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Centerra Gold Inc. (TSX:CG - News) today announced that
its 2010 consolidated gold production totalled 678,941 ounces, which includes
249,866 ounces of gold produced in the fourth quarter of 2010.
2010 Quarterly Gold Production
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Gold Production
First Second Third Fourth
Quarter Quarter Quarter Quarter Full-Year
Ounces of gold 2010 2010 2010 2010 2010
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Kumtor mine 180,562 90,050 68,757 228,433 567,802
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Boroo mine 30,477 31,678 27,551 21,433 111,139
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Total 211,039 121,728 96,308 249,866 678,941
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Steve Lang, President and CEO of
Centerra stated, "As expected we had another strong fourth quarter,
despite a 10-day shutdown at Kumtor, enabling the Company to achieve its 2010
production guidance. For our 2011 gold production guidance we have not included
any production from the heap leach facility at Boroo and our Gatsuurt
development project. Continued delays in receiving the final permits and
approvals including the regulatory commissioning of the Gatsuurt project,
pending the resolution of the Water and Forest Law in Mongolia, makes it
difficult to predict the timing of the start of production. We continue to
expand our exploration and business development efforts as we look for
additional operating platforms in an effort to increase our future gold production
and help us achieve our goal of producing 1.5 million ounces of gold
annually."
2011 Outlook
Centerra's gold production and unit
costs for 2011 are forecast as follows:
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2011 Production Forecast 2011 Total Cash Cost(1)
(ounces of gold) ($ per ounce produced)
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Kumtor 550,000 - 600,000 430 - 460
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Boroo approx. 50,000 approx. 865
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Consolidated 600,000 - 650,000 460 - 495
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(1) Total cash cost is a non-GAAP measure and includes mine operating costs
such as mining, processing, regional office administration, royalties and
production taxes (except at Kumtor where revenue-based taxes are excluded),
but exclude amortization, reclamation costs, financing costs, capital
development and exploration.
Centerra's 2011 consolidated gold
production is forecast to be in the 600,000 to 650,000 ounce range. The
Kumtor mine is expected to produce between 550,000 to 600,000 ounces in 2011.
The production profile at Kumtor differs significantly from recent years in
that it will have consistent quarterly production throughout the year.
At the Boroo mine, gold production is
forecast to be approximately 50,000 ounces and assumes no mining activities
at Boroo in 2011. The 2011 forecast also assumes no production from the heap
leach facility or the Gatsuurt project due to uncertainties with permitting.
The Boroo mill is expected to process the remaining direct mill feed
stockpiled ore at Boroo until the end of May 2011 with an average grade of
approximately 1.44 g/t. For the balance of the year, the Boroo mill is
expected to process stockpiled material with grades between 0.76 - 0.81 g/t.
Receipt of the final heap leach
operating permit would add approximately 4,000 ounces of gold a month. At
Gatsuurt, the project is ready to begin production of the oxide ore on
receipt of the final approvals and regulatory commissioning.
2011 Exploration Expenditures
Exploration expenditures of $34 million
are planned for 2011, an increase from $30 million in 2010. The 2011 program
will continue the aggressive exploration work at the Kumtor mine together
with an increase in the exploration in the Kumtor district with target
definition and drilling programs on the properties acquired in 2010 and
planned expenditures of about $13 million. In Mongolia $5 million is
allocated for target definition and drill programs on the Gatsuurt project
and on our land holdings along the Yeroogol trend and in eastern Mongolia.
In 2011, drilling programs will continue
on the Kara Beldyr project in Russia to determine the resource potential of
the property. Drilling programs will also continue in Turkey and Nevada. In
addition, generative programs will continue in Russia, China, Turkey and the
U.S. to increase the pipeline of projects that the Company is developing to
meet the longer term growth targets of Centerra.
2011 Capital Expenditures
The capital expenditures for 2011 are
estimated to be $213 million, including $38 million of sustaining capital and
$175 million of growth capital.
Capital expenditures include:
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2011 Growth Capital 2011 Sustaining Capital
Projects (millions of dollars) (millions of dollars)
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Kumtor mine $ 170 $ 36
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Mongolia $ 5 $ 1
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Corporate - $ 1
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Consolidated Total $ 175 $ 38
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Kumtor
At Kumtor, during 2011 total capital
expenditures are forecast to be $206 million including $36 million of
sustaining capital. The largest sustaining capital spending will be on the
major overhaul maintenance of the heavy duty mine equipment ($19 million),
expenditures for the shear key, buttress and tailings dam construction works
($5 million) and for equipment replacement and other items ($12 million).
Growth capital investment at Kumtor for
2011 is forecast at $170 million primarily for the purchase of seven CAT 789
haul trucks ($21 million), purchase of remaining equipment for the North Wall
expansion project ($28 million), pre-strip costs related to the development
of the open pit ($63 million) and a waste dump expansion project ($3
million). Also, $52 million is included in growth capital investment for the
underground growth capital, to continue to develop the SB Zone and Stockwork
Zone, as well as, for delineation drilling and capital purchases in 2011.
Boroo & Gatsuurt (Mongolia)
At Boroo, 2011 sustaining capital
expenditures are expected to be $1 million and growth capital is forecast at
$5 million primarily for the tailings dam construction to expand the capacity
of the Boroo tailings facility to allow treatment of waste from processing of
the oxide and sulphide ore from the Gatsuurt project.
No capital for the development of the
deeper sulphide ores at Gatsuurt has been forecast and will only be invested
following successful regulatory commissioning of the Gatsuurt oxide project.
The engineering and construction of the bio-oxidation facility to be located
at the Boroo mill, which is needed to treat Gatsuurt sulphide ores, will be
restarted only after the approval to begin mining at Gatsuurt has been
received from the Government of Mongolia.
Corporate Administration
Corporate and administration expenses
for 2011 are forecast at $44 million.
Major Assumptions
The following material assumptions have been
used to forecast production, costs and future capital expenditures;
-- a gold price of $1,300 per ounce,
-- exchange rates:
-- $1USD:$1.03 CAD
-- $1USD:48.50 Kyrgyz Som
-- $1USD:1,250 Mongolian Tugrik
-- $1USD:0.74 Euro
-- diesel fuel price assumption:
-- $0.78/litre at Kumtor
-- $0.94/litre at Boroo
The assumed diesel price of $0.78/litre
at Kumtor includes a customs export duty imposed by the Russian authorities
on the diesel fuel exported to the Kyrgyz Republic. Russia imposed a customs
duty of approximately $194 per tonne on gasoline and diesel fuel exports to
the Kyrgyz Republic that went into effect on April 1, 2010. The customs
export duty for 2011 is assumed to be at approximately $0.18/litre or $212.77
per tonne of diesel fuel; however, there has been public statements made by
Kyrgyz authorities that it could be revoked retroactive to January 1, 2011.
Should the Russian authorities revoke the customs export duty, Kumtor's cash
costs are expected to decrease by approximately $17 million.
Diesel fuel is sourced from separate
Russian suppliers for both sites and only loosely correlates with world oil
prices. The diesel fuel price assumptions were made when the price of oil was
approximately $84 per barrel.
Other important assumptions include the
following:
-- no recurrence of political and civil unrest in the Kyrgyz Republic and
it does not impact operations, including movement of people, supplies
and gold shipments to and from the Kumtor mine,
-- grades and recoveries at Kumtor will remain consistent with the life-of-
mine plan to achieve the forecast gold production,
-- the dewatering program at Kumtor continues to produce the expected
results and the water management system works as planned,
-- the remedial plan to deal with the Kumtor waste and ice movement is
successful, see "Kumtor Mine - Remedial Plan to Manage the High Movement
Area" in the Company's December 7, 2009 news release,
-- no unplanned delays in or interruption of scheduled production from our
mines, including due to civil unrest, natural phenomena, labour,
regulatory or political disputes, equipment breakdown or other
developmental and operational risks,
-- certain issues at Boroo raised by the General Department of Specialized
Inspection ("SSIA") concerning state alluvial reserves, the production
and sale of gold from the Boroo heap leach facility and other matters
will be resolved through negotiation without material adverse impact on
the Company, see "Other Corporate Developments, Mongolia, Mongolian
Regulatory Matters" in the Company's MDA for the period ended September
30, 2010,
-- no further suspension of Boroo's operating licenses, and
-- all necessary permits, licences and approvals are received in a timely
manner.
Production and cost forecasts and
capital estimates are forward-looking information and are based on key
assumptions and subject to material risk factors. If any event arising from
these risks occurs, the Company's business, prospects, financial condition,
results of operations or cash flows could be adversely affected. Additional
risks and uncertainties not currently known to the Company, or that are
currently deemed immaterial, may also materially and adversely affect the
Company's business operations, prospects, financial condition, and results of
operations or cash flows. See the sections entitled "Recent
Developments" and "Risk Factors" in the Company's most recently
filed annual information form, available on SEDAR at www.sedar.com
and see also the discussion below under the heading "Cautionary Note
Regarding Forward-looking Information".
Qualified Person
The production information and other
scientific and technical information in this news release were prepared in
accordance with the standards of the Canadian Institute of Mining, Metallurgy
and Petroleum and National Instrument 43-101 - Standards of Disclosure for
Mineral Projects ("NI 43-101") and were reviewed, verified and
compiled by Centerra's geological and mining staff under the supervision of
Ian Atkinson, Certified Professional Geologist, Centerra's Senior
Vice-President, Global Exploration, who is the qualified person for the
purpose of NI 43-101.
The Kumtor deposit is described in a
technical report dated December 16, 2009 prepared in accordance with NI
43-101. The technical report has been filed on SEDAR at www.sedar.com. The
technical report describes the exploration history, geology and style of gold
mineralization at the Kumtor deposit. Sample preparation, analytical
techniques, laboratories used and quality assurance-quality control protocols
used during the drilling programs at the Kumtor site are described in the
technical report.
The Boroo deposit is described in a
technical report dated December 17, 2009 prepared in accordance with NI
43-101, which is available on SEDAR at www.sedar.com. The technical report
describes the exploration history, geology and style of gold mineralization
at the Boroo deposit. Sample preparation, analytical techniques, laboratories
used and quality assurance-quality control protocols used during the drilling
programs at the Boroo site are the same as, or similar to, those described in
the technical report.
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, Centerra's
expectations regarding future growth, results of operations (including,
without limitation, future production and sales, and operating and capital
expenditures), performance (both operational and financial), business and
political environment and business prospects (including the timing and
development of new deposits and the success of exploration activities) and
opportunities.
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.
Factors that could cause actual results
or events to differ materially from current expectations include, among other
things: risks relating to the recent political and civil unrest in the Kyrgyz
Republic, risks related to the creep of ice and waste movement into the
Kumtor open-pit, the resolution of issues at the Boroo mine raised by the
Mongolian SSIA concerning alluvial reserves and matters relating to the
suspension of the Boroo licenses in June 2009, the potential impact of
Mongolian legislation prohibiting mineral activity in water basins and forest
areas on the Gatsuurt project, the threatened termination of the stability
agreement with the Mongolian Government in relation to the Boroo mine, the
receipt of a final permit to operate the heap leach operation at the Boroo
mine, fluctuations in gold prices, replacement of mineral reserves, reduction
in reserves related to geotechnical risks, ground movements, political risk,
nationalization risk, changes in laws and regulations, political civil
unrest, labour unrest, legal compliance costs, reserve and resource
estimates, production estimates, exploration and development activities, competition,
operational risks, environmental, health and safety risks, costs associated
with reclamation and decommissioning, defects in title, seismic activity,
cost and availability of labour, material and supplies, increases in
production and capital costs, permitting and construction to raise the
tailings dam height and increase the capacity of the existing Kumtor tailing
dam, the ability to renew and obtain licenses, permits and other rights,
illegal mining, enforcement of legal rights, decommissioning and reclamation
cost estimates, future financing and personnel and the receipt of all
permitting and commissioning requirements for the Gatsuurt mine. In addition,
material assumptions used to forecast production and costs include those
described above under the heading "Major Assumptions". 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 and Annual Management's Discussion and Analysis 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 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
January 6, 2010. 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.
About Centerra
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.
Additional information on Centerra is
available on the Company's website at www.centerragold.com and at SEDAR at
www.sedar.com.
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