebuilds and overhauls, $4.7 million invested in growth capital**** and $14.1 million for capitalized stripping ($10.4 million cash). Kumtor is currently constructing a heavy vehicle workshop and expects to complete this project during the second quarter of 2016. Capital expenditures the comparative quarter of 2015 totaled $86.4 million, consisting of $12.4 million for sustaining capital****, $6.5 million for growth capital**** and $67.5 million of capitalized stripping ($51.7 million cash).
All-in sustaining costs per ounce sold****, which excludes revenue-based tax, for the first quarter of 2016 increased 44% to $916 compared to $634 in the comparative period of 2015. The increase results primarily from the lower ounces sold. This was partially offset by reduced operating costs for mining, milling and site support.
Operating Results of the Kumtor Project
|Three month ended March 31|
|Revenue from gold sales to Kyrgyzaltyn – $ millions**||73.2||205.0||(64%)|
|Cost of sales**** – $millions||31.5||106.7||(71%)|
|Cost of sales**** – $/$/oz sold||510||631||(19%)|
|Tonnes mined – 000s||39,275||41,731||(6%)|
|Tonnes ore mined – 000s||1,826||1,339||36%|
|Tonnes milled – 000s||1,543||1,175||31%|
|Average mill head grade – g/t||2.27||5.13||(56%)|
|Recovery – %||75.0%||81.0%||(7%)|
|Gold produced – ounces*||86,444||164,272||(47%)|
|Gold produced – kg||2688.71||5,109||(47%)|
|Gold sold – ounces*||61,744||169,185||(64%)|
|Gold sold – kg||1920.45||5,262||(64%)|
|Average realized gold price**** – $/oz||1,186||1,212||(2%)|
|Capital expenditures**** (sustaining)||23.0||12.4||85%|
|Capital expenditures**** (growth)||4.7||6.5||(28%)|
|Capital expenditures**** (stripping)||14.1||67.5||(79%)|
|Adjusted operating costs**** – $/oz sold||371||254||46%|
|All-in sustaining costs**** – $/oz sold||916||634||44%|
|All-in costs**** – $/oz sold||993||673||48%|
|All-in costs (including taxes)**** – $/oz sold||1,159||842||38%|
* – One Troy ounce equals to 31.103 48 grammes.
** – Unless specified otherwise, all dollar figures in this news release are in US dollars.
***– Numbers may not add up 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 and capital expenditures (sustaining and growth) are non-GAAP measures.
2016 Payments to the Kyrgyz National Budget and Mandatory Contributions
During the first three months of 2016, contributions to the national budget in taxes, deductions to the Social Fund and other mandatory payments have totaled 1.6 billion soms.
Kumtor’s Contributions in Taxes and Mandatory Payments for the First Three Months of 2016
|As of March 31, 2016.||USD thousands|
|Issyk-Kul Development Fund||1,159.76|
|Employee Income tax||1,125.93|
|Social Insurance Fund||5,056.86|
|Tax on nonresident companies||173.33|
|Other taxes and mandatory payments||63.92|
|US$ official exchange rate to the Kyrgyz Soms as of March 31, 2016||70.0158|
|Equivalent of payments effected in thousand Kyrgyz Soms||1,621,245.46|
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.
Outlook for 2016
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.
Scott Perry CEO of Centerra Gold stated, “Kumtor had strong gold production in the quarter producing 86,444 ounces which was in line with our expectations. Our team continues to pursue a number of business improvement opportunities at both the operational and corporate levels.The Kumtor mine is expected to produce between 480,000 and 530,000 ounces, or 14,9 and 16,5 tonnes, of gold in 2016. At Kumtor this year, it is expected that gold production will be weighted more towards the second half of the year as the higher grade portion of the SB Zone will be accessed at the end of the second quarter.
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 March 31, 2016, has produced approximately 10.51 million ounces or 326.79 tonnes of gold.
Kumtor Gold Company is a wholly-owned subsidiary of Centerra Gold Inc. and is the operator of the Kumtor project responsible for the entire production cycle.
Centerra Gold Inc. Centerra is a Canadian-based gold mining company focused on operating, developing, exploring and acquiring gold properties in Asia, North America 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.
Additional information on Centerra is available on SEDAR at www.sedar.com and the corporate websites at www.centerragold.com. The full text of the news release on the results of the first quarter of 2016.