Centerra Gold Reports 2010 Results;
Fourth Quarter Earnings $153 million or $0.65 per share
(This news release contains forward-looking information that is subject to assumptions and risk factors set out on page 11 and in our Cautionary Note Regarding Forward-looking Information on page 21. All figures are in United States dollars.)
To view the 2010 Management�s Discussion and Analysis and the Audited Financial Statements and Notes
for the year-ended December 31, 2010, please visit the following link: http://media3.marketwire.com/docs/cg0224.pdf
Toronto, ON - February 24, 2011 - Centerra Gold Inc. (TSX: CG) today reported fourth quarter 2010 net earnings of $153.1 million or $0.65 per common share based on revenues of $323.3 million, compared to net earnings of $140.0 million or $0.60 per common share on revenues of $323.9 million in the same quarter of 2009.
Centerra�s consolidated gold production for the fourth quarter of 2010 totalled 249,866 ounces at a total cash cost of $311 per ounce compared to 296,048 ounces at a total cash cost of $276 per ounce in the corresponding quarter of 2009. During the fourth quarter 2010, production was lower at both Boroo and Kumtor compared to the fourth quarter of 2009.
2010 Fourth Quarter Highlights
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Proven and probable mineral reserves increased to 8.2 million contained ounces of gold as a result of reserve increases at Kumtor and Gatsuurt.
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Kumtor�s open pit mine life extended to 2021.
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Fourth quarter revenue increased 180% over the third quarter to $323 million.
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Cash provided by operations of $137 million or $0.58 per share in the fourth quarter.
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Entered into a $150 million three-year revolving credit facility with the European Bank for Reconstruction and Development.
Cash provided by operations in the fourth quarter of 2010, net of working capital changes and other operating items was $137.1 million compared to $188.6 million in the fourth quarter of 2009 as a result of lower gold sales, higher working capital levels, partially offset by the higher average realized price of gold ($1,375 per ounce vs. $1,129 per ounce in the fourth quarter of 2009).
For 2010, the Company recorded net earnings of $322.6 million or $1.37 per common share on revenues of $846.5 million reflecting a 22% increase in realized gold price in the year and the gain from the sale of the REN property of $34.9 million. Net earnings for 2009 were $60.3 million or $0.27 per share on revenues of $685.5 million, after reflecting a charge for unusual items of $49.3 million relating to the Kyrgyz settlement. Consolidated 2010 gold production was 678,941 ounces at a total cash cost of $444 per ounce, compared with consolidated gold production of 675,592 ounces at a total cash cost of $459 per ounce for the prior year. (Total cash cost is a non-GAAP measure and is discussed under �Non-GAAP Measures� in this news release.)
During 2010, cash provided by operations was $271.4 million or $1.15 per share up from $245.6 million or $1.08 per share in 2009, reflecting the higher net earnings, primarily as a result of the higher average gold price realized.
Commentary
Stephen Lang, President and CEO of Centerra Gold commented, �Our operations generated strong cash flow during the quarter of $137 million and Centerra ended the year with a balance sheet that includes $413 million in cash and short-term investments and no debt outstanding.�
�For 2011, consolidated gold production is expected to be in the 600,000 to 650,000 ounce range and total cash costs are expected in the $460 to $495 per ounce range. The production profile at Kumtor differs significantly from recent years in that Kumtor is expected to have consistent quarterly production throughout the year.�
�The Mongolian Parliament continues to assess the water and forest legislation enacted in 2009 and we remain optimistic that this issue will ultimately be resolved and Gatsuurt will move forward. However, as we are uncertain regarding the timing we have not included Gatsuurt in our 2011 outlook,� he concluded.
Year-end Reserves and Resources
Reserves
As reported in the Company�s news release of February 7, 2011, Centerra�s proven and probable reserves, as of December 31, 2010, increased 1.7 million contained ounces (before accounting for 2010 production) to 8.2 million ounces of contained gold, compared to 7.3 million ounces as of December 31, 2009. This represents an increase of 24% before accounting for 885,000 contained ounces processed at Kumtor and Boroo during 2010. All 2010 year-end reserves were estimated using a gold price of $1,000 per ounce compared to $825 per ounce at December 31, 2009.
Resources
As of December 31, 2010, Centerra�s measured and indicated resources increased by 18% or 739,000 ounces over the December 31, 2009 figures to total 4.9 million ounces of contained gold, compared to 4.1 million contained ounces as of December 31, 2009.
The Company�s inferred resources total 3.5 million ounces of contained gold a decrease by 34,000 contained ounces of gold year-over-year. The majority of the inferred resources are at Kumtor, in the high-grade underground SB Zone, which totals 1.4 million contained ounces of gold with an average grade of 15.3 g/t and in the high-grade underground Stockwork Zone which totals 638,000 contained ounces of gold with an average grade of 12.1 g/t.
THIS PRESS RELEASE CONTAINS OVERVIEWS AND TABLES, CLICK HERE TO VIEW THE ENTIRE DOCUMENT IN PDF FORMAT.
About Centerra
Centerra Gold Inc. 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.
Additional information on Centerra is available on the Company�s website at www.centerragold.com and at SEDAR at www.sedar.com.
Conference Call
Centerra invites you to join its 2010 fourth quarter, year-end conference call on Thursday, February 24, 2011 at 12:00 noon Eastern Time. The call is open to all investors and the media. To join the call, please dial Toll-Free in North America (800) 920-9723 or International callers dial +1 (212) 231-2907. Alternatively, an audio feed web cast will be available on www.centerragold.com. A recording of the call will be available on www.centerragold.com shortly after the call, and via telephone until midnight on Thursday, March 3, 2011 by calling (416) 626-4100 or (800) 558-5253 and using passcode 21507630.
THIS PRESS RELEASE CONTAINS OVERVIEWS AND TABLES, CLICK HERE TO VIEW THE ENTIRE DOCUMENT IN PDF FORMAT.
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Cautionary Note Regarding Forward-looking Information
This news release and the documents referred to herein contain statements which are not statements of current or historical facts and are �forward-looking information� within the meaning of applicable Canadian securities laws. Such forward-looking information involves risks, uncertainties and other factors that could cause actual results, performance, prospects and opportunities to differ materially from those expressed or implied by such forward-looking information. Wherever possible, words such as �believe�, �expect�, �anticipate�, �contemplate�, �target�, �plan�, �intends�, �continue�, �budget�, �forecast�, �projections�, �estimate�, �may�, �will�, �schedule�, �potential�, �strategy� and other similar expressions have been used to identify forward-looking information. These forward-looking statements relate to, among other things, the statements made under the heading, �2011 Outlook�, including the Company�s expectations regarding future growth, results of operations, future production and sales, operating capital expenditures, and performance; planned exploration drilling in 2011; mining plans at each of the Company�s operations and at the Gatsuurt property; 2011 exploration expenditures; 2011 capital expenditures; the resolution of the social fund dispute with respect to high altitude premiums paid to national employees at the Kumtor mine; the impact of the Water and Forest Law on the Company�s Mongolian activities; the receipt of permitting and regulatory approvals at the Company�s Gatsuurt development property; the application of the new graduated royalty fee regime under the 2006 Mongolian Minerals Law to the Company�s Mongolian properties; permitting of the Company�s heap leach activities at the Boroo mine; anticipated delays and approvals and regulatory commissioning of the Company�s Gatsuurt development property as a result of the Water and Forest Law; the Company�s business and political environment and business prospects; and the timing and development of new deposits.
Although the forward-looking information in this news release reflects Centerra�s current beliefs as of the date of this news release based on information currently available to management and based upon what management believes to be reasonable assumptions, Centerra cannot be certain that actual results, performance, achievements, prospects and opportunities, either expressed or implied will be consistent with such forward-looking information. Forward-looking information is necessarily based upon a number of estimates and assumptions that, while considered reasonable by Centerra, are inherently subject to significant political, business, economic and competitive uncertainties and contingencies. Known and unknown factors could cause actual results to differ materially from those projected in the forward-looking information.
Material assumptions used to forecast production and costs include those described under the heading �2011 Outlook�. Other factors that could cause actual results or events to differ materially from current expectations include, among other things: the sensitivity of the Company�s business to the volatility of gold prices; the political risks associated with the Company�s principal operations in the Kyrgyz Republic and Mongolia; the impact of changes in, or more oppressive enforcement of, laws, regulations and government practices in the jurisdictions in which the Company operates; the effect of the 2006 Mongolian Minerals Law; the effect of the November 2010 amendments to the 2006 Mongolian Minerals Law on the royalty payments payable in connection with the Company�s Mongolian operations; the effect of the Water and Forest Law on the Company�s operations in Mongolia; the impact of continued scrutiny from Mongolian regulatory authorities; the impact of changes to, or the increased enforcement of, environmental laws and regulations relating to the Company�s operations; the Company�s ability to replace its reserves; ground movements at the Kumtor Mine; waste and ice movement at the Kumtor Mine; litigation; the accuracy of the Company�s reserves and resources estimate; the accuracy of the Company�s production and cost estimates; the success of the Company�s future exploration and development activities; competition for mineral acquisition opportunities; the adequacy of the Company�s insurance; environmental, health and safety risks; defects in title in connection with the Company�s properties; the impact of restrictive covenants in the Company�s revolving credit facility; the Company�s ability to successfully negotiate an investment agreement for the Gatsuurt development property to complete the development of the mine and the Company�s ability to obtain all necessary permits and commissions needed to commence mining activity at the Gatsuurt development property; seismic activity in the vicinity of the Company�s operations in the Kyrgyz Republic and Mongolia; long lead times required for equipment and supplies given the remote location of the Company�s properties; illegal mining on the Company�s Mongolian properties; the Company�s ability to enforce its legal rights; the Company�s ability to accurately predict decommissioning and reclamation costs; the Company�s ability to obtain future financing; the impact of current global financial conditions; the impact of currency fluctuations; the effect of recent market conditions on the Company�s short-term investments; the Company�s ability to attract and retain qualified personnel; the Company�s ability to make payments including payments of principal and interest on the Company�s debt facilities; risks associated with the conduct of joint ventures; risks associated with the Company�s largest shareholder, the Kyrgyz government; and possible director conflicts of interest. There may be other factors that cause results, assumptions, performance, achievements, prospects or opportunities in future periods not to be as anticipated, estimated or intended. See �Risk Factors� in the Company�s most recently filed AIF available on SEDAR at www.sedar.com.
Furthermore, market price fluctuations in gold, as well as increased capital or production costs or reduced recovery rates may render ore reserves containing lower grades of mineralization uneconomic and may ultimately result in a restatement of reserves. The extent to which resources may ultimately be reclassified as proven or probable reserves is dependent upon the demonstration of their profitable recovery. Economic and technological factors which may change over time always influence the evaluation of reserves or resources. Centerra has not adjusted mineral resource figures in consideration of these risks and, therefore, Centerra can give no assurances that any mineral resource estimate will ultimately be reclassified as proven and probable reserves.
Centerra�s mineral reserve and mineral resource figures are estimates and Centerra can provide no assurances that the indicated levels of gold will be produced or that Centerra will receive the gold price assumed in determining its mineral reserves. Such estimates are expressions of judgment based on knowledge, mining experience, analysis of drilling results and industry practices. Valid estimates made at a given time may significantly change when new information becomes available. While Centerra believes that these mineral reserve and mineral resource estimates are well established and the best estimates of Centerra�s management, by their nature mineral reserve and mineral resource estimates are imprecise and depend, to a certain extent, upon analysis of drilling results and statistical inferences which may ultimately prove unreliable. If Centerra�s reserve or reserve estimates for its properties are inaccurate or are reduced in the future, this could have an adverse impact on Centerra�s future cash flows, earnings, results or operations and financial condition.
Centerra has not adjusted resource figures included herein in consideration of these risks and, therefore, Centerra can give no assurances that any resource estimate will ultimately be reclassified as proven and probable reserves or incorporated into future production guidance. If Centerra�s reserve or resource estimates or production guidance for its gold properties are inaccurate or are reduced in the future, this could have an adverse impact on Centerra�s future cash flows, earnings, results of operations and financial condition. Centerra estimates the future mine life of its operations and provides production guidance in respect of its mining operations. Centerra can give no assurance that mine life estimates will be achieved or that actual production will not differ materially from its guidance. Failure to achieve estimates or production guidance could have an adverse impac t on Centerra�s future cash flows, earnings, results of operations and financial condition.
Mineral resources are not mineral reserves, and do not have demonstrated economic viability, but do have reasonable prospects for economic extraction. Measured and indicated resources are sufficiently well defined to allow geological and grade continuity to be reasonably assumed and permit the application of technical and economic parameters in assessing the economic viability of the resource. Inferred resources are estimated on limited information not sufficient to verify geological and grade continuity or to allow technical and economic parameters to be applied. Interred resources are too speculative geologically to have economic considerations applied to them to enable them to be categorized as mineral reserves. There is no certainty that mineral resources of any category can be upgraded to mineral reserves through continued exploration.
Centerra estimates the future mine life of its operations. Centerra can give no assurance that mine life estimates will be achieved. Failure to achieve these estimates could have an adverse impact on Centerra�s future cash flows, earnings, results of operations and financial condition.
There can be no assurances that forward-looking information and statements will prove to be accurate, as many factors and future events, both known and unknown could cause actual results, performance or achievements to vary or differ materially from the results, performance or achievements that are or may be expressed or implied by such forward-looking statements contained in this news release. Accordingly, all such factors should be considered carefully when making decisions with respect to Centerra, and prospective investors should not place undue reliance on forward-looking information. Forward-looking information is as of February 23, 2011. Centerra assumes no obligation to update or revise forward-looking information to reflect changes in assumptions, changes in circumstances or any other events affecting such forward-looking information, except as required by applicable law. |
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