• Gold Production: Over 93,000 ounces in the third quarter.
• Copper Production: 13.7 million pounds in the third quarter.
• Free Cash Flow: $37 million in the third quarter.
• Cash and Cash Equivalents: $604 million at the end of the third quarter.
• Adjusted Net Earnings: $39 million or $0.19 per share in the third quarter.
• Gold Sales: 96,736 ounces in the third quarter.
• Copper Sales: 14.2 million pounds in the third quarter.
• Average Realized Gold Price: $2,206 per ounce.
• Average Realized Copper Price: $3.37 per pound.
• Molybdenum Sales: 2.4 million pounds at an average price of $23.27 per pound.
• All-in Sustaining Costs: $1,302 per ounce on a by-product basis.
• Cash Flow from Operations: $104 million in the third quarter.
• Share Buybacks: 1.7 million shares repurchased for $12 million in the third quarter.
• Quarterly Dividend: C$0.07 per share.
• Total Liquidity: $1 billion at the end of the third quarter.

• Warning! GuruFocus has detected 6 Warning Signs with CGAU.

Release Date: November 01, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Centerra Gold Inc (NYSE:CGAU) reported strong free cash flow generation in the third quarter, even after significant investments in the Thompson Creek restart.
• The company is on track to meet its consolidated production and cost guidance for the year, with stable cost performance in an elevated metal price environment.
• Centerra Gold Inc (NYSE:CGAU) has made significant progress in its strategic plan, including securing an agreement with Royal Gold to evaluate Mount Milligan's long-term potential.
• The US molybdenum operations are expected to produce an after-tax NPV of $472 million and a 22% IRR, with Langeloth potentially generating $50 million of annual EBITDA.
• The company has a strong cash balance of $604 million, providing total liquidity of $1 billion, positioning it well for future strategic initiatives.

Negative Points

• Gold production at Mount Milligan is trending towards the lower end of the guidance range due to lower grades and oxidized material impacting recovery.
• All-in sustaining costs at AksAt are expected to be the highest in the fourth quarter due to lower production from lower grade areas.
• Inflation in Turkey is outpacing the devaluation of the lira, which may lead to increased costs at AksAt going forward.
• The molybdenum business unit reported a free cash flow deficit of $45 million in the third quarter, mainly due to spending on the Thompson Creek restart.
• There is a potential for AksAt's costs to exceed guidance due to higher royalties driven by elevated gold prices.

Q & A Highlights

Q: Can you provide an update on the recovery at Mount Milligan, particularly regarding the impact of oxidized material on gold recovery in Q3 and expectations for Q4? A: Paul Chawrun, Chief Operating Officer, explained that the recovery was impacted by oxidized material in Phase 6 and Phase 9 of the deposit, affecting gold grades. The mine plan has changed since the 2022 technical report, with an expanded pit size. The recovery is expected to improve as they move deeper into the deposit.

Q: What is causing the increase in mining costs at Mount Milligan, and when can we expect these costs to decrease? A: Paul Chawrun noted that the increase in mining costs is due to timing on equipment refurbishment, including major components like loaders and engines. These costs were primarily a Q3 item, and the mine's productivity indicators remain on track.

Q: How do you plan to optimize gold recoveries at Mount Milligan on a life-of-mine basis? A: Paul Tomory, CEO, mentioned initiatives like adjusting the flotation circuit parameters in real-time (Float IQ) and optimizing the blend of concentrate. They aim to reach mid-60% recovery rates without significant capital investment, focusing on throughput improvements.

Q: Can you provide insights into the inflation impact in Turkey and its effect on costs at AksAt? A: Paul Tomory stated that inflation in Turkey is outpacing the devaluation of the lira, leading to potential cost increases at AksAt. While 2024 cost guidance remains unchanged, costs may rise slightly next year due to inflationary pressures.

Q: What is the likelihood of increasing share buybacks given the improved free cash flow and current gold prices? A: Paul Tomory indicated that Centerra plans to continue share buybacks at levels higher than Q1 and Q2, similar to Q3. The extent of buybacks will depend on capital allocation decisions, including internal projects and potential M&A opportunities.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.