Operating Results of the 3rd Quarter of 2013

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Operating Results of the 3rd Quarter of 2013

Centerra Gold Inc. (Centerra), Kumtor Gold Company (KGC) and Kumtor Operating Company (KOC) have reported operating results of the 3rd quarter of 2013. In the first nine months of 2013, the Kumtor mine produced 252,272 ounces* (one troy ounce equals to 31,10348 grams) or 7,846.5 kg of gold, and contributed more than 3.6 billion soms in taxes and mandatory payments to the Kyrgyz Government. 

Gold Production and Sales

Operating Results of the 3rd Quarter of 2013At the Kumtor mine in the Kyrgyz Republic, gold production in the third quarter was 2,808.3 kg’s compared to 739.8 kg in the same quarter in 2012. The increase in ounces poured was mainly due to accessing and mining higher grade ore in cut-back 15. During the third quarter of 2013, Kumtor’s average head grade was 3.04 g/t with a recovery of 76.4%. Tonnage processed was approximately 1.3 million tonnes for the third quarter of 2013 up significantly from the comparative period in 2012.

Gold sales in the third quarter of 2013 were 2.7 tonnes. Total revenue from gold sales in the third quarter of 2013 was $116.8 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 KOC, 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

Operating cash cost per ounce produced in the third quarter of 2013 were $709 compared to $1,338 per ounce in the comparative period of 2012. These results were due to the impact of significantly higher production levels, which resulted in a 280% increase in ounces produced compared to the comparative quarter of 2012. This figure, however, does not include the capitalization of stripping activities and the expensing of unloading activities.

All-in cash costs per ounce produced post-tax were $1,576 in the third quarter of 2013.

Capital expenditures in the third quarter of 2013 at Kumtor amounted to $77.7 million, which includes:

• $13.3 million of sustaining capital;

• $8.1 million invested in growth capital for the fleet expansion;

• $56.4 million for capitalized stripping.

Exploration expenditures totaled $0.9 million for the third quarter of 2013.

A complete listing of the drill results and supporting maps for the Kumtor pit have been filed on the System for Electronic Document Analysis and Retrieval (‘SEDAR’) at www.sedar.com and are available on the Company’s web site at www.centerragold.com.

Operating Results for the Kumtor Project

Three months ended September 30 Nine months ended September 30
2013 2012* % Change 2013 2012* % Change
Gold sold – ounces 86,699 26,626 226% 248,635 129,051 93%
Gold sold – kg 2,696,6 828.2 226% 7,733.4 4,013.9 93%
Average realized gold price – $/oz* 1,347 1,651 (18%) 1,456 1,671 (13%)
Revenue from gold sales to Kyrgyzaltyn – $ millions 116.8 44.0 166% 362.0 215.7 68%
Cost of sales – $ millions 86.0 38.0 126% 217.9 166.9 31%
Cost of sales – $/oz sold* 991 1,427 (31%) 876 1,294 (32%)
Tonnes mined – 000’s 41,741 35,943 16% 129,827 109,425 19%
Tonnes ore mined – 000’s 2,087 412 407% 3,095 491 530%
Average mining grade – g/t 2.78 2.25 24% 2.53 2.09 21%
Tonnes milled – 000s 1,312 581 126% 4,136 3,209 29%
Average mill head grade – g/t 3.04 1.78 71% 2.63 1.66 58%
Recovery – % 76.4 75.1 2% 73.6 72.6 1%
Gold produced – ounces 90,289 23,786 280% 252,272 125,799 101%
Gold produced – kg 2,808.3 739.8 280% 7,846.5 3.912.8 101%
Operating cash cost – $/oz produced* 709 1,338 (47%) 589 828 (29%)
All-in cash cost (pre-tax) – $/oz produced* 1,395 4,911 (72%) 1,478 3,388 (56%)
All-in cash cost including tax – $/oz produced* 1,576 5,170 (70%) 1,678 3,628 (54%)
Capital expenditures – $ millions 77.7 96.8 (20%) 281.3 368.0 (24%)
Exploration expenditures- $millions 0.9 3.5 (74%) 5.3 8.9 (40%)

* All-in cash cost (pre-tax) include operating cash costs (mining, processing, production taxes (excluding the revenue-based tax) and administrative expenses), and sustaining and growth capital (including capitalized stripping).

Operating cash cost, all-in cash cost pre-tax and including tax, average realized gold price, and cost of sales per ounce sold are non-GAAP measures and are discussed under “Non-GAAP Measures” in Centerra’s MD&A filed on SEDAR***.

The Company has decided to report all-in cash costs because it believes that this measure reflects more precisely the actual amount of production costs.

Operating cash cost and capital expenditures for 2012 have been restated to reflect the impact of the adoption of IFRIC 20 on January 1, 2013.


Centerra’s Board of Directors has authorized a dividend of Cdn$0.04 per common share. The dividend is payable on November 25, 2013, to shareholders of record on the Toronto Stock Exchange on November 15, 2013.

Payments to the Kyrgyz National Budget and Mandatory Contributions

During the first nine months of 2013, contributions to the national budget in taxes, deductions to the Social Fund and other mandatory payments totaled 3.6 billion soms.

Kumtor’s Contributions in Taxes and Mandatory Payments for the First Nine Months of 2013

As of September 30, 2013 USD thousands
Gross Proceeds Tax (13%) 47,715.91
Issyk-Kul Contribution (1%) 4,616.49
Environmental Pollution Charge for 2013 310.00
Employee Income Tax 3,346.00
Contributions to the KR Social Fund (employer and employee) 15,939.55
Customs Administration Fee 840.45
Withholding Tax on non-residents 483.89
Other taxes and mandatory payments 86.47
Total 73,338.75
US$ official exchange rate to the Kyrgyz Soms as of September 30, 2013 48.62
Equivalent of payments effected in thousands Kyrgyz Soms 3,565,708.17

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.


Michael Fischer, President of KOC and KGC, stated, “We are happy to have accessed the high-grade ore in the open pit mine as planned.  We are also relieved that the abnormal movement of the Central Valley Waste Dump (CVWD), which began in mid-March 2013, has slowed to normal levels in the third quarter of 2013. This makes us confident that we will achieve our budgeted production levels in the fourth quarter of 2013, to enable us to meet our production guidance for the full 2013 year”.

Outlook for 2013

In 2013, up to 58% of Kumtor’s gold production is planned to occur in the fourth quarter. Ore production is planned from the high-grade SB Ore Zone ore that has several years of production history. As planned Cutback 15 exposed the high grade SB Ore Zone at the end of September 2013, and mining at Kumtor is currently estimated to be on track to meet the 2013 production guidance of 550,000 to 600,000 ounces of gold.

At Kumtor, 2013 total capital expenditures, excluding capitalized stripping, are forecast to be $90 million ($97 million in the previous guidance) including:

• $68 million of sustaining capital*** (major overhaul maintenance of the heavy duty mine equipment and purchase of new mining equipment, tailings dam construction raise, etc.);

• $22 million of growth capital***, including the relocation of certain infrastructure at the mine.

The cash component of capitalized stripping costs related to the development of the open pit is expected to be $203 million in 2013.

Material Assumptions & Risks

Material assumptions or factors are used to forecast production and costs for the fourth quarter of 2013, including a gold price of $1,250 per ounce, expected exchange rates, and diesel fuel price assumptions.  None of Centerra, KGC nor KOC can give any assurances in this regard.

Other assumptions used in forecasting production and costs for the fourth quarter of 2013 include:

• that discussions between the Kyrgyz Republic Government and Centerra will result in a mutually satisfactory      solution to the outstanding matters affecting the Kumtor project, and      which is fair to all of Centerra’s shareholders, and that such proposal will receive all necessary legal and regulatory approvals under Kyrgyz law  and/or Canadian law.

• any recurrence      of political or civil unrest in the Kyrgyz Republic will not impact      operations, including movement of people, supplies and gold shipments to      and from the Kumtor mine and/or power to the mine site.

• Kumtor is able to continue managing the      movement of the Central Valley Waste Dump to ensure continued safe      operations, without impact to gold production.

• Grades and recovery will remain consistent      with the Kumtor annual and life-of-mine plans.

There are other material assumptions and risks that are considered by Centerra, KGC and KOC in forecasting production.  See Centerra’s MD&A for the third quarter of 2013 for further information.  See also “Cautionary Note Regarding Forward-looking Information” below.

* * *

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 September 30, 2013, has produced approximately 8.9 million ounces or 277.7 tonnes of gold.

Kumtor Operating 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 primarily in Asia, the former Soviet Union and other emerging markets worldwide. Centerra is a leading North American-based gold producer and 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, Canada.

The Kyrgyz Republic, via Kyrgyzaltyn JSC, is Centerra’s largest shareholder owning 77,401,766 shares (about 33%). As of November 13, 2013, Kyrgyzstan’s interests were estimated at 242 million.

Currently, Centerra has two producing gold mines in the Kyrgyz Republic and Mongolia. The Company also owns Oksut Project, Turkey, and has interests in the promising exploration properties in Mongolia, Turkey, China and Russia.

This news release contains forward-looking information that is subject to risk factors and assumptions.  The words “expect”, “plan”, “continue”, “budget”, “estimate”, “will”,” and similar expressions identify forward-looking information.  The forward-looking statements in this news release include, among other things, the statements under the heading “Outlook for 2013” relating to the Company’s production for the remainder of 2013 and forecasted expenditures.  For a discussion of the assumptions and risks used in determining forward-looking information, please see the section below under the heading, “Material Assumptions & Risks” and also Centerra’s news release regarding the third quarter 2013 results dated October 30, 2013, under the heading, “Cautionary Note Regarding Forward-looking Information”.  This news release should be read in conjunction with Centerra Gold Inc.’s unaudited interim condensed consolidated financial statements and notes for the three and nine months ended September 30, 2013 and associated Management’s Discussion and Analysis (MD&A), and Centerra Gold Inc.’s news release relating thereto dated October 30, 2013.   These documents can all be found under Centerra Gold Inc.’s profile on www.sedar.com.  This news release also contains non-GAAP (generally accepted accounting principles applicable to Canada) measures which do not have any standardized meaning prescribed by GAAP. Examples of non-GAAP measures include operating cash costs per ounce, all-in cash costs per ounce, average realized gold price, sustaining capital, and growth capital.  Please see Centerra Gold Inc.’s MD&A for further information regarding non-GAAP measures.  Unless otherwise noted, all figures are in U.S. dollars. 

Additional information on Centerra and the full text of the news release on the results of the third quarter of 2013 are available on SEDAR at www.sedar.com and www.centerragold.com. Information on KOC is available at www.kumtor.kg


* One Troy ounce equals to 31,10348 grammes..

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

*** – Non-GAAP measure see discussion of “Non-GAAP Measures” in Centerra’s MD&A.